Document:

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

                          Dated as of [_______________]

                                     Between

                              FIRST SECURITY BANK,
                              NATIONAL ASSOCIATION,
                         Not in its Individual Capacity,
                      except as expressly provided herein,
                          but solely as Owner Trustee,

                                     Lessor

                                       and

                           CONTINENTAL AIRLINES, INC.,

                                     Lessee

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             One Boeing Model [737-824] [757-224] [767-424] Aircraft
              Bearing United States Registration No. N[______] and
               Bearing Manufacturer's Serial No. [______] with two
              [CFM MODEL 56-7B26] [ROLLS-ROYCE MODEL RB211-535E4-B]
                         [GE MODEL CF6-80C2B8F] Engines
         Bearing Engine Manufacturer's Serial Nos. [______] and [______]

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

      THE RIGHT,  TITLE AND  INTEREST OF LESSOR IN AND TO,  AMONG OTHER  THINGS,
THIS LEASE AGREEMENT HAS BEEN ASSIGNED TO AND IS SUBJECT TO A SECURITY  INTEREST
IN FAVOR OF  WILMINGTON  TRUST  COMPANY,  A  DELAWARE  BANKING  CORPORATION,  AS
MORTGAGEE,  UNDER  THE  TRUST  INDENTURE  AND  MORTGAGE  [______],  DATED  AS OF
[_______________],  FOR  THE  BENEFIT  OF THE  HOLDERS  OF THE  EQUIPMENT  NOTES
REFERRED TO IN SUCH TRUST  INDENTURE,  ALL TO THE EXTENT  PROVIDED IN SUCH TRUST
INDENTURE.  THIS LEASE AGREEMENT HAS BEEN EXECUTED IN MULTIPLE COUNTERPARTS;  TO
THE EXTENT,  IF ANY,  THAT THIS LEASE  AGREEMENT  CONSTITUTES  CHATTEL PAPER (AS
DEFINED  IN  THE  UNIFORM  COMMERCIAL  CODE  AS  IN  EFFECT  IN  ANY  APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN LESSOR'S RIGHT, TITLE AND INTEREST IN AND
TO THIS LEASE  AGREEMENT MAY BE PERFECTED  THROUGH THE DELIVERY OR POSSESSION OF
ANY COUNTERPART OF THIS LEASE AGREEMENT OTHER THAN THE COUNTERPART OF THIS LEASE
AGREEMENT  THAT  CONTAINS  THE ORIGINAL  RECEIPT  EXECUTED BY  WILMINGTON  TRUST
COMPANY, AS MORTGAGEE.

<PAGE>

                                   CONTENTS

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

SECTION 2.    DELIVERY AND ACCEPTANCE...................................     1

      2.1     Delivery and Lease of Aircraft............................     1
      2.2     Acceptance by Lessee......................................     2

SECTION 3.    TERM AND RENT.............................................     2

      3.1     Term......................................................     2
      3.2     Rent......................................................     2
      3.3     Payments..................................................     5

SECTION 4.    DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION
              1110 MATTERS..............................................     6

      4.1     Disclaimer................................................     6
      4.2     Certain Agreements of Lessor..............................     7
      4.3     Quiet Enjoyment...........................................     7
      4.4     Investment of Funds Held as Security......................     7
      4.5     Title Transfers by Lessor.................................     8
      4.6     Lessor's Interest in Certain Engines......................     9
      4.7     Lease For U.S. Federal Income Tax Law Purposes;
              Section 1110 of Bankruptcy Code...........................     9

SECTION 5.    RETURN OF AIRCRAFT........................................     9

      5.1     Compliance with Annex B...................................     9
      5.2     Storage and Related Matters...............................    10
      5.3     Return of Other Engines...................................    10
      5.4     Fuel......................................................    10

SECTION 6.    LIENS.....................................................    11

SECTION 7.    REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND
              RECORDS...................................................    12

      7.1     Registration and Operation................................    12
      7.2     Possession................................................    13
      7.3     Certain Limitations on Subleasing or Other
              Relinquishment of Possession..............................    17

<PAGE>

SECTION 8.    MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
              ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER
              LESSEE COVENANTS..........................................    18

      8.1     Maintenance; Replacement and Pooling of Parts;
              Alterations, Modifications and Additions..................    18
      8.2     Information, Certificates, Notices and Reports............    18

SECTION 9.    VOLUNTARY TERMINATION UPON OBSOLESCENCE...................    20

      9.1     Right of Termination......................................    20
      9.2     Election by Lessor to Sell................................    20
      9.3     Retention of Aircraft by Lessor...........................    23

SECTION 10.   LOSS, DESTRUCTION, REQUISITION, ETC.......................    24

      10.1    Event of Loss With Respect to Aircraft....................    24
      10.2    Event of Loss With Respect to an Engine...................    27
      10.3    Conditions to any Replacement.............................    27
      10.4    Conveyance to Lessee......................................    29
      10.5    Application of Payments...................................    29
      10.6    Requisition of Aircraft for Use...........................    30
      10.7    Requisition of an Engine for Use..........................    31
      10.8    Application of Payments...................................    31
      10.9    Application of Payments During Existence of a Lease
              Event of Default..........................................    31

SECTION 11.   INSURANCE.................................................    32

      11.1    Lessee's Obligation to Insure.............................    32
      11.2    Insurance for Own Account.................................    32
      11.3    Indemnification by Government in Lieu of Insurance........    32
      11.4    Application of Insurance Proceeds.........................    33
      11.5    Application of Payments During Existence of Default.......    33

SECTION 12.   INSPECTION................................................    33

SECTION 13.   ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............    34

      13.1    In General................................................    34
      13.2    Merger of Lessee..........................................    34
      13.3    Assignment Security for Lessor's Obligations..............    35
      13.4    Successor Owner Trustee...................................    36

<PAGE>

SECTION 14.   LEASE EVENTS OF DEFAULT...................................    36

      14.1    Payments..................................................    36
      14.2    Insurance.................................................    37
      14.3    Other Covenants...........................................    37
      14.4    Representations and Warranties............................    37
      14.5    Bankruptcy and Insolvency.................................    37

SECTION 15.   REMEDIES AND WAIVERS......................................    38

      15.1    Remedies..................................................    38
      15.2    Limitations Under CRAF....................................    42
      15.3    Right to Perform for Lessee...............................    42
      15.4    Determination of Fair Market Rental Value and Fair
              Market Sales Value........................................    42
      15.5    Remedies Cumulative.......................................    43

SECTION 16.   LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........    43

SECTION 17.   RENEWAL AND PURCHASE OPTIONS..............................    44

      17.1    Notices Generally.........................................    44
      17.2    Renewal Options...........................................    44
      17.3    Purchase Option...........................................    46
      17.4    Appraisals................................................    47

SECTION 18.   MISCELLANEOUS.............................................    48

      18.1    Amendments................................................    48
      18.2    Severability..............................................    48
      18.3    Third-Party Beneficiary...................................    49
      18.4    Reproduction of Documents.................................    49
      18.5    Counterparts..............................................    49
      18.6    Notices...................................................    49
      18.7    GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE..........    50
      18.8    No Waiver.................................................    51
      18.9    Entire Agreement..........................................    51

ANNEXES, EXHIBITS AND SCHEDULES
-------------------------------

ANNEX A       Definitions
ANNEX B       Return Conditions
ANNEX C       Maintenance
ANNEX D       Insurance

<PAGE>

EXHIBIT A     Form of Lease Supplement
EXHIBIT B     Form of Return Acceptance Supplement

SCHEDULE 1    Certain Terms
SCHEDULE 2    Basic Rent
SCHEDULE 3    Stipulated Loss Value Schedule
SCHEDULE 4    Termination Value Schedule
SCHEDULE 5    Permitted Countries
SCHEDULE 6    Placards

<PAGE>

                            LEASE AGREEMENT [______]

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

                                   RECITALS

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

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

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

SECTION 1.        DEFINITIONS AND CONSTRUCTION

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

SECTION 2.        DELIVERY AND ACCEPTANCE

      2.1         DELIVERY AND LEASE OF AIRCRAFT

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

<PAGE>

      2.2         ACCEPTANCE BY LESSEE

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

      (b)   Lessor has authorized one or more employees of Lessee, designated by
Lessee in writing, as the authorized representative or representatives of Lessor
to accept  delivery of the Aircraft on behalf of Lessor pursuant to the Purchase
Agreement Assignment and the Participation Agreement.  Lessee hereby agrees that
if delivery of the  Aircraft  shall be accepted by an employee or  employees  of
Lessee pursuant to such authorization by Lessor,  such acceptance of delivery by
such  employee or  employees  on behalf of Lessor  shall,  without  further act,
irrevocably  constitute acceptance by Lessee of the Aircraft for all purposes of
this Agreement.

SECTION 3.        TERM AND RENT

      3.1         TERM

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

      3.2         RENT

                  3.2.1       INTERIM RENT; BASIC RENT; ADJUSTMENTS TO BASIC
                              RENT AND CERTAIN OTHER AMOUNTS

      (a)   Lessee  shall  pay  Interim  Rent to  Lessor  on the last day of the
Interim Lease Term,  which shall be allocated to the Interim Lease Term.  During
the Base Lease Term,  Lessee shall pay to Lessor,  on each Payment  Date,  Basic
Rent in the  amount  equal to the  percentage  of  Lessor's  Cost  specified  in
Schedule 2 for such Payment Date, which shall be allocated to the Payment Period
ending on such Payment Date, if designated as a payment in arrears, or allocated
to the Payment  Period  commencing  on such Payment  Date,  if  designated  as a
payment in advance,  in each case as specified in Schedule 2, as such amount may
be adjusted pursuant to Section 3.2.1(b).

      (b)   Basic Rent,  Stipulated Loss Values and Termination Values, shall be
subject to adjustment as follows:

<PAGE>

            (i) In the event that  Transaction  Expenses paid by Lessor pursuant
      to Section 9.2 of the  Participation  Agreement are determined to be other
      than 1.0% of Lessor's Cost,  then in each case the Basic Rent  percentages
      set forth in Schedule 2,  Stipulated  Loss Value  percentages set forth in
      Schedule 3 and the Termination  Value  percentages set forth in Schedule 4
      shall be recalculated (upwards or downwards) by the Owner Participant,  on
      or prior to the 120th day after the  Delivery  Date using the same methods
      and  assumptions  used to calculate  original Basic Rent,  Stipulated Loss
      Value and Termination Value percentages in order to (1) maintain the Owner
      Participant's  Net Economic  Return and (2) minimize the Net Present Value
      of Rents to Lessee to the  extent  possible  consistent  with  clause  (1)
      hereof.

            (ii) In the event of a refinancing as  contemplated by Section 11 of
      the Participation Agreement,  then the Basic Rent percentages set forth in
      Schedule 2, Stipulated Loss Value  percentages set forth in Schedule 3 and
      the  Termination  Value  percentages  set  forth  in  Schedule  4 shall be
      recalculated   (upwards  and  downwards)  by  the  Owner   Participant  as
      contemplated by such Section to (1) maintain the Owner  Participant's  Net
      Economic Return and (2) to the extent possible  consistent with clause (1)
      hereof, minimize the Net Present Value of Rents to Lessee.

            (iii) In the event that Lessee is required  to  indemnify  the Owner
      Participant under the Tax Indemnity Agreement,  then (A) in the event that
      the Lessee agrees to satisfy such indemnity obligation pursuant to Section
      __ of the Tax Indemnity Agreement, the Basic Rent percentages set forth in
      Schedule 2, and (B) in any event,  the Stipulated  Loss Value  percentages
      set forth in Schedule 3 and the Termination Value percentages set forth in
      Schedule  4  shall  be  recalculated   (upwards  or  downwards)  by  Owner
      Participant,  using the same methods and assumptions (except to the extent
      such  assumptions  shall be varied to take  into  account  the Tax Loss or
      Foreign Tax Credit Loss (as each such term is defined in the Tax Indemnity
      Agreement)  that is the subject of such  indemnification  and any prior or
      contemporaneous Tax Loss or Foreign Tax Credit Loss) used to calculate the
      Basic Rent  percentages,  the Stipulated  Loss Value  percentages  and the
      Termination  Value  percentages  on the  Delivery  Date,  in  order to (1)
      maintain the Owner Participant's Net Economic Return and (2) to the extent
      possible consistent with clause (1) hereof, minimize the Net Present Value
      of Rents to Lessee.

<PAGE>

      (c) All adjustments pursuant to Section 3.2.1(b) shall be made as promptly
as  practicable  after  either Owner  Participant  or Lessee gives notice to the
other that an event has occurred that requires an adjustment.  Owner Participant
and  Lessee  shall give  prompt  notice to the other of any event  requiring  an
adjustment.  Any recalculation of the percentages of Basic Rent, Stipulated Loss
Value and Termination Value shall be prepared by Owner  Participant,  subject to
verification at the request of Lessee in accordance with this Section  3.2.1(c),
on the basis of the same methodology and assumptions  used by Owner  Participant
in  determining  the  percentages  of Basic  Rent,  Stipulated  Loss  Value  and
Termination  Value as of the Delivery Date, except as such assumptions have been
modified to reflect the events giving rise to  adjustments  hereunder.  Promptly
after an adjustment is made hereunder, Owner Participant shall deliver to Lessee
a  description  of such  adjustment,  setting  forth in  reasonable  detail  the
calculation  thereof.  All  adjustments  shall  (i)  be  made  so  as  to  avoid
characterization  of  the  Lease  as  a  "disqualified  leaseback  or  long-term
agreement" within the meaning of Section 467 of the Code unless such adjustments
are made in a manner that reflects the effect of such  characterization and (ii)
be in compliance with the  requirements of Sections  4.02(5),  4.07(l) and, on a
prospective basis, 4.08(1) of Revenue Procedure 75-28, except to the extent that
on the  Delivery  Date  the  Lease  constituted  a  "disqualified  leaseback  or
long-term  agreement" or was not in compliance with the regulations  referred to
in clause (ii). All adjustments  required  pursuant to Section 3.2.1(b) shall be
set forth in a Lease  Supplement or in an amendment to this Lease,  and promptly
after execution  thereof by Lessor and Lessee,  Lessee shall give a copy thereof
to Mortgagee.

      (d) If Lessee believes that any calculations by Owner Participant pursuant
to Section 3.2.1(c) are in error, and if, after  consultation,  Lessee and Owner
Participant are unable to agree on an adjustment,  then a nationally  recognized
firm of  accountants  selected by Lessee and  reasonably  satisfactory  to Owner
Participant  shall  verify  such  calculations.   Owner  Participant  will  make
available  to such  firm,  but  not,  in any  circumstances,  to  Lessee  or any
representative of Lessee, the methodology and assumptions referred to in Section
3.2.1(c) and any modifications thereto made to reflect the events giving rise to
adjustments   hereunder   (subject   to  the   execution   by  such  firm  of  a
confidentiality   agreement,   reasonably   acceptable  to  Owner   Participant,
prohibiting  disclosure of such methodology and assumptions to any third party).
The  determination by such firm of accountants  shall be final.  Lessee will pay
the  reasonable  costs  and  expenses  of  such  further  verification  by  such
accountants, provided that if it results in a decrease in Basic Rent which

<PAGE>

decreases  the  remaining Net Present Value of Rents by ten or more basis points
from the  remaining  Net  Present  Value of Rents as  recalculated  by the Owner
Participant, then the Owner Participant will pay such costs and expenses.

      (e) Notwithstanding  anything to the contrary in any Operative  Agreement,
the amount of the  payment of Basic Rent due and  payable on each  Payment  Date
shall be at least  sufficient to pay in full, as of such Payment Date  (assuming
timely  payment  of the  Equipment  Notes  prior to such  Date),  the  aggregate
principal   amount  of  scheduled   installments  due  on  the  Equipment  Notes
outstanding on such Payment Date,  together with the accrued and unpaid interest
thereon,  due on such Payment Date in respect of the Equipment Notes;  provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase  would be based upon (i) any  attachment  or diversion of Basic Rent on
account of Lessor  Liens,  (ii) any  modification  of the  payment  terms of the
Equipment Notes, other than as required or permitted by any Operative  Agreement
(including,  without  limitation,  as permitted  upon the  occurrence of a Lease
Event of Default) or (iii) the  acceleration  of any Equipment Note or Equipment
Notes due solely to the  occurrence  of an Indenture  Event of Default that does
not constitute a Lease Event of Default.

                  3.2.2       SUPPLEMENTAL RENT

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

      3.3         PAYMENTS

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

<PAGE>

be  entitled  thereto to such  account in the United  States as such  person may
specify from time to time to Lessee at least 10 Business  Days prior to the date
such payment of Rent is due.

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

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

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

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

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

      4.1         DISCLAIMER

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

<PAGE>

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

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

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

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

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

      4.2         CERTAIN AGREEMENTS OF LESSOR

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

      4.3         QUIET ENJOYMENT

      So  long  as no  Lease  Event  of  Default  shall  have  occurred  and  be
continuing,  Lessor  shall not  interfere  with  Lessee's  rights  hereunder  to
continued possession, use and operation of, and quiet enjoyment of, the Aircraft
during the Term.

      4.4         INVESTMENT OF FUNDS HELD AS SECURITY

                  4.4.1       INVESTMENT

      Any moneys  required to be paid to or retained by Lessor that are required
to be paid to Lessee or applied as provided  herein shall,  until paid to Lessee
as  provided  herein or applied as provided  herein,  be invested by Lessor from
time to time as directed in writing by Lessee (or, if Lessee fails to so direct,
by or as directed by Lessor in its sole  discretion) and at the expense and risk
of Lessee in Cash  Equivalents  so long as such Cash  Equivalents  specified  by
Lessee or Lessor,  as the case may be, can be acquired by Lessor  using its best

<PAGE>

efforts;  provided,  that so long as the Lien of the Trust  Indenture  shall not
have been  discharged,  such moneys shall be invested and held by Mortgagee,  as
assignee of Lessor,  in  accordance  with this Lease and upon  discharge of such
Lien,  Mortgagee  shall pay any such  money  held by it to Lessor to be held and
invested in accordance with this Section.

                  4.4.2       PAYMENT OF GAIN OR LOSS

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

                  4.4.3       LIMITATION OF LIABILITY

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

      4.5         TITLE TRANSFERS BY LESSOR

      If Lessor shall be required to transfer title to the Aircraft, Airframe or
any Engine to Lessee or any other person pursuant to this Lease, then (a) Lessor
shall (1)  transfer to Lessee or such other  person,  as the case may be, all of
Lessor's  right,  title and  interest in and to the  Aircraft,  Airframe or such
Engine,  as the case may be, free and clear of all Lessor Liens,  (2) so long as
the Lien of the Trust Indenture has not been  discharged,  comply with the Trust
Indenture relating to the release of the Aircraft,  Airframe or such Engine, (3)
assign to Lessee or such other person,  as the case may be, if and to the extent
permitted under the Purchase Agreement,  all warranties of Airframe Manufacturer
and Engine  Manufacturer with respect to the Aircraft,  Airframe or such Engine,
and (4) assign to Lessee or such other person, as the case may be, if and to the
extent permitted,  all claims,  if any, for damage to the Aircraft,  Airframe or

<PAGE>

such Engine, in each case free of Lessor Liens, and without recourse or warranty
of any kind whatsoever  (except as to the transfer described in clause (1) above
and as to the absence of such Lessor Liens, as aforesaid),  and (b) Lessor shall
promptly  deliver to Lessee or such other person,  as the case may be, a bill of
sale and agreements of assignment,  evidencing such transfer and assignment, and
such  other  instruments  of  transfer,  all in form  and  substance  reasonably
satisfactory to Lessee (or such other person, as the case may be), as Lessee (or
such other person, as the case may be) may reasonably request.

      4.6         LESSOR'S INTEREST IN CERTAIN ENGINES

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

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

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

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

SECTION 5.        RETURN OF AIRCRAFT

      5.1         COMPLIANCE WITH ANNEX B

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

<PAGE>

      5.2         STORAGE AND RELATED MATTERS

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

      5.3         RETURN OF OTHER ENGINES

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

      5.4         FUEL

      Upon the return of the Airframe upon any termination of this Lease, Lessor
shall pay Lessee,  as compensation  for any fuel or oil contained in the fuel or
oil tanks of such  Airframe,  the value of such fuel or oil at the price paid by
Lessee for such fuel or oil,  PROVIDED that if the Aircraft is being returned in
connection  with the exercise of remedies  pursuant to Section 15,  Lessor shall
have no  obligation  to make such payment to Lessee until Lessor shall have been
paid all amounts due to it pursuant to Section 15.

<PAGE>

SECTION 6.        LIENS

      Lessee shall not, directly or indirectly,  create, incur, assume or suffer
to exist any Lien on or with respect to the Aircraft,  the Airframe,  any Engine
or any Part, title to any of the foregoing or any interest of Lessee therein, or
the Lessee's rights in and to this Lease or any Permitted  Sublease,  except (a)
the respective rights of Lessor, Mortgagee, the Participants or Lessee under the
Operative  Agreements,  or  of  any  Permitted  Sublessee  under  any  Permitted
Sublease;  (b)  Lessor  Liens;  (c) the  rights of others  under  agreements  or
arrangements  to the extent  permitted  by the terms of Sections  7.2 and 7.3 or
Annex  C;  (d)  Liens  for  Taxes  of  Lessee  (and  its  U.S.  federal  tax law
consolidated  group),  or Liens  for Taxes of any Tax  Indemnitee  (and its U.S.
federal tax law  consolidated  group) for which Lessee is obligated to indemnify
such Tax Indemnitee  under any of the Lessee Operative  Agreements,  in any such
case  either  not yet  due or  being  contested  in good  faith  by  appropriate
proceedings  so long as such  Liens  and such  proceedings  do not  involve  any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, any
Engine or the  interest  of any  Participant  therein  or impair the lien of the
Trust Indenture; (e) materialmen's, mechanics', workers', repairers', employees'
or other like Liens  arising in the ordinary  course of business for amounts the
payment of which is either not yet  delinquent for more than 60 days or is being
contested in good faith by  appropriate  proceedings,  so long as such Liens and
such  proceedings  do not involve any material  risk of the sale,  forfeiture or
loss  of  the  Aircraft,  the  Airframe,  any  Engine  or  the  interest  of any
Participant therein or impair the lien of the Trust Indenture; (f) Liens arising
out  of  any  judgment  or  award  against  Lessee  (or  against  any  Permitted
Sublessee),  so long as such  judgment  shall,  within  60 days  after the entry
thereof,  have been discharged or vacated,  or execution  thereof stayed pending
appeal or shall have been  discharged,  vacated or reversed within 60 days after
the  expiration of such stay, and so long as during any such 60-day period there
is not, or any such judgment or award does not involve, any material risk of the
sale,  forfeiture  or loss of the  Aircraft,  the  Airframe,  any  Engine or the
interest of any Participant  therein or impair the lien of the Trust  Indenture,
and (g) any other Lien with respect to which Lessee (or any Permitted Sublessee)
shall have provided a bond,  cash  collateral or other security  adequate in the
reasonable opinion of Lessor.  Lessee shall promptly take (or cause to be taken)
such action as may be necessary  duly to discharge (by bonding or otherwise) any
Lien not  excepted  above if the same  shall at any time arise in respect of the
Aircraft, the Airframe, any Engine or any Part during the Term.

<PAGE>

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

      7.1         REGISTRATION AND OPERATION

                  7.1.1       REGISTRATION AND RECORDATION

      Subject  to the  compliance  by Lessor  and Owner  Participant  with their
respective obligations under Section 13 of the Participation  Agreement,  Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered  with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor  (except to the  extent  that such  registration  under the Act cannot be
effected  with the FAA  because of Lessor's  or Owner  Participant's  failure to
comply with the citizenship  requirements for registration of the Aircraft under
the Act).  Lessor shall execute and deliver all such documents as Lessee (or any
Permitted  Sublessee)  may  reasonably  request for the purpose of effecting and
continuing such registration.  Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times  maintained  of record as a  first-priority
perfected  mortgage  (subject to Permitted Liens) on the Aircraft,  the Airframe
and each of the Engines (except to the extent such perfection or priority cannot
be  maintained  solely as a result of the  failure  by  Lessor or  Mortgagee  to
execute and deliver any necessary documents).

                  7.1.2       REREGISTRATION

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

                  7.1.3       MARKINGS

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

<PAGE>

or Engines.  If any such placard is damaged or becomes  illegible,  Lessee shall
promptly  replace  it with a placard  complying  with the  requirements  of this
Section 7.1.3.

                  7.1.4       COMPLIANCE WITH LAWS

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

                  7.1.5       OPERATION

      Lessee agrees not to operate, use or locate the Aircraft,  the Airframe or
any Engine,  or allow the  Aircraft,  the Airframe or any Engine to be operated,
used or located (a) in any area excluded from coverage by any insurance required
by the terms of  Section  11,  except in the case of a  requisition  by the U.S.
Government  where Lessee obtains an indemnity in lieu of such insurance from the
U.S. Government,  or insurance from the U.S. Government,  covering such area, in
accordance with Section 11.3 or (b) in any recognized area of hostilities unless
fully  covered in accordance  with Annex D by war-risk  insurance as required by
the terms of Section 11 (including, without limitation, Section 11.3), unless in
any case  referred to in this  Section  7.1.5 the  Aircraft is only  temporarily
operated,  used or located in such area as a result of an  emergency,  equipment
malfunction,  navigational error, hijacking,  weather condition or other similar
unforeseen  circumstances,  so  long as  Lessee  diligently  and in  good  faith
proceeds to remove the Aircraft from such area.

      7.2         POSSESSION

      Lessee will not, without the prior written consent of Lessor,  sublease or
otherwise  in any manner  deliver,  transfer  or  relinquish  possession  of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine

<PAGE>

to be installed,  on any airframe  other than the Airframe;  PROVIDED,  HOWEVER,
subject to the provisions of Section 7.3, Lessee may, without such prior written
consent:

                  7.2.1       INTERCHANGE AND POOLING

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

                  7.2.2       TESTING AND SERVICE

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

                  7.2.3       TRANSFER TO U.S. GOVERNMENT

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

                  7.2.4       INSTALLATION OF ENGINES ON OWNED AIRCRAFT

      Install  or permit  any  Permitted  Sublessee  to  install an Engine on an
airframe owned by Lessee or such Permitted  Sublessee,  as the case may be, free

<PAGE>

and clear of all Liens,  except (a) Permitted  Liens and those that do not apply
to the Engines and (b) the rights of third parties under normal  interchange  or
pooling  agreements and  arrangements  of the type that would be permitted under
Section 7.2.1.

                  7.2.5       INSTALLATION OF ENGINES ON OTHER AIRFRAMES

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

                  7.2.6       INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT

      Install  or permit  any  Permitted  Sublessee  to  install an Engine on an
airframe owned by Lessee or such Permitted  Sublessee,  leased to Lessee or such
Permitted Sublessee,  or purchased by Lessee or such Permitted Sublessee subject
to a conditional  sale or other security  agreement  under  circumstances  where
neither Section 7.2.4 or 7.2.5 is applicable;  PROVIDED,  HOWEVER, that any such
installation  shall be deemed an Event of Loss with respect to such Engine,  and
Lessee shall comply with Section 10.2 hereof in respect thereof.

                  7.2.7       SUBLEASING

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

      (a) Lessee shall  provide  written  notice to Lessor and  Mortgagee  (such
notice in the event of a sublease  to a U.S.  Air  Carrier to be given  promptly

<PAGE>

after entering into any such sublease or, in the case of a sublease to any other
Permitted Air Carrier, 10 days in advance of entering into such sublease);

      (b) At the time that Lessee enters into such sublease,  such Permitted Air
Carrier  shall  not be  subject  to  any  bankruptcy,  insolvency,  liquidation,
reorganization,   dissolution  or  similar   proceeding,   and  shall  not  have
substantially all of its property in the possession of any liquidator,  trustee,
receiver or similar person;

      (c) Any such  sublease (i) shall not extend  beyond the  expiration of the
Base Lease Term or any Renewal  Lease Term then in effect  unless  Lessee  shall
have  irrevocably  committed  to  purchase  the  Aircraft,  (ii)  shall  include
provisions for the maintenance,  operation, possession, inspection and insurance
of the  Aircraft  that are the same in all material  respects as the  applicable
provisions of this Lease and (iii) shall be expressly subject and subordinate to
all the terms of this Agreement and to the rights, powers and remedies of Lessor
hereunder,  including,  without limitation,  Lessor's rights under Section 15 to
repossess the Aircraft, Airframe and Engines and to terminate such sublease upon
the occurrence of a Lease Event of Default;

      (d) In connection with a sublease to a Permitted Foreign Air Carrier,  (1)
the United States maintains diplomatic relations with the country of domicile of
such  Permitted  Foreign  Air  Carrier  (or,  in the case of Taiwan,  diplomatic
relations  at least as good as those in  effect  on the  Delivery  Date) and (2)
Lessee shall have furnished Lessor and Mortgagee a favorable opinion of counsel,
reasonably  satisfactory to Lessor, in the country of domicile of such Permitted
Foreign Air Carrier,  that (i) the terms of such  sublease are the legal,  valid
and binding  obligations of the parties  thereto  enforceable  under the laws of
such  jurisdiction,  (ii) it is not necessary for Owner  Participant,  Lessor or
Mortgagee  to register or qualify to do  business in such  jurisdiction,  if not
already so  registered or  qualified,  as a result,  in whole or in part, of the
proposed sublease,  (iii) Lessor's title to, and Mortgagee's Lien in respect of,
the Aircraft, Airframe and Engines will be recognized in such jurisdiction, (iv)
the Laws of such  jurisdiction  of domicile  require  fair  compensation  by the
government of such  jurisdiction,  payable in a currency freely convertible into
Dollars, for the loss of title to the Aircraft, Airframe or Engines in the event
of the requisition by such government of such title (unless Lessee shall provide
insurance in the amounts  required with respect to hull insurance  under Section
11 covering the requisition of title to the Aircraft, Airframe or Engines by the
government of such jurisdiction so long as the Aircraft, Airframe or Engines are

<PAGE>

subject to such  sublease) and (v) the  agreement of such  Permitted Air Carrier
that its rights under the sublease are subject and  subordinate to all the terms
of this Lease is enforceable against such Permitted Air Carrier under applicable
law;

      (e)  Lessee  shall  furnish  to Lessor,  Mortgagee  and Owner  Participant
evidence  reasonably  satisfactory  to Lessor  that the  insurance  required  by
Section 11 remains in effect;

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

      (g) Lessee shall reimburse Lessor, Mortgagee and Owner Participant for all
of  their  reasonable  out-of-pocket  fees  and  expenses,   including,  without
limitation,  reasonable fees and  disbursements of counsel,  incurred by Lessor,
Mortgagee and Owner Participant in connection with any such sublease; and

      (h) No such  sublease  shall be made to a  Permitted  Foreign  Air Carrier
prior to the close of the Tax  Attribute  Period,  unless  Lessee  prepays  on a
lump-sum  basis any liability due under the Tax Indemnity  Agreement as a result
of such sublease based upon the  assumption  that such sublease were to continue
for the remainder of the term of such sublease.

      7.3         CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT
                  OF POSSESSION

      Notwithstanding anything to the contrary in Section 7.2:

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

      (b) Lessee shall remain  primarily liable hereunder for the performance of
all the  terms of this  Lease to the same  extent  as if such  transfer  had not
occurred,  and no transfer of  possession of the  Aircraft,  the  Airframe,  any

<PAGE>

Engine  or any Part  shall in any way  discharge  or  diminish  any of  Lessee's
obligations to Lessor hereunder or under any Operative Agreement;

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

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

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

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

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

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

      8.2         INFORMATION, CERTIFICATES, NOTICES AND REPORTS

                  8.2.1       FINANCIAL INFORMATION

      Lessee will furnish to Lessor:

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

<PAGE>

            has been filed with the SEC and providing a website address at which
            such report may be accessed will satisfy this paragraph (a).

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

                  8.2.2       ANNUAL CERTIFICATE

      Within 120 days  after the close of each  fiscal  year of  Lessee,  Lessee
shall deliver to Lessor and Mortgagee an Officer's Certificate of Lessee (which,
in lieu of delivery pursuant to Section 18.6, may be delivered by e-mail and, in
such case, need not include a manual signature of a required officer but instead
shall set forth a typed  signature  of such an  officer) to the effect that such
officer is familiar  with or has  reviewed or caused to be reviewed the relevant
terms of this  Lease and the other  Lessee  Operative  Agreements  and that such
officer  does  not  have  knowledge  of the  existence  as at the  date  of such
certificate of any Lease Event of Default or, if any such Lease Event of Default
exists,  specifying  the nature and period of  existence  thereof and the action
Lessee has taken or is taking or proposes to take with respect thereto.

                  8.2.3       INFORMATION FOR FILINGS

      Lessee  shall  promptly  furnish  to  Owner  Participant  or  Lessor  such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's  possession,  or reasonably
available to or  obtainable  by Lessee or such  Permitted  Sublessee,  as may be
required to enable Lessor timely to file any reports  required to be filed by it
as lessor  under the Lease or to enable  Owner  Participant  to timely  file any
reports  required to be filed by it, as the beneficiary of the Trust Estate,  in
either case, with any Government  Entity because of, or in connection  with, the
interest of Owner  Participant  or Lessor in the Aircraft,  Airframe or Engines,

<PAGE>

this Lease or any other part of the Trust Estate;  provided,  however, that with
respect to any such  information  which  Lessee  reasonably  deems  commercially
sensitive or  confidential,  Owner  Participant  or Lessor,  as the case may be,
shall afford Lessee a reasonable  opportunity  to seek from any such  Government
Entity a waiver of the  obligation  of Owner  Participant  or Lessor to file any
such information, or shall consent to the filing of such information directly by
Lessee in lieu of filing by Owner Participant or Lessor,  and if any such waiver
or consent is evidenced to the reasonable  satisfaction of Owner  Participant or
Lessor,  as the case may be, then Lessee  shall not be required to furnish  such
information to Owner Participant or Lessor.

SECTION 9.        VOLUNTARY TERMINATION UPON OBSOLESCENCE

      9.1         RIGHT OF TERMINATION

      (a)  Lessee  shall have the right at its  option to  terminate  this Lease
during the Base Lease Term, effective only on a Termination Date occurring on or
after the fifth anniversary of the Delivery Date, if:

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

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

      (b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to sell
or retain the  Aircraft,  as  provided  in this  Section 9, within 30 days after
Lessee gives Lessor written notice pursuant to Section  9.1(a)(ii).  Any failure
by Lessor to give such notice of its election  shall be deemed to be an election
to sell the Aircraft, as provided in this Section 9.

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

<PAGE>

      9.2         ELECTION BY LESSOR TO SELL

                  9.2.1       BIDS; CLOSING OF SALE

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

                  9.2.2       CLOSING OF SALE

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

      (b) All  proceeds of any sale  described in Section  9.2.2(a)  (net of the
Expenses  of  Sale)  shall  be paid  to and  retained  by  Lessor  and,  on such
Termination Date, and as a condition  precedent to such sale and the delivery of

<PAGE>

the Aircraft and Engines or engines to such bidder,  Lessee shall pay to Lessor,
in the manner and in funds of the type specified in Section 3.3:

            (i) all unpaid Basic Rent due at any time prior to such  Termination
      Date and all Basic Rent due on such Termination Date to the extent payable
      in arrears with respect to the Payment Period then ended; plus

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

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

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

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

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

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

      (d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take place
only on a  Termination  Date.  Subject  to  Section  9.3,  if no sale shall have
occurred  on or as of  the  proposed  Termination  Date,  this  Agreement  shall

<PAGE>

continue  in full  force  and  effect,  and all of  Lessee's  obligations  shall
continue,  including,  without  limitation,  its obligation to pay Rent, in each
case, as if the notice under Section 9.1 shall not have been given and,  subject
to Section 9.2.3(b), Lessee may give another notice pursuant to Section 9.1.

                  9.2.3       WITHDRAWAL OF NOTICE OF TERMINATION

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

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

      9.3         RETENTION OF AIRCRAFT BY LESSOR

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

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

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

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

                  (1)   all  unpaid  Basic  Rent due at any  time  prior to such
                        Termination   Date  and  all  Basic  Rent  due  on  such

<PAGE>

                        Termination  Date to the extent  payable in arrears with
                        respect to the Payment Period then ended; plus

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

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

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

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

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

SECTION 10.       LOSS, DESTRUCTION, REQUISITION, ETC.

      10.1        EVENT OF LOSS WITH RESPECT TO AIRCRAFT

                  10.1.1      NOTICE AND ELECTION

      (a) Upon the  occurrence of an Event of Loss with respect to the Airframe,
and any Engine or Engines  installed  thereon at the time of such Event of Loss,
Lessee shall  promptly  (and in any event within 15 days after such  occurrence)
give Lessor and Mortgagee  written notice of such Event of Loss.  Within 45 days
after such occurrence,  Lessee shall give Lessor and Mortgagee written notice of

<PAGE>

Lessee's  election to make payment in respect of such Event of Loss, as provided
in Section 10.1.2, or to replace the Airframe, and any such Engines, as provided
in Section 10.1.3.

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

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

                  10.1.2      PAYMENT OF LOSS AND TERMINATION OF LEASE

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

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

            (1)   all unpaid  Interim  Rent,  Basic Rent or Renewal Rent, as the
                  case may be,  due at any time  prior  to the  Stipulated  Loss
                  Value  Date  that  is on or  immediately  preceding  the  Loss
                  Payment Date; plus

            (2)   the Stipulated  Loss Value of the Aircraft  computed as of the
                  Stipulated  Loss Value Date used in the  foregoing  clause (1)
                  for the computation of unpaid Rent; plus

            (3)   if the Stipulated Loss Value Date used in the foregoing clause
                  (1) is a Payment  Date on which Basic Rent  payable in arrears
                  is due, the amount of such Basic Rent; plus

<PAGE>

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

            (5)   interest on the amounts specified in the foregoing clauses (2)
                  and (3) at the SLV Rate from and including the Stipulated Loss
                  Value  Date  used  in  the   foregoing   clause  (1)  for  the
                  computation of unpaid Rent to the date such amount is due, and
                  thereafter  at the  Payment Due Rate to the date of payment of
                  such amounts in full; and

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

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

                  10.1.3      REPLACEMENT OF AIRFRAME AND ENGINES

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

<PAGE>

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

      10.2        EVENT OF LOSS WITH RESPECT TO AN ENGINE

                  10.2.1      NOTICE

      Upon the  occurrence  of an Event of Loss with  respect to an Engine under
circumstances  in which an Event of Loss with  respect to the  Airframe  has not
occurred,  Lessee  shall  promptly  (and in any event  within 15 days after such
occurrence) give Lessor written notice of such Event of Loss.

                  10.2.2      REPLACEMENT OF ENGINE

      Lessee  shall,  promptly  and  in any  event  within  60  days  after  the
occurrence of such Event of Loss,  convey or cause to be conveyed to Lessor,  in
compliance  with Section 10.3 and as replacement  for the Engine with respect to
which any Event of Loss occurred,  title to a Replacement  Engine free and clear
of all Liens other than Permitted  Liens.  Such  Replacement  Engine shall be an
engine  manufactured by Engine Manufacturer that is the same model as the Engine
to be  replaced  thereby,  or an  improved  model,  and  that  is  suitable  for
installation  and  use on the  Airframe,  and  that  has a  value,  utility  and
remaining  useful  life  (without  regard to hours and  cycles  remaining  until
overhaul)  at least equal to the Engine to be replaced  thereby  (assuming  that
such Engine had been maintained in accordance with the Lease).

                  10.2.3      ENGINE EXCHANGE

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

<PAGE>

      10.3        CONDITIONS TO ANY REPLACEMENT

                  10.3.1      DOCUMENTS

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

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

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

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

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

      (e)  furnish  an opinion  of  Lessee's  aviation  law  counsel  reasonably
satisfactory  to Lessor  and  addressed  to Lessor and  Mortgagee  as to the due
registration of any such Replacement Airframe and the due filing for recordation

<PAGE>

of each Lease  Supplement and Trust  Indenture  Supplement  with respect to such
Replacement Airframe or Replacement Engine under the Act; and

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

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

                  10.3.2      OTHER OBLIGATIONS

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

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

      10.4        CONVEYANCE TO LESSEE

      Upon  compliance by Lessee with the applicable  terms of Sections  10.1.3,
10.2 and 10.3.1,  Lessor will transfer to Lessee the Airframe or Engine,  as the

<PAGE>

case may be, with respect to which such Event of Loss  occurred,  in  accordance
with Section 4.5.

      10.5        APPLICATION OF PAYMENTS

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

                  10.5.1      REPLACEMENT OF AIRFRAME AND ENGINES

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

                  10.5.2      LOSS OF ENGINE

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

                  10.5.3      PAYMENT OF LOSS

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

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

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

      10.6        REQUISITION OF AIRCRAFT FOR USE

      If any Government  Entity shall  requisition  for use the Airframe and the
Engines or engines  installed  thereon,  and if the same does not  constitute an

<PAGE>

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

      10.7        REQUISITION OF AN ENGINE FOR USE

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

      10.8        APPLICATION OF PAYMENTS

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

<PAGE>

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

      Any amount  described in this Section 10 that is payable or creditable to,
or  retainable  by,  Lessee  shall not be paid or credited  to, or retained  by,
Lessee if at the time such payment,  credit or retention would otherwise occur a
Special Default shall have occurred and be continuing, but shall instead be held
by or paid over to Lessor (or to Mortgagee  so long as  Mortgagee  has not given
notice to Lessee that the Trust Indenture has been duly  discharged) as security
for the  obligations  of Lessee under this Lease and the other Lessee  Operative
Agreements and shall be invested pursuant to Section 4.4 hereof unless and until
Lessor shall have  demanded  liquidated  damages  pursuant to Section  15.1.3 or
15.1.4 and such amount is applied,  at the option of Lessor, or upon the written
request of Lessee to Lessor, from time to time during the continuance of a Lease
Event of Default,  to Lessee's  obligations under this Lease as and when due, it
being understood that any such application  shall be made to such obligations of
Lessee as Lessor may  determine  in its sole  discretion.  At such time as there
shall not be continuing any Special Default, such amount shall be paid to Lessee
to the extent not previously applied in accordance with this Section 10.9.

SECTION 11.       INSURANCE

      11.1        LESSEE'S OBLIGATION TO INSURE

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

      11.2        INSURANCE FOR OWN ACCOUNT

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

      11.3        INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE

      Lessor  agrees  to  accept,  in lieu of  insurance  against  any risk with
respect to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S.  Government,  or upon the written consent of Lessor, other

<PAGE>

Government Entity, against such risk in an amount that, when added to the amount
of insurance  (including  permitted  self-insurance),  if any, against such risk
that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance
with this Section 11, during the period of such  requisition or transfer,  shall
be at least  equal to the  amount  of  insurance  against  such  risk  otherwise
required by this Section 11.

      11.4        APPLICATION OF INSURANCE PROCEEDS

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

      11.5        APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT

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

<PAGE>

SECTION 12.       INSPECTION

      (a) At all reasonable  times Lessor,  Mortgagee or the Owner  Participant,
and their respective  authorized  representatives (the "Inspecting Parties") may
(not more than once every 12 months unless a Lease Event of Default has occurred
and is continuing  then such inspection  right shall not be so limited)  inspect
the Aircraft, Airframe and Engines (including,  without limitation, the Aircraft
Documents)  and any such  Inspecting  Party  may make  copies  of such  Aircraft
Documents  not  reasonably  deemed  confidential  by  Lessee  or such  Permitted
Sublessee.

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

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

      (d) Each  Inspecting  Party shall bear its own expenses in connection with
any such  inspection  (including the cost of any copies made in accordance  with
Section 12(a)).

SECTION 13.       ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE

      13.1        IN GENERAL

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

<PAGE>

      13.2        MERGER OF LESSEE

                  13.2.1      IN GENERAL

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

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

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

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

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

                  13.2.2      EFFECT OF MERGER

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

      13.3        ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS

      In order to secure the  indebtedness  evidenced  by the  Equipment  Notes,
Lessor has  agreed in the Trust  Indenture,  among  other  things,  to assign to
Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in favor

<PAGE>

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

      13.4        SUCCESSOR OWNER TRUSTEE

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

SECTION 14.       LEASE EVENTS OF DEFAULT

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

      14.1        PAYMENTS

      Lessee shall fail to pay any amount of Interim Rent,  Basic Rent,  Renewal
Rent,  Stipulated Loss Value or Termination  Value within ten (10) Business Days

<PAGE>

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

      14.2        INSURANCE

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

      14.3        OTHER COVENANTS

      Lessee  shall  fail to observe or  perform  (or cause to be  observed  and
performed) in any material  respect any other covenant,  agreement or obligation
set forth  herein or in any other  Lessee  Operative  Agreement  (other than the
covenants, agreements and obligations set forth in the Tax Indemnity Agreement),
and such  failure  shall  continue  unremedied  for a period of 30 days from and
after the date of written  notice  thereof to Lessee from  Lessor or  Mortgagee,
unless such failure is capable of being corrected and Lessee shall be diligently
proceeding to correct such failure,  in which case there shall be no Lease Event
of Default unless and until such failure shall continue  unremedied for a period
of 270 days after receipt of such notice.

      14.4        REPRESENTATIONS AND WARRANTIES

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

<PAGE>

      14.5        BANKRUPTCY AND INSOLVENCY

      (a) Lessee shall consent to the appointment of or the taking of possession
by a receiver,  trustee or liquidator of itself or of  substantially  all of its
property,  or Lessee  shall  admit in  writing  its  inability  to pay its debts
generally  as they come due, or does not pay its debts  generally as they become
due or shall make a general  assignment for the benefit of creditors,  or Lessee
shall file a voluntary  petition  in  bankruptcy  or a voluntary  petition or an
answer seeking  reorganization,  liquidation or other relief in a case under any
bankruptcy Laws or other  insolvency Laws (as in effect at such time), or Lessee
shall seek relief by voluntary petition, answer or consent, under the provisions
of any other bankruptcy or other similar Law providing for the reorganization or
winding-up  of  corporations  (as in effect at such time) or  Lessee's  board of
directors shall adopt a resolution authorizing any of the foregoing; or

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

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

SECTION 15.       REMEDIES AND WAIVERS

      15.1        REMEDIES

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

<PAGE>

                  15.1.1      RETURN AND REPOSSESSION

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

                  15.1.2      SALE AND USE

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

                  15.1.3      CERTAIN LIQUIDATED DAMAGES

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

<PAGE>

for the  Aircraft  in respect  of all  periods  commencing  on or after the date
specified for payment in such notice), the following amounts:

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

      (b)  whichever of the following  amounts  Lessor,  in its sole  discretion
shall specify in such notice:

            (i) an amount  equal to the excess,  if any,  of the present  value,
      computed as of the  Stipulated  Loss Value Date  specified in such notice,
      discounted  to such  date at a rate per  annum  equal  to the  Debt  Rate,
      compounded semiannually,  of all unpaid Interim Rent and Basic Rent during
      the then  remaining  portion of the Base Lease Term or, if a Renewal Lease
      Term has  commenced,  of all unpaid  Renewal  Rent  during  the  remaining
      portion of such Renewal  Lease Term,  over the Fair Market Rental Value of
      the Aircraft for the remainder of the Term,  after  discounting  such Fair
      Market  Rental Value to its then present  value (at a rate per annum equal
      to the Debt Rate, compounded semiannually) as of the Stipulated Loss Value
      Date specified in such notice, or

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

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

      (d) interest on the amount  specified in the  foregoing  clause  (b)(i) or
(b)(ii),  according  to  Lessor's  election,  at the  Payment  Due Rate from and
including the Stipulated Loss Value Date specified in such notice to the date of
payment of such amount.

                  15.1.4      LIQUIDATED DAMAGES UPON SALE

      If Lessor,  pursuant to Section 15.1.2 or applicable  Law, shall have sold
the Airframe and/or any Engine,  Lessor,  in lieu of exercising its rights under
Section 15.1.3 with respect to the Aircraft, Airframe or any Engine, as the case
may be, may, if Lessor  shall so elect,  upon giving  written  notice to Lessee,
demand Lessee to pay Lessor, and Lessee shall pay to Lessor, on the date of such
sale and in the manner and in funds of the type  specified  in Section  3.3,  as

<PAGE>

liquidated  damages  for loss of a bargain  and not as a penalty (in lieu of the
Interim  Rent,  Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods  commencing  on or after the date of such  sale),  the
following amounts:

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

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

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

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

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

                  15.1.5      RESCISSION

      Lessor may (i) at its option,  rescind or  terminate  this Lease as to the
Aircraft,  Airframe or any Engine,  or any Part  thereof,  or (ii)  exercise any
other  right or  remedy  that may be  available  to it under  applicable  Law or
proceed by appropriate court action to enforce the terms hereof.

                  15.1.6      OTHER REMEDIES

      In addition to the foregoing remedies (but without  duplication of amounts
otherwise  paid under this Section  15),  Lessee shall be liable for any and all
unpaid Rent due hereunder before,  during or after (except as otherwise provided

<PAGE>

herein) the exercise of any of the  foregoing  remedies  and for all  reasonable
attorneys'  fees and other  costs and  expenses of Lessor,  Mortgagee  the Owner
Participant and the Note Holders,  including,  without  limitation,  interest on
overdue  Rent  at the  rate  as  herein  provided,  incurred  by  reason  of the
occurrence  of any Lease Event of Default or the  exercise of Lessor's  remedies
with respect thereto,  including all reasonable  costs and expenses  incurred in
connection with the return of the Airframe or any Engine, in accordance with the
terms of Section 5 or in placing the  Airframe or any Engine,  in the  condition
and airworthiness required by Section 5.

      15.2        LIMITATIONS UNDER CRAF

      Notwithstanding the provisions of Section 15.1, during any period that the
Aircraft,  Airframe  or any  Engine is subject  to CRAF in  accordance  with the
provisions of Section 7.2.3 and in the possession of the U.S. Government, Lessor
shall not,  as a result of any Lease  Event of Default,  exercise  its  remedies
hereunder in such manner as to limit  Lessee's  control under this Lease (or any
Permitted  Sublessee's  control under any  Permitted  Sublease) of the Aircraft,
Airframe or such  Engine,  unless at least 30 days' (or such other period as may
then be applicable  under CRAF) written notice of default  hereunder  shall have
been given by Lessor or Mortgagee by registered or certified mail to Lessee (and
any Permitted  Sublessee) with a copy to the Contracting Officer  Representative
or  Representatives  for the Military  Airlift  Command of the United States Air
Force to whom notices must be given under the  contract  governing  Lessee's (or
any Permitted  Sublessee's)  participation in CRAF with respect to the Aircraft,
Airframe or any Engine.

      15.3        RIGHT TO PERFORM FOR LESSEE

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

<PAGE>

      15.4        DETERMINATION OF FAIR MARKET RENTAL VALUE AND FAIR MARKET
                  SALES VALUE

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

      15.5        REMEDIES CUMULATIVE

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

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

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

<PAGE>

Engine,  or any  interruption  or cessation in the use or possession  thereof by
Lessee   for  any  reason   whatsoever;   (iii)  any   insolvency,   bankruptcy,
reorganization or similar  proceedings by or against Lessee or any other Person;
or (iv) any other  circumstance,  happening or event whatsoever,  whether or not
similar to any of the foregoing.

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

      (c) Nothing set forth in this  Section 16 shall be  construed  to prohibit
Lessee  from  separately  pursuing  any claim that it may have from time to time
against  Lessor or any other Person with  respect to any matter  (other than the
absolute and unconditional nature of Lessee's obligations hereunder to pay Rent,
and other than the matters specified in paragraphs (a) and (b) above).

SECTION 17.       RENEWAL AND PURCHASE OPTIONS

      17.1        NOTICES GENERALLY

      (a) At least  120 days  prior to the  Scheduled  Expiration  Date or, if a
Renewal  Lease  Term is then in  effect,  prior to the  Scheduled  Renewal  Term
Expiration Date of such Renewal Lease Term,  Lessee may provide notice to Lessor
that Lessee may exercise either the option to extend the leasing of the Aircraft
for a Renewal  Lease Term pursuant to Section 17.2 or the option to purchase the
Aircraft on the Scheduled  Expiration Date or Scheduled  Renewal Term Expiration
Date of such Renewal Lease Term, as the case may be, pursuant to Section 17.3 (a
"Preliminary Notice").

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

<PAGE>

      17.2        RENEWAL OPTIONS

                  17.2.1      RENEWAL NOTICE

      (a) If Lessee has given a  Preliminary  Notice,  as  specified  in Section
17.1, and subject to the terms and  conditions of this Section 17.2,  Lessee may
exercise  its option to extend the leasing of the Aircraft  hereunder  until the
next Scheduled  Renewal Term Expiration Date, on the same terms,  provisions and
conditions  (except as  contemplated by this Section 17) set forth herein and in
the other Lessee  Operative  Agreements  with respect to the Base Lease Term, by
delivery of a notice (a "Renewal  Notice") to Lessor not less than 90 days prior
to (i) if the Base Lease Term is then in effect, the Scheduled  Expiration Date,
or (ii) if a Renewal Lease Term is then in effect,  the  Scheduled  Renewal Term
Expiration Date for such Renewal Lease Term.

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

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

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

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

                  17.2.2      RENEWAL RENT

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

      (b) The Renewal  Rent  payable by Lessee on each  Payment  Date during any
Fixed  Renewal  Lease Term shall be the lower of (i) the Renewal  Rent Limit and
(ii) the Fair Market Rental Value of the Aircraft for such Renewal Lease Term.

<PAGE>

The Renewal Rent  payable by Lessee on each  Payment Date during any  Subsequent
Renewal  Lease Term shall be the Fair Market  Rental  Value of the  Aircraft for
such Renewal  Lease Term.  Any such Fair Market Rental Value shall be determined
not  more  than  120  days  and not  less  than  100  days  prior to the date of
commencement of such Renewal Lease Term by mutual agreement of Lessor and Lessee
or, if they shall be unable to agree, by an appraisal in accordance with Section
17.4.  Notwithstanding the foregoing, (i) on the first Payment Date of a Renewal
Term, Lessee shall pay to Lessor a pro-rated amount of Renewal Rent equal to (x)
the Renewal Rent  applicable  to such Renewal Term divided by 180  multiplied by
(y) the actual  number of days  elapsed in such  Payment  Period and (ii) on the
last  Payment  Date in such  Renewal  Term Lessee  shall pay to Lessor an amount
equal to the Renewal Rent minus the amount  referred to in the preceding  clause
(i).

                  17.2.3      STIPULATED LOSS AND TERMINATION VALUES

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

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

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

      17.3        PURCHASE OPTION

                  17.3.1      PURCHASE NOTICE

      (a) Subject to Section 17.1 and the terms and  conditions  of this Section
17.3,  Lessee may elect to purchase the  Aircraft,  on any Purchase  Date,  at a

<PAGE>

purchase  price equal to the lesser of 50% of Lessor's  Cost and the Fair Market
Sales Value of the Aircraft computed as of the Purchase Date.

      (b) Lessee may exercise such option to purchase the Aircraft,  by delivery
of a notice (a  "Purchase  Notice") to Lessor not less than 90 days prior to the
Purchase Date specified in such Purchase Notice.

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

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

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

                  17.3.2      DETERMINATION OF FAIR MARKET SALES VALUE

      The Fair Market Sales Value of the Aircraft  shall be determined  not more
than 120 days and not less than 100 days prior to the  applicable  Purchase Date
by mutual  agreement  of Lessor and Lessee or, if they shall be unable to agree,
by an appraisal in accordance with Section 17.4.

                  17.3.3      TITLE

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

      17.4        APPRAISALS

      Whenever  Fair  Market  Rental  Value or Fair  Market  Sales  Value of the
Aircraft is required to be  determined  by an  appraisal  under this Section 17,
Lessee and Lessor  shall  appoint a mutually  satisfactory  Appraiser to conduct
such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser
then each shall promptly appoint a separate  Appraiser and such Appraisers shall

<PAGE>

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

SECTION 18.       MISCELLANEOUS

      18.1        AMENDMENTS

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

<PAGE>

      18.2        SEVERABILITY

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

      18.3        THIRD-PARTY BENEFICIARY

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

      18.4        REPRODUCTION OF DOCUMENTS

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

      18.5        COUNTERPARTS

      This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate  signature pages
bound  together into one or more  counterparts),  each of which when so executed

<PAGE>

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

      18.6        NOTICES

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

      18.7        GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

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

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

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

<PAGE>

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

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

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

      18.8        NO WAIVER

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

      18.9        ENTIRE AGREEMENT

      This Agreement, together with the other Operative Agreements, on and as of
the date hereof  constitutes  the entire  agreement  of the parties  hereto with
respect  to  the  subject  matter  hereof,  and  all  prior  or  contemporaneous

<PAGE>

understandings  or  agreements,  whether  written or oral,  between  the parties
hereto  with  respect to such  subject  matter are  hereby  superseded  in their
entireties.

                     [This space intentionally left blank.]

<PAGE>

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

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

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

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

                                    WILMINGTON TRUST COMPANY,
                                       as Mortgagee

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

<PAGE>

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

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

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

<PAGE>

                                   ANNEX A

              [SEE LEASED AICRAFT PARTICIPATION AGREEMENT ANNEX A]

<PAGE>

                                  ANNEXES B-D

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

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

                             LEASE SUPPLEMENT NO.__

      LEASE SUPPLEMENT No. [__], dated [________,  20__,] between FIRST SECURITY
BANK,  NATIONAL  ASSOCIATION,  a  national  banking  association,   not  in  its
individual  capacity,  but  solely as Owner  Trustee  under the Trust  Agreement
[_____],  dated as of [_____________,]  with the Owner Participant named therein
(such Owner  Trustee,  in its capacity as such Owner Trustee being herein called
"Lessor"),  and CONTINENTAL AIRLINES,  INC., a Delaware  corporation,  as Lessee
("Lessee").

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

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

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

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

      2. Lessor hereby  delivers and leases to Lessee under the Lease and Lessee
hereby  accepts and leases from Lessor under the Lease the  following  described
Boeing  [__________]  aircraft (the  "Aircraft"),  which Aircraft as of the date
hereof consists of the following components:

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

<PAGE>

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

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

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

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

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

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

                    [This space intentionally left blank.]

<PAGE>

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

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

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

<PAGE>

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

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

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

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

                                    WILMINGTON TRUST COMPANY,
                                       as Mortgagee

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

<PAGE>

                                               --------------------------------
                                              |  EXHIBIT B - LEASE SUPPLEMENT  |
                                              |      LEASE AGREEMENT [___]     |
                                               --------------------------------

                         RETURN ACCEPTANCE SUPPLEMENT

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

                                    CONTINENTAL AIRLINES, INC.,
                                       as Lessee

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

<PAGE>

                                 SCHEDULES 1-4

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

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

                               PERMITTED COUNTRIES

Argentina                              Malta

Australia                              Mexico

Austria                                Morocco

Bahamas                                Netherlands

Belgium                                New Zealand

Brazil                                 Norway

Canada                                 Paraguay

Chile                                  Peoples Republic of China

Denmark                                Philippines

Egypt                                  Portugal

Ecuador                                Republic of China (Taiwan)

Finland                                Singapore

France                                 South Africa

Germany                                South Korea

Greece                                 Spain

Hungary                                Sweden

Iceland                                Switzerland

India                                  Thailand

Indonesia                              Tobago

Ireland                                Trinidad

Italy                                  United Kingdom

Japan                                  Uruguay

Luxembourg                             Venezuela

Malaysia

<PAGE>

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

                                    PLACARDS

                                   Leased from

                   First Security Bank, National Association,
                  not in its individual capacity but solely as
                         Owner Trustee, Owner and Lessor

                                       and
                                  Mortgaged to

                            Wilmington Trust Company,
             not in its individual capacity but solely as Mortgagee--------------------------------------------------------------------------------

                      TRUST INDENTURE AND MORTGAGE [___]

                        Dated as of [____________, 20__]

                                     Between

                  FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                       not in its individual capacity,
                      except as expressly stated herein,
                          but solely as Owner Trustee,

                                  Owner Trustee

                                       and

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

                                    Mortgagee

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

                            EQUIPMENT NOTES COVERING
                        ONE BOEING [________] AIRCRAFT
                   BEARING U.S. REGISTRATION MARK N[_____]
                     LEASED BY CONTINENTAL AIRLINES, INC.

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

<PAGE>
                                TABLE OF CONTENTS
                                                                          PAGE

                                 GRANTING CLAUSE

                             ARTICLE I - DEFINITIONS

                        ARTICLE II - THE EQUIPMENT NOTES

SECTION 2.01.    Form of Equipment Notes................................     7
SECTION 2.02.    Issuance and Terms of Equipment Notes..................    12
SECTION 2.03.    Payments from Trust Indenture Estate Only..............    15
SECTION 2.04.    Method of Payment......................................    16
SECTION 2.05.    Application of Payments................................    18
SECTION 2.06.    Termination of Interest in Trust Indenture
                 Estate.................................................    18
SECTION 2.07.    Registration Transfer and Exchange of
                 Equipment Notes........................................    19
SECTION 2.08.    Mutilated, Destroyed, Lost or Stolen
                 Equipment Notes........................................    20
SECTION 2.09.    Payment of Expenses on Transfer;
                 Cancellation...........................................    20
SECTION 2.10.    Mandatory Redemptions of Equipment Notes...............    21
SECTION 2.11.    Voluntary Redemptions of Equipment Notes...............    21
SECTION 2.12.    Redemptions; Notice of Redemption......................    21
SECTION 2.13.    Option to Purchase Equipment Notes.....................    22
SECTION 2.14.    Subordination..........................................    23

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

SECTION 3.01.    Basic Rent Distribution................................    24
SECTION 3.02.    Event of Loss; Replacement; Voluntary
                 Termination; Optional Redemption.......................    25
SECTION 3.03.    Payments After Event of Default........................    26
SECTION 3.04.    Certain Payments.......................................    29
SECTION 3.05.    Other Payments.........................................    29
SECTION 3.06.    Payments to Owner Trustee..............................    30

<PAGE>
                                TABLE OF CONTENTS
                                   (Continued)
                                                                          PAGE

     ARTICLE IV - COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF
                                    MORTGAGEE

SECTION 4.01.    Covenants of Owner Trustee.............................    30
SECTION 4.02.    Event of Default.......................................    31
SECTION 4.03.    Certain Rights.........................................    33
SECTION 4.04.    Remedies...............................................    35
SECTION 4.05.    Return of Aircraft, Etc................................    37
SECTION 4.06.    Remedies Cumulative....................................    38
SECTION 4.07.    Discontinuance of Proceedings..........................    39
SECTION 4.08.    Waiver of Past Defaults................................    39
SECTION 4.09.    Appointment of Receiver................................    39
SECTION 4.10.    Mortgagee Authorized to Execute Bills of
                 Sale, Etc..............................................    40
SECTION 4.11.    Rights of Note Holders to Receive Payment..............    40

                       ARTICLE V - DUTIES OF THE MORTGAGEE

SECTION 5.01.    Notice of Event of Default.............................    40
SECTION 5.02.    Action Upon Instructions; Certain Rights
                 and Limitations........................................    41
SECTION 5.03.    Indemnification........................................    44
SECTION 5.04.    No Duties Except as Specified in Trust
                 Indenture or Instructions..............................    44
SECTION 5.05.    No Action Except Under Lease, Trust
                 Indenture or Instructions..............................    45
SECTION 5.06.    Replacement Airframes and Replacement
                 Engines................................................    45
SECTION 5.07.    Indenture Supplements for Replacements.................    45
SECTION 5.08.    Effect of Replacement..................................    45
SECTION 5.09.    Investment of Amounts Held by Mortgagee................    46

               ARTICLE VI - THE OWNER TRUSTEE AND THE MORTGAGEE

SECTION 6.01.    Acceptance of Trusts and Duties........................    46
SECTION 6.02.    Absence of Duties......................................    47
SECTION 6.03.    No Representations or Warranties as to
                 Aircraft or Documents..................................    47
SECTION 6.04.    No Segregation of Monies; No Interest..................    48
SECTION 6.05.    Reliance; Agreements; Advice of Counsel................    48
SECTION 6.06.    Capacity in Which Acting...............................    49
SECTION 6.07.    Compensation...........................................    49
SECTION 6.08.    Instructions from Note Holders.........................    49

<PAGE>
                                TABLE OF CONTENTS
                                   (Continued)
                                                                          PAGE

         ARTICLE VII - INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE

SECTION 7.01.    Scope of Indemnification...............................    49

                ARTICLE VIII - SUCCESSOR AND SEPARATE TRUSTEES

SECTION 8.01.    Notice of Successor Owner Trustee......................    50
SECTION 8.02.    Resignation of Mortgagee; Appointment of
                 Successor..............................................    51
SECTION 8.03.    Appointment of Additional and Separate
                 Trustees...............................................    52

  ARTICLE IX - SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER
                                    DOCUMENTS

SECTION 9.01.    Instructions of Majority; Limitations..................    53
SECTION 9.02.    Trustees Protected.....................................    55
SECTION 9.03.    Documents Mailed to Note Holders.......................    55
SECTION 9.04.    No Request Necessary for Lease Supplement
                 or Trust Indenture Supplement..........................    55

                            ARTICLE X - MISCELLANEOUS

SECTION 10.01.   Termination of Trust Indenture.........................    56
SECTION 10.02.   No Legal Title to Trust Indenture Estate
                 in Note Holders........................................    56
SECTION 10.03.   Sale of Aircraft by Mortgagee Is Binding...............    56
SECTION 10.04.   Trust Indenture for Benefit of Owner
                 Trustee, Mortgagee, Owner Participant,
                 Note Holders and the other Indenture
                 Indemnitees............................................    57
SECTION 10.05.   Notices................................................    57
SECTION 10.06.   Severability...........................................    57
SECTION 10.07.   No Oral Modification or Continuing Waivers.............    57
SECTION 10.08.   Successors and Assigns.................................    58
SECTION 10.09.   Headings...............................................    58
SECTION 10.10.   Normal Commercial Relations............................    58
SECTION 10.11.   Governing Law; Counterpart Form........................    58
SECTION 10.12.   Voting By Note Holders.................................    59
SECTION 10.13.   Bankruptcy.............................................    59

EXHIBIT A       Form of Trust Indenture and Mortgage Supplement
SCHEDULE I      Equipment Notes Amortization and Interest Rates

<PAGE>

                       TRUST INDENTURE AND MORTGAGE [___]

            TRUST INDENTURE AND MORTGAGE [___], dated as of [___________,  20__]
("Trust  Indenture"),  between FIRST  SECURITY  BANK,  NATIONAL  ASSOCIATION,  a
national  banking  association,  not  in  its  individual  capacity,  except  as
expressly  stated herein,  but solely as Owner Trustee under the Trust Agreement
referred to below (together with its successors under the Trust  Agreement,  the
"Owner Trustee"),  and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
not in its individual capacity, except as expressly stated herein, but solely as
Mortgagee hereunder (together with its successors hereunder, the "Mortgagee").

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

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

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

            WHEREAS,  the parties hereto desire by this Trust  Indenture,  among
other things, (i) to provide for the issuance by the Owner Trustee of the Series
of Equipment Notes specified on Schedule I hereto (it being  understood that not
all Series may be issued,  in which case  references in this Trust  Indenture to
Series not issued shall be disregarded)  and (ii) to provide for the assignment,
mortgage and pledge by the Owner Trustee to the Mortgagee,  as part of the Trust
Indenture Estate  hereunder,  among other things,  of all of the Owner Trustee's
right,  title and interest in and to the  Aircraft  and,  except as  hereinafter
expressly provided,  all of the Owner Trustee's right, title and interest in, to
and under the Lease and the  Participation  Agreement and all payments and other
amounts received  hereunder or thereunder in accordance with the terms hereof or
thereof,  as security  for,  among other  things,  the Owner  Trustee's  and the
Lessee's obligations to the Note Holders and the Indenture Indemnitees;

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

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

<PAGE>

                                 GRANTING CLAUSE

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

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

            (2) All right,  title,  interest,  claims  and  demands of the Owner
Trustee,  as  Lessor,  in, to and under the  Lease,  together  with all  rights,
powers,  privileges,  options and other  benefits of the Owner Trustee as lessor
under the Lease,  including the immediate  and  continuing  right to receive and

<PAGE>

collect  all  Rent,  income,  revenues,  issues,  profits,  insurance  proceeds,
condemnation  awards and other  payments,  tenders and security now or hereafter
payable to or receivable by the Lessor under the Lease  pursuant  thereto,  and,
subject to Section 5.02 hereof, the right to make all waivers and agreements, to
give and receive copies of all notices and other instruments or  communications,
to accept  surrender or redelivery of the Aircraft or any part thereof,  as well
as all the  rights,  powers  and  remedies  on the part of the Owner  Trustee as
Lessor under the Lease, to take such action upon the occurrence of a Lease Event
of Default thereunder,  including the commencement,  conduct and consummation of
legal,  administrative or other proceedings,  as shall be permitted by the Lease
or by Law, and to do any and all other things whatsoever which the Owner Trustee
or any lessor is or may be  entitled  to do under or in respect of the Lease and
any right to  restitution  from the Lessee or any other Person in respect of any
determination of invalidity of the Lease;

            [(3) Each Permitted Sublease  assignment and each assigned Permitted
Sublease (to the extent assigned under such Permitted Sublease assignment),  and
including,  without  limitation,  all rents or other  payments  of any kind made
under  such  assigned  Permitted  Sublease  (to the extent  assigned  under such
Permitted Sublease assignment);]<F1>

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

            (a) the Purchase Agreement and the GTA;

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

            (c) the Bills of Sale; and

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

            together with all rights, powers, privileges,  licenses,  easements,
options and other benefits of the Owner Trustee under each  contract,  agreement
and  instrument  referred to in this clause  [(3)/(4)],  including  the right to
receive  and  collect  all  payments  to the  Owner  Trustee  thereunder  now or
hereafter  payable to or receivable by the Owner Trustee  pursuant  thereto and,
subject to Section 5.02 hereof, the right to make all waivers and agreements, to
give and receive notices and other instruments or communications, or to take any
other  action under or in respect of any thereof or to take such action upon the
occurrence  of a default  thereunder,  including the  commencement,  conduct and
consummation  of  legal,  administrative  or  other  proceedings,  as  shall  be
permitted  thereby or by Law, and to do any and all other things which the Owner

----------
<F1>
Insert  Bracketed  Language  If the  Lease  Provides  for  the  Assignment  of a
Permitted Sublease.

<PAGE>

Trustee is or may be entitled to do thereunder and any right to restitution from
the  Lessee,  the Owner  Participant  or any  other  Person  in  respect  of any
determination of invalidity of any thereof;

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

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

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

            [(7)/(8)]  Without  limiting the  generality of the  foregoing,  all
monies and  securities  from time to time  deposited or required to be deposited
with the Mortgagee pursuant to any terms of this Trust Indenture or the Lease or
required  hereby  or by the  Lease  to be held  by the  Mortgagee  hereunder  as
security  for the  obligations  of the  Lessee  under  the Lease or of the Owner
Trustee hereunder; and

            [(8)/(9)] All proceeds of the foregoing;  excluding, however, in all
events  from each of  foregoing  clauses  (1) through  [(8)/(9)]  inclusive  all
Excluded  Payments and the right to specifically  enforce the same or to sue for
damages for the breach thereof as provided in Section 5.02 hereof.

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

            TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee,  and  its  successors  and  assigns,  in  trust  for  the  equal  and
proportionate  benefit and security of the Loan  Participants,  the Note Holders
and the  Indenture  Indemnitees,  except as provided in Section 2.14 and Article
III hereof without any preference,  distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue,  sale,  negotiation,
date of maturity  thereof or otherwise  for any reason  whatsoever,  and for the
uses and purposes  and in all cases and as to all property  specified in clauses
(1) through [(8)/(9)]  inclusive above,  subject to the terms and provisions set
forth in this Trust Indenture.

<PAGE>

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

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

<PAGE>

of the Trust Indenture  Estate,  for  distribution by the Mortgagee  pursuant to
this  Trust   Indenture,   except  that  the  Owner  Trustee  shall  accept  for
distribution  pursuant to the Trust  Agreement any amounts  distributed to it by
the Mortgagee under this Trust Indenture.

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

            The Owner Trustee does hereby  warrant and represent that it has not
assigned or pledged,  and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right,  title or interest hereby  assigned,  to anyone other than the Mortgagee,
and that it will not,  except as otherwise  provided in this Trust Indenture and
except with respect to Excluded Payments to which it is entitled, (i) accept any
payment  from  Lessee  [or any  Permitted  Sublessee]<F2>  under  any  Indenture
Agreement, (ii) enter into any agreement amending or supplementing any Indenture
Agreement,  (iii) execute any waiver or modification  of, or consent under,  the
terms of, or exercise any rights,  powers or  privileges  under,  any  Indenture
Agreement,  (iv) settle or  compromise  any claim  arising  under any  Indenture
Agreement or (v) submit or consent to the submission of any dispute,  difference
or other  matter  arising  under or in respect  of any  Indenture  Agreement  to
arbitration thereunder.

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

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

             (b) except as  contemplated  by the Trust  Agreement in  connection
with the appointment of a successor  owner trustee,  sell,  mortgage,  transfer,
assign or  hypothecate  (other than to the Mortgagee  hereunder) its interest in
the  Airframe and Engines or any part thereof or in any amount to be received by

----------
<F2>
Insert  bracketed  language  if the  Lease  provides  for  the  assignment  of a
permitted sublease.

<PAGE>

it from the use or disposition  of the Airframe and Engines,  other than amounts
distributed to it pursuant to Article III hereof.

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

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

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

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

                                    ARTICLE I

                                   DEFINITIONS

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

                                   ARTICLE II

                               THE EQUIPMENT NOTES

            SECTION 2.01.    Form of Equipment Notes

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

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

<PAGE>

            FIRST SECURITY BANK,  NATIONAL  ASSOCIATION,  AS OWNER TRUSTEE UNDER
TRUST  AGREEMENT  [___]  DATED AS OF  [_______________,  20__].  SERIES  [_____]
LIMITED RECOURSE  EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE BOEING
MODEL [_______] AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N[_____].

No. ____                                               Date: [__________, ____]
                             $_______________________
       INTEREST RATE                                         MATURITY DATE
       [___________]                                        [___________]

            FIRST SECURITY  BANK,  NATIONAL  ASSOCIATION,  not in its individual
capacity but solely as Owner Trustee  (herein in such capacity called the "Owner
Trustee") under that certain Trust Agreement [___],  dated as of  [____________,
20__],  between the Owner  Participant  named therein and First  Security  Bank,
National  Association  (herein as such Trust  Agreement may be  supplemented  or
amended from time to time called the "Trust Agreement"),  hereby promises to pay
to __________________,  or the registered assignee thereof, the principal sum of
$____________ (the "Original  Amount"),  together with interest on the amount of
the Original Amount  remaining unpaid from time to time (calculated on the basis
of a year of 360 days  comprised of twelve  30-day  months) from the date hereof
until  paid in full at a rate per annum  equal to the Debt  Rate.  The  Original
Amount of this Equipment Note shall be [payable in installments on the dates set
forth in Schedule I hereto equal to the corresponding percentage of the Original
Amount of this Equipment Note set forth in Schedule I hereto.]<F3> [paid in full
on  _______.]<F4>  Accrued  but  unpaid  interest  shall be due and  payable  in
semiannual installments commencing on [_____________], 20[__], and thereafter on
[_______]  and  [_______]  of each  year,  to and  including  [_______________].
Notwithstanding  the  foregoing,  the final payment made on this  Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original Amount
and all accrued and unpaid  interest on, and any other  amounts due under,  this
Equipment Note.  Notwithstanding  anything to the contrary  contained herein, if
any date on which a payment under this Equipment Note becomes due and payable is
not a Business Day, then such payment shall not be made on such  scheduled  date
but shall be made on the next  succeeding  Business  Day and if such  payment is
made on such next  succeeding  Business  Day,  no interest  shall  accrue on the
amount of such payment during such extension.

            For  purposes  hereof,  the term "Trust  Indenture"  means the Trust
Indenture and Mortgage [___],  dated as of  [_____________,  20__],  between the
Owner Trustee and Wilmington Trust Company (the "Mortgagee"), as the same may be
amended or supplemented  from time to time. All other  capitalized terms used in

----------
<F3>
Not included in Series A-2 or Series C-2 Equipment Notes.

<F4>
To be inserted in the case of a Series A-2 and Series C-2 Equipment Note.

<PAGE>

this Equipment  Note and not defined  herein shall have the respective  meanings
assigned in the Trust Indenture.

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

            All payments of Original Amount,  interest,  Make-Whole  Amount,  if
any, and other  amounts,  if any, to be made by the Owner Trustee  hereunder and
under the Trust Indenture or the  Participation  Agreement shall be payable only
from the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture  Estate and only to the extent that the Owner Trustee shall have
sufficient  income or proceeds  from the Trust Estate to the extent  included in
the Trust  Indenture  Estate to enable the  Mortgagee  to make such  payments in
accordance  with  the  terms  of  Section  2.03  and  Article  III of the  Trust
Indenture,  and each holder hereof,  by its  acceptance of this Equipment  Note,
agrees  that it will  look  solely to the  income  and  proceeds  from the Trust
Indenture  Estate to the extent  available for distribution to the holder hereof
as above provided and that none of the Owner Participant,  the Owner Trustee and
the  Mortgagee  is  personally  liable or liable in any manner  extending to any
assets  other  than the Trust  Indenture  Estate to the  holder  hereof  for any
amounts  payable  or any  liability  under  this  Equipment  Note or,  except as
provided  in the Trust  Indenture  or in the  Participation  Agreement,  for any
liability under the Trust Indenture or the  Participation  Agreement;  PROVIDED,
HOWEVER, that nothing herein contained shall limit, restrict or impair the right
of the  Mortgagee,  subject  always  to the terms  and  provisions  of the Trust
Indenture,  to accelerate the maturity of this Equipment Note upon occurrence of
an Event of Default under the Trust Indenture in accordance with Section 4.04(b)
of the Trust  Indenture,  to bring suit and obtain a judgment  against the Owner
Trustee  on this  Equipment  Note for  purposes  of  realizing  upon  the  Trust
Indenture  Estate and to exercise  all rights and  remedies  provided  under the
Trust Indenture or otherwise realize upon the Trust Indenture Estate as provided
under the Trust Indenture.

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

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

            The holder hereof,  by its acceptance of this Equipment Note, agrees
that,  except as provided in the Trust  Indenture,  each payment of the Original

<PAGE>

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

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

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

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

            This Equipment Note is subject to redemption as provided in Sections
2.10,  2.11 and 2.12 of the Trust  Indenture but not  otherwise.  This Equipment
Note is also subject to exchange and to purchase by the Owner Participant or the
Owner  Trustee  as  provided  in  Section  2.13 of the Trust  Indenture  but not
otherwise.  In addition,  this  Equipment Note may be accelerated as provided in
Section 4.04 of the Trust Indenture.

            [The  indebtedness  evidenced  by  this  Equipment Note  is, to  the
extent and  in  the   manner  provided  in   the  Trust  Indenture,  subordinate
and  subject  in right of payment to  the prior  payment in full of the  Secured
Obligations (as defined in the Trust Indenture) in  respect  of  [Series A-1 and
Series A-2  Equipment  Notes]<F5> [Series A-1, Series A-2 and Series B Equipment

----------
<F5>
To be inserted in the case of a Series B Equipment Note.

<PAGE>

Notes]<F6>  [Series  A-1,  Series  A-2,  Series B,  Series  C-1 and  Series  C-2
Equipment  Notes],<F7>  and  this  Equipment  Note  is  issued  subject  to such
provisions.  The Note Holder of this Equipment  Note, by accepting the same, (a)
agrees to and shall be bound by such provisions,  (b) authorizes and directs the
Mortgagee on his behalf to take such action as may be  necessary or  appropriate
to  effectuate  the  subordination  as provided in the Trust  Indenture  and (c)
appoints the Mortgagee his attorney-in-fact for such purpose.]<F8>

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

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

                                      * * *

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

                                    FIRST SECURITY BANK, NATIONAL ASSOCIATION,
                                       not in its individual capacity
                                       but solely as Owner Trustee

                                    By_______________________________________
                                      Name:
                                      Title:

----------
<F6>
To be inserted in the case of a Series C-1 and Series C-2 Equipment Note.

<F7>
To be inserted in the case of a Series D Equipment Note.

<F8>
To be inserted for each  Equipment  Note other than any Series A-1 or Series A-2
Equipment Note.

<PAGE>

                    MORTGAGEE'S CERTIFICATE OF AUTHENTICATION

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

                                    WILMINGTON TRUST COMPANY, as Mortgagee

                                    By_______________________________________
                                      Name:
                                      Title:

                                  SCHEDULE I<F9>

                           EQUIPMENT NOTE AMORTIZATION

                                                     Percentage of
              Payment Date                     Original Amount to be Paid
              ------------                     --------------------------

                       [SEE SCHEDULE I TO TRUST INDENTURE
                        WHICH IS INSERTED UPON ISSUANCE]

                                      * * *

            SECTION 2.02.    Issuance and Terms of Equipment Notes

            The  Equipment  Notes shall be dated the date of  issuance  thereof,
shall be issued in up to six separate  series  consisting of Series A-1,  Series
A-2,  Series B, Series C-1,  Series C-2 and Series D and in the  maturities  and
principal  amounts and shall bear interest as specified in Schedule I hereto. On
the date of the  consummation of the  Transaction,  each Equipment Note shall be
issued  to the  Subordination  Agent on behalf of the  Applicable  Pass  Through
Trustees under the Applicable Pass Through Trust Agreements. The Equipment Notes
shall be issued in registered  form only. The Equipment Notes shall be issued in
denominations  of  $1,000  and  integral  multiples  thereof,  except  that  one

----------
<F9>
Not included in Series A-2 or Series C-2 Equipment Notes.

<PAGE>

Equipment  Note of  each  Series  may be in an  amount  that is not an  integral
multiple of $1,000.

            Each Equipment Note shall bear interest at the Debt Rate (calculated
on the basis of a year of 360 days  comprised  of twelve  30-day  months) on the
unpaid Original Amount thereof from time to time outstanding, payable in arrears
on [_____________,  20__], and on each [________] and [____________]  thereafter
until  maturity.  The Original  Amount of each Equipment Note (i) in the case of
Equipment Notes other than Series A-2 and Series C-2 Equipment  Notes,  shall be
payable  on the  dates  and  in  the  installments  equal  to the  corresponding
percentage of the Original  Amount as set forth in Schedule I hereto which shall
be attached as Schedule I to such  Equipment  Notes,  (ii) in the case of Series
A-2 Equipment Notes,  shall be paid in full on May 1, 2010 and (iii) in the case
of the  Series  C-2  Equipment  Notes,  shall  be paid  in full on May 1,  2005.
Notwithstanding the foregoing,  the final payment made under each Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original Amount
and all accrued and unpaid  interest on, and any other  amounts due under,  such
Equipment  Note. Each Equipment Note shall bear interest at the Payment Due Rate
(calculated  on the  basis  of a year of 360 days  comprised  of  twelve  30-day
months) on any part of the Original Amount,  Make-Whole  Amount, if any, and, to
the extent  permitted by applicable Law,  interest and any other amounts payable
thereunder  not paid when due for any  period  during  which  the same  shall be
overdue,  in each case for the  period  the same is  overdue.  Amounts  shall be
overdue if not paid when due (whether at stated  maturity,  by  acceleration  or
otherwise).  Notwithstanding  anything to the contrary  contained herein, if any
date on which a payment under any Equipment  Note becomes due and payable is not
a Business Day then such payment  shall not be made on such  scheduled  date but
shall be made on the next succeeding Business Day and if such payment is made on
such next  succeeding  Business  Day, no interest  shall accrue on the amount of
such payment during such extension.

            The Owner Trustee agrees to pay to the Mortgagee for distribution in
accordance with Section 3.04 hereof:  (i) to the extent not payable  (whether or
not in  fact  paid)  under  Section  6(a) of the  Note  Purchase  Agreement  (as
originally in effect or amended with the consent of the Owner  Participant),  an
amount equal to the fees payable to the Liquidity Provider under Section 2.03 of
each  Liquidity  Facility  and  the  related  Fee  Letter  (as  defined  in  the
Intercreditor  Agreement)  multiplied by a fraction the numerator of which shall
be the then outstanding  aggregate  principal amount of the Series A-1 Equipment
Notes,  Series  A-2  Equipment  Notes,  Series B  Equipment  Notes,  Series  C-1
Equipment  Notes and Series C-2  Equipment  Notes and the  denominator  of which
shall be the then  outstanding  aggregate  principal  amount of all  "Series A-1
Equipment  Notes",  "Series A-2 Equipment  Notes",  "Series B Equipment  Notes",
"Series C-1 Equipment  Notes" and "Series C-2 Equipment  Notes" (each as defined
in the Note  Purchase  Agreement);  (ii) (x) the amount equal to interest on any
Downgrade  Advance  (other than any Applied  Downgrade  Advance)  payable  under
Section 3.07 of each  Liquidity  Facility  minus  Investment  Earnings from such
Downgrade  Advance  multiplied  by (y) the fraction  specified in the  foregoing
clause (i); (iii) (x) the amount equal to interest on any Non-Extension  Advance
(other than any Applied  Non-Extension  Advance)  payable  under Section 3.07 of
each  Liquidity  Facility  minus  Investment  Earnings  from such  Non-Extension
Advance  multiplied by (y) the fraction  specified in the foregoing  clause (i);
and (iv) if any payment  default  shall have  occurred  and be  continuing  with
respect to  interest on any Series A-1  Equipment  Notes,  Series A-2  Equipment

<PAGE>

Notes,  Series B  Equipment  Notes,  Series  C-1  Equipment  Notes or Series C-2
Equipment Notes, (x) the excess,  if any, of (1) the amount equal to interest on
any Unpaid Advance,  Applied Downgrade Advance or Applied  Non-Extension Advance
payable  under  Section  3.07 of each  Liquidity  Facility  OVER  (2) the sum of
Investment  Earnings  from any Final  Advance PLUS any amount of interest at the
Payment  Due Rate  actually  payable  (whether or not in fact paid) by the Owner
Trustee on the overdue  scheduled  interest on the Equipment Notes in respect of
which such Unpaid Advance,  Applied Downgrade  Advance or Applied  Non-Extension
Advance was made  multiplied  by (y) a fraction the  numerator of which shall be
the then  aggregate  overdue  amounts of  interest  on the Series A-1  Equipment
Notes,  Series  A-2  Equipment  Notes,  Series B  Equipment  Notes,  Series  C-1
Equipment Notes and Series C-2 Equipment Notes (other than interest becoming due
and payable solely as a result of acceleration of any such Equipment  Notes) and
the denominator of which shall be the then aggregate overdue amounts of interest
on all "Series A-1 Equipment  Notes",  "Series A-2 Equipment  Notes",  "Series B
Equipment Notes",  "Series C-1 Equipment Notes" and "Series C-2 Equipment Notes"
(each as defined in the Note Purchase  Agreement)  (other than interest becoming
due and  payable  solely  as a result  of  acceleration  of any such  "Equipment
Notes"). For purposes of this paragraph,  the terms "Applied Downgrade Advance",
"Applied Non-Extension Advance", "Cash Collateral Account", "Downgrade Advance",
"Final  Advance",  "Investment  Earnings",  "Non-Extension  Advance" and "Unpaid
Advance"  shall have the meanings  specified in each  Liquidity  Facility or the
Intercreditor Agreement referred to therein.

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

            The  aggregate   Original  Amount  of  the  Equipment  Notes  issued
hereunder shall not exceed [__]% of Lessor's Cost.

<PAGE>

            SECTION 2.03.    Payments from Trust Indenture Estate Only

             (a) Without  impairing any of the other rights,  powers,  remedies,
privileges,  liens or security  interests of the Note  Holders  under this Trust
Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that
as between it and the Owner Trustee,  except as expressly provided in this Trust
Indenture, the Participation Agreement or any other Operative Agreement, (i) the
obligation  to make  all  payments  of the  Original  Amount  of,  interest  on,
Make-Whole  Amount,  if any,  and all  other  amounts  due with  respect  to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Trust Indenture and in the Participation Agreement or
any of the other Operative Agreements, shall be payable only from the income and
proceeds  from the Trust  Estate to the extent  included in the Trust  Indenture
Estate  and only to the extent  that the Owner  Trustee  shall  have  sufficient
income or  proceeds  from the Trust  Estate to the extent  included in the Trust
Indenture  Estate to enable the  Mortgagee to make such  payments in  accordance
with  the  terms  of   Article   III   hereof,   and  all  of  the   statements,
representations,  covenants and agreements  made by the Owner Trustee (when made
in such capacity)  contained in this Trust Indenture and any agreement  referred
to herein other than the Trust Agreement, unless expressly otherwise stated, are
made and  intended  only  for the  purpose  of  binding  the  Trust  Estate  and
establishing  the  existence of rights and remedies  which can be exercised  and
enforced against the Trust Estate;  therefore,  anything contained in this Trust
Indenture or such other agreements to the contrary  notwithstanding  (except for
any express provisions or representations  that the Owner Trustee is responsible
for, or is making, in its individual capacity, for which there would be personal
liability of the Owner  Trustee),  no recourse shall be had with respect to this
Trust  Indenture  or such  other  agreements  against  the Owner  Trustee in its
individual  capacity  or  against  any  institution  or person  which  becomes a
successor trustee or co-trustee or any officer,  director,  trustee,  servant or
direct or indirect  parent or controlling  Person or Persons of any of them, and
(ii)  none  of  the  Owner  Trustee,  in  its  individual  capacity,  the  Owner
Participant,   the  Mortgagee  and  any  officer,  director,  trustee,  servant,
employee, agent or direct or indirect parent or controlling Person or Persons of
any of them shall have any personal liability for any amounts payable hereunder,
under the  Participation  Agreement or any of the other Operative  Agreements or
under the Equipment Notes except as expressly  provided herein,  in the Lease or
in the Participation  Agreement;  PROVIDED,  HOWEVER,  that nothing contained in
this Section 2.03(a) shall be construed to limit the exercise and enforcement in
accordance  with the terms of this Trust  Indenture or such other  agreements of
rights and remedies against the Trust Indenture Estate.

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

<PAGE>

hereinafter  defined)  which  reflects any payment by the Owner  Trustee (in its
individual  capacity) or the Owner  Participant on account of clause (ii) above,
then  such Note  Holder or the  Mortgagee,  as the case may be,  shall  promptly
refund  to  the  Owner  Trustee  (in  its  individual  capacity)  or  the  Owner
Participant (whichever shall have made such payment) such Excess Amount.

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

            SECTION 2.04.    Method of Payment

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

<PAGE>

registered  on the Equipment  Note Register as the absolute  owner and holder of
such Equipment Note for the purpose of receiving  payment of all amounts payable
with respect to such Equipment Note and for all other purposes,  and none of the
Owner Trustee or the Mortgagee  shall be affected by any notice to the contrary.
So long as any signatory to the Participation Agreement or nominee thereof shall
be a registered Note Holder,  all payments to it shall be made to the account of
such Note Holder  specified  in Schedule I thereto and  otherwise  in the manner
provided  in or  pursuant to the  Participation  Agreement  unless it shall have
specified  some other  account  or manner of payment by notice to the  Mortgagee
consistent with this Section 2.04.

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

            If a Note Holder  which is a Non-U.S.  Person has  furnished  to the
Mortgagee a properly  completed,  accurate and currently effective U.S. Internal
Revenue  Service  Form  1001 or W-8 (or such  successor  form or forms as may be
required by the United States Treasury  Department)  during the calendar year in
which the payment  hereunder or under the Equipment  Note(s) held by such holder
is made  (but  prior to the  making  of such  payment),  or in either of the two
preceding  calendar years,  and has not notified the Mortgagee of the withdrawal
or  inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no  reason  to  believe  that any  information  set  forth  in such  form is
inaccurate),  the Mortgagee shall withhold only the amount,  if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United  States  federal  income tax. If a Note
Holder (x) which is a Non-U.S.  Person has furnished to the Mortgagee a properly
completed,  accurate and currently  effective U.S. Internal Revenue Service Form
W-8ECI in  duplicate  (or such  successor  certificate,  form or forms as may be
required by the United  States  Treasury  Department  as  necessary  in order to
properly  avoid  withholding  of United  States  federal  income tax),  for each
calendar year in which a payment is made (but prior to the making of any payment
for  such  year),  and has not  notified  the  Mortgagee  of the  withdrawal  or
inaccuracy  of such  certificate  or form prior to the date of such payment (and
the  Mortgagee has no reason to believe that any  information  set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly  completed,  accurate and currently  effective U.S.  Internal Revenue
Service  Form W-9,  if  applicable,  prior to a payment  hereunder  or under the
Equipment  Notes held by such holder,  no amount shall be withheld from payments
in respect of United States  federal income tax. If any Note Holder has notified

<PAGE>

the Mortgagee that any of the foregoing  forms or  certificates  is withdrawn or
inaccurate,  or if such holder has not filed a form  claiming an exemption  from
United States  withholding tax or if the Code or the  regulations  thereunder or
the administrative  interpretation  thereof is at any time after the date hereof
amended to require such  withholding  of United States federal income taxes from
payments under the Equipment Notes held by such holder,  the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder  withholding taxes at
the  appropriate  rate  under  Law and  will,  on a timely  basis as more  fully
provided above, deposit such amounts with an authorized depository and make such
returns,  statements,  receipts  and other  documentary  evidence in  connection
therewith as required by Law.

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

            SECTION 2.05.    Application of Payments

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

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

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

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

            Fourth: the balance, if any, remaining thereafter, to the payment of
      the Original Amount of such Equipment Note remaining unpaid (provided that
      such Equipment Note shall not be subject to redemption  except as provided
      in Sections 2.10, 2.11 and 2.12 hereof).

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

            SECTION 2.06.    Termination of Interest in Trust Indenture Estate

            No Note Holder nor any other  Indenture  Indemnitee  shall, as such,
have any  further  interest  in,  or other  right  with  respect  to,  the Trust
Indenture Estate when and if the Original Amount of, Make-Whole  Amount, if any,
and  interest on and other  amounts due under all  Equipment  Notes held by such
Note  Holder and all other sums then due and payable to such Note  Holder,  such
Indenture Indemnitee or the Mortgagee hereunder (including,  without limitation,

<PAGE>

under the third  paragraph of Section 2.02 hereof) and under the other Operative
Agreements  by the Owner  Trustee  and the Lessee  (collectively,  the  "Secured
Obligations") shall have been paid in full.

            SECTION 2.07.    Registration Transfer and Exchange of Equipment
                             Notes

            The Mortgagee  shall keep a register (the "Equipment Note Register")
in which the Mortgagee shall provide for the registration of Equipment Notes and
the  registration  of transfers of Equipment  Notes.  No such transfer  shall be
given effect unless and until  registration  hereunder shall have occurred.  The
Equipment  Note  Register  shall be kept at the  Corporate  Trust  Office of the
Mortgagee.  The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of  registering  Equipment  Notes and  transfers of  Equipment  Notes as
herein  provided.  A holder of any  Equipment  Note  intending to exchange  such
Equipment  Note shall  surrender  such  Equipment  Note to the  Mortgagee at the
Corporate  Trust  Office,  together with a written  request from the  registered
holder thereof for the issuance of a new Equipment Note, specifying, in the case
of a surrender for transfer,  the name and address of the new holder or holders.
Upon  surrender for  registration  of transfer of any Equipment  Note, the Owner
Trustee shall execute,  and the Mortgagee shall authenticate and deliver, in the
name of the  designated  transferee  or  transferees,  one or more new Equipment
Notes of a like aggregate  Original Amount and of the same series. At the option
of the Note Holder,  Equipment  Notes may be exchanged for other Equipment Notes
of any  authorized  denominations  of a like  aggregate  Original  Amount,  upon
surrender  of the  Equipment  Notes  to be  exchanged  to the  Mortgagee  at the
Corporate  Trust Office.  Whenever any Equipment  Notes are so  surrendered  for
exchange,  the Owner Trustee shall execute, and the Mortgagee shall authenticate
and deliver,  the  Equipment  Notes which the Note Holder making the exchange is
entitled  to receive.  All  Equipment  Notes  issued  upon any  registration  of
transfer or exchange of  Equipment  Notes  (whether  under this  Section 2.07 or
under Section 2.08 hereof or otherwise under this Trust  Indenture) shall be the
valid   obligations  of  the  Owner  Trustee   evidencing  the  same  respective
obligations,  and entitled to the same  security  and benefits  under this Trust
Indenture, as the Equipment Notes surrendered upon such registration of transfer
or exchange.  Every Equipment Note presented or surrendered for  registration of
transfer  shall  (if so  required  by the  Mortgagee)  be duly  endorsed,  or be
accompanied  by a written  instrument  of transfer in form  satisfactory  to the
Mortgagee  duly  executed  by the Note  Holder or such  holder's  attorney  duly
authorized in writing, and the Mortgagee shall require evidence  satisfactory to
it as to the  compliance of any such transfer with the  Securities  Act, and the
securities Laws of any applicable  state. The Mortgagee shall make a notation on
each new  Equipment  Note of the  amount  of all  payments  of  Original  Amount
previously  made on the old  Equipment  Note or Equipment  Notes with respect to
which such new Equipment  Note is issued and the date to which  interest on such
old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to
have been paid on such new Equipment  Note to the date on which  interest  shall
have been paid on such old  Equipment  Note,  and all  payments of the  Original
Amount marked on such new Equipment Note, as provided above,  shall be deemed to
have been made thereon.  The Owner Trustee shall not be required to exchange any
surrendered  Equipment  Notes  as  provided  above  during  the  ten-day  period
preceding the due date of any payment on such Equipment  Note. The Owner Trustee
shall in all cases deem the Person in whose name any  Equipment  Note shall have
been issued and  registered as the absolute  owner and holder of such  Equipment

<PAGE>

Note for the purpose of  receiving  payment of all amounts  payable by the Owner
Trustee with respect to such  Equipment Note and for all purposes until a notice
stating otherwise is received from the Mortgagee and such change is reflected on
the  Equipment  Note  Register.  The Mortgagee  will  promptly  notify the Owner
Trustee and the Lessee of each  registration of a transfer of an Equipment Note.
Any such  transferee  of an Equipment  Note,  by its  acceptance of an Equipment
Note, agrees to the provisions of the Participation Agreement applicable to Note
Holders,  and  shall  be  deemed  to  have  covenanted  to  the  parties  to the
Participation  Agreement  as to the  matters  covenanted  by the  original  Loan
Participant in the  Participation  Agreement.  Subject to compliance by the Note
Holder and its transferee (if any) of the requirements set forth in this Section
2.07,  Mortgagee and Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes upon transfer or exchange within 10 Business Days of the date an
Equipment Note is surrendered for transfer or exchange.

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

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

            SECTION 2.09.    Payment of Expenses on Transfer; Cancellation

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

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

<PAGE>

            SECTION 2.10.    Mandatory Redemptions of Equipment Notes

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

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

            SECTION 2.11.    Voluntary Redemptions of Equipment Notes

            All (but not less than all) of the  Equipment  Notes may be redeemed
by the Owner Trustee in connection with a transaction  described in, and subject
to the terms and conditions of, Section 11 of the  Participation  Agreement upon
at least 30 days'  revocable  prior written notice to the Mortgagee and the Note
Holders,  and such  Equipment  Notes  shall,  as  provided  in Section 11 of the
Participation  Agreement,  be redeemed in whole at a  redemption  price equal to
100% of the unpaid  Original  Amount  thereof,  together  with accrued  interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to the Note  Holders  plus  (except as provided in Section 11 of
the Participation Agreement) Make-Whole Amount, if any.

            SECTION 2.12.    Redemptions; Notice of Redemption

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

             (b) Notice of redemption  with respect to the Equipment Notes shall
be given by the Mortgagee by first-class mail, postage prepaid,  mailed not less
than 20 nor more than 60 days prior to the applicable  redemption  date, to each
Note  Holder of such  Equipment  Notes to be  redeemed,  at such  Note  Holder's
address appearing in the Equipment Note Register;  PROVIDED that, in the case of
a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice
shall be revocable and shall be deemed  revoked in the event that the Lease does
not in fact  terminate on the  specified  termination  date or if notice of such
redemption  shall have been given in connection  with a refinancing of Equipment
Notes and the Mortgagee  receives  written  notice of such  revocation  from the
Lessee or the Owner  Trustee  not later than three days prior to the  redemption
date. All notices of redemption  shall state:  (1) the redemption  date, (2) the
applicable  basis  for  determining  the  redemption  price,  (3)  that  on  the
redemption date, the redemption price will become due and payable upon each such

<PAGE>

Equipment  Note,  and that, if any such  Equipment  Notes are then  outstanding,
interest  on such  Equipment  Notes  shall  cease to accrue  on and  after  such
redemption  date, and (4) the place or places where such Equipment  Notes are to
be surrendered for payment of the redemption price.

             (c) On or before the  redemption  date,  the Owner  Trustee (or any
person on behalf of the Owner Trustee)  shall,  to the extent an amount equal to
the  redemption  price for the Equipment  Notes to be redeemed on the redemption
date shall not then be held in the Trust Indenture  Estate,  deposit or cause to
be  deposited  with  the  Mortgagee  by  12:00  noon on the  redemption  date in
immediately  available  funds the redemption  price of the Equipment Notes to be
redeemed.

             (d) Notice of  redemption  having been given as aforesaid  (and not
deemed revoked as contemplated in the proviso to Section 2.12(b)), the Equipment
Notes to be redeemed  shall, on the redemption  date,  become due and payable at
the  Corporate  Trust  Office  of the  Mortgagee  or at  any  office  or  agency
maintained  for such purposes  pursuant to Section 2.07, and from and after such
redemption  date  (unless  there  shall  be a  default  in  the  payment  of the
redemption  price) any such Equipment Notes then outstanding shall cease to bear
interest. Upon surrender of any such Equipment Note for redemption in accordance
with said notice, such Equipment Note shall be redeemed at the redemption price.
If any Equipment Note called for redemption  shall not be so paid upon surrender
thereof for redemption, the principal amount thereof shall, until paid, continue
to bear interest  from the  applicable  redemption  date at the interest rate in
effect for such Equipment Note as of such redemption date.

            SECTION 2.13.    Option to Purchase Equipment Notes

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

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

<PAGE>

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

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

            SECTION 2.14.    Subordination

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

            (b) By the  acceptance of its  Equipment  Notes of any Series (other
than Series A-1 and Series A-2),  each Note Holder of such Series agrees that in
the event that such Note Holder, in its capacity as a Note Holder, shall receive
any payment or distribution on any Secured Obligations in respect of such Series
which it is not  entitled  to receive  under this  Section  2.14 or Article  III
hereof,  it will hold any amount so received in trust for the Senior  Holder (as
defined in Section  2.14(c) hereof) and will forthwith turn over such payment to
the  Mortgagee  in the form  received  to be applied as  provided in Article III
hereof.

            (c) As used in this Section  2.14,  the term "Senior  Holder"  shall
mean,  (i) the Note  Holders  of Series  A-1 and  Series  A-2 until the  Secured
Obligations  in respect of Series A-1 and Series A-2  Equipment  Notes have been
paid in full,  (ii) after the Secured  Obligations  in respect of Series A-1 and
Series A-2 Equipment  Notes have been paid in full, the Note Holders of Series B
until the Secured  Obligations in respect of Series B Equipment  Notes have been
paid in full and (iii)  after the  Secured  Obligations  in  respect of Series B
Equipment  Notes  have been paid in full,  the Note  Holders  of Series  C-1 and
Series C-2 until the Secured Obligations in respect of Series C-1 and Series C-2
Equipment Notes have been paid in full.

<PAGE>

                                   ARTICLE III

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

            SECTION 3.01.    Basic Rent Distribution

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

First, (i)  so much of such  installment  or payment as shall be required to pay
            in full the aggregate  amount of the payment or payments of Original
            Amount and interest (as well as any interest on any overdue Original
            Amount and, to the extent permitted by Law, on any overdue interest)
            then due under all Series A-1 and Series A-2  Equipment  Notes shall
            be  distributed  to the Note  Holders  of Series  A-1 and Series A-2
            ratably,  without  priority of one over the other, in the proportion
            that the  amount of such  payment  or  payments  then due under each
            Series  A-1 and  Series A-2  Equipment  Note bears to the  aggregate
            amount of the payments  then due under all Series A-1 and Series A-2
            Equipment Notes;

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

      (iii) after  giving  effect  to  paragraph  (ii)  above,  so  much of such
            installment or payment remaining as shall be required to pay in full
            the aggregate  amount of the payment or payments of Original  Amount
            and interest (as well as any interest on any overdue Original Amount
            and, to the extent  permitted by Law, on any overdue  interest) then
            due under all Series C-1 and Series  C-2  Equipment  Notes  shall be
            distributed  to the  Note  Holders  of  Series  C-1 and  Series  C-2
            ratably,  without  priority of one over the other, in the proportion
            that the  amount of such  payment  or  payments  then due under each
            Series  C-1 and  Series C-2  Equipment  Note bears to the  aggregate
            amount of the payments  then due under all Series C-1 and Series C-2
            Equipment Notes; and

      (iv)  after  giving  effect  to  paragraph  (iii)  above,  so much of such
            payment  remaining as shall be required to pay in full the aggregate
            amount of the payment or payments  of Original  Amount and  interest

<PAGE>

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

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

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

            Except as otherwise  provided in Section  3.03 hereof,  any payments
received by the  Mortgagee  (i) with respect to the Airframe or the Airframe and
one or more  Engines  as the  result  of an Event of Loss,  (ii)  pursuant  to a
voluntary  termination  of the Lease  pursuant  to Section 9  thereof,  or (iii)
pursuant to an optional redemption of the Equipment Notes pursuant to Section 11
of the  Participation  Agreement shall be applied to redemption of the Equipment
Notes  and to all  other  Secured  Obligations  by  applying  such  funds in the
following order of priority:

First,      (a)   to  reimburse  the  Mortgagee  and the  Note  Holders  for any
                  reasonable costs or expenses  incurred in connection with such
                  redemption  for which they are entitled to  reimbursement,  or
                  indemnity by Lessee,  under the Operative  Agreements and then
                  (b) to pay  any  other  Secured  Obligations  then  due to the
                  Mortgagee,   the  Note   Holders   and  the  other   Indenture
                  Indemnitees  under this  Trust  Indenture,  the  Participation
                  Agreement or the Equipment Notes (other than amounts specified
                  in clause Second below);

Second,     (i)   to pay  the  amounts  specified  in  paragraph  (i) of  clause
                  "Third" of Section 3.03 hereof plus Make-Whole Amount, if any,
                  then due and  payable  in respect of the Series A-1 and Series
                  A-2 Equipment Notes;

            (ii)  after giving effect to paragraph (i) above, to pay the amounts
                  specified in paragraph  (ii) of clause "Third" of Section 3.03
                  hereof plus Make-Whole Amount, if any, then due and payable in
                  respect of the Series B Equipment Notes;

<PAGE>

            (iii) after  giving  effect  to  paragraph  (ii)  above,  to pay the
                  amounts  specified  in  paragraph  (iii) of clause  "Third" of
                  Section 3.03 hereof plus Make-Whole  Amount,  if any, then due
                  and  payable  in  respect  of the  Series  C-1 and  Series C-2
                  Equipment Notes; and

            (iv)  after  giving  effect to  paragraph  (iii)  above,  to pay the
                  amounts  specified  in  paragraph  (iv) of clause  "Third"  of
                  Section 3.03 hereof plus Make-Whole  Amount,  if any, then due
                  and payable in respect of the Series D Equipment Notes; and

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

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

            SECTION 3.03.    Payments After Event of Default

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

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

<PAGE>

            by the  Mortgagee  as between  itself,  WTC and the Note  Holders in
            reimbursement  of such expenses and any other expenses for which the
            Mortgagee,  WTC or the Note  Holders are  entitled to  reimbursement
            under  any  Operative  Agreement  and (ii) all  Secured  Obligations
            payable to the other Indenture  Indemnitees  hereunder and under the
            Participation  Agreement and the Lease (other than amounts specified
            in clauses  Second and Third  below);  and in the case the aggregate
            amount to be so distributed is  insufficient  to pay as aforesaid in
            clauses (i) and (ii), then ratably, without priority of one over the
            other, in proportion to the amounts owed each hereunder;

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

THIRD, (i)  so much of such  payments or amounts  remaining as shall be required
            to pay in full the aggregate  unpaid  Original  Amount of all Series
            A-1 and Series  A-2  Equipment  Notes,  and the  accrued  but unpaid
            interest and other amounts due thereon (other than Make-Whole Amount
            which  shall  not  be  due  and  payable)  and  all  other   Secured
            Obligations  in respect  of the Series A-1 and Series A-2  Equipment
            Notes (other than  Make-Whole  Amount) to the date of  distribution,
            shall be  distributed  to the Note  Holders of Series A-1 and Series
            A-2, and in case the aggregate amount so to be distributed  shall be
            insufficient  to pay in full as  aforesaid,  then  ratably,  without
            priority of one over the other, in the proportion that the aggregate
            unpaid  Original  Amount of all Series A-1 and Series A-2  Equipment
            Notes held by each holder plus the accrued but unpaid  interest  and
            other  amounts due hereunder or  thereunder  (other than  Make-Whole
            Amount, if any) to the date of distribution,  bears to the aggregate
            unpaid  Original  Amount of all Series A-1 and Series A-2  Equipment
            Notes held by all such holders plus the accrued but unpaid  interest
            and other amounts due thereon (other than Make-Whole  Amount) to the
            date of distribution;

      (ii)  after giving effect to paragraph (i) above, so much of such payments
            or  amounts  remaining  as  shall  be  required  to pay in full  the
            aggregate  unpaid Original  Amount of all Series B Equipment  Notes,
            and the accrued but unpaid  interest  and other  amounts due thereon
            (other than  Make-Whole  Amount  which shall not be due and payable)
            and all  other  Secured  Obligations  in  respect  of the  Series  B
            Equipment  Notes  (other  than  Make-Whole  Amount)  to the  date of
            distribution,  shall be distributed to the Note Holders of Series B,
            and in case  the  aggregate  amount  so to be  distributed  shall be
            insufficient  to pay in full as  aforesaid,  then  ratably,  without
            priority of one over the other, in the proportion that the aggregate
            unpaid  Original Amount of all Series B Equipment Notes held by each
            holder plus the accrued but unpaid  interest  and other  amounts due
            hereunder or thereunder  (other than the Make-Whole  Amount, if any)
            to the date of distribution,  bears to the aggregate unpaid Original

<PAGE>

            Amount of all Series B Equipment Notes held by all such holders plus
            the accrued but unpaid interest and other amounts due thereon (other
            than the Make-Whole Amount) to the date of distribution;

      (iii) after  giving  effect  to  paragraph  (ii)  above,  so  much of such
            payments  or amounts  remaining  as shall be required to pay in full
            the aggregate  unpaid  Original  Amount of all Series C-1 and Series
            C-2 Equipment  Notes,  and the accrued but unpaid interest and other
            amounts due thereon (other than Make-Whole Amount which shall not be
            due and payable) and all other Secured Obligations in respect of the
            Series C-1 and Series C-2  Equipment  Notes  (other than  Make-Whole
            Amount) to the date of  distribution,  shall be  distributed  to the
            Note Holders of Series C-1 and Series C-2, and in case the aggregate
            amount so to be distributed  shall be insufficient to pay in full as
            aforesaid,  then ratably, without priority of one over the other, in
            the  proportion  that the aggregate  unpaid  Original  Amount of all
            Series C-1 and Series C-2  Equipment  Notes held by each holder plus
            the accrued but unpaid  interest and other  amounts due hereunder or
            thereunder (other than the Make-Whole Amount, if any) to the date of
            distribution,  bears to the aggregate  unpaid Original Amount of all
            Series C-1 and Series C-2  Equipment  Notes held by all such holders
            plus the accrued but unpaid  interest and other  amounts due thereon
            (other than the Make-Whole Amount) to the date of distribution; and

      (iv)  after  giving  effect  to  paragraph  (iii)  above,  so much of such
            payments  or amounts  remaining  as shall be required to pay in full
            the  aggregate  unpaid  Original  Amount of all  Series D  Equipment
            Notes,  and the accrued but unpaid  interest  and other  amounts due
            thereon  (other than  Make-Whole  Amount  which shall not be due and
            payable) and all other Secured  Obligations in respect of the Series
            D  Equipment  Notes  (other than  Make-Whole  Amount) to the date of
            distribution,  shall be distributed to the Note Holders of Series D,
            and in case  the  aggregate  amount  so to be  distributed  shall be
            insufficient  to pay in full as  aforesaid,  then  ratably,  without
            priority of one over the other, in the proportion that the aggregate
            unpaid  Original Amount of all Series D Equipment Notes held by each
            holder plus the accrued but unpaid  interest  and other  amounts due
            hereunder or thereunder  (other than the Make-Whole  Amount, if any)
            to the date of distribution,  bears to the aggregate unpaid Original
            Amount of all Series D Equipment Notes held by all such holders plus
            the accrued but unpaid interest and other amounts due thereon (other
            than the Make-Whole Amount) to the date of distribution; and

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

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

<PAGE>

            SECTION 3.04.    Certain Payments

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

            (b)  Notwithstanding  anything  to the  contrary  contained  in this
Article III, the Mortgagee will  distribute  promptly upon receipt any indemnity
payment  received  by it from the Owner  Trustee  or Lessee  in  respect  of the
Mortgagee in its  individual  capacity,  any Note Holder or any other  Indenture
Indemnitee,  in each case  whether  pursuant  to Section 9 of the  Participation
Agreement or as Supplemental Rent, directly to the Person entitled thereto.  Any
payment  received by the  Mortgagee  under the third  paragraph  of Section 2.02
shall be distributed to the Subordination  Agent to be distributed in accordance
with the terms of the Intercreditor Agreement.

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

            (d)  Notwithstanding  any  provision of this Trust  Indenture to the
contrary,  any amounts held by Mortgagee  pursuant to the terms of the Lease [or
any  Permitted  Sublease  assignment]<F10>  shall  be held by the  Mortgagee  as
security for the  obligations  of Lessee under the Lessee  Operative  Agreements
and, if and when required by the Lease,  paid and/or applied in accordance  with
the applicable provisions of the Lease.

            SECTION 3.05.    Other Payments

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

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

----------
<F10>
Insert  Bracketed  Language  If the  Lease  Provides  for  the  Assignment  of a
Permitted Sublease.

<PAGE>

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

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

            SECTION 3.06.    Payments to Owner Trustee

            Any amounts  distributed  hereunder  by the  Mortgagee  to the Owner
Trustee shall be paid to the Owner Trustee (within the time limits  contemplated
by  Section  2.04(a))  by wire  transfer  of funds of the type  received  by the
Mortgagee  at such  office and to such  account or  accounts  of such  entity or
entities  as  shall be  designated  by  notice  from the  Owner  Trustee  to the
Mortgagee  from time to time.  The Owner Trustee  hereby  notifies the Mortgagee
that unless and until the  Mortgagee  receives  notice to the contrary  from the
Owner Trustee,  all amounts to be  distributed to the Owner Trustee  pursuant to
clause  "Second" of Section 3.01 or clause "Fourth" of Section 3.03 hereof shall
be  distributed  by wire transfer of funds of the type received by the Mortgagee
to the Owner  Participant's  account  (within  the time limits  contemplated  by
Section 2.04(a)) specified in Schedule 1 to the Participation Agreement.

                                   ARTICLE IV

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

            SECTION 4.01.    Covenants of Owner Trustee

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

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

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

<PAGE>

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

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

            (e) except with the  consent of the  Mortgagee  (acting  pursuant to
instructions  given in  accordance  with  Section 9.01 hereof) or as provided in
Sections 2 and 11 of the  Participation  Agreement,  the Owner  Trustee will not
contract for,  create,  incur,  assume or suffer to exist any Debt, and will not
guarantee  (directly  or  indirectly  or by an  instrument  having the effect of
assuring  another's payment or performance on any obligation or capability of so
doing,  or otherwise),  endorse or otherwise be or become  contingently  liable,
directly or indirectly, in connection with the Debt of any other person; and

            (f) the Owner  Trustee  will not enter  into any  business  or other
activity other than the business of owning the Aircraft,  the leasing thereof to
Lessee and the carrying out of the transactions  contemplated  hereby and by the
Lease,  the  Participation  Agreement  and the  Trust  Agreement  and the  other
Operative Agreements.

            SECTION 4.02.    Event of Default

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

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

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

<PAGE>

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

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

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

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

            (g) at any time either (i) the  commencement of an involuntary  case
or other proceeding in respect of the Owner Participant,  the Owner Trustee, the
Trust or the Trust Estate under the federal  bankruptcy Laws, as now constituted
or  hereafter  amended,  or any other  applicable  federal or state  bankruptcy,
insolvency or other similar Law in the United States or seeking the  appointment
of a  receiver,  liquidator,  assignee,  custodian,  trustee,  sequestrator  (or
similar official) of the Owner Participant,  the Owner Trustee, the Trust or the

<PAGE>

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

            SECTION 4.03.    Certain Rights

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

            If as a result of the  occurrence  of an Event of Default in respect
of the  nonpayment  by Lessee of Basic Rent due under the Lease,  the  Mortgagee
shall  have  insufficient  funds to make any  payment  of  Original  Amount  and
interest on any Equipment Note on the day it becomes due and payable,  the Owner
Trustee  may,  but  shall not be  obligated  to pay the  Mortgagee  prior to the
Enforcement Date, in the manner provided in Section 2.04 hereof, for application
in  accordance  with Section 3.01 hereof,  an amount equal to the portion of the
Original  Amount  and  interest  (including  interest,  if any,  on any  overdue
payments of such portion of Original  Amount and interest)  then due and payable
on the  Equipment  Notes,  and,  unless the Owner  Trustee  has cured  Events of

<PAGE>

Default in respect of payments  of Basic Rent on each of the [three]  [six]<F11>
immediately  preceding  Basic Rent payment dates, or the Owner Trustee has cured
[six]  [eight]<F12>  previous  Events of Default in respect of payments of Basic
Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust
Indenture  be deemed to cure any Event of Default  which  would  otherwise  have
arisen on account of the nonpayment by Lessee of such  installment of Basic Rent
(but not any other  Default or Event of Default which shall have occurred and be
continuing).

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

            Except as  hereinafter  in this  Section  4.03  provided,  the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default,  obtain any Lien on any of the  Mortgaged  Property or any Rent payable
under the Lease for or on account of costs or expenses  incurred  in  connection
with the  exercise  of such  right,  nor shall  any  claim of the Owner  Trustee
against  Lessee or any other party for the  repayment  of such costs or expenses
impair the prior  right and  security  interest of the  Mortgagee  in and to the
Mortgaged Property.  Upon any payment by the Owner Trustee pursuant to the first
or second preceding  paragraphs of this Section 4.03, the Owner Trustee shall be
subrogated to the rights of the Mortgagee and the Note Holders in respect of the
Basic Rent which was overdue at the time of such payment and interest payable by
the Lessee on account of its being overdue and any Supplemental  Rent in respect
of  the  reimbursement  of  amounts  paid  by  Owner  Trustee  pursuant  to  the
immediately  preceding  paragraph  (but in either case shall have no rights as a
secured party  hereunder),  and thereafter,  the Owner Trustee shall be entitled
(so long as the  application  thereof shall not give rise to an Event of Default
hereunder) to receive such overdue Basic Rent or Supplemental  Rent, as the case
may be, and interest  thereon upon receipt  thereof by the Mortgagee;  PROVIDED,
HOWEVER,  that (i) if the Original  Amount and interest on the  Equipment  Notes
shall have  become due and  payable  pursuant to Section  4.04(b)  hereof,  such
subrogation shall,  until the Secured  Obligations shall have been paid in full,
be  subordinate  to the  rights  of the  Mortgagee,  the  Note  Holders  and the
Indenture  Indemnitees  in  respect  of such  payment  of  overdue  Basic  Rent,
Supplemental  Rent  and such  interest  and (ii) the  Owner  Trustee  shall  not
otherwise  attempt to recover any such amount paid by it on behalf of the Lessee
pursuant to this Section 4.03 except by demanding of the Lessee  payment of such
amount,  or by  commencing an action at law against the Lessee and obtaining and
enforcing a judgment against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee (PROVIDED, that
at no time while an Event of Default shall have occurred and be continuing shall
any such demand be made or shall any such action be commenced (or continued) and

----------
<F11>
Insert appropriate term for Owner Participant

<F12>
Insert appropriate term for Owner Participant

<PAGE>

any amounts nevertheless  received by the Owner Trustee in respect thereof shall
be held in trust for the benefit of, and  promptly  paid to, the  Mortgagee  for
distribution as provided in Section 3.03 hereof).

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

            SECTION 4.04.    Remedies

            (a) If an Event of Default shall have occurred and be continuing and
so long as the same shall continue  unremedied,  then and in every such case the
Mortgagee  may,  subject  to the  second and third  paragraphs  of this  Section
4.04(a),  exercise any or all of the rights and powers and pursue any and all of
the remedies  pursuant to this Article IV and shall have and may exercise all of
the rights and  remedies of a secured  party under the Uniform  Commercial  Code
and, in the event such Event of Default is also a Lease  Event of  Default,  any
and all of the remedies pursuant to Section 15 of the Lease [and pursuant to any
Permitted Sublease  assignment]<F13>  and may take possession of all or any part
of the  properties  covered or intended to be covered by the Lien created hereby
or pursuant hereto and may exclude the Owner Participant,  the Owner Trustee and
Lessee and all persons  claiming  under any of them wholly or partly  therefrom;
provided,  that  the  Mortgagee  shall  give the  Owner  Trustee  and the  Owner
Participant  twenty  days' prior  written  notice of its  intention  to sell the
Aircraft,  and provided,  further,  that in the event the  Mortgagee  shall have
validly  terminated  the  Lease,  the  Mortgagee  shall  not sell or  lease,  or
otherwise  afford the use of, the Aircraft or any portion  thereof to the Lessee
or any  Affiliate  thereof.  Unless an Event of Default  not  resulting  from or
relating to a Lease Event of Default has occurred and is  continuing,  the Owner
Participant may bid at the sale and become the purchaser.  Without  limiting any
of the  foregoing,  it is understood  and agreed that the Mortgagee may exercise
any right of sale of the Aircraft available to it, even though it shall not have
taken  possession of the Aircraft and shall not have  possession  thereof at the
time of such sale.

            Anything in this Trust  Indenture to the  contrary  notwithstanding,
the Mortgagee shall not be entitled to exercise any remedy hereunder as a result
of an Event of Default  which  arises  solely by reason of one or more events or
circumstances  which constitute a Lease Event of Default unless the Mortgagee as
security  assignee of the Owner Trustee shall have exercised or  concurrently be
exercising one or more of the dispossessory  remedies provided for in Section 15
of the  Lease  with  respect  to the  Aircraft;  PROVIDED,  however,  that  such
requirement  to exercise one or more of such remedies  under the Lease shall not
apply in  circumstances  where the Mortgagee is, and has been,  for a continuous
period in excess of 60 days or such other  period as may be specified in Section
1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "New
Section 1110 Period"),  involuntarily  stayed or prohibited by applicable law or
court order from  exercising  such remedies under the Lease (a "Continuous  Stay
Period");  PROVIDED  FURTHER,  HOWEVER,  that the requirement to exercise one or

----------
<F13>
Insert  bracketed  language  if the  Lease  provides  for  the  assignment  of a
permitted sublease.

<PAGE>

more of such remedies under the Lease shall  nonetheless be applicable  during a
Continuous  Stay Period  subsequent  to the  expiration  of the New Section 1110
Period to the  extent  that the  continuation  of such  Continuous  Stay  Period
subsequent to the  expiration of the New Section 1110 Period (A) results from an
agreement by the trustee or the  debtor-in-possession  in such proceeding during
the New Section 1110 Period with the  approval of the relevant  court to perform
the Lease in accordance  with Section  1110(a)(1)(A)  of the Bankruptcy Code and
continues to perform as required by Section  1110(a)(1)(A-B)  of the  Bankruptcy
Code or (B) is an  extension  of the New Section 1110 Period with the consent of
the Mortgagee  pursuant to Section 1110(b) of the Bankruptcy Code or (C) results
from the  Lessee's  assumption  during  the New  Section  1110  Period  with the
approval  of the  relevant  court of the Lease  pursuant  to Section  365 of the
Bankruptcy Code and Lessee's  continuous  performance of the Lease as so assumed
or (D) is the  consequence of the  Mortgagee's own failure to give any requisite
notice to any person. In the event that the applicability of Section 1110 of the
Bankruptcy  Code to the  Aircraft  is being  contested  by  Lessee  in  judicial
proceedings, both of the Mortgagee and the Owner Trustee shall have the right to
participate in such  proceedings;  provided that any such  participation  by the
Owner  Trustee shall not affect in any way any rights or remedy of the Mortgagee
hereunder.

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

            (b) If an Event of Default  shall have  occurred and be  continuing,
then and in every such case the  Mortgagee  may (and  shall,  upon  receipt of a
written demand therefor from a Majority in Interest of Note Holders), subject to
Section 4.03 hereof,  at any time,  by delivery of written  notice or notices to
the Owner Trustee and the Owner Participant,  declare all the Equipment Notes to
be due and payable,  whereupon the unpaid Original Amount of all Equipment Notes
then  outstanding,  together with accrued but unpaid interest  thereon  (without
Make-Whole  Amount) and other amounts due thereunder,  shall immediately  become
due and payable without presentment, demand, protest or notice, all of which are
hereby waived; PROVIDED that if an Event of Default referred to in clause (g) of
Section  4.02  hereof  shall have  occurred  or a Lease  Event of Default  under
Section 14.5 of the Lease shall have  occurred,  then and in every such case the
unpaid  Original  Amount  then  outstanding,  together  with  accrued but unpaid
interest and all other amounts due  thereunder and hereunder  shall  immediately
and  without  further act become due and payable  without  presentment,  demand,
protest or notice, all of which are hereby waived;  PROVIDED FURTHER that in the
event of a  reorganization  proceeding  involving  the Lessee  instituted  under
Chapter 11 of the Bankruptcy  Code, if no Lease Event of Default  (including any
Lease  Event of  Default  set forth in  Section  14.3 of the Lease) and no other
Event of  Default  (other  than the  failure to pay the  Original  Amount of the
Equipment Notes which by such  declaration  shall have become payable) exists at
any time after the  consummation of such proceeding,  such declaration  shall be
automatically  rescinded  without  any  further  action  on the part of any Note
Holder.

<PAGE>

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

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

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

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

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

            SECTION 4.05.    Return of Aircraft, Etc.

            (a) If an Event of Default shall have occurred and be continuing and
the Equipment  Notes have been  accelerated,  subject to Section 4.03 hereof and
unless the Owner Trustee or the Owner Participant shall have elected to purchase
the Equipment  Notes,  at the request of the Mortgagee,  the Owner Trustee shall
promptly  execute and deliver to the  Mortgagee  such  instruments  of title and
other  documents as the Mortgagee may deem  necessary or advisable to enable the

<PAGE>

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

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

            SECTION 4.06.    Remedies Cumulative

            Each and  every  right,  power  and  remedy  given to the  Mortgagee
specifically  or otherwise in this Trust Indenture shall be cumulative and shall
be in addition to every other right, power and remedy herein  specifically given

<PAGE>

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

            SECTION 4.07.    Discontinuance of Proceedings

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

            SECTION 4.08.    Waiver of Past Defaults

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

            SECTION 4.09.    Appointment of Receiver

            The  Mortgagee  shall,  as a matter of  right,  be  entitled  to the
appointment  of a receiver (who may be the Mortgagee or any successor or nominee
thereof)  for  all  or  any  part  of  the  Mortgaged  Property,   whether  such
receivership  be incidental to a proposed sale of the Mortgaged  Property or the
taking of possession thereof or otherwise, and the Owner Trustee hereby consents
to the appointment of such a receiver and will not oppose any such  appointment.
Any receiver  appointed for all or any part of the Mortgaged  Property  shall be
entitled to exercise all the rights and powers of the Mortgagee  with respect to
the Mortgaged Property.

<PAGE>

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

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

            SECTION 4.11.    Rights of Note Holders to Receive Payment

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

                                    ARTICLE V

                             DUTIES OF THE MORTGAGEE

            SECTION 5.01.    Notice of Event of Default

            If the Mortgagee shall have Actual  Knowledge of an Event of Default
or of a Default  arising from a failure to pay Rent,  the  Mortgagee  shall give
prompt  written  notice  thereof to the Owner  Trustee,  the Owner  Participant,
Lessee, and each Note Holder. Subject to the terms of Sections 2.13, 4.03, 4.04,
4.08,  5.02 and 5.03 hereof,  the Mortgagee  shall take such action,  or refrain
from  taking  such  action,  with  respect  to such  Event of Default or Default
(including with respect to the exercise of any rights or remedies  hereunder) as
the  Mortgagee  shall be instructed in writing by a Majority in Interest of Note
Holders.  Subject to the provisions of Section 5.03, if the Mortgagee  shall not
have received instructions as above provided within 20 days after mailing notice
of such Event of Default to the Note  Holders,  the  Mortgagee  may,  subject to
instructions  thereafter  received pursuant to the preceding  provisions of this
Section 5.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain  from taking any action,  with  respect to such
Event  of  Default  or  Default  as it  shall  determine  advisable  in the best
interests of the Note  Holders;  PROVIDED,  HOWEVER,  that the Mortgagee may not
sell the Aircraft or any Engine without the consent of a Majority in Interest of
Note Holders. For all purposes of this Trust Indenture, in the absence of Actual
Knowledge  on  the  part  of the  Mortgagee,  the  Owner  Trustee  or the  Owner
Participant,  the Mortgagee, the Owner Trustee or the Owner Participant,  as the

<PAGE>

case may be,  shall not be deemed to have  knowledge of a Default or an Event of
Default (except, in the case of the Mortgagee,  the failure of Lessee to pay any
installment  of Basic Rent within one  Business  Day after the same shall become
due,  if any  portion of such  installment  was then  required to be paid to the
Mortgagee,  which  failure  shall  constitute  knowledge  of a  Default)  unless
notified in writing by Lessee,  the Owner Trustee,  the Owner Participant or one
or more Note Holders.

            SECTION 5.02.    Action Upon Instructions; Certain Rights and
                             Limitations

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

            (1) the Owner  Trustee or the Owner  Participant,  may,  without the
      consent of the Mortgagee, demand, collect, sue for or otherwise obtain all
      amounts  included  in  Excluded  Payments  from  Lessee  and seek legal or
      equitable  remedies to require  Lessee to maintain the insurance  coverage
      referred to in Section 11 of the Lease [(or the  comparable  provisions of
      any assigned Permitted  Sublease)]<F14> provided, that the rights referred
      to in this clause (1) shall not be deemed to include  the  exercise of any
      remedies  provided  for in Section 15 of the Lease other than the right to
      proceed  by  appropriate  court  action,  either at Law or in  equity,  to
      enforce payment by Lessee of such amounts included in Excluded Payments or
      performance by Lessee of such insurance covenant or to recover damages for
      the breach  thereof or for specific  performance  of any other term of the
      Lease  [(or  the   comparable   provisions   of  any  assigned   Permitted
      Sublease)]<F15>;

            (2) (A) the  Mortgagee  shall not,  without the consent of the Owner
      Trustee,  enter into,  execute or deliver  amendments or  modifications in
      respect of any of the  provisions  of the Lease[,  any assigned  Permitted

----------
<F14>
Insert  Bracketed  Language  If the  Lease  Provides  for  the  Assignment  of a
Permitted Sublease.

<F15>
Insert  Bracketed  Language  If the  Lease  Provides  for  the  Assignment  of a
Permitted Sublease.

<PAGE>

      Sublease  or any  Permitted  Sublease  assignment]<F16>,  and (B) unless a
      Mortgagee Event shall have occurred and be continuing, the Mortgagee shall
      not, without the consent of the Owner Trustee,  which consent shall not be
      withheld  if no  right or  interest  of the  Owner  Trustee  or the  Owner
      Participant  shall be  diminished  or  impaired  thereby,  (i) enter into,
      execute or deliver waivers or consents in respect of any of the provisions
      of the Lease, or (ii) approve any  accountants,  engineers,  appraisers or
      counsel as  satisfactory  to render  services for or issue opinions to the
      Owner Trustee pursuant to the Operative Agreements,  provided that whether
      or not any  Mortgagee  Event has  occurred  and is  continuing,  the Owner
      Trustee's  consent  shall be  required  with  respect  to any  waivers  or
      consents in respect of any of the  provisions of Section 5, 7 or 11 of the
      Lease,  or of any other  Section  of the Lease to the extent  such  action
      shall affect (y) the amount or timing of, or the right to enforce  payment
      of any Excluded Payment or (z) the amount or timing of any amounts payable
      by the Lessee under the Lease as originally  executed (or as  subsequently
      modified  with  the  consent  of the  Owner  Trustee)  which,  absent  the
      occurrence  and  continuance  of an Event of Default  hereunder,  would be
      distributable to the Owner Trustee under Article III hereof;

            (3)  whether or not a Default  or Event of  Default  under the Trust
      Indenture has occurred and is continuing,  the Owner Trustee and the Owner
      Participant  shall have the right,  together  with the  Mortgagee,  (i) to
      receive from Lessee [or any  Permitted  Sublessee]<F17>  certificates  and
      other  documents  and  information  which  Lessee is  required  to give or
      furnish  to the Owner  Trustee  or the Lessor  pursuant  to any  Operative
      Agreement  and (ii) to inspect in  accordance  with the Lease the Airframe
      and Engines and all Aircraft Documents;

            (4)  whether or not a Default  or Event of  Default  under the Trust
      Indenture has occurred and is continuing, the Owner Trustee shall have the
      right to adjust  upwards  Rent,  Stipulated  Loss  Values and  Termination
      Values as provided in Section 3.2.1 of the Lease;

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

----------
<F16>
Insert  Bracketed  Language  If the  Lease  Provides  for  the  Assignment  of a
Permitted Sublease.

<F17>
Insert  Bracketed  Language  If the  Lease  Provides  for  the  Assignment  of a
Permitted Sublease.

<PAGE>

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

            (7) so  long  as no  Mortgagee  Event  shall  have  occurred  and be
      continuing,  all  other  rights  of the  "Lessor"  under the Lease [or any
      assigned Permitted  Sublease]<F18> shall be exercised by the Owner Trustee
      to the exclusion of the Mortgagee including, without limitation, the right
      to (i) exercise  all rights with  respect to Lessee's  use and  operation,
      modification or maintenance of the Aircraft and any Engine which the Lease
      specifically  confers on the Lessor,  and (ii)  consent to and approve any
      assignment  pursuant  to  Section  13 of  the  Lease;  provided  that  the
      foregoing  shall not (x) limit (A) any  rights  separately  granted to the
      Mortgagee under the Operative Agreements or (B) the right of the Mortgagee
      to  receive  any funds to be  delivered  to the  "Lessor"  under the Lease
      (except  with  respect  to  Excluded  Payments)  and  under  the  Purchase
      Agreement  or (y) confer  upon the Owner  Trustee  the right to  adversely
      affect the validity or enforceability of the lien of this Indenture.

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

            The Mortgagee  will execute and the Owner Trustee will file or cause
to be filed such  continuation  statements with respect to financing  statements
relating to the  security  interest  created  hereunder  in the Trust  Indenture
Estate  as may be  specified  from  time to time in  written  instructions  of a
Majority in Interest of Note Holders (which instructions shall be accompanied by

----------
<F18>
Insert  bracketed  language  if the  Lease  provides  for  the  assignment  of a
permitted sublease.

<PAGE>

the form of such  continuation  statement so to be filed).  The  Mortgagee  will
furnish to each Note Holder (and,  during the continuation of a Mortgagee Event,
to the Owner  Trustee and Owner  Participant),  promptly  upon receipt  thereof,
duplicates or copies of all reports, notices,  requests,  demands,  certificates
and other  instruments  furnished to the Mortgagee under the Lease or hereunder,
including, without limitation, a copy of each report or notice received pursuant
to Section 9 and Paragraph E of Annex D of the Lease, respectively to the extent
that the same shall not have been  furnished to such holder  pursuant  hereto or
the Lease.

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

            SECTION 5.03.    Indemnification

            The  Mortgagee  shall not be  required to take any action or refrain
from  taking  any action  under  Section  5.01  (other  than the first  sentence
thereof),  5.02 or  Article  IV hereof  unless  the  Mortgagee  shall  have been
indemnified  to its  reasonable  satisfaction  against  any  liability,  cost or
expense (including  counsel fees) which may be incurred in connection  therewith
pursuant to a written  agreement  with one or more Note  Holders.  The Mortgagee
agrees that it shall look solely to the Note Holders for the satisfaction of any
indemnity  (except  expenses for  foreclosure  of the type referred to in clause
"First" of Section 3.03 hereof)  owed to it pursuant to this Section  5.03.  The
Mortgagee  shall not be under any obligation to take any action under this Trust
Indenture or any other  Operative  Agreement and nothing herein or therein shall
require the  Mortgagee  to expend or risk its own funds or  otherwise  incur the
risk of any  financial  liability  in the  performance  of any of its  rights or
powers if it shall have reasonable  grounds for believing that repayment of such
funds or adequate  indemnity  against such risk or  liability is not  reasonably
assured to it (the written  indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof,  in favor of, delivered to and in form reasonably
satisfactory  to the  Mortgagee  shall be accepted as  reasonable  assurance  of
adequate  indemnity).  The  Mortgagee  shall not be  required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV
hereof,  nor shall any other  provision  of this  Trust  Indenture  or any other
Operative  Agreement  be deemed to  impose a duty on the  Mortgagee  to take any
action,  if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or of the Lease or is otherwise contrary to Law.

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

            The Mortgagee shall not have any duty or obligation to use, operate,
store,  lease,  control,  manage,  sell,  dispose of or otherwise  deal with the
Aircraft or any other part of the Trust Indenture  Estate,  or to otherwise take
or refrain  from taking any action  under,  or in  connection  with,  this Trust
Indenture  or any  part of the  Trust  Indenture  Estate,  except  as  expressly
provided  by the terms of this  Trust  Indenture  or as  expressly  provided  in
written instructions from Note Holders as provided in this Trust Indenture;  and

<PAGE>

no implied duties or obligations shall be read into this Trust Indenture against
the Mortgagee.  The Mortgagee agrees that it will in its individual capacity and
at its own cost and expense  (but  without any right of  indemnity in respect of
any such cost or expense under  Section 7.01 hereof),  promptly take such action
as may be necessary duly to discharge all liens and  encumbrances on any part of
the Trust Indenture Estate which result from claims against it in its individual
capacity not related to the ownership of the Aircraft or the  administration  of
the Trust  Indenture  Estate or any other  transaction  pursuant  to this  Trust
Indenture or any document included in the Trust Indenture Estate.

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

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

            SECTION 5.06.    Replacement Airframes and Replacement Engines

            At any  time an  Airframe  or  Engine  is to be  replaced  under  or
pursuant to Section 10 of the Lease by a  Replacement  Airframe  or  Replacement
Engine,  if no Lease Event of Default is  continuing,  the Owner  Trustee  shall
direct the Mortgagee to execute and deliver to the Owner Trustee an  appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien of
this Trust Indenture and the Mortgagee shall execute and deliver such instrument
as aforesaid,  but only upon compliance by Lessee with the applicable provisions
of Section 10 of the Lease.

            SECTION 5.07.    Indenture Supplements for Replacements

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

            SECTION 5.08.    Effect of Replacement

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

<PAGE>

the Airframe or Engine or Engines being  replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced.

            SECTION 5.09.    Investment of Amounts Held by Mortgagee

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

                                   ARTICLE VI

                       THE OWNER TRUSTEE AND THE MORTGAGEE

            SECTION 6.01.    Acceptance of Trusts and Duties

            The Mortgagee accepts the duties hereby created and applicable to it
and agrees to perform  the same but only upon the terms of this Trust  Indenture
and agrees to receive and  disburse  all monies  constituting  part of the Trust
Indenture Estate in accordance with the terms hereof. The Owner Trustee,  in its
individual capacity, and the Mortgagee, in its individual capacity, shall not be
answerable  or  accountable  under any  circumstances,  except (i) for their own
willful  misconduct or gross  negligence  (other than for the handling of funds,
for  which  the  standard  of  accountability  shall be  willful  misconduct  or
negligence),  (ii) in the  case of the  Mortgagee,  as  provided  in the  fourth
sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof,
and (iii) for  liabilities  that may result,  in the case of the Owner  Trustee,
from the  inaccuracy  of any  representation  or warranty  of the Owner  Trustee
expressly made in its individual  capacity in the Participation  Agreement or in
Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Mortgagee
or any Note  Holder in  connection  with the  transactions  contemplated  by the
Operative  Agreements)  or,  in the  case of the  Mortgagee  (in its  individual

<PAGE>

capacity),  from  the  inaccuracy  of  any  representation  or  warranty  of the
Mortgagee  (in  its  individual  capacity)  in the  Participation  Agreement  or
expressly made  hereunder.  Neither the Owner Trustee nor the Mortgagee shall be
liable for any action or inaction of the other or of the Owner Participant.

            SECTION 6.02.    Absence of Duties

            In the case of the  Mortgagee,  except in  accordance  with  written
instructions  furnished  pursuant to Section 5.01 or 5.02 hereof,  and except as
provided in, and without  limiting the  generality of,  Sections 5.03,  5.04 and
6.08 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b)  hereof,  the Owner Trustee and the Mortgagee  shall have no duty (i) to
see to any  registration of the Aircraft or any recording or filing of the Lease
or of this Trust Indenture or any other  document,  or to see to the maintenance
of any such registration,  recording or filing,  (ii) to see to any insurance on
the Aircraft or to effect or maintain any such insurance,  whether or not Lessee
shall  be in  default  with  respect  thereto,  (iii) to see to the  payment  or
discharge of any lien or  encumbrance  of any kind against any part of the Trust
Estate or the Trust Indenture  Estate,  (iv) to confirm,  verify or inquire into
the failure to receive any financial  statements from Lessee,  or (v) to inspect
the  Aircraft  at any time or  ascertain  or  inquire as to the  performance  or
observance of any of Lessee's covenants under the Lease [or any of the Permitted
Sublessee's  covenants under any assigned Permitted  Sublease]<F19> with respect
to the Aircraft. The Owner Participant shall not have any duty or responsibility
hereunder, including, without limitation, any of the duties mentioned in clauses
(i) through (v) above;  provided,  that nothing contained in this sentence shall
limit any obligations of the Owner Participant under the Participation Agreement
or relieve the Owner Participant from any restriction under Section 4.03 hereof.

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

            NEITHER THE MORTGAGEE IN ITS  INDIVIDUAL  OR TRUST  CAPACITY NOR THE
OWNER  TRUSTEE IN ITS  INDIVIDUAL  CAPACITY OR AS OWNER  TRUSTEE UNDER THE TRUST
AGREEMENT,  MAKES OR SHALL BE  DEEMED  TO HAVE  MADE AND EACH  HEREBY  EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY,  EXPRESS OR IMPLIED,  AS TO THE TITLE,
AIRWORTHINESS,   VALUE,  COMPLIANCE  WITH  SPECIFICATIONS,   CONDITION,  DESIGN,
QUALITY,  DURABILITY,  OPERATION,  MERCHANTABILITY  OR  FITNESS  FOR  USE  FOR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR
OTHER  DEFECTS,  WHETHER  OR  NOT  DISCOVERABLE,   AS  TO  THE  ABSENCE  OF  ANY
INFRINGEMENT  OF ANY  PATENT,  TRADEMARK  OR  COPYRIGHT,  AS TO THE  ABSENCE  OF
OBLIGATIONS  BASED ON STRICT  LIABILITY IN TORT OR ANY OTHER  REPRESENTATION  OR

----------
<F19>
Insert  bracketed  language  if the  Lease  provides  for  the  assignment  of a
permitted sublease.

<PAGE>

WARRANTY  WHATSOEVER,  except  the  Owner  Trustee  in its  individual  capacity
warrants  that (i) the Owner  Trustee has received on the Delivery Date whatever
title was  conveyed  to it,  and (ii) the  Aircraft  is free and clear of Lessor
Liens attributable to the Owner Trustee in its individual capacity.  Neither the
Owner Trustee,  in its  individual  capacity or as Owner Trustee under the Trust
Agreement,  nor the Mortgagee,  in its individual or trust capacities,  makes or
shall be deemed to have made any  representation or warranty as to the validity,
legality or  enforceability  of this Trust Indenture,  the Trust Agreement,  the
Participation  Agreement, the Equipment Notes, the Lease, the Purchase Agreement
or the Purchase  Agreement  Assignment  with the Consent and  Agreement  and the
Engine Consent and Agreement  attached thereto,  or as to the correctness of any
statement  contained  in  any  thereof,   except  for  the  representations  and
warranties  of the  Owner  Trustee  made  in its  individual  capacity  and  the
representations and warranties of the Mortgagee in its individual  capacity,  in
each  case  expressly  made  in this  Trust  Indenture  or in the  Participation
Agreement.  The Loan  Participants,  the Note Holders and the Owner  Participant
make no representation or warranty hereunder whatsoever.

            SECTION 6.04.    No Segregation of Monies; No Interest

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

            SECTION 6.05.    Reliance; Agreements; Advice of Counsel

            Neither  the  Owner  Trustee  nor  the  Mortgagee  shall  incur  any
liability  to  anyone  in  acting  upon  any  signature,   instrument,   notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper  believed by it to be genuine and  believed by it to be signed
by the proper party or parties. The Owner Trustee and the Mortgagee may accept a
copy of a resolution of the Board of Directors (or Executive  Committee thereof)
of any party to the  Participation  Agreement,  certified by the Secretary or an
Assistant  Secretary  thereof as duly  adopted and in full force and effect,  as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and  effect.  As to the  aggregate  unpaid  Original  Amount of
Equipment  Notes  outstanding  as of any  date,  the Owner  Trustee  may for all
purposes  hereof rely on a  certificate  signed by any Vice  President  or other
authorized  corporate  trust officer of the Mortgagee.  As to any fact or matter
relating to Lessee the manner of the  ascertainment of which is not specifically
described  herein,  the Owner  Trustee and the  Mortgagee  may for all  purposes
hereof rely on a certificate,  signed by a duly authorized officer of Lessee, as
to such fact or matter, and such certificate shall constitute full protection to

<PAGE>

the Owner  Trustee and the Mortgagee for any action taken or omitted to be taken
by them in good faith in reliance thereon. The Mortgagee shall assume, and shall
be fully  protected in assuming,  that the Owner  Trustee is  authorized  by the
Trust  Agreement to enter into this Trust Indenture and to take all action to be
taken by it pursuant to the  provisions  hereof,  and shall not inquire into the
authorization of the Owner Trustee with respect thereto.  In the  administration
of the trusts  hereunder,  the Owner Trustee and the Mortgagee  each may execute
any of the trusts or powers  hereof and perform its powers and duties  hereunder
directly  or through  agents or  attorneys  and may, at the expense of the Trust
Indenture Estate, advise with counsel,  accountants and other skilled persons to
be selected and retained by it, and the Owner  Trustee and the  Mortgagee  shall
not be liable for  anything  done,  suffered or omitted in good faith by them in
accordance  with the  written  advice or written  opinion  of any such  counsel,
accountants or other skilled persons.

            SECTION 6.06.    Capacity in Which Acting

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

            SECTION 6.07.    Compensation

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

            SECTION 6.08.    Instructions from Note Holders

            In the administration of the trusts created hereunder, the Mortgagee
shall have the right to seek  instructions  from a Majority  in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions.  The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 6.08.

                                   ARTICLE VII

                  INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE

            SECTION 7.01.    Scope of Indemnification

            The Owner  Trustee,  not in its individual  capacity,  but solely as
Owner  Trustee,   hereby  agrees,   whether  or  not  any  of  the  transactions

<PAGE>

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

                                  ARTICLE VIII

                         SUCCESSOR AND SEPARATE TRUSTEES

            SECTION 8.01.    Notice of Successor Owner Trustee

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

<PAGE>

            SECTION 8.02.    Resignation of Mortgagee; Appointment of
                             Successor

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

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

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

             (d) Any  corporation  into  which  the  Mortgagee  may be merged or
converted or with which it may be  consolidated,  or any  corporation  resulting
from any merger,  conversion or  consolidation to which the Mortgagee shall be a

<PAGE>

party,  or any  corporation  to  which  substantially  all the  corporate  trust
business of the Mortgagee  may be  transferred,  shall,  subject to the terms of
paragraph (c) of this Section  8.02, be a successor  Mortgagee and the Mortgagee
under this Trust Indenture without further act.

            SECTION 8.03.    Appointment of Additional and Separate Trustees

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

            (b) No additional or separate  trustee shall be entitled to exercise
any of the rights,  powers,  duties and obligations conferred upon the Mortgagee
in  respect  of the  custody,  investment  and  payment of monies and all monies
received by any such additional or separate trustee from or constituting part of
the Trust Indenture Estate or otherwise payable under any Operative Agreement to
the  Mortgagee  shall be promptly  paid over by it to the  Mortgagee.  All other

<PAGE>

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

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

                                   ARTICLE IX

     SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS

            SECTION 9.01.    Instructions of Majority; Limitations

            (a) Except as provided in Section  5.02  hereof,  the Owner  Trustee
agrees it shall not enter into any amendment of or supplement to the Lease,  the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement
or the Engine Consent and  Agreement,  or execute and deliver any written waiver
or  modification  of, or consent  under,  the terms of the Lease,  the  Purchase
Agreement,  the Purchase Agreement Assignment,  the Consent and Agreement or the
Engine  Consent  and  Agreement,  unless  such  supplement,  amendment,  waiver,
modification  or consent is  consented  to in  writing  by the  Mortgagee  and a
Majority in Interest of Note Holders.  Anything to the contrary contained herein
notwithstanding, without the necessity of the consent of any of the Note Holders
or the Mortgagee, (i) any Excluded Payments payable to the Owner Participant may
be modified,  amended, changed or waived in such manner as shall be agreed to by
the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter
into  amendments of or additions to the Lease to modify Section 5 (except to the
extent that such amendment would affect the rights or exercise of remedies under

<PAGE>

Section 15 of the Lease) or Section 17 of the Lease so long as such  amendments,
modifications and changes do not and would not affect the time of, or reduce the
amount of, Rent payments  (except to the extent  expressly  permitted by Section
5.02  hereof)  until  after the payment in full of all  Secured  Obligations  or
otherwise adversely affect the Note Holders.

            (b) Without  limiting the  provisions  of Section  9.01 hereof,  the
Mortgagee  agrees  with  the  Note  Holders  that it shall  not  enter  into any
amendment,  waiver or  modification  of,  supplement  or  consent  to this Trust
Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement, the Engine Consent and Agreement or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement,  amendment,  waiver, modification or consent is consented to in
writing by a Majority in Interest of Note Holders,  but upon the written request
of a Majority in Interest of Note Holders, the Mortgagee shall from time to time
enter into any such  supplement  or  amendment,  or execute and deliver any such
waiver,  modification or consent, as may be specified in such request and as may
be (in the case of any  such  amendment,  supplement  or  modification),  to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate,  the Airframe  Manufacturer  or the Engine  Manufacturer;
PROVIDED,  HOWEVER,  that,  without  the  consent of each  holder of an affected
Equipment  Note  then  outstanding  and  of the  Liquidity  Providers,  no  such
amendment of or  supplement  to this Trust  Indenture,  the Lease,  the Purchase
Agreement,  the Purchase Agreement  Assignment,  the Consent and Agreement,  the
Engine  Consent  and  Agreement  or the  Participation  Agreement  or  waiver or
modification  of the terms of, or consent under,  any thereof,  shall (i) modify
any of the  provisions  of this Section 9.01, or of Article II or III or Section
4.02, 4.04(c),  4.04(d), 5.02 or 5.06 hereof, Section 13.3, 14 (except to add an
Event  of  Default)  or 16 of the  Lease,  Section  15.1  of  the  Participation
Agreement,  the  definitions of "Event of Default,"  "Default,"  "Lease Event of
Default," "Lease Default,"  "Majority in Interest of Note Holders,"  "Make-Whole
Amount" or "Note Holder," or the percentage of Note Holders  required to take or
approve any action  hereunder,  (ii)  reduce the  amount,  or change the time of
payment or method of calculation of any amount,  of Original Amount,  Make-Whole
Amount,  if any, or interest  with respect to any  Equipment  Note,  or alter or
modify  the  provisions  of  Article  III  hereof  with  respect to the order of
priorities  in which  distribution  thereunder  shall be made as among  the Note
Holders,  the  Owner  Trustee  and  Lessee,  (iii)  reduce,  modify or amend any
indemnities  in favor of the Owner  Trustee,  the  Mortgagee or the Note Holders
(except that the Owner Trustee (in its individual capacity) or the Mortgagee, as
the case may be, may consent to any waiver or reduction of an indemnity  payable
to it) or the other  Indenture  Indemnitees,  (iv)  consent to any change in the
Trust  Indenture or the Lease which would permit  redemption of Equipment  Notes
earlier  than  permitted  under  Section  2.10 or 2.11 hereof or the purchase or
exchange of the Equipment  Notes other than as permitted by Section 2.13 hereof,
(v) except as contemplated by the Lease or the Participation  Agreement,  reduce
the amount or extend the time of payment of Basic Rent,  Stipulated  Loss Value,
or Termination Value for the Aircraft in each case as set forth in the Lease, or
modify, amend or supplement the Lease or consent to any assignment of the Lease,
in either case releasing  Lessee from its  obligations in respect of the payment
of Basic Rent,  Stipulated  Loss Value or Termination  Value for the Aircraft or
altering the absolute and  unconditional  character of the obligations of Lessee
to pay Rent as set forth in  Sections  3 and 16 of the Lease or (vi)  permit the
creation of any Lien on the Trust  Indenture  Estate or any part  thereof  other

<PAGE>

than  Permitted  Liens or deprive  any Note Holder of the benefit of the Lien of
this Trust  Indenture  on the Trust  Indenture  Estate,  except as  provided  in
connection with the exercise of remedies under Article IV hereof.

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

            SECTION 9.02.    Trustees Protected

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

            SECTION 9.03.    Documents Mailed to Note Holders

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

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

            No written request or consent of the Mortgagee,  the Note Holders or
the Owner  Participant  pursuant  to Section  9.01  hereof  shall be required to

<PAGE>

enable  the  Owner  Trustee  to enter  into any  Lease  Supplement  specifically
required by the terms of the Lease or to execute  and deliver a Trust  Indenture
Supplement specifically required by the terms hereof.

                                    ARTICLE X

                                  MISCELLANEOUS

            SECTION 10.01.   Termination of Trust Indenture

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

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

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

            SECTION 10.03.   Sale of Aircraft by Mortgagee Is Binding

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

<PAGE>

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

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

            SECTION 10.05.   Notices

            Unless  otherwise  expressly  specified  or  permitted  by the terms
hereof, all notices, requests, demands,  authorizations,  directions,  consents,
waivers or documents  provided or permitted by this Trust  Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid,  or by facsimile or confirmed telex, and (i) if
to the Owner Trustee,  addressed to it at 79 South Main Street,  3rd Floor, Salt
Lake City, Utah 84111 with a copy to the Owner Participant addressed as provided
in clause (iii) below,  (ii) if to  Mortgagee,  addressed to it at its office at
Rodney Square  North,  1100 North Market  Street,  Wilmington,  Delaware  19890,
Attention:  Corporate  Trust  Administration,  facsimile  number (302) 651-8882,
(iii) if to any  Participant,  Lessee,  any Note  Holder or any other  Indenture
Indemnitee,  addressed  to such party at such  address as such party  shall have
furnished by notice to the Owner Trustee and the Mortgagee, or, until an address
is so  furnished,  addressed  to the address of such party (if any) set forth on
Schedule 1 to the  Participation  Agreement or in the Equipment  Note  Register.
Whenever any notice in writing is required to be given by the Owner Trustee, any
Participant  or the  Mortgagee  or any Note  Holder to any of the other of them,
such  notice  shall be deemed  given and such  requirement  satisfied  when such
notice is  received,  or if such  notice is mailed by  certified  mail,  postage
prepaid,  three Business Days after being mailed,  addressed as provided  above.
Any party  hereto may change the address to which  notices to such party will be
sent by  giving  notice  of such  change  to the  other  parties  to this  Trust
Indenture.

            SECTION 10.06.   Severability

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

            SECTION 10.07.   No Oral Modification or Continuing Waivers

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

<PAGE>

            SECTION 10.08.   Successors and Assigns

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

            SECTION 10.09.   Headings

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

            SECTION 10.10.   Normal Commercial Relations

            Anything   contained  in  this  Trust   Indenture  to  the  contrary
notwithstanding,  Owner Trustee, Mortgagee, any Participant or any bank or other
Affiliate  of such  Participant  may  conduct  any  banking  or other  financial
transactions,  and have banking or other commercial  relationships,  with Lessee
[or any  Permitted  Sublessee]<F20>,  fully to the same  extent as if this Trust
Indenture were not in effect,  including without  limitation the making of loans
or other  extensions  of credit to Lessee for any  purpose  whatsoever,  whether
related to any of the transactions contemplated HEREBY or otherwise.

            SECTION 10.11.   Governing Law; Counterpart Form

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

----------
<F20>
Insert  Bracketed  Language  If the  Lease  Provides  for  the  Assignment  of a
Permitted Sublease.

<PAGE>

            SECTION 10.12.   Voting By Note Holders

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

            SECTION 10.13.   Bankruptcy

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

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

                                    FIRST SECURITY BANK,  NATIONAL  ASSOCIATION,
                                       not in its individual capacity, except as
                                       expressly  provided herein, but solely as
                                       Owner Trustee, as Owner Trustee

                                    By_________________________________________
                                      Name:
                                      Title:

                                    WILMINGTON TRUST COMPANY, as Mortgagee

                                    By__________________________________________
                                      Name:
                                      Title:

<PAGE>
                                                                       EXHIBIT A
                                           TO TRUST INDENTURE AND MORTGAGE [___]

                TRUST INDENTURE AND MORTGAGE [___] SUPPLEMENT

            This TRUST  INDENTURE  AND MORTGAGE  [___]  SUPPLEMENT  NO. 1, dated
[___________,  20__] (herein called this "Trust Indenture  Supplement") of FIRST
SECURITY BANK, NATIONAL ASSOCIATION,  not in its individual capacity, but solely
as Owner Trustee  (herein called the "Owner  Trustee")  under that certain Trust
Agreement [___] dated as of [___________, 20__] (the "Trust Agreement"), between
the Owner Trustee and the Owner Participant named therein.

                              W I T N E S S E T H:

            WHEREAS,  the  Trust  Indenture  and  Mortgage  [___],  dated  as of
[____________, 20__] (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner Trustee and Wilmington Trust Company, as Mortgagee
(the  "Mortgagee"),  provides  for the  execution  and  delivery of a supplement
thereto  substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Mortgagee; and

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

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

                                    AIRFRAME

One airframe identified as follows:

                                                 FAA
                                            REGISTRATION       MANUFACTURER'S
    MANUFACTURER            MODEL              NUMBER           SERIAL NUMBER
    ------------            -----              ------           -------------

The Boeing Company

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

<PAGE>

                                AIRCRAFT ENGINES

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

MANUFACTURER                MANUFACTURER'S MODEL       SERIAL NUMBER
------------                --------------------       -------------

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

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

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

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

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

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

<PAGE>

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

                                      * * *

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

                                    FIRST SECURITY BANK,  NATIONAL  ASSOCIATION,
                                       not  in  its  individual  capacity,   but
                                       solely as Owner Trustee, Owner Trustee

                                    By__________________________________________
                                      Name:
                                      Title:

<PAGE>
                                                  TRUST INDENTURE AND MORTGAGE

                                   SCHEDULE I

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

Series A-1:
Series A-2:
Series B:
Series C-1:
Series C-2:
Series D:

<PAGE>

                                                  TRUST INDENTURE AND MORTGAGE

                           Equipment Note Amortization

                                                      Percentage of
                                                     Original Amount
              Payment Date                             to be Paid
              ------------                           ---------------

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