Document:

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                                                                    Exhibit 10.2

                         REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into on  September 27, 2000, among MIDWAY AIRLINES CORPORATION, a
Delaware corporation (the "Company"), ALLFIRST BANK, as Trustee under each of
the Trust Agreements (as defined below), and MORGAN STANLEY & CO. INCORPORATED
and SEABURY SECURITIES LLC (the "Placement Agents").

          This Agreement is made pursuant to the Placement Agreement dated
September 27, 2000, among the Company and the Placement Agents (the "Placement
Agreement"),which provides for the sale to the Placement Agents of (i)
$129,801,000 aggregate principal amount of 8.82% 2000-1A Pass Through
Certificates (the "Class A Certificates"), (ii) $51,110,000 aggregate principal
amount of 10.07% 2000-1B Pass Through Certificates (the "Class B Certificates"),
and (iii) $16,661,000 aggregate principal amount of 11.19% 2000-1C Pass Through
Certificates (the "Class C Certificates", and together with the Class A
Certificates and the Class B Certificates, the "Certificates"), respectively.
In order to induce the Placement Agents to enter into the Placement Agreement,
the Company has agreed to provide to the Placement Agents and their direct and
indirect transferees the registration rights set forth in this Agreement.  The
execution of this Agreement is a condition to the closing under the Placement
Agreement.

          In consideration of the foregoing, the parties hereto agree as
follows:

          1.   Definitions.

          As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

          "1933 Act" shall mean the Securities Act of 1933, as amended from time
           --------
     to time.

          "1934 Act" shall mean the Securities Exchange Act of 1934, as amended
           --------
     from time to time.

          "Applicable Trust Agreement" shall mean, (i) with respect to the Class
           --------------------------
     A Certificates, the Class A Holders or the Class A Trustee, the Class A
     Trust Agreement, (ii) with respect to the Class B Certificates, the Class B
     Holders or the Class B Trustee, the Class B Trust Agreement, and (iii) with
     respect to the Class C Certificates, the Class C Holders or the Class C
     Trustee, the Class C Trust Agreement.

          "Certificates" shall have the meaning set forth in the second
           ------------
     paragraph of this Agreement.
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          "Class A Certificates" shall have the meaning set forth in the
           --------------------
      second paragraph of this Agreement.

          "Class A Exchange Certificates" shall mean securities issued under the
           -----------------------------
     Class A Trust Agreement of equal outstanding principal amount as and
     containing terms identical to the Class A Certificates (except that (i)
     interest thereon shall accrue from the last date on which interest was paid
     on the Class A Certificates or, if no such interest has been paid, from the
     Closing Date, (ii) the transfer restrictions thereon shall be modified or
     eliminated, as appropriate and (iii) certain provisions relating to an
     increase in the stated rate of interest thereon shall be eliminated), to be
     offered to Holders of the Class A Certificates in exchange for such Class A
     Certificates pursuant to the Exchange Offer.

          "Class A Holder" shall mean any Placement Agent, for so long as it
           --------------
     owns any Class A Registrable Certificates, and each of its successors,
     assigns and direct and indirect transferees who become registered owners of
     Class A Registrable Certificates under the Class A Trust Agreement;

     provided that for purposes of Sections 4 and 5 of this Agreement, the term
     --------
     "Class A Holder" shall include Participating Broker-Dealers (as defined in
     Section 4(a)).

          "Class A Registrable Certificates" shall mean the Class A
           --------------------------------
     Certificates; provided, however, that the Class A Certificates shall cease
                   --------  -------
     to be Class A Registrable Certificates upon the earliest to occur of (i)
     the consummation of the Exchange Offer, (ii) a Registration Statement with
     respect to such Class A Certificates shall have been declared effective
     under the 1933 Act and such Class A Certificates shall have been disposed
     of pursuant to such Registration Statement, (iii) such Class A Certificates
     shall have been sold to the public pursuant to Rule 144(k) (or any similar
     provision then in force, but not Rule 144A) under the 1933 Act or (iv) such
     Class A Certificates shall have ceased to be outstanding.

          "Class A Trust Agreement" shall mean the Pass Through Trust Agreement
           -----------------------
     relating to the Class A Certificates dated as of the Closing Date between
     the Company and the Class A Trustee, as the same may be amended from time
     to time in accordance with the terms thereof.

          "Class A Trustee" shall mean Allfirst Bank, not in its individual
           ---------------
     capacity except as expressly set forth in the Class A Trust Agreement, but
     solely as Trustee under the Class A Trust Agreement, together with any
     successor Trustee under the terms of the Class A Trust Agreement.

          "Class B Certificates" shall have the meaning set forth in the second
           --------------------
     paragraph of this Agreement.

          "Class B Exchange Certificates" shall mean securities issued under the
           -----------------------------
     Class B Trust Agreement of equal outstanding principal amount as and
     containing terms identical to the Class B Certificates (except that (i)
     interest thereon shall accrue from the last date on which interest was paid
     on the Class B Certificates or, if no such interest has been

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     paid, from the Closing Date, (ii) the transfer restrictions thereon shall
     be modified or eliminated, as appropriate and (iii) certain provisions
     relating to an increase in the stated rate of interest thereon shall be
     eliminated), to be offered to Holders of the Class B Certificates in
     exchange for such Class B Certificates pursuant to the Exchange Offer.

          "Class B Holder" shall mean any Placement Agent, for so long as it
           --------------
     owns any Class B Registrable Certificates, and each of its successors,
     assigns and direct and indirect transferees who become registered owners of
     Class B Registrable Certificates under the Class B Trust Agreement;
     provided that for purposes of Sections 4 and 5 of this Agreement, the term
     --------
     "Class B Holder" shall include Participating Broker-Dealers (as defined in
     Section 4(a)).

          "Class B Registrable Certificates" shall mean the Class B
           --------------------------------
     Certificates; provided, however, that the Class B Certificates shall cease
                   --------  -------
     to be Class B Registrable Certificates upon the earliest to occur of (i)
     the consummation of the Exchange Offer, (ii) a Registration Statement with
     respect to such Class B Certificates shall have been declared effective
     under the 1933 Act and such Class B Certificates shall have been disposed
     of pursuant to such Registration Statement, (iii) such Class B Certificates
     shall have been sold to the public pursuant to Rule 144(k) (or any similar
     provision then in force, but not Rule 144A) under the 1933 Act or (iv) such
     Class B Certificates shall have ceased to be outstanding.

          "Class B Trust Agreement" shall mean the Pass Through Trust Agreement
           -----------------------
     relating to the Class B Certificates dated as of the Closing Date between
     the Company and the Class B Trustee, as the same may be amended from time
     to time in accordance with the terms thereof.

          "Class B Trustee" shall mean Allfirst Bank, not in its individual
           ---------------
     capacity except as expressly set forth in the Class B Trust Agreement, but
     solely as Trustee under the Class B Trust Agreement, together with any
     successor Trustee under the terms of the Class B Trust Agreement.

          "Class C Certificates" shall have the meaning set forth in the second
           --------------------
     paragraph of this Agreement.

          "Class C Exchange Certificates" shall mean securities issued under the
           -----------------------------
     Class C Trust Agreement of equal outstanding principal amount as and
     containing terms identical to the Class C Certificates (except that (i)
     interest thereon shall accrue from the last date on which interest was paid
     on the Class C Certificates or, if no such interest has been paid, from the
     Closing Date, (ii) the transfer restrictions thereon shall be modified or
     eliminated, as appropriate and (iii) certain provisions relating to an
     increase in the stated rate of interest thereon shall be eliminated), to be
     offered to Holders of the Class C Certificates in exchange for such Class C
     Certificates pursuant to the Exchange Offer.

          "Class C Holder" shall mean any Placement Agent, for so long as it
           --------------
     owns any Class C Registrable Certificates, and each of its successors,
     assigns and direct and

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     indirect transferees who become registered owners of Class C Registrable
     Certificates under the Class C Trust Agreement; provided that for purposes
                                                     --------
     of Sections 4 and 5 of this Agreement, the term "Class C Holder" shall
     include Participating Broker-Dealers (as defined in Section 4(a)).

          "Class C Registrable Certificates" shall mean the Class C
           --------------------------------
     Certificates; provided, however, that the Class C Certificates shall cease
                   --------  -------
     to be Class C Registrable Certificates upon the earliest to occur of (i)
     the consummation of the Exchange Offer, (ii) a Registration Statement with
     respect to such Class C Certificates shall have been declared effective
     under the 1933 Act and such Class C Certificates shall have been disposed
     of pursuant to such Registration Statement, (iii) such Class C Certificates
     shall have been sold to the public pursuant to Rule 144(k) (or any similar
     provision then in force, but not Rule 144A) under the 1933 Act or (iv) such
     Class C Certificates shall have ceased to be outstanding.

          "Class C Trust Agreement" shall mean the Pass Through Trust Agreement
           -----------------------
     relating to the Class C Certificates dated as of the Closing Date between
     the Company and the Class C Trustee, as the same may be amended from time
     to time in accordance with the terms thereof.

          "Class C Trustee" shall mean Allfirst Bank, not in its individual
           ---------------
     capacity except as expressly set forth in the Class C Trust Agreement, but
     solely as Trustee under the Class C Trust Agreement, together with any
     successor Trustee under the terms of the Class C Trust Agreement.

          "Closing Date" shall mean the Closing Date as defined in the Placement
           ------------
     Agreement.

          "Company" shall have the meaning set forth in the preamble and shall
           -------
     also include the Company's successors.

          "Exchange Certificates" shall mean, together, the Class A Exchange
           ---------------------
     Certificates, the Class B Exchange Certificates and the Class C Exchange
     Certificates.

          "Exchange Dates" shall have the meaning set forth in Section 2(a)(ii)
           --------------
     of this Agreement.

          "Exchange Offer" shall mean the exchange offer by the Company of
           --------------
     Exchange Certificates for Registrable Certificates pursuant to Section 2(a)
     hereof.

          "Exchange Offer Registration" shall mean a registration under the 1933
           ---------------------------
     Act effected pursuant to Section 2(a) hereof.

          "Exchange Offer Registration Statement" shall mean an exchange offer
           -------------------------------------
     registration statement on Form S-4 (or, if applicable, on another
     appropriate form) and all amendments and supplements to such registration
     statement, in each case including the

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     Prospectus contained therein, all exhibits thereto and all material
     incorporated by reference therein.

          "Holder" shall mean a Class A Holder, a Class B Holder, or a Class C
           ------
     Holder; provided that for purposes of Sections 4 and 5 of this Agreement,
             --------
     the term "Holder" shall include Participating Broker-Dealers (as defined in
     Section 4(a)).

          "Majority Holders" shall mean, together, the Holders of a majority in
           ----------------
     aggregate principal amount of the Registrable Certificates then
     outstanding; provided that whenever the consent or approval of Holders of a
                  --------
     specified percentage of Registrable Certificates is required hereunder,
     Registrable Certificates held by the Company or any of its affiliates (as
     such term is defined in Rule 405 under the 1933 Act) (other than the
     Placement Agents or subsequent holders of Registrable Certificates if such
     subsequent holders are deemed to be such affiliates solely by reason of
     their holding of such Registrable Certificates) shall not be counted in
     determining whether such consent or approval was given by the Holders of
     such required percentage or amount.

          "Person" shall mean an individual, partnership, corporation, trust or
           ------
     unincorporated organization, or a government or agency or political
     subdivision thereof.

          "Placement Agents" shall have the meaning set forth in the preamble.
           ----------------

          "Placement Agreement" shall have the meaning set forth in the
           -------------------
     preamble.

          "Prospectus" shall mean the prospectus included in a Registration
           ----------
     Statement, including any preliminary prospectus, and any such prospectus as
     amended or supplemented by any prospectus supplement, including a
     prospectus supplement with respect to the terms of the offering of any
     portion of the Registrable Certificates covered by a Shelf Registration
     Statement, and by all other amendments and supplements to such prospectus,
     and in each case including all material incorporated by reference therein.

          "Registrable Certificates" shall mean, together, the Class A
           ------------------------
     Registrable Certificates, the Class B Registrable Certificates and the
     Class C Registrable Certificates.

          "Registration Expenses" shall mean any and all expenses incident to
           ---------------------
     performance of or compliance by the Company and the Trustees with this
     Agreement, including without limitation:  (i) all SEC, stock exchange or
     National Association of Securities Dealers, Inc. registration and filing
     fees, (ii) all fees and expenses incurred in connection with compliance
     with state securities or blue sky laws (including reasonable fees and
     disbursements of counsel for any underwriters or Holders in connection with
     blue sky qualification of any of the Exchange Certificates or Registrable
     Certificates), (iii) all expenses of any Persons in preparing or assisting
     in preparing, word processing, printing and distributing any Registration
     Statement, any Prospectus, any amendments or supplements thereto, any
     underwriting agreements, securities sales agreements and other documents
     relating to the performance of and compliance with this Agreement, (iv) all
     rating agency fees, (v) all fees and disbursements relating to the
     qualification of the Trust Agreements under applicable securities laws,
     (vi) the fees and disbursements of the

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     Trustees and their counsel, (vii) the fees and disbursements of counsel for
     the Company and, in the case of a Shelf Registration Statement, the fees
     and disbursements of one counsel for the Holders (which counsel shall be
     selected by the Majority Holders and which counsel may also be counsel for
     the Placement Agents) and (viii) the fees and disbursements of the
     independent public accountants of the Company, including the expenses of
     any special audits or "cold comfort" letters required by or incident to
     such performance and compliance, but excluding fees and expenses of counsel
     to the underwriters (other than fees and expenses set forth in clause (ii)
     above) or the Holders and underwriting discounts and commissions and
     transfer taxes, if any, relating to the sale or disposition of Registrable
     Certificates by a Holder.

          "Registration Statement" shall mean any registration statement of the
           ----------------------
     Company that covers any of the Exchange Certificates or Registrable
     Certificates pursuant to the provisions of this Agreement and all
     amendments and supplements to any such Registration Statement, including
     post-effective amendments, in each case including the Prospectus contained
     therein, all exhibits thereto and all material incorporated by reference
     therein.

          "SEC" shall mean the Securities and Exchange Commission.
           ---

          "Shelf Registration" shall mean a registration effected pursuant to
           ------------------
     Section 2(b) hereof.

          "Shelf Registration Statement" shall mean a "shelf" registration
           ----------------------------
     statement of the Company pursuant to the provisions of Section 2(b) of this
     Agreement which covers all of the Registrable Certificates (but no other
     securities unless approved by the Holders whose Registrable Certificates
     are covered by such Shelf Registration Statement) on an appropriate form
     under Rule 415 under the 1933 Act, or any similar rule that may be adopted
     by the SEC, and all amendments and supplements to such registration
     statement, including post-effective amendments, in each case including the
     Prospectus contained therein, all exhibits thereto and all material
     incorporated by reference therein.

          "Trust Agreement" shall mean the Class A Trust Agreement, the Class B
           ---------------
     Trust Agreement or the Class C Trust Agreement, as applicable, and when
     used in the plural shall mean, together, the Class A Trust Agreement, the
     Class B Trust Agreement and the Class C Trust Agreement.

          "Trustee" shall mean the Class A Trustee, the Class B Trustee or the
           -------
     Class C Trustee, as applicable, and when used in the plural shall mean,
     together, the Class A Trustee, the Class B Trustee and the Class C Trustee.

          "Underwritten Registration" or "Underwritten Offering" shall mean a
           -------------------------      ---------------------
     registration in which Registrable Certificates are sold to an Underwriter
     (as hereinafter defined) for re-offering to the public.

          2.  Registration Under the 1933 Act.  (a)  To the extent not
              -------------------------------
prohibited by any applicable law or applicable interpretation of the Staff of
the SEC, the Company shall use its best

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efforts (A) to file with the SEC within 120 days after the Closing Date an
Exchange Offer Registration Statement covering the offer by the Company to the
Holders to exchange all of the Registrable Certificates for Exchange
Certificates and (B) to cause such Exchange Offer Registration Statement to be
declared effective by the SEC within 180 days after the Closing Date. The
Company shall commence the Exchange Offer promptly after the Exchange Offer
Registration Statement has been declared effective by the SEC. The Company shall
commence the Exchange Offer by mailing the related exchange offer Prospectus and
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:

          (i)    that the Exchange Offer is being made pursuant to this
     Registration Rights Agreement and that all Registrable Certificates validly
     tendered will be accepted for exchange;

          (ii)   the period for exchange (which shall be a period of at least 20
     consecutive business days from the date such notice is mailed) (such days
     being the "Exchange Dates");

          (iii)  that any Registrable Certificate not tendered will remain
     outstanding and continue to accrue interest, but will not retain any rights
     under this Registration Rights Agreement;

          (iv)   that Holders electing to have a Registrable Certificate
     exchanged pursuant to the Exchange Offer will be required to surrender such
     Registrable Certificate, together with the enclosed letters of transmittal,
     to the institution and at the office specified in the notice prior to the
     close of business on the last Exchange Date; and

          (v)    that Holders will be entitled to withdraw their election, not
     later than the close of business on the last Exchange Date, by sending to
     the institution and at the office specified in the notice, a telegram,
     telex, facsimile transmission or letter setting forth the name of such
     Holder, the principal amount of Registrable Certificates delivered for
     exchange, and a statement that such Holder is withdrawing his election to
     have such Certificates exchanged.

          As soon as practicable after the last Exchange Date, the Company shall
or shall cause the Trustees to:

          (i)    accept for exchange Registrable Certificates or portions
     thereof tendered and not validly withdrawn pursuant to the Exchange Offer;

          (ii)   deliver, or cause to be delivered, to the Class A Trustee for
     cancellation all Class A Registrable Certificates or portions thereof so
     accepted for exchange by the Company, and issue, and cause the Class A
     Trustee to promptly authenticate and mail to each Class A Holder, Class A
     Exchange Certificates equal in principal amount to the principal amount of
     the Class A Registrable Certificates surrendered by such Class A Holder;

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          (iii)  deliver, or cause to be delivered, to the Class B Trustee for
     cancellation all Class B Registrable Certificates or portions thereof so
     accepted for exchange by the Company, and issue, and cause the Class B
     Trustee to promptly authenticate and mail to each Class B Holder, Class B
     Exchange Certificates equal in principal amount to the principal amount of
     the Class B Registrable Certificates surrendered by such Class B Holder;
     and

          (iv)   deliver, or cause to be delivered, to the Class C Trustee for
     cancellation all Class C Registrable Certificates or portions thereof so
     accepted for exchange by the Company, and issue, and cause the Class C
     Trustee to promptly authenticate and mail to each Class C Holder, Class C
     Exchange Certificates equal in principal amount to the principal amount of
     the Class C Registrable Certificates surrendered by such Class C Holder.

The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer.  The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC.  The Company shall inform the
Placement Agents of the names and addresses of the Holders to whom the Exchange
Offer is made, and the Placement Agents shall have the right, subject to
applicable law, to contact such Holders and otherwise facilitate the tender of
Registrable Certificates in the Exchange Offer.

          (b)    In the event that (i) the Company determines that the Exchange
Offer Registration provided for in Section 2(a) above is not available or may
not be consummated as soon as practicable after the last Exchange Date because
it would violate applicable law or the applicable interpretations of the Staff
of the SEC, (ii) the Exchange Offer Registration Statement is not declared
effective by within 180 days after the Closing Date, (iii) the Exchange Offer is
not for any other reason consummated within 210 days after the Closing Date or
(iv) the Exchange Offer has been completed and in the opinion of counsel for the
Placement Agents a Registration Statement must be filed and a Prospectus must be
delivered by the Placement Agents in connection with any offering or sale of
Registrable Certificates, the Company shall file as soon as practicable after
such determination, date or notice of such opinion of counsel is given to the
Company, as the case may be, a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Certificates, and shall use its
best efforts to have such Shelf Registration Statement declared effective by the
SEC by the 180th day after the Closing Date.  The Company agrees to use its best
efforts to keep the Shelf Registration Statement continuously effective until
the second anniversary of the Closing Date or such shorter period that will
terminate when all of the Registrable Certificates covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement.  The Company further agrees to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use its best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable.  The Company

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agrees to furnish to the Holders of Registrable Certificates copies of any such
supplement or amendment promptly after its being used or filed with the SEC.

          (c) The Company shall pay all Registration Expenses in connection with
the registration pursuant to Section 2(a) or Section 2(b).  Each Holder shall
pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Certificates
pursuant to the Shelf Registration Statement.

          (d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that if, after it has been declared effective, the
         --------  -------
offering of Registrable Certificates pursuant to a Shelf Registration Statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court, such Shelf Registration
Statement will be deemed not to have become effective during the period of such
interference until the offering of Registrable Certificates pursuant to such
Registration Statement may legally resume.  As provided for in the Trust
Agreements, the interest rate on the Class A Certificates, the Class B
Certificates and the Class C Certificates shall be 8.82%, 10.07% and 11.19%, per
annum, respectively; however, in the event that the Exchange Offer is not
consummated and, if a Shelf Registration Statement is required hereby, the Shelf
Registration Statement is not declared effective (each a "Registration Event")
on or prior to the 210/th/ day after the Closing Date, the interest rate borne
by the Certificates will increase by 0.50% per annum, effective from and
including such 210/th/ day to but excluding the date on which the Exchange Offer
is consummated or a Shelf Registration Statement is declared effective.

          (e) Without limiting the remedies available to the Placement Agents
and the Holders, the Company acknowledges that any failure by the Company to
comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.

          3.  Registration Procedures.  In connection with the obligations of
              -----------------------
the Company with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, the Company shall as expeditiously as possible:

          (a) prepare and file with the SEC a Registration Statement on the
     appropriate form under the 1933 Act, which form (x) shall be selected by
     the Company and (y) shall, in the case of a Shelf Registration, be
     available for the sale of the Registrable Certificates by the selling
     Holders thereof and (z) shall comply as to form in all material respects
     with the requirements of the applicable form and include all financial
     statements required by the SEC to be filed therewith, and use its best
     efforts to cause such Registration Statement to become effective and remain
     effective in accordance with Section 2 hereof;

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          (b) prepare and file with the SEC such amendments and post-effective
     amendments to each Registration Statement as may be necessary to (x) keep
     such Registration Statement effective for the applicable period under this
     Registration Rights Agreement, and (y) cause each Prospectus to be
     supplemented by any required prospectus supplement and, as so supplemented,
     to be filed pursuant to Rule 424 under the 1933 Act and (z) keep each
     Prospectus current during the period described under Section 4(3) and Rule
     174 under the 1933 Act that is applicable to transactions by brokers or
     dealers with respect to the Registrable Certificates or Exchange
     Certificates;

          (c) in the case of a Shelf Registration, furnish to each Holder of
     Registrable Certificates, to counsel for the Placement Agents, to counsel
     for the Holders and to each Underwriter of an Underwritten Offering of
     Registrable Certificates, if any, and each such Underwriter's Counsel,
     without charge, as many copies of each Prospectus, including each
     preliminary Prospectus, and any amendment or supplement thereto and such
     other documents as such Holder or Underwriter may reasonably request, in
     order to facilitate the public sale or other disposition of the Registrable
     Certificates; and the Company consents to the use of such Prospectus and
     any amendment or supplement thereto in accordance with applicable law by
     each of the selling Holders of Registrable Certificates and any such
     Underwriters in connection with the offering and sale of the Registrable
     Certificates covered by and in the manner described in such Prospectus or
     any amendment or supplement thereto in accordance with applicable law;

          (d) use their best efforts to register or qualify the Registrable
     Certificates under all applicable state securities or "blue sky" laws of
     such jurisdictions as any Holder of Registrable Certificates covered by a
     Registration Statement shall reasonably request in writing by the time the
     applicable Registration Statement is declared effective by the SEC, to
     cooperate with such Holders in connection with any filings required to be
     made with the National Association of Securities Dealers, Inc. and do any
     and all other acts and things which may be reasonably necessary or
     advisable to enable such Holder to consummate the disposition in each such
     jurisdiction of such Registrable Certificates owned by such Holder;
     provided, however, that the Company shall not be required to (i) qualify as
     --------  -------
     a foreign corporation or as a dealer in securities in any jurisdiction
     where it would not otherwise be required to qualify but for this Section
     3(d), (ii) file any general consent to service of process or (iii) subject
     itself to taxation in any such jurisdiction if it is not so subject;

          (e) in the case of a Shelf Registration, notify each Holder of
     Registrable Certificates, counsel for the Holders and counsel for the
     Placement Agents promptly and, if requested by any such Holder or counsel,
     confirm such advice in writing, (i) when a Registration Statement has
     become effective and when any post-effective amendment thereto has been
     filed and become effective, (ii) of any request by the SEC or any state
     securities authority for amendments and supplements to a Registration
     Statement and Prospectus or for additional information, in each case after
     the Registration Statement has become effective, (iii) of the issuance by
     the SEC or any state securities authority of any stop order suspending the
     effectiveness of a Registration Statement or the initiation of any
     proceedings for that purpose, (iv) if, between the effective date of a
     Registration

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     Statement and the closing of any sale of Registrable Certificates covered
     thereby, the representations and warranties of the Company contained in any
     underwriting agreement, securities sales agreement or other similar
     agreement, if any, relating to such offering cease to be true and correct
     in all material respects or if the Company receives any notification with
     respect to the suspension of the qualification of the Registrable
     Certificates for sale in any jurisdiction or the initiation of any
     proceeding for such purpose, (v) of the happening of any event during the
     period a Shelf Registration Statement is effective which makes any
     statement made in such Registration Statement or the related Prospectus
     untrue in any material respect or which requires the making of any changes
     in such Registration Statement or Prospectus in order to make the
     statements therein not misleading, and (vi) of any determination by the
     Company that a post-effective amendment to a Registration Statement would
     be appropriate;

          (f) make every reasonable effort to obtain the withdrawal of any order
     suspending the effectiveness of a Registration Statement at the earliest
     possible moment and provide immediate notice to each Holder of the
     withdrawal of any such order;

          (g) in the case of a Shelf Registration, furnish to each Holder of
     Registrable Certificates, without charge, at least one conformed copy of
     each Registration Statement and any post-effective amendment thereto
     (without documents incorporated therein by reference or exhibits thereto,
     unless requested);

          (h) in the case of a Shelf Registration, cooperate and cause the
     Trustee to cooperate with the selling Holders of Registrable Certificates
     to facilitate the timely preparation and delivery of certificates
     representing Registrable Certificates to be sold and not bearing any
     restrictive legends and enable such Registrable Certificates to be in such
     denominations (consistent with the provisions of the Applicable Trust
     Agreement) and registered in such names as the selling Holders may
     reasonably request at least two business days prior to the closing of any
     sale of Registrable Certificates;

          (i) in the case of a Shelf Registration, upon the occurrence of any
     event contemplated by Section 3(e)(v) hereof, use its best efforts to
     prepare and file with the SEC a supplement or post-effective amendment to a
     Registration Statement or the related Prospectus or any document
     incorporated therein by reference or file any other required document so
     that, as thereafter delivered to the purchasers of the Registrable
     Certificates, such Prospectus will not contain any untrue statement of a
     material fact or omit to state a material fact necessary to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading; the Company agrees to notify the Holders to suspend
     use of the Prospectus as promptly as practicable after the occurrence of
     such an event, and the Holders hereby agree to suspend use of the
     Prospectus until the Company has amended or supplemented the Prospectus to
     correct such misstatement or omission;

          (j) a reasonable time prior to the filing of any Registration
     Statement, any Prospectus, any amendment to a Registration Statement or
     amendment or supplement to a Prospectus or any document which is to be
     incorporated by reference into a Registration Statement or a Prospectus
     (other than filings pursuant to the 1934 Act) after initial filing

                                       11
<PAGE>

     of a Registration Statement, provide copies of such document to the
     Placement Agents and their counsel (and, in the case of a Shelf
     Registration Statement, the Holders and their counsel) and make such of the
     representatives of the Company as shall be reasonably requested by the
     Placement Agents or their counsel (and, in the case of a Shelf Registration
     Statement, the Holders or their counsel) available for discussion of such
     document, and shall not at any time file or make any amendment to the
     Registration Statement, any Prospectus or any amendment of or supplement to
     a Registration Statement or a Prospectus or any document which is to be
     incorporated by reference into a Registration Statement or a Prospectus, of
     which the Placement Agents and their counsel (and, in the case of a Shelf
     Registration Statement, the Holders and their counsel) shall not have
     previously been advised and furnished a copy or to which the Placement
     Agents or their counsel (and, in the case of a Registration Statement, the
     Holders or their counsel) shall object;

          (k) obtain a CUSIP number for all Exchange Certificates or Registrable
     Certificates, as the case may be, not later than the effective date of a
     Registration Statement and provide the Trustees with printed certificates
     evidencing the Exchange Certificates or the Registrable Certificates, as
     the case may be, held in book entry form in a form eligible for deposit
     with The Depository Trust Company;

          (l) cause the Trust Agreements to be qualified under the Trust
     Indenture Act of 1939, as amended (the "TIA"), in connection with the
     registration of the Exchange Certificates or Registrable Certificates, as
     the case may be, cooperate with the Trustees and the Holders to effect such
     changes to the Trust Agreements as may be required for the Trust Agreements
     to be so qualified in accordance with the terms of the TIA and execute, and
     use its best efforts to cause the Trustees to execute, all documents as may
     be required to effect such changes, and all other forms and documents
     required to be filed with the SEC to enable the Trust Agreements to be so
     qualified in a timely manner;

          (m) in the case of a Shelf Registration, make available for inspection
     by a representative of the Holders of the Registrable Certificates, any
     Underwriter participating in any disposition pursuant to such Shelf
     Registration Statement, and attorneys and accountants designated by the
     Holders, at reasonable times and in a reasonable manner, all financial and
     other records, pertinent documents and properties of the Company, and cause
     the respective officers, directors and employees of the Company to supply
     all information reasonably requested by any such representative,
     Underwriter, attorney or accountant in connection with a Shelf Registration
     Statement;

          (n) in the case of a Shelf Registration, use its best efforts to cause
     all Registrable Certificates to be listed on any securities exchange or any
     automated quotation system on which similar securities issued by the
     Company are then listed if requested by the Majority Holders, to the extent
     such Registrable Certificates satisfy applicable listing requirements;

                                       12
<PAGE>

          (o) use its best efforts to cause the Exchange Certificates or
     Registrable Certificates, as the case may be, to be rated by two nationally
     recognized statistical rating organizations (as such term is defined in
     Rule 436(g)(2) under the 1933 Act);

          (p) if reasonably requested by any Holder of Registrable Certificates
     covered by a Registration Statement, (i) promptly incorporate in a
     Prospectus supplement or post-effective amendment such information with
     respect to such Holder as such Holder reasonably requests to be included
     therein and (ii) make all required filings of such Prospectus supplement or
     such post-effective amendment as soon as the Company has received
     satisfactory notification of the matters to be incorporated in such filing;
     and

          (q) in the case of a Shelf Registration, enter into such customary
     agreements and take all such other actions in connection therewith
     (including those requested by the Holders of a majority of the class of
     Registrable Certificates being sold) in order to expedite or facilitate the
     disposition of such Registrable Certificates including, but not limited to,
     an Underwritten Offering and in such connection, (i) to the extent
     possible, make such representations and warranties to the Holders and any
     Underwriters of such Registrable Certificates with respect to the business
     of the Company, the Registration Statement, Prospectus and documents
     incorporated by reference or deemed incorporated by reference, if any, in
     each case, in form, substance and scope as are customarily made by issuers
     to underwriters in similar underwritten offerings and confirm the same if
     and when requested, (ii) obtain an opinion of counsel to the Company (which
     counsel and opinion, in form, scope and substance, shall be reasonably
     satisfactory to the Holders and such Underwriters and their respective
     counsel) addressed to each selling Holder and Underwriter of Registrable
     Certificates, covering the matters customarily covered in opinions
     requested in similar underwritten offerings, (iii) obtain "cold comfort"
     letters from the independent certified public accountants of the Company
     addressed to each selling Holder and Underwriter of Registrable
     Certificates, such letters to be in customary form and covering matters of
     the type customarily covered in "cold comfort" letters in connection with
     underwritten offerings, and (iv) deliver such documents and certificates as
     may be reasonably requested by the Holders of a majority in principal
     amount of the Registrable Certificates being sold or the Underwriters, and
     which are customarily delivered in underwritten offerings, to evidence the
     continued validity of the representations and warranties of the Company
     made pursuant to clause (i) above and to evidence compliance with any
     customary conditions contained in an underwriting agreement.

          In the case of a Shelf Registration Statement, the Company may require
each Holder of Registrable Certificates to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Certificates as the Company may from time to time reasonably
request in writing.

          In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable Certificates pursuant to a Shelf
Registration Statement until such Holder's receipt of the copies

                                       13
<PAGE>

of the supplemented or amended Prospectus contemplated by Section 3(i) hereof,
and, if so directed by the Company, such Holder will deliver to the Company (at
its expense) all copies in its possession, other than permanent file copies then
in such Holder's possession, of the Prospectus covering such Registrable
Certificates current at the time of receipt of such notice. If the disposition
of Registrable Certificates pursuant to a Shelf Registration Statement shall be
suspended for more than an aggregate of 60 days, whether or not consecutive,
during any 12-month period, the interest rate per annum borne by the
Certificates will be increased by 0.50% from the 61st day of the applicable 12-
month period until such time as disposition of Registrable Certificates is no
longer suspended. If the Company shall give any such notice to suspend the
disposition of Registrable Certificates pursuant to a Registration Statement,
the Company shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Registration Rights Agreement by
the number of days during the period from and including the date of the giving
of such notice to and including the date when the Holders shall have received
copies of the supplemented or amended Prospectus necessary to resume such
dispositions.

          The Holders of Registrable Certificates covered by a Shelf
Registration Statement who desire to do so may sell such Registrable
Certificates in an Underwritten Offering.  In any such Underwritten Offering,
the investment banker or investment bankers and manager or managers (the
"Underwriters") that will administer the offering will be selected by the
Majority Holders of the Registrable Certificates included in such offering.

          4.  Participation of Broker-Dealers in Exchange Offer.  (a)  The Staff
              -------------------------------------------------
of the SEC has taken the position that any broker-dealer that receives Exchange
Certificates for its own account in the Exchange Offer in exchange for
Certificates that were acquired by such broker-dealer as a result of market
making or other trading activities (a "Participating Broker-Dealer") may be
deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Certificates.

          The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Certificates, without
naming the Participating Broker-Dealers or specifying the amount of Exchange
Certificates owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the 1933
Act in connection with resales of Exchange Certificates for their own accounts,
so long as the Prospectus otherwise meets the requirements of the 1933 Act.

          (b) In light of Section 4(a) above, notwithstanding the other
provisions of this Registration Rights Agreement, the Company agrees that the
provisions of this Registration Rights Agreement as they relate to a Shelf
Registration shall also apply to an Exchange Offer Registration to the extent,
and with such reasonable modifications thereto as may be reasonably requested by
the Placement Agents or by one or more Participating Broker-Dealers, in each
case as provided in clause (ii) below, in order to expedite or facilitate the
disposition of any Exchange

                                       14
<PAGE>

Certificates by Participating Broker-Dealers consistent with the positions of
the Staff recited in Section 4(a) above; provided that:
                                         --------

          (i)  the Company shall not be required to amend or supplement the
     Prospectus contained in the Exchange Offer Registration Statement, as would
     otherwise be contemplated by Section 3(i), for a period exceeding 90 days
     after the last Exchange Date (as such period may be extended pursuant to
     the penultimate paragraph of Section 3 of this Agreement) and Participating
     Broker-Dealers shall not be authorized by the Company to deliver and shall
     not deliver such Prospectus after such period in connection with the
     resales contemplated by this Section 4; and

          (ii) the application of the Shelf Registration procedures set forth in
     Section 3 of this Registration Rights Agreement to an Exchange Offer
     Registration, to the extent not required by the positions of the Staff of
     the SEC or the 1933 Act and the rules and regulations thereunder, will be
     in conformity with the reasonable request to the Company by the Placement
     Agents or with the reasonable request in writing to the Company by one or
     more broker-dealers who certify to the Placement Agents and the Company in
     writing that they anticipate that they will be Participating Broker-
     Dealers; provided that in connection with such application of the Shelf
              --------
     Registration procedures set forth in Section 3 to an Exchange Offer
     Registration, the Company shall be obligated (x) to deal only with one
     entity representing the Participating Broker-Dealers, which shall be Morgan
     Stanley & Co. Incorporated unless it elects not to act as such
     representative, (y) to pay the fees and expenses of only one counsel
     representing the Participating Broker-Dealers, which shall be counsel to
     the Placement Agents unless such counsel elects not to so act, and (z) to
     cause to be delivered only one, if any, "cold comfort" letter with respect
     to the Prospectus in the form existing on the last Exchange Date and with
     respect to each subsequent amendment or supplement, if any, effected during
     the period specified in clause (i) above.

          (c)  The Placement Agents shall have no liability to the Company or
any Holder with respect to any request that it may make pursuant to Section 4(b)
above.

          5.   Indemnification and Contribution.  (a)  The Company agrees to
               --------------------------------
indemnify and hold harmless each Placement Agent, each Holder and each person,
if any, who controls any Placement Agent or any Holder within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under
common control with, or is controlled by, any Placement Agent or any Holder,
from and against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
Agent, any Holder or any such controlling or affiliated person in connection
with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which Exchange
Certificates or Registrable Certificates were registered under the 1933 Act,
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company

                                       15
<PAGE>

shall have furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein in light of the circumstances under which they were made
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Placement Agent or any Holder
furnished to the Company in writing by such Placement Agent or any selling
Holder expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Placement Agent from whom the person asserting any such
losses, claims, damages or liabilities purchased Certificates, or any person
controlling such Placement Agent, if a copy of the final Prospectus (as then
amended or supplemented if the Company shall have furnished any amendment or
supplements thereto) was not sent or given by or on behalf of such Placement
Agent to such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Certificates to such person, and
if the final Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncomplicance by the Company with Section 3 hereof. In
connection with any Underwritten Offering permitted by Section 3, the Company
will also indemnify the Underwriters, if any, selling brokers, dealers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of the 1933 Act and the 1934 Act) to the same extent as provided
above with respect to the indemnification of the Holders, if requested in
connection with any Registration Statement.

          (b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, each Placement Agent and the other selling Holders,
and each of their respective directors, officers who sign the Registration
Statement and each Person, if any, who controls the Company, each Placement
Agent and any other selling Holder within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing
indemnity from the Company to each Placement Agent and the Holders, but only
with reference to information relating to such Holder furnished to the Company
in writing by such Holder expressly for use in any Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto).

          (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same

                                       16
<PAGE>

counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Placement Agents and all persons, if any,
who control any Placement Agent within the meaning of either Section 15 of the
1933 Act or Section 20 of the 1934 Act, (b) the fees and expenses of more than
one separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either such Section and (c)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Holders and all persons, if any, who control any Holders within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In such case involving any Placement Agent and
persons who control such Placement Agent, such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated. In such case involving the Holders
and such persons who control Holders, such firm shall be designated in writing
by the Majority Holders. In all other cases, such firm shall be designated by
the Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.

          (d) If the indemnification provided for in paragraph (a) or paragraph
(b) of this Section 4 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations.  The relative fault of the Company and the Holders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.  The Holders'
respective obligations to contribute pursuant to this Section 5(d) are several
in proportion to the respective number of Registrable Certificates of such
Holder that were registered pursuant to a Registration Statement.

          (e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
                                                                        --- ----
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above.  The amount
paid or payable by an indemnified party as a result of the

                                       17
<PAGE>

losses, claims, damages and liabilities referred to in paragraph (d) above shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Certificates were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.

          The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Placement Agent, any Holder or any person controlling any Placement Agent or
any Holder, or by or on behalf of the Company, its officers or directors or any
person controlling the Company, (iii) acceptance of any of the Exchange
Certificates and (iv) any sale of Registrable Certificates pursuant to a Shelf
Registration Statement.

          6.  Miscellaneous.  (a)  No Inconsistent Agreements.  The Company has
              -------------        --------------------------
not entered into, and on or after the date of this Registration Rights Agreement
will not enter into, any agreement which is inconsistent with the rights granted
to the Holders of Registrable Certificates in this Registration Rights Agreement
or otherwise conflicts with the provisions hereof.  The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.

          (b) Amendments and Waivers.  The provisions of this Registration
              ----------------------
Rights Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Certificates affected by such amendment, modification,
supplement, waiver or consent; provided, however, that no amendment,
                               --------  -------
modification, supplement, waiver or consent to any departure from the provisions
of Section 5 hereof shall be effective as against any Holder of Registrable
Certificates unless consented to in writing by such Holder.

          (c) Notices.  All notices and other communications provided for or
              -------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Placement Agreement; and (ii) if to the Company,
initially at the

                                       18
<PAGE>

Company's address set forth in the Placement Agreement and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 6(c).

          All such notices and communications shall be deemed to have been duly
given:  at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.

          Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to each Trustee, at the
address specified in the Applicable Trust Agreement.

          (d) Successors and Assigns.  This Registration Rights Agreement shall
              ----------------------
inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation and without
the need for an express assignment, subsequent Holders; provided that nothing
                                                        --------
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Certificates in violation of the terms of the Placement Agreement
or the Trust Agreements.  If any transferee of any Holder shall acquire
Registrable Certificates, in any manner, whether by operation of law or
otherwise, such Registrable Certificates shall be held subject to all of the
terms of this Registration Rights Agreement, and by taking and holding such
Registrable Certificates, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Registration Rights Agreement and such Person shall be entitled to receive the
benefits hereof. The Placement Agents (in their capacity as Placement Agents)
shall have no liability or obligation to the Company with respect to any failure
by any other Holder to comply with, or any breach by any other Holder of, any of
the obligations of such other Holder under this Registration Rights Agreement.

          (e) Purchases and Sales of Certificates.  The Company shall not, and
              -----------------------------------
shall use its best efforts to cause its affiliates (as defined in Rule 405 under
the 1933 Act), not to purchase and then resell or otherwise transfer any
Certificates.

          (f) Trustees.  The Trustees shall take such action as may be
              --------
reasonably requested by the Company pursuant to Sections 2(a), 3(h), and 3(l)
hereof.

          (g) Third Party Beneficiary.  The Holders shall be third party
              -----------------------
beneficiaries to the agreements made hereunder and shall have the right to
enforce such agreements directly to the extent they deem such enforcement
necessary or advisable to protect their rights hereunder.

          (h) Counterparts.  This Registration Rights Agreement may be executed
              ------------
in any number of counterparts and by the parties hereto in separate
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.

          (i) Headings.  The headings in this Registration Rights Agreement are
              --------
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                                       19
<PAGE>

          (j) Governing Law.  This Registration Rights Agreement shall be
              -------------
governed by and construed in accordance with the internal laws of the State of
New York.

          (k) Severability.  In the event that any one or more of the provisions
              ------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

                                       20
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                               MIDWAY AIRLINES CORPORATION

                                  By:  /s/ Jonathan W. Waller
                                     -----------------------------------------
                                     Name:  Jonathan W. Waller
                                     Title: Senior Vice President
                                            General Counsel

                               ALLFIRST BANK,
                                  not in its individual capacity, but solely as
                                  Trustee under each of the Trust Agreements

                                  By:  /s/ Robert D. Brown
                                     -----------------------------------------
                                     Name:  Robert D. Brown
                                     Title:  Vice President

Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
SEABURY SECURITIES LLC
By Morgan Stanley & Co. Incorporated

By:  /s/ Christopher Chaput
    ------------------------------------------
    Name:  Christopher Chaput
    Title: Principal

                                       21<PAGE>

                                                                    Exhibit 10.3

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

                          REVOLVING CREDIT AGREEMENT

                        Dated as of September 27, 2000

                                    between

                                 ALLFIRST BANK

                  not in its individual capacity but solely
                           as Subordination Agent,
                         as agent and trustee for the
                 Midway Airlines Pass Through Trust 2000-1A,

                                  as Borrower

                                     and

                    MORGAN STANLEY CAPITAL SERVICES INC.,

                             as Liquidity Provider

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

                                  Relating to

                  Midway Airlines Pass Through Trust 2000-1A
                                 8.82% Midway
                     Airlines Pass Through Certificates,
                                Series 2000-1A
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                          Page
                                                                                                          ----
<S>                                                                                                       <C>
                                                 ARTICLE I

DEFINITIONS
     Section 1.01. Certain Defined Terms................................................................  1

                                                ARTICLE II

AMOUNT AND TERMS OF THE COMMITMENT

     Section 2.01.  The Advances........................................................................  8
     Section 2.02.  Making the Advances.................................................................  8
     Section 2.03.  Fees................................................................................ 10
     Section 2.04.  Reduction or Termination of the Maximum Commitment.................................. 10
     Section 2.05.  Repayments of Interest Advances or the Final Advance................................ 11
     Section 2.06.  Repayments of Provider Advances..................................................... 11
     Section 2.07.  Payments to the Liquidity Provider
                     Under the Intercreditor Agreement.................................................. 12
     Section 2.08.  Book Entries........................................................................ 13
     Section 2.09.  Payments from Available Funds Only.................................................. 13
     Section 2.10.  Extension of the Expiry Date; Non-Extension Advance................................. 13

                                                ARTICLE III

OBLIGATIONS OF THE BORROWER

     Section 3.01   Increased Costs..................................................................... 14
     Section 3.02   Capital Adequacy.................................................................... 15
     Section 3.03.  Payments Free of Deductions......................................................... 15
     Section 3.04.  Payments............................................................................ 16
     Section 3.05.  Computations........................................................................ 16
     Section 3.06.  Payment on Non-Business Days........................................................ 16
     Section 3.07.  Interest............................................................................ 17
     Section 3.08.  Replacement of Borrower............................................................. 18
     Section 3.09.  Funding Loss Indemnification........................................................ 18
     Section 3.10.  Illegality.......................................................................... 19
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                 <C>
                                              ARTICLE IV

CONDITIONS PRECEDENT
     Section 4.01.  Conditions Precedent to Effectiveness of Section 2.01.....................      19
     Section 4.02.  Conditions Precedent to Borrowing.........................................      21

                                              ARTICLE V

COVENANTS

     Section 5.01.  Affirmative Covenants of the Borrower.....................................      21
     Section 5.02.  Negative Covenants of the Borrower........................................      22

                                              ARTICLE VI

LIQUIDITY EVENTS OF DEFAULT

     Section 6.01.  Liquidity Events of Default...............................................      22

                                             ARTICLE VII

MISCELLANEOUS

     Section 7.01.  Amendments, Etc...............................................................  23
     Section 7.02.  Notices, Etc..................................................................  23
     Section 7.03.  No Waiver: Remedies...........................................................  23
     Section 7.04.  Further Assurances............................................................  24
     Section 7.05.  Indemnification; Survival of Certain Provisions...............................  24
     Section 7.06.  Liability of the Liquidity Provider...........................................  24
     Section 7.07.  Costs, Expenses and Taxes.....................................................  25
     Section 7.08.  Binding Effect; Participations................................................  25
     Section 7.09.  Severability..................................................................  27
     Section 7.10.  GOVERNING LAW.................................................................  27
     Section 7.11.  Submission to Jurisdiction; Waiver of Jury Trial;
                    Waiver of Immunity............................................................  27
     Section 7.12.  Execution in Counterparts.....................................................  28
     Section 7.13.  Entirety......................................................................  28
     Section 7.14.  Headings......................................................................  28
     Section 7.15.  LIQUIDITY PROVIDER'S OBLIGATION
                    TO MAKE ADVANCES..............................................................  28
</TABLE>

                                      ii
<PAGE>

ANNEX I        Interest Advance Notice of Borrowing

ANNEX II       Non-Extension Advance Notice of Borrowing

ANNEX III      Downgrade Advance Notice of Borrowing

ANNEX IV       Final Advance Notice of Borrowing

ANNEX V        Notice of Termination

ANNEX VI       Notice of Replacement Subordination Agent

EXHIBIT I      Form of Guarantee Agreement

                                      iii
<PAGE>

                          REVOLVING CREDIT AGREEMENT

          This REVOLVING CREDIT AGREEMENT dated as of September 27, 2000,
between ALLFIRST BANK, a Maryland state-chartered commercial bank ("Allfirst"),
                                                                    --------
not in its individual capacity but solely as Subordination Agent under the
Intercreditor Agreement (each as defined below), as agent and trustee for the
Class A Trust (as defined below) (the "Borrower"), and MORGAN STANLEY CAPITAL
                                       --------
SERVICES INC., a Delaware corporation ("MSCS" or the "Liquidity Provider").
                                        ----          ------------------

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

          WHEREAS, pursuant to the Class A Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class A Trust is issuing the Class A
Certificates;

          WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class A Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder; and

          WHEREAS, the Liquidity Provider has requested Morgan Stanley Dean
Witter & Co. (the "Guarantor") to enter into a Guarantee Agreement, providing
                   ---------
for the full and unconditional guarantee of the Liquidity Provider's obligations
under this Agreement (the "Guarantee Agreement");
                           -------------------

          NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

          Section 1.01. Certain Defined Terms. (a) Definitions. As used in this
                        ---------------------      -----------
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:

          "Additional Cost" has the meaning assigned to such term in Section
           ---------------
     3.01.
<PAGE>

                                       2

          "Advance" means an Interest Advance, a Final Advance or a Provider
           -------
     Advance, as the case may be.

          "Applicable Liquidity Rate" has the meaning assigned to such term in
           -------------------------
     Section 3.07(f).

          "Applicable Margin" means (x) with respect to any Unpaid Advance or
           -----------------
     Applied Provider Advance, 2.25% and (y) with respect to any Unapplied
     Downgrade Advance or Unapplied Non-Extension Advance, 0.50 %.

          "Applied Downgrade Advance" has the meaning assigned to such term in
           -------------------------
     Section 2.06(a).

          "Applied Non-Extension Advance" has the meaning assigned to such term
           -----------------------------
     in Section 2.06(a).

          "Applied Provider Advance" has the meaning assigned to such term in
           ------------------------
     Section 2.06(a).

          "Base Rate" means a fluctuating interest rate per annum in effect from
           ---------
     time to time, which rate per annum shall at all times be equal to (a) the
     weighted average of the rates on overnight Federal funds transactions with
     members of the Federal Reserve System arranged by Federal funds brokers, as
     published for such day (or, if such day is not a Business Day, for the next
     preceding Business Day) by the Federal Reserve Bank of New York, or if such
     rate is not so published for any day that is a Business Day, the average of
     the quotations for such day for such transactions received by the Liquidity
     Provider from three Federal funds brokers of recognized standing selected
     by it, plus (b) one-quarter of one percent (1/4 of 1%).

          "Base Rate Advance" means an Advance that bears interest at a rate
           -----------------
     based upon the Base Rate.

          "Borrower" has the meaning assigned to such term in the recital of
           --------
     parties to this Agreement.

          "Borrowing" means the making of Advances requested by delivery of a
           ---------
     Notice of Borrowing.

          "Business Day" means any day other than a Saturday or Sunday or a day
           ------------
     on which commercial banks are required or authorized to close in Charlotte,
     North Carolina, Baltimore, Maryland, New York, New York, or, so long as any
     Class A Certificate is
<PAGE>

                                       3

     outstanding, the city and state in which the Class A Trustee, the Borrower
     or any Loan Trustee maintains its Corporate Trust Office or receives or
     disburses funds, and, if the applicable Business Day relates to any Advance
     or other amount bearing interest based on the LIBOR Rate, on which dealings
     are carried on in the London interbank market.

          "Depositary" has the meaning assigned to such term in the Deposit
           ----------
     Agreement.

          "Deposit Agreement" means the Deposit Agreement dated the Closing Date
           -----------------
     between First Union Trust Company, National Association, as Escrow Agent
     and Allfirst Bank, as Depositary, pertaining to the Class A Certificates,
     as the same may be amended, modified or supplemented from time to time in
     accordance with the terms thereof.

          "Downgrade Advance" means an Advance made pursuant to Section 2.02(c).
           -----------------

          "Effective Date" has the meaning specified in Section 4.01. The
           --------------
     delivery of the certificate of the Liquidity Provider contemplated by
     Section 4.01(e) shall be conclusive evidence that the Effective Date has
     occurred.

          "Excluded Taxes" means (i) taxes imposed on the overall net income of
           --------------
     the Liquidity Provider or of its Lending Office by the jurisdiction where
     such Liquidity Provider's principal office or such Lending Office is
     located, and (ii) Excluded Withholding Taxes.

          "Excluded Withholding Taxes" means (i) withholding Taxes imposed by
           --------------------------
     the United States except to the extent that such United States withholding
     Taxes are imposed as a result of any change in applicable law after the
     date hereof (excluding from change in applicable law for this purpose a
     change in an applicable treaty or other change in law affecting the
     applicability of a treaty), or in the case of a successor Liquidity
     Provider (including a transferee of an Advance) or Lending Office, after
     the date on which such successor Liquidity Provider obtains its interest or
     on which the Lending Office is changed, and (ii) any withholding Taxes
     imposed by the United States which are imposed or increased as a result of
     the Liquidity Provider failing to deliver to the Borrower any certificate
     or document (which certificate or document in the good faith judgment of
     the Liquidity Provider it is legally entitled to provide) which is
     reasonably requested by the Borrower to establish that payments under this
     Agreement are exempt from (or entitled to a reduced rate of) withholding
     Tax.

          "Expenses" means liabilities, obligations, damages, settlements,
           --------
     penalties, claims, actions, suits, costs, expenses, and disbursements
     (including, without limitation, reasonable fees and disbursements of legal
     counsel and costs of investigation), provided that Expenses shall not
     include any Taxes.
<PAGE>

                                       4

          "Expiry Date" means September 25, 2001, initially, or any date to
           -----------
     which the Expiry Date is extended pursuant to Section 2.10.

          "Final Advance" means an Advance made pursuant to Section 2.02(d).
           -------------

          "Guarantee Agreement" has the meaning assigned to such term in the
           -------------------
     preliminary statements of this Agreement.

          "Guarantee Event" has the meaning specified in Section 2.02(c)
           ---------------

          "Guarantor" has the meaning assigned to such term in the preliminary
           ---------
     statements of this Agreement.

          "Intercreditor Agreement" means the Intercreditor Agreement dated the
           -----------------------
     date hereof, among the Trustees, the Liquidity Provider, the liquidity
     provider under each Liquidity Facility (other than this Agreement) and the
     Subordination Agent, as the same may be amended, supplemented or otherwise
     modified from time to time in accordance with its terms.

          "Interest Advance" means an Advance made pursuant to Section 2.02(a).
           ----------------

          "Interest Period" means, with respect to any LIBOR Advance, each of
           ---------------
     the following periods:

          (i)  the period beginning on the third Business Day following either
               (x) the Liquidity Provider's receipt of the Notice of Borrowing
               for such LIBOR Advance or (y) the withdrawal of funds from the
               Class A Cash Collateral Account for the purpose of paying
               interest on the Class A Certificates as contemplated by Section
               2.06(a) hereof and, in either case, ending on the next Regular
               Distribution Date (or ending, in the case of an Interest Period
               applicable to any Unapplied Provider Advance, on the numerically
               corresponding day in the first or sixth calendar month after the
               first day of the applicable Interest Period and/or on the next
               Regular Distribution Date, as Midway may select by providing
               notice thereof to the Borrower and the Liquidity Provider no
               later than three Business Days prior to the commencement of such
               Interest Period, provided that if Midway shall not provide such a
                                --------
               notice at least three Business Days prior to the commencement of
               such Interest Period, then Midway shall be deemed to have
               selected an Interest Period ending on the next Regular
               Distribution Date); and
<PAGE>

                                       5

          (ii) each subsequent period commencing on the last day of the
               immediately preceding Interest Period and ending on the next
               Regular Distribution Date (or ending, in the case of an Interest
               Period applicable to any Unapplied Provider Advance, on the
               numerically corresponding day in the first or sixth calendar
               month after the first day of the applicable Interest Period
               and/or on the next Regular Distribution Date, as Midway may
               select by providing notice thereof to the Borrower and the
               Liquidity Provider no later than three Business Days prior to the
               commencement of such Interest Period, provided that if Midway
                                                     --------
               shall not provide such a notice at least three Business Days
               prior to the commencement of such Interest Period, then Midway
               shall be deemed to have selected an Interest Period ending on the
               next Regular Distribution Date);

     provided, however, that (I) if an Unapplied Provider Advance which is a
     --------  -------
     LIBOR Advance becomes an Applied Provider Advance, the Interest Period then
     applicable to such Unapplied Provider Advance shall be applicable to such
     Applied Provider Advance, (II) if (x) the Final Advance shall have been
     made, or (y) other outstanding Advances shall have been converted into the
     Final Advance, then the Interest Periods shall be successive periods of one
     month beginning on the third Business Day following the Liquidity
     Provider's receipt of the Notice of Borrowing for such Final Advance (in
     the case of clause (x) above) or the Regular Distribution Date following
     such conversion (in the case of clause (y) above) and (III) each Interest
     Period shall end on or prior to the next Regular Distribution Date.

          "Leased Aircraft Participation Agreement" means a participation
           ---------------------------------------
     substantially in the form of Exhibit A-1 to the Note Purchase Agreement.

          "Lending Office" means the lending office of the Liquidity Provider
           --------------
     presently located at New York, New York, or such other lending office as
     the Liquidity Provider from time to time shall notify the Borrower as its
     lending office hereunder; provided that the Liquidity Provider shall not
     change its Lending Office to a Lending Office outside the United States of
     America except in accordance with Section 3.01, 3.02 or 3.03 hereof.

          "LIBOR Advance" means an Advance bearing interest at a rate based upon
           -------------
     the LIBOR Rate.

          "LIBOR Rate" means, with respect to any Interest Period, (i) the rate
           ----------
     per annum appearing on display page 3750 (British Bankers Association-
     LIBOR) of the Dow Jones Markets Service (or any successor or substitute
     therefor) at approximately 11:00 A.M. (London time) two Business Days
     before the first day of such Interest Period, as the rate for dollar
     deposits with a maturity comparable to such Interest Period, or (ii) if the
     rate
<PAGE>

                                       6

     calculated pursuant to clause (i) above is not available, the average
     (rounded upwards, if necessary, to the next 1/16 of 1%) of the rates per
     annum at which deposits in dollars are offered for the relevant Interest
     Period by three banks of recognized standing selected by the Liquidity
     Provider in the London interbank market at approximately 11:00 A.M. (London
     time) two Business Days before the first day of such Interest Period in an
     amount approximately equal to the principal amount of the LIBOR Advance to
     which such Interest Period is to apply and for a period comparable to such
     Interest Period.

          "Liquidity Event of Default" means the occurrence of either (a) the
           --------------------------
     Acceleration of all of the Equipment Notes or (b) an Midway Bankruptcy
     Event.

          "Liquidity Indemnitee" means (i) the Liquidity Provider, (ii) the
           --------------------
     Guarantor, (iii) the respective directors, officers, employees and agents
     of the Liquidity Provider and the Guarantor, and (iv) the successors and
     permitted assigns of the persons described in clauses (i) through (iii),
     inclusive.

          "Liquidity Provider" has the meaning assigned to such term in the
           ------------------
     recital of parties to this Agreement.

          "Maximum Commitment" shall mean, subject to the proviso contained in
           ------------------
     the third sentence of Section 2.02(a), at any time of determination, (a)
     the Required Amount at such time less (b) the aggregate amount of each
     Interest Advance outstanding at such time; provided that following a
     Provider Advance or a Final Advance, the Maximum Commitment shall be zero.

          "Non-Extension Advance" means an Advance pursuant to Section 2.02(b).
           ---------------------

          "Notice of Borrowing" has the meaning specified in Section 2.02(e).
           -------------------

          "Notice of Replacement Subordination Agent" has the meaning specified
           -----------------------------------------
     in Section 3.08.

          "Offering Memorandum" means the Offering Memorandum dated September
           -------------------
     22, 2000 relating to the Certificates.

          "Owned Aircraft Participation Agreement" means a participation
           --------------------------------------
     agreement substantially in the form of Exhibit C-1 to the Note Purchase
     Agreement.

          "Participation Agreements" means, collectively, the Leased Aircraft
           ------------------------
     Participation Agreement and the Owned Aircraft Participation Agreement.
<PAGE>

                                       7

          "Performing Note Deficiency" means any time that less than 65% of the
           --------------------------
     then aggregate outstanding principal amount of all Equipment Notes are
     Performing Equipment Notes.

          "Provider Advance" means a Downgrade Advance or a Non-Extension
           ----------------
     Advance.

          "Regulatory Change" has the meaning assigned to such term in Section
           -----------------
     3.01.

          "Replenishment Amount" has the meaning assigned to such term in
           --------------------
     Section 2.06(b).

          "Required Amount" means, for any day, the sum of the aggregate amount
           ---------------
     of interest, calculated at the rate per annum equal to the Stated Interest
     Rate for the Class A Certificates, that would be payable on the Class A
     Certificates on each of the three successive semiannual Regular
     Distribution Dates immediately following such day or, if such day is a
     Regular Distribution Date, on such day and the succeeding two semiannual
     Regular Distribution Dates, in each case calculated on the basis of the
     Pool Balance of the Class A Certificates on such day and without regard to
     expected future payments of principal on the Class A Certificates.

          "Termination Date" means the earliest to occur of the following: (i)
           ----------------
     the Expiry Date; (ii) the date on which the Borrower delivers to the
     Liquidity Provider a certificate, signed by a Responsible Officer of the
     Borrower, certifying that all of the Class A Certificates have been paid in
     full (or provision has been made for such payment in accordance with the
     Intercreditor Agreement and the Trust Agreements) or are otherwise no
     longer entitled to the benefits of this Agreement; (iii) the date on which
     the Borrower delivers to the Liquidity Provider a certificate, signed by a
     Responsible Officer of the Borrower, certifying that a Replacement
     Liquidity Facility has been substituted for this Agreement in full pursuant
     to Section 3.6(e) of the Intercreditor Agreement; (iv) the fifth Business
     Day following the receipt by the Borrower of a Termination Notice from the
     Liquidity Provider pursuant to Section 6.01 hereof; and (v) the date on
     which no Advance is or may (including by reason of reinstatement as herein
     provided) become available for a Borrowing hereunder.

          "Termination Notice" means the Notice of Termination substantially in
           ------------------
     the form of Annex IV to this Agreement.

          "Transferee" has the meaning assigned to such term in Section 7.08(b).
           ----------

          "Unapplied Downgrade Advance" means any Downgrade Advance other than
           ---------------------------
     an Applied Downgrade Advance.
<PAGE>

                                       8

          "Unapplied Non-Extension Advance" means any Non-Extension Advance
           -------------------------------
     other than an Applied Non-Extension Advance.

          "Unapplied Provider Advance" means any Provider Advance other than an
           --------------------------
     Applied Provider Advance.

          "Unpaid Advance" has the meaning assigned to such term in Section
           --------------
     2.05.

          (b)  Terms Defined in the Intercreditor Agreement. For all purposes of
               --------------------------------------------
this Agreement, the following terms shall have the respective meanings assigned
to such terms in the Intercreditor Agreement:

     "Acceleration", "Midway", "Midway Bankruptcy Event", "Certificates", "Class
      ------------    ------    -----------------------    ------------    -----
     A Cash Collateral Account", "Class A Certificates", "Class A
     -------------------------    --------------------    -------
     Certificateholder", "Class A Trust", "Class A Trust Agreement", "Class A
     -----------------    -------------    -----------------------    -------
     Trustee", "Class B Certificates", "Class C Certificates", "Closing Date",
     -------    --------------------    --------------------    ------------
     "Controlling Party", "Corporate Trust Office", "Distribution Date",
      -----------------    ----------------------    -----------------
     "Downgraded Facility", "Equipment Notes", "Final Legal Distribution Date",
      -------------------    ---------------    -----------------------------
     "Financing Agreement", "Indenture",  "Interest Payment Date", "Investment
      -------------------    ---------     ---------------------    ----------
     Earnings", "Liquidity Facility", "Liquidity Obligations", "Loan Trustee",
     --------    ------------------    ---------------------    ------------
     "MSCS Fee Letter", "MSCS Liquidity Facilities", "Non-Extended Facility",
      ---------------    -------------------------    ---------------------
     "Note Purchase Agreement", "Operative Agreements", "Performing Equipment
      -----------------------    --------------------    --------------------
     Note", "Person", "Placement Agents", "Placement Agreement", "Pool Balance",
     ----    ------    ----------------    -------------------    ------------
     "Rating Agencies", "Ratings Confirmation", "Regular Distribution Dates",
      ---------------    --------------------    --------------------------
     "Replacement Liquidity Facility", "Responsible Officer", "Scheduled
      ------------------------------    -------------------    ---------
     Payment", "Special Payment", "Stated Interest Rate", "Subordination Agent",
     -------    ---------------    --------------------    -------------------
     "Taxes", "Threshold Rating", "Trust Agreement", "Trustee", and "Written
      -----    ----------------    ---------------    -------        -------
     Notice".
     ------

                                  ARTICLE II

                      AMOUNT AND TERMS OF THE COMMITMENT

          Section 2.01. The Advances. The Liquidity Provider hereby irrevocably
                        ------------
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the Maximum Commitment.

          Section 2.02. Making the Advances. (a) Interest Advances shall be made
                        -------------------
in one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed
<PAGE>

                                       9

Notices of Borrowing in substantially the form of Annex I attached hereto,
signed by a Responsible Officer of the Borrower, in an amount not exceeding the
Maximum Commitment at such time and shall be used solely for the payment when
due of the interest on the Class A Certificates at the Stated Interest Rate
therefor in accordance with Section 3.6(a) of the Intercreditor Agreement. Each
Interest Advance made hereunder shall automatically reduce the Maximum
Commitment and the amount available to be borrowed hereunder by subsequent
Advances by the amount of such Interest Advance (subject to reinstatement as
provided in the next sentence). Upon repayment to the Liquidity Provider in full
of the amount of any Interest Advance made pursuant to this Section 2.02(a),
together with accrued interest thereon (as provided herein), the Maximum
Commitment shall be reinstated by the amount of such repaid Interest Advance;
provided, however, that the Maximum Commitment shall not be so reinstated at any
--------  -------
time if (i) a Liquidity Event of Default shall have occurred and be continuing
and (ii) there is a Performing Note Deficiency.

          (b)  A Non-Extension Advance shall be made in a single Borrowing if
this Agreement is not extended in accordance with Section 3.6(d) of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement shall have been delivered to the Borrower as contemplated by said
Section 3.6(d) within the time period specified in such Section) by delivery to
the Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex II attached hereto, signed by a Responsible
Officer of the Borrower, in an amount equal to the Maximum Commitment at such
time, and shall be used to fund the Class A Cash Collateral Account in
accordance with said Section 3.6(d) and Section 3.6(f) of the Intercreditor
Agreement.

          (c)  A Downgrade Advance shall be made in a single Borrowing, as
provided for in Section 3.6(c) of the Intercreditor Agreement, (i) upon a
downgrading of the Guarantor's short-term unsecured debt rating issued by either
Rating Agency below the applicable Threshold Rating or (ii) if the Guarantee
Agreement ceases to be in full force and effect, becomes invalid or
unenforceable or the Guarantor denies its liability thereunder (any such
occurrence, a "Guarantee Event"), unless a Replacement Liquidity Facility to
replace this Agreement shall have been previously delivered to the Borrower in
accordance with said Section 3.6(c), by delivery to the Liquidity Provider of a
written and completed Notice of Borrowing in substantially the form of Annex III
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
equal to the Maximum Commitment at such time, and shall be used to fund the
Class A Cash Collateral Account in accordance with said Section 3.6(c) and
Section 3.6(f) of the Intercreditor Agreement.

          (d)  A Final Advance shall be made in a single Borrowing upon the
receipt by the Borrower of a Termination Notice from the Liquidity Provider
pursuant to Section 6.01 hereof by delivery to the Liquidity Provider of a
written and completed Notice of Borrowing in substantially the form of Annex IV
attached hereto, signed by a Responsible Officer of the
<PAGE>

                                      10

Borrower, in an amount equal to the Maximum Commitment at such time, and shall
be used to fund the Class A Cash Collateral Account (in accordance with Section
3.6(i) of the Intercreditor Agreement) and Section 3.6(f) of the Intercreditor
Agreement.

          (e)  Each Borrowing shall be made on notice in writing(a "Notice of
                                                                    ---------
Borrowing") in substantially the form required by Section 2.02(a), 2.02(b),
---------
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 1:00 PM (New York City time) on a Business Day, upon
satisfaction of the conditions precedent set forth in Section 4.02 with respect
to a requested Borrowing, the Liquidity Provider shall make available to the
Borrower, in accordance with its payment instructions, the amount of such
Borrowing in U.S. dollars and immediately available funds, before 4:00 PM (New
York City time) on the day of receipt of such Notice of Borrowing or on such
later Business Day specified in such Notice of Borrowing. If a Notice of
Borrowing is delivered by the Borrower in respect of any Borrowing after 1:00 PM
(New York City time) on a Business Day, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing, the
Liquidity Provider shall make available to the Borrower, in accordance with its
payment instructions, the amount of such Borrowing in U.S. dollars and
immediately available funds, before 4:00 PM (New York City time) on the first
Business Day next following the day of receipt of such Notice of Borrowing or on
such later Business Day specified by the Borrower in such Notice of Borrowing.
Payments of proceeds of a Borrowing shall be made by wire transfer of
immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.

          (f)  Upon the making of any Advance requested pursuant to a Notice of
Borrowing, in accordance with the Borrower's payment instructions, the Liquidity
Provider shall be fully discharged of its obligation hereunder with respect to
such Notice of Borrowing, and the Liquidity Provider shall not thereafter be
obligated to make any further Advances hereunder in respect of such Notice of
Borrowing to the Borrower or to any other Person. If the Liquidity Provider
makes an Advance requested pursuant to a Notice of Borrowing before 12:00 Noon
(New York City time) on the second Business Day after the date of payment
specified in said Section 2.02(e), the Liquidity Provider shall have fully
discharged its obligations hereunder with respect to such Advance and an event
of default shall not have occurred hereunder. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class A Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class A Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class A Cash Collateral Account; provided that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity
<PAGE>

                                      11

Provider makes no representation as to, and assumes no responsibility for, the
correctness or sufficiency for any purpose of the amount of the Advances so made
and requested.

          Section 2.03.  Fees.  Subject to Section 2.09, the Borrower agrees to
                         ----
pay to the Liquidity Provider the fees set forth in the MSCS Fee Letter.

          Section 2.04.  Reduction or Termination of the Maximum Commitment.
                         --------------------------------------------------

          (a)  Automatic Reduction. Promptly following each date on which the
               -------------------
Required Amount is reduced as a result of a reduction in the Pool Balance of the
Class A Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Maximum Commitment to the Liquidity Provider within two Business Days thereof.
The failure by the Borrower to furnish any such notice shall not affect such
automatic reduction of the Maximum Commitment.

          (b)  Termination. Upon the making of any Provider Advance or Final
               -----------
Advance hereunder or the occurrence of the Termination Date, the obligation of
the Liquidity Provider to make further Advances hereunder shall automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.

          Section 2.05. Repayments of Interest Advances or the Final Advance.
                        ----------------------------------------------------
Subject to Sections 2.06, 2.07 and 2.09 hereof, the Borrower hereby agrees,
without notice of an Advance or demand for repayment from the Liquidity Provider
(which notice and demand are hereby waived by the Borrower), to pay, or to cause
to be paid, to the Liquidity Provider on each date on which the Liquidity
Provider shall make an Interest Advance or the Final Advance, an amount equal to
(a) the amount of such Advance (any such Advance, until repaid, is referred to
herein as an "Unpaid Advance"), plus (b) interest on the amount of each such
              --------------
Unpaid Advance as provided in Section 3.07 hereof; provided that if (i) the
                                                   --------
Liquidity Provider shall make a Provider Advance at any time after making one or
more Interest Advances which shall not have been repaid in accordance with this
Section 2.05 or (ii) this Liquidity Facility shall become a Downgraded Facility
or Non-Extended Facility at any time when unreimbursed Interest Advances have
reduced the Maximum Commitment to zero, then such Interest Advances shall cease
to constitute Unpaid Advances and shall be deemed to have been changed into an
Applied Downgrade Advance or Applied Non-Extension Advance for all purposes of
this Agreement (including, without limitation, for the purpose of determining
when such Interest Advance is required to be repaid to the Liquidity Provider in
accordance with Section 2.06 and for the purposes of Section 2.06(b)). The
Borrower and the Liquidity Provider agree that the repayment in full of each
Interest Advance and Final Advance on the date such Advance is made is intended
to be a contemporaneous exchange for new value given to the Borrower by the
Liquidity Provider.
<PAGE>

                                      12

          Section 2.06. Repayments of Provider Advances. (a) Amounts advanced
                        -------------------------------
hereunder in respect of a Provider Advance shall be deposited in the Class A
Cash Collateral Account, invested and withdrawn from the Class A Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Provider Advance, interest on the principal amount of any such
Provider Advance as provided in Section 3.07; provided, however, that amounts in
                                              --------  -------
respect of a Provider Advance withdrawn from the Class A Cash Collateral Account
for the purpose of paying interest on the Class A Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (x) in the case of a Downgrade Advance, an "Applied Downgrade
                                                             -----------------
Advance" and (y) in the case of a Non-Extension Advance, an "Applied Non-
-------                                                      ------------
Extension Advance" and, together with an Applied Downgrade Advance, an "Applied
-----------------                                                       -------
Provider Advance") shall thereafter (subject to Section 2.06(b)) be treated as
----------------
an Interest Advance under this Agreement for purposes of determining the
Applicable Liquidity Rate for interest payable thereon; provided further,
                                                        ----------------
however, that if, following the making of a Provider Advance, the Liquidity
-------
Provider delivers a Termination Notice to the Borrower pursuant to Section 6.01
hereof, such Provider Advance shall thereafter be treated as a Final Advance
under this Agreement for purposes of determining the Applicable Liquidity Rate
for interest payable thereon. Subject to Sections 2.07 and 2.09 hereof,
immediately upon the withdrawal of any amounts from the Class A Cash Collateral
Account on account of a reduction in the Required Amount, the Borrower shall
repay to the Liquidity Provider a portion of the Provider Advances in a
principal amount equal to such reduction, plus interest on the principal amount
prepaid as provided in Section 3.07 hereof.

          (b)  At any time when an Applied Provider Advance (or any portion
thereof) is outstanding, upon the deposit in the Class A Cash Collateral Account
of any amount pursuant to clause "third" of Section 2.4(b) of the Intercreditor
Agreement, clause "third" of Section 3.2 of the Intercreditor Agreement or
clause "fourth" of Section 3.3 of the Intercreditor Agreement (any such amount
being a "Replenishment Amount") for the purpose of replenishing or increasing
         --------------------
the balance thereof up to the Required Amount at such time, (i) the aggregate
outstanding principal amount of all Applied Provider Advances (and of Provider
Advances treated as an Interest Advance for purposes of determining the
Applicable Liquidity Rate for interest payable thereon) shall be automatically
reduced by the amount of such Replenishment Amount and (ii) the aggregate
outstanding principal amount of all Unapplied Provider Advances shall be
automatically increased by the amount of such Replenishment Amount.

          (c)  Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, amounts remaining on deposit in the Class A Cash
Collateral Account after giving effect to any Applied Provider Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider,
<PAGE>

                                      13

but only to the extent such amounts are necessary to repay in full to the
Liquidity Provider all amounts owing to it hereunder.

          Section 2.07. Payments to the Liquidity Provider Under the
                        --------------------------------------------
Intercreditor Agreement. In order to provide for payment or repayment to the
-----------------------
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
or, if not provided for in the Intercreditor Agreement, then in such manner as
the Liquidity Provider shall deem appropriate.

          Section 2.08. Book Entries. The Liquidity Provider shall maintain in
                        ------------
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower resulting from Advances made from time to time and
the amounts of principal and interest payable hereunder and paid from time to
time in respect thereof; provided, however, that the failure by the Liquidity
                         --------  -------
Provider to maintain such account or accounts shall not affect the obligations
of the Borrower in respect of Advances.

          Section 2.09. Payments from Available Funds Only. All payments to be
                        ----------------------------------
made by the Borrower under this Agreement shall be made only from the amounts
that constitute Scheduled Payments, Special Payments or payments under Section
7.01 of the Participation Agreements and Section 6 of the Note Purchase
Agreement and only to the extent that the Borrower shall have sufficient income
or proceeds therefrom to enable the Borrower to make payments in accordance with
the terms hereof after giving effect to the priority of payments provisions set
forth in the Intercreditor Agreement. The Liquidity Provider agrees that it will
look solely to such amounts to the extent available for distribution to it as
provided in the Intercreditor Agreement and this Agreement and that the
Borrower, in its individual capacity, is not personally liable to it for any
amounts payable and shall have no liability under this Agreement except as
expressly provided in this Agreement, the Intercreditor Agreement or any
Participation Agreement. Amounts on deposit in the Class A Cash Collateral
Account shall be available to the Borrower to make payments under this Agreement
only to the extent and for the purposes expressly contemplated in Section 3.6(f)
of the Intercreditor Agreement.

          Section 2.10. Extension of the Expiry Date; Non-Extension Advance. The
                        ---------------------------------------------------
Expiry Date shall be automatically extended, effective on the 25/th/ day prior
to each Expiry Date (unless such Expiry Date is on or after the date that is 15
days after the Final Legal Distribution Date for the Class A Certificates), for
a period of 364 days after such Expiry Date (unless the obligations of the
Liquidity Provider are earlier terminated in accordance with the terms hereof),
<PAGE>

                                      14

without the necessity of any act on the part of the Borrower or the Liquidity
Provider, unless the Liquidity Provider shall advise the Borrower prior to such
25/th/ day that it does not agree to such extension of such Expiry Date, in
which event (and if the Liquidity Provider shall not have been replaced in
accordance with Section 3.6(e) of the Intercreditor Agreement), the Borrower
shall be entitled on and after such 25/th/ day (but prior to such Expiry Date)
to request a Non-Extension Advance in accordance with Section 2.02(b) hereof and
Section 3.6(d) of the Intercreditor Agreement.

                                  ARTICLE III

                          OBLIGATIONS OF THE BORROWER

          Section 3.01 Increased Costs. If the Liquidity Provider shall
                       ---------------
reasonably determine that (a) any change, after the Effective Date, in any law
or regulation or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof or in the
compliance by the Liquidity Provider(or any corporation controlling the
Liquidity Provider) with any applicable direction, request or requirement
(whether or not having the force of law) of any central bank or competent
governmental or other authority shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans or loan commitments made by, the
Liquidity Provider pursuant to this Agreement and (b) the result of any event
referred to in clause (a) shall be to increase the cost to the Liquidity
Provider of issuing or maintaining its commitment hereunder or funding or
maintaining Advances (which increase in cost shall be determined by the
Liquidity Provider's reasonable allocations of the aggregate of such cost
increases resulting from such event among similarly affected credit and funding
facilities), or to reduce the amount of any sum received or receivable by the
Liquidity Provider under this Agreement with respect thereto, then, upon demand
by the Liquidity Provider (such demand to be made as soon as practicable, but
not later than 30 days after a Responsible Officer of the Liquidity Provider
obtains or reasonably should have obtained knowledge of any event referred to in
clause (a) above), and subject to Section 2.09, the Borrower shall pay, or cause
to be paid, to the Liquidity Provider, from time to time as specified by the
Liquidity Provider, additional amounts which shall be sufficient to compensate
the Liquidity Provider for such increased cost or reduction; provided that if
such demand for payment is made after such 30-day period, the Borrower shall be
obligated to pay such additional amounts only with respect to such increased
cost or reduction actually incurred or effected on or after the 30th day prior
to the date of such demand. A certificate as to such increased cost or reduction
(which shall set forth in reasonable detail the basis for such increased cost on
reduction) incurred by the Liquidity Provider as a result of any event mentioned
in clause (a) above, prepared in reasonable detail and submitted by the
Liquidity Provider to the Borrower, shall be conclusive, absent manifest error,
as to the amount thereof.
<PAGE>

                                      15

          The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.01 that
may thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous in any material respect to the Liquidity
Provider. The Liquidity Provider agrees that if it shall make a demand for
payment of additional amounts under this Section the Borrower shall have the
right to obtain a Replacement Liquidity Facility in replacement of this
Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement.

          Section 3.02 Capital Adequacy. If the Liquidity Provider shall
                       ----------------
reasonably determine that the adoption, after the Effective Date, of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change, after the Effective Date, in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or any corporation controlling the Liquidity
Provider) with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has the effect of requiring an increase in the amount of capital
required to be maintained by the Liquidity Provider (or any corporation
controlling the Liquidity Provider) as a consequence of issuing or maintaining
its commitment hereunder or its funding or maintaining Advances and such
increase is based upon the Liquidity Provider's obligations hereunder and in
respect of similar obligations, then, upon demand by the Liquidity Provider
(such demand to be made as soon as is practicable, but not later than 30 days
after a Responsible Officer of the Liquidity Provider obtains or should
reasonably have obtained knowledge of any event referred to above in this
Section 3.02), and subject to Section 2.09, the Borrower shall pay to the
Liquidity Provider, from time to time as specified by the Liquidity Provider,
additional amounts (which amounts shall be determined by the Liquidity
Provider's reasonable allocations of the aggregate of such amounts resulting
from such event among similarly affected credit and funding facilities) which
shall be sufficient to compensate the Liquidity Provider for such increase in
respect of issuing or maintaining its commitment hereunder or its funding or
maintaining Advances; provided that, if such demand for payment is made after
such 30 day period, the Borrower shall be obligated to pay such amounts only
with respect to such increase actually effected on or after the 30th day prior
to the date of such demand. A certificate describing the event (including
setting forth the necessary calculations) resulting in the demand for
compensation by the Liquidity Provider under this Section, prepared in
reasonable detail and submitted by the Liquidity Provider to the Borrower, shall
be conclusive, absent manifest error, as to the amount thereof.

          The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount
<PAGE>

                                      16

payable under this Section 3.02 that may thereafter accrue and would not, in the
reasonable judgment of the Liquidity Provider, be otherwise disadvantageous in
any material respect to the Liquidity Provider. The Liquidity Provider agrees
that if it shall make a demand for payment of additional amounts under this
Section the Borrower shall have the right to obtain a Replacement Liquidity
Facility in replacement of this Agreement in accordance with Section 3.6(e) of
the Intercreditor Agreement.

          Section 3.03.  Payments Free of Deductions.  (a) All payments made by
                         ---------------------------
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes" and,
                                                  ------------------
individually, as a "Non-Excluded Tax").  If any Non-Excluded Taxes are required
                    ----------------
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in this Agreement.  The
Liquidity Provider agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider.  From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Forms W-8 BEN or W-8 ECI, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.

          (b) All payments (including, without limitation, Advances) made by the
Liquidity Provider under this Agreement shall be made free and clear of, and
without reduction for or on account of, any Taxes.  If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate governmental or taxing authority the
full amount of any such Taxes (and any additional Taxes in respect of the
payment required under clause (ii) hereof) and make such reports or returns in
connection therewith at the time or times and in the manner prescribed by
applicable law, and (ii) pay to the Borrower an additional amount which (after
deduction of all such Taxes) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such withholding or
deduction been made.  Within 30 days after the date of each payment hereunder,
the Liquidity
<PAGE>

                                      17

Provider shall furnish to the Borrower the original or a certified copy of (or
other documentary evidence of) the payment of the Taxes applicable to such
payment.

          Section 3.04.  Payments.  The Borrower shall make or cause to be made
                         --------
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to Citibank, N.A., New York, NY,
ABA No. 021000089, Account Name: Morgan Stanley Capital Services Inc., Account
No. 407-24-601, Reference: Midway Airlines, 2000-1B.

          Section 3.05.  Computations.  All computations of interest based on
                         ------------
the Base Rate shall be made on the basis of a year of 365 or 366 days, as the
case may be, and all computations of interest based on the LIBOR Rate shall be
made on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest is payable.

          Section 3.06.  Payment on Non-Business Days.  Whenever any payment to
                         ----------------------------
be made hereunder shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made, shall be deemed to have been
made when due).  If any payment in respect of interest on an Advance is so
deferred to the next succeeding Business Day, such deferral shall not delay the
commencement of the next Interest Period for such Advance (if such Advance is a
LIBOR Advance) or reduce the number of days for which interest will be payable
on such Advance on the next interest payment date for such Advance.

          Section 3.07.  Interest.  (a)  Subject to Section 2.09, the Borrower
                         --------
shall pay, or shall cause to be paid, without duplication, interest on (i) the
unpaid principal amount of each Advance from and including the date of such
Advance (or, in the case of an Applied Provider Advance, from and including the
date on which the amount thereof was withdrawn from the Class B Cash Collateral
Account to pay interest on the Class B Certificates) to but excluding the date
such principal amount shall be paid in full (or, in the case of an Applied
Provider Advance, the date on which the Class B Cash Collateral Account is fully
replenished in respect of such Advance) and (ii) any other amount due hereunder
(whether fees, commissions, expenses or other amounts or, to the extent
permitted by law, installments of interest on Advances or any such other amount)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
provided, however, that, if at any time the otherwise applicable interest rate
--------  -------
as set
<PAGE>

                                      18

forth in this Section 3.07 shall exceed the maximum rate permitted by applicable
law, then any subsequent reduction in such interest rate will not reduce the
rate of interest payable pursuant to this Section 3.07 below the maximum rate
permitted by applicable law until the total amount of interest accrued equals
the amount of interest that would have accrued if such otherwise applicable
interest rate as set forth in this Section 3.07 had at all times been in effect.

          (b) Each Advance will be either a Base Rate Advance or a LIBOR Advance
as provided in this Section.  Each such Advance will be a Base Rate Advance for
the period from the date of its borrowing to (but excluding) the third Business
Day following the Liquidity Provider's receipt of the Notice of Borrowing for
such Advance.  Thereafter, such Advance shall be a LIBOR Advance; provided that
the Borrower (at the direction of the Controlling Party, so long as the
Liquidity Provider is not the Controlling Party) may (x) convert the Final
Advance into a Base Rate Advance on the last day of an Interest Period for such
Advance by giving the Liquidity Provider no less than four Business Days' prior
written notice of such election or (y) elect to maintain the Final Advance as a
Base Rate Advance by not requesting a conversion of the Final Advance to a LIBOR
Advance under Clause (5) of the applicable Notice of Borrowing (or, if such
Final Advance is deemed to have been made without delivery of a Notice of
Borrowing pursuant to Section 2.06, by requesting, prior to 11:00 AM on the
first Business Day immediately following the Borrower's receipt of the
applicable Termination Notice, such that such Final Advance not be converted
from a Base Rate Advance to a LIBOR Advance).

          (c) Each LIBOR Advance shall bear interest during each Interest Period
at a rate per annum equal to the LIBOR Rate for such Interest Period plus the
Applicable Margin for such LIBOR Advance, payable in arrears on the last day of
such Interest Period and, in the event of the payment of principal of such LIBOR
Advance on a day other than such last day, on the date of such payment (to the
extent of interest accrued on the amount of principal repaid).

          (d) Each Base Rate Advance shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).

          (e) Each Unapplied Provider Advance shall bear interest as provided in
Section 3.07(b) hereof plus an amount equal to the amount by which (i) the
                       ----
Investment Earnings plus 0.50% per annum on the outstanding amount from time to
time of such Advance for the period for which interest is calculated pursuant to
clause (ii) hereof exceeds (ii) the amount of interest on such Unapplied
Provider Advance under Section 3.07(b).

          (f) Each amount not paid by the Borrower when due hereunder (whether
fees, commissions, expenses or other amounts or, to the extent permitted by
applicable law,
<PAGE>

                                      19

installments of interest on Advances but excluding Advances) shall bear interest
at a rate per annum equal to the Base Rate plus 2.00% until paid.

          (g) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.07 with respect to any Advance
or other amount shall be referred to as the "Applicable Liquidity Rate".
                                             -------------------------

          Section 3.08.  Replacement of Borrower.  From time to time and subject
                         -----------------------
to the successor Borrower's meeting the eligibility requirements set forth in
Section 6.9 of the Intercreditor Agreement applicable to the Subordination
Agent, upon the effective date and time specified in a written and completed
Notice of Replacement Subordination Agent in substantially the form of Annex V
attached hereto (a "Notice of Replacement Subordination Agent") delivered to the
                    -----------------------------------------
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for as the Borrower for all purposes hereunder.

          Section 3.09.  Funding Loss Indemnification.  The Borrower shall pay
                         ----------------------------
to the Liquidity Provider, upon the request of the Liquidity Provider, such
amount or amounts as shall be sufficient (in the reasonable opinion of the
Liquidity Provider) to compensate it for any loss, cost, or expense incurred by
reason of the liquidation or redeployment of deposits or other funds acquired by
the Liquidity Provider to fund or maintain any LIBOR Advance (but excluding loss
of anticipated profits) incurred as a result of:

          (1) Any repayment of a LIBOR Advance on a date other than the last day
     of the Interest Period for such Advance; or

          (2) Any failure by the Borrower to borrow a LIBOR Advance on the date
     for borrowing specified in the relevant notice under Section 2.02.

          Section 3.10.  Illegality.  Notwithstanding any other provision in
                         ----------
this Agreement, if any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Liquidity Provider (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for the Liquidity Provider (or its Lending Office) to maintain or
fund its LIBOR Advances, then upon notice to the Borrower by the Liquidity
Provider, the outstanding principal amount of the LIBOR Advances shall be
converted to Base Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the judgment of the
Liquidity Provider, requires immediate repayment; or (b) at the expiration of
the last Interest Period to expire before the effective date of any such change
or request.
<PAGE>

                                      20

                                  ARTICLE IV

                             CONDITIONS PRECEDENT

          Section 4.01.  Conditions Precedent to Effectiveness of Section 2.01.
                         -----------------------------------------------------
Section 2.01 of this Agreement shall become effective on and as of the first
date (the "Effective Date") on which the following conditions precedent have
           --------------
been satisfied or waived:

          (a)   The Liquidity Provider shall have received on or before the
Closing Date each of the following, and in the case of each document delivered
pursuant to paragraphs (i), (ii) and (iii), each in form and substance
satisfactory to the Liquidity Provider:

          (i)   This Agreement duly executed on behalf of the Borrower;

          (ii)  The Intercreditor Agreement duly executed on behalf of each of
     the parties thereto;

          (iii) Fully executed copies of each of the Operative Agreements
     executed and delivered on or before the Closing Date (other than this
     Agreement and the Intercreditor Agreement);

          (iv)  A copy of the Offering Memorandum, and specimen copies of the
     Class B Certificates;

          (v)   An executed copy of each document, instrument, certificate and
     opinion delivered on or before the Closing Date pursuant to the Class B
     Trust Agreement, the Intercreditor Agreement and the other Operative
     Agreements (in the case of each such opinion, other than the opinion of
     counsel for the Placement Agents, either addressed to the Liquidity
     Provider or accompanied by a letter from the counsel rendering such opinion
     to the effect that the Liquidity Provider is entitled to rely on such
     opinion as of its date as if it were addressed to the Liquidity Provider);

          (vi)  Evidence that there shall have been made and shall be in full
     force and effect, all filings, recordings and/or registrations, and there
     shall have been given or taken any notice or other similar action as may be
     reasonably necessary or, to the extent reasonably requested by the
     Liquidity Provider, reasonably advisable, in order to establish, perfect,
     protect and preserve the right, title and interest, remedies, powers,
     privileges, liens and security interests of, or for the benefit of, the
     Trustees, the Borrower and the Liquidity Provider created by the Operative
     Agreements executed and delivered on or prior to the Closing Date;
<PAGE>

                                      21

          (vii)  An agreement from Midway, pursuant to which (i) Midway agrees
     to provide copies of quarterly financial statements and audited annual
     financial statements to the Liquidity Provider, and such other information
     as the Liquidity Provider shall reasonably request with respect to the
     transactions contemplated by the Operative Agreements, in each case, only
     to the extent that Midway is obligated to provide such information pursuant
     to Section 8.04 of the Trust Agreement and (ii) Midway agrees to allow the
     Liquidity Provider to inspect Midway's books and records regarding such
     transactions, and to discuss such transactions with officers and employees
     of Midway; and

          (viii) Such other documents, instruments, opinions and approvals
     pertaining to the transactions contemplated hereby or by the other
     Operative Agreements as the Liquidity Provider shall have reasonably
     requested.

          (b)    The following statement shall be true on and as of the
Effective Date: No event has occurred and is continuing, or would result from
the entering into of this Agreement or the making of any Advance, which
constitutes a Liquidity Event of Default.

          (c)    The Liquidity Provider shall have received payment in full of
all fees and other sums required to be paid to or for the account of the
Liquidity Provider on or prior to the Effective Date.

          (d)    All conditions precedent to the issuance of the Certificates
under the Trust Agreements shall have been satisfied or waived, all conditions
precedent to the effectiveness of the other Liquidity Facilities shall have been
satisfied or waived, and all conditions precedent to the purchase of the
Certificates by the Placement Agents under the Placement Agreement shall have
been satisfied (unless any of such conditions precedent shall have been waived
by the Placement Agents).

          (e)    The Borrower shall have received on or before the Closing Date
each of the following:

          (i)    The Guarantee Agreement, substantially in the form of Exhibit I
     hereto, duly executed on behalf of each of the parties thereto;

          (ii)   A certificate, dated the date hereof, signed by a duly
     authorized representative of the Liquidity Provider, certifying that all
     conditions precedent to the effectiveness of Section 2.01 have been
     satisfied or waived.

          Section 4.02.  Conditions Precedent to Borrowing.  The obligation of
                         ---------------------------------
the Liquidity Provider to make an Advance on the occasion of each Borrowing
shall be subject to the
<PAGE>

                                      22

conditions precedent that the Effective Date shall have occurred and, prior to
the date of such Borrowing, the Borrower shall have delivered a Notice of
Borrowing which conforms to the terms and conditions of this Agreement and has
been completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.

                                   ARTICLE V

                                   COVENANTS

          Section 5.01.  Affirmative Covenants of the Borrower.  So long as any
                         -------------------------------------
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will, unless the Liquidity
Provider shall otherwise consent in writing:

          (a) Performance of This and Other Agreements.  Punctually pay or
              ----------------------------------------
     cause to be paid all amounts payable by it under this Agreement and the
     other Operative Agreements and observe and perform in all material respects
     the conditions, covenants and requirements applicable to it contained in
     this Agreement and the other Operative Agreements.

          (b) Reporting Requirements.  Furnish to the Liquidity Provider with
              ----------------------
     reasonable promptness, such other information and data with respect to the
     transactions contemplated by the Operative Agreements as from time to time
     may be reasonably requested by the Liquidity Provider; and permit the
     Liquidity Provider, upon reasonable notice, to inspect the Borrower's books
     and records with respect to such transactions and to meet with officers and
     employees of the Borrower to discuss such transactions.

          (c) Certain Operative Agreements.  Furnish to the Liquidity Provider
              ----------------------------
     with reasonable promptness such Operative Agreements entered into after the
     date hereof as from time to time may be reasonably requested by the
     Liquidity Provider.

          Section 5.02.  Negative Covenants of the Borrower.  So long as any
                         ----------------------------------
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
Commitment hereunder or the Borrower shall have any obligation to pay any amount
to the Liquidity Provider hereunder, the Borrower will not appoint or permit or
suffer to be appointed any successor Borrower without the prior written consent
of the Liquidity Provider, which consent shall not be unreasonably withheld or
delayed.
<PAGE>

                                      23

                                  ARTICLE VI

                          LIQUIDITY EVENTS OF DEFAULT

          Section 6.01.  Liquidity Events of Default.  If (a) any Liquidity
                         ---------------------------
Event of Default has occurred and is continuing and (b) there is a Performing
Note Deficiency, the Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) this
Agreement to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(i) of the Intercreditor
Agreement, (iii) all other outstanding Advances to be automatically converted
into Final Advances for purposes of determining the Applicable Liquidity Rate
for interest payable thereon, and (iv) subject to Sections 2.07 and 2.09 hereof,
all Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.

                                  ARTICLE VII

                                 MISCELLANEOUS

          Section 7.01.  Amendments, Etc.,  No amendment or waiver of any
                         ----------------
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Liquidity Provider, and, in the case of an amendment or of a
waiver by the Borrower, the Borrower, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

          Section 7.02.  Notices, Etc.  Except as otherwise expressly provided
                         ------------
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopier and mailed or delivered or sent by telecopier):

          Borrower:      ALLFIRST BANK
                         25 South Charles Street
                         Baltimore, MD 21201

                         Attention:      Corporate Trust Department
                         Telephone:      (410) 244-4626
                         Telecopy:       (410) 244-4236

          Liquidity
          Provider:      MORGAN STANLEY CAPITAL SERVICES INC.
<PAGE>

                                      24

                         1585 Broadway
                         New York, NY  10036

                         Attention: Michael Pohly/Chris Boas
                         Telecopy:  (212) 761-0569

or, as to each of the foregoing, at such other address as shall be designated by
such Person in a written notice to the others.  All such notices and
communications shall be effective (i) if given by telecopier, when transmitted
to the telecopier number specified above, (ii) if given by mail, when deposited
in the mails addressed as specified above, and (iii) if given by other means,
when delivered at the address specified above, except that written notices to
the Liquidity Provider pursuant to the provisions of Articles II and III hereof
shall not be effective until received by the Liquidity Provider.  A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.

          Section 7.03.  No Waiver: Remedies.  No failure on the part of the
                         -------------------
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right.  The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

          Section 7.04.  Further Assurances.  The Borrower agrees to do such
                         ------------------
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.

          Section 7.05.  Indemnification; Survival of Certain Provisions.  The
                         -----------------------------------------------
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 7.01 of the Participation Agreements and Section 6
of the Note Purchase Agreement.  In addition, the Borrower agrees to indemnify,
protect, defend and hold harmless the Liquidity Provider from, against and in
respect of, and shall pay on demand, all Expenses of any kind or nature
whatsoever (other than any Expenses of the nature described in Sections 3.01,
3.02 or 7.07 hereof or in the MSCS Fee Letter (regardless of whether indemnified
against pursuant to said Sections or in such MSCS Fee Letter)), that may be
imposed, incurred by or asserted against any Liquidity Indemnitee, in any way
relating to, resulting from, or arising out of or in connection with any action,
suit or proceeding by any third party against such Liquidity Indemnitee and
relating to this Agreement, the MSCS Fee Letter, the Intercreditor Agreement or
any Financing Agreement; provided, however, that the Borrower shall not be
                         --------  -------
required to indemnify, protect,
<PAGE>

                                      25

defend and hold harmless any Liquidity Indemnitee in respect of any Expense of
such Liquidity Indemnitee (i) to the extent such Expense is attributable to the
gross negligence or willful misconduct of such Liquidity Indemnitee or any other
Liquidity Indemnitee, (ii) ordinary and usual operating overhead expense, or
(iii) attributable to the failure by such Liquidity Indemnitee or any other
Liquidity Indemnitee to perform or observe any agreement, covenant or condition
on its part to be performed or observed in this Agreement, the Intercreditor
Agreement, the MSCS Fee Letter or any other Operative Agreement to which it is a
party. The indemnities contained in Section 7.01 of the Participation
Agreements, and the provisions of Sections 3.01, 3.02, 3.03, 3.09, 7.05 and 7.07
hereof, shall survive the termination of this Agreement.

          Section 7.06.  Liability of the Liquidity Provider.  (a) Neither the
                         -----------------------------------
Liquidity Provider nor any of its officers, employees, directors or affiliates
shall be liable or responsible for: (i) the use which may be made of the
Advances or any acts or omissions of the Borrower or any beneficiary or
transferee in connection therewith; (ii) the validity, sufficiency or
genuineness of documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent or
forged; or (iii) the making of Advances by the Liquidity Provider against
delivery of a Notice of Borrowing and other documents which do not comply with
the terms hereof; provided, however, that the Borrower shall have a claim
                  --------  -------
against the Liquidity Provider, and the Liquidity Provider shall be liable to
the Borrower, to the extent of any damages suffered by the Borrower which were
the result of (A) the Liquidity Provider's willful misconduct or negligence in
determining whether documents presented hereunder comply with the terms hereof,
or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.

          (b) Neither the Liquidity Provider nor any of its officers, employees,
director or affiliates shall be liable or responsible in any respect for (i) any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with this Agreement or
any Notice of Borrowing delivered hereunder, or (ii) any action, inaction or
omission which may be taken by it in good faith, absent willful misconduct or
negligence (in which event the extent of the Liquidity Provider's potential
liability to the Borrower shall be limited as set forth in the immediately
preceding paragraph), in connection with this Agreement or any Notice of
Borrowing.

          Section 7.07.  Costs, Expenses and Taxes.  Subject to Section 2.09,
                         -------------------------
the Borrower agrees to pay, or cause to be paid (A) on the Effective Date and on
such later date or dates on which the Liquidity Provider shall make demand, all
reasonable out-of-pocket costs and expenses (including, without limitation, the
reasonable fees and expenses of outside counsel for the Liquidity Provider) of
the Liquidity Provider in connection with the preparation, negotiation,
execution, delivery, filing and recording of this Agreement, any other Operative
Agreement and
<PAGE>

                                      26

any other documents which may be delivered in connection with this Agreement and
(B) on demand, all reasonable costs and expenses (including reasonable counsel
fees and expenses) of the Liquidity Provider in connection with (i) the
enforcement of this Agreement or any other Operative Agreement, (ii) the
modification or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be delivered in connection
herewith or therewith (whether or not the same shall become effective) or (iii)
any action or proceeding relating to any order, injunction, or other process or
decree restraining or seeking to restrain the Liquidity Provider from paying any
amount under this Agreement, the Intercreditor Agreement or any other Operative
Agreement or otherwise affecting the application of funds in the Class B Cash
Collateral Account. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative Agreement and such other documents, and agrees to save the
Liquidity Provider harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.

           Section 7.08.  Binding Effect; Participations.
                          ------------------------------

          (a) This Agreement shall be binding upon and inure to the benefit of
the Borrower and the Liquidity Provider and their respective successors and
assigns, except that neither the Liquidity Provider (except as otherwise
provided in this Section 7.08) nor (except as contemplated by Section 3.08) the
Borrower shall have the right to assign its rights or obligations hereunder or
any interest herein without the prior written consent of the other party,
subject to the requirements of Section 7.08(b). The Liquidity Provider may grant
participations herein or in any of its rights hereunder (including, without
limitation, funded participations and participations in rights to receive
interest payments hereunder) and under the other Operative Agreements to such
Persons as (not including Midway or any affiliate of Midway) the Liquidity
Provider may in its sole discretion select, subject to the requirements of
Section 7.08(b). No such participation by the Liquidity Provider, however, will
relieve the Liquidity Provider of its obligations hereunder. In connection with
any participation or any proposed participation, the Liquidity Provider may
disclose to the participant or the proposed participant any information that the
Borrower is required to deliver or to disclose to the Liquidity Provider
pursuant to this Agreement.  The Borrower acknowledges and agrees that the
Liquidity Provider's source of funds may derive in part from its participants.
Accordingly, references in this Agreement and the other Operative Agreements to
determinations, reserve and capital adequacy requirements, increased costs,
reduced receipts, additional amounts due pursuant to Section 3.03(a) and the
like as they pertain to the Liquidity Provider shall be deemed also to include
those of each of its participants (subject, in each case, where such participant
is not (i) a bank organized under the laws of the United States or any State
thereof and (ii) a member of the Federal Reserve System with deposits exceeding
$1,000,000,000 (a bank described in (i) and (ii) above being a "Reference
Bank"), to
<PAGE>

                                      27

the maximum amount that would have been incurred by or attributable to a
Reference Bank directly if such Reference Bank, rather than the participant, had
held the interest participated).

          (b) If, pursuant to subsection (a) above, the Liquidity Provider sells
any participation in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such participation,
 ----------
the Transferee shall (i) represent to the Liquidity Provider (for the benefit of
the Liquidity Provider and the Borrower) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect of this
Agreement, (ii) furnish to the Liquidity Provider and the Borrower either (x) a
statement that it is incorporated under the laws of the United States or a state
thereof or (y) if it is not so incorporated, two copies of a properly completed
United States Internal Revenue Service Form W-8 ECI or Form W-8 BEN, as
appropriate, or other applicable form, certificate or document prescribed by the
Internal Revenue Service certifying, in each case, such Transferee's entitlement
to a complete exemption from United States federal withholding tax in respect to
any and all payments to be made hereunder, and (iii) agree (for the benefit of
the Liquidity Provider and the Borrower) to provide the Liquidity Provider and
the Borrower a new Form W-8 ECI or Form W-8 BEN, as appropriate, (A) on or
before the date that any such form expires or becomes obsolete or (B) after the
occurrence of any event requiring a change in the most recent form previously
delivered by it and prior to the immediately following due date of any payment
by the Borrower hereunder, certifying in the case of a Form W-8 BEN or Form W-8
ECI that such Transferee is entitled to a complete exemption from United States
federal withholding tax on payments under this Agreement.  Unless the Borrower
has received forms or other documents reasonably satisfactory to it (and
required by applicable law) indicating that payments hereunder are not subject
to United States federal withholding tax, the Borrower will withhold taxes as
required by law from such payments at the applicable statutory rate.

          Section 7.09.  Severability.  Any provision of this Agreement which is
                         ------------
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.

          Section 7.10.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY,
                         -------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          Section 7.11.  Submission to Jurisdiction; Waiver of Jury Trial;
                         -------------------------------------------------
Waiver of Immunity.  (a)  Each of the parties hereto hereby irrevocably and
------------------
unconditionally:
<PAGE>

                                      28

     (i)   submits for itself and its property in any legal action or proceeding
           relating to this Agreement or any other Operative Agreement, or for
           recognition and enforcement of any judgment in respect hereof or
           thereof, to the nonexclusive general jurisdiction of the courts of
           the State of New York, the courts of the United States of America for
           the Southern District of New York, and the appellate courts from any
           thereof;

     (ii)  consents that any such action or proceeding may be brought in such
           courts, and waives any objection that it may now or hereafter have to
           the venue of any such action or proceeding in any such court or that
           such action or proceeding was brought in an inconvenient court and
           agrees not to plead or claim the same;

     (iii) agrees that service of process in any such action or proceeding may
           be effected by mailing a copy thereof by registered or certified mail
           (or any substantially similar form and mail), postage prepaid, to
           each party hereto at its address set forth in Section 7.02 hereof, or
           at such other address of which the Liquidity Provider shall have been
           notified pursuant thereto; and

     (iv)  agrees that nothing herein shall affect the right to effect service
           of process in any other manner permitted by law or shall limit the
           right to sue in any other jurisdiction.

          (b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory claims.  The Borrower and
the Liquidity Provider each warrant and represent that it has reviewed this
waiver with its legal counsel, and that it knowingly and voluntarily waives its
jury trial rights following consultation with such legal counsel.  THIS WAIVER
IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.

          Section 7.12.  Execution in Counterparts.  This Agreement may be
                         -------------------------
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
<PAGE>

                                      29

          Section 7.13.  Entirety.  This Agreement, the Intercreditor Agreement
                         --------
and the other Operative Agreements to which the Liquidity Provider is a party
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior understandings and agreements of
such parties.

          Section 7.14.  Headings.  Section headings in this Agreement are
                         --------
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

          Section 7.15.  LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
                         ------------------------------------------------
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
<PAGE>

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

                                             ALLFIRST BANK, not in its
                                             individual capacity but solely as
                                             Subordination Agent, as agent and
                                             trustee for the Class B Trust, as
                                             Borrower

                                             By: /s/ Robert D. Brown
                                                 -------------------
                                                 Name: Robert D. Brown
                                                 Title: Vice President

                                             MORGAN STANLEY CAPITAL
                                                 SERVICES INC.,
                                                 as Liquidity Provider

                                             By: /s/ Elinor L. Hoover
                                                 --------------------
                                                 Name: Elinor L. Hoover
                                                 Title: Vice President
<PAGE>

                                                                      Annex I to
                                                      Revolving Credit Agreement

                     INTEREST ADVANCE NOTICE OF BORROWING

          The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to Morgan Stanley Capital Services
               --------
Inc. (the "Liquidity Provider"), with reference to the Revolving Credit
           ------------------
Agreement (2000-1B) dated as of September 27, 2000, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not
                         -------------------
otherwise defined herein being used herein as therein defined or referenced),
that:

          (1) The Borrower is the Subordination Agent under the Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of an Interest Advance by the Liquidity Provider to be used, subject to
     clause (3)(v) below, for the payment of the interest on the Class B
     Certificates which was payable on ________________, ______ (the
     "Distribution Date") in accordance with the terms and provisions of the
      -----------------
     Class B Trust Agreement and the Class B Certificates which Advance is
     requested to be made on ________________, ______.

          (3) The amount of the Interest Advance requested hereby (i) is $_____,
     to be applied in respect of the payment of the interest which was due and
     payable on the Class B Certificates on the Distribution Date, (ii) does not
     include any amount with respect to the payment of principal of, or premium
     on, the Class A Certificates, the Class B Certificates or the Class C
     Certificates, or interest on the Class A Certificates or the Class C
     Certificates, (iii) was computed in accordance with the provisions of the
     Class B Certificates, the Class B Trust Agreement and the Intercreditor
     Agreement (a copy of which computation is attached hereto as Schedule I),
     (iv) does not exceed the Maximum Commitment on the date hereof, (v) does
     not include any amount of interest which was due and payable on the Class B
     Certificates on such Distribution Date but which remains unpaid due to the
     failure of the Depositary to pay any amount pursuant to the Deposit
     Agreement on such Distribution Date and (vi) has not been and is not the
     subject of a prior or contemporaneous Notice of Borrowing.

          (4) Upon receipt by or on behalf of the Borrower of the amount
     requested hereby, (a) the Borrower will apply the same in accordance with
     the terms of Section 3.6(b) of the Intercreditor Agreement, (b) no portion
     of such amount shall be applied by the Borrower for any other purpose and
     (c) no portion of such amount until so applied shall be commingled with
     other funds held by the Borrower.
<PAGE>

                                      I-2

          The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, the making of the Interest Advance as requested by this Notice of
Borrowing shall automatically reduce, subject to reinstatement in accordance
with the terms of the Liquidity Agreement, the Maximum Commitment by an amount
equal to the amount of the Interest Advance requested to be made hereby as set
forth in clause (i) of paragraph (3) of this Certificate and such reduction
shall automatically result in corresponding reductions in the amounts available
to be borrowed pursuant to a subsequent Advance.

          IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the __ day of ________________, _____.

                                                  ALLFIRST BANK, not in its
                                                   individual capacity but
                                                   solely as Subordination
                                                   Agent, as Borrower

                                                  By:________________________
                                                     Name:
                                                     Title:
<PAGE>

                                      I-3

              SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING

               [Insert Copy of Computations in accordance with
                    Interest Advance Notice of  Borrowing]
<PAGE>

                                                                     Annex II to
                                                      Revolving Credit Agreement

                   NON-EXTENSION ADVANCE NOTICE OF BORROWING

          The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Morgan Stanley Capital
                          ---------
Services Inc. (the "Liquidity Provider"), with reference to the Revolving Credit
                    ------------------
Agreement (2000-1B) dated as of September 27, 2000, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not
                         -------------------
otherwise defined herein being used herein as therein defined or referenced),
that:

          (1) The Borrower is the Subordination Agent under the Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the Non-Extension Advance by the Liquidity Provider to be used for the
     funding of the Class B Cash Collateral Account in accordance with Section
     3.6(d) of the Intercreditor Agreement, which Advance is requested to be
     made on __________, ____.

          (3) The amount of the Non-Extension Advance  requested hereby (i) is
     $________.____, which equals the Maximum Commitment on the date hereof and
     is to be applied in respect of the funding of the Class B Cash Collateral
     Account in accordance with Section 3.6(d) of the Intercreditor Agreement,
     (ii) does not include any amount with respect to the payment of the
     principal of, or premium on, the Class B Certificates, or principal of, or
     interest or premium on, the Class A Certificates or the Class C
     Certificates, (iii) was computed in accordance with the provisions of the
     Class B Certificates, the Class B Trust Agreement and the Intercreditor
     Agreement (a copy of which computation is attached hereto as Schedule I),
     and (iv) has not been and is not the subject of a prior or contemporaneous
     Notice of Borrowing under the Liquidity Agreement.

          (4) Upon receipt by or on behalf of the Borrower of the amount
     requested hereby, (a) the Borrower will deposit such amount in the Class B
     Cash Collateral Account and apply the same in accordance with the terms of
     Section 3.6(d) of the Intercreditor Agreement, (b) no portion of such
     amount shall be applied by the Borrower for any other purpose and (c) no
     portion of such amount until so applied shall be commingled with other
     funds held by the Borrower.

          The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension Advance as requested by this
Notice of Borrowing shall
<PAGE>

                                     II-2

automatically and irrevocably terminate the obligation of the Liquidity Provider
to make further Advances under the Liquidity Agreement; and (B) following the
making by the Liquidity Provider of the Non-Extension Advance requested by this
Notice of Borrowing, the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.

          IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of _________________,____.

                                             ALLFIRST BANK, not in its
                                               individual capacity but solely as
                                               Subordination Agent, as Borrower

                                             By: ___________________________
                                                 Name:
                                                 Title:
<PAGE>

            SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING

                [Insert Copy of computations in accordance with
                  Non-Extension Advance Notice of Borrowing]
<PAGE>

                                                                    Annex III to
                                                      Revolving Credit Agreement

                     DOWNGRADE ADVANCE NOTICE OF BORROWING

          The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby certifies to Morgan Stanley Capital
                          --------
Services Inc. (the "Liquidity Provider"), with reference to the Revolving Credit
                    ------------------
Agreement (2000-1B) dated as of September 27, 2000, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not
                         -------------------
otherwise defined herein being used herein as therein defined or referenced),
that:

          (1) The Borrower is the Subordination Agent under the Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the Downgrade Advance by the Liquidity Provider to be used for the
     funding of the Class B Cash Collateral Account in accordance with Section
     3.6(c) of the Intercreditor Agreement by reason of (i) the downgrading of
     the short-term unsecured debt rating of the Guarantor issued by any Rating
     Agency below the Threshold Rating or (ii) the occurrence of a Guarantee
     Event, which Advance is requested to be made on __________, ____.

          (3) The amount of the Downgrade  Advance  requested hereby (i) is
     $________.____, which equals the Maximum Commitment on the date hereof and
     is to be applied in respect of the funding of the Class B Cash Collateral
     Account in accordance with Section 3.6(c) of the Intercreditor Agreement,
     (ii) does not include any amount with respect to the payment of the
     principal of, or premium on, the Class B Certificates, or principal of, or
     interest or premium on, the Class A Certificates or the Class C
     Certificates, (iii) was computed in accordance with the provisions of the
     Class B Certificates, the Class B Trust Agreement and the Intercreditor
     Agreement (a copy of which computation is attached hereto as Schedule I),
     and (iv) has not been and is not the subject of a prior or contemporaneous
     Notice of Borrowing under the Liquidity Agreement.

          (4) Upon receipt by or on behalf of the Borrower of the amount
     requested hereby, (a) the Borrower will deposit such amount in the Class B
     Cash Collateral Account and apply the same in accordance with the terms of
     Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
     amount shall be applied by the Borrower for any other purpose and (c) no
     portion of such amount until so applied shall be commingled with other
     funds held by the Borrower.
<PAGE>

                                     III-2

          The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Downgrade Advance
requested by this Notice of Borrowing, the Borrower shall not be entitled to
request any further Advances under the Liquidity Agreement.

          IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of _________________,____.

                                             ALLFIRST BANK, not in its
                                              individual capacity but solely as
                                              Subordination Agent, as Borrower

                                             By:_____________________________
                                                Name:
                                                Title:
<PAGE>

              SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING

                [Insert Copy of computations in accordance with
                    Downgrade Advance Notice of Borrowing]
<PAGE>

                                                                     Annex IV to
                                                      Revolving Credit Agreement

                       FINAL ADVANCE NOTICE OF BORROWING

          The undersigned, a duly authorized signatory of the undersigned
borrower (the "Borrower"), hereby certifies to Morgan Stanley Capital Services
               --------
Inc. (the "Liquidity Provider"), with reference to the Revolving Credit
           ------------------
Agreement (2000-1B) dated as of September 27, 2000, between the Borrower and the
Liquidity Provider (the "Liquidity Agreement"; the terms defined therein and not
                         -------------------
otherwise defined herein being used herein as therein defined or referenced),
that:

          (1) The Borrower is the Subordination Agent under the Intercreditor
     Agreement.

          (2) The Borrower is delivering this Notice of Borrowing for the making
     of the Final Advance by the Liquidity Provider to be used for the funding
     of the Class B Cash Collateral Account in accordance with Section 3.6(i) of
     the Intercreditor Agreement by reason of the receipt by the Borrower of a
     Termination Notice from the Liquidity Provider with respect to the
     Liquidity Agreement, which Advance is requested to be made on

          (3) The amount of the Final Advance requested hereby (i) is
     $__________.__, which equals the Maximum Commitment on the date hereof and
     is to be applied in respect of the funding of the Class B Cash Collateral
     Account in accordance with Section 3.6(i) of the Intercreditor Agreement,
     (ii) does not include any amount with respect to the payment of principal
     of, or premium on, the Class B Certificates, or principal of, or interest
     or premium on, the Class A Certificates or the Class C Certificates, (iii)
     was computed in accordance with the provisions of the Class B Certificates,
     the Class B Trust Agreement and the Intercreditor Agreement (a copy of
     which computation is attached hereto as Schedule I), and (iv) has not been
     and is not the subject of a prior or contemporaneous Notice of Borrowing.

          (4) Upon receipt by or on behalf of the Borrower of the amount
     requested hereby, (a) the Borrower will deposit such amount in the Class B
     Cash Collateral Account and apply the same in accordance with the terms of
     Section 3.6(i) of the Intercreditor Agreement, (b) no portion of such
     amount shall be applied by the Borrower for any other purpose and (c) no
     portion of such amount until so applied shall be commingled with other
     funds held by the Borrower.
<PAGE>

                                     IV-2

          (5) The Borrower hereby requests that the Advance requested hereby be
     a Base Rate Advance [and that such Base Rate Advance be converted into a
     LIBOR Advance on the third Business Day following your receipt of this
     notice]/1/.

          The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Final Advance as requested by this Notice of
Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Final Advance
requested by this Notice of Borrowing, the Borrower shall not be entitled to
request any further Advances under the Liquidity Agreement.

          IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ___ day of ______________, ____.

                                             ALLFIRST BANK, not in its
                                              individual capacity but solely as
                                              Subordination Agent, as Borrower

                                             By:_________________________
                                                Name:
                                                Title:

_________________

/1/  Bracketed language may be included at Borrower's option.
<PAGE>

                SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING

                [Insert Copy of Computations in accordance with
                      Final Advance Notice of Borrowing]
<PAGE>

                                                                     Annex V  to
                                                      Revolving Credit Agreement

                             NOTICE OF TERMINATION

                                                [Date]

Allfirst Bank
   as Subordination Agent, as Borrower
25 South Charles Street
Baltimore, MD 21201

Attention:  Corporate Trust Department

Re:  Revolving Credit Agreement dated as of September 27, 2000, between Allfirst
     Bank, as Subordination Agent, as agent and trustee for the Midway Airlines
     Pass Through Trust, 2000-1B, as Borrower, and Morgan Stanley Capital
     Services Inc. (the "Liquidity Agreement")

Ladies and Gentlemen:

          You are hereby notified that pursuant to Section 6.01 of the Liquidity
Agreement, by reason of the occurrence of a Liquidity Event of Default and the
existence of a Performing Note Deficiency (each as defined therein), we are
giving this notice to you in order to cause (i) our obligations to make Advances
(as defined therein) under such Liquidity Agreement to terminate on the fifth
Business Day after the date on which you receive this notice and (ii) you to
request a Final Advance under the Liquidity Agreement pursuant to Section 3.6(i)
of the Intercreditor Agreement (as defined in the Liquidity Agreement) as a
consequence of your receipt of this notice.
<PAGE>

                                      V-2

          THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE
LIQUIDITY AGREEMENT.  OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY
AGREEMENT WILL TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU
RECEIVE THIS NOTICE.

                              Very truly yours,

                              Morgan Stanley Capital Services Inc.,
                                  as Liquidity Provider

                              By: ________________________
                                  Name:
                                  Title:

cc:  Allfirst Bank as Class B Trustee
<PAGE>

                                                                     Annex VI to
                                                      Revolving Credit Agreement

                   NOTICE OF REPLACEMENT SUBORDINATION AGENT

[Date]

Attention:

Re:  Revolving Credit Agreement dated as of September 27, 2000, between Allfirst
     Bank, as Subordination Agent, as agent and trustee for the Midway Airlines
     Pass Through Trust, 2000-1B, as Borrower, and Morgan Stanley Capital
     Services Inc. (the "Liquidity Agreement")

Ladies and Gentlemen:

          For value received, the undersigned beneficiary hereby irrevocably
transfers to:

                         ________________________________
                         [Name of Transferee]

                         _________________________________
                         [Address of Transferee]

all rights and obligations of the undersigned as Borrower under the Liquidity
Agreement referred to above.  The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement, pursuant to the terms of Section 8.1 of
the Intercreditor Agreement.

          By this transfer, all rights of the undersigned as Borrower under the
Liquidity Agreement are transferred to the transferee and the transferee shall
hereafter have the sole rights and obligations as Borrower thereunder.  The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
<PAGE>

                                     VI-2

          We ask that this transfer be effective as of _______________, ____.

                                             ALLFIRST BANK, not in its
                                               individual capacity but solely as
                                               Subordination Agent, as Borrower

                                             By __________________________

                                                Name:
                                                Title:
<PAGE>

                                                                    Exhibit I to
                                                      Revolving Credit Agreement

                          FORM OF GUARANTEE AGREEMENT

Midway Airlines Pass Through Trust 2000-1B

Ladies and Gentlemen:

          In consideration of the Revolving Credit Agreement (the "Agreement")
                                                                   ---------
dated as of September 27, 2000 between Morgan Stanley Capital Services Inc., a
Delaware corporation (hereinafter "MSCS") and Allfirst Bank, as Subordination
                                   ----
Agent, as agent and trustee for the Midway Airlines Pass Through Trust 2000-1B
("Counterparty"), Morgan Stanley Dean Witter & Co., a Delaware Corporation
  ------------
(hereinafter "MSDW"), hereby irrevocably and unconditionally guarantees to
              ----
Counterparty, with effect from the date of the Agreement, the due and punctual
payment of all amounts payable by MSCS under the Agreement when the same shall
become due and payable, whether on scheduled payment dates, upon demand, upon
declaration of termination or otherwise, in accordance with the terms of the
Agreement and giving effect to any applicable grace period.  Upon failure of
MSCS punctually to pay any such amounts, and upon written demand by Counterparty
to MSDW at its address set forth in the signature block of this Guarantee (or to
such other address as MSDW may specify in writing), MSDW agrees to pay or cause
to be paid such amounts; provided that delay by Counterparty in giving such
demand shall in no event affect MSDW's obligations under this Guarantee.

          MSDW hereby agrees that its obligations hereunder shall be
unconditional and will not be discharged except by complete payment of the
amounts payable under the Agreement, irrespective of any claim as to the
Agreement's validity, regularity or enforceability or the lack of authority of
MSCS to execute or deliver the Agreement, or any change in or amendment to the
Agreement, or any waiver or consent by Counterparty with respect to any
provisions thereof, or the absence of any action to enforce the Agreement or the
recovery of any judgment against MSCS or of any action to enforce a judgment
against MSCS under the Agreement; or any similar circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor
generally.  MSDW hereby waives diligence, presentment, demand on MSCS for
payment or otherwise (except as provided hereinabove), filing of claims
requirement of a prior proceeding against MSCS and protest or notice except as
provided for in the Agreement with respect to amounts payable by MSCS.  If at
any time payment under the Agreement is rescinded or must be otherwise restored
or returned by Counterparty upon the insolvency, bankruptcy or reorganization of
MSCS or MSDW or otherwise, MSDW's obligations hereunder with respect to such
payment shall be reinstated upon such restoration or return being made by
Counterpart.
<PAGE>

                                      I-2

          MSDW represents to Counterparty as of the date hereof, which
representations will be deemed to be repeated by MSDW on each date on which a
Transaction is entered into, that:

          (1) it is duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has full power and legal right to execute
and deliver this Guarantee and to perform the provisions of this Guarantee on
its part to be performed;

          (2) its execution, delivery and performance of this Guarantee have
been and remain duly authorized by all necessary corporate action and do not
contravene any provision of its certificate of incorporation or by-laws or any
law, regulation or contractual restriction binding on it or its assets;

          (3) all consents, authorizations, approvals and clearances (including,
without limitation, any necessary exchange control approval) and notifications,
reports and registrations requisite for its due execution, delivery and
performance of this Guarantee have been obtained from or, as the case may be,
filed with the relevant governmental authorities having jurisdiction and remain
in full force and effect and all conditions thereof have been duly complied with
and no other action by, and no notice to or filing with, any governmental
authority having jurisdiction is required for such execution, delivery or
performance; and

          (4) this Guarantee is its legal, valid and binding obligation
enforceable against it in accordance with its terms except as enforcement hereof
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights or by general equity
principles.

          By accepting this Guarantee and entering into the Agreement,
Counterparty agrees that MSDW shall be subrogated to all rights of Counterparty
against MSCS in respect of any amounts paid by MSDW pursuant to this Guarantee,
provided that MSDW shall be entitled to enforce or to receive any payment
arising out of or based upon such right of subrogation only to the extent that
it has paid all amounts payable by MSCS under the Agreement.
<PAGE>

                                      I-3

          This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York.  All capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Agreement.

                                        MORGAN STANLEY DEAN WITTER & CO.

                                        By:____________________________________
                                        Name:
                                        Title:

                                        Address:    1585 Broadway
                                                    3/rd/ Floor
                                                    New York, NY 10036
                                        Attention:  Swap Group
                                        Fax No.:    (212) 761-0162

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