Document:

Exhibit 10.2

                           AIRCRAFT SECURITY AGREEMENT

     This AIRCRAFT SECURITY AGREEMENT (23074) ("Aircraft Security Agreement")
dated as of December 20, 2007 (this "Agreement"), is entered into by and among,
Global Aircraft Solutions Inc., a Nevada corporation (the "Parent Grantor"),
Hamilton Aerospace Technologies, Inc., a Delaware corporation ("Hamilton"),
World Jet Corporation, a Nevada corporation ("World Jet"), and Hamilton
Aerospace Mexico S.A. de C.V. a Mexican corporation ("Hamilton Mexico"), as
subsidiaries of the Parent Grantor (each, including the Parent Grantor a
"Company" and together with the Parent Grantor, the "Companies") and each Person
other than the Companies which is a party hereto or which becomes a party hereto
pursuant to the joinder provisions of Section 5.7 hereof (hereinafter the
Companies and such other Persons are collectively referred to as the "Obligors"
or individually referred to as an "Obligor"), and Victory Park Master Fund, Ltd.
("Victory Park" or "Lead Secured Party" or "Agent" as agent for the Secured
Parties (as defined below) pursuant to Section 16 of that certain Security
Agreement (as defined below)) and the Holders (including Victory Park) of the
Debentures (together the "Secured Parties").

                              W I T N E S S E T H:

     WHEREAS, pursuant to those certain Senior Secured Debentures due December
19, 2008 (or other date as set forth therein) in the original aggregate
principal amount of $10,000,000, as the same may be amended from time to time
(the "Debentures"), issued by the Obligors to the Secured Parties in connection
with that certain Securities Purchase Agreement entered into by and among the
Obligors and the Secured Parties dated as of even date herewith in substantially
the form attached hereto as Exhibit A, (the "Securities Purchase Agreement"),
the Secured Parties have agreed to purchase the Debentures from the Obligors;

     WHEREAS, to secure the payment of the Companies under the Debentures and as
an inducement to the Holders to purchase the Debentures, the Companies have
agreed to enter into this Aircraft Security Agreement for the benefit of the
Secured Parties; and

     WHEREAS, all things necessary to make this Aircraft Security Agreement a
legal, valid, and binding obligation of Obligors and Lead Secured Party and
Secured Parties, for the uses and purposes herein set forth, in accordance with
its terms, have been done and performed and have occurred.

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

                           DEFINITIONS AND CONSTRUCTION
                           ----------------------------

     (1.1) Definitions. All words or phrases defined in this Article I (except
as herein otherwise expressly provided or unless the context otherwise requires)
shall, for the purposes of this Aircraft Security Agreement, have the respective
meanings specified in this Article 1. Capitalized terms used but not defined
herein shall have the respective meanings specified in the Securities Purchase
Agreement.

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<PAGE>

     "Additional Insureds" shall mean the Lead Secured Party and Secured Parties
and their respective affiliates, directors, officers, agents, employees,
successors and permitted assigns.

     "Administrator" shall mean a person registered as an "administrator" for a
party under the rules of the International Registry.

     "Aeronautical Authority" shall mean as of any time of determination, the
FAA or other governmental airworthiness authority having jurisdiction over the
Aircraft or the Airframe and Engines or engines attached thereto under the laws
of the country in which the Airframe is then registered.

     "Aircraft" shall mean, collectively, the Airframe and Engines (whether or
not the Engines are installed on the Airframe or any other airframe), the
Aircraft Documentation (when applicable), and the Aviation Documents (when
applicable).

     "Aircraft Documentation" shall mean all records, logs, manuals and
Technical Records relating to the Aircraft which are in the possession of the
Companies on the Effective Date.

     "Aircraft Security Agreement" shall have the meaning set forth in the
introductory paragraph hereto.

     "Airframe Manufacturer" shall mean Boeing.

     "Airframe" shall mean (a) one (1) used Boeing (also shown as BOEING on the
International Registry drop down menu), Model 737-200 (also shown as 737-200 on
the International Registry drop down menu) aircraft (excluding Engines or
engines from time to time installed thereon), bearing manufacturer's serial
number 23074 and United States registration number N302DL; and any Replacement
Airframe and (b) any and all related Parts so long as the same shall be
incorporated or installed in or attached to such aircraft, or so long as the
same shall be subject to the security interest and Lien of this Aircraft
Security Agreement in accordance with the terms of Section 3.3(f), (g) or (h)
thereof, removed from such aircraft. The Airframe is of a type certified to
transport at least eight persons including crew, or goods in excess of 2750
kilograms.

     "Applicable Law" shall mean any laws applicable to Obligors.

     "Aviation Documents" shall mean any or all of the following which at any
time may be obtainable from the Aviation Authority in the State of Registration:
(i) if required, a temporary certificate of airworthiness from the Aviation
Authority allowing the Aircraft to be flown to the State of Registration, (ii)
an application for registration of the Aircraft with the appropriate authority
in the State of Registration, (iii) the certificate of registration for the
Aircraft issued by the State of Registration, (iv) a full certificate of
airworthiness for the Aircraft specifying transport category (passenger), (v) an
air transport license (if applicable), (vi) an air operator's certificate (if
applicable), (vii) such recordation of Obligors' title to the Aircraft and
interest of Lead Secured Party in this Aircraft Security Agreement as may be
available in the State of Registration, and (viii) all such other
authorizations, approvals, consents, and certificates in the State of
Registration as may be required to operate the Aircraft in commercial service.

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     "Cape Town Treaty" shall mean collectively the Convention and the Protocol,
together with the Regulations for the International Registry and the
International Registry Procedures, and all other rules, amendments, supplements,
and revisions thereto.

     "Collateral" has the meaning set forth in Section 2.1 of this Aircraft
Security Agreement.

     "Contract of Sale" shall have the meaning set forth in the Cape Town
Treaty.

     "Convention" shall mean the Convention on International Interests in Mobile
Equipment signed in Cape Town, South Africa on November 16, 2001, as ratified by
the United States.

     "Effective Date" shall mean the date of this Agreement.

     "Engine" shall mean each of two (2) used, Pratt & Whitney (also shown as
PRATT & WHITNEY on the International Registry drop down menu) model JT8D-15A
(also shown as JT8D STD on the International Registry drop down menu) engines
bearing manufacturer's serial numbers 709149 (also shown as 709149 on the
International Registry drop down menu) and 709154 (also shown as 709154 on the
International Registry drop down menu) and any Replacement Engine, in any case
whether or not from time to time installed or such Airframe or installed on any
other airframe or aircraft; that may from time to time be substituted for an
Engine pursuant to Section 3.4 of this Aircraft Security Agreement; together, in
each case, with any and all Parts so long as the same shall be incorporated or
installed in or attached thereto or, so long as the same shall be subject to the
security interest and Lien of this Aircraft Security Agreement in accordance
with the terms of Section 3.3 (f), (g) or (h) hereof, removed from any such
Engine. Each of the above described Engines have (i) 750 or more rated take-off
horsepower or the equivalent thereof, and/or (ii) at lease 1750 pounds of thrust
or at least 550 rated take off shaft horsepower.

     "Engine Manufacturer" shall mean Pratt & Whitney.

     "Engine Warranties" shall mean the warranties and assurances relating to
the Engines and related equipment manufactured by the Engine Manufacturer.

     "Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe, or any Engine:

     (i) any theft, hijacking or disappearance of such property for a period of
180 consecutive days or more or, if earlier for a period that extends beyond the
Maturity Date;

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<PAGE>

     (ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;

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

     (iv) condemnation, confiscation or seizure of, or requisition of title to
or use of such property by any foreign government or purported government (or in
the case of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of in the case of any
requisition of use, 90 consecutive days (for countries listed in Annex A) or 60
consecutive days (for any other country) or, in any of the cases in this clause
(iv), such shorter period ending on the Maturity Date;

     (v) condemnation, confiscation or seizure of, or requisition of use of such
property by the Government for a period extending beyond the Maturity Date;

     (vi) as a result of any law, rule, regulation, order or other action by the
Aeronautical Authority, the use of the Aircraft or Airframe in the normal course
of air transportation shall have been prohibited by virtue of a condition
affecting all Boeing 737 200 aircraft equipped with engines of the same make and
model as the Engines for a period of 180 consecutive days (or beyond the end of
the Maturity Date), unless the Obligors, prior to the expiration of such 180-day
period, shall be diligently carrying forward all necessary and desirable steps
to permit normal use of the Aircraft and shall within 12 months have conformed
at least one Boeing 737 200 aircraft (but not necessarily the Aircraft) to the
requirements of any such law, rule, regulation, order or action, and shall be
diligently pursuing conformance of the Aircraft in a non-discriminatory manner
provided that, notwithstanding the foregoing, if such normal use of such
property hall be prohibited, or if such normal use of such property shall be
prohibited for a period of 12 consecutive months, an Event of Loss shall be
deemed to have occurred;

     (vii) the basing of the Aircraft, while under requisition for use by any
government (other than the Government while an indemnity of the type and scope
described in Section 3.3(c) of this Aircraft Security Agreement) is in full
force and effect in any area excluded from coverage by any required insurance
policy; and

     (viii) with respect to an Engine only, the requisition or taking of use
thereof by any government, and any divestiture of title or ownership deemed to
be an Event of Loss with respect to an Engine under Section 3.2(iii) or 3.2(vi)
of the Aircraft Security Agreement.

     The date of such Event of Loss shall be (aa) the 3rd Business Day following
loss of such property or its use due to theft or disappearance or the Maturity
Date if earlier; (bb) the date of any destruction, damage beyond economic repair
or rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 3rd Business Day following condemnation, confiscation,
seizure or requisition of title to such property by a foreign government
referred to in clause (iv) above (or the 11th day in the case of appropriation
of title), or the Maturity Date if earlier than such 3rd Business Day (or 11th
day, as applicable); (ee) the Maturity Date in the case of requisition of title
to or use of such property by the Government; and (ff) the last day of the
applicable period referred to in clause (vi) above (or if earlier, the Maturity
Date without the Obligors' having conformed at least one Boeing 737 200 aircraft
to the applicable requirements). An Event of Loss with respect to the Aircraft
shall be deemed to have occurred if any Event of Loss occurs with respect to the
Airframe.

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<PAGE>

     "FAA" shall mean the U.S. Federal Aviation Administration and any agency or
instrumentality of the U.S. Government succeeding to its functions.

     "First Lien Obligations" shall have the meaning set forth in the Security
Agreement.

     "Government" shall mean the United States or an agency or instrumentality
thereof the obligations of which bear the full faith and credit of the United
States.

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

     "International Interest" shall have the meaning set forth in the Cape Town
Treaty.

     "International Registry" shall have the meaning set forth in the Cape Town
Treaty.

     "Lead Secured Party" shall have the meaning as set forth in this Agreement.

     "Letter Agreement" shall have the meaning set forth in the Security
Agreement.

     "Lien" shall have the meaning set forth in the Securities Purchase
Agreement.

     "Maintenance Program" shall mean a maintenance program approved by the
Aeronautical Authority applicable to the Airframe and the Engines.

     "Manufacturer" shall mean the Airframe Manufacturer or the Engine
Manufacturer.

     "Maturity Date" shall have the meaning set forth in the Debentures.

     "Minimum Liability Amount" shall be $1,500,000.

     "Moody's" means Moody's Investors Service, Inc.

     "Obligor" has the meaning set forth in the introductory paragraph hereof.

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<PAGE>

     "Parts" shall mean all appliances, avionics, parts, instruments,
appurtenances, accessories, furnishings, and other equipment of whatever nature
(other than complete Engines or engines) from time to time incorporated in the
Airframe or an Engine (or removed therefrom, if title remains in Obligors).

     "Permitted Investments" means investments in (a) direct obligations of the
United States or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States or any agency or instrumentality thereof, (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, any bank, trust company, or national banking
association incorporated or doing business under the laws of the United States
or one of the states thereof, having a combined capital and surplus of at least
$500,000,000 and having a rating of "A" or better from S&P or "A2" or better
from Moody's, (d) commercial paper issued by companies in the United States
which directly issue their own commercial paper and which are doing business
under the laws of the United States or one of the states thereof and in each
case having a rating assigned to such commercial paper by a nationally
recognized rating organization in the United States equal to the highest rating
assigned by such organization, or (e) obligations of the type described in
clauses (a) through (d) above, purchased from any bank, trust company, or
banking association referred to in clause (c) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by Obligors, all such
Permitted Investments shall mature not later than 30 days from the date of
purchase. The aggregate amount invested in certificates of deposit or commercial
paper or repurchase agreements issued by any one bank or company shall not
exceed $5,000,000.

     "Permitted Lessee" shall mean a lessee of the Aircraft with the prior
written consent of the Lead Secured Party.

     "Permitted Liens" shall have the meaning set forth in the Debentures.

     "Professional User" shall mean a party registered as a "professional user
entity" under the rules of the International Registry.

     "Protocol" shall mean the Protocol to the Convention on International
Interests in Mobile Equipment on Matters Specific to Aircraft Equipment signed
in Cape Town, South Africa on November 16, 2001, as ratified by the United
States.

     "Replacement Airframe" shall mean (a) one (1) used Boeing (also shown as
BOEING on the International Registry drop down menu), Model 737-200 (also shown
as 737-200 on the International Registry drop down menu) aircraft (excluding
Engines or engines from time to time installed thereon); and any Replacement
Airframe that may from time to time be substituted for an Airframe pursuant to
Section 3.4 of this Aircraft Security Agreement and (b) any and all related
Parts so long as the same shall be incorporated or installed in or attached to
such aircraft, or so long as the same shall be subject to the security interest
and Lien of this Aircraft Security Agreement in accordance with the terms of
Section 3.3(f), (g) or (h) thereof, removed from such aircraft.

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<PAGE>

     "Replacement Engine" hall mean each of two (2) used, Pratt & Whitney (also
shown as PRATT & WHITNEY on the International Registry drop down menu) model
JT8D-15A (also shown as JT8D STD on the International Registry drop down menu)
engines and any Replacement Engine, in any case whether or not from time to time
installed or an Airframe or installed on any other airframe or aircraft; that
may from time to time be substituted for an Engine pursuant to Section 3.4 of
this Aircraft Security Agreement.

     "Secured Obligations" has the meaning set forth in Section 2.1 of this
Aircraft Security Agreement.

     "Security Agreement" shall mean that certain Pledge and Security Agreement,
dated as of even date herewith, by and among the Companies and the Secured
Parties.

     "S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.

     "Section 1110" shall mean 11 U.S.C. 1110 or any successor statute.

     "Second Lien Obligations" shall have the meaning set forth in the Security
Agreement.

     "Stipulated Loss Value" shall have the meaning set forth in Section
3.3(i)(i)(B).

     "Transaction Documents" shall have the meaning as set forth in the
Securities Purchase Agreement.

     "Voidable Transfer" shall have the meaning set forth in Section 5.16 of
this Aircraft Security Agreement.

     (1.2) Construction.

          (a) Unless the context of this Aircraft Security Agreement otherwise
clearly requires, terms defined in the plural form apply equally to the singular
form and vice versa, and "or" has the inclusive meaning frequently identified by
the phrase "and/or."

          (b) References to "determination" and derivations thereof by Lead
Secured Party include a good-faith estimate by Lead Secured Party (in the case
of a quantitative determination) and a good faith belief by Lead Secured Party
(in the case of a qualitative determination). References to the terms "acting
reasonably" or "reasonably satisfactory to Lead Secured Party, acting
reasonably" or terms of similar import mean satisfactory or acceptable to Lead
Secured Party acting in a reasonable manner.

          (c) The words "herein," "hereunder," and "hereof" and similar terms in
this Aircraft Security Agreement refer to this Aircraft Security Agreement as a
whole and not to any particular provision of this Aircraft Security Agreement.

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<PAGE>

          (d) The Articles, Sections, and other headings contained in this
Aircraft Security Agreement are for reference purposes only and shall not
control or affect the construction of this Aircraft Security Agreement or the
interpretation thereof in any respect.

          (e) This Aircraft Security Agreement and all documents executed in
connection herewith shall be construed without regard to the identity of the
party which prepared the same, and no presumption shall arise as a result
thereof.

          (f) Any defined term in any of the Transaction Documents which refers
to a document, instrument, agreement, or mortgage shall include any amendments,
supplements, or modifications entered into from time to time with respect to
such document, instrument, agreement, or mortgage.

                                    SECURITY
                                    --------

     (2.1) Grant of Security. To secure the full payment when due (whether at
the stated maturity, by acceleration, or otherwise) of all Obligations under the
Transaction Documents (other than contingent indemnification obligations)
whether now in existence or hereafter incurred, and the performance and
observance by Obligors of all the agreements and covenants, and all other
obligations or liabilities (other than contingent indemnification obligations),
now or in the future, to be performed, observed or borne by Obligors for the
benefit of Agent and Secured Parties contained in or arising out of any of the
Transaction Documents (collectively, the "Secured Obligations") and in
consideration of the purchase of the Debentures pursuant to the terms of the
Securities Purchase Agreement, the premises and the covenants contained herein
and in the other Transaction Documents, and other good and valuable
consideration given to Obligors by Agent and Secured Parties, the receipt of
which is hereby acknowledged, Parent Grantor do hereby grant, bargain, sell,
convey, transfer, mortgage, assign, pledge, and confirm unto Agent as agent for
the Secured Parties, and its permitted successors and assigns, for the security
and benefit of Secured Parties (i) a first-priority security interest in, and
Lien on, and consents to the registration of an International Interest on, all
estate, right, title, and interest of Obligors in, to, and under, any and all of
the following described properties, rights, interests, and privileges whether
now or hereafter acquired and wherever the same may be located (collectively,
the "Collateral") to secure the payment of the First Lien Obligations; and (ii)
a security interest in, and Lien on, and consents to the registration of an
International Interest on the Collateral to secure payment of the Second Lien
Obligation:

          (a) Aircraft. The Aircraft, including the Airframe and the Engines
(each such Engine having (i) at least 750 or more rated take-off horsepower or
the equivalent thereof, and/or (ii) at least 1750 pounds of thrust or its
equivalent for jet propulsion engines or at least 550 rated take off shaft
horsepower or its equivalent for turbine powered or piston powered engines), and
whether or not any such Engine may from time to time be installed on the
Airframe or any other airframe or any other aircraft, any and all Parts which
are from time to time included within the definitions of "Airframe" or "Engines"
and, to the extent provided herein, all substitutions and replacements of, and
additions, improvements, accessions, and accumulations to, such Aircraft, such
Airframe, such Engines and any and all such Parts, and all renewals,
substitutions, replacements, additions, improvements, accessories, and
accumulations with respect to any of the foregoing, and together with all
Aircraft Documentation.

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<PAGE>

          (b) Warranties. All warranties, indemnities, or agreements, product
support, service life policies, or otherwise, in respect of the Aircraft or the
Engines, and together in each case under this clause (b) with all rights,
powers, privileges, options, and other benefits of Obligors thereunder with
respect to the Airframe, the Engines, or any Part.

          (c) Requisition Proceeds. All requisition, confiscation, seizure, or
condemnation proceeds with respect to the Aircraft or any Part thereof or any
other Collateral, and all proceeds from the sale, lease, or other disposition of
the Aircraft, either Engine, or any Part or any other Collateral described
herein.

          (d) Insurance. All insurance policies (including the proceeds thereof)
with respect to the Aircraft, the Airframe, either Engine, or any Part required
to be maintained by Obligors under Section 3.3(d) hereof.

          (e) Reserved.

          (f) Reserved.

          (g) Reserved.

          (h) Property Acquired With Proceeds of the Collateral. To the extent
related to any of the foregoing or consisting of or acquired with proceeds of
any of the foregoing, all accounts, goods, inventory, equipment, general
intangibles (including software and payment intangibles), documents, promissory
notes and other instruments, chattel paper (including electronic chattel paper
and tangible chattel paper), investment property, deposit accounts, commercial
tort claims, letters of credit, letter of credit rights, and contract rights, if
any, of Obligors.

          (i) After Acquired Property. All property that may from time to time
hereafter be expressly subjected to the security interest and Lien of this
Aircraft Security Agreement.

          (j) Proceeds. All proceeds of the foregoing.

     TO HAVE AND TO HOLD any and all of the Collateral unto Agent, its permitted
successors and assigns, forever, upon the terms and trusts herein set forth, for
the benefit, security, and protection of Secured Parties, and for the uses and
purposes and subject to the terms and provisions set forth in this Aircraft
Security Agreement.

     (2.2) Agent Appointed Attorney-in-Fact. Obligors do hereby constitute and
appoint Agent the true and lawful attorney of Obligors, irrevocably, for good
and valuable consideration with full power of substitution, which appointment is
coupled with an interest, with full power (in the name of Obligors or otherwise)
to ask for, require, demand, receive, sue for, compound, and give acquittance
for any and all moneys and claims for moneys due and to become due under or
arising out of all property (in each case including insurance and requisition
proceeds) which now or hereafter constitutes part of the Collateral, to endorse
any checks or other instruments or orders in connection therewith and to file
any claims or to take any action or to institute any proceeding which Agent may
deem to be necessary or advisable in the premises as fully as Obligors

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<PAGE>

themselves could do; provided that Agent shall not exercise any such rights
except during the continuance of an Event of Default. Without limiting the
foregoing provisions, during the continuance of any Event of Default but subject
to the terms hereof and any mandatory requirements of Applicable Law, Agent
shall have the right under such power of attorney, but no obligation, in its
discretion to file any claim or to take any other action or proceedings, either
in its own name or in the name of Obligors or otherwise, which Agent may
reasonably deem necessary or appropriate to protect and preserve the right,
title and interest of Agent for the benefit of the Secured Parties in and to the
security intended to be afforded hereby.

     (2.3) Further Assurances. Obligors agree that at any time and from time to
time, upon the written request of Agent, Obligors will, at their cost and
expense, promptly and duly execute and deliver or cause to be duly executed and
delivered any and all such further instruments and documents, and do such
further acts and things, including using its commercially reasonable efforts to
assist the Agent in obtaining control under the UCC with respect to any
Collateral consisting of Deposit Accounts and receiving satisfactory legal
opinions from counsel to Obligors with respect to such control, making filings,
recordations, registrations, and undertaking similar actions under the UCC or
any similar statute under any other applicable jurisdiction, with the Aviation
Authority, with the International Registry, or any other registry with respect
to the Aircraft or any Engine, or as may be contemplated by the Cape Town
Treaty, as Agent may reasonably deem desirable in obtaining the full benefits of
the assignment and grant hereunder and of the rights and powers herein granted.

     (2.4) Conflicting Security Interests; No Amendments; and Relative
Priorities.

          (a) No Conflicting Security Interests. Obligors do hereby warrant and
represent that it has not assigned or pledged, and hereby covenants that it will
not assign or pledge, so long as the security interest and Lien of this Aircraft
Security Agreement has not been discharged in accordance with the terms hereof,
any of its rights, titles, or interests hereby assigned to any Person other than
Agent.

          (b) No Amendments of Existing Agreements. Obligors do hereby warrant
and represent that it has not amended or supplemented, and hereby covenants that
it will not except as provided hereunder, or in each case so long as no Event of
Default is in existence and in each case solely except in a manner that does not
adversely affect Agent, enter into any agreement amending or supplementing any
agreement assigned or pledged hereunder or execute any waiver or modification
of, or consent under, the terms of, or exercise any rights, powers, or
privileges under, any agreement assigned or pledged hereunder, or settle or
compromise any claim arising under any agreement assigned or pledged hereunder,
submit or consent to the submission of any dispute, difference, or other matter
arising under or in respect of any agreement assigned or pledged hereunder, or
to arbitration thereunder.

     (2.5) After Acquired Property. It is hereby further agreed that any and all
property described or referred to in the granting clause provisions of Section
2.1 hereof which is hereafter acquired by Obligors shall ipso facto, and without
any other conveyance, assignment, or act on the part of Obligors or Agent,
become and be subject to the security interest and Lien herein granted as fully
and completely as though specifically described and set forth in Section 2.1
hereof.

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<PAGE>

                                   COVENANTS
                                   ---------

     (3.1) Liens. Obligors covenant that it shall not directly or indirectly
create, incur, assume, or suffer to exist any security interest or Lien
attributable to it against or with respect to the Aircraft, Airframe, any
Engine, or any Part or title thereto or any interest therein except (a) the
respective rights of the Obligors and Lead Secured Party as provided herein; (b)
the rights of others under agreements or arrangements to the extent expressly
permitted in Sections 3.2 and 3.3(g); (c) security interests or Liens for taxes
either not yet due or being contested in good faith by appropriate proceedings
so long as such proceedings do not involve any risk (other than a de minimis
risk) of the sale, forfeiture or loss of the Aircraft, Airframe or an Engine or
the interest of the Obligors therein or any risk of criminal liability or any
material risk of civil penalty against Secured Party; and (e) salvage and
similar rights of insurers under policies of insurance maintained with respect
to the Aircraft. Security interests or Liens described in clauses (a) through
(d) above are referred to herein as "Permitted Liens." The Obligors shall
promptly, at their own expense, take such action as may be necessary to duly
discharge (by bonding or otherwise) any such security interest or Lien other
than a Permitted Lien arising at any time.

     (3.2) Possession. The Obligors shall not lease, or otherwise in any manner
deliver, relinquish or transfer possession of the Airframe or any Engine to any
Person or install any Engine, or permit any Engine to be installed, on the
Airframe other than the Airframe, without the prior consent of the Lead Secured
Party, which consent may be withheld in its sole discretion, provided, however,
that so long as (A) no Event of Default shall have occurred and be continuing,
and (B) all approvals, consents or authorizations required from the Aeronautical
Authority in connection with any such lease or such delivery, transfer or
relinquishment of possession have been obtained and remain in full force and
effect, the Obligors may, without the prior consent of the Lead Secured Party:

          (i) enter into a charter or wet lease or other similar arrangement
under which the Obligors have operational control of the Airframe and any
Engines installed thereon in the course of the Obligors' business (which shall
not be considered a transfer of possession hereunder), provided that the
Obligors' obligations under this Aircraft Security Agreement shall continue in
full force and effect notwithstanding any such charter or wet lease or other
similar arrangement;

          (ii) deliver possession of the Airframe or any Engine or any Part to
the manufacturer thereof or to any FAA certified organization for testing,
service, repair, maintenance, overhaul work or other similar purposes or for
alterations or modifications or additions required or permitted by the terms of
this Aircraft Security Agreement;

          (iii) subject the Airframe and any Engines installed thereon to
interchange agreements (provided that (x) any such interchange agreement with
respect to the Airframe shall not result in the Obligors being out of possession
of the Airframe for a period of more than two (2) consecutive days at any one
time; (y) such interchange agreement is entered into with a Permitted Lessee;
and (z) the party to such interchange agreement is not then subject to a
proceeding or final order under applicable bankruptcy, insolvency or
reorganization laws on the date such interchange agreement is entered into) or
any Engine to interchange or pooling agreements or arrangements which are
applicable to other similar property owned by or leased to the Obligors and are

                                       11
<PAGE>

entered into by the Obligors in the course of its airline business with any air
carrier, provided that (A) no such agreement or arrangement shall under any
circumstances result in, contemplate or require the transfer of title to the
Aircraft, Airframe or any Engine or any effect upon the Lead Secured Party's
first priority Lien thereon and (B) if the Lien of this Aircraft Security
Agreement shall nevertheless be adversely affected under any such agreement or
arrangement, such circumstance shall be deemed to be an Event of Loss with
respect to such Engine and the Obligors shall comply with Section 3.4 hereof in
respect thereof;

          (iv) install an Engine on an airframe owned by the Obligors free and
clear of all Liens except (A) Permitted Liens, (B) those which apply only to the
engines (other than the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than Parts) installed on
such airframe, and (C) those created by the rights of other air carriers under
interchange or pooling agreements or other arrangements customary in the airline
industry which do not contemplate, permit or require the transfer of title to
such airframe or engines installed thereon;

          (v) install an Engine on an airframe, leased to the Obligors or
purchased by the Obligors subject to a conditional sale or other security
agreement, 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
Section 3.2(iv) and (B) Obligors 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 Aircraft Security Agreement;

          (vi) install an Engine on an airframe, owned by the Obligors, leased
by the Obligors or purchased by the Obligors subject to a conditional sale or
other security agreement under circumstances where neither clause (iv) nor
clause (v) above is applicable, provided that any such installation (so long as
the same shall be continuing) shall be deemed an Event of Loss with respect to
such Engine and the Obligors shall comply with Section 3.4(h) hereof;

          (vii) Reserved.

          (viii) transfer possession of the Airframe or any Engine to the United
States when required by Applicable Law (it being understood that nothing in this
clause (viii) shall relieve the Obligors from their obligations under Section
3.4(a) if such transfer becomes an Event of Loss), in which event Obligors shall
promptly notify Lead Secured Party in writing of any such transfer of
possession;

          (ix) subject to the provisions of this Section 3.2, enter into a lease
with respect to any Engine or the Airframe and Engines or engines then installed
on the Airframe with any Permitted Lessee, if (A) Obligors shall provide written
notice to Lead Secured Party at least 10 days prior to entering into any such
lease, (B) in any such case, the Permitted Lessee under such lease is not

                                       12
<PAGE>

subject to a proceeding or final order under applicable bankruptcy, insolvency
or reorganization laws on the date such lease is entered into, (C) in the event
that the Permitted Lessee under such lease is a foreign air carrier or Person
based in a country other than the United States, the United States maintains
normal diplomatic relations with the country in which such proposed Permitted
Lessee is principally based at the time such lease is entered into and (D) in
the event that the Permitted Lessee under such lease is a foreign air carrier or
Person based in a country other than the United States, prior to the
effectiveness of such lease Lead Secured Party shall have received an opinion
(in form and substance reasonably acceptable to Lead Secured Party) of counsel
to Obligors (reasonably acceptable to Lead Secured Party) in such jurisdiction
to the effect that (I) the terms of the proposed lease will be legal, valid,
binding and (subject to customary exceptions, including applicable bankruptcy,
reorganization, or similar laws affecting creditors' rights generally)
enforceable against the proposed Permitted Lessee in the country in which the
proposed Permitted Lessee is principally based, (II) there exist no possessory
rights in favor of the Permitted Lessee under such lease or other third party
(including any Government Entity) under the laws of such Permitted Lessee's
country of domicile that would, upon bankruptcy or insolvency of or other
default by the Obligors and assuming that at such time such Permitted Lessee is
not insolvent or bankrupt, prevent the repossession of the Aircraft in
accordance with and when permitted by the terms of Section 4.1 upon the exercise
by Lead Secured Party of its remedies under Section 4.1, (III) the laws of such
Permitted Lessee's country of domicile require fair compensation by the
government of such jurisdiction payable in currency freely convertible into
Dollars for the loss of use of or title to such Engine or the Airframe in the
event of the requisition by such government of such use or title (it being
understood that in the event such opinion cannot be given in a form reasonably
satisfactory to Lead Secured Party, such opinion will be waived if insurance
reasonably satisfactory to Lead Secured Party is provided to cover such
requisition), (IV) the laws of such Permitted Lessee's country of domicile would
give recognition to the Lien of this Aircraft Security Agreement upon such
Engine(s) or the Airframe, (V) all filings, if any, required to be made in such
jurisdiction in connection with the execution of such lease in order to protect
the interest of Lead Secured Party in such Engine(s) or the Airframe have been
made, (VI) it is not necessary for Lead Secured Party to register or qualify to
do business in such jurisdiction, if not already so registered or qualified, as
a result, in whole or in part, of the proposed lease, (VII) the agreement of
such Permitted Lessee that its rights under the lease are subject and
subordinate to all the terms of this Aircraft Security Agreement is enforceable
against such Permitted Lessee under Applicable Law of such country, and (VIII)
there is no tort liability against a secured lender or agent thereof not in
possession or operational control of aircraft in such country more onerous than
under the laws of the United States or any state thereof (it being agreed that
in the event such opinion cannot be given in a form reasonably satisfactory to
Lead Secured Party, such opinion will be waived if insurance reasonably
satisfactory to Lead Secured Party is provided to cover the risk of such tort
liability); (IX) that all necessary governmental approvals required for such
Engine(s) or Airframe to be imported and, to the extent reasonably obtainable,
exported from the applicable country of domicile upon repossession of such
leased Engine(s) or Airframe by the Lead Secured Party (and the Obligors as
lessors) have been obtained and any exchange permits necessary to allow all
payments of rent and other payments under any lease assigned to the Lead Secured
Party hereunder are in full force and effect, and (X) to such further effect
with respect to all matters reasonably requested by Lead Secured Party; provided
that (1) the rights of any transferee who receives possession by reason of a
transfer permitted by this Section 3.2 (other than by a transfer of an Engine
which is deemed an Event of Loss) shall be subject and subordinate to all the
terms of this Aircraft Security Agreement; (2) the Obligors shall remain
primarily liable hereunder for the performance of all the terms and conditions
of this Aircraft Security Agreement and all of the terms and conditions of this

                                       13
<PAGE>

Aircraft Security Agreement and the other applicable Transaction Documents shall
remain in effect; (3) no lease or transfer of possession otherwise in compliance
with this Section 3.2 shall (A) result in any registration or re-registration of
the Aircraft or the maintenance, operation or use thereof except in compliance
with Sections 3.3(c), (d) and (f), or (B) permit any action not permitted to the
Obligors hereunder; (4) if any such lease or transfer of possession shall, in
the reasonable opinion of any Secured Party, result in any risk of adverse tax
consequences to such Secured Party, the Obligors shall, prior to entering into
the same, provide an indemnity satisfactory in form and substance to such
Secured Party against any such adverse tax consequences; (5) the Obligors shall
provide evidence reasonably satisfactory to Lead Secured Party and each Secured
Party that the insurance required by Section 3.3(k) remains in effect and for
the purpose of the Lead Secured Party's and the Lead Secured Party's review of
such insurance requirements, the Obligors shall, at least five (5) days prior to
the date of any lease permitted under this Section 3.2, provide to Lead Secured
Party and each Secured Party, forms of the broker's report and insurance
certificates required by Section 3.3(k)(vi); (6) all necessary documents shall
have been duly filed or recorded in applicable public offices as may be required
to preserve the Lien of this Aircraft Security Agreement upon the Airframe and
Engines; and (7) Obligors shall reimburse Lead Secured Party and each Secured
Party for all of its reasonable out-of-pocket expenses (including fees and
disbursements of counsel) in connection with any such lease or transfer.

     In the case of any lease permitted under this Section 3.2, the Obligors
will include in such lease appropriate provisions which (a) make such lease
expressly subject and subordinate to all of the terms of this Aircraft Security
Agreement, including the rights of the Lead Secured Party to avoid such lease in
the exercise of its rights to repossession of the Airframe and Engines hereunder
and thereunder; (b) expressly prohibit any subleasing of the Airframe and
Engines; (c) require that the Airframe and Engines be maintained in accordance
with a Maintenance Program; (d) require the Permitted Lessee to comply with the
terms of Section 3.3(k) hereof; (e) require that the Airframe and Engines be
used in accordance with the limitations applicable to the Obligors' possession
and use provided in this Aircraft Security Agreement and (f), as to the
maintenance, operation, possession and inspection of the Aircraft, are the same
in all material respects as the applicable provisions of this Aircraft Security
Agreement.

     Obligors agree to assign, as collateral security for the Obligations, each
such lease to the Lead Secured Party, which collateral assignment shall be
effected pursuant to the filing of a financing statement against Obligors and
such filings with the FAA and the International Registry as the Lead Secured
Party may request. With respect to each lease which has a term (including
possible renewal and extension periods) of more than one year, (i) such
collateral assignment shall be effected pursuant to an agreement (including a
consent from the lessee to such assignment) in form and substance reasonably
satisfactory to the Lead Secured Party and which agreement shall be accompanied
by such legal opinions, certificates and financing statements relating to the
perfection of such collateral assignment as may be reasonably requested by the
Lead Secured Party; and (ii) such lease shall provide that all payments due
thereunder shall be paid to Obligors unless and until notice has been provided
by the Lead Secured Party to the lessee of such lease of the occurrence of an
Event of Default, at which time all rental payments shall be made by lessee to
Lead Secured Party.

                                       14
<PAGE>

     With respect to any lease to which the Cape Town Treaty is applicable as
provided in Article 3 of the Cape Town Treaty (whether in respect of both the
Airframe and an Engine or only the Airframe), (A) Obligors agree to have
registered with the International Registry (i) first, the International Interest
vested in Obligors as lessors under the lease, and (ii) second, a collateral
assignment by Obligors of such International Interest attributable to such lease
and (B) Obligors shall have received a favorable opinion of counsel (which
counsel and opinion are reasonably satisfactory to the Lead Secured Party), and
a supporting priority search certificate issued by the International Registry,
regarding such registrations. The Lead Secured Party agrees that with respect to
any lease collaterally assigned to the Lead Secured Party as provided herein,
upon termination of such lease, the Lead Secured Party shall assign or consent
to the assignment of the International Interest, if any, attributable to such
lease to Obligors.

     (3.3) Registration and Operation.

          (a) Registration and Recordation. The Aircraft shall be duly
registered in the name of the applicable Obligors with the Aeronautical
Authority and this Aircraft Security Agreement shall be recorded with the
Aeronautical Authority and on the International Registry in accordance with the
Cape Town Treaty at all times that any of the Secured Obligations remain
outstanding; provided that Lead Secured Party shall execute and deliver all such
documents as Obligors, to the extent deemed advisable or necessary in the
opinion of the Lead Secured Party, may reasonably request for the purpose of
effecting, continuing, or (as provided in this Section 3.3(a)) changing such
registration. Unless the security interest or Lien of this Aircraft Security
Agreement has been discharged, at all times Obligors shall cause the Aircraft
Security Agreement to be maintained of record at the International Registry, as
a first-priority perfected mortgage on the Aircraft, the Airframe, and each of
the Engines. Obligors shall not register or record any other interest against
the Aircraft, the Airframe, and each of the Engines (or any amendment,
modification, supplement, subordination, of subrogation thereof). Obligors shall
not register or record any other interest against the Aircraft, the Airframe,
and each of the Engines (or any amendment, modification, supplement,
subordination, of subrogation thereof), including any filing of any Form
8050-135, with the FAA without the prior written consent of Lead Secured Party
which may be withheld in its sole discretion at all times that any of the
Secured Obligations remain outstanding.

          (b) Compliance With Laws. The Obligors shall not permit the Airframe
or any Engine to be used or operated while any of the Secured Obligations remain
outstanding in violation of any Applicable Law, this Aircraft Security Agreement
or in violation of any airworthiness certificate, license or registration
relating to the Aircraft or such Engines issued by any competent Government
Entity, unless (i) the validity thereof is being contested in good faith and by
appropriate proceedings which do not involve a danger (other than a de minimis
danger) of the sale, forfeiture or loss of the Airframe or such Engine or the
security interest or Lien of this Aircraft Security Agreement thereupon, or (ii)
it is not possible for the Obligors to comply with the Laws of a jurisdiction
other than the United States (or other than any jurisdiction in which the
Aircraft is then registered) because of a conflict with the Applicable Laws of
the United States (or such jurisdiction in which the Aircraft is then
registered).

                                       15
<PAGE>

          (c) Operation. The Obligors shall not operate, use or locate the
Airframe or any Engine, or suffer such Airframe or any Engine to be operated,
used or located (i) in any area excluded from coverage by any insurance required
by the terms of Section 3.3(i) hereof, except in the case of a requisition by
the United States where the Obligors obtain (and provides evidence of) indemnity
from the Government for the benefit of the Additional Insured against
substantially the same risks and for at least the amounts of the insurance
required by Section 3.3(i) hereof covering such area, or (ii) outside the United
States or Canada in any recognized or, in the Obligors' reasonable judgment,
threatened area of hostilities unless covered by war risk insurance, or in
either case unless the Airframe or such Engine is operated or used under
contract with the Government under which contract the Government assumes
liability for substantially the same risks in at least the same amounts as would
be covered by such insurance.

          (d) Information for Filings. Obligors shall promptly furnish to Lead
Secured Party such information as may be required to enable Lead Secured Party
or such Secured Party timely to file any reports required to be filed by it with
any Government Entity because of, or in connection with, the interest of Lead
Secured Party and Secured Parties in the Aircraft, Airframe, or Engine or any
other part of the Collateral.

          (e) Maintenance. The Obligors, at their own cost and expense, shall
service, repair, maintain, overhaul and test the Aircraft, the Airframe and each
Engine or cause the same to be done in accordance with (i) a Maintenance Program
and (ii) maintenance standards required by, or substantially equivalent to those
required by, the FAA, and shall keep or cause to be kept the Aircraft, the
Airframe and each Engine in as good operating condition as of the date hereof,
ordinary wear and tear excepted, and shall keep or cause to be kept the
Aircraft, the Airframe and each Engine in such operating condition as may be
necessary to enable the airworthiness certification of the Aircraft to be
maintained in good standing at all times under the applicable rules and
regulations of the Aeronautical Authority, except when aircraft of the same
type, model or series as the Airframe (powered by engines of the same type as
those with which the Airframe shall be equipped at the time of grounding)
registered in the same country have been grounded by the Aeronautical Authority.
Nothing herein shall be deemed to prevent the Obligors from taking the Aircraft
out of service for maintenance or modifications permitted hereunder or storage
in accordance with applicable Aeronautical Authority requirements and sound
practice for such storage. The Obligors shall maintain or cause to be maintained
all records, logs and other documents required by the Aeronautical Authority to
be maintained in respect of the Aircraft in English. Obligors further agree that
the Aircraft, Airframe and Engines will be maintained, used, serviced, repaired,
overhauled or inspected in compliance with Applicable Law with respect to the
maintenance of the Aircraft and compliance with each applicable airworthiness
certificate, license and registration relating to the Aircraft, Airframe or any
Engine issued by the Aeronautical Authority.

          (f) Replacement of Parts. Except as otherwise provided in the proviso
to the third sentence of Section 3.3(h) or if the Airframe or an Engine to which
a Part relates has suffered an Event of Loss, the Obligors, at their own cost
and expense, will, so long as any of the Secured Obligations remain outstanding,
promptly replace all Parts that may from time to time become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever. In addition, in the ordinary
course of maintenance, service, repair, overhaul or testing, the Obligors, at
their own cost and expense, may remove any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that the Obligors, at their own cost and
expense, shall, except as otherwise provided in the proviso to the third
sentence of Section 3.3(h), replace such Parts as promptly as practicable with
replacement Parts or temporary replacement parts as provided in Section 3.3(g)
hereof. All replacement Parts shall be free and clear of all security interests
or Liens except for pooling arrangements to the extent permitted by Section
3.3(g) and Permitted Liens and shall be in as good operating condition as, and
shall have a value and utility at least equal to, the Parts replaced assuming
such replaced Parts were in the condition and repair required to be maintained
by the terms hereof.

                                       16
<PAGE>

     Except in respect of any Part that the Obligors may remove from the
Airframe or an Engine as provided in the proviso to the third sentence of
Section 3.3(h) and the fourth sentence of Section 3.3(h), all Parts at any time
removed from the Airframe or any Engine shall remain the property of the
Obligors and subject to this Aircraft Security Agreement, no matter where
located, until such time as such Parts shall be replaced by Parts that have been
incorporated or installed in or attached to such Airframe or Engine and that
meet the requirements for replacement Parts specified in the first paragraph of
this Section 3.3(f). Immediately upon any replacement Part becoming incorporated
or installed in or attached to an Airframe or Engine as provided in this Section
3.3(f), without further act, (i) title to the replaced Part shall remain in the
Obligors and such Part shall no longer be deemed a Part hereunder; (ii) title to
such replacement Part shall thereupon vest in the Obligors; and (iii) such
replacement Part shall become subject to the security interest and Lien of this
Aircraft Security Agreement and be deemed part of such Airframe or Engine, as
the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to such Airframe or Engine.

          (g) Pooling of Parts. Any Part removed from the Airframe or from any
Engine as provided in the first paragraph of Section 3.3(f) may be subjected by
the Obligors to a pooling or parts leasing agreement or arrangement of a type
customary in the airline industry entered into in the ordinary course of the
Obligors' business, provided the part replacing such removed Part shall be
incorporated or installed in or attached to such Airframe or Engine in
accordance with Section 3.3(f) as promptly as practicable after the removal of
such removed Part. In addition, any replacement part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with
Section 3.3(f) may be owned by another aircraft owner or operator or vendor as
customary in the airline industry, subject to a pooling or parts leasing
arrangement, provided that the Obligors, at its expense as promptly thereafter
as reasonably practicable, either (i) causes title to such temporary replacement
part to vest in the Obligors, subject to the security interest or Lien of this
Aircraft Security Agreement in accordance with Section 3.3(f) and free and clear
of all other security interests and Liens except Permitted Liens, at which time
such temporary replacement part shall become a Part and become subject to this
Aircraft Security Agreement or (ii) replaces such temporary replacement part by
incorporating or installing in or attaching to such Airframe or Engine a further
replacement Part owned by the Obligors free and clear of all security interests
and Liens except Permitted Liens and by causing such further replacement Part to
become subject to the security interest and Lien of this Aircraft Security
Agreement in accordance with Section 3.3(f).

          (h) Alterations, Modifications and Additions. The Obligors, at their
own expense, shall make (or cause to be made) alterations and modifications in
and additions to the Airframe and any Engine as may be required to be made from

                                       17
<PAGE>

time to time by Applicable Law and to meet applicable standards of any
airworthiness directives, or any other standards of the Aviation Authority and
any mandatory service bulletins of the Manufacturer, issues and Incurred after
January 1, 2008, or in order to maintain the insurance required under Section
3.3(i) regardless of upon whom such requirements are, by their terms, nominally
imposed; provided that the Obligors may, in good faith and by appropriate
procedure, contest (or cause to be contested) the validity or application of any
such standard in any reasonable manner which does not materially adversely
affect the interests of the Secured Party and does not involve any risk (other
than a de minimis risk) of sale, forfeiture or loss of the Aircraft or the
security interest and Lien of this Aircraft Security Agreement thereupon. In
addition, the Obligors, at their own expense, may from time to time make or
cause to be made such alterations and modifications in and additions to the
Airframe and any Engine as the Obligors may deem desirable in the proper conduct
of its business including, without limitation, removal of Parts which Obligors
deem are obsolete or no longer suitable or appropriate for use in the Aircraft,
Airframe or such Engine so long as the aggregate value of such removed Parts
(based on their value as of the Effective Date) does not exceed $50,000,
provided further that no such alteration, modification or addition (i)
diminishes the value, utility, estimated residual value (with respect to the
Airframe only), condition, remaining useful life or airworthiness of such
Airframe or Engine below the value, utility, estimated residual value,
condition, remaining useful life or airworthiness thereof immediately prior to
such alteration, modification or addition, assuming such Airframe or Engine was
then in the condition required to be maintained by the terms of this Aircraft
Security Agreement, or (ii) causes the Aircraft to be limited use property,
except that the value (but not the utility, estimated residual value, condition,
remaining useful life or airworthiness) of the Aircraft may be reduced by the
value of Parts which the Obligors have removed as permitted above. All Parts
incorporated or installed in or attached or added to the Airframe or any Engine
as the result of any alteration, modification or addition effected by the
Obligors shall become the property of the Obligors and, without further act,
subject to the security interest and Lien of this Aircraft Security Agreement
and shall be free and clear of any other security interests or Liens except
Permitted Liens, provided that the Obligors may, at any time while any of the
Secured Obligations remains outstanding, remove any such Part from the Airframe
or an Engine if (i) such Part is in addition to, and not in replacement of or in
substitution for, any Part originally incorporated or installed in or attached
to such Airframe or Engine at the time of delivery thereof hereunder or any Part
in replacement of, or in substitution for, any such original Part, (ii) such
Part is not required to be incorporated or installed in or attached or added to
such Airframe or Engine pursuant to the terms of Section 3.3(e) or the first
sentence of this Section 3.3(h) or pursuant to the terms of any insurance
policies required to be carried hereunder or under any Applicable Law, and (iii)
such Part can be removed from such Airframe or Engine without diminishing or
impairing the value, condition, utility, estimated residual value, remaining
useful life or airworthiness which such Airframe or Engine would have had at the
time of removal had such alteration, modification or addition not been effected
by the Obligors assuming the Aircraft was otherwise maintained in the condition
required by this Aircraft Security Agreement. Upon the removal by the Obligors
of any such Part as above provided, title thereto shall, without further act,
remain in the Obligors, free and clear of all rights of the Secured Party and
such Part shall no longer be deemed a Part hereunder.

          (i) Insurance.

                                       18
<PAGE>

               (i) (A) Public Liability and Property Damage Insurance.

     To the extent the Obligors operate and do not "just store" the Aircraft the
Obligors shall, without expense to the Lead Secured Party or any Secured Party,
maintain or cause to be maintained in effect at all times with independent
insurers of internationally recognized reputation and responsibility, and
reasonably acceptable to the Lead Secured Party and the Secured Parties, public
liability insurance (including, without limitation, aircraft third party,
passenger legal liability, property damage, general third party legal liability
and product liability coverage but excluding manufacturer's product liability
coverage) with respect to the Aircraft in an amount equal to the Minimum
Liability Amount. To the extent the Obligors operate and do not "just store" the
Aircraft the Obligors shall in all events maintain in effect, at all times war
risk and allied perils liability insurance in accordance with the London form
AVN52C (as in effect on September 1, 2001) or its equivalent form reasonably
acceptable to Lead Secured Party (or an agreement of the Government to insure
against or indemnify for substantially the same risks), from time to time, with
respect to the Aircraft , (I) in an amount not less than $300,000 per
occurrence, and (II) maintained with independent insurers of internationally
recognized reputation and responsibility reasonably acceptable to the Lead
Secured Party and the Secured Parties.

     During any period that the Aircraft is grounded and not in operation, the
Obligors may, so long as the Obligors take reasonable measures to protect the
Aircraft, modify the insurance required by this Section 3.3(i)(i) to modify the
amounts of public liability and property damage insurance, the scope of the
risks covered and the type of insurance, in all circumstances to conform to such
insurance as is customary in the United States in respect of similar aircraft
which are grounded, not in operation, and stored or hangared, provided that in
all instances, the amounts of coverage and scope of risk covered and the type of
insurance shall be at a minimum no less favorable than the insurance as from
time to time applicable to aircraft owned or leased by Obligors on the ground,
not in operation, and stored or hangared.

               (B) Insurance Against Loss or Damage to the Aircraft and Engines.

     The Obligors shall, without expense to the Lead Secured Party or any
Secured Party, maintain or cause to be maintained in effect at all times with
insurers of internationally recognized reputation and responsibility, and
reasonably acceptable to the Lead Secured Party and the Secured Parties all
risk, agreed value, ground and to the extent the Obligors operate and do not
"just store" the Aircraft flight hull insurance covering the Aircraft for an
amount at all times (even when the Aircraft is grounded or in storage) not less
than $2,000,000 (the "Stipulated Loss Value"), provided that, the Obligors shall
not be required to maintain all-risk flight aircraft hull insurance with respect
to any period in which the Aircraft is grounded and properly stored or hangared
(but each such Person shall be required to maintain agreed value all-risk ground
hull insurance in an amount not less than the Stipulated Loss Value and on the
other terms required hereby). Such insurance shall not provide insurers with a
right to replace the Airframe or any Engine with another airframe or Engine.
Such hull insurance or other personal property insurance of the Obligors shall
cover Engines or engines and Parts while not installed on the Airframe. Such
insurance shall be of the type usually carried by the Obligors with respect to
similar aircraft and engines, and covering risks of the kind customarily insured
against by the Obligors. An agreement by the Government, in a form and substance

                                       19
<PAGE>

reasonably acceptable to the Lead Secured Party, for the benefit of the
Additional Insureds to insure against or indemnify for substantially the same
risks to at least the same amount will satisfy any of the requirements of this
Section 3.3(i)(ii), provided that on or prior to the date of such agreement, the
Obligors shall provide an Officer's Certificate of the Obligors certifying that
any such insurance or indemnity provides protection no less favorable than
insurance coverage that would comply with this Section 3.3(i)(ii). To the extent
the Obligors operate and do not "just store" the Aircraft Obligors shall in any
event maintain at all times, with independent insurers of internationally
recognized reputation and responsibility hull war risks and allied perils
insurance in accordance with the London form LSW555B or its equivalent form
reasonably acceptable to the Lead Secured Party (or an agreement of the
Government to insure against or indemnify for substantially the same risks) from
time to time covering the Aircraft in an amount not less than the Stipulated
Loss Value.

               (ii) Additional Insureds; Loss Payment. Obligors shall cause all
policies of insurance carried in accordance with this Section 3.3(i) to name the
Additional Insureds as their respective interests may appear as Additional
Insureds. Such policies shall provide with respect to such Additional Insureds
that (i) none of their respective interests in such policies shall be
invalidated by any act or omission or breach of warranty or condition contained
in such policies by Obligors or, in the case of any particular Additional
Insured, any other Additional Insured; (ii) no cancellation or lapse of coverage
for nonpayment of premium or otherwise, and no substantial change of coverage
which adversely affects the interests of any such Additional Insured, shall be
effective as to such Additional Insured until 30 days (or such lesser period as
may be applicable in the case of any war risk coverage) after receipt by such
Additional Insured of written notice from the insurers of such cancellation,
lapse, or change; (iii) they shall have no liability for premiums, commissions,
calls, assessments, or advances with respect to such policies; (iv) such
policies will be primary without any right of contribution from any other
insurance carried by such Additional Insureds; (v) the insurers waive any rights
of set-off, counterclaim, deduction, or subrogation against such Additional
Insureds and (vi) shall apply world wide and have only such territorial
restrictions or limitations as may be reasonably acceptable to Lead Secured
Party. Each liability policy shall provide that all the provisions thereof,
except the limits of liability, shall operate in the same manner as if there
were a separate policy covering each insured and provide that the exercise by
the insurer of rights of subrogation derived from rights retained by Obligors
will not delay payment of any claim that would otherwise be payable but for such
rights of subrogation. Each hull policy shall provide that for losses in respect
of the Aircraft, Airframe or any Engine, payment in connection with claims for
such losses shall be paid directly to the Lead Secured Party.

               (iii) Application of Hull Insurance Proceeds. Subject to Section
3.4(e), as between Lead Secured Party and Obligors, any payments received under
policies of hull or other property insurance required to be maintained by
Obligors pursuant to Section 3.3(i)(i), shall be applied to the repayment of the
Debentures.

               (iv) Reports. Obligors will furnish to Lead Secured Party on or
prior to the Effective Date, and when received thereafter, all reports, provided
that all information contained in such report shall be held confidential by Lead
Secured Party, and shall not be furnished or disclosed by them to anyone except
their legal counsel, insurance brokers or advisors, Secured Parties, bona fide
prospective transferees and their respective agents (provided that they shall

                                       20
<PAGE>

agree for the benefit of Obligors to hold all such information similarly
confidential) or as may be required by Applicable Law. Obligors will instruct
(or cause to be instructed) the firm of aircraft insurance brokers covering the
Aircraft to give prompt written notice to Lead Secured Party (X) if such firm
ceases to be the insurance broker to Obligors, (Y) of any default in the payment
of any premium, and (Z) of any other act or omission on the part of Obligors of
which it has knowledge and which would in such firm's opinion invalidate or
render unenforceable, in whole or in any material part, any insurance on the
Aircraft. Obligors will also instruct such firm to advise Lead Secured Party in
writing at least 30 days prior to the termination or cancellation of, or
material adverse change in, such insurance carried and maintained on the
Aircraft pursuant to this Section 3.3(i) (or such lesser period as may be
applicable in the case of war risk coverage).

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

          (j) Markings. If permitted by Applicable Law, Obligors will cause to
be affixed to, and maintained in, the cockpit of such Airframe, in a clearly
visible location, and in a visible location on each Engine, a placard of a
reasonable size and shape bearing the legend, in English, set forth below:

                                  Mortgaged to
                         Victory Park Master Fund, Ltd.
                              As Lead Secured Party

     Such placard may be removed temporarily, if necessary, in the course of
maintenance of the Airframe or Engine, as the case may be. If such placard is
damaged or becomes illegible, Obligors shall promptly replace it with a placard
complying with the requirements of this Section 3.3(j).

     (3.4) Loss, Destruction, Requisition, Etc.

          (a) Event of Loss with Respect to the Airframe. Upon the occurrence of
an Event of Loss with respect to the Airframe, the Obligors shall forthwith (and
in any event within 5 Business Days after such occurrence) give the Lead Secured
Party notice of such Event of Loss. The Obligors shall, within thirty (30) days
after such occurrence, give the Lead Secured Party written notice of its
election to perform one of the following options (it being agreed that if the
Obligors shall not have given the Lead Secured Party such notice of such
election, the Obligors shall be deemed to have elected to perform the option
identified in the following clause (ii)):

                                       21
<PAGE>

               (i) subject to the satisfaction of the conditions contained in
Section 3.4(d), on a date not more than ninety (90) days after the occurrence of
the Event of Loss (or, if earlier, the Maturity Date), cause to be subjected to
the Lien of this Aircraft Security Agreement a Replacement Airframe (together
with the same number of Replacement Engines as the number of Engines, if any,
which were subject to such Event of Loss), such Replacement Airframe and
Replacement Engines to be free and clear of all Liens except Permitted Liens and
to have a remaining useful life, estimated residual value, value and utility at
least equal to the Airframe and Engines, if any, so replaced (assuming such
Airframe and Engines were in the condition and repair required by the terms
hereof) and to be an airframe that is the same model and same or later vintage
as the Airframe to be replaced thereby, or an improved model; provided that, if
the Obligors shall not perform its obligation to effect such replacement under
this clause (i) during the 90-day period of time provided herein (or, if
earlier, the Maturity Date), it shall give the Lead Secured Party and the
Secured Parties notice to such effect upon or before the expiration of such
period of time and shall promptly pay on the thirtieth (30th) day after the date
of such notice to the Lead Secured Party (or, if earlier, the Maturity Date), in
immediately available funds, the amount specified in clause (ii) below; or

               (ii) pay or cause to be paid to the Lead Secured Party, in
immediately available funds, on a date specified at least 30 days in advance by
the Obligors not later than the earlier to occur of ninety (90) days after the
occurrence of the Event of Loss or 3 days following receipt of insurance
proceeds in respect of such Event of Loss, an amount equal to the Stipulated
Loss Value if the Aircraft (i.e., the Airframe and either or both Engines) or
the Airframe is subject to such Event of Loss.

Anything in this Section 3.4(a) to the contrary notwithstanding, any payments
received under any insurance policies shall, within 3 days of receipt thereof,
be applied in accordance with Section 3.3(i)(iii).

          (b) Effect of Replacement. Should the Obligors have (i) provided a
Replacement Airframe (together with the same number of Replacement Engines as
the number of Engines, if any, which were subject to the Event of Loss) as
provided for in Section 3.4(a)(i), (A) this Aircraft Security Agreement shall
continue with respect to such Replacement Airframe (together with the same such
Replacement Engines and any remaining Engines not subject to such Event of Loss)
as though no Event of Loss had occurred; (B) the Lead Secured Party shall, at
the expense of Obligors, release from the Lien of this Aircraft Security
Agreement the replaced Airframe and the replaced Engine or Engines, if any,
installed on the Airframe upon the occurrence of the Event of Loss and subject
thereto by executing and delivering to the Obligors such documents and
instruments as the Obligors may reasonably request to evidence such release (and
Lead Secured Party shall discharge or consent to the discharge of the
registration of the International Interest in such replaced Airframe and
replaced Engine or replaced Engines vested in Lead Secured Party pursuant to
this Aircraft Security Agreement; and further, if any lease of such replaced
Aircraft has been assigned to Lead Secured Party as provided herein, Lead
Secured Party shall (unless such lease is applicable to the replacement
Aircraft) assign or consent to the assignment of the International Interest, if

                                       22
<PAGE>

any, attributable to such lease to the Obligors); and (C) the Obligors shall be
entitled to receive all insurance proceeds and proceeds from any award in
respect of condemnation, confiscation, seizure or requisition, including any
investment interest thereon, to the extent not previously applied to the
purchase price of the replacement Aircraft as provided in Sections 3.3(i)(iv)(C)
and 3.4(e)(i), and (ii) paid the Stipulated Loss Value as provided for in
Section 3.4(a)(ii), the Lead Secured Party shall, at the expense of Obligors,
release from the Lien of this Aircraft Security Agreement the Airframe and any
Engine that Obligors sell to a third party (including any transfer of such
Airframe and any such Engines to insurers in consideration of such insurers'
payment of all or a portion of the Stipulated Loss Value under policies of hull
or other property insurance required to be maintained by the Obligors pursuant
to Section 3.3(i)(i)(B)) and that is installed on the Airframe upon the
occurrence of the Event of Loss and subject thereto by executing and delivering
to the Obligors such documents and instruments as the Obligors may reasonably
request to evidence such release (and Lead Secured Party shall discharge or
consent to the discharge of the registration of the International Interest in
such Airframe and Engine or Engines vested in Lead Secured Party pursuant to
this Aircraft Security Agreement; and further, if any lease of such Airframe and
any such Engines has been assigned to Lead Secured Party as provided herein,
Lead Secured Party shall assign or consent to the assignment of the
International Interest, if any, attributable to such lease to such third party).

          (c) Effect of Payment. In the event of the payment in full of all
obligations of the Obligors, (i) this Aircraft Security Agreement and the
obligations of the Obligors hereunder shall terminate, (ii) any remaining
insurance proceeds, including any investment interest thereon, shall be promptly
paid over to the Obligors; and (iii) the Lead Secured Party, at the expense of
Obligors, shall release from the Lien of this Aircraft Security Agreement the
Airframe and the Engine or Engines, if any, installed on the Airframe upon the
occurrence of the Event of Loss by executing and delivering to the Obligors such
releases and other documents and instruments as the Obligors may reasonably
request to evidence such release (and Lead Secured Party shall discharge or
consent to the discharge of the registration of the International Interest in
such Airframe and Engine or Engines vested in Lead Secured Party pursuant to
this Aircraft Security Agreement; and further, if any lease of such Aircraft has
been assigned to Lead Secured Party as provided herein, Lead Secured Party shall
assign or consent to the assignment of the International Interest, if any,
attributable to such lease to the Obligors).

          (d) Conditions to Airframe Replacement. The Obligors' right to
substitute a Replacement Airframe (and Replacement Engines, if applicable) as
provided in Section 3.4(a)(i) shall be subject to the fulfillment, at the
Obligors' sole cost and expense, in addition to the conditions contained in such
Section 3.4(a)(i), of the following conditions precedent:

               (i) On the date when the Replacement Airframe (and Replacement
Engines, if applicable) are subjected to the Lien of this Aircraft Security
Agreement (such date being referred to in this Section 3.4(d) as the
"Replacement Closing Date"), no Event of Default shall have occurred and be
continuing and the Lead Secured Party and the Obligors shall have received an
Officer's Certificate so certifying;

               (ii) On the Replacement Closing Date the following documents
shall have been duly authorized, executed and delivered by the respective party
or parties thereto and shall be in full force and effect, and an executed
counterpart of each thereof shall have been delivered to the Lead Secured Party
and the Secured Parties:

                                       23
<PAGE>

                    (A) such "precautionary" Uniform Commercial Code financing
statements as are deemed necessary or desirable by counsel for the Obligors to
perfect the Lead Secured Party's interests in the Replacement Airframe (and
Replacement Engines, if applicable); and

                    (B) an Officer's Certificate of the Obligors certifying that
(i) the Replacement Airframe (and Replacement Engines, if applicable) is a
Boeing 737 200 aircraft of the same or a more advanced model, is in as good
operating condition as, and has a value, remaining useful life, estimated
residual value and utility at least equal to, the Airframe (and Replacement
Engines, if applicable) it replaces, assuming such Airframe (and Replacement
Engines, if applicable) had been maintained in the condition required hereunder
and (ii) in the event the Event of Loss occurs after the fifth anniversary of
the delivery of this Aircraft Security Agreement for the relevant Airframe, the
Replacement Airframe shall have no more than 50% of the total hours of
operation, as compared to the Airframe it replaces;

               (iii) On or before the Replacement Closing Date, the Lead Secured
Party and the Secured Parties (acting directly or by authorization to their
respective special counsel) shall have received such documents and evidence with
respect to the Obligors, the Lead Secured Party or the Secured Parties, as the
Lead Secured Party or its special counsel may reasonably request in order to
establish the consummation of the transactions contemplated by Section 3.4(a)(i)
and this Section 3.4(d), the taking of all necessary corporate action in
connection therewith and compliance with the conditions set forth in this
Section 3.4(d), in each case in form and substance reasonably satisfactory to
the Lead Secured Party and the Secured Parties;

               (iv) The Lead Secured Party and the Secured Parties (acting
directly or by authorization to their respective special counsel) shall each
have received satisfactory evidence as to the compliance with Section 3.3(i)
hereof with respect to the Replacement Aircraft;

               (v) On the Replacement Closing Date, (A) the Replacement Airframe
(and Replacement Engines, if applicable) shall be duly subjected to the Lien of
this Aircraft Security Agreement free and clear of Liens (other than Permitted
Liens) and there shall have been registered with the International Registry a
sale to the Obligors of such Replacement Airframe (and Replacement Engines, if
applicable) and the International Interest for the benefit of the Lead Secured
Party under this Aircraft Security Agreement and (B) the Replacement Airframe
(and Replacement Engines, if applicable) shall have been duly certified by the
FAA as to type and airworthiness in accordance with the terms of this Aircraft
Security Agreement, and (C) application for registration of the Replacement
Airframe in accordance with Section 3.3(a) shall have been duly made with the
FAA;

               (vi) The Secured Parties shall have received an appraisal
reasonably satisfactory to it with respect to the Replacement Airframe (and
Replacement Engines, if applicable);

                                       24
<PAGE>

               (vii) The Lead Secured Party and the Secured Parties shall have
received (acting directly or by authorization to its special counsel) (A) an
opinion, satisfactory in form and substance to the Lead Secured Party and the
Secured Parties, of counsel to the Obligors to the effect that (x) the Aircraft
Security Agreement constitutes an effective instrument for the subjection of the
Replacement Airframe and Replacement Engines, if any, to the Lien of this
Aircraft Security Agreement, (y) all documents executed and delivered by the
Obligors pursuant to this Section 3.4(d) have been duly authorized, executed and
delivered by the Obligors and constitute legal, valid and binding obligations
of, and are enforceable against, the Obligors in accordance with their
respective terms, and (z) the Lead Secured Party is entitled to the benefits of
Section 1110 with respect to such Replacement Aircraft to the same extent as
with respect to the replaced Aircraft immediately preceding such replacement;
and (B) an opinion of qualified FAA counsel, with a supporting priority search
certificate, as to the registration with the International Registry referred to
above and all other documents or instruments with the FAA, the International
Registry, or such other agency or registrar, the recordation of which is
necessary to perfect and protect the rights of the Lead Secured Party in the
Replacement Aircraft, or, in the case of counsel in another jurisdiction, the
taking of all action necessary in such jurisdiction for such purposes;

               (viii) the Lead Secured Party shall be entitled to the benefits
of Section 1110 with respect to such Replacement Aircraft to the same extent as
with respect to the replaced Aircraft immediately preceding such replacement;
and

               (ix) Obligors shall reimburse the Lead Secured Party and the
Secured Parties for all reasonable out-of-pocket costs (including reasonable
attorneys' fees) incurred by them in connection with any substitution of a
Replacement Aircraft pursuant to this Section 3.4

          (e) Non-Insurance Payments Received on Account of an Event of Loss. As
between the Lead Secured Party and the Obligors, any payments on account of an
Event of Loss (other than insurance proceeds, condemnation awards, or other
payments the application of which is provided for in this Section 3.4, or
elsewhere in this Aircraft Security Agreement, as the case may be, or payments
in respect of damage to the business or property of the Obligors) with respect
to the Aircraft, an Engine or any Part received at any time by the Lead Secured
Party or by the Obligors from any governmental authority or other Person will be
applied as follows:

               (i) in respect of any property damage or loss constituting an
Event of Loss, for which Obligors do not elect, pursuant to Section 3.4(a)(i),
to provide a Replacement Airframe (together with the same number of Replacement
Engines as the number of Engines, if any, which were subject to such Event of
Loss), such payments shall be paid over to the Lead Secured Party, and applied
by the Lead Secured Party to the obligations as set forth in the Securities
Purchase Agreement and the Debenture; and

               (ii) in respect of any property damage or loss constituting an
Event of Loss, for which Obligors do elect, pursuant to Section 3.4(a)(i), to
provide a Replacement Airframe (together with the same number of Replacement
Engines as the number of Engines, if any, which were subject to such Event of
Loss), such payments shall be paid over to and held in the Controlled Account
(as defined in the Security Agreement), and shall, subject to the conditions set
forth in the Debentures, be applied to pay (or to reimburse Obligors) for such
Replacement Airframe and Replacement Engines, and any remaining amounts shall be
applied in accordance with the priority of payments set forth in the Debentures.

                                       25
<PAGE>

          (f) Requisition for Use. In the event of a requisition for use by any
government of the Airframe and the Engines, if any, or engines installed on the
Airframe, the Obligors shall promptly notify the Lead Secured Party and the
Secured Parties of such requisition and, if the same does not constitute an
Event of Loss, all of the Obligors' obligations under this Aircraft Security
Agreement shall continue to the same extent as if such requisition had not
occurred except to the extent that the performance or observance of any
obligation by the Obligors shall have been prevented or delayed by such
requisition, provided that the Obligors' obligations for the payment of money
and under Section 3.3(i) (except, in the case of Section 3.3(i), while an
assumption of liability by the Government of the United States of the scope
referred to in Section 3.3(c) is in effect) shall not be reduced, delayed or
affected by such requisition. Any payments received by the Lead Secured Party or
the Obligors from such government with respect to the use of such Airframe or
Engines shall be paid over to, or retained by, the Obligors; provided that, if
such requisition constitutes an Event of Loss, then all of such payments shall
be paid over to the Lead Secured Party (so long as the Lien of this Aircraft
Security Agreement has not been duly discharged), and held and applied as
provided in Section 3.4(e). In the event of an Event of Loss of an Engine
resulting from the requisition for use by a government of such Engine (but not
the Airframe), the Obligors will replace such Engine hereunder by complying with
the terms of Section 3.4(h) and any payments received by the Lead Secured Party
or the Obligors from such government with respect to such requisition shall be
paid over to, or retained by, the Obligors.

          (g) Certain Payments to be Held As Security. Any amount referred to in
this Section 3.4 or Section 3.3(i) hereof which is payable to the Obligors shall
not be paid to the Obligors, or, if it has been previously paid directly to the
Obligors, shall not be retained by the Obligors, if at the time of such payment
an Event of Default shall have occurred and be continuing, but shall be paid to
and held by the Lead Secured Party as security for the Secured Obligations,
unless and until applied by Lead Secured Party to the secured obligations and at
such time as there shall not be continuing any such Event of Default, such
amount and any gain realized as a result of Permitted Investments required to be
made pursuant to Section 3.8 shall to the extent not so applied be paid over to
the Obligors.

          (h) Substitution of Engines. So long as no Event of Default shall have
occurred and be continuing, the Obligors shall have the right at its option at
any time, on at least 30 days' prior notice to the Lead Secured Party, to
subject to the Lien of this Aircraft Security Agreement, and if an Event of Loss
shall have occurred with respect to an Engine under circumstances in which there
has not occurred an Event of Loss with respect to the Airframe, shall within 60
days of the occurrence of such Event of Loss and on at least five (5) Business
Days' prior notice to the Lead Secured Party shall subject to the Lien of this
Aircraft Security Agreement, a Replacement Engine for any Engine not then
installed or held for use on the Airframe. In such event, immediately upon the
effectiveness thereof on the date set forth in such notice and without further
act, (i) the Replacement Engine shall be subjected to the Lien of this Aircraft

                                       26
<PAGE>

Security Agreement free and clear of all other Liens (other than Permitted
Liens), and there shall have been registered with the International Registry a
sale to the Obligors of such Replacement Engine and the International Interest
for the benefit of the Lead Secured Party under this Aircraft Security
Agreement, (ii) the replaced Engine shall, at the expense and request of the
Obligors, be released from the Lien of this Aircraft Security Agreement and
shall no longer be deemed an Engine hereunder, and (iii) such Replacement Engine
shall be deemed part of the Aircraft for all purposes hereof to the same extent
as the Engine originally installed on or attached to the Airframe. Upon the
substitution of a Replacement Engine, the following conditions shall be
satisfied at the Obligors' sole cost and expense and the parties agree to
cooperate with the Obligors to the extent necessary to enable it to timely
satisfy such conditions:

          (i) the following documents shall be duly authorized, executed and
delivered by the respective party or parties thereto, and an executed
counterpart of each shall be delivered to the Lead Secured Party:

                    (A) such "precautionary" Uniform Commercial Code financing
statements as are deemed necessary or desirable by counsel for the Secured
Parties to protect the Lead Secured Party's interests in the Replacement Engine;

                    (B) an Officer's Certificate of the Obligors certifying that
(i) in the case of a voluntary replacement only, no Event of Default shall have
occurred and be continuing and (ii) (x) in the case of a voluntary replacement,
the Replacement Engine has at least the same number of hours or cycles
(whichever is applicable) of operation on such Replacement Engine remaining
until the next scheduled life limited part replacement as the Engine it
replaces, assuming such Engine had been maintained in the condition required
hereunder; or (y) in the case of a mandatory replacement, the Obligors has not
discriminated in its selection of the Replacement Engine (based on the financed
status of the Aircraft);

                    (C) an opinion of qualified FAA counsel, with a supporting
priority search certificate, as to the registrations with the International
Registry referred to above and all other documents or instruments the
recordation with the FAA, the International Registry, or other registrar or
agency, of which is necessary to perfect and protect the rights of the Lead
Secured Party in the Replacement Engine;

                    (D) to the extent that an engine warranty in respect of such
Replacement Engine is available to the Obligors, and only to the extent
assignable, an engine warranty assignment covering such Replacement Engine and a
consent to such engine warranty assignment in such form and substance
satisfactory to the Lead Secured Party; and

                    (E) evidence that the insurance requirements of Section
3.3(i) with respect to an Engine are satisfied and that the insurance covering
such Replacement Engine shall be of the type usually carried by the Obligors
(or, in the case of a voluntary replacement, such Permitted Lessee) with respect
to similar engines, and covering risks of the kind customarily insured against
by the Obligors (or, in the case of a voluntary replacement, such Permitted
Lessee); and

               (ii) the Obligors shall furnish (or cause to be furnished to) the
Lead Secured Party and the Secured Parties with an opinion, reasonably
satisfactory in form and substance to the Lead Secured Party and the Secured

                                       27
<PAGE>

Parties, of the Obligors' counsel to the effect that (x) such documents
reasonably requested by the Lead Secured Party or the Secured Parties are
sufficient to subject such Replacement Engine to the Lien of this Aircraft
Security Agreement and, (y) the Lead Secured Party is entitled to the benefits
of Section 1110 with respect to such Replacement Engine to the same extent as
with respect to the replaced Engine immediately preceding such replacement.

     Upon satisfaction of all conditions to such substitution, (x) the Lead
Secured Party shall, at the expense of the Obligors, execute and deliver to the
Obligors such documents and instruments as the Obligors shall reasonably request
to release of the replaced Engine from the Lien of this Aircraft Security
Agreement (and Lead Secured Party shall discharge or consent to the discharge of
the registration of the International Interest in such replaced Engine vested in
Lead Secured Party pursuant to this Aircraft Security Agreement), and (y) the
Obligors shall be entitled to receive all insurance proceeds and proceeds in
respect of any Event of Loss giving rise to such replacement to the extent not
previously applied to the purchase price of the Replacement Engine as provided
in Sections 3.3(i)(iv)(A) and 3.4(e)(ii).

     (3.5) Agreement Regarding Engines. Lead Secured Party hereby agrees for the
benefit of the agent or secured party of any engine (other than the Engine) or
of any airframe (other than the Airframe) leased to Obligors or purchased by
Obligors subject to a conditional sale or other security agreement, which lease
or conditional sale or other security agreement (in the case of any such
airframe) also covers an engine or engines owned by the agent or secured party
under such lease or subject to a security interest in favor of the agent or
secured party under such conditional sale or other security agreement, that Lead
Secured Party will not acquire or claim, as against such agent or secured party,
any right, title, or interest in any such engine as the result of such engine
being installed on the Airframe at any time while such engine is owned by such
agent or secured party or is subject to such conditional sale or other security
agreement or security interest in favor of such agent or secured party.

     (3.6) Quiet Enjoyment. Lead Secured Party covenants that so long as the
security interest and Lien of this Aircraft Security Agreement shall not be
discharged, that as long as no Event of Default has occurred and is continuing,
Obligors' possession, use and quiet enjoyment of the Aircraft, subject to the
provisions of this Aircraft Security Agreement and the Debentures, shall not be
interrupted by Lead Secured Party (or any Person lawfully claiming through Lead
Secured Party.

     (3.7) Inspection. At all reasonable times, but upon at least 5 days' prior
notice to the Obligors (unless an Event of Default shall have occurred and be
continuing, in which event a prior written notice of at least one (1) Business
Day is required) and at a time and place reasonably acceptable to the Obligors,
the Lead Secured Party and the Secured Parties or their authorized
representatives may at their own expense and risk (unless an Event of Default
shall have occurred and be continuing, in which event the Obligors shall bear
such expense and risk) conduct a visual walk-around inspection of the Aircraft
and any Engine (including a visual walk-around inspection of the Aircraft during
any "C" check or other heavy maintenance) and may inspect the books and records
of the Obligors relating to the operation and maintenance thereof and the
Obligors shall provide copies of such books and records to the Lead Secured
Party and the Secured Parties or their authorized representatives at its or

                                       28
<PAGE>

their reasonable request; provided that (a) such representatives shall be fully
insured to the reasonable satisfaction of the Obligors by the Lead Secured Party
or the Secured Parties with respect to any risks incurred in connection with any
such inspection, (b) any such inspection shall be subject to the safety,
security and workplace rules applicable at the location where such inspection is
conducted and any applicable governmental rules or regulations, and (c) in the
case of an inspection during a maintenance visit, such inspection shall not
interfere with the normal conduct of such maintenance visit or extend the time
required for such maintenance visit or, in any event, at any time interfere with
the use or operation of the Airframe or any Engine or with the normal conduct of
the Obligors' or a Permitted Lessee's business.

     In addition to any inspection as provided hereunder, upon each request of
any Secured Party to Obligors made not more than four times in a calendar year,
Obligors will make available to such Secured Party information with respect to
the cycles and hours of operation of the Airframe and Engines and the status of
the time controlled components of the Engines.

     If requested by Lead Secured Party or any Secured Party, Obligors shall
provide, or shall cause any Permitted Lessee to provide, the date (if then
scheduled) upon which the Airframe undergoes its next scheduled major check and,
with respect to any Engine, the next scheduled off the Airframe maintenance, and
shall advise Lead Secured Party and such Secured Party of the name and location
(if then known) of the relevant maintenance performer.

     (3.8) No liability or obligation will be incurred by Lead Secured Party or
any Secured Party, as the case may be, by reason of non-exercise by it of the
inspection rights referred to in this Section 3.7. Any viewing of the Aircraft
by Lead Secured Party, any Secured Party, or any of their representatives, as
the case may be, shall be for such Person's information purposes only, and there
shall be no inference or implication therefrom that the Obligors are in
compliance with its obligations under the Debentures or this Aircraft Security
Agreement.

     (3.9) Investment of Security Funds. Any monies paid to or retained by Lead
Secured Party which are required to be paid to Obligors or applied for the
benefit of Obligors (including, without limitation, amounts payable to Obligors
under Sections 3.4 and 3.3(i)), but which Lead Secured Party is entitled to hold
under the terms hereof pending the occurrence of some event or the performance
of some act (including, without limitation, the remedying of an Event of
Default), may, at Lead Secured Party's sole discretion, until paid to Obligors
or applied as provided herein, be invested by Lead Secured Party from time to
time at the direction, risk and expense of Obligors in Permitted Investments.
There shall be promptly remitted to Obligors any gain (including interest
received) realized as the result of any such investment (net of any fees,
commissions and other expenses, if any, incurred in connection with such
investment) unless an Event of Default shall have occurred and be continuing, in
which case such gains shall be held or applied in accordance with the preceding
sentence.

     (3.10) Additional Cape Town Treaty Provisions. Obligors further agree and
acknowledges this Aircraft Security Agreement creates and constitutes an
International Interest in the Collateral. Obligors hereby undertake to perform
all of its obligations hereunder and under any contracts or agreements
constituting part of the Collateral. Obligors shall establish a valid and
existing account with the International Registry, appoint an Administrator
and/or a Professional User acceptable to Lead Secured Party to make registration

                                       29
<PAGE>

in regards to the Collateral. Obligors shall not register any prospective or
current International Interest or Contract of Sale related to the Aircraft (or
any amendment, modification, supplement, subordination, or subrogation thereof)
with the International Registry without the prior written consent of Lead
Secured Party which may be withheld in its sole discretion at all times that any
of the Secured Obligations remain outstanding. Obligors further represent and
confirm that it is situated in a Contracting State (as that term is used in the
Cape Town Treaty) as of the Effective Date as contemplated under the Cape Town
Treaty, and Obligors have the power to dispose of the Collateral, as
contemplated by the Cape Town Treaty.

                                    REMEDIES
                                    --------

     (4.1) Remedies with Respect to Collateral.

          (a) Remedies Available. Subject to Section 3.6 hereof, upon the
occurrence of any Event of Default and at any time thereafter so long as the
same shall be continuing, this Aircraft Security Agreement shall be in default,
and Lead Secured Party may, do one or more of the following but without any duty
to account to Obligors with respect to such action or inaction:

               (i) Demand in writing that Obligors, at Obligors' expense,
deliver promptly, and Obligors shall deliver promptly, all or such part of the
Airframe or any Engine or any other Collateral to Lead Secured Party or its
designee or, Lead Secured Party, at its option, may enter upon the premises
where all or any part of the Airframe or any Engine or any other Collateral are
located or are supposed to be located, search for Collateral and take immediate
possession of and remove the same by summary proceedings or otherwise, and
without demand or notice.

               (ii) If at the time such action may be lawful and always subject
to compliance with any mandatory legal requirements, either with or without
taking possession, and either before or after taking possession and without
instituting any legal proceedings whatsoever, and having first given notice of
such sale by registered mail to Obligors at least 10 days prior to the date of
such sale, and any other notice which may be required by Law, sell and dispose
of the Collateral, or any part thereof, or interest therein, free and clear of
any rights or claims of Obligors, at public auction or private sale, in one lot
as an entirety or in separate lots, and either for cash or on credit and on such
terms as Lead Secured Party may determine, and at any place (whether or not it
be the location of the Collateral or any part thereof) and time designated in
the above referred to notice. Any such sale may be adjourned from time to time
by announcement at the time and place appointed for such sale, or for any such
adjourned sale, without further notice, and Lead Secured Party may bid and
become the purchaser at any such sale and Lead Secured Party shall be entitled
at any sale to credit against any purchase price bid at such sale by Lead
Secured Party all or any part of any unpaid Principal amount and Interest under
the Debentures secured by the security interest and Lien of this Aircraft
Security Agreement. Any proceeds of such sale that are in excess of the unpaid
Principal, Interest and other amounts due and owing under the Debenture shall be
promptly remitted to the Obligors.

                                       30
<PAGE>

               (iii) Hold, use, operate, lease to others, or keep idle all or
any part of the Airframe or such Engine as Lead Secured Party, in its sole
discretion, may determine, all free and clear of any rights or claims of
Obligors.

               (iv) Exercise any or all of other rights and powers and pursue
any and all other remedies accorded to a secured party under Applicable Law or
the Cape Town Treaty (including but not limited to the right to obtain the
orders noted in Article 8 and Article 11 of the Convention), including to
recover judgment in its own name as Lead Secured Party against the Collateral
and to take possession of all or any part of the Collateral, to exclude Obligors
and all Persons claiming under any of them wholly or partly therefrom, and
including to exercise any other remedy of a secured party under the UCC (whether
or not in effect in the jurisdiction in which enforcement is sought) or any
similar statute under any other applicable jurisdiction.

     Upon the occurrence of any Event of Default and at any time thereafter so
long as the same shall be continuing, Lead Secured Party may, in its sole
discretion, from time to time, at the expense of Obligors, make all such
expenditures for maintenance, insurance, or repairs to and of the Collateral, as
it may deem proper. In each such case, Lead Secured Party shall have the right
to maintain, use, operate, store, lease, control, or manage the Collateral and
to exercise all rights and powers of Obligors relating to the Collateral in
connection therewith, as Lead Secured Party shall deem appropriate, including
the right to enter into any and all such agreements with respect to the
maintenance, insurance, use, operation, storage, leasing, control, management,
or disposition of the Collateral or any part thereof as Lead Secured Party may
determine; and Lead Secured Party shall be entitled to collect and receive
directly all tolls, rents, revenues, issues, income, products, and profits of
the Collateral and every part thereof. Such tolls, rents, revenues, issues,
income, products, and profits shall be applied to pay the expenses of use,
operation, storage, leasing, control, management, or disposition of the
Collateral, and of all maintenance and repairs, and to make all payments which
Lead Secured Party may be required or may elect to make, if any, for taxes,
insurance, or other proper charges assessed against or otherwise imposed upon
the Collateral or any part thereof (including the employment of engineers and
accountants to examine, inspect, and make reports upon the properties and books
and records of Obligors, solely as and to the extent related to the Collateral),
and all other payments which Lead Secured Party may be required or authorized to
make under any provision of this Aircraft Security Agreement, as well as just
and reasonable compensation for the services, of all Persons engaged or employed
by Lead Secured Party.

     If an Event of Default shall have occurred and be continuing, at the
request of Lead Secured Party, Obligors shall promptly execute and deliver to
Lead Secured Party such instruments of title and other documents as Lead Secured
Party may deem necessary or advisable to enable Lead Secured Party or an agent
or representative designated by Lead Secured Party, at such time or times and
place or places as Lead Secured Party may specify, to obtain possession of all
or any part of the Collateral to which Lead Secured Party shall at the time be
entitled hereunder. If Obligors shall for any reason fail to execute and deliver
such instruments and documents after such request by Lead Secured Party, Lead
Secured Party may obtain a judgment conferring on Lead Secured Party the right
to immediate possession and requiring Obligors to execute and deliver such
instruments and documents to Lead Secured Party, to the entry of which judgment
Obligors hereby specifically consents to the fullest extent it may lawfully do
so.

                                       31
<PAGE>

     Nothing in the foregoing shall affect the right of Lead Secured Party to
receive all amounts owing to such Lead Secured Party as and when the same may be
due.

          (b) Legal Proceedings. Lead Secured Party may proceed to protect and
enforce this Aircraft Security Agreement by suit or suits or proceedings in
equity, at law, or in bankruptcy, and whether for the specific performance of
any covenant or agreement herein contained or in execution or aid of any power
herein granted; or for foreclosure hereunder, or for the appointment of a
receiver or receivers for the Collateral or any part thereof, or for the
recovery of judgment for the indebtedness secured by the security interest and
Lien created under this Aircraft Security Agreement or for the enforcement of
any other proper, legal, or equitable remedy available under Applicable Law.

          (c) Distribution of Proceeds. Any proceeds received by Lead Secured
Party after the occurrence of an Event of Default shall be distributed by Lead
Secured Party to the Secured Parties in accordance with the priority of payments
set forth in the Debentures. Any proceeds of such sale that are in excess of the
unpaid Principal, Interest and other amounts due and owing under the Debenture
shall be promptly remitted to the Obligors.

     (4.2) Remedies Cumulative. To the maximum extent permitted by Applicable
Law, each and every right, power, and remedy herein specifically given to Lead
Secured Party or otherwise in this Aircraft Security Agreement shall be
cumulative and shall be in addition to every other right, power, and remedy
herein specifically given or now or hereafter existing at law, in equity, by
statute, or by the Transaction Documents, 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
Lead Secured Party, 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 Lead Secured Party in the exercise of any right, remedy, or power or
in the pursuit of any remedy shall, to the extent permitted by Applicable Law,
impair any such right, power, or remedy or be construed to be a waiver of any
default on the part of Obligors or to be an acquiescence therein.

     (4.3) Discontinuance of Proceedings. In case Lead Secured Party shall have
instituted any proceeding to enforce any right, power, or remedy under this
Aircraft Security Agreement by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall
have been determined adversely to Lead Secured Party, then and in every such
case Obligors and Lead Secured Party shall, subject to any determination in such
proceedings, be restored to their former positions and rights hereunder with
respect to the Collateral, and all rights, remedies, and powers of Lead Secured
Party shall continue, as if no such proceedings had been undertaken (but
otherwise without prejudice).

     (4.4) Limitation of Liability. The Lead Secured Party and the Secured
Parties shall at all times be under a duty to mitigate any and all damages and
except as otherwise set forth in this Agreement, neither the Lead Secured Party
nor the Secured Parties shall be entitled to any consequential, incidental or
punitive damages.

                                       32
<PAGE>

                                  MISCELLANEOUS
                                  -------------

     (5.1) Termination and Release. Upon payment and performance in full of the
Secured Obligations, Lead Secured Party shall, upon the written request of
Obligors, execute and deliver to, or as directed in writing by, and at the
expense of, Obligors an appropriate instrument or instruments (in due form for
recording and in the form provided by Obligors and approved by Lead Secured
Party) reasonably required to release, without recourse, representation, or
warranty, the Aircraft and the balance of the Collateral from the security
interest and Lien of this Aircraft Security Agreement and Lead Secured Party
hereby covenants and undertakes (at Obligors' sole cost and expense) to provide
its written consent to the revocation of any deregistration power of attorney
filed with any Aviation Authority and, to the extent practicable and possible
under Applicable Law, shall use commercially reasonable efforts to endeavor to
return such deregistration power of attorney to Obligors and, in such event,
this Aircraft Security Agreement shall terminate; provided, however, and to the
extent not provided for elsewhere herein, that this Aircraft Security Agreement
shall earlier terminate upon any sale or other final disposition by Lead Secured
Party of all property constituting the Collateral and the final distribution by
Lead Secured Party of all monies or other property or proceeds constituting the
Collateral in accordance with the terms of the Debentures. Except as otherwise
provided above, this Aircraft Security Agreement and the security interests and
Liens in respect of the Collateral created hereby shall continue in full force
and effect in accordance with the terms hereof.

     (5.2) No Legal Title to Collateral in Lead Secured Party; Conflicting
Security Documents. Lead Secured Party shall have no legal title to any part of
the Collateral. No transfer, by operation of Law or otherwise, of any right,
title, and interest of Lead Secured Party in and to the Collateral or this
Aircraft Security Agreement shall operate to terminate this Aircraft Security
Agreement or the security interests granted hereunder or entitle any successor
or transferee of Lead Secured Party to an accounting or to the transfer to it of
legal title to any part of the Collateral.

     (5.3) Sale of the Aircraft by Lead Secured Party is Binding. Any sale or
other conveyance of the Aircraft, the Airframe, any Engine, or any interest
therein by Lead Secured Party made pursuant to the terms of this Aircraft
Security Agreement shall bind Obligors, and shall be effective to transfer or
convey all right, title, and interest of Lead Secured Party and Obligors, in and
to such Aircraft, Airframe, Engine, or interest therein. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency, or regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by Lead Secured Party.

     (5.4) Benefit of Aircraft Security Agreement. Nothing in this Aircraft
Security Agreement, whether express or implied, shall be construed to give to
any Person other than Obligors, Lead Secured Party and Secured Parties any legal
or equitable right, remedy, or claim under or in respect of this Aircraft
Security Agreement.

     (5.5) Performance and Rights. Any obligation of the Obligors shall require
only that Obligors perform or cause to be performed such obligation, even if
stated as a direct obligation, and the performance of any such obligation by any
permitted assignee, lessee, or transferee under an assignment, lease, or
transfer agreement then in effect and in accordance with the provisions of the
Transaction Documents shall constitute performance by Obligors and to the extent
of such performance, discharge such obligation by Obligors. Except as otherwise

                                       33
<PAGE>

expressly provided herein, any right granted to Obligors in this Aircraft
Security Agreement shall grant Obligors the right to permit such right to be
exercised by any such permitted assignee, lessee, or transferee. The inclusion
of specific references to obligations or rights of any such permitted assignee,
lessee, or transferee in certain provisions of this Aircraft Security Agreement
shall not in any way prevent or diminish the application of the provisions of
the two sentences immediately preceding with respect to obligations or rights in
respect of which specific reference to any such permitted assignee, lessee, or
transferee has not been made in this Aircraft Security Agreement.

     (5.6) Reserved.

     (5.7) Notices. Whenever notice is required to be given under this Aircraft
Security Agreement, unless otherwise provided herein, such notice shall be given
in accordance with Section 9(f) of the Securities Purchase Agreement. The
Secured Parties shall provide the Obligor with prompt written notice of all
actions taken pursuant to this Aircraft Security Agreement, including in
reasonable detail a description of such action and the reason therefor.

     (5.8) Severability. In the event any provision of this Agreement is held to
be invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable. If, notwithstanding the foregoing, any provision of
this Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.

     (5.9) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

     (5.10) Assignment, Successors and Assigns. None of Lead Secured Party,
Secured Parties, or Obligors may assign or transfer its rights and obligations
under this Aircraft Security Agreement and the other Transaction Documents
except as permitted by the Transaction Documents or otherwise with the prior
written consent of Lead Secured Party (which consent shall not unreasonably be
withheld). The provisions hereof shall be binding upon each party hereto, and
each or its successors and permitted assigns. No sales of participations, other
than sales, assignments, transfers or other dispositions of any agreement
governing or instrument evidencing the Secured Obligations or any portion
thereof or interest therein shall in any manner affect the security interest and
Lien created herein and granted to Lead Secured Party on behalf of Obligors
hereunder.

                                       34
<PAGE>

     (5.11) Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Aircraft
Security Agreement.

     (5.12) Governing Law; Jurisdiction and Venue. This Agreement shall be
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Agreement and all
disputes arising hereunder shall be governed by, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York. The parties hereto (a) agree that any legal action or proceeding with
respect to this Agreement or any other agreement, document, or other instrument
executed in connection herewith or therewith, shall be brought in any state or
federal court located within the City of New York in the State of New York, (b)
irrevocably waive any objections which either may now or hereafter have to the
venue of any suit, action or proceeding arising out of or relating to this
Agreement, or any other agreement, document, or other instrument executed in
connection herewith or therewith, brought in the aforementioned courts, and (c)
further irrevocably waive any claim that any such suit, action, or proceeding
brought in any such court has been brought in an inconvenient forum.

     (5.13) Waiver of Jury Trial. OBLIGORS AND SECURED PARTIES IRREVOCABLY WAIVE
THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE ANY
PROVISION OF THIS AIRCRAFT SECURITY AGREEMENT OR ANY TRANSACTION DOCUMENT.

     (5.14) Amendments. This Aircraft Security Agreement may be amended,
supplemented, or otherwise modified only by the written consent of the Required
Holders.

     (5.15) Limitation on Lead Secured Party's Duty in Respect of Collateral.
Lead Secured Party shall use reasonable care with respect to the Collateral in
its possession or under its control. Lead Secured Party shall not have any other
duty as to any Collateral in its possession or control, or any income thereon or
as to the preservation of rights against prior or any other parties or any other
rights pertaining thereto.

     (5.16) Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Obligors or the transfer to Lead Secured Party or
any Secured Party of any property should for any reason subsequently be declared
to be void or voidable under any state or federal Law relating to creditors'
rights, including provisions of any bankruptcy Law relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (each, a "Voidable Transfer"), and if Lead Secured Party
or any Secured Party is required to repay or restore, in whole or in part, any
such Voidable Transfer, or elects to do so upon the reasonable advice of its
counsel, then, as to any such Voidable Transfer, or the amount thereof that Lead
Secured Party or such Secured Party is required or elects to repay or restore,
and as to all reasonable costs, expenses, and attorneys fees of Lead Secured
Party or such Secured Party related thereto, the liability of Obligors
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.

                                       35
<PAGE>

     (5.17) Joinder. In the event a party becomes an Obligor (the "New Obligor")
pursuant to this joinder provisions, upon such execution the New Obligor shall
be bound by all the terms and conditions hereof to the same extent as though the
New Obligor had originally executed this Aircraft Security Agreement. The
addition of the New Obligor shall not in any manner affect the obligations of
the other Obligors hereunder. Each Obligor hereto acknowledges that any
schedules hereto may be amended or modified in connection with the addition of
any New Obligor to reflect information relating to such New Obligor.

     (5.18) Subordination. The relative rights of the Parties hereto are
governed by the Letter Agreement.

                            [Signature Page Follows]

                                       36
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Aircraft Security
Agreement (23074) to be duly executed on the day and year first above written.

OBLIGOR AND COMPANY:                           Address for Notice and Delivery:
                                               -------------------------------

GLOBAL AIRCRAFT SOLUTIONS INC.                 Global Aircraft Solutions Inc.
                                               6451 S. Country Club, Suite 111
                                               Tuscon, AZ 85706
                                               Telephone: (520) 547-8631
                                               Facsimile: (520) 547-8638
                                               Attention:

By:__________________________________________
   Name:
   Title:

<PAGE>

OBLIGOR AND COMPANY:                       Address for Notice and Delivery:
                                           --------------------------------

HAMILTON AEROSPACE TECHNOLOGIES            Hamilton Aerospace Technologies, Inc.
                                           6901 S. Park Avenue
                                           Tuscon, AZ 85706
                                           Telephone: (520) 294-3481
                                           Facsimile: (520) 741-1430
                                           Attention:

By:______________________________________
   Name:
   Title:

<PAGE>

OBLIGOR AND COMPANY:                           Address for Notice and Delivery:
                                               -------------------------------

WORLD JET CORPORATION                          World Jet Corporation
                                               6901 S. Park Avenue
                                               Tuscon, AZ 85706
                                               Telephone: (520) 806-4192
                                               Facsimile: (520) 741-1430
                                               Attention:

By:__________________________________________
   Name:
   Title:

<PAGE>

OBLIGOR AND COMPANY:                      Address for Notice and Delivery:
                                          --------------------------------

HAMILTON AEROSPACE MEXICO S.A. DE C.V.

By:_____________________________________  Hamilton Aerospace Mexico S.A. de C.V.
   Name:                                  Avenida Aeropuerto
   Title:                                 Tijuana, 22404
                                          Telephone: (520) 294-3481
                                          Facsimile: (520) 741-1430
                                          Attention:

<PAGE>

LEAD SECURED PARTY:                           Address for Notice and Delivery:
                                              --------------------------------

VICTORY PARK MASTER FUND, LTD.                227 W. Monroe Street
                                              Suite 3900
                                              Chicago, IL 60606
                                              Telephone: (312) 701-0788
                                              Facsimile: (312) 701-0794
                                              Attention:

By: Victory Park Capital Advisors, LLC,
    Its investment manager
By: Jacob Capital, LLC, Its Manager
By: __________________________
    Name:
    Title: Sole Member

<PAGE>

SECURED PARTY:                                 Address for Notice and Delivery:
                                               --------------------------------

SANDHURST ASSET MANAGEMENT, LLC                Sandhurst Asset Management, LLC
                                               800 Connecticut Avenue, FL4
                                               Norwalk, CT 06854
                                               Telephone: (203) 656-4848
                                               Facsimile: (203) 656-1994
                                               Attention:

By:__________________________________________
   Name:
   Title:

<PAGE>

                                    Exhibit A
                                    ---------

                          Securities Purchase AgreementExhibit 10.3

                               GUARANTY AGREEMENT

     This GUARANTY AGREEMENT (this "Guaranty"), dated as of December 20, 2007,
is made by John Sawyer, an individual (the "Guarantor") in favor of Victory Park
Master Fund, Ltd., as Lead Secured Party for the Secured Parties referred to
below (in such capacity, together with its successors in such capacity, the
"Lead Secured Party").

     WHEREAS, Global Aircraft Solutions Inc., a Nevada corporation ("Parent"),
and Hamilton Aerospace Technologies, Inc., a Delaware corporation ("Hamilton"),
World Jet Corporation, a Nevada corporation ("World Jet"), and Hamilton
Aerospace Mexico S.A. de C.V. a Mexican corporation ("Hamilton Mexico") as
subsidiaries of the Parent (each, including the Parent, an "Issuer" and
together, including the Parent, the "Issuers"), have entered into that certain
Securities Purchase Agreement, dated as of the date hereof (as the same from
time to time hereafter may be amended, modified, supplemented or restated,
respectively the "Securities Purchase Agreement"), by and among the Lead Secured
Party and the Holders of the Debentures as defined below (together the "Secured
Parties"), whereby the Secured Parties agreed to purchase those certain Senior
Secured Debentures and Junior Secured Debenture due December 19, 2008 (or other
date as set forth therein) in the original aggregate principal amount of
$10,000,000, as the same may be amended from time to time (the "Debentures");

     WHEREAS, the Issuers and Secured Parties have entered into that certain
Pledge and Security Agreement (the "Security Agreement") and those certain
Aircraft Security Agreements (the "Aircraft Security Agreements") of even date
herewith, whereby the assets of the Issuers are pledged to the Secured Parties;

     WHEREAS, it is a condition precedent to the purchase of the Debentures by
the Secured Parties that the Guarantor shall have executed and delivered this
Guaranty to the Secured Parties; and

     WHEREAS, the Guarantor expects to realize direct and indirect benefits as
the result of the purchase of the Debentures from the Issuers.

     NOW THEREFORE, to induce the Secured Parties to purchase the Debentures
pursuant to the Securities Purchase Agreement, the Guarantor has agreed to
guarantee the amount of $2,000,000 upon the terms and conditions of this
Guaranty. Accordingly, the Guarantor agrees as follows:

     SECTION 1. DEFINITIONS.

     1.01. Definitions. Unless otherwise defined herein, all capitalized terms
used in this Guaranty that are defined in the Securities Purchase Agreement, the
Security Agreement and the Debentures (including those terms incorporated by
reference) shall have the respective meanings assigned to them in the Securities
Purchase Agreement, the Security Agreement and the Debentures. In addition, the
following terms shall have the following meanings under this Guaranty:

     "Bankruptcy Code" shall mean Title 11 of the United States Code.

<PAGE>

     "Guaranteed Obligations" shall mean (a) any and all obligations of the
Issuers and any and all other obligations of the Issuers for the performance of
their agreements, covenants and undertakings under or in respect of the
Transaction Documents (as defined in the Securities Purchase Agreement, and (b)
any and all other obligations of the Issuers for the payment of all amounts,
liabilities and indebtedness (whether for principal, interest, reimbursement,
fees, charges, indemnification or otherwise) now or in the future owed to the
Lead Secured Party, the Secured Parties or any such Person individually, and for
the performance by the Issuers of their agreements, covenants and undertakings,
in each case under or in respect of any and all of the Transaction Documents, it
being acknowledged by the Guarantor that such other obligations may arise or be
created, incurred or assumed at any time and from time to time and in such
manner and such circumstances and with such terms and provisions as the Issuers,
the Lead Secured Party and the Secured Parties or any such Person individually
may agree without notice or demand of any kind or nature whatsoever to the
Guarantor.

     1.02. Interpretation. In this Guaranty, unless otherwise indicated, the
singular includes the plural and plural the singular; words importing any gender
include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Guaranty; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to such instruments; and references to
Persons include their respective successors and permitted assigns and, in the
case of governmental authorities, Persons succeeding to their respective
functions and capacities.

     SECTION 2. THE GUARANTEE.

     2.01. Guarantee. Subject to the limitation set forth in Section 2.09, the
Guarantor hereby agrees that if the Issuers shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) all or any part of
the Debentures, and in case that the proceeds of any sale by foreclosure of the
assets of the Issuers shall not satisfy the Debentures, the Guarantor will
immediately pay to the Secured Parties the unpaid obligations of the Issuers,
provided, that, the Guarantor shall not be obligated to pay an amount greater
than $2,000,000. Such payment shall be made without any demand or notice
whatsoever, and upon any extension of time of payment or renewal of all or any
part of the Debentures, the same will be timely paid when due (whether at
extended maturity, by acceleration or otherwise) in accordance with the terms of
such extension or renewal. This Guaranty is absolute, irrevocable and
unconditional (except as provided herein) in nature and is made with respect to
any and all obligations now existing or in the future arising. The Guarantor's
liability under this Guaranty shall continue until full satisfaction of the
Debentures. This Guaranty constitutes a guaranty of payment and not collection.
The Guarantor shall not be obligated to make any payment under this Guaranty
unless the proceeds of the Collateral have been insufficient to repay in full
the First Lien Indebtedness.

                                       2
<PAGE>

     2.02. Acknowledgments, Waivers and Consents. The Guarantor acknowledges
that the obligations undertaken by it under this Guaranty involve the guarantee
of obligations of Persons other than the Guarantor and that such obligations of
the Guarantor are absolute, irrevocable and unconditional (except as provided
herein) under any and all circumstances. In full recognition and in furtherance
of the foregoing, the Guarantor agrees that:

     (a) Without affecting the enforceability or effectiveness of this Guaranty
in accordance with its terms and without affecting, limiting, reducing,
discharging or terminating the liability of the Guarantor, or the rights,
remedies, powers and privileges of the Lead Secured Party and the Secured
Parties under this Guaranty, the Lead Secured Party and the Secured Parties may,
at any time and from time to time and without notice or demand of any kind or
nature whatsoever:

          (i) amend, supplement, modify, extend, renew, waive, accelerate or
otherwise change the time for payment or performance of, or the terms of, all or
any part of the Debentures pursuant to the terms thereof;

          (ii) amend, supplement, modify, extend, renew, waive or otherwise
change, or enter into or give, any agreement, security document, guarantee,
approval, consent or other instrument with respect to all or any part of the
Debentures, any Transaction Document or any such other instrument or any term or
provision of the foregoing pursuant to the terms thereof;

          (iii) accept or enter into new or additional agreements, security
documents, guarantees (including letters of credit) or other instruments in
addition to, in exchange for or relative to any Transaction Document, all or any
part of the Debentures or any collateral now or in the future serving as
security for the Debentures;

          (iv) accept or receive (including from any other guarantor) partial
payments or performance on the Debentures (whether as a result of the exercise
of any right, remedy, power or privilege or otherwise);

          (v) accept, receive and hold any additional collateral for all or any
part of the Debentures (including from any other guarantor);

          (vi) release, reconvey, terminate, waive, abandon, allow to lapse or
expire, fail to perfect, subordinate, exchange, substitute, transfer, foreclose
upon or enforce any collateral, security documents or guarantees (including
letters of credit or the obligations of any other guarantor) for or relative to
all or any part of the Debentures;

          (vii) apply any collateral or the proceeds of any collateral or
guarantee (including any letter of credit or the obligations of any other
guarantor) to all or any part of the Debentures in such manner and extent as the
Lead Secured Party or any Secured Party may in its discretion determine;

          (viii) release any Person (including any other guarantor) from any
personal liability with respect to all or any part of the Debentures;

                                       3
<PAGE>

          (ix) settle, compromise, release, liquidate or enforce upon such terms
and in such manner as the Lead Secured Party or the Secured Parties may
determine or as applicable law may dictate all or any part of the Debentures or
any collateral on or guarantee of (including any letter of credit issued with
respect to) all or any part of the Debentures (including with any other
guarantor);

          (x) consent to the merger or consolidation of, the sale of substantial
assets by, or other restructuring or termination of the existence of the Issuers
or any other Person (including any other guarantor);

          (xi) proceed against the Issuers, the Guarantor or any other guarantor
of all or any part of the Debentures or any collateral provided by any Person
and exercise the rights, remedies, powers and privileges of the Lead Secured
Party and the Secured Parties under the Transaction Documents or otherwise in
such order and such manner as the Lead Secured Party or any Secured Party may,
in its discretion, determine, without any necessity to proceed upon or against
or exhaust any right, remedy, power or privilege (other than against Collateral)
before proceeding to call upon or otherwise enforce this Guaranty as to the
Guarantor;

          (xii) obtain the appointment of a receiver with respect to any
collateral for all or any part of the Debentures and apply the proceeds of such
receivership as the Lead Secured Party or any Secured Party may in its
discretion determine (it being agreed that nothing in this clause (xii) shall be
deemed to make the Lead Secured Party or any Secured Party a party in possession
in contemplation of law, except at its option); and

          (xiii) do all or any combination of the actions set forth in this
Section 2.02(a).

     (b) The enforceability and effectiveness of this Guaranty and the liability
of the Guarantor and the rights, remedies, powers and privileges of the Lead
Secured Party and the Secured Parties under this Guaranty shall not be affected,
limited, reduced, discharged or terminated, and the Guarantor hereby expressly
waives to the fullest extent not prohibited by applicable law any defense now or
in the future arising (other than a defense that the Debentures have been paid
in full in cash), by reason of:

          (i) the illegality, invalidity or unenforceability of all or any part
of the Debentures, any Transaction Document or any agreement, security document,
guarantee or other instrument relative to all or any part of the Debentures;

          (ii) [Reserved.]

          (iii) the illegality, invalidity or unenforceability of any security
or guarantee (including any letter of credit) for all or any part of the
Debentures or the lack of perfection or continuing perfection or failure of the
priority of any lien on any collateral for all or any part of the Debentures;

          (iv) [Reserved.]

                                        4
<PAGE>

          (v) any failure of the Lead Secured Party or any Secured Party to give
notice of sale or other disposition of any collateral (including any notice of
any judicial or nonjudicial foreclosure or sale of any interest in real property
serving as collateral for all or any part of the Debentures) for all or any part
of the Debentures to the Issuers, the Guarantor or any other Person or any
defect in, or any failure by the Guarantor or any other Person to receive, any
notice that may be given in connection with any sale or disposition of any
collateral;

          (vi) any failure of the Lead Secured Party or any Secured Party to
comply with applicable laws in connection with the sale or other disposition of
any collateral for all or any part of the Debentures;

          (vii) [Reserved.]

          (viii) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation;

          (ix) the possibility that the obligations of the Issuers to the Lead
Secured Party and the Secured Parties may at any time and from time to time
exceed the aggregate liability of the Guarantor under this Guaranty;

          (x) [Reserved.]

          (xi) any failure of the Lead Secured Party or any Secured Party to
file or enforce a claim in any bankruptcy or other proceeding with respect to
any Person.

          (xii) the election by the Lead Secured Party or any Secured Party in
any bankruptcy proceeding of any Person, of the application or nonapplication of
Section 1111(b)(2) of the Bankruptcy Code;

          (xiii) any extension of credit or the grant of any Lien under Section
364 of the Bankruptcy Code;

          (xiv) any use of cash collateral under Section 363 of the Bankruptcy
Code;

          (xv) any agreement or stipulation with respect to the provision of
adequate protection in any bankruptcy proceeding of any Person;

          (xvi) the avoidance of any Lien in favor of the Lead Secured Party or
any Secured Party for any reason;

          (xvii) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against any Person, including any discharge of, or bar or stay against
collecting, all or any part of the Debentures (or any interest on all or any
part of the Debentures) in or as a result of any such proceeding; or

                                       5
<PAGE>

          (xviii) any action taken by the Lead Secured Party or any Secured
Party, whether similar or dissimilar to any of the foregoing, that is authorized
by this Section 2.02 or otherwise in this Guaranty or by any other provision of
any Transaction Document or any omission to take any such action.

     (c) The Guarantor waives all rights and defenses arising out of an election
of remedies by the Lead Secured Party and the Secured Parties (other than
Secured Parties' obligations to proceed against Collateral first), other than if
that election of remedies, may have destroyed the Guarantor's rights of
subrogation and reimbursement against the principal in whole or in part.

     (d) [Reserved.]

     (e) The Guarantor represents and warrants to the Lead Secured Party and the
Secured Parties that it has established adequate means of obtaining financial
and other information pertaining to the business, operations and condition
(financial and otherwise) of the Issuers and their properties on a continuing
basis and that the Guarantor is now and will in the future remain fully familiar
with the business, operations and condition (financial and otherwise) of the
Issuers and their properties. The Guarantor further represents and warrants that
it has reviewed and approved each of the Transaction Documents and is fully
familiar with the transaction contemplated by the Transaction Documents and that
it will in the future remain fully familiar with such transaction and with any
new Transaction Documents and the transactions contemplated by such Transaction
Documents. The Guarantor hereby expressly waives and relinquishes any duty on
the part of the Lead Secured Party or the Secured Parties (should any such duty
exist) to disclose to such or any other guarantor any matter of fact or other
information related to the business, operations or condition (financial or
otherwise) of the Issuers or their properties or to any Transaction Document or
the transactions undertaken pursuant to, or contemplated by, any such
Transaction Document, whether now or in the future known by the Lead Secured
Party or any Secured Party.

     (f) The Guarantor intends that its rights and obligations shall be those
expressly set forth in this Guaranty and that its obligations shall not be
affected, limited, reduced, discharged or terminated by reason of any principles
or provisions of law which conflict with the terms of this Guaranty.

     (g) Nothing in this Guaranty amends, modifies or otherwise affects any
agreement between the Issuers, the Lead Secured Party and the Secured Parties
regarding the amendment of, modification of or supplement to any Transaction
Document.

     2.03. Understanding With Respect to Waivers and Consents. The Guarantor
warrants and agrees that each of the waivers and consents set forth in this
Guaranty is made voluntarily and unconditionally after consultation with outside
legal counsel and with full knowledge of its significance and consequences, with
the understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such or any other
guarantor otherwise may have against the Issuers, the Lead Secured Party, any
Secured Party or any other Person or against any collateral. If, notwithstanding
the intent of the parties that the terms of this Guaranty shall control in any
and all circumstances, any such waivers or consents are determined to be
unenforceable under applicable law, such waivers and consents shall be effective
to the maximum extent not prohibited by law.

                                       6
<PAGE>

     2.04. Subrogation. The Guarantor hereby agrees that, until the payment and
satisfaction in full of all of the Debentures and the expiration and termination
of the commitments of the Secured Parties under the Transaction Documents, it
shall not exercise any right, remedy, power or privilege, such as any right of
subrogation, contribution or indemnity or related remedy, power or privilege,
arising (whether by contract or operation of law, including under the Bankruptcy
Code) against the Issuers or any other guarantor of all or any part of the
Debentures or any collateral for all or any part of the Debentures by reason of
any payment or other performance pursuant to the provisions of this Guaranty
and, if any amount shall be paid to the Guarantor on account of such rights,
remedies, powers or privileges, it shall hold such amount in trust for the
benefit of, and pay the same over to, the Lead Secured Party (for the benefit of
the Secured Parties) on account of the Debentures. The Guarantor understands
that the exercise by the Lead Secured Party or any Secured Party of any right,
remedy, power or privilege that it may have under the Transaction Documents, any
agreement, security document, guarantee or other instrument relative to all or
any part of the Guaranteed Obligations or otherwise may affect or eliminate such
or any other guarantor's right of subrogation or similar recovery against the
Issuers, any other guarantors or any collateral and that the Guarantor may
therefore incur partially or totally nonreimbursable liability under this
Guaranty. Nevertheless, the Guarantor hereby authorizes and empowers the Lead
Secured Party and the Secured Parties to exercise, in its or their sole
discretion, any combination of such rights, remedies, powers and privileges.

     2.05. Reinstatement. The obligations of the Guarantor under this Guaranty
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of the Issuers, any other guarantor or any other Person
or any other application of funds (including the proceeds of any collateral for
all or any part of the Debentures) in respect of all or any part of the
Debentures is rescinded or must be otherwise restored by any holder of such
Debentures, whether as a result of any proceedings in bankruptcy, reorganization
or otherwise and the Guarantor agrees that it will indemnify the Lead Secured
Party and each Secured Party on demand for all costs and expenses (including
fees and expenses of counsel) incurred by the Lead Secured Party or such Secured
Party in connection with such rescission or restoration.

     2.06. Remedies. The Guarantor hereby agrees that, between it and the
Secured Parties, the obligations of the Issuers under the Security Agreement and
the Aircraft Security Agreements and the other Transaction Documents may be
declared to be forthwith (or may become automatically) due and payable as
provided in the Security Agreement and the Aircraft Security Agreements for
purposes of Section 2.01 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations becoming due and
payable as against the Issuers) and that, in the event of such declaration (or
such obligation being deemed due and payable), such obligations (whether or not
due and payable by the Issuers) shall forthwith become due and payable for
purposes of Section 2.01.

     2.07. Separate Action. Subject to the Secured Parties' obligation to
proceed against Collateral first, the Lead Secured Party may bring and prosecute
a separate action or actions against the Guarantor (or any one of them) whether
or not any Issuer, any other guarantor or any other Person is joined in any such
action or a separate action or actions are brought against any Issuer, any other

                                       7
<PAGE>

guarantor, any other Person, or any collateral for all or any part of the
Debentures. The obligations of the Guarantor under, and the effectiveness of,
this Guaranty are not conditioned upon the existence or continuation of any
other guarantee (including any letter of credit) of all or any part of the
Debentures. By its acceptance hereof, each Secured Party agrees that this
Guaranty may be enforced only by action of the Lead Secured Party upon the
instructions of the Secured Parties and that no Secured Party shall have any
right individually to seek to enforce this Guaranty.

     2.08. Subordination of Indebtedness of the Issuers. The Guarantor agrees
that any indebtedness of the Issuers now or in the future owed to the Guarantor
is hereby subordinated to the Debentures. Other than with respect to any right
Guarantor has to receive compensation in the nature of employment related
services, if the Lead Secured Party so requests after the occurrence and during
the continuation of an Event of Default, any such indebtedness shall be
collected, enforced and received by the Guarantor as trustee for the Lead
Secured Party and shall be paid over to the Lead Secured Party (for the benefit
of the Secured Parties) in kind on account of the Debentures. If, after the Lead
Secured Party's request, the Guarantor fails to collect or enforce any such
indebtedness or to pay the proceeds of such indebtedness to the Lead Secured
Party, the Lead Secured Party as the Guarantor's attorney-in-fact may do such
acts and sign such documents in the Guarantor's name and on the Guarantor's
behalf as the Lead Secured Party considers necessary or desirable to effect such
collection, enforcement or payment, the Lead Secured Party being hereby
appointed the Guarantor's attorney-in-fact for such purpose.

     2.09. Limitation on Guarantee.

          (a) If under any applicable law (including without limitation state
and Federal fraudulent transfer laws) the obligations of the Guarantor under
Section 2.01 would otherwise be held or determined to be void, invalid or
unenforceable or if the claims of the Secured Parties in respect of such
obligations would be subordinated to the claims of any other creditors on
account of the Guarantor's liability under Section 2.01, then, notwithstanding
any other provision of this Guaranty to the contrary, the amount of such
liability shall, without any further action by the Guarantor, any Secured Party,
the Lead Secured Party or any other Person, be automatically limited and reduced
to the highest amount which is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or proceeding.

          (b) The Secured Parties agree to cause the Lead Secured Party to
release this Guaranty when the Debentures are paid in full.

     2.10. Revocation. To the fullest extent not prohibited by law, the
Guarantor hereby waives all right of revocation with respect to the Debentures.

     2.11. Right to Offset Balances. The Guarantor agrees that, in addition to
(and without any limitation of) any right of set-off, banker's lien or
counterclaim any Secured Party may otherwise have, each Secured Party shall be
entitled, at its option, to offset balances held by it for the account of the
Guarantor at any of its offices, in dollars or in any other currency, against
any obligations of the Issuers to such Secured Party after the occurrence and
during the continuance of an Event of Default (regardless of whether such
balances are then due to the Guarantor). Any Secured Party so entitled shall
promptly notify the applicable Guarantor and the Secured Parties of any offset
effected by it; provided that such Secured Party's failure to give such notice
shall not affect the validity of such offset or the obligations of the Guarantor
hereunder or under any other Transaction Document.

                                       8
<PAGE>

     SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GUARANTOR. The
Guarantor represents and warrants to the Lead Secured Party and each of the
Secured Parties that each of the following statements is accurate and complete
as of the date of this Guaranty:

          (c) this Guaranty has been duly executed and delivered by the
Guarantor and constitutes a legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws of general application
relating to or affecting the enforcement of creditors' rights generally;

          (d) the execution, delivery and performance of this Guaranty do not
(i) violate any requirement of law, (ii) contravene any provision of any
contractual obligation, or (iii) result in the creation or imposition of any
lien, charge or encumbrance of any nature upon any property, asset or revenue of
the Guarantor;

          (e) all consents, approvals, orders and authorizations of, and
registrations, declarations and filings with, any governmental authority or
other person or entity (including, without limitation, the shareholders, members
or partners of any entity), if any, which are required to be obtained in
connection with the execution and delivery of this Guaranty or the performance
of the Guarantor's obligations hereunder have been obtained, and each is in full
force and effect;

          (f) the Guarantor has paid all taxes and other charges imposed by any
governmental authority due and payable by the Guarantor other than those which
are being challenged in good faith by appropriate proceedings;

          (g) the Guarantor is not in violation of any requirement of law or
contractual obligation other than any violation the consequences of which could
not have a Material Adverse Effect on the Guarantor's ability to perform its
obligations hereunder; and

          (h) no action, proceeding, investigation or litigation is pending or,
to the knowledge of the Guarantor, overtly threatened against the Guarantor by
any person or entity which, if adversely determined, could have a Material
Adverse Effect.

     SECTION 4. MISCELLANEOUS PROVISIONS.

     4.01. Waiver. No waiver of any breach or default or any right under this
Guaranty shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.

     4.02. Notices. Whenever notice is required to be given under this Guaranty,
unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Secured Parties shall
provide the Guarantor with prompt written notice of all actions taken pursuant
to this Guaranty, including in reasonable detail a description of such action
and the reason therefor.

                                       9
<PAGE>

     4.03. Expenses, Etc. The Guarantor agrees to pay or to reimburse the Lead
Secured Party and the Secured Parties for all costs and expenses (including fees
and expenses of counsel) that may be incurred by the Lead Secured Party or the
Secured Parties in any effort to enforce any of the obligations of the Guarantor
under this Guaranty, whether or not any lawsuit is filed, including all such
costs and expenses (and attorneys' fees and expenses) incurred by the Lead
Secured Party and the Secured Parties in any bankruptcy, reorganization, workout
or similar proceeding. All amounts due under this Guaranty (including under
Section 2.01) and not paid when due shall bear interest until paid.

     4.04. Amendments, Etc. This Guaranty may be amended, supplemented, or
otherwise modified only by the written consent of the Secured Parties.

     4.05. Assignment, Successors and Assigns. None of Lead Secured Party,
Secured Parties, or Guarantor may assign or transfer its rights and obligations
under this Guaranty except as permitted by the Transaction Documents or
otherwise with the out prior written consent of the Secured Parties (which
consent shall not unreasonably be withheld). The provisions hereof shall be
binding upon each party hereto, and each or its successors and permitted
assigns.

     4.06. Survival. All representations and warranties made in this Guaranty or
in any certificate or other document delivered pursuant to or in connection with
this Guaranty shall survive the execution and delivery of this Guaranty or such
certificate or other document (as the case may be) or any deemed repetition of
any such representation or warranty.

     4.07. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE COMPLETE AND FINAL
AGREEMENT AMONG THE GUARANTOR AND THE LEAD SECURED PARTY AND SUPERSEDES ALL
PRIOR AGREEMENTS, WRITTEN OR ORAL, ON THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR
AMONG THE GUARANTOR, THE LEAD SECURED PARTY AND THE SECURED PARTIES.

     4.08. Severability. In the event any provision of this Guaranty is held to
be invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Guaranty shall,
as to such jurisdiction, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable. If, notwithstanding the foregoing, any provision of
this Guaranty is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Guaranty and without affecting the validity or enforceability of such
provision or the other provisions of this Guaranty in any other jurisdiction.

                                       10
<PAGE>

     4.09. Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Guaranty.

     4.10. Counterparts. This Guaranty may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Guaranty. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

     4.11. Governing Law; Jurisdiction and Venue. This Guaranty shall be
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Guaranty and all
disputes arising hereunder shall be governed by, the laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York. The parties hereto (a) agree that any legal action or proceeding with
respect to this Guaranty or any other agreement, document, or other instrument
executed in connection herewith or therewith, shall be brought in any state or
federal court located within the City of New York in the State of New York, (b)
irrevocably waive any objections which either may now or hereafter have to the
venue of any suit, action or proceeding arising out of or relating to this
Guaranty, or any other agreement, document, or other instrument executed in
connection herewith or therewith, brought in the aforementioned courts, and (c)
further irrevocably waive any claim that any such suit, action, or proceeding
brought in any such court has been brought in an inconvenient forum.

     4.12. Waiver of Jury Trial. THE GUARANTOR AND SECURED PARTIES IRREVOCABLY
WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT TO
ENFORCE ANY PROVISION OF THIS GUARANTY OR ANY TRANSACTION DOCUMENT.

     4.13. Power of Attorney. The Guarantor hereunder hereby grants to the
Issuers an irrevocable power of attorney to act as its attorney-in-fact for the
limited purpose of perfecting, exercising and enforcing their rights under this
Guaranty, but only after the occurrence and during the continuance of an Event
of Default. The Guarantor hereby explicitly acknowledges that the Lead Secured
Party has executed and delivered this Guaranty and each other Transaction
Document to which it is a party, and has performed its obligations under this
Guaranty and each other Transaction Document to which it is a party, in reliance
upon the irrevocable grant of such power of attorney pursuant to this Section
4.13.

     4.14. Binding Upon Successor; Death of Guarantor. This Guaranty shall be
binding upon the Guarantor and the Guarantor's heirs, successors and assigns and
shall inure to the benefit of the Lead Secured Party and each of the Secured
Parties and each of their successors and assigns. This Guaranty shall not
terminate or be revoked upon the death of the Guarantor, notwithstanding any
knowledge by the Lead Secured Party or any Secured Party of the Guarantor's
death.

     4.15. Advice of Counsel. THE GUARANTOR ACKNOWLEDGES THAT THE GUARANTOR HAS
EITHER OBTAINED THE ADVICE OF COUNSEL OR HAS HAD THE OPPORTUNITY TO OBTAIN SUCH
ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF THIS GUARANTY.

                                       11
<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Guaranty as of the date
first above written.

                                         GUARANTOR:

                                         JOHN SAWYER,
                                         an individual
                                         /s/ John B. Sawyer
                                         ---------------------------------------

                                       12
<PAGE>

ACKNOWLEDGED AND AGREED
as of the date of this Guaranty Agreement
first above written.

VICTORY PARK MASTER FUND, LTD.
AS LEAD SECURED PARTY

By: /s/ Richard Levy
------------------------------------
Name:   Richard Levy
Title:  Sole Member

                                       13

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