Document:

<PAGE>

                                                                     Exhibit 4.4

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                         PASS THROUGH TRUST AGREEMENT

                        Dated as of September 27, 2000

                                    between

                          MIDWAY AIRLINES CORPORATION

                                      and

                                 ALLFIRST BANK

                                  as Trustee

                  Midway Airlines 2000-1C Pass Through Trust

               11.19% 2000-1C Initial Pass Through Certificates

               11.19% 2000-1C Exchange Pass Through Certificates

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<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                 <C>
ARTICLE I     DEFINITIONS........................................................................     3
    Section 1.01.   Definitions..................................................................     3
    Section 1.02.   Compliance Certificates and Opinions.........................................    14
    Section 1.03.   Form of Documents Delivered to Trustee.......................................    14
    Section 1.04.   Acts of Certificateholders...................................................    15

ARTICLE II    ORIGINAL ISSUANCE OF CERTIFICATES.................................................     16
    Section 2.01.   Delivery of Documents; Delivery Date........................................     16
    Section 2.02.   Withdrawal of Deposits......................................................     17
    Section 2.03.   The Trustee.................................................................     18
    Section 2.04.   Acceptance by Trustee.......................................................     18
    Section 2.05.   Limitation of Powers........................................................     18

ARTICLE III   THE CERTIFICATES..................................................................     18
    Section 3.01.   Title, Form, Denomination and Execution of Certificates.....................     18
    Section 3.02.   Restrictive Legends.........................................................     20
    Section 3.03.   Authentication of Certificates..............................................     22
    Section 3.04.   Transfer and Exchange.......................................................     22
    Section 3.05.   Book-Entry Provisions for U.S. Global Certificate
                    and Offshore Global Certificates............................................     23
    Section 3.06.   Special Transfer Provisions.................................................     24
    Section 3.07.   Mutilated, Destroyed, Lost or Stolen Certificates...........................     27
    Section 3.08.   Persons Deemed Owners.......................................................     28
    Section 3.09.   Cancellation................................................................     28
    Section 3.10.   Limitation of Liability for Payments........................................     28
    Section 3.11.   Temporary Certificates......................................................     28
    Section 3.12.   ERISA Restrictive Legend....................................................     28

ARTICLE IV    DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS...................................     29
    Section 4.01.   Certificate Account and Special Payments Account............................     29
    Section 4.02.   Distributions from Certificate Account and
                    Special Payments Account....................................................     29
    Section 4.03.   Statements to Certificateholders............................................     31
    Section 4.04.   Investment of Special Payment Moneys........................................     32

ARTICLE V     THE COMPANY.......................................................................     33
    Section 5.01.   Maintenance of Corporate Existence..........................................     33
    Section 5.02.   Consolidation, Merger, Etc..................................................     33
</TABLE>

                                      -i-
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<TABLE>
<S>                                                                                                  <C>
ARTICLE VI       DEFAULT........................................................................     34
    Section 6.01.   Events of Default...........................................................     34
    Section 6.02.   Incidents of Sale of Equipment Notes........................................     36
    Section 6.03.   Judicial Proceedings Instituted by Trustee;
                    Trustee May Bring Suit......................................................     36
    Section 6.04.   Control by Certificateholders...............................................     37
    Section 6.05.   Waiver of Past Defaults.....................................................     37
    Section 6.06.   Right of Certificateholders to Receive Payments
                    Not to Be Impaired..........................................................     38
    Section 6.07.   Certificateholders May Not Bring Suit Except
                    Under Certain Conditions....................................................     38
    Section 6.08.   Remedies Cumulative.........................................................     38
    Section 6.09.   Undertaking for Costs.......................................................     39

ARTICLE VII      THE TRUSTEE....................................................................     39
    Section 7.01.   Certain Duties and Responsibilities.........................................     39
    Section 7.02.   Notice of Defaults..........................................................     39
    Section 7.03.   Certain Rights of Trustee...................................................     40
    Section 7.04.   Not Responsible for Recitals or Issuance of Certificates....................     41
    Section 7.05.   May Hold Certificates.......................................................     41
    Section 7.06.   Money Held in Trust.........................................................     41
    Section 7.07.   Compensation and Reimbursement..............................................     41
    Section 7.08.   Corporate Trustee Required; Eligibility.....................................     43
    Section 7.09.   Resignation and Removal; Appointment of Successor...........................     43
    Section 7.10.   Acceptance of Appointment by Successor......................................     45
    Section 7.11.   Merger, Conversion, Consolidation or Succession to Business.................     45
    Section 7.12.   Maintenance of Agencies.....................................................     45
    Section 7.13.   Money for Certificate Payments to Be Held in Trust..........................     46
    Section 7.14.   Registration of Equipment Notes in Name of
                    Subordination Agent.........................................................     47
    Section 7.15.   Representations and Warranties of Trustee...................................     47
    Section 7.16.   Withholding Taxes; Information Reporting....................................     48
    Section 7.17.   Trustee's Liens.............................................................     48
    Section 7.18.   Preferential Collection of Claims...........................................     48

ARTICLE VIII     CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE...............................     49
    Section 8.01.   The Company to Furnish Trustee with Names and
                    Addresses of Certificateholders.............................................     49
    Section 8.02.   Preservation of Information; Communications to
                    Certificateholders..........................................................     49
    Section 8.03.   Reports by Trustee..........................................................     49
    Section 8.04.   Reports by the Company......................................................     49
</TABLE>

                                     -ii-
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<TABLE>
<S>                                                                                                  <C>
ARTICLE IX   SUPPLEMENTAL AGREEMENTS............................................................     50
    Section 9.01.   Supplemental Agreements Without Consent of Certificateholders...............     50
    Section 9.02.   Supplemental Agreements with Consent of Certificateholders..................     51
    Section 9.03.   Documents Affecting Immunity or Indemnity...................................     52
    Section 9.04.   Execution of Supplemental Agreements........................................     52
    Section 9.05.   Effect of Supplemental Agreements...........................................     52
    Section 9.06.   Conformity with Trust Indenture Act.........................................     53
    Section 9.07.   Reference in Certificates to Supplemental Agreements........................     53

ARTICLE X    AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS...................................     53
    Section 10.01.  Amendments and Supplement to Indentures and Other Note Documents............     53

ARTICLE XI   TERMINATION OF TRUST...............................................................     54
    Section 11.01.  Termination of the Trust....................................................     54

ARTICLE XII  MISCELLANEOUS PROVISIONS...........................................................     55
    Section 12.01.  Limitation on Rights of Certificateholders..................................     55
    Section 12.02.  Certificates Nonassessable and Fully Paid...................................     55
    Section 12.03.  Notices.....................................................................     55
    Section 12.04.  Governing Law...............................................................     56
    Section 12.05.  Severability of Provisions..................................................     56
    Section 12.06.  Effect of Headings and Table of Contents....................................     57
    Section 12.07.  Successors and Assigns......................................................     57
    Section 12.08.  Benefits of Agreement.......................................................     57
    Section 12.09.  Legal Holidays..............................................................     57
    Section 12.10.  Counterparts................................................................     57
    Section 12.11.  Communication by Certificateholders with Other Certificateholders...........     57
    Section 12.12.  Intention of Parties........................................................     57
    Section 12.13.  Trust Indenture Act Controls................................................     57
</TABLE>
                                 EXHIBIT LIST

    Exhibit A     Form of Certificate

    Exhibit B     Form of Certificate for Unlegended Certificates

    Exhibit C     Form of Certificate to be Delivered in connection with
                  Transfers Pursuant to Regulation S

                                     -iii-
<PAGE>

    Exhibit D     Form of Certificate to be Delivered in connection with
                  Transfers to Non-QIB Accredited Investors

                                     -iv-
<PAGE>

                         PASS THROUGH TRUST AGREEMENT

                  This PASS THROUGH TRUST AGREEMENT, dated as of September 27,
2000, between MIDWAY AIRLINES CORPORATION, a Delaware corporation (the
"Company"), and ALLFIRST BANK, a Maryland state-chartered commercial bank, as
Trustee, is made with respect to the formation of Midway Airlines 2000-1C Pass
Through Trust and the issuance of 11.19% Midway Airlines 2000-1C Pass Through
Certificates representing fractional undivided interests in the Trust.

                                   WITNESSETH:

                  WHEREAS, the Company has obtained commitments from The Boeing
Company for the delivery of certain Aircraft;

                  WHEREAS, the Company intends to finance the acquisition of
each such Aircraft either (i) through separate leveraged lease transactions, in
which case the Company will lease such Aircraft (collectively, the "Leased
                                                                    ------
Aircraft") or (ii) through separate secured loan transactions, in which case the
--------
Company will own such Aircraft (collectively, the "Owned Aircraft");
                                                   --------------

                  WHEREAS, in the case of each Leased Aircraft, each Owner
Trustee, acting on behalf of the corresponding Owner Participant, will issue
pursuant to an Indenture, on a non-recourse basis, Equipment Notes in order to
finance a portion of its purchase price of such Leased Aircraft;

                  WHEREAS, in the case of each Owned Aircraft, the Company will
issue pursuant to an Indenture, on a recourse basis, Equipment Notes to finance
a portion of the purchase price of such Owned Aircraft;

                  WHEREAS, the Trustee, upon execution and delivery of this
Agreement, hereby declares the creation of this Trust (the "2000-1C Trust") for
                                                            -------------
the benefit of the Certificateholders, and the initial Certificateholders, as
the grantors of the 2000-1C Trust, by their respective acceptances of the
Certificates, join in the creation of this 2000-1C Trust with the Trustee;

                  WHEREAS, all Certificates to be issued by the Trust will
evidence fractional undivided interests in the Trust and will convey no rights,
benefits or interests in respect of any property other than the Trust Property
except for those Certificates to which an Escrow Receipt has been affixed;

                  WHEREAS, the Escrow Agent and the Placement Agents have
contemporaneously herewith entered into an Escrow Agreement with the Trustee and
the Escrow Paying Agent pursuant to which the Placement Agents have delivered to
the Escrow Agent the proceeds from the sale of the
<PAGE>

Certificates and have irrevocably instructed the Escrow Agent to withdraw and
pay funds from such proceeds upon request and proper certification by the
Trustee to purchase Equipment Notes as the Aircraft are delivered by The Boeing
Company from time to time prior to the Delivery Period Termination Date;

                  WHEREAS, the Escrow Agent on behalf of the Certificateholders
has contemporaneously herewith entered into a Deposit Agreement with the
Depositary under which the Deposits referred to therein will be made and from
which it will withdraw funds to allow the Trustee to purchase Equipment Notes
from time to time prior to the Delivery Period Termination Date;

                  WHEREAS, pursuant to the terms and conditions of this
Agreement and the Note Purchase Agreement, upon or shortly following the
delivery of an Aircraft, the Trustee on behalf of the Trust shall purchase one
or more issues of Equipment Notes having the same interest rate as, and final
maturity dates not later than the final Regular Distribution Date of, the
Certificates issued hereunder and shall hold such Equipment Notes in trust for
the benefit of the Certificateholders;

                  WHEREAS, all of the conditions and requirements necessary to
make this Agreement, when duly executed and delivered, a valid, binding and
legal instrument, enforceable in accordance with its terms and for the purposes
herein expressed, have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof have been in
all respects duly authorized;

                  WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the 2000-1C Trust, the
Company as the "issuer" (as such term is defined in and solely for purposes of
the Securities Act of 1933, as amended) of the Certificates to be issued
pursuant hereto and as the "obligor" (as such term is defined in and solely for
purposes of the Trust Indenture Act of 1939, as amended), has duly authorized
the execution and delivery of this Agreement with respect to all such
Certificates and is undertaking to perform certain administrative and
ministerial duties hereunder and is also undertaking to pay the fees and
expenses of the Trustee; and

                  WHEREAS, upon issuance of the Exchange Certificates, if any,
or the effectiveness of the Shelf Registration Statement, this Agreement, as
amended or supplemented from time to time, will be subject to the provisions of
the Trust Indenture Act of 1939, and shall, to the extent applicable, be
governed by such provisions;

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

                                      -2-
<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.01.     Definitions.  For all purposes of this Agreement,
                           -----------
except as otherwise expressly provided or unless the context otherwise requires:

                  (1) the terms used herein that are defined in this Article
         have the meanings assigned to them in this Article, and include the
         plural as well as the singular;

                  (2) all other terms used herein which are defined in the Trust
         Indenture Act, either directly or by reference herein have the meanings
         assigned to them therein;

                  (3) all references in this Agreement to designated "Articles",
         "Sections", "Subsections" and other subdivisions are to the designated
         Articles, Sections, Subsections and other subdivisions of this
         Agreement;

                  (4) the words "herein", "hereof" and "hereunder" and other
         words of similar import refer to this Agreement as a whole and not to
         any particular Article, Section, Subsection or other subdivision; and

                  (5) unless the context otherwise requires, whenever the words
         "including", "include" or "includes" are used herein, it shall be
         deemed to be followed by the phrase "without limitation".

                  Act:  With respect to any Certificateholder has the meaning
                  ---
         specified in Section 1.04.

                  Affiliate: Means, with respect to any specified Person, any
                  ---------
         other Person directly or indirectly controlling or controlled by or
         under direct or indirect common control with such Person. For purposes
         of this definition, "control", when used with respect to any specified
         Person, means the power to direct the management and policies of such
         Person, directly or indirectly, whether through the ownership of voting
         securities, by contract or otherwise, and the terms "controlling" and
         "controlled" have meanings correlative to the foregoing.

                  Agent Members:  Has the meaning specified in Section 3.05(a).
                  -------------

                  Aircraft:  Means each of the New Aircraft in respect of which
                  --------
         a Participation Agreement is entered into in accordance with the Note
         Purchase Agreement.

                  Applicable Delivery Date:  Has the meaning specified in
                  ------------------------
         Section 2.01(b).

                  Applicable Participation Agreement:  Has the meaning
                  ----------------------------------
         specified in Section 2.01(b).

                                      -3-
<PAGE>

                  Authorized Agent:  Means any Paying Agent or Registrar for
                  ----------------
         the Certificates.

                  Avoidable Tax: Means a state or local tax (i) upon (w) the
                  -------------
         Trust, (x) the Trust Property, (y) Certificateholders or (z) the
         Trustee for which the Trustee is entitled to seek reimbursement from
         the Trust Property, and (ii) which would be avoided if the Trustee were
         located in another state, or jurisdiction within a state, within the
         United States. A tax shall not be an Avoidable Tax if the Company or
         any Owner Trustee shall agree to pay, and shall pay, such tax.

                  Book-Entry Certificates: With respect to the Certificates,
                  -----------------------
         means a beneficial interest in the Certificates, ownership and
         transfers of which shall be made through book entries as described in
         Section 3.04.

                  Business Day: Means any day other than a Saturday, a Sunday or
                  ------------
         a day on which commercial banks are required or authorized to close in
         Baltimore, Maryland, New York, New York, Charlotte, North Carolina or,
         so long as any Certificate is outstanding, the city and state in which
         the Trustee or any Loan Trustee maintains its Corporate Trust Office or
         receives and disburses funds.

                  Certificate:  Means any one of the Initial Certificates or
                  -----------
         Exchange Certificates and any such Certificates issued in exchange
         therefor or replacement thereof, executed and authenticated by the
         Trustee.

                  Certificate Account:  Means the account or accounts created
                  -------------------
         and maintained pursuant to Section 4.01(a).

                  Certificateholder or Holder:  Means the Person in whose name
                  ---------------------------
          a Certificate is registered in the Register.

                  Clearing Agency:  Means an organization registered as a
                  ---------------
         "clearing agency" pursuant to Section 17A of the Securities Exchange
         Act of 1934, as amended.

                  Clearing Agency Participant: Means a broker, dealer, bank,
                  ---------------------------
         other financial institution or other Person for whom from time to time
         a Clearing Agency effects, directly or indirectly, book-entry transfers
         and pledges of securities deposited with the Clearing Agency.

                  Clearstream:  Means Clearstream Banking, societe anonyme, and
                  -----------
          any successor thereto.

                  Code: Means the United States Internal Revenue Code of 1986,
                  ----
          as amended.

                  Company:  Means Midway Airlines Corporation, a Delaware
                  -------
         corporation, or its successor in interest.

                                      -4-
<PAGE>

                  Controlling Party:  Means the party entitled to act as such
                  -----------------
         pursuant to the terms of the Intercreditor Agreement.

                  Corporate Trust Office: With respect to the Trustee or any
                  ----------------------
         Loan Trustee, means the office of such trustee in the city at which at
         any particular time its corporate trust business shall be principally
         administered.

                  Cut-off Date:  Means the earlier of (a) the Delivery Period
                  ------------
         Termination Date and (b) the date on which a Triggering Event occurs.

                  Delivery Date:  Has the meaning specified in the Note
                  -------------
         Purchase Agreement.

                  Delivery Notice:  Has the meaning specified in the Note
                  ---------------
         Purchase Agreement.

                  Delivery Period Termination Date: Means November 30, 2001
                  --------------------------------
         (provided that, if a labor strike occurs at the Manufacturer prior to
         such date, such date shall be extended by adding thereto the number of
         days that such strike has continued in effect).

                  Deposits:  Has the meaning specified in the Deposit Agreement.
                  --------

                  Deposit Agreement: Means the Deposit Agreement dated as of
                  -----------------
         September 27, 2000 relating to the Certificates between the Depositary
         and the Escrow Agent, as the same may be amended, supplemented or
         otherwise modified from time to time in accordance with its terms.

                  Depositary:  Means Allfirst Bank.
                  ----------

                  DTC:  Means The Depository Trust Company, its nominees and
                  ---
         their respective successors.

                  Direction:  Has the meaning specified in Section 1.04(c).
                  ---------

                  Distribution Date:  Means each Regular Distribution Date or
                  -----------------
         Special Distribution Date.

                  Equipment Notes:  Means the Equipment Notes issued pursuant
                  ---------------
         to the Indentures.

                  ERISA:  Means the Employee Retirement Income Security Act of
                  -----
         1974, as amended.

                  Escrow Agent: Means, initially, First Union Trust Company,
                  ------------
         National Association, and any replacement or successor therefor
         appointed in accordance with the Escrow Agreement.

                                      -5-
<PAGE>

                  Escrow Agreement: Means the Escrow and Paying Agent Agreement
                  ----------------
         dated as of the date hereof relating to the Certificates, among the
         Escrow Agent, the Escrow Paying Agent, the Trustee and the Placement
         Agents, as the same may be amended, supplemented or otherwise modified
         from time to time in accordance with its terms.

                  Escrow Paying Agent:  Means the Person acting as paying agent
                  -------------------
         under the Escrow Agreement.

                  Escrow Receipt:  Means the receipt substantially in the form
                  --------------
         annexed to the Escrow Agreement representing a fractional undivided
         interest in the funds held in escrow thereunder.

                  Euroclear:  Means Morgan Guaranty Trust Company of New York,
                  ---------
         Brussels office, in its capacity as operator of the Euroclear System,
         and any successor thereto.

                  Exchange Certificates: Means the pass through certificates
                  ---------------------
         substantially in the form of Exhibit A hereto issued in exchange for
         the Initial Certificates pursuant to the Registration Rights Agreement
         and authenticated hereunder.

                  Exchange Offer:  Means the exchange offer which may be made
                  --------------
         pursuant to the Registration Rights Agreement to exchange Initial
         Certificates for Exchange Certificates.

                  Exchange Offer Registration Statement: Means the registration
                  -------------------------------------
         statement that, pursuant to the Registration Rights Agreement, is filed
         by the Company with the SEC with respect to the exchange of Initial
         Certificates for Exchange Certificates.

                  Event of Default: Means the occurrence of an Indenture Default
                  ----------------
         under any Indenture pursuant to which Equipment Notes held by the Trust
         were issued.

                  Final Withdrawal:  Has the meaning specified in the Escrow
                  ----------------
         Agreement.

                  Final Withdrawal Date:  Has the meaning specified in the
                  ---------------------
         Escrow Agreement.

                  Final Withdrawal Notice:  Has the meaning specified in
                  -----------------------
         Section 2.02.

                  Fractional Undivided Interest:  Means the fractional
                  -----------------------------
         undivided interest in the Trust that is evidenced by a Certificate.

                  Global Certificates:  Has the meaning assigned to such term
                  -------------------
         in Section 3.01.

                  Indenture: Means each of the separate trust indenture and
                  ---------
         security agreements relating to the Aircraft, each as specified or
         described in a Delivery Notice delivered pursuant to the Note Purchase
         Agreement or the related Participation Agreement in each case as the

                                      -6-
<PAGE>

         same may be amended, supplemented or otherwise modified from time to
         time in accordance with its terms.

                  Indenture Default:  With respect to any Indenture, means any
                  -----------------
         Indenture Event of Default (as such term is defined in such Indenture)
         thereunder.

                  Initial Certificates: Means the certificates issued and
                  --------------------
         authenticated hereunder substantially in the form of Exhibit A hereto
         other than the Exchange Certificates.

                  Initial Regular Distribution Date:  Means the first Regular
                  ---------------------------------
         Distribution Date on which a Scheduled Payment is to be made.

                  Institutional Accredited Investor: Means an institutional
                  ---------------------------------
         investor that is an "accredited investor" within the meaning set forth
         in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
         Act.

                  Intercreditor Agreement:  Means the Intercreditor Agreement
                  -----------------------
         dated September 27, 2000 among the Trustee, the Other Trustees, the
         Liquidity Provider, the liquidity providers, if any, relating to the
         Certificates issued under (and as defined in) the Other Pass Through
         Trust Agreements, and Allfirst Bank, as Subordination Agent thereunder,
         as amended, supplemented or otherwise modified from time to time in
         accordance with its terms.

                  Issuance Date:  Means the initial date of issuance of the
                  -------------
         Initial Certificates.

                  Lease: Means, with respect to each Leased Aircraft, the lease
                  -----
         between an Owner Trustee, as the lessor, and the Company, as the
         lessee, referred to in the related Indenture, as each such lease may be
         amended or supplemented in accordance with its respective terms; and
         Leases means all such leases.

                  Leased Aircraft:  Has the meaning given to such term in the
                  ---------------
         recitals hereto.

                  Letter of Representations:  Means the agreement dated the
                  -------------------------
         Issuance Date among the Company, the Trustee and the initial Clearing
         Agency.

                  Liquidity Facility: Means the Revolving Credit Agreement dated
                  ------------------
         the date hereof relating to the Certificates, between the Liquidity
         Provider and the Subordination Agent, as amended, replaced,
         supplemented or otherwise modified from time to time in accordance with
         its terms and the terms of the Intercreditor Agreement.

                  Liquidity Provider: Means, initially, Morgan Stanley Capital
                  ------------------
         Services Inc., and any replacement or successor therefor appointed in
         accordance with the Liquidity Facility and the Intercreditor Agreement.

                                      -7-
<PAGE>

                  Loan Trustee: With respect to any Equipment Note or the
                  ------------
         Indenture applicable thereto, means the bank or trust company
         designated as loan or indenture trustee under such Indenture; and any
         successor to such Loan Trustee as such trustee; and Loan Trustees means
         all of the Loan Trustees under the Indentures.

                  New Aircraft:  Has the meaning specified in the Note
                  ------------
         Purchase Agreement.

                  Non-U.S. Person:  Means a Person that is not a U.S. Person,
                  ---------------
         as defined in Regulation S.

                  Note Documents: With respect to any Equipment Note, means (i)
                  --------------
         the Indenture and the Participation Agreement relating to such
         Equipment Note, and (ii) in the case of any Equipment Note related to a
         Leased Aircraft, also includes the Lease relating to such Leased
         Aircraft.

                  Note Purchase Agreement. Means the Note Purchase Agreement
                  -----------------------
         dated as of September 27, 2000 among the Trustee, the Other Trustees,
         the Company, the Escrow Agent, the Escrow Paying Agent and the
         Subordination Agent, providing for, among other things, the purchase of
         Equipment Notes by the Trustee on behalf of the Trust, as the same may
         be amended, supplemented or otherwise modified from time to time, in
         accordance with its terms.

                  Notice of Purchase Withdrawal:  Has the meaning specified in
                  -----------------------------
          the Deposit Agreement.

                  Officer's Certificate: Means a certificate signed, (a) in the
                  ---------------------
         case of the Company, by (i) the President or any Executive Vice
         President or Senior Vice President of the Company, signing alone or
         (ii) any Vice President of the Company signing together with the
         Secretary, the Assistant Secretary, the Treasurer or any Assistant
         Treasurer of the Company or (b) in the case of the Trustee or an Owner
         Trustee or a Loan Trustee, a Responsible Officer of the Trustee or such
         Owner Trustee or such Loan Trustee, as the case may be.

                  Offshore Certificates Exchange Date:  Has the meaning
                  -----------------------------------
         specified in Section 3.01.

                  Offshore Global Certificates:  Has the meaning assigned to
                  ----------------------------
         such term in Section 3.01.

                  Offshore Physical Certificates:  Has the meaning assigned to
                  ------------------------------
          such term in Section 3.01.

                  Opinion of Counsel: Means a written opinion of legal counsel
                  ------------------
         who (a) in the case of counsel for the Company may be (i) a senior
         attorney in rank of the officers of the Company a principal duty of
         which is furnishing advice as to legal matters or (ii) such other
         counsel designated by the Company and reasonably acceptable to the
         Trustee and (b) in the case of any Owner Trustee or any Loan Trustee
         may be such counsel as may be designated

                                      -8-
<PAGE>

         by any of them whether or not such counsel is an employee of any of
         them, and who shall be reasonably acceptable to the Trustee.

                  Other Pass Through Trust Agreement: Means each of the two
                  ----------------------------------
         other Midway Airlines 2000-1 Pass Through Trust Agreements relating to,
         respectively, Midway Airlines 2000-1A Pass Through Trust and Midway
         Airlines 2000-1B Pass Through Trust, each dated the date hereof; and
         Other Pass Through Trust Agreements means all such agreements..

                  Other Trust: Means each of the Midway Airlines Pass Through
                  -----------
         Trust 2000-1A and Midway Airlines 2000-1B Pass Through Trust, each
         created on the date hereof; and Other Trusts means all such trusts.

                  Other Trustee: Means the trustee under each of the Other Pass
                  -------------
         Through Trust Agreement, and any successor or other trustee appointed
         as provided therein; and Other Trustees means all such trustees.

                  Outstanding:  With respect to Certificates, means, as of the
                  -----------
          date of determination, all Certificates theretofore authenticated and
          delivered under this Agreement, except:

                           (i)   Certificates theretofore cancelled by the
                  Registrar or delivered to the Trustee or the Registrar for
                  cancellation;

                           (ii)  All of the Certificates if money in the full
                  amount required to make the final distribution with respect
                  thereto pursuant to Section 11.01 hereof has been theretofore
                  deposited with the Trustee in trust for the Holders of such
                  Certificates as provided in Section 4.01 pending distribution
                  of such money to such Certificateholders pursuant to such
                  final distribution payment; and

                           (iii) Certificates in exchange for or in lieu of
                  which other Certificates have been authenticated and delivered
                  pursuant to this Agreement.

                  Owned Aircraft:  Has the meaning given to such term in the
                  --------------
         recitals hereto.

                  Owner Participant: With respect to any Equipment Note relating
                  -----------------
         to a Leased Aircraft, means the "Owner Participant" as referred to in
         the Indenture pursuant to which such Equipment Note is issued and any
         permitted successor or assign of such Owner Participant; and Owner
                                                                      -----
         Participants at any time of determination means all of the Owner
         ------------
         Participants thus referred to in the Indentures.

                  Owner Trustee: With respect to any Equipment Note relating to
                  -------------
         a Leased Aircraft, means the "Owner Trustee", as referred to in the
         Indenture pursuant to which such Equipment Note is issued, not in its
         individual capacity but solely as trustee; and Owner Trustees means all
                                                        --------------
         of the Owner Trustees party to any of the Indentures.

                                      -9-
<PAGE>

                  Participation Agreement: Means each Participation Agreement to
                  -----------------------
         be entered into by the Trustee pursuant to the Note Purchase Agreement,
         as the same may be amended, supplemented or otherwise modified in
         accordance with its terms.

                  Paying Agent:  Means the paying agent maintained and
                  ------------
         appointed for the Certificates pursuant to Section 7.12.

                  Permanent Offshore Global Certificates:  Has the meaning
                  --------------------------------------
         specified in Section 3.01.

                  Permitted Investments: Means obligations of the United States
                  ---------------------
         of America or agencies or instrumentalities thereof for the payment of
         which the full faith and credit of the United States of America is
         pledged, maturing in not more than 60 days or such lesser time as is
         necessary for payment of any Special Payments on a Special Distribution
         Date or any mutual fund the portfolio of which is limited to such
         obligations, including any proprietary mutual fund of Allfirst Bank for
         which such bank or an affiliate is investment advisor or to which such
         bank provides other services and receives reasonable compensation for
         such services.

                  Person: Means any person, including any individual,
                  ------
         corporation, partnership, joint venture, association, joint-stock
         company, trust, unincorporated organization, or government or any
         agency or political subdivision thereof.

                  Physical Certificates:  Has the meaning specified in Section
                  ---------------------
         3.01.

                  Placement Agents:  Means Morgan Stanley & Co. Incorporated
                  ----------------
         and Seabury Securities LLC.

                  Placement Agreement:  Means the Placement Agreement dated
                  -------------------
         September 22, 2000 among the Company and the Placement Agents.

                  Plan Transferee: Means any Plan or any entity that is using
                  ---------------
         the assets of any Plan to purchase or hold its interest in a
         Certificate. For purposes of this definition, a "Plan" means any
                                                          ----
         employee benefit plan subject to ERISA as well as any plan that is not
         subject to ERISA but which is subject to Section 4975 of the Internal
         Revenue Code of 1986, as amended.

                  Pool Balance: Means, as of any date, (i) the original
                  ------------
         aggregate face amount of the Certificates less (ii) the aggregate
         amount of all payments made in respect of such Certificates or in
         respect of Deposits other than payments made in respect of interest or
         premium thereon or reimbursement of any costs or expenses incurred in
         connection therewith. The Pool Balance as of any Distribution Date
         shall be computed after giving effect to any special distribution with
         respect to unused Deposits, payment of principal of the Equipment Notes
         or payment with respect to other Trust Property and the distribution
         thereof to be made on such Distribution Date.

                                     -10-
<PAGE>

                  Pool Factor: Means, as of any date, the quotient (rounded to
                  -----------
         the seventh decimal place) computed by dividing (i) the Pool Balance as
         at such date by (ii) the original aggregate face amount of the
         Certificates. The Pool Factor as of any Distribution Date shall be
         computed after giving effect to any special distribution with respect
         to unused Deposits, payment of principal, if any, on the Equipment
         Notes or other Trust Property and the distribution thereof to be made
         on such Distribution Date.

                  Private Placement Legend:  Has the meaning specified in
                  ------------------------
         Section 3.02.

                  QIB:  Means a qualified institutional buyer as defined in
                  ---
         Rule 144A.

                  Record Date: Means (i) for Scheduled Payments to be
                  -----------
         distributed on any Regular Distribution Date, other than the final
         distribution, the 15th day (whether or not a Business Day) preceding
         such Regular Distribution Date, and (ii) for Special Payments to be
         distributed on any Special Distribution Date, other than the final
         distribution, the 15th day (whether or not a Business Day) preceding
         such Special Distribution Date.

                  Register and Registrar:  Mean the register maintained and
                  ----------------------
         the registrar appointed pursuant to Sections 3.04 and 7.12.

                  Registration Rights Agreement: Means the Registration Rights
                  -----------------------------
         Agreement, dated as of September 27, 2000, among the Placement Agents,
         the Trustee, the Other Trustees and the Company, as amended,
         supplemented or otherwise modified from time to time in accordance with
         its terms.

                  Regular Distribution Date: With respect to distributions of
                  -------------------------
         Scheduled Payments in respect of the Certificates, means each April 1
         and October 1, until payment of all the Scheduled Payments to be made
         under the Equipment Notes held in the Trust have been made; provided,
                                                                     --------
         however, that, if any such day shall not be a Business Day, the related
         -------
         distribution shall be made on the next succeeding Business Day without
         additional interest.

                  Regulation S: Means Regulation S under the Securities Act or
                  ------------
         any successor regulation thereto.

                  Request: Means a request by the Company setting forth the
                  -------
         subject matter of the request accompanied by an Officer's Certificate
         and an Opinion of Counsel as provided in Section 1.02 of this
         Agreement.

                  Responsible Officer: With respect to the Trustee, any Loan
                  -------------------
         Trustee and any Owner Trustee, means any officer in the Corporate Trust
         Division of the Trustee, Loan Trustee or Owner Trustee or any other
         officer customarily performing functions similar to those performed by
         the persons who at the time shall be such officers, respectively, or to
         whom any corporate trust matter is referred because of his knowledge of
         and familiarity with a particular subject.

                                     -11-
<PAGE>

                  Rule 144A: Means Rule 144A under the Securities Act and any
                  ---------
         successor regulation thereto.

                  Scheduled Payment: With respect to any Equipment Note, means
                  -----------------
         any payment of principal and interest on such Equipment Note (other
         than any such payment which is not in fact received by the Trustee or
         any Subordination Agent within five days of the date on which such
         payment is scheduled to be made) or any payment of interest on the
         Certificates with funds drawn under the Liquidity Facility due from the
         obligor thereon which payment represents the installment of principal
         at the stated maturity of such installment of principal on such
         Equipment Note, the payment of regularly scheduled interest accrued on
         the unpaid principal amount of such Equipment Note, or both; provided
                                                                      --------
         that any payment of principal, premium, if any, or interest resulting
         from the redemption or purchase of any Equipment Note shall not
         constitute a Scheduled Payment.

                  SEC: Means the Securities and Exchange Commission, as from
                  ---
         time to time constituted or created under the Securities Exchange Act
         of 1934, as amended, or, if at any time after the execution of this
         instrument such Commission is not existing and performing the duties
         now assigned to it under the Trust Indenture Act, then the body
         performing such duties on such date.

                  Securities Act:  Means the United States Securities Act of
                  --------------
         1933, as amended from time to time, or any successor thereto.

                  Shelf Registration Statement: Means the shelf registration
                  ----------------------------
         statement which may be required to be filed by the Company with the SEC
         pursuant to any Registration Rights Agreement, other than an Exchange
         Offer Registration Statement.

                  Special Distribution Date:  Means each date on which a
                  -------------------------
         Special Payment is to be distributed as specified in this Agreement;
         provided, however, that, if any such day shall not be a Business Day,
         --------  -------
         the related distribution shall be made on the next succeeding Business
         Day without additional interest.

                  Special Payment: Means any payment (other than a Scheduled
                  ---------------
         Payment) in respect of, or any proceeds of, any Equipment Note or
         Indenture Estate (as defined in each Indenture) or Special Redemption
         Premium.

                  Special Payments Account:  Means the account or accounts
                  ------------------------
         created and maintained pursuant to Section 4.01(b).

                  Special Redemption Premium:  Means the premium payable by
                  --------------------------
         the Company in respect of the Final Withdrawal pursuant to the Note
         Purchase Agreement.

                  Specified Investments: Means (i) obligations of, or guaranteed
                  ---------------------
         by, the United States Government or agencies thereof, (ii) open market
         commercial paper of any corporation

                                     -12-
<PAGE>

         incorporated under the laws of the United States of America or any
         State thereof rated at least P-2 or its equivalent by Moody's Investors
         Service, Inc. or at least A-2 or its equivalent by Standard & Poor's
         Ratings Group, (iii) certificates of deposit issued by commercial banks
         organized under the laws of the United States or of any political
         subdivision thereof having a combined capital and surplus in excess of
         $500,000,000 which banks or their holding companies have a rating of A
         or its equivalent by Moody's Investors Service, Inc. or Standard &
         Poor's Ratings Group; provided, however, that the aggregate amount at
                               --------  -------
         any one time so invested in certificates of deposit issued by any one
         bank shall not exceed 5% of such bank's capital and surplus, (iv) U.S.
         dollar denominated offshore certificates of deposit issued by, or
         offshore time deposits with, any commercial bank described in (iii) or
         any subsidiary thereof, (v) repurchase agreements with any financial
         institution having combined capital and surplus of at least
         $500,000,000 with any of the obligations described in clauses (i)
         through (iv) as collateral and (vi) any mutual fund the portfolio of
         which is limited to investments of the types specified in the preceding
         clauses (i) through (v), including any proprietary mutual fund of
         Allfirst Bank for which such bank or an affiliate is investment advisor
         or to which such bank provides other services and receives reasonable
         compensation for such services; provided further that if all of the
                                         -------- -------
         above investments are unavailable, the entire amounts to be invested
         may be used to purchase Federal Funds from an entity described in
         clause (iii) above.

                  Subordination Agent:  Has the meaning specified in the
                  -------------------
         Intercreditor Agreement.

                  Temporary Offshore Global Certificates:  Has the meaning
                  --------------------------------------
         specified in Section 3.01.

                  Transfer Date:  Has the meaning specified in Section 11.01.
                  -------------

                  Triggering Event:  Has the meaning assigned to such term in
                  ----------------
         the Intercreditor Agreement.

                  Trust:  Means the trust created by this Agreement, the estate
                  -----
         of which consists of the Trust Property.

                  Trust Indenture Act:  Except as otherwise provided in Section
                  -------------------
          9.06, means the United States Trust Indenture Act of 1939 as in force
          at the date hereof.

                  Trust Property: Means (i) subject to the Intercreditor
                  --------------
         Agreement, the Equipment Notes held as the property of the Trust, all
         monies at any time paid thereon and all monies due and to become due
         thereunder, (ii) funds from time to time deposited in the Certificate
         Account and the Special Payments Account and, subject to the
         Intercreditor Agreement, any proceeds from the sale by the Trustee
         pursuant to Section 6.02 of any Equipment Note and (iii) all rights of
         the Trust and the Trustee, on behalf of the Trust, under the
         Intercreditor Agreement, the Escrow Agreement, the Note Purchase
         Agreement and the Liquidity Facilities, including, without limitation,
         all rights to receive certain payments thereunder, and all monies paid
         to the Trustee on behalf of the Trust pursuant to the Intercreditor
         Agreement

                                     -13-

<PAGE>

         or the Liquidity Facilities, provided that rights with respect to the
                                      --------
         Deposits or under the Escrow Agreement, except for the right to direct
         withdrawals for the purchase of Equipment Notes to be held herein, will
         not constitute Trust Property.

                  Trustee:  Means Allfirst Bank, or its successor in interest,
                  -------
         and any successor or other trustee appointed as provided herein.

                  Trustee's Lien:  Has the meaning specified in Section 7.17.
                  --------------

                  U.S. Global Certificate:  Has the meaning specified in
                  -----------------------
         Section 3.01.

                  U.S. Physical Certificates:  Has the meaning specified in
                  --------------------------
         Section 3.01.

         Section 1.02. Compliance Certificates and Opinions. Upon any
                       ------------------------------------
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.

                  Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:

                  (1) a statement that each individual signing such certificate
         or opinion has read such covenant or condition and the definitions in
         this Agreement relating thereto;

                  (2) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

                  (3) a statement that, in the opinion of each such individual,
         he has made such examination or investigation as is necessary to enable
         him to express an informed opinion as to whether or not such covenant
         or condition has been complied with; and

                  (4) a statement as to whether, in the opinion of each such
         individual, such condition or covenant has been complied with.

         Section 1.03. Form of Documents Delivered to Trustee. In any case where
                       --------------------------------------
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary

                                     -14-

<PAGE>

that all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters and any such Person may
certify or give an opinion as to such matters in one or several documents.

                  Any Opinion of Counsel stated to be based on the opinion of
other counsel shall be accompanied by a copy of such other opinion.

                  Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be consolidated
and form one instrument.

         Section 1.04. Acts of Certificateholders. (a) Any direction, consent,
                       --------------------------
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
an agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required pursuant to this Agreement, to the Company or any Loan Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Certificateholders
                                                  ---
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee, the Company
and any Loan Trustee, if made in the manner provided in this Section.

                  (b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the certificate of any notary public
or other officer of any jurisdiction authorized to take acknowledgments of deeds
or administer oaths that the Person executing such instrument acknowledged to
him the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or such other officer and where such execution
is by an officer of a corporation or association or a member of a partnership,
on behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.

                  (c) In determining whether the Certificateholders of the
requisite Fractional Undivided Interests of Certificates Outstanding have given
any direction, consent or waiver (a "Direction") under this Agreement,
                                     ---------
Certificates owned by the Company, any Owner Trustee, any Owner Participant or
any Affiliate of any such Person thereof shall be disregarded and deemed not to
be Outstanding for purposes of any such determination. In determining whether
the Trustee shall be protected in relying upon any such Direction, only
Certificates which the Trustee in fact knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of
the Certificates Outstanding, such Certificates shall not be so disregarded as
aforesaid, and

                                     -15-

<PAGE>

(ii) if any amount of Certificates so owned by any such Person have been pledged
in good faith, such Certificates shall not be disregarded as aforesaid if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Certificates and that the pledgee is not the Company,
any Owner Trustee, any Owner Participant or any Affiliate of any such Person.

                  (d) For all purposes of this Agreement, all Initial
Certificates and all Exchange Certificates shall vote and take all other actions
of Certificateholders together as one series of Certificates.

                  (e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other Act. Such record date shall be the record
date specified in such Officer's Certificate, which shall be a date not more
than 30 days prior to the first solicitation of Certificateholders in connection
therewith. If such a record date is fixed, such consent, request, demand,
authorization, direction, notice, waiver or other Act may be given before or
after such record date, but only the Certificateholders of record at the close
of business on such record date shall be deemed to be Certificateholders for the
purposes of determining whether Certificateholders of the requisite proportion
of Outstanding Certificates have authorized or agreed or consented to such
consent, request, demand, authorization, direction, notice, waiver or other Act,
and for that purpose the Outstanding Certificates shall be computed as of such
record date; provided that no such consent, request, demand, authorization,
             --------
direction, notice, waiver or other Act by the Certificateholders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Agreement not later than one year after such record date.

                  (f) Any direction, consent, waiver or other action by the
Certificateholder of any Certificate shall bind the Certificateholder of every
Certificate issued upon the transfer thereof or in exchange therefor or in lieu
thereof, whether or not notation of such action is made upon such Certificate.

                  (g) Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates.

                                  ARTICLE II

                       ORIGINAL ISSUANCE OF CERTIFICATES

         Section 2.01. Delivery of Documents; Delivery Date. (a) The Trustee is
                       ------------------------------------
hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Placement Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Certificates

                                      -16-

<PAGE>

in authorized denominations equalling in the aggregate the amount set forth,
with respect to the Trust, in Schedule I to the Placement Agreement evidencing
the entire ownership interest in the Trust, which amount equals the maximum
aggregate principal amount of Equipment Notes which may be purchased by the
Trustee pursuant to the Note Purchase Agreement. Except as provided in Sections
3.04, 3.05, 3.07 and 3.11, the Trustee shall not execute, authenticate or
deliver Certificates in excess of the aggregate amount specified in this
paragraph.

                  (b) On or after the Issuance Date, the Company may deliver
from time to time to the Trustee a Delivery Notice relating to one or more
Equipment Notes. After receipt of a Delivery Notice and in any case no later
than one Business Day prior to a Delivery Date as to which such Delivery Notices
relates (the "Applicable Delivery Date"), the Trustee shall (as and when
              ------------------------
specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice
of Purchase Withdrawal to the Depositary requesting (A) the withdrawal of one or
more Deposits on the Applicable Delivery Date in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement
and (B) the payment of all, or a portion, of such Deposit or Deposits in an
amount equal in the aggregate to the purchase price of such Equipment Notes to
or on behalf of the Owner Trustee or the Company, as the case may be, issuing
such Equipment Notes, all as shall be described in the Delivery Notice. The
Trustee shall (as and when specified in such Delivery Notice), subject to the
conditions set forth in Section 2 of the Note Purchase Agreement, enter into and
perform its obligations under the Participation Agreement specified in such
Delivery Notice (the "Applicable Participation Agreement") and cause such
                      ----------------------------------
certificates, documents and legal opinions relating to the Trustee to be duly
delivered as required by the Applicable Participation Agreement. If at any time
prior to the Applicable Delivery Date, the Trustee receives a notice of
postponement pursuant to Section 1(e) or 1(f) of the Note Purchase Agreement,
then the Trustee shall give the Depositary (with a copy to the Escrow Agent) a
notice of cancellation of such Notice of Purchase Withdrawal relating to such
Deposit or Deposits on such Applicable Delivery Date. Upon satisfaction of the
conditions specified in the Note Purchase Agreement and the Applicable
Participation Agreement, the Trustee shall purchase the applicable Equipment
Notes with the proceeds of the withdrawals of one or more Deposits made on the
Applicable Delivery Date in accordance with the terms of the Deposit Agreement
and the Escrow Agreement. The purchase price of such Equipment Notes shall equal
the principal amount of such Equipment Notes. Amounts withdrawn from such
Deposit or Deposits in excess of the purchase price of the Equipment Notes or to
the extent not applied on the Applicable Delivery Date to the purchase price of
the Equipment Notes, shall be re-deposited by the Trustee with the Depositary on
the Applicable Delivery Date in accordance with the terms of the Deposit
Agreement.

         Section 2.02. Withdrawal of Deposits. If any Deposits remain
                       ----------------------
outstanding on the Business Day next succeeding the Cut-off Date, (i) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (ii) the Trustee will make a demand upon the
 -----------------------
Company under the Note Purchase Agreement for an amount equal to the Special
Redemption Premium, such payment to be made on the Final Withdrawal Date.

                                     -17-
<PAGE>

         Section 2.03. The Trustee. Subject to Section 7.15, the Trustee shall
                       -----------
not be responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Agreement, the Deposit Agreement or the Escrow Agreement or
the due execution hereof or thereof by the Company or the other parties thereto
(other than the Trustee), or for or in respect of the recitals and statements
contained herein or therein, all of which recitals and statements are made
solely by the Company.

         Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
                       ---------------------
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.

         Section 2.05. Limitation of Powers. The Trust is constituted solely for
                       --------------------
the purpose of making the investment in the Equipment Notes, and, except as set
forth herein, the Trustee shall not be authorized or empowered to acquire any
other investments or engage in any other activities and, in particular, the
Trustee shall not be authorized or empowered to do anything that would cause
such Trust to fail to qualify as a "grantor trust" for federal income tax
purposes (including as subject to this restriction, acquiring any Aircraft (as
defined in the respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft once
acquired).

                                  ARTICLE III

                               THE CERTIFICATES

         Section 3.01. Title, Form, Denomination and Execution of Certificates.
                       -------------------------------------------------------
(a) The Initial Certificates shall be known as the "11.19% 2000-1C Initial Pass
                                                    ---------------------------
Through Certificates" and the Exchange Certificates shall be known as the
--------------------
"11.19% 2000-1C Exchange Pass Through Certificates", in each case, of the Trust.
 -------------------------------------------------
Each Certificate will represent a fractional undivided interest in the Trust and
shall be substantially in the form set forth as Exhibit A hereto, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such
Certificates, as evidenced by their execution of the Certificates. Any portion
of the text of any Certificate may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Certificate. At the Escrow
Agent's request under the Escrow Agreement, the Trustee shall affix the
corresponding Escrow Receipt to each Certificate. In any event, any transfer or
exchange of any Certificate shall also effect a transfer or exchange of the
related Escrow Receipt. Prior to the Final

                                     -18-
<PAGE>

Withdrawal Date, no transfer or exchange of any Certificate shall be permitted
unless the corresponding Escrow Receipt is attached thereto and also is so
transferred or exchanged. By acceptance of any Certificate to which an Escrow
Receipt is attached, each Holder of such a Certificate acknowledges and accepts
the restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.

                  (b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$16,661,000.

                  (c) Initial Certificates offered and sold in reliance on Rule
144A shall be issued initially in the form of a single permanent global
Certificate in registered form, substantially in the form set forth as Exhibit A
hereto (the "U.S. Global Certificate"), duly executed and authenticated by the
             -----------------------
Trustee as hereinafter provided. The U.S. Global Certificate will be registered
in the name of a nominee for DTC and deposited with the Trustee, as custodian
for DTC. The aggregate principal amount of the U.S. Global Certificate may from
time to time be increased or decreased by adjustments made on the records of the
Depositary or its nominee, or of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.

                  (d) Initial Certificates offered and sold in offshore
transactions in reliance on Regulation S shall be issued initially in the form
of a single temporary global Certificate in registered form, substantially in
the form set forth as Exhibit A hereto (the "Temporary Offshore Global
                                             -------------------------
Certificate") duly executed and authenticated by the Trustee as hereinafter
-----------
provided. The Temporary Offshore Global Certificate will be registered in the
name of a nominee of DTC for credit to the account of the Agent Members acting
as depositaries for Euroclear and Clearstream and deposited with the Trustee as
custodian for DTC. At any time on or after November 6, 2000 (the "Offshore
                                                                  --------
Certificates Exchange Date"), upon receipt by the Trustee of a certificate
--------------------------
substantially in the form of Exhibit B hereto, a single permanent global
Certificate in registered form substantially in the form set forth in Exhibit A
(the "Permanent Offshore Global Certificate"; and together with the Temporary
      -------------------------------------
Offshore Global Certificate, the "Offshore Global Certificates"), duly executed
                                  ----------------------------
and authenticated by the Trustee as hereinafter provided, shall be registered in
the name of a nominee for DTC and deposited with the Trustee, as custodian for
DTC, and the Registrar shall reflect on its books and records the date of such
transfer and a decrease in the principal amount of any Temporary Offshore Global
Certificate in an amount equal to the principal amount of the beneficial
interest in such Temporary Offshore Global Certificate transferred. The U.S.
Global Certificate and the Offshore Global Certificates are sometimes referred
to as the "Global Certificates".
           -------------------

                  (e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
             --------------------------
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form

                                     -19-

<PAGE>

of permanent certificated Certificates in registered form substantially in the
form set forth in Exhibit A (the "Offshore Physical Certificates"). The Offshore
                                  ------------------------------
Physical Certificates and U.S. Physical Certificates are sometimes collectively
herein referred to as the "Physical Certificates".
                           ---------------------

                  (f) The Exchange Certificates shall be issued in the form of
one or more global Certificates substantially in the form of Exhibit A hereto
(each, a "Global Exchange Certificate"), except that the Private Placement
          ---------------------------
Legend (hereinafter defined) shall be omitted. Such Global Exchange Certificates
shall be in registered form and be registered in the name of DTC and deposited
with the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificates. Subject to clause (i) of the first sentence of this Section
3.01(f), the terms hereof applicable to Global Certificates shall apply to the
Global Exchange Certificates, mutatis mutandis.

                  (g) The definitive Certificates shall be in registered form
and shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner, all as
determined by the officers executing such Certificates, as evidenced by their
execution of such Certificates.

         Section 3.02.  Restrictive Legends. (a) Subject to Section 3.06, each
                        -------------------
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
                                                                     -------
Placement Legend") on the face thereof:
----------------

                  THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
         SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
         SECURITIES LAWS, AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
         UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS
         EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
         HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
         INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
         ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
         RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
         ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
         PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN
         COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
         IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
         SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT
         (OR ANY SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS
         CERTIFICATE EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
         WITH RULE 144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES
         TO AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE
         AGGREGATE

                                     -20-
<PAGE>

         PRINCIPAL AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER,
         FURNISHES TO THE TRUSTEE AND MIDWAY AIRLINES CORPORATION ("MIDWAY") A
         SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
         RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM
         OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE OR MIDWAY), (C)
         OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
         RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
         REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
         AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
         DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
         EFFECTIVE AT THE TIME OF SUCH TRANSFER) OR (F) TO MIDWAY OR ANY
         SUBSIDIARY THEREOF; (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
         PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH TO THE TRUSTEE SUCH
         CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE TRUSTEE MAY
         REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
         TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
         REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4) AGREES THAT IT
         WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
         NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
         ANY TRANSFER OF THIS CERTIFICATE PRIOR TO THE EXPIRATION OF THE HOLDING
         PERIOD APPLICABLE TO SALES OF THE CERTIFICATES UNDER RULE 144(K) UNDER
         THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK
         THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
         MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
         THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A
         PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH
         TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY, SUCH CERTIFICATIONS, LEGAL
         OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE
         TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
         FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
         OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF
         THE TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E) ABOVE OR UPON
         ANY TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES
         ACT (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE
         TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
         TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH
         TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
         REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
         RESTRICTIONS.

                                     -21-
<PAGE>

                  (b)  Each Global Certificate shall also bear the following
legend on the face thereof:

         UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
                                                                ---
         TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
         AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS
         REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
         REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
         HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
         AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
         HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
         AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
         WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
         SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
         CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
         RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH
         TRUST AGREEMENT REFERRED TO HEREIN.

         Section 3.03. Authentication of Certificates. (a) The Trustee shall
                       ------------------------------
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.

                  (b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.

         Section 3.04. Transfer and Exchange. The Trustee shall cause to be kept
                       ---------------------
at the office or agency to be maintained by it in accordance with the provisions
of Section 7.12 of this Agreement a register (the "Register") for the
                                                   --------
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
                                               ---------
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial
          --------

                                     -22-
<PAGE>

Certificates for Exchange Certificates shall occur until an Exchange Offer
Registration Statement shall have been declared effective by the SEC (notice of
which shall be provided to the Trustee by the Company). No such transfer shall
be effected until, and such transferee shall succeed to the rights of a
Certificateholder only upon, final acceptance and registration of the transfer
by the Registrar in the Register. Prior to the registration of any transfer by a
Certificateholder as provided herein, the Trustee shall treat the person in
whose name the Certificate is registered as the owner thereof for all purposes,
and the Trustee shall not be affected by notice to the contrary. Furthermore,
DTC shall, by acceptance of a Global Certificate, agree that transfers of
beneficial interests in such Global Certificate may be effected only through a
book-entry system maintained by the Depositary (or its agent), and that
ownership of a beneficial interest in the Certificate shall be required to be
reflected in a book entry. When Certificates are presented to the Registrar with
a request to register the transfer or to exchange them for an equal face amount
of Certificates of other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee shall
execute and authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange of the
Certificates, but the Trustee may require payment by the transferor of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.

         Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
                       -----------------------------------------------------
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
----------------------------                                            -----
Members") shall have no rights under this Agreement with respect to any Global
-------
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.

                  (b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the

                                     -23-
<PAGE>

Company, the Trustee and DTC through its Clearing Agency Participants in writing
that the continuation of a book-entry system through DTC is no longer in the
best interests of the Certificateholders, then the Trustee shall notify all
owners of beneficial interests in the U.S. Global Certificate or an Offshore
Global Certificate, through DTC, of the occurrence of any such event and the
availability of definitive Certificates.

                  (c) Any beneficial interest in one of the Global Certificates
that is transferred to a Person who takes delivery in the form of an interest in
the other Global Certificate will, upon such transfer, cease to be an interest
in such Global Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all transfer
restrictions, if any, and other procedures applicable to beneficial interests in
such other Global Certificate for as long as it remains such an interest.

                  (d) [Intentionally omitted.]

                  (e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global
Certificate or Offshore Global Certificate, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, an equal aggregate principal amount of
U.S. Physical Certificates or Offshore Physical Certificates, as the case may
be, of authorized denominations.

                  (f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.

                  (g) Any Offshore Physical Certificate delivered in exchange
for an interest in an Offshore Global Certificate pursuant to paragraph (b) of
this Section shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the applicable legend regarding transfer restrictions set forth in
Section 3.02(a).

                  (h) The registered holder of the U.S. Global Certificate or
any Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.

         Section 3.06. Special Transfer Provisions. Unless and until (i) an
                       ---------------------------
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:

                                     -24-
<PAGE>

                  (a) Transfers to Non-QIB Institutional Accredited Investors.
                      -------------------------------------------------------
The following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):

                  (i)   The Registrar shall register the transfer of any
         Certificate, whether or not such Certificate bears the Private
         Placement Legend, if (x) the requested transfer is after the time
         period referred to in Rule 144(k) under the Securities Act as in effect
         with respect to such transfer or (y) the proposed transferee has
         delivered to the Registrar a letter substantially in the form of
         Exhibit D hereto and the aggregate principal amount of the Certificates
         being transferred is at least $100,000.

                  (ii)  If the proposed transferor is an Agent Member holding a
         beneficial interest in the U.S. Global Certificate, upon receipt by the
         Registrar of (x) the documents, if any, required by paragraph (i) and
         (y) instructions given in accordance with DTC's and the Registrar's
         procedures, the Registrar shall reflect on its books and records the
         date of the transfer and a decrease in the principal amount of such
         U.S. Global Certificate in an amount equal to the principal amount of
         the beneficial interest in such U.S. Global Certificate to be
         transferred, and the Company shall execute, and the Trustee shall
         authenticate and deliver to the transferor or at its direction, one or
         more U.S. Physical Certificates of like tenor and amount.

                  (b)   Transfers to QIBs.  The following provisions shall
                        -----------------
apply with respect to the registration of any proposed transfer of an Initial
Certificate to a QIB (excluding Non-U.S. Persons):

                  (i)   If the Certificate to be transferred consists of U.S.
         Physical Certificates or an interest in any Temporary Offshore Global
         Certificate, the Registrar shall register the transfer if such transfer
         is being made by a proposed transferor who has checked the box provided
         for on the form of Initial Certificate stating, or has otherwise
         advised the Trustee and the Registrar in writing, that the sale has
         been made in compliance with the provisions of Rule 144A to a
         transferee who has signed the certification provided for on the form of
         Initial Certificate stating, or has otherwise advised the Trustee and
         the Registrar in writing, that it is purchasing the Initial Certificate
         for its own account or an account with respect to which it exercises
         sole investment discretion and that it, or the Person on whose behalf
         it is acting with respect to any such account, is a QIB within the
         meaning of Rule 144A, and is aware that the sale to it is being made in
         reliance on Rule 144A and acknowledges that it has received such
         information regarding the Trust and/or the Company as it has requested
         pursuant to Rule 144A or has determined not to request such information
         and that it is aware that the transferor is relying upon its foregoing
         representations in order to claim the exemption from registration
         provided by Rule 144A.

                  (ii)  Upon receipt by the Registrar of the documents referred
         to in clause (i) above and instructions given in accordance with DTC's
         and the Registrar's procedures therefor, the Registrar shall reflect on
         its books and records the date of such transfer and an increase in the
         principal amount of the U.S. Global Certificate in an amount equal to
         the principal

                                     -25-
<PAGE>

         amount of the U.S. Physical Certificates or interests in the Temporary
         Offshore Global Certificate, as the case may be, being transferred, and
         the Trustee shall cancel such Physical Certificates or decrease the
         amount of such Temporary Offshore Global Certificate so transferred.

                  (c)  [Intentionally omitted.]

                  (d)  Transfers of Interests in the Permanent Offshore Global
                       -------------------------------------------------------
Certificate or Offshore Physical Certificates.  The Registrar shall register
---------------------------------------------
any transfer of interests in the Permanent Offshore Global Certificate or
Offshore Physical Certificates without requiring any additional certification.

                  (e)  Transfers to Non-U.S. Persons at Any Time.  The
                       -----------------------------------------
following provisions shall apply with respect to any registration of any
transfer of an Initial Certificate to a Non-U.S. Person:

                  (i)   Prior to the Offshore Certificates Exchange Date, the
         Registrar shall register any proposed transfer of an Initial
         Certificate to a Non-U.S. Person upon receipt of a certificate
         substantially in the form set forth as Exhibit C hereto from the
         proposed transferor.

                  (ii)  On and after the Offshore Certificates Exchange Date,
         the Registrar shall register any proposed transfer to any Non-U.S.
         Person if the Certificate to be transferred is a U.S. Physical
         Certificate or an interest in the U.S. Global Certificate, upon receipt
         of a certificate substantially in the form of Exhibit C from the
         proposed transferor. The Registrar shall promptly send a copy of such
         certificate to the Company.

                  (iii) Upon receipt by the Registrar of (x) the documents, if
         any, required by paragraph (ii) and (y) instructions in accordance with
         the Depositary's and the Registrar's procedures, the Registrar shall
         reflect on its books and records the date of such transfer and a
         decrease in the principal amount of such U.S. Global Certificate in an
         amount equal to the principal amount of the beneficial interest in such
         U.S. Global Certificate to be transferred, and (B) upon receipt by the
         Registrar of instructions given in accordance with the Depositary's and
         the Registrar's procedures, the Registrar shall reflect on its books
         and records the date and an increase in the principal amount of the
         Offshore Global Certificate in an amount equal to the principal amount
         of the U.S. Physical Certificate or the U.S. Global Certificate, as the
         case may be, to be transferred, and the Trustee shall cancel the
         Physical Certificate, if any, so transferred or decrease the amount of
         such U.S. Global Certificate.

                  (f)  Private Placement Legend. Upon the transfer, exchange or
                       ------------------------
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph

                                     -26-
<PAGE>

(a)(i)(x) or (e)(ii) of this Section 3.06 exist or (ii) there is delivered to
the Registrar an Opinion of Counsel to the effect that neither such legend nor
the related restrictions on transfer are required in order to maintain
compliance with the provisions of the Securities Act.

                  (g) General. By its acceptance of any Certificate bearing the
                      -------
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any transfer of Certificates, each
Certificateholder agrees by its acceptance of the Certificates to furnish the
Registrar or the Trustee such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
                                                                 --------
neither the Trustee nor the Registrar shall be required to determine the
sufficiency of any such certifications, legal opinions or other information.

                  Until such time as no Certificates remain Outstanding, the
Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 3.05 or this Section 3.06. The
Trustee, if not the Registrar at such time, shall have the right to inspect and
make copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to the Registrar.

         Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
                       -------------------------------------------------
any mutilated Certificate is surrendered to the Registrar or the Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save each of them
harmless, then, in the absence of notice to the Registrar or the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.

                  In connection with the issuance of any new Certificate under
this Section 3.07, the Trustee shall require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Registrar) connected therewith.

                  Any duplicate Certificate issued pursuant to this Section 3.07
shall constitute conclusive evidence of the appropriate Fractional Undivided
Interest in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.

                  The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Certificates.

                                     -27-
<PAGE>

         Section 3.08. Persons Deemed Owners. Prior to due presentment of a
                       ---------------------
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent may treat the Person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Article IV and for all other purposes whatsoever, and none of the
Trustee, the Registrar or any Paying Agent shall be affected by any notice to
the contrary.

         Section 3.09. Cancellation. All Certificates surrendered for payment or
                       ------------
transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.

         Section 3.10. Limitation of Liability for Payments. All payments and
                       ------------------------------------
distributions made to Certificateholders shall be made only from the Trust
Property and only to the extent that the Trustee shall have sufficient income or
proceeds from the Trust Property to make such payments in accordance with the
terms of Article IV of this Agreement. Each Certificateholder, by its acceptance
of a Certificate, agrees that it will look solely to the income and proceeds
from the Trust Property to the extent available for distribution to such
Certificateholder as provided in this Agreement.

         Section 3.11. Temporary Certificates. Until definitive Certificates are
                       ----------------------
ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.

         Section 3.12. ERISA Restrictive Legend. All Certificates issued
                       ------------------------
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend") unless the Company and the Trustee determine otherwise
 ------------
consistent with applicable law:

                  "BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE
BENEFIT OF THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE
PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT
THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL
NOT CONSTITUTE A NON-EXEMPT

                                     -28-
<PAGE>

PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH
TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS."

                  By acceptance of any Certificate bearing the ERISA Legend,
each Holder of such a Certificate acknowledges for the benefit of the Company
and each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.

                                  ARTICLE IV

                           DISTRIBUTIONS; STATEMENTS
                             TO CERTIFICATEHOLDERS

         Section 4.01. Certificate Account and Special Payments Account. (a) The
                       ------------------------------------------------
Trustee shall establish and maintain on behalf of the Certificateholders a
Certificate Account as one or more non- interest-bearing accounts. The Trustee
shall hold the Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals therefrom only as
provided in this Agreement. On each day when a Scheduled Payment is made to the
Trustee, the Trustee upon receipt thereof shall immediately deposit the
aggregate amount of such Scheduled Payment into the Certificate Account.

                  (b) The Trustee shall establish and maintain on behalf of the
Certificateholders a Special Payments Account as one or more accounts, which
shall be non-interest bearing except as provided in Section 4.04. The Trustee
shall hold the Special Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom only as
provided in this Agreement. On each day when one or more Special Payments are
made to the Trustee, the Trustee, upon receipt thereof, shall immediately
deposit the aggregate amount of such Special Payments into the Special Payments
Account.

                  (c) The Trustee shall present to the Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.

         Section 4.02. Distributions from Certificate Account and Special
                       --------------------------------------------------
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
----------------
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate Account the
entire amount deposited therein pursuant to Section 4.01(a). There shall be so
distributed to each Certificateholder of record on the Record Date with respect
to such Regular

                                     -29-
<PAGE>

Distribution Date (other than as provided in Section 11.01 concerning the final
distribution) by check mailed to such Certificateholder, at the address
appearing in the Register, such Certificateholder's pro rata share (based on the
Fractional Undivided Interest in the Trust held by such Certificateholder) of
the total amount in the Certificate Account, except that, with respect to
Certificates registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such distribution shall
be made by wire transfer in immediately available funds to the account
designated by such nominee.

                  (b)    On each Special Distribution Date with respect to any
Special Payment or as soon thereafter as the Trustee has confirmed receipt of
any Special Payments, the Trustee shall distribute out of the Special Payments
Account the entire amount of such Special Payment deposited therein pursuant to
Section 4.01(b). There shall be so distributed to each Certificateholder of
record on the Record Date with respect to such Special Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by check
mailed to such Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the aggregate Fractional Undivided
Interest in the Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.

                  (c)    The Trustee shall, at the expense of the Company, cause
notice of each Special Payment to be mailed to each Certificateholder at his
address as it appears in the Register. In the event of redemption, prepayment or
purchase of Equipment Notes held in the Trust, such notice shall be mailed not
less than 15 days prior to the date any Special Payment is scheduled to be
distributed. In the case of any other Special Payments, such notice shall be
mailed as soon as practicable after the Trustee has confirmed that it has
received funds for such Special Payment (which notice, in the case of a Special
Redemption Premium, shall include a copy of the notice delivered by the Escrow
Paying Agent under Section 2.06 of the Escrow Agreement). Notices mailed by the
Trustee shall set forth:

                  (i)    the Special Distribution Date and the Record Date
         therefor (except as otherwise provided in Section 11.01),

                  (ii)   the amount of the Special Payment for each $1,000 face
         amount Certificate (taking into account any payment to be made by the
         Company pursuant to Section 2.02) and the amount thereof constituting
         principal, premium, if any, and interest,

                  (iii)  the reason for the Special Payment, and

                  (iv)   if the Special Distribution Date is the same date as a
         Regular Distribution Date, the total amount to be received on such date
         for each $1,000 face amount Certificate.

                                     -30-
<PAGE>

If the amount of (x) premium, if any, payable upon the redemption, prepayment or
purchase of an Equipment Note or (y) Special Redemption Premium has not been
calculated at the time that the Trustee mails notice of a Special Payment, it
shall be sufficient if the notice sets forth the other amounts to be distributed
and states that any such premium or Special Redemption Premium, as the case may
be, received will also be distributed.

                  If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.

         Section 4.03.   Statements to Certificateholders. (a) On each
                         --------------------------------
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:

                  (i)    the aggregate amount of funds distributed on such
         Distribution Date under the Agreement and under the Escrow Agreement,
         indicating the amount allocable to each source, including any portion
         thereof paid by the Liquidity Provider;

                  (ii)   the amount of such distribution under the Agreement
         allocable to principal and the amount allocable to premium (including
         the Special Redemption Premium), if any;

                  (iii)  the amount of such distribution under the Agreement
         allocable to interest;

                  (iv)   the amount of such distribution under the Escrow
         Agreement allocable to interest;

                  (v)    the amount of such distribution under the Escrow
         Agreement allocable to Deposits; and

                  (vi)   the Pool Balance and the Pool Factor.

                  With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, on the record date prior to each Distribution
Date, the Trustee will request from the Clearing Agency a securities position
listing setting forth the names of all the Clearing Agency Participants
reflected on the Clearing Agency's books as holding interests in the
Certificates on such record date. On each Distribution Date, the Trustee will
mail to each such Clearing Agency Participant the statement described above and
will make available additional copies as requested by such Clearing Agency
Participant for forwarding to holders of Certificates.

                  (b)    Within a reasonable period of time after the end of
each calendar year but not later than the latest date permitted by law, the
Trustee shall furnish to each Person who at any time

                                     -31-
<PAGE>

during such calendar year was a Certificateholder of record a statement
containing the sum of the amounts determined pursuant to clauses (a)(i),
(a)(ii), (a)(iii), (a)(iv) and (a)(v) above with respect to the Trust for such
calendar year or, in the event such Person was a Certificateholder of record
during a portion of such calendar year, for the applicable portion of such year,
and such other items as are readily available to the Trustee and which a
Certificateholder shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its federal income tax returns. With respect
to Certificates registered in the name of a Clearing Agency or its nominee, such
report and such other items shall be prepared on the basis of information
supplied to the Trustee by the Clearing Agency Participants and shall be
delivered by the Trustee to such Clearing Agency Participants to be available
for forwarding by such Clearing Agency Participants.

                  (c)   Utilizing information provided by Midway, promptly
following (i) the Delivery Period Termination Date, if there has been any change
in the information set forth in clauses (x), (y) and (z) below from that set
forth in page 45 of the Offering Memorandum, and (ii) any early redemption or
purchase of, or any default in the prepayment of principal or interest in
respect of, any of the Equipment Notes held in the Trust, or any Final
Withdrawal, the Trustee shall furnish to Certificateholders of record on such
date a statement setting forth (x) the expected Pool Balances for each
subsequent Regular Distribution Date following the Delivery Period Termination
Date, (y) the related Pool Factors for such Regular Distribution Dates and (z)
the expected principal distribution schedule of the Equipment Notes, in the
aggregate, held as Trust Property at the date of such notice. With respect to
the Certificates registered in the name of a Clearing Agency, on the Delivery
Period Termination Date, the Trustee will request from such Clearing Agency a
securities position listing setting forth the names of all Clearing Agency
Participants reflected on such Clearing Agency's books as holding interests in
the Certificates on such date. The Trust will mail to each such Clearing Agency
Participant the statement described above and will make available additional
copies as requested by such Clearing Agency Participant for forwarding to
holders of interests in the Certificates.

         Section 4.04.  Investment of Special Payment Moneys. Any money received
                        ------------------------------------
by the Trustee pursuant to Section 4.01(b) representing a Special Payment which
is not to be promptly distributed shall, to the extent practicable, be invested
in Permitted Investments by the Trustee as directed in writing by the Company
pending distribution of such Special Payment pursuant to Section 4.02. Any
investment made pursuant to this Section 4.04 shall be in such Permitted
Investments having maturities not later than the date that such moneys are
required to be used to make the payment required under Section 4.02 on the
applicable Special Distribution Date and the Trustee shall hold any such
Permitted Investments until maturity. The Trustee shall have no liability with
respect to any investment made pursuant to this Section 4.04, other than by
reason of the willful misconduct or gross negligence (or simple negligence in
the handling of funds) of the Trustee. All income and earnings from such
investments shall be distributed on such Special Distribution Date as part of
such Special Payment.

                                     -32-
<PAGE>

                                   ARTICLE V

                                  THE COMPANY

         Section 5.01.  Maintenance of Corporate Existence. The Company, at its
                        ----------------------------------
own cost and expense, will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises, except as otherwise specifically permitted in Section 5.02;
provided, however, that the Company shall not be required to preserve any right
--------  -------
or franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.

         Section 5.02.  Consolidation, Merger, Etc. The Company shall not
                        --------------------------
consolidate with or merge into any other corporation or convey, transfer or
lease substantially all of its assets as an entirety to any Person unless:

                  (a)   the corporation formed by such consolidation or into
         which the Company is merged or the Person which acquires by conveyance,
         transfer or lease substantially all of the assets of the Company as an
         entirety shall be (i) organized and validly existing under the laws of
         the United States of America or any state thereof or the District of
         Columbia, (ii) a "citizen of the United States" (as defined in Section
         40102(a)(15) of Title 49 of the United States Code) and (iii) a United
         States certificated air carrier, if and so long as such status is a
         condition of entitlement to the benefits of Section 1110 of the
         Bankruptcy Reform Act of 1978, as amended (11 U.S.C. (S). 1110), with
         respect to the Aircraft;

                  (b)   the corporation formed by such consolidation or into
         which the Company is merged or the Person which acquires by conveyance,
         transfer or lease substantially all of the assets of the Company as an
         entirety shall execute and deliver to the Trustee a duly authorized,
         valid, binding and enforceable agreement in form and substance
         reasonably satisfactory to the Trustee containing an assumption by such
         successor corporation or Person of the due and punctual performance and
         observance of each covenant and condition of this Agreement, the Other
         Pass Through Trust Agreements, the Participation Agreements, and each
         other Note Document to be performed or observed by the Company;

                  (c)   immediately after giving effect to such transaction, no
         Event of Default (as defined in any Lease or any Indenture relating to
         an Owned Aircraft), shall have occurred and be continuing; and

                  (d)   the Company shall have delivered to the Trustee an
         Officer's Certificate of the Company and an Opinion of Counsel of the
         Company reasonably satisfactory to the Trustee, each stating that such
         consolidation, merger, conveyance, transfer or lease and the assumption
         agreement mentioned in clause (b) above comply with this Section 5.02
         and that all conditions precedent herein provided for relating to such
         transaction have been complied with.

                                     -33-
<PAGE>

                  Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all of the assets of the Company as an entirety in
accordance with this Section 5.02, the successor corporation or Person formed by
such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Agreement with
the same effect as if such successor corporation or Person had been named as the
Company herein. No such conveyance, transfer or lease of substantially all of
the assets of the Company as an entirety shall have the effect of releasing the
Company or any successor corporation or Person which shall theretofore have
become such in the manner prescribed in this Section 5.02 from its liability in
respect of this Agreement or any Financing Document to which it is a party.

                                  ARTICLE VI

                                    DEFAULT

         Section 6.01.  Events of Default. (a) Exercise of Remedies. Upon the
                        -----------------      --------------------
occurrence and during the continuation of any Indenture Default under any
Indenture, the Trustee may, to the extent it is the Controlling Party at such
time, direct the exercise of remedies as provided in the Intercreditor
Agreement.

                  (b)   Purchase Rights of Certificateholders. At any time after
                        -------------------------------------
the occurrence and during the continuation of a Triggering Event, each
Certificateholder shall have the right (which shall not expire upon any purchase
of the Class A Certificates pursuant to Section 6.01(b)(i) of the Class B Trust
Agreement) to purchase all, but not less than all, of the Class A Certificates
and the Class B Certificates upon ten (10) days' written notice to the Class A
Trustee, the Class B Trustee and each other Certificateholder provided that (A)
if prior to the end of such ten-day period any other Certificateholder notifies
such purchasing Certificateholder that such other Certificateholder wants to
participate in such purchase, then such other Certificateholder may join with
the purchasing Certificateholder to purchase all, but not less than all, of the
Class A Certificates and the Class B Certificates pro rata based on the
principal amount of the Certificates held by each such Certificateholder and (B)
if prior to the end of such ten-day period any other Certificateholder fails to
notify the purchasing Certificateholder of such other Certificateholder's desire
to participate in such a purchase, then such other Certificateholder shall lose
its right to purchase the Class A Certificates and the Class B Certificates
pursuant to this Section 6.01(b).

                  The purchase price with respect to each Class of Certificates
shall be equal to the Pool Balance of such Class of Certificates, together with
accrued and unpaid interest thereon to the date of such purchase, without
premium, but including any other amounts then due and payable to the
Certificateholders of such Class under this Agreement, the Intercreditor
Agreement, the Escrow Agreement or any Note Document or on or in respect of the
Certificates of such Class; provided, however, that (i) if such purchase occurs
                            --------  -------
after the record date specified in Section 2.03(b) of the Escrow Agreement
relating to the distribution of unused Deposits and accrued and unpaid interest
thereunder, such purchase price shall be reduced by the aggregate amount of
unused Deposits and

                                     -34-
<PAGE>

interest to be distributed under the Escrow Agreement (which deducted amounts
shall remain distributable to, and may be retained by the Certificateholder of
such Class as of such record date) and (ii) if such purchase occurs after a
Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the related Distribution date (which deducted amounts
shall remain distributable to, and may be retained by, the Certificateholder of
such Class as of such Record Date); provided further that no such purchase of
                                    -------- -------
Certificates of any Class shall be effective unless the purchaser shall certify
to the Other Trustee for such Class that contemporaneously with such purchase,
such purchaser is purchasing, pursuant to the terms of this Agreement and the
Other Pass Through Trust Agreements, the Class A Certificates and the Class B
Certificates. Each payment of the purchase price of the Certificates of any
Class referred to in the first sentence hereof shall be made to an account or
accounts designated by the Other Trustee for such Class and each such purchase
shall be subject to the terms of this Section 6.01(b). The Class A Certificates
and Class B Certificates will be deemed to be purchased on the date payment of
the purchase price is made notwithstanding the failure of the Certificateholders
of any Class to deliver any Certificates of such Class (whether in the form of
Physical Certificates or beneficial interests in Global Certificates) and, upon
such a purchase, (i) the only rights of the Certificateholders of such Class
will be to deliver the Certificates of such Class to the purchaser and receive
the purchase price for the Certificates of such Class and (ii) if the purchaser
shall so request, such Certificateholder will comply with all the provisions of
Section 3.04 of the Other Pass Through Trust Agreement for such Class to enable
new Certificates of such Class to be issued to the purchaser in such
denominations as it shall request. All charges and expenses in connection with
the issuance of any such new Certificates of any Class shall be borne by the
purchaser thereof.

                  As used in this Section 6.01(b), the terms
"Certificateholder", "Class", "Class A Certificate" and "Class B Certificate",
shall have the respective meanings assigned to such terms in the Intercreditor
Agreement.

         Section 6.02.  Incidents of Sale of Equipment Notes. Upon any sale of
                        ------------------------------------
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:

                  (1)   Certificateholders and Trustee May Purchase Equipment
                        -----------------------------------------------------
         Notes. Any Certificateholder, the Trustee in its individual or any
         -----
         other capacity or any other Person may bid for and purchase any of the
         Equipment Notes, and upon compliance with the terms of sale, may hold,
         retain, possess and dispose of such Equipment Notes in their own
         absolute right without further accountability.

                  (2)   Receipt of Trustee Shall Discharge Purchaser. The
                        --------------------------------------------
         receipt of the Trustee or of the officer making such sale shall be a
         sufficient discharge to any purchaser for his purchase money, and,
         after paying such purchase money and receiving such receipt, such
         purchaser or its personal representative or assigns shall not be
         obliged to see to the application of such purchase money, or be in any
         way answerable for any loss, misapplication or non-application thereof.

                                     -35-
<PAGE>

                  (3)   Application of Moneys Received upon Sale. Any moneys
                        ----------------------------------------
         received by the Trustee from the Subordination Agent pursuant to the
         Intercreditor Agreement upon any sale made either under the power of
         sale given by this Agreement or otherwise for the enforcement of this
         Agreement shall be applied as provided in Section 4.02.

         Section 6.03.  Judicial Proceedings Instituted by Trustee; Trustee May
                        -------------------------------------------------------
Bring Suit. If there shall be a failure to make payment of the principal of,
----------
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance with Section 8.03 of any
applicable Indenture relating to a Leased Aircraft), shall be entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.

         Section 6.04.  Control by Certificateholders. Subject to Section 6.03
                        -----------------------------
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee with
respect to the Trust or pursuant to the terms of the Intercreditor Agreement, or
exercising any trust or power conferred on the Trustee under this Agreement or
the Intercreditor Agreement, including any right of the Trustee as Controlling
Party under the Intercreditor Agreement or as holder of the Equipment Notes,
provided that
--------
                  (1)   such Direction shall not be in conflict with any rule of
         law or with this Agreement and would not involve the Trustee in
         personal liability or expense,

                  (2)   the Trustee shall not determine that the action so
         directed would be unjustly prejudicial to the Certificateholders not
         taking part in such Direction, and

                  (3)   the Trustee may take any other action deemed proper by
         the Trustee which is not inconsistent with such Direction.

         Section 6.05.  Waiver of Past Defaults. Subject to the Intercreditor
                        -----------------------
Agreement, the Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in the
Trust (i) may on behalf of all of the Certificateholders waive any past Event of
Default hereunder and its consequences or (ii) if the Trustee is the Controlling
Party, may direct the Trustee to instruct the applicable Loan Trustee to waive,
any past Indenture Default under any Indenture and its consequences, and thereby
annul any Direction given by such Certificateholders or the Trustee to such Loan
Trustee with respect thereto, except a default:

                                     -36-
<PAGE>

                  (1)   in the deposit of any Scheduled Payment or Special
         Payment under Section 4.01 or in the distribution of any payment under
         Section 4.02 on the Certificates, or

                  (2)   in the payment of the principal of (premium, if any) or
         interest on the Equipment Notes, or

                  (3)   in respect of a covenant or provision hereof which under
         Article IX or X cannot be modified or amended without the consent of
         each Certificateholder holding an Outstanding Certificate affected
         thereby.

                  Upon any such waiver, such default shall cease to exist with
respect to the Certificates and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose and any direction given by the
Trustee on behalf of the Certificateholders to the relevant Loan Trustee shall
be annulled with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Upon any such waiver, the Trustee shall vote the Equipment Notes issued
under the relevant Indenture to waive the corresponding Indenture Default.

         Section 6.06.  Right of Certificateholders to Receive Payments Not to
                        ------------------------------------------------------
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
-----------
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement of any such
payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of such
Certificateholder.

         Section 6.07.  Certificateholders May Not Bring Suit Except Under
                        --------------------------------------------------
Certain Conditions. A Certificateholder shall not have the right to institute
------------------
any suit, action or proceeding at law or in equity or otherwise with respect to
this Agreement, for the appointment of a receiver or for the enforcement of any
other remedy under this Agreement, unless:

                  (1)   such Certificateholder previously shall have given
         written notice to the Trustee of a continuing Event of Default;

                  (2)   Certificateholders holding Certificates evidencing
         Fractional Undivided Interests aggregating not less than 25% of the
         Trust shall have requested the Trustee in writing to institute such
         action, suit or proceeding and shall have offered to the Trustee
         indemnity as provided in Section 7.03(e);

                  (3)   the Trustee shall have refused or neglected to institute
         such an action, suit or proceeding for 60 days after receipt of such
         notice, request and offer of indemnity; and

                                     -37-
<PAGE>

                  (4)   no direction inconsistent with such written request
         shall have been given to the Trustee during such 60-day period by
         Certificateholders holding Certificates evidencing Fractional Undivided
         Interests aggregating not less than a majority in interest in the
         Trust.

                  It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder or (iii) enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all the Certificateholders subject to the
provisions of this Agreement.

         Section 6.08.  Remedies Cumulative. Every remedy given hereunder to the
                        -------------------
Trustee or to any of the Certificateholders shall not be exclusive of any other
remedy or remedies, and every such remedy shall be cumulative and in addition to
every other remedy given hereunder or now or hereafter given by statute, law,
equity or otherwise.

         Section 6.09.  Undertaking for Costs. In any suit for the enforcement
                        ---------------------
of any right or remedy under this Agreement, or in any suit against the Trustee
for any action taken, suffered or omitted by it as Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided that neither this
                                                --------
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Company.

                                  ARTICLE VII

                                  THE TRUSTEE

         Section 7.01.  Certain Duties and Responsibilities. (a) Except during
                        -----------------------------------
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.

                  (b)   In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of its own affairs.

                  (c)   No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own gross negligence (or simple
negligence in the handling of funds) or wilful misconduct, except that

                                     -38-
<PAGE>

                  (1)   this Subsection shall not be construed to limit the
         effect of Subsection (a) of this Section; and

                  (2)   the Trustee shall not be liable for any error of
         judgment made in good faith by a Responsible Officer of the Trustee,
         unless it shall be proved that the Trustee was negligent in
         ascertaining the pertinent facts.

                  (d)   Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Section.

         Section 7.02.  Notice of Defaults. As promptly as practicable after,
                        ------------------
and in any event within 90 days after, the occurrence of any default (as such
term is defined below) hereunder known to the Trustee, the Trustee shall
transmit by mail to the Company, the Owner Trustees, the Owner Participants, the
Loan Trustees and the Certificateholders in accordance with Section 313(c) of
the Trust Indenture Act, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that,
                                                     --------  -------
except in the case of a default in the payment of the principal, premium, if
any, or interest on any Equipment Note or any other Trust Property, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interests of the Certificateholders. For the purpose of
this Section, the term "default" means any event that is, or after notice or
                        -------
lapse of time or both would become, an Event of Default.

         Section 7.03.  Certain Rights of Trustee. Subject to the provisions of
                        -------------------------
Section 315 of the Trust Indenture Act:

                  (a)   the Trustee may rely and shall be protected in acting or
         refraining from acting in reliance upon any resolution, certificate,
         statement, instrument, opinion, report, notice, request, direction,
         consent, order, bond, debenture or other paper or document believed by
         it to be genuine and to have been signed or presented by the proper
         party or parties;

                  (b)   any request or direction of the Company mentioned herein
         shall be sufficiently evidenced by a Request;

                  (c)   whenever in the administration of this Agreement or the
         Intercreditor Agreement the Trustee shall deem it desirable that a
         matter be proved or established prior to taking, suffering or omitting
         any action hereunder, the Trustee (unless other evidence be herein
         specifically prescribed) may, in the absence of bad faith on its part,
         rely upon an Officer's Certificate of the Company, any Owner Trustee or
         any Loan Trustee;

                                     -39-
<PAGE>

                  (d)   the Trustee may consult with counsel and the advice of
         such counsel or any Opinion of Counsel shall be full and complete
         authorization and protection in respect of any action taken, suffered
         or omitted by it hereunder in good faith and in reliance thereon;

                  (e)   the Trustee shall be under no obligation to exercise any
         of the rights or powers vested in it by this Agreement or the
         Intercreditor Agreement at the request or direction of any of the
         Certificateholders pursuant to this Agreement or the Intercreditor
         Agreement, unless such Certificateholders shall have offered to the
         Trustee reasonable security or indemnity against the cost, expenses and
         liabilities which might be incurred by it in compliance with such
         request or direction;

                  (f)   the Trustee shall not be bound to make any investigation
         into the facts or matters stated in any resolution, certificate,
         statement, instrument, opinion, report, notice, request, direction,
         consent, order, bond, debenture or other paper or document;

                  (g)   the Trustee may execute any of the trusts or powers
         under this Agreement or the Intercreditor Agreement or perform any
         duties under this Agreement or the Intercreditor Agreement either
         directly or by or through agents or attorneys, and the Trustee shall
         not be responsible for any misconduct or negligence on the part of any
         agent or attorney appointed with due care by it under this Agreement or
         the Intercreditor Agreement;

                  (h)   the Trustee shall not be liable with respect to any
         action taken or omitted to be taken by it in good faith in accordance
         with the direction of the Certificateholders holding Certificates
         evidencing Fractional Undivided Interests aggregating not less than a
         majority in interest in the Trust relating to the time, method and
         place of conducting any proceeding for any remedy available to the
         Trustee, or exercising any trust or power conferred upon the Trustee,
         under this Agreement or the Intercreditor Agreement; and

                  (i)   the Trustee shall not be required to expend or risk its
         own funds in the performance of any of its duties under this Agreement,
         or in the exercise of any of its rights or powers, if it shall have
         reasonable grounds for believing that repayment of such funds or
         adequate indemnity against such risk is not reasonably assured to it.

         Section 7.04.  Not Responsible for Recitals or Issuance of
                        -------------------------------------------
Certificates. The recitals contained herein and in the Certificates, except the
------------
certificates of authentication, shall not be taken as the statements of the
Trustee, and the Trustee assumes no responsibility for their correctness.
Subject to Section 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Agreement, any Participation Agreement, the Escrow
Agreement, the Deposit Agreement, any Equipment Notes, the Certificates or any
other Note Document, except that the Trustee hereby represents and warrants that
this Agreement has been, and the Intercreditor Agreement, each Note Document and
each Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.

                                     -40-
<PAGE>

         Section 7.05.  May Hold Certificates. The Trustee, any Paying Agent,
                        ---------------------
Registrar or any of their Affiliates or any other agent in their respective
individual or any other capacity may become the owner or pledgee of Certificates
and, subject to Sections 310(b) and 311 of the Trust Indenture Act, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.

         Section 7.06.  Money Held in Trust. Money held by the Trustee or the
                        -------------------
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.

         Section 7.07.  Compensation and Reimbursement.  The Company agrees:
                        ------------------------------

                  (1)   to pay, or cause to be paid, to the Trustee from time to
         time compensation (as set out in a separate fee agreement between the
         Trustee and the Company) for all services rendered by it hereunder
         (which compensation shall not be limited by any provision of law in
         regard to the compensation of a trustee of an express trust);

                  (2)   except as otherwise expressly provided herein, to
         reimburse, or cause to be reimbursed, the Trustee upon its request for
         all reasonable out-of-pocket expenses, disbursements and advances
         incurred or made by the Trustee in accordance with any provision of
         this Agreement or the Intercreditor Agreement (including the reasonable
         compensation and the expenses and disbursements of its agents and
         counsel), except any such expense, disbursement or advance as may be
         attributable to its own gross negligence (or simple negligence in the
         handling of funds), willful misconduct or bad faith or as may be
         incurred due to the Trustee's breach of its representations and
         warranties set forth in Section 7.15;

                  (3)   to indemnify, or cause to be indemnified, the Trustee
         for, and to hold it harmless against, any loss, liability or expense
         (other than for or with respect to any tax) incurred without gross
         negligence (or simple negligence in the handling of funds), willful
         misconduct or bad faith, on its part, arising out of or in connection
         with the acceptance or administration of this Trust, including the
         costs and expenses of defending itself against any claim or liability
         in connection with the exercise or performance of any of its powers or
         duties hereunder, except for any such loss, liability or expense
         incurred by reason of the Trustee's breach of its representations and
         warranties set forth in Section 7.15. The Trustee shall notify the
         Company promptly of any claim for which it may seek indemnity. The
         Company shall defend the claim and the Trustee shall cooperate in the
         defense. The Trustee may have separate counsel with the consent of the
         Company (which consent shall not be unreasonably withheld) and the
         Company will pay the reasonable fees and expenses of such counsel. The
         Company need not pay for any settlement made without its consent; and

                                     -41-
<PAGE>

                  (4)   to indemnify, or cause to be indemnified, the Trustee,
         solely in its individual capacity, for, and to hold it harmless
         against, any tax (except to the extent the Trustee is reimbursed
         therefor pursuant to the next paragraph, provided that no
         indemnification shall be available with respect to any tax attributable
         to the Trustee's compensation for serving as such) incurred without
         gross negligence (or simple negligence in the handling of funds),
         willful misconduct or bad faith, on its part, arising out of or in
         connection with the acceptance or administration of this Trust,
         including any costs and expenses incurred in contesting the imposition
         of any such tax. The Trustee, in its individual capacity, shall notify
         the Company promptly of any claim for any tax for which it may seek
         indemnity. The Trustee shall permit the Company to contest the
         imposition of such tax and the Trustee, in its individual capacity,
         shall cooperate in the defense. The Trustee, in its individual
         capacity, may have separate counsel with the consent of the Company
         (which consent shall not be unreasonably withheld) and the Company will
         pay the reasonable fees and expenses of such counsel. The Company need
         not pay for any taxes paid, in settlement or otherwise, without its
         consent.

                  The Trustee shall be entitled to reimbursement from, and shall
have a lien prior to the Certificates upon, the Trust Property for any tax
incurred without gross negligence (or simple negligence in the handling of
funds), bad faith or willful misconduct, on its part, arising out of or in
connection with the acceptance or administration of such Trust (other than any
tax attributable to the Trustee's compensation for serving as such), including
any costs and expenses incurred in contesting the imposition of any such tax. If
the Trustee reimburses itself from the Trust Property of such Trust for any such
tax, it will mail a brief report within 30 days setting forth the circumstances
thereof to all Certificateholders as their names and addresses appear in the
Register.

         Section 7.08.  Corporate Trustee Required; Eligibility. There shall at
                        ---------------------------------------
all times be a Trustee hereunder which shall be eligible to act as a trustee
under Section 310(a) of the Trust Indenture Act and shall have a combined
capital and surplus of at least $75,000,000 (or a combined capital and surplus
in excess of $5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any state or
territory thereof or of the District of Columbia and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of conditions so published.

                  In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.

         Section 7.09.  Resignation and Removal; Appointment of Successor. (a)
                        -------------------------------------------------
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.

                                     -42-
<PAGE>

                  (b)   The Trustee may resign at any time as trustee by giving
prior written notice thereof to the Company, the Authorized Agents, the Owner
Trustees and the Loan Trustees. In addition, upon the occurrence of an Event of
Default, in the event the Trustee shall not have received instructions from the
Certificateholders or the Certificateholders with respect to any Other Trust,
the Trustee shall resign. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan Trustees and the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

                  (c)   The Trustee may be removed at any time by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.

                  (d)   If at any time:

                  (1)   the Trustee shall fail to comply with Section 310 of the
         Trust Indenture Act, if applicable, after written request therefor by
         the Company or by any Certificateholder who has been a bona fide
         Certificateholder for at least six months; or

                  (2)   the Trustee shall cease to be eligible under Section
         7.08 and shall fail to resign after written request therefor by the
         Company or by any such Certificateholder; or

                  (3)   the Trustee shall become incapable of acting or shall be
         adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
         property shall be appointed or any public officer shall take charge or
         control of the Trustee or of its property or affairs for the purpose of
         rehabilitation, conservation or liquidation;

then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

                  (e)   If a Responsible Officer of the Trustee shall obtain
actual knowledge of an Avoidable Tax which has been or is likely to be asserted,
the Trustee shall promptly notify the Company and shall, within 30 days of such
notification, resign hereunder unless within such 30-day period the Trustee
shall have received notice that the Company has agreed to pay such tax. The
Company shall promptly appoint a successor Trustee in a jurisdiction where there
are no Avoidable Taxes.

                  (f)   If the Trustee shall resign, be removed or become
incapable of acting as trustee or if a vacancy shall occur in the office of the
Trustee for any cause, the Company shall promptly appoint a successor Trustee.
If, within 90 days after such resignation, removal or

                                     -43-
<PAGE>

incapability, or other occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust delivered to the Company, the Owner Trustees, the Loan Trustees and
the retiring Trustee, and the Company approves such appointment, which approval
shall not be unreasonably withheld, then the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become the successor
Trustee and supersede the successor Trustee appointed as provided above. If no
successor Trustee shall have been so appointed as provided above and accepted
appointment in the manner hereinafter provided, any Certificateholder who has
been a bona fide Certificateholder for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.

                  (g)   The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the successor Trustee
by mailing written notice of such event by first-class mail, postage prepaid,
to the Certificateholders as their names and addresses appear in the Register.
Each notice shall include the name of such successor Trustee and the address of
its Corporate Trust Office.

         Section 7.10.  Acceptance of Appointment by Successor. Every successor
                        --------------------------------------
Trustee appointed hereunder shall execute and deliver to the Company, the
Authorized Agents, the Owner Trustees and the Loan Trustees and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on
request of the Company or the successor Trustee, such retiring Trustee shall
execute and deliver an instrument transferring to such successor Trustee all
such rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all Trust Property held by such
retiring Trustee hereunder, subject nevertheless to its lien, if any, provided
for in Section 7.07 and the retiring Trustee shall thereupon be released from
further liability hereunder. Upon request of any such successor Trustee, the
Company, the retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as shall be necessary
or desirable to transfer and confirm to, and for more fully and certainly
vesting in, such successor Trustee all such rights, powers and trusts.

                  No institution shall accept its appointment as a Trustee
hereunder unless at the time of such acceptance such institution shall be
qualified and eligible under this Article VII.

         Section 7.11.  Merger, Conversion, Consolidation or Succession to
                        --------------------------------------------------
Business. Any corporation into which the Trustee may be merged or converted or
--------
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
--------
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates

                                     -44-
<PAGE>

shall have been executed or authenticated, but not delivered, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such execution or authentication and deliver
the Certificates so executed or authenticated with the same effect as if such
successor Trustee had itself executed or authenticated such Certificates.

         Section 7.12.  Maintenance of Agencies. (a) There shall at all times be
                        -----------------------
maintained an office or agency where Certificates may be presented or
surrendered for registration of transfer or for exchange, and for payment
thereof and where notices and demands to or upon the Trustee in respect of such
Certificates may be served. Presentations and demands may be made and notices
may be served at the Corporate Trust Office of the Trustee.

                  (b)   There shall at all times be a Registrar and a Paying
Agent hereunder with respect to the Certificates. Each such Authorized Agent
shall be a bank or trust company, shall be a corporation organized and doing
business under the laws of the United States or any state, with a combined
capital and surplus of at least $75,000,000, or a corporation having a combined
capital and surplus in excess of $5,000,000, the obligations of which are
guaranteed by a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise corporate trust
powers, subject to supervision by federal or state authorities. The Trustee
shall initially be the Paying Agent and, as provided in Section 3.04, Registrar
hereunder with respect to the Certificates. Each Registrar shall furnish to the
Trustee, at stated intervals of not more than six months, and at such other
times as the Trustee may request in writing, a copy of the Register maintained
by such Registrar.

                  (c)   Any corporation into which any Authorized Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any Authorized
Agent shall be a party, or any corporation succeeding to the corporate trust
business of any Authorized Agent, shall be the successor of such Authorized
Agent hereunder, if such successor corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the parties hereto or such Authorized Agent or such successor
corporation.

                  (d)   Any Authorized Agent may at any time resign by giving
written notice of resignation to the Trustee, the Company, the Owner Trustees
and the Loan Trustees. The Company may, and at the request of the Trustee shall,
at any time terminate the agency of any Authorized Agent by giving written
notice of termination to such Authorized Agent and to the Trustee. Upon the
resignation or termination of an Authorized Agent or in case at any time any
such Authorized Agent shall cease to be eligible under this Section (when, in
either case, no other Authorized Agent performing the functions of such
Authorized Agent shall have been appointed), the Company shall promptly appoint
one or more qualified successor Authorized Agents, reasonably satisfactory to
the Trustee, to perform the functions of the Authorized Agent which has resigned
or whose agency has been terminated or who shall have ceased to be eligible
under this Section. The Company shall give written notice of any such
appointment made by it to the Trustee, the Owner Trustees and the Loan

                                     -45-
<PAGE>

Trustees; and in each case the Trustee shall mail notice of such appointment to
all Certificateholders as their names and addresses appear on the Register.

                  (e)   The Company agrees to pay, or cause to be paid, from
time to time to each Authorized Agent reasonable compensation for its services
and to reimburse it for its reasonable expenses.

         Section 7.13.  Money for Certificate Payments to Be Held in Trust. All
                        --------------------------------------------------
moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited and held in trust for the benefit of the
Certificateholders entitled to such payment, subject to the provisions of this
Section. Moneys so deposited and held in trust shall constitute a separate trust
fund for the benefit of the Certificateholders with respect to which such money
was deposited.

                  The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.

         Section 7.14.  Registration of Equipment Notes in Name of Subordination
                        --------------------------------------------------------
Agent. The Trustee agrees that all Equipment Notes to be purchased by the Trust
-----
shall be issued in the name of the Subordination Agent or its nominee and held
by the Subordination Agent in trust for the benefit of the Certificateholders,
or, if not so held, the Subordination Agent or its nominee shall be reflected as
the owner of such Equipment Notes in the register of the issuer of such
Equipment Notes.

         Section 7.15.  Representations and Warranties of Trustee. The Trustee
                        -----------------------------------------
hereby represents and warrants that:

                  (a)   the Trustee is a state-chartered commercial bank
         organized and validly existing in good standing under the laws of the
         State of Maryland;

                  (b)   the Trustee has full power, authority and legal right to
         execute, deliver, and perform this Agreement, the Escrow Agreement, the
         Intercreditor Agreement and the Note Purchase Agreement and has taken
         all necessary action to authorize the execution, delivery, and
         performance by it of this Agreement, the Escrow Agreement, the
         Intercreditor Agreement and the Note Purchase Agreement;

                  (c)   the execution, delivery and performance by the Trustee
         of this Agreement, the Escrow Agreement, the Intercreditor Agreement
         and the Note Purchase Agreement (i) will not violate any provision of
         United States law, Maryland law or any order, writ, judgment, or decree
         of any court, arbitrator or governmental authority of the United States
         or the State of Maryland applicable to the Trustee or any of its
         assets, (ii) will not violate any provision of the articles of
         association or by-laws of the Trustee, or (iii) will not violate any

                                     -46-
<PAGE>

         provision of, or constitute, with or without notice or lapse of time, a
         default under, or result in the creation or imposition of any lien on
         any properties included in the Trust Property pursuant to the
         provisions of any mortgage, indenture, contract, agreement or other
         undertaking to which it is a party, which violation, default or lien
         could reasonably be expected to have an adverse effect on the Trustee's
         performance or ability to perform its duties hereunder or thereunder or
         on the transactions contemplated herein or therein; the execution,
         delivery and performance by the Trustee of this Agreement, the Escrow
         Agreement, the Intercreditor Agreement and the Note Purchase Agreement
         will not require the authorization, consent, or approval of, the giving
         of notice to, the filing or registration with, or the taking of any
         other action in respect of, any governmental authority or agency of the
         United States or the State of the United States where it is located
         regulating the banking and corporate trust activities of the Trustee;
         and

                  (d)   this Agreement, the Escrow Agreement, the Intercreditor
         Agreement and the Note Purchase Agreement have been duly executed and
         delivered by the Trustee and constitute the legal, valid, and binding
         agreements of the Trustee, enforceable against it in accordance with
         their respective terms, provided that enforceability may be limited by
         (i) applicable bankruptcy, insolvency, reorganization, moratorium or
         similar laws affecting the rights of creditors generally and (ii)
         general principles of equity.

         Section 7.16.  Withholding Taxes; Information Reporting. (a) The
                        ----------------------------------------
Trustee, as trustee of the grantor trust created by this Agreement, shall
exclude and withhold from each distribution of principal, premium, if any, and
interest and other amounts due under this Agreement or under the Certificates
any and all withholding taxes applicable thereto as required by law. The Trustee
agrees to act as such withholding agent and, in connection therewith, whenever
any present or future taxes or similar charges are required to be withheld with
respect to any amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Certificateholders, that it will file any necessary withholding
tax returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from time
to time. The Trustee agrees to file any other information reports as may be
required to be filed by it under United States law.

                  (b)   The Trustee may satisfy certain of its obligations with
respect to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
                                     -----------
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.

                                     -47-
<PAGE>

                  (c)   The Trustee, at the request (and expense) of the
Company, will make such United States federal income tax elections as may be
necessary to prevent the Trust from being classified for federal income tax
purposes as an association taxable as a corporation.

         Section 7.17.  Trustee's Liens. The Trustee in its individual capacity
                        ---------------
agrees that it will at its own cost and expense promptly take any action as may
be necessary to duly discharge and satisfy in full any mortgage, pledge, lien,
charge, encumbrance, security interest or claim ("Trustee's Liens") on or with
                                                  ---------------
respect to the Trust Property which is attributable to the Trustee either (i) in
its individual capacity and which is unrelated to the transactions contemplated
by this Agreement, the Intercreditor Agreement, the Note Purchase Agreement or
the Note Documents, or (ii) as Trustee hereunder or in its individual capacity
and which arises out of acts or omissions which are not contemplated by this
Agreement.

         Section 7.18.  Preferential Collection of Claims. The Trustee shall
                        ---------------------------------
comply with Section 311(a) of the Trust Indenture Act, excluding any creditor
relationship listed in Section 311(b) of the Trust Indenture Act. If the Trustee
shall resign or be removed as Trustee, it shall be subject to Section 311(a) of
the Trust Indenture Act to the extent provided therein.

                                 ARTICLE VIII

               CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE

         Section 8.01.  The Company to Furnish Trustee with Names and Addresses
                        -------------------------------------------------------
of Certificateholders. The Company will furnish or cause to be furnished to the
---------------------
Trustee within 15 days after each Record Date with respect to a Scheduled
Payment, and at such other times as the Trustee may request in writing within 30
days after receipt by the Company of any such request, a list, in such form as
the Trustee may reasonably require, of all information in the possession or
control of the Company as to the names and addresses of the Certificateholders,
in each case as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the sole Registrar,
           --------  -------
no such list need be furnished; and provided further, however, that no such list
                                    -------- -------  -------
need be furnished for so long as a copy of the Register is being furnished to
the Trustee pursuant to Section 7.12.

         Section 8.02.  Preservation of Information; Communications to
                        ----------------------------------------------
Certificateholders. The Trustee shall preserve, in as current a form as is
------------------
reasonably practicable, the names and addresses of Certificateholders contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as Registrar, if so
acting. The Trustee may destroy any list furnished to it as provided in Section
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.

         Section 8.03.  Reports by Trustee. Within 60 days after May 15 of each
                        ------------------
year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the

                                     -48-
<PAGE>

Certificateholders, as provided in Section 313(c) of the Trust Indenture Act, a
brief report dated as of such May 15, if required by Section 313(a) of the Trust
Indenture Act.

         Section 8.04.  Reports by the Company.  The Company shall:
                        ----------------------

                  (a)   file with the Trustee, within 30 days after the Company
         is required to file the same with the SEC, copies of the annual reports
         and of the information, documents and other reports (or copies of such
         portions of any of the foregoing as the SEC may from time to time by
         rules and regulations prescribe) which the Company is required to file
         with the SEC pursuant to section 13 or section 15(d) of the Securities
         Exchange Act of 1934, as amended; or, if the Company is not required to
         file information, documents or reports pursuant to either of such
         sections, then to file with the Trustee and the SEC, in accordance with
         rules and regulations prescribed by the SEC, such of the supplementary
         and periodic information, documents and reports which may be required
         pursuant to section 13 of the Securities Exchange Act of 1934, as
         amended, in respect of a security listed and registered on a national
         securities exchange as may be prescribed in such rules and regulations;

                  (b)   file with the Trustee and the SEC, in accordance with
         the rules and regulations prescribed by the SEC, such additional
         information, documents and reports with respect to compliance by the
         Company with the conditions and covenants of the Company provided for
         in this Agreement, as may be required by such rules and regulations,
         including, in the case of annual reports, if required by such rules and
         regulations, certificates or opinions of independent public
         accountants;

                  (c)   transmit to all Certificateholders, in the manner and to
         the extent provided in Section 313(c) of the Trust Indenture Act such
         summaries of any information, documents and reports required to be
         filed by the Company pursuant to subsections (a) and (b) of this
         Section 8.04 as may be required by rules and regulations prescribed by
         the SEC; and

                  (d)   furnish to the Trustee, not less often than annually, a
         brief certificate from the principal executive officer, principal
         financial officer or principal accounting officer as to his or her
         knowledge of the Company's compliance with all conditions and covenants
         under this Agreement (it being understood that for purposes of this
         paragraph (d), such compliance shall be determined without regard to
         any period of grace or requirement of notice provided under this
         Agreement).

                                  ARTICLE IX

                            SUPPLEMENTAL AGREEMENTS

         Section 9.01.  Supplemental Agreements Without Consent of
                        ------------------------------------------
Certificateholders. Without the consent of the Certificateholders, the Company
------------------
may and the Trustee (subject to Section 9.03) shall, at any time and from time
to time (and at the sole cost and expense of the Company), enter into

                                     -49-
<PAGE>

one or more agreements supplemental hereto or, if applicable, to the Escrow
Agreement, the Deposit Agreement, the Note Purchase Agreement, the Intercreditor
Agreement or the Liquidity Facility, in form and substance reasonably
satisfactory to the Trustee, for any of the following purposes:

                  (1)   to evidence the succession of another corporation to the
         Company and the assumption by any such successor of the covenants of
         the Company herein contained or in the Note Purchase Agreement;

                  (2)   to add to the covenants of the Company for the benefit
         of the Certificateholders, or to surrender any right or power conferred
         upon the Company in this Agreement, the Intercreditor Agreement or the
         Note Purchase Agreement;

                  (3)   to correct or supplement any provision in this
         Agreement, the Escrow Agreement, the Deposit Agreement, the Note
         Purchase Agreement, the Intercreditor Agreement or the Liquidity
         Facility which may be defective or inconsistent with any other
         provision of this Agreement, the Deposit Agreement, the Escrow
         Agreement, the Note Purchase Agreement, the Intercreditor Agreement or
         any Liquidity Facility, as applicable, or to cure any ambiguity or to
         modify any other provisions with respect to matters or questions
         arising under this Agreement, the Escrow Agreement, the Note Purchase
         Agreement, the Deposit Agreement, the Intercreditor Agreement or the
         Liquidity Facility, provided that any such action shall not materially
                             --------
         adversely affect the interests of the Certificateholders;

                  (4)   as provided in the Intercreditor Agreement, to give
         effect to or provide for a Replacement Liquidity Facility;

                  (5)   to comply with any requirement of the Commission, any
         applicable law, rules or regulations of any exchange or quotation
         system on which the Certificates are listed, or any regulatory body;

                  (6)   to modify, eliminate or add to the provisions of this
         Agreement, the Deposit Agreement, the Escrow Agreement, the
         Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
         Facility to such extent as shall be necessary to qualify or continue
         the qualification of this Agreement under the Trust Indenture Act, or
         any similar federal statute enacted after the execution of this
         Agreement, and to add to this Agreement, the Deposit Agreement, the
         Escrow Agreement, the Intercreditor Agreement, the Note Purchase
         Agreement or the Liquidity Facility such provisions as may be expressly
         permitted by the Trust Indenture Act;

                  (7)   to evidence and provide for the acceptance of
         appointment under this Agreement, the Deposit Agreement, the Escrow
         Agreement, the Intercreditor Agreement, the Note Purchase Agreement or
         the Liquidity Facility by a successor Trustee and to add or change any
         of the provisions of this Agreement, the Deposit Agreement, the Escrow
         Agreement, the Intercreditor Agreement, the Note Purchase Agreement or
         the Liquidity

                                     -50-
<PAGE>

         Facility as shall be necessary to provide for or facilitate the
         administration of the Trust under this Agreement by more than one
         Trustee,

provided that in each case, such modification or supplement does not adversely
affect the status of the Trust as a grantor trust under Subpart E, Part I of
Subchapter J of Chapter 1 of Subtitle A of the Code for U.S. federal income tax
purposes.

         Section 9.02.  Supplemental Agreements with Consent of
                        ---------------------------------------
Certificateholders. With the consent of the Certificateholders holding
------------------
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust, by Act of said Certificateholders delivered
to the Company and the Trustee, the Company may, and the Trustee (subject to
Section 9.03) shall, at the sole cost and expense of the Company, enter into an
agreement or agreements supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Liquidity Facility or the Note Purchase Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the Liquidity
Facility or the Note Purchase Agreement; provided, however, that no such
                                         --------  -------
supplemental agreement shall, without the consent of the Certificateholder of
each Outstanding Certificate affected thereby:

                  (1)   reduce in any manner the amount of, or delay the timing
         of, any receipt by the Trustee (or, with respect to the Deposits, the
         Receiptholders) of payments on the Deposits or the Equipment Notes held
         in the Trust or distributions that are required to be made herein on
         any Certificate, or change any date of payment of any Certificate, or
         change the place of payment where, or the coin or currency in which,
         any Certificate is payable, or impair the right to institute suit for
         the enforcement of any such payment or distribution on or after the
         Regular Distribution Date or Special Distribution Date applicable
         thereto;

                  (2)   permit the disposition of any Equipment Note included in
         the Trust Property except as permitted by this Agreement, or otherwise
         deprive such Certificateholder of the benefit of the ownership of the
         Equipment Notes in the Trust;

                  (3)   alter the priority of distributions specified in the
         Intercreditor Agreement in a manner materially adverse to the interests
         of the Certificateholders;

                  (4)   modify any of the provisions of this Section 9.02 or
         Section 6.05, except to increase any such percentage or to provide that
         certain other provisions of this Agreement cannot be modified or waived
         without the consent of the Certificateholder of each Certificate
         affected thereby; or

                  (5)   modify any of the provisions relating to the rights of
         the Certificateholders in respect of the waiver of Events of Default or
         receipt of payment.

                                     -51-
<PAGE>

                  It shall not be necessary for any Act of Certificateholders
under this Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve the substance
thereof.

         Section 9.03.  Documents Affecting Immunity or Indemnity. If in the
                        -----------------------------------------
opinion of the Trustee any document required to be executed by it pursuant to
the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or
indemnity in favor of the Trustee under this Agreement, the Trustee may in its
discretion decline to execute such document.

         Section 9.04.  Execution of Supplemental Agreements. In executing, or
                        ------------------------------------
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.

         Section 9.05.  Effect of Supplemental Agreements. Upon the execution of
                        ---------------------------------
any agreement supplemental to this Agreement under this Article, this Agreement
shall be modified in accordance therewith, and such supplemental agreement shall
form a part of this Agreement for all purposes; and every Certificateholder
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.

         Section 9.06.  Conformity with Trust Indenture Act. Every supplemental
                        -----------------------------------
agreement executed pursuant to this Article shall conform to the requirements of
the Trust Indenture Act as then in effect.

         Section 9.07.  Reference in Certificates to Supplemental Agreements.
                        ----------------------------------------------------
Certificates authenticated and delivered after the execution of any supplemental
agreement pursuant to this Article may bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental agreement; and, in
such case, suitable notation may be made upon Outstanding Certificates after
proper presentation and demand.

                                   ARTICLE X

               AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS

         Section 10.01. Amendments and Supplement to Indentures and Other Note
                        ------------------------------------------------------
Documents. In the event that the Trustee, as holder (or beneficial owner through
---------
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice. The
Trustee shall request from the Certificateholders a Direction as to (a) whether
or not to take or refrain from taking (or to direct the Subordination Agent

                                     -52-
<PAGE>

to take or refrain from taking) any action which a holder of such Equipment Note
or the Controlling Party has the option to direct, (b) whether or not to give or
execute (or to direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of such Equipment
Note or as Controlling Party and (c) how to vote or direct the Subordination
Agent to vote any Equipment Note if a vote has been called for with respect
thereto. Provided such a request for Certificateholder Direction shall have been
made, in directing any action or casting any vote or giving any consent as the
holder of any Equipment Note (or in directing the Subordination Agent in any of
the foregoing), (i) other than as Controlling Party, the Trustee shall vote for
or give consent to any such action with respect to such Equipment Note in the
same proportion as that of (x) the aggregate face amount of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the Trust and (ii) as the Controlling Party, the
Trustee shall vote as directed in such Certificateholder direction by the
Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest in the Trust. For purposes of the immediately
preceding sentence, a Certificate shall have been "actually voted" if the Holder
of such Certificate has delivered to the Trustee an instrument evidencing such
Holder's consent to such Direction prior to two Business Days before the Trustee
directs such action or casts such vote or gives such consent. Notwithstanding
the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the
Trustee may, in its own discretion and at its own direction, consent and notify
the relevant Loan Trustee of such consent (or direct the Subordination Agent to
consent and notify the relevant Loan Trustee of such consent) to any amendment,
modification, waiver or supplement under the relevant Indenture or any other
Note Document or other related document, if an Event of Default hereunder shall
have occurred and be continuing, or if such amendment, modification or waiver
will not materially adversely affect the interests of the Certificateholders.

                                  ARTICLE XI

                             TERMINATION OF TRUST

         Section 11.01. Termination of the Trust. The respective obligations and
                        ------------------------
responsibilities of the Company and the Trustee with respect to the Trust shall
terminate upon the distribution to all Certificateholders and the Trustee of all
amounts required to be distributed to them pursuant to this Agreement and the
disposition of all property held as part of the Trust Property; provided,
                                                                --------
however, that in no event shall the Trust continue beyond one hundred ten (110)
-------
years following the date of the execution of this Agreement.

                  In connection with the occurrence of the event set forth in
the paragraph above, notice of any termination, specifying the Regular
Distribution Date (or Special Distribution Date, as the case may be) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be mailed promptly,
upon notice to the Trustee, by the Trustee to Certificateholders not earlier
than the 60th day and not later than the 20th day next preceding such final
distribution specifying (A) the Regular Distribution Date (or Special
Distribution Date, as the case may be) upon which the proposed final payment of
the Certificates will

                                     -53-
<PAGE>

be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (C) that the Record Date otherwise applicable to such Regular
Distribution Date (or Special Distribution Date, as the case may be) is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Registrar at the time such notice is given
to Certificateholders. Upon presentation and surrender of the Certificates in
accordance with such notice, the Trustee shall cause to be distributed to
Certificateholders such final distribution pursuant to Section 4.02.

                  In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. No additional interest shall accrue on the Certificates after the
Regular Distribution Date (or Special Distribution Date, as the case may be)
specified in the first written notice. In the event that any money held by the
Trustee for the payment of distributions on the Certificates shall remain
unclaimed for two years (or such lesser time as the Trustee shall be satisfied,
after sixty days' notice from the Company, is one month prior to the escheat
period provided under applicable law) after the final distribution date with
respect thereto, the Trustee shall pay to each Loan Trustee the appropriate
amount of money relating to such Loan Trustee and shall give written notice
thereof to the related Owner Trustees, the Owner Participants and the Company.

                                  ARTICLE XII

                           MISCELLANEOUS PROVISIONS

         Section 12.01. Limitation on Rights of Certificateholders. The death or
                        ------------------------------------------
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties
hereto or any of them.

         Section 12.02. Certificates Nonassessable and Fully Paid. Except as set
                        -----------------------------------------
forth in the last sentence of this Section 12.02, Certificateholders shall not
be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders

                                     -54-
<PAGE>

owned Trust Property as co-owners, or incurred any obligations of the Trust,
directly rather than through the Trust.

         Section 12.03. Notices. (a) Unless otherwise specifically provided
                        -------
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier service or telecopy, and any such notice shall be effective
when delivered or received or, if mailed, three days after deposit in the United
States mail with proper postage for ordinary mail prepaid,

                  if to the Company, to:

                        Midway Airlines Corporation
                        2801 Slater Road, Suite 200
                        Morrisville, North Carolina 27560
                        Attention:  General Counsel
                        Facsimile:   (919) 595-1705
                        Telephone:   (919) 595-6009

                  if to the Trustee, to:

                        Allfirst Bank
                        25 South Charles Street
                        Mail Code 101-591
                        Baltimore, Maryland  21201
                        Attention:  Corporate Trust Department
                        Facsimile:  (410) 244-4236
                        Telephone:  (410) 244-4626

                  (b)   The Company or the Trustee, by notice to the other, may
designate additional or different addresses for subsequent notices or
communications.

                  (c)   Any notice or communication to Certificateholders shall
be mailed by first-class mail to the addresses for Certificateholders shown on
the Register kept by the Registrar. Failure so to mail a notice or communication
or any defect in such notice or communication shall not affect its sufficiency
with respect to other Certificateholders.

                  (d)   If a notice or communication is mailed in the manner
provided above within the time prescribed, it is conclusively presumed to have
been duly given, whether or not the addressee receives it.

                  (e)   If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.

                                     -55-
<PAGE>

                  (f)   Notwithstanding the foregoing, all communications or
notices to the Trustee shall be deemed to be given only when received by a
Responsible Officer of the Trustee.

                  (g)   The Trustee shall promptly furnish the Company with a
copy of any demand, notice or written communication received by the Trustee
hereunder from any Certificateholder, Owner Trustee or Loan Trustee.

         Section 12.04. Governing Law.  THIS AGREEMENT AND THE CERTIFICATES
                        -------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

         Section 12.05. Severability of Provisions. If any one or more of the
                        --------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the Trust, or of the
Certificates or the rights of the Certificateholders thereof.

         Section 12.06. Effect of Headings and Table of Contents. The Article
                        ----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.

         Section 12.07. Successors and Assigns. All covenants, agreements,
                        ----------------------
representations and warranties in this Agreement by the Trustee and the Company
shall bind and, to the extent permitted hereby, shall inure to the benefit of
and be enforceable by their respective successors and assigns, whether so
expressed or not.

         Section 12.08. Benefits of Agreement. Nothing in this Agreement or in
                        ---------------------
the Certificates, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Certificateholders, any
benefit or any legal or equitable right, remedy or claim under this Agreement.

         Section 12.09. Legal Holidays. In any case where any Regular
                        --------------
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, then (notwithstanding any other provision of this
Agreement) payment need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on such
Regular Distribution Date or Special Distribution Date, and no interest shall
accrue during the intervening period.

         Section 12.10. Counterparts. For the purpose of facilitating the
                        ------------
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

                                     -56-
<PAGE>

         Section 12.11. Communication by Certificateholders with Other
                        ----------------------------------------------
Certificateholders. Certificateholders may communicate with other
------------------
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to Section 312(b) of the Trust Indenture Act. The Company,
the Trustee and any and all other persons benefitted by this Agreement shall
have the protection afforded by Section 312(c) of the Trust Indenture Act.

         Section 12.12. Intention of Parties. The parties hereto intend that the
                        --------------------
Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.

         Section 12.13. Trust Indenture Act Controls. Upon the qualification of
                        ----------------------------
this Agreement under the Trust Indenture Act, this Agreement shall be subject to
the provisions of the Trust Indenture Act and shall, to the extent applicable,
be governed by such provisions. If any provision of this Agreement limits,
qualifies or conflicts with another provision which is required to be included
in this Agreement by the Trust Indenture Act, the required provision shall
control.

           [The remainder of this page is intentionally left blank]

                                     -57-
<PAGE>

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

                               MIDWAY AIRLINES CORPORATION

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

                               ALLFIRST BANK, as Trustee

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

                                     -58-
<PAGE>

                                                                       Exhibit A

                              FORM OF CERTIFICATE

REGISTERED

No. ______________

         [THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
         OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
         LAWS, AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
         STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSONS EXCEPT AS
         SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
         HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
         (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
         INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
         (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
         ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
         THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
         REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT,
         PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
         CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
         SUCCESSOR PROVISION) RESELL OR OTHERWISE TRANSFER THIS CERTIFICATE
         EXCEPT (A) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
         144A UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
         INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR MORE AGGREGATE
         PRINCIPAL AMOUNT OF SUCH CERTIFICATE, THAT, PRIOR TO SUCH TRANSFER,
         FURNISHES TO THE TRUSTEE AND MIDWAY AIRLINES CORPORATION ("MIDWAY") A
         SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
         RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM
         OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE OR MIDWAY), (C)
         OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
         RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
         REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
         AVAILABLE), (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
         DECLARED EFFECTIVE UNDER THE SECURITIES ACT

                                      A-1
<PAGE>

         (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER) OR
         (F) TO MIDWAY OR ANY SUBSIDIARY THEREOF; (3) PRIOR TO SUCH TRANSFER
         (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), IT WILL FURNISH
         TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
         AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
         BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
         SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (4)
         AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS
         TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
         CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE PRIOR TO THE
         EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
         CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
         SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
         FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
         SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS
         AN INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A
         U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
         TRUSTEE AND MIDWAY, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
         INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
         SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
         TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
         SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE
         TRANSFER OF THE CERTIFICATES PURSUANT TO CLAUSE 2(E) ABOVE OR UPON ANY
         TRANSFER OF THE CERTIFICATES UNDER RULE 144(K) UNDER THE SECURITIES ACT
         (OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "OFFSHORE
         TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
         TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH
         TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
         REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
         RESTRICTIONS.]*

         BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
         MIDWAY AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS
         NOT A PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT)
         OR (B) ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE

_______________

*   Not to be included on the face of the Permanent Offshore Global Certificate.

                                      A-2
<PAGE>

         EXEMPTIONS APPLIES SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND
         HOLD THIS PASS THROUGH CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT
         PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE. THE
         PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE
         TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
         THE FOREGOING RESTRICTIONS.

         [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
         OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
         TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
         AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE IS
         REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
         REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
         HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
         AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
         HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
         AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
         WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
         SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
         CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
         RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH
         TRUST AGREEMENT REFERRED TO HEREIN.]*

______________
*   To be included on the face of each Global Certificate.

                                      A-3
<PAGE>

                             [GLOBAL CERTIFICATE]*

                  MIDWAY AIRLINES 2000-1C PASS THROUGH TRUST

      11.19% Midway Airlines [Initial/Exchange] Pass Through Certificate
                                Series 2000-1C

                Final Expected Distribution Date: April 1, 2006

evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.

                 $______Initial Fractional Undivided Interest
            representing._____% of the Trust per $1,000 face amount

          THIS CERTIFIES THAT _____________, for value received, is the
registered owner of a $_______ (__________ dollars) Fractional Undivided
Interest in Midway Airlines 2000-1C Pass Through Trust (the "Trust") created
                                                             -----
pursuant to a Pass Through Trust Agreement, dated as of September 27, 2000 (the
"Agreement"), between Allfirst Bank (the "Trustee") and Midway Airlines
 ---------                                -------
Corporation, a corporation incorporated under Delaware law (the "Company"), a
                                                                 -------
summary of certain of the pertinent provisions of which is set forth below. The
initial Fractional Undivided Interest evidenced hereby may be decreased or
increased from time to time in accordance with the terms of the Agreement, as
evidenced in the records of the Trustee. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
the Agreement. This Certificate is one of the duly authorized Certificates
designated as "11.19% Midway Airlines [Initial/Exchange] Pass Through
Certificates Series 2000-1C" (herein called the "Certificates"). This
                                                 ------------
Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement. By virtue of its acceptance hereof the
Certificateholder of this Certificate assents to and agrees to be bound by the
provisions of the Agreement and the Intercreditor Agreement. The property of the
Trust includes certain Equipment Notes and all rights of the Trust to receive
payments under the Intercreditor Agreement and the Liquidity Facility (the
"Trust Property"). Each issue of the Equipment Notes is secured by, among other
 --------------
things, a security interest in the Aircraft leased to or owned by the Company.

          The Certificates represent fractional undivided interests in the Trust
and the Trust Property, and have no rights, benefits or interest in respect of
any assets or property other than the Trust Property.

          Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee, there will be distributed

__________________
* To be included on the face of each Global Certificate.

                                      A-4
<PAGE>

on each April 1 and October 1 (a "Regular Distribution Date"), commencing on
                                  -------------------------
April 1, 2001, to the Person in whose name this Certificate is registered at the
close of business on the 15th day preceding the Regular Distribution Date, an
amount in respect of the Scheduled Payments on the Equipment Notes due on such
Regular Distribution Date, the receipt of which has been confirmed by the
Trustee, equal to the product of the percentage interest in the Trust evidenced
by this Certificate and an amount equal to the sum of such Scheduled Payments.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, in the event that Special Payments on the Equipment
Notes are received by the Trustee, from funds then available to the Trustee,
there shall be distributed on the applicable Special Distribution Date, to the
Person in whose name this Certificate is registered at the close of business on
the 15th day preceding the Special Distribution Date, an amount in respect of
such Special Payments on the Equipment Notes, the receipt of which has been
confirmed by the Trustee, equal to the product of the percentage interest in the
Trust evidenced by this Certificate and an amount equal to the sum of such
Special Payments so received. If a Regular Distribution Date or Special
Distribution Date is not a Business Day, distribution shall be made on the
immediately following Business Day with the same force and effect as if made on
such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.

          Except as otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Certificate will be made after notice
mailed by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency of the
Trustee specified in such notice.

          THE AGREEMENT AND, UNTIL THE TRANSFER, THIS CERTIFICATE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

          Reference is hereby made to the further provisions of this Certificate
set forth in the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

          Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.

          [The Certificateholder of this Certificate is entitled to the benefits
of the Registration Rights Agreement, dated as of September 27, 2000, among the
Company, the Trustee and the Placement Agents named therein (the "Registration
Rights Agreement"). In the event that neither the consummation of the Exchange
Offer nor the declaration by the Commission of a Shelf Registration to be
effective (a "Registration Event") occurs on or prior to the 210/th/ day after
the date of the issuance of the Certificates, the interest rate per annum borne
by the Equipment Notes shall be increased by 0.50%, from and including such
210/th/ day, to but excluding the date on which a

                                      A-5
<PAGE>

Registration Event occurs. In the event that the Shelf Registration Statement
ceases to be effective at any time during the period specified by the
Registration Rights Agreement for more than 60 days, whether or not consecutive,
during any 12-month period, the interest rate per annum borne by the Equipment
Notes shall be increased by 0.50% from the 61/st/ day of the applicable 12-month
period such Shelf Registration Statement ceases to be effective until such time
as the Shelf Registration Statement again becomes effective.]*

          IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.

Dated:  _________ __, 2000                   MIDWAY AIRLINES
                                             2000-1C PASS THROUGH TRUST

                                             By:  Allfirst Bank, as Trustee

                                             By:  ___________________________
                                                  Name:
                                                  Title:

________________
* To be included only on each Initial Certificate.

                                      A-6
<PAGE>

             [FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

                  This is one of the Certificates referred to
                      in the within-mentioned Agreement.

                                             Allfirst Bank,
                                              as Trustee

                                             By: ____________________
                                                 Authorized Officer

                                      A-7
<PAGE>

                           [REVERSE OF CERTIFICATE]

          The Certificates do not represent a direct obligation of, or an
obligation guaranteed by, or an interest in, the Company or the Trustee or any
of their affiliates. The Certificates are limited in right or payment, all as
more specifically set forth on the face hereof and in the Agreement. All
payments or distributions made to Certificateholders under the Agreement shall
be made only from the Trust Property and only to the extent that the Trustee
shall have sufficient income or proceeds from the Trust Property to make such
payments in accordance with the terms of the Agreement. Each Certificateholder
of this Certificate, by its acceptance hereof, agrees that it will look solely
to the income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.

          The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.

          As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Registrar, or
by any successor Registrar, in the Borough of Manhattan, the City of New York,
duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Registrar duly executed by the
Certificateholder hereof or such Certificateholder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate Fractional Undivided Interest in the Trust will be
issued to the designated transferee or transferees.

          The Certificates are issuable only as registered Certificates without
coupons in minimum denominations of $100,000 Fractional Undivided Interest and
integral multiples of $1,000 in excess thereof. As provided in the Agreement and
subject to certain limitations therein set forth, the Certificates are
exchangeable for new Certificates of authorized denominations evidencing the

                                      A-8
<PAGE>

same aggregate Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.

          No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment by the Holder of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.

          The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.

          The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.

                                      A-9
<PAGE>

                            FORM OF TRANSFER NOTICE

          FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto

Insert Taxpayer Identification No.
---------------------------------

________________________
________________________
please print or typewrite name and address including zip code of assignee

________________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing

________________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.

                    [THE FOLLOWING PROVISION TO BE INCLUDED
                              ON ALL CERTIFICATES
                     EXCEPT PERMANENT OFFSHORE GLOBAL AND
                        OFFSHORE PHYSICAL CERTIFICATES]

          In connection with any transfer of this Certificate occurring prior to
the date that is the earlier of (i) the date of Registration Event or (ii) the
end of the period referred to in Rule 144(k) of the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:

                                  [Check One]
                                   ---------

[ ] (a)   this Certificate is being transferred in compliance with the exemption
          from registration under the Securities Act of 1933, as amended,
          provided by Rule 144A thereunder.

                                      or
                                      --

[ ] (b)   this Certificate is being transferred other than in accordance with
          (a) above and documents are being furnished that comply with the
          conditions of transfer set forth in this Certificate and the
          Agreement.

                                     A-10
<PAGE>

If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.

Date: ___________________                  [Name of Transferor]
                                           -------------------------------

                                           NOTE: The signature must correspond
                                           with the name as written upon the
                                           face of the within- mentioned
                                           instrument in every particular,
                                           without alteration or any change
                                           whatsoever.

Signature Guarantee:_____________________
_________________________

TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.

          The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

Dated:____________________                 _______________________________
                                           NOTE: To be executed by an executive
                                           officer.

                                     A-11
<PAGE>

                                                                       Exhibit B

                FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES

                                                                [Date]

[Name and address of Trustee]

Attention:  Corporate Trust Department

         Re:   Midway Airlines 2000-1C Pass Through Trust (the "Trust"),
                                                                -----
               11.19% Midway Airlines Pass Through Certificates Series
               2000-1C (the "Certificates")
               --------------------------------------------------------

Dear Sirs:

               This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
                                                            --------
Certificate") which bears a legend outlining restrictions upon transfer of such
-----------
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of September 27, 2000 (the
"Trust Agreement"), between Midway Airlines Corporation ("Midway") and you, we
 ---------------                                          ------
hereby certify that we are (or we will hold such securities on behalf of) a
person outside the United States to whom the Certificates could be transferred
in accordance with Rule 904 of Regulation S promulgated under the U.S.
Securities Act of 1933, as amended. Accordingly, you are hereby requested to
exchange the legended certificate for an unlegended certificate representing an
identical principal amount of Certificates, all in the manner provided for in
the Trust Agreement.

               You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.

                                                    Very truly yours,

                                                    [Name of Certificateholder]

                                                    By: ____________________
                                                        Authorized Signature

                                      B-1
<PAGE>

                                                                       Exhibit C

               FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
                    WITH TRANSFERS PURSUANT TO REGULATION S

                                                                          [date]

[Name and address of Trustee]

Attention:  Corporate Trust Department

     Re:  Midway Airlines 2000-1C Pass Through Trust (the "Trust"),
                                                           -----
          11.19% Midway Airlines Pass Through Certificates Series
          2000-1C (the "Certificates")
          -------------------------------------------------------

Sirs:

In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:

          (1)  the offer of the Certificates was not made to a person in the
     United States;

          (2)  either (a) at the time the buy order was originated, the
     transferee was outside the United States or we and any person acting on our
     behalf reasonably believed that the transferee was outside the United
     States or (b) the transaction was executed in, on or through the facilities
     of a designated off-shore securities market and neither we nor any person
     acting on our behalf knows that the transaction has been pre-arranged with
     a buyer in the United States;

          (3)  no directed selling efforts have been made in the United States
     in contravention of the requirements of Rule 903(b) or Rule 904(b) of
     Regulation S, as applicable; and

          (4)  the transaction is not part of a plan or scheme to evade the
     registration requirements of the Securities Act.

                                      C-1
<PAGE>

          In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.

          You, Midway Airlines Corporation are entitled to rely upon this letter
and are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.

                                             Very truly yours,

                                             [Name of Transferor]

                                             By: _______________________
                                                 Authorized Signature

                                      C-2
<PAGE>

                                                                       Exhibit D

                           FORM OF CERTIFICATE TO BE
                         DELIVERED IN CONNECTION WITH
                   TRANSFERS TO NON-QIB ACCREDITED INVESTORS
                   -----------------------------------------
                                                                          [date]

[Name and address of Trustee]

Attention:  Corporate Trust Department

     Re:  Midway Airlines 2000-1C Pass Through Trust (the "Trust"),
                                                           -----
          11.19% Midway Airlines Pass Through Certificates Series
          2000-1C (the "Certificates")
          -------------------------------------------------------

Dear Sirs:

     In connection with our proposed purchase of $_______________ aggregate
principal amount of the Certificates, we confirm that:

     1.   We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass Through
Trust Agreement, dated as of September 27, 2000, between Midway Airlines
Corporation (the "Company") and Allfirst Bank (the "Trustee") relating to the
Certificates, and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Certificates except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").

     2.   We are purchasing Certificates having an aggregate principal amount of
not less than $100,000 and each account (if any) for which we are purchasing
Certificates is purchasing Certificates having an aggregate principal amount of
not less than $100,000.

     3.   We understand that the Certificates have not been registered under the
Securities Act, that the Certificates are being sold to us in a transaction that
is exempt from the registration requirements of the Securities Act and that the
Certificates may not be offered or resold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that, if we should sell any Certificates
within the applicable time period referred to in Rule 144(k) of the Securities
Act, we will do so only (A) to the Company or a subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) inside the United States to an Institutional
Accredited Investor (as defined below) acquiring $100,000 or more aggregate
principal amount of such

                                      D-1
<PAGE>

Certificate that, prior to such transfer, furnishes to the Trustee and the
Company a signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Certificates (the form of which
letter can be obtained from the Trustee or the Company), (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act or (F) pursuant to a registration statement which has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer), and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such purchaser that
resales of the Certificates are restricted as stated herein. We further
understand that the Certificates purchased by us will bear a legend to the
foregoing effect.

     4.   We understand that, on any proposed resale of any Certificates, we
will be required to furnish to the Company and to the Trustee such
certifications, legal opinions and other information as the Company and the
Trustee may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Certificates
purchased by us will bear a legend to the foregoing effect.

     5.   We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
("Institutional Accredited Investor") and have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of our investment in the Certificates, and we and any accounts for which
we are acting are each able to bear the economic risk of our or their
investments.

     6.   We are acquiring the Certificates purchased by us for our own account
or for one or more accounts (each of which is an Institutional Accredited
Investor) as to each of which we exercise sole investment discretion.

     7.   We represent that (1) no ERISA Plan assets have been used to purchase
the Certificates or (2) one or more prohibited transaction statutory or
administrative exemptions applies such that the use of such plan assets to
purchase and hold the Certificates will not constitute a non- exempt prohibited
transaction under ERISA or section 4975 of the Code.

     You are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

                                       Very truly yours,

                                       [Name of Transferor]

                                       By:  ___________________________
                                            Authorized Signature

                                      D-2<PAGE>

                                                                    Exhibit 10.1

                          MIDWAY AIRLINES CORPORATION
                              PLACEMENT AGREEMENT

                                              September 22, 2000

Morgan Stanley & Co. Incorporated
Seabury Securities LLC
 c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York  10036-8293

Dear Sirs and Mesdames:

          Midway Airlines Corporation, a Delaware corporation (the "Company"),
in connection with the financing of eight (8) new Boeing model 737-700 aircraft,
proposes that Allfirst Bank, as trustee (the "Trustee") under each of the Trusts
(as hereinafter defined), issue and sell to the placement agents named in
Schedule II hereto its Pass Through Certificates, Series 2000-1 in the aggregate
principal amounts and with the interest rates and final distribution dates set
forth on Schedule I hereto (the "Certificates") on the terms and conditions
stated herein.  As used herein, unless the context otherwise requires, the term
"Placement Agents" shall mean the firms named as Placement Agents in Schedule II
hereto, and the term "you" shall mean Morgan Stanley & Co. Incorporated ("Morgan
Stanley").

          The Certificates will be issued pursuant to three separate pass
through trust agreements each to be dated as of the Closing Date (as defined in
Section 3 hereof below) between the Company and the Trustee (collectively, the
"Pass Through Trust Agreements").  The Pass Through Trust Agreements are related
to the creation and administration of Midway Airlines Corporation Pass Through
Trust Series 2000-1A (the "Class A Trust"), Midway Airlines Corporation Pass
Through Trust Series 2000-1B (the "Class B Trust") and Midway Airlines
Corporation Pass Through Trust Series 2000-1C (the "Class C Trust"; and together
with the Class A Trust and the Class B Trust, the "Trusts").

          The cash proceeds of the offering of Certificates by each Trust will
be paid to First Union Trust Company, National Association, as escrow agent (the
"Escrow Agent"), under an Escrow and Paying Agent Agreement among the Escrow
Agent, the Placement Agents, the Trustee of such Trust and Allfirst Bank, as
paying agent (the "Paying Agent"), for the benefit of the holders of
Certificates issued by such Trust (each, an "Escrow Agreement").  The Escrow
Agent will deposit such cash proceeds (each, a "Deposit") with Allfirst Bank
(the "Depositary"), in accordance with a Deposit Agreement relating to such
Trust (each, a "Deposit Agreement"), and will withdraw Deposits upon request to
allow the Trustee to purchase Equipment Notes (as defined in the Note Purchase
Agreement referred to herein) from time to time pursuant to a Note Purchase
Agreement to be dated as of the Closing Date (the "Note Purchase Agreement")
among the Company, Allfirst Bank, as Trustee of each of the Trusts, as
Subordination Agent (as hereinafter defined) and as Paying Agent, and the Escrow
Agent.  Each Escrow Agent will issue receipts to be attached to each related
Certificate ("Escrow Receipts") representing each holder's fractional undivided
interest in amounts deposited with such Escrow Agent and will pay to such
<PAGE>

holders through the related Paying Agent interest accrued on the Deposits and
received by such Paying Agent pursuant to the related Deposit Agreement at a
rate per annum equal to the interest rate applicable to the corresponding
Certificates.

          Certain amounts of interest payable on the Certificates to be issued
by the Class A Trust, the Class B Trust and the Class C Trust will be entitled
to the benefits of a separate liquidity facility for each such Trust.  Morgan
Stanley Capital Services Inc. (the "Liquidity Provider"), will enter into three
separate revolving credit agreements (each, a "Liquidity Facility") to be dated
as of the Closing Date for the benefit of the holders of the Certificates issued
by the Class A Trust, the Class B Trust and the Class C Trust, respectively.
The Liquidity Provider and the holders of the Certificates will be entitled to
the benefits of an Intercreditor Agreement to be dated as of the Closing Date
(the "Intercreditor Agreement") among the Trusts, Allfirst Bank as Trustee and
as Subordination Agent (the "Subordination Agent"), and the Liquidity Provider.

          The Certificates will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom.

          The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement (the "Registration
Rights Agreement"), to be dated the Closing Date and to be substantially in the
form attached hereto as Exhibit A, pursuant to which the Company will file a
registration statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") registering the Exchange Certificates
referred to in such Registration Rights Agreement (the "Exchange Certificates")
or the Certificates under the Securities Act.

          In connection with the sale of the Certificates, the Company has
prepared a preliminary offering memorandum (such preliminary offering
memorandum, including the documents incorporated by reference therein, the
"Preliminary Memorandum") and will prepare a final offering memorandum (such
final offering memorandum, including the documents incorporated by reference
therein, the "Final Memorandum" and, with the Preliminary Memorandum, each a
"Memorandum") setting forth or including a description of the terms of the
Certificates, the terms of the offering and a description of the Company and its
business.  The terms "supplement," "amendment" and "amend" as used herein with
respect to a Memorandum shall include all documents deemed to be incorporated by
reference in the Preliminary Memorandum or Final Memorandum that are filed
subsequent to the date of such Memorandum with the Commission pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act").  The Company
hereby confirms that it has authorized the use of both of the Memoranda in
connection with the offer and resale of the Certificates by the Placement
Agents.

          Capitalized terms not otherwise defined in this Agreement shall have
the meanings specified therefor in the Pass Through Trust Agreements or in the
Note Purchase Agreement or Intercreditor Agreement referred to in the Pass
Through Trust Agreements; provided that, as used in this Agreement, the term
                          --------
"Operative Documents" shall mean this Agreement, the Indentures, the Leases, the
Note Purchase Agreement, the Participation Agreements, the Pass Through Trust
Agreements, the Deposit Agreements, the Escrow

                                       2
<PAGE>

Agreements, the Intercreditor Agreement, the Liquidity Facilities and the
Registration Rights Agreement.

          1.  Representations and Warranties.  The Company represents and
              ------------------------------
warrants to, and agrees with, you that as of the date hereof:

          (a) (i) The Preliminary Memorandum does not contain and the Final
          Memorandum, in the form used by the Placement Agents to confirm sales
          and on the Closing Date, will not contain any untrue statement of a
          material fact or omit to state a material fact necessary to make the
          statements therein, in the light of the circumstances under which they
          were made, not misleading.  The preceding sentence does not apply to
          statements in or omissions from either Memorandum based upon written
          information relating to any Placement Agent furnished to the Company
          by such Placement Agent through Morgan Stanley expressly for use
          therein ("Placement Agent Information"); and (ii) each document filed
          or to be filed pursuant to the Exchange Act and incorporated by
          reference in either Memorandum complied or will comply when so filed
          in all material respects with the requirements of the Exchange Act and
          the applicable rules and regulations thereunder.

          (b) The Company has been duly incorporated, is validly existing as a
          corporation in good standing under the laws of the jurisdiction of its
          incorporation, has the corporate power and authority to own its
          property and to conduct its business as described in each Memorandum
          and to perform its obligations under this Agreement and the Operative
          Documents to which it is, or is to be, a party; and the Company is
          duly qualified to transact business and is in good standing in each
          jurisdiction in which the conduct of its business or its ownership or
          leasing of property requires such qualification, except to the extent
          that the failure to be so qualified or be in good standing would not
          have a material adverse effect on the Company (a "Material Adverse
          Effect").

          (c) The Company has no subsidiaries.

          (d) This Agreement has been duly authorized, executed and delivered by
          the Company.  The Operative Documents to which the Company will be a
          party will be duly executed and delivered by the Company on or prior
          to the Closing Date or the applicable Funding Date.

          (e) On or prior to the Closing Date, the issuance of the Certificates
          will be duly authorized by the Trustee.  When executed, authenticated,
          issued and delivered in the manner provided for in the related Pass
          Through Trust Agreement and sold and paid for as provided in this
          Agreement, each of the Certificates will be valid and binding
          obligations of the Trust entitled to the benefits of the related Pass
          Through Trust Agreement, enforceable against the Trust in accordance
          with its terms, except as limited by bankruptcy, insolvency,
          fraudulent conveyance, reorganization, moratorium and other similar
          laws relating to or affecting creditors' rights generally and general
          equitable principles (whether considered in

                                       3
<PAGE>

          a proceeding in equity or at law). When executed, authenticated,
          issued and delivered in the manner provided for in the Escrow
          Agreements, the Escrow Receipts will be legally and validly issued and
          will be entitled to the benefits of the related Escrow Agreements.

          (f) The Operative Documents to which the Company is, or is to be, a
          party, have each been duly authorized by the Company, are or will be
          substantially in the form heretofore supplied to you and, when duly
          executed and delivered by Company, will constitute valid and binding
          obligations of the Company, except (i) as limited by bankruptcy,
          insolvency, fraudulent conveyance, reorganization, moratorium and
          other similar laws relating to or affecting creditors' rights
          generally and general equitable principles (whether considered in a
          proceeding in equity or at law) and (ii) in the case of each Lease, as
          limited by applicable laws which may affect the remedies provided in
          such Lease, which laws, however, do not make the remedies provided in
          such Lease inadequate for the practical realization of the rights and
          benefits provided thereby.  On each Funding Date, the related Leases
          and the other Operative Documents to which the Company is, or is to
          be, a party will constitute the valid and binding obligations of the
          Company, except (i) as limited by bankruptcy, insolvency, fraudulent
          conveyance, reorganization, moratorium and other similar laws relating
          to or affecting creditors' rights generally and general equitable
          principles (whether considered in a proceeding in equity or at law)
          and (ii) in the case of each Lease, as limited by applicable laws
          which may affect the remedies provided in such Lease, which laws,
          however, do not make the remedies provided in such Lease inadequate
          for the practical realization of the rights and benefits provided
          thereby.  The Certificates, the Equipment Notes, the Indentures, the
          Leases and the other Operative Documents to which the Company is, or
          is to be, a party will conform in all material respects to the
          descriptions thereof in the Final Memorandum.

          (g) The execution and delivery by the Company of this Agreement and
          the Operative Documents to which the Company is, or is to be, a party,
          the consummation by the Company of the transactions contemplated in
          this Agreement and such Operative Documents, and compliance by the
          Company with the terms of this Agreement and such Operative Documents
          will not contravene (i) any provision of applicable law or the
          certificate of incorporation or by-laws of the Company, (ii) any
          agreement or other instrument binding upon the Company or (iii) any
          judgment, order or decree of any governmental body, agency or court
          having jurisdiction over the Company other than, in the case of
          clauses (ii) and (iii) above, such contraventions that would not
          individually or in the aggregate have a Material Adverse Effect, and
          no consent, approval, authorization or order of, or qualification
          with, any governmental body or agency is required for the valid
          authorization, execution, delivery and performance by the Company of
          this Agreement and the Operative Documents to which the Company is, or
          is to be, a party, or the consummation by the Company of the
          transactions contemplated by this Agreement and such Operative
          Documents, except (x) such as may be required by the securities or
          Blue Sky laws of the various states in connection with the offer and
          sale of the Certificates and the Equipment Notes, (y) such as

                                       4
<PAGE>

          may be required under the Securities Act, the Trust Indenture Act or
          rules of the National Association of Securities Dealers in connection
          with the registration of the Certificates or the Exchange Certificates
          under the Securities Act pursuant to the Registration Rights Agreement
          and (z) filings or recordings with the Federal Aviation Administration
          (the "FAA") and under the Uniform Commercial Code as in effect in
          North Carolina and Delaware, which filings or recordings referred to
          in this clause (z) shall have been made or obtained in connection with
          the purchase of Equipment Notes relating to each Aircraft on or prior
          to the Funding Date for such Aircraft.

          (h) There has not occurred any material adverse change, or any
          development involving a prospective material adverse change, in the
          condition, financial or otherwise, or in the earnings, business or
          operations of the Company from that set forth in the Preliminary
          Memorandum.

          (i) There are no legal or governmental proceedings pending or, to the
          knowledge of the Company, threatened to which the Company is a party
          or to which any of the properties of the Company is subject other than
          proceedings accurately described in all material respects in each
          Memorandum and proceedings that would not have a Material Adverse
          Effect or adversely affect the power or ability of the Company to
          perform its obligations under this Agreement or any of the Operative
          Documents, to which it is, or is to be, a party, or to consummate the
          transactions contemplated by the Final Memorandum.

          (j) The Company has all necessary consents, authorizations, approvals,
          orders, certificates and permits of and from, and has made all
          declarations and filings with, all federal, state, local and other
          governmental authorities, all self-regulatory organizations and all
          courts and other tribunals, to own, lease, license and use its
          properties and assets and to conduct its business in the manner
          described in the Final Memorandum, except to the extent that the
          failure to obtain such consents, authorizations, approvals, orders,
          certificates and permits or make such declarations and filings would
          not have a Material Adverse Effect on the Company.  The Company has
          not received any notice of proceedings relating to the revocation or
          modification of any such consent, authorization, approval, order,
          certificate or permit which, singly or in the aggregate, if the
          subject of an unfavorable decision, ruling or finding, would result in
          a material adverse change in the condition, financial or otherwise, or
          in the earnings, business or operations of the Company, except as
          described in or contemplated by the Final Memorandum.

          (k) Neither the Company nor any of the Trusts is an "investment
          company" within the meaning of the Investment Company Act of 1940, as
          amended (the "Investment Company Act"), in each case required to
          register under the Investment Company Act; and after giving effect to
          the offering and sale of the Certificates and the application of the
          proceeds thereof as described in the Final Memorandum, none of the
          Trusts will be an "investment company" as defined in the Investment
          Company Act, nor will the escrow arrangements contemplated by

                                       5
<PAGE>

          the Escrow Agreement result in the creation of, an "investment
          company" as defined in the Investment Company Act, in each case
          required to register under the Investment Company Act.

          (l) The Company (i) is in compliance with any and all applicable
          foreign, federal, state and local laws and regulations relating to the
          protection of human health and safety, the environment or hazardous or
          toxic substances or wastes, pollutants or contaminants ("Environmental
          Laws"), (ii) has received all permits, licenses or other approvals
          required of it under applicable Environmental Laws to conduct its
          business and (iii) is in compliance with all terms and conditions of
          any such permit, license or approval, except where such noncompliance
          with Environmental Laws, failure to receive required permits, licenses
          or other approvals or failure to comply with the terms and conditions
          of such permits, licenses or approvals would not, singly or in the
          aggregate, have a Material Adverse Effect on the Company.

          (m) There are no costs or liabilities associated with Environmental
          Laws (including, without limitation, any capital or operating
          expenditures required for clean-up, closure of properties or
          compliance with Environmental Laws or any permit, license or approval,
          any related constraints on operating activities and any potential
          liabilities to third parties) for which the Company is now liable
          which would, singly or in the aggregate, have a Material Adverse
          Effect on the Company.

          (n) The Company is not in default in the performance or observance of
          any obligation, agreement, covenant or condition contained in any
          contract, indenture, mortgage, loan agreement, note, lease or other
          agreement or instrument to which it is a party or by which it may be
          bound or to which any of its properties may be subject, except for
          such defaults that would not have a Material Adverse Effect.

          (o) Subsequent to the dates as of which information is given in each
          of the Memorandum, (i) the Company has not incurred any material
          liability or obligation, direct or contingent, nor entered into any
          material transaction not in the ordinary course of business; (ii) the
          Company has not purchased any of its outstanding capital stock, nor
          declared, paid or otherwise made any dividend or distribution of any
          kind on its capital stock; and (iii) there has not been any material
          change in the capital stock, short-term debt or long-term debt of the
          Company except in each case as described in or contemplated by the
          Final Memorandum.

          (p) The Company has good and marketable title in fee simple to all
          real property and good and marketable title to all personal property
          owned by it which is material to the business of the Company, in each
          case free and clear of all liens, encumbrances and defects except such
          as are described in the Final Memorandum or such as do not materially
          affect the value of such property and do not interfere with the use
          made and proposed to be made of such property by the Company; and any
          real property and buildings held under lease by the Company are held
          by

                                       6
<PAGE>

          it under valid, subsisting and enforceable leases with such exceptions
          as are not material and do not interfere with the use made and
          proposed to be made of such property and buildings by the Company, in
          each case except as described in or contemplated by the Final
          Memorandum.

          (q) The Company owns or possesses, or can acquire on reasonable terms,
          all material patents, patent rights, licenses, inventions, copyrights,
          know-how (including trade secrets and other unpatented and/or
          unpatentable proprietary or confidential information, systems or
          procedures), trademarks, service marks and trade names currently
          employed by it in connection with the business now operated by it, and
          the Company has not received any notice of infringement of or conflict
          with asserted rights of others with respect to any of the foregoing
          which, singly or in the aggregate, if the subject of an unfavorable
          decision, ruling or finding, would result in any material adverse
          change in the condition, financial or otherwise, or in the earnings,
          business or operations of the Company.

          (r) No material labor dispute with the employees of the Company
          exists, except as described in or contemplated by the Final
          Memorandum, or, to the knowledge of the Company, is imminent; and the
          Company is not aware of any existing, threatened or imminent labor
          disturbance by the employees of any of its principal suppliers,
          manufacturers or contractors that could result in any material adverse
          change in the condition, financial or otherwise, or in the earnings,
          business or operations of the Company.

          (s) Neither the Company nor any affiliate (as defined in Rule 501(b)
          of Regulation D under the Securities Act, an "Affiliate") of the
          Company has directly, or through any agent, (i) sold, offered for
          sale, solicited offers to buy or otherwise negotiated in respect of,
          any security (as defined in the Securities Act) which is or will be
          integrated with the sale of the Certificates in a manner that would
          require the registration under the Securities Act of the Certificates
          or (ii) engaged in any form of general solicitation or general
          advertising in connection with the offering of the Certificates (as
          those terms are used in Regulation D under the Securities Act) or in
          any manner involving a public offering within the meaning of Section
          4(2) of the Securities Act.

          (t) None of the Company, its Affiliates or any person acting on its or
          their behalf (other than the Placement Agents) has engaged in any
          directed selling efforts (as that term is defined in Regulation S
          under the Securities Act ("Regulation S")) with respect to the
          Certificates and the Company and its Affiliates and any person acting
          on its or their behalf (other than the Placement Agents) have complied
          with the offering restrictions requirement of Regulation S.

          (u) The Company is subject to Section 13 or 15(d) of the Securities
          Exchange Act.

          (v) The Certificates satisfy the eligibility requirements of Rule
          144A(d)(3) under the Securities Act.

                                       7
<PAGE>

          (w)  It is not necessary in connection with the offer, sale and
          delivery of the  Certificates to the Placement Agents in the manner
          contemplated by this Agreement to register the Certificates under the
          Securities Act or to qualify any of the Indentures or the Pass Through
          Trust Agreements under the Trust Indenture Act of 1939, as amended
          (the "Trust Indenture Act").

          (x)  The accountants that examined and issued an auditors report with
          respect to the financial statements of the Company included or
          incorporated by reference in the Final Memorandum are independent
          public accountants within the meaning of the Securities Act and the
          regulations thereunder.

          (y)  The financial statements included or incorporated by reference in
          the Final Memorandum present fairly the financial position of the
          Company as of the dates indicated and the results of operations and
          cash flows or changes in financial position of the Company for the
          periods specified.  Such financial statements have been prepared in
          conformity with generally accepted accounting principles applied on a
          consistent basis throughout the periods involved (except as expressly
          disclosed in such financial statements as to such application).  The
          financial statement schedules, if any, included or incorporated by
          reference in the Final Memorandum present fairly the information
          required to be stated therein.

          (z)  The Company is insured by insurers of recognized financial
          responsibility against such losses and risks and in such amounts as
          are prudent and customary in the businesses in which it is engaged;
          the Company has not been refused any insurance coverage sought or
          applied for; and the Company has no reason to believe that it will not
          be able to renew its existing insurance coverage as and when such
          coverage expires or to obtain similar coverage from similar insurers
          as may be necessary to continue its business at a cost that would not
          materially and adversely affect the condition, financial or otherwise,
          or the earnings, business or operations of the Company, except as
          described in or contemplated by the Final Memorandum.

          (aa) The Company maintains a system of internal accounting controls
          sufficient to provide reasonable assurance that (i) transactions are
          executed in accordance with management's general or specific
          authorizations; (ii) transactions are recorded as necessary to permit
          preparation of financial statements in conformity with generally
          accepted accounting principles and to maintain asset accountability;
          (iii) access to assets is permitted only in accordance with
          management's general or specific authorization; and (iv) the recorded
          accountability for assets is compared with the existing assets at
          reasonable intervals and appropriate action is taken with respect to
          any differences.

          (bb) The Company has no customer sales which account for ten percent
          or more of the Company's revenues.

                                       8
<PAGE>

          (cc) The Company has not taken and will not take, directly or
          indirectly, any action prohibited by Regulation M under the Exchange
          Act, to the extent applicable, in connection with the offering of the
          Certificates.

          (dd) The Company is a "citizen of the United States" (as defined in
          Section 40102(a)(15) of Title 49 of the United States Code, as
          amended) and is an air carrier operating under a certificate of public
          convenience and necessity issued by the Secretary of Transportation
          pursuant to Section 41102 of Title 49, United States Code.  There is
          in force with respect to the Company an air carrier operating
          certificate issued by the Federal Aviation Administration pursuant to
          14 C.F.R. Part 119.

          (ee) No Appraiser is an affiliate of the Company or, to the knowledge
          of the Company, has a substantial interest, direct or indirect, in the
          Company.  To the knowledge of the Company, none of the officers and
          directors of any of such Appraisers are connected with the Company or
          any of its affiliates as an officer, employee, promoter, underwriter,
          trustee, partner, director or person performing similar functions.

          (ff) The parties agree that any certificate signed by a duly
          authorized officer of the Company and delivered to a Placement Agent,
          or to counsel for the Placement Agents, on the Closing Date and in
          connection with this Agreement or the offering of the Certificates,
          shall be deemed a representation and warranty by (and only by) the
          Company to the Placement Agents as to the matters covered thereby.

          (gg) The Company has complied with all provisions of Section 517.075,
          Florida Statutes relating to doing business with the Government of
          Cuba or with any person or affiliate located in Cuba.

          The representations and warranties contained in this Agreement shall
be true and correct as of the date of this Agreement and as of the Closing Date.

          2.   Offering.  The Placement Agents have advised the Company that the
               --------
Placement Agents will make an offering of the Certificates purchased by the
Placement Agents hereunder on the terms to be set forth in the Final Memorandum
as soon as practicable after this Agreement is entered into as in your judgment
is advisable.

          3.   Purchase and Delivery.  The Company hereby agrees to cause the
               ---------------------
Trusts to sell to the several Placement Agents, and the Placement Agents, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agree, severally and not jointly, to purchase
from the Trusts the principal amount of Certificates set forth in Schedule II
hereto opposite their names at a purchase price of 100% of the principal amount
thereof.  Concurrently with the issuance of the Certificates, the Escrow Agents
shall issue and deliver to the Trustees the Escrow Receipts in accordance with
the terms of the Escrow Agreements, which Escrow Receipts shall be attached to
the related Certificates.

          Payment for the Certificates (with attached Escrow Receipts) shall be
made against delivery of the Certificates (with attached Escrow Receipts) at a
closing (the "Closing")

                                       9
<PAGE>

to be held at the office of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New
York, New York, at 10:00 A.M., local time, on September 27, 2000, or at such
other time on the same or such other date, not later than October 4, 2000, as
shall be designated in writing by you (such date of Closing being the "Closing
Date"). The time and date of such payment are herein referred to as the Closing
Date. Delivery of the Certificates (with attached Escrow Receipts) shall be made
to your respective accounts at The Depository Trust Company against payment by
the Placement Agents of the purchase price thereof to the accounts and in the
manner specified in the related Escrow Agreement by wire transfer. The
Certificates (with attached Escrow Receipts) shall be in definitive or global
form and registered in the name of Cede & Co. or in such other names, and in
such denominations as you may request in writing at least one full business day
in advance of the Closing Date in definitive or global form. The Company agrees
to have the Certificates (with attached Escrow Receipts) available for
inspection, checking and packaging by you in New York, New York not later than
1:00 P.M. on the business day prior to the Closing Date.

          As compensation to the Placement Agents for their commitments and
obligations hereunder in respect of the Certificates, including their
undertakings to distribute the Certificates, the Company will pay to each
Placement Agent an amount equal to that percentage of the aggregate principal
amount of Certificates purchased by it as set forth in Schedule II. Such payment
shall be made on the Closing Date simultaneously with the issuance and sale of
the Certificates (with attached Escrow Receipts) to the Placement Agents and
shall be made by Federal funds check or other immediately available funds.

          It is understood that each Placement Agent has authorized you for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Certificates (with attached Escrow Receipts) that it has agreed
to purchase.  You, individually and not as a representative, may (but shall not
be obligated to) make payment of the purchase price for the Certificates to be
purchased by any Placement Agent whose check or checks shall not have been
received by the Closing Date.

          4.   Conditions to Closing.  The several obligations of the Placement
               ---------------------
Agents under this Agreement to purchase the Certificates will be subject to the
following conditions:

          (a)  Subsequent to the date of this Agreement and prior to the Closing
Date,

          (i)  there shall not have occurred any downgrading, nor shall any
     notice have been given of any intended or potential downgrading or of any
     review for a possible change that does not indicate the direction of the
     possible change, in the rating accorded any of the Company's securities,
     including the Certificates, by any "nationally recognized statistical
     rating organization," as such term is defined for purposes of Rule
     436(g)(2) under the Securities Act; and

          (ii) there shall not have occurred any change, or any development
     involving a prospective change, in the condition, financial or otherwise,
     or in the earnings, business or operations, of the Company from that set
     forth in the Preliminary Memorandum that, in your judgment, is material and
     adverse and that makes it, in your judgment,

                                       10
<PAGE>

     impracticable to market the Certificates on the terms and in the manner
     contemplated in the Final Memorandum.

          (b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date.

          The officer signing and delivering such certificate may rely upon the
best of his knowledge as to proceedings threatened.

          (c) You shall have received on the Closing Date (i) an opinion of
Fulbright & Jaworski L.L.P., independent counsel for the Company, dated the
Closing Date, to the effect set forth in Exhibit B, (ii) an opinion of General
Counsel of the Company, dated the Closing Date, to the effect set forth in
Exhibit C, (iii) an opinion of Ober, Kaler, Grimes & Shriver, a Professional
Corporation, independent counsel for the Trustee and Paying Agent, dated the
Closing Date, to the effect set forth in Exhibit D, (iv) an opinion of Morris
James Hitchens & Williams, counsel for the Escrow Agent, dated the Closing Date,
to the effect set forth in Exhibit E, (v) an opinion of Ober, Kaler, Grimes &
Shriver, a Professional Corporation, counsel for the Depositary, dated the
Closing Date, to the effect set forth in Exhibit F and (vi) an opinion of
Shearman & Sterling, independent counsel for the Liquidity Provider, dated the
Closing Date, to the effect set forth in Exhibit G.

          (d) You shall have received on the Closing Date an opinion of Shearman
& Sterling, counsel for the Placement Agents, dated the Closing Date, in form
and substance satisfactory to you.

          (e) You shall have received on each of the date hereof and the Closing
Date a letter, dated the date hereof or the Closing Date, as the case may be, in
form and substance satisfactory to you, from Ernst & Young L.L.P., the Company's
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in or incorporated by reference into the Final Memorandum.

          (f) The Company shall have furnished to you and to counsel for the
Placement Agents, in form and substance satisfactory to you, such other
documents, certificates and opinions as such counsel may reasonably request in
order to pass upon the matters referred to in Section 4(d) and in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements, the performance of any covenant by the Company theretofore to be
performed, or the compliance with any of the conditions herein contained.

          (g) Each of the Appraisers shall have furnished to you a letter from
such Appraiser, addressed to the Company and dated the Closing Date, confirming
that such Appraiser and each of its directors and officers (i) is not an
affiliate of the Company or any of its affiliates, (ii) does not have any
substantial interest, direct or indirect, in the Company or any of

                                       11
<PAGE>

its affiliates, (iii) is not connected with the Company or any of its affiliates
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions and (iv) is undertaking to provide its
consent to the use of its appraisal in the Registration Statement.

          (h) At the Closing Date, each of the Operative Documents (other than
the Indentures, Leases and Participation Agreements) shall have been duly
executed and delivered by each of the parties thereto; the representations and
warranties of the Company contained in each of such executed Operative Documents
shall be true and correct as of the Closing Date (except to the extent that they
relate solely to an earlier date in which case they shall be true and correct as
of such earlier date) and you shall have received a certificate of a Vice
President of the Company, dated as of the Closing Date, to such effect.

          (i) On the Closing Date, the Certificates shall be rated A- in the
case of the Certificates of the Class A Trust, BBB- in the case of the
Certificates of the Class B Trust, and BB+ in the case of the Certificates of
the Class C Trust, by Standard & Poor's Ratings Services, a Division of The
McGraw Hill Companies, Inc.; and Baa1 in the case of the Certificates of the
Class A Trust, Ba1 in the case of the Certificates of the Class B Trust, and Ba2
in the case of the Certificates of the Class C Trust by Moody's Investors
Service, Inc.

          (j) At the Closing Date, the Registration Rights Agreement, attached
as Exhibit A hereto, shall have been duly executed and delivered and be in full
force and effect.

          5.  Covenants of the Company.  In further consideration of the
              ------------------------
agreements of the Placement Agents contained in this Agreement, the Company
covenants as follows:

          (a) To furnish to you, without charge, during the period mentioned in
     paragraph (c) below, as many copies of the Final Memorandum, any documents
     incorporated by reference therein and any supplements and amendments
     thereto as you may reasonably request and to use its best efforts to
     deliver such copies to you by 5 p.m. (New York time) on the business day
     next following the execution of this Agreement.

          (b) Before amending or supplementing either Memorandum, to furnish to
     you a copy of each such proposed amendment or supplement and not to use any
     such proposed amendment or supplement to which you reasonably object.

          (c) If, during such period after the date hereof and prior to the
     Closing Date, any event shall occur or condition exist as a result of which
     it is necessary in your judgment to amend or supplement the Final
     Memorandum in order to make the statements therein, in the light of the
     circumstances when such Memorandum is delivered to a purchaser, not
     misleading, or if, with the opinion of counsel to the Placement Agents it
     is necessary to amend or supplement such Memorandum to comply with
     applicable law, forthwith to prepare and furnish, at their own expense, to
     the Placement Agents, either amendments or supplements to such Memorandum
     so that the statements in such Memorandum as so amended or supplemented
     will not, in the light of the circumstances when such Memorandum is
     delivered to a purchaser, be misleading or so that such Memorandum, as so
     amended or supplemented, will comply with applicable law.

                                       12
<PAGE>

          (d) During the period mentioned in paragraph (c) above, to notify you
     immediately (i) of the transmittal to the Commission for filing of any
     document that would as a result thereof be incorporated by reference in the
     Final Memorandum and (ii) the request by the Commission for any amendment,
     supplement or for additional information relating to any document
     incorporated by reference in the Final Memorandum.

          (e) To endeavor to qualify the Certificates for offer and sale under
     the securities or Blue Sky laws of such jurisdictions as you shall
     reasonably request.

          (f) The Company agrees to furnish to the Placement Agents, promptly
     after each Funding Date, a copy of each opinion required to be delivered
     under the applicable Participation Agreement addressed to the Placement
     Agents and of such other documents furnished in connection with the
     fulfillment of the conditions precedent therein as the Placement Agents or
     counsel for the Placement Agents may reasonably request.

          (g) Whether or not any sale of such Certificates is consummated, to
     pay all expenses incident to the performance of their obligations under
     this Agreement, including:  (i) the preparation of each Memorandum and all
     amendments and supplements thereto, (ii) the preparation, issuance and
     delivery of the Certificates, (iii) the fees and disbursements of the
     Company's counsel and accountants and the Indenture Trustee, the
     Subordination Agent, the Escrow Agent, the Depositary, the Trustees and
     their counsel, (iv) the qualification of such Certificates under securities
     or Blue Sky laws in accordance with the provisions of Section 5(d),
     including filing fees and the fees and disbursements of counsel for the
     Placement Agents in connection therewith and in connection with the
     preparation of any Blue Sky or legal investment memoranda, (v) the printing
     and delivery to the Placement Agents in quantities as hereinabove stated of
     copies of each Memorandum and any amendments or supplements thereto, (vi)
     any fees charged by rating agencies for the rating of such Certificates,
     (vii) all document production charges and fees and expenses of counsel to
     the Placement Agents, and the Liquidity Provider (viii) the fees and
     expenses, if any, incurred in connection with the admission of such
     Certificates for trading in PORTAL or any other appropriate market system,
     (ix) the costs and expenses of the Company relating to investor
     presentations on any "road show" undertaken in connection with the
     marketing of the Certificates, including, without limitation, expenses
     associated with the production of road show slides and graphics, fees and
     expenses of any consultants engaged in connection with the road show
     presentations with the prior approval of the Company, travel and lodging
     expense of the representatives and officers of the Company and any such
     consultants, and the cost of any aircraft chartered in connection with the
     road show, and (x) all other costs and expenses incident to the performance
     of the obligations of the Company hereunder for which provision is not
     otherwise made in this Section.

          (h) Neither the Company nor any Affiliate will sell, offer for sale or
     solicit offers to buy or otherwise negotiate in respect of any security (as
     defined in the Securities Act) which could be integrated with the sale of
     the Certificates in a manner which would require the registration under the
     Securities Act of such Certificates.

                                       13
<PAGE>

          (i) Not to solicit any offer to buy or offer or sell the Certificates
     by means of any form of general solicitation or general advertising (as
     those terms are used in Regulation D under the Securities Act) or in any
     manner involving a public offering within the meaning of Section 4(2) of
     the Securities Act.

          (j) While any of the Certificates remain outstanding, to make
     available, upon request, to any seller of such Certificates the information
     specified in Rule 144A(d)(4) under the Securities Act, unless the Company
     is then subject to Section 13 or 15(d) of the Exchange Act.

          (k) None of the Company, its Affiliates or any person acting on its or
     their behalf (other than the Placement Agents) will engage in any directed
     selling efforts (as that term is defined in Regulation S) with respect to
     the Certificates, and the Company and their Affiliates and each person
     acting on its or their behalf (other than the Placement Agents) will comply
     with the offering restrictions of Regulation S.

          (l) For a period of five years after the Closing Date, upon request,
     to make available to the Placement Agents, copies of all annual reports,
     quarterly reports and current reports filed by the Company with the
     Securities and Exchange Commission (the "Commission") on Forms 10-K, 10-Q
     and 8-K, or such other similar forms as may be designated by the
     Commission, and such other documents, reports and information as shall be
     furnished by the Company to the holders of Certificates or the Company to
     its security holders generally.

          (m) During the period of two years after the Closing Date, upon
     request, to furnish to the Placement Agent and any holder of Certificates a
     copy of the restrictions on transfer applicable to the Certificates.

          (n) During the period of two years after the Closing Date, not to, and
     not to permit any of its Affiliates to, resell any of the Certificates that
     have been reacquired by any of them.

          (o) During the period of two years after the Closing Date, not to
     become an open-end investment company, unit investment trust or face-amount
     certificate company that is or is required to be registered under Section 8
     of the Investment Company Act, or a closed-end investment company required
     to be registered, but not registered, under the Investment Company Act.

          (p) In connection with the offering, until the Placement Agents shall
     have notified the Company of the completion of the resale of the
     Certificates, neither the Company nor any of its Affiliates has bid for or
     purchased or will bid for or purchase, either alone or with one or more
     other persons, for any account in which it or any of its Affiliates has a
     beneficial interest any Certificates; and neither it nor any of its
     Affiliates will make bids or purchases for the purpose of creating actual,
     or apparent, active trading in, or of raising the price of, the
     Certificates.

          (q) Between the date of this Agreement and the Closing Date, the
     Company will not without your prior written consent offer, sell, or enter
     into any agreement to sell,

                                       14
<PAGE>

     any public debt securities registered under the Securities Act or any debt
     securities which may be resold in a transaction exempt from the
     registration requirements of the Securities Act in reliance on Rule 144A
     thereunder and which are marketed through the use of a disclosure document
     containing substantially the same information as a prospectus for similar
     debt securities registered under the Securities Act (other than the
     Certificates).

          (r)   If requested by you, to use its best efforts to permit the
     Certificates to be designated PORTAL securities in accordance with the
     rules and regulations adopted by the National Association of Securities
     Dealers, Inc. relating to trading in the PORTAL Market; unless so requested
     by you, the Company will not take any action to permit the Certificates to
     be designated PORTAL securities without your prior consent, which shall not
     be unreasonably withheld.

          6.    Offering of Certificates; Restrictions on Transfer.  (a)  Morgan
                --------------------------------------------------
Stanley & Co. Incorporated represents that it is a qualified institutional
buyer, as defined in Rule 144A under the Securities Act (a "QIB").  Seabury
Securities LLC represents that it is an institutional accredited investor (as
defined in Rule 501(a) (1), (2), (3) or (7) under the Securities Act)
("institutional accredited investor").  Each Placement Agent, severally and not
jointly, agrees with the Company that (i) it will not solicit offers for, or
offer or sell, such Certificates by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Certificates only
from, and will offer such  Certificates only to, persons that it reasonably
believes to be (A) in the case of offers inside the United States, (x) QIBs or
(y) other institutional accredited investors that, prior to their purchase of
the Certificates, deliver to such Placement Agent a letter containing the
representations and agreements set forth in Annex III to the Final Memorandum
and (B) in the case of offers outside the United States, to persons other than
U.S. persons ("foreign purchasers", which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)) that, in each
case, in purchasing such Certificates are deemed to have represented and agreed
as provided in the Final Memorandum under the caption "Transfer Restrictions."

          (b)   Each Placement Agent, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:

          (i)   it understands that no action has been or will be taken in any
     jurisdiction by the Company that would permit a public offering of the
     Certificates, or possession or distribution of either Memorandum or any
     other offering or publicity material relating to the Certificates, in any
     country or jurisdiction where action for that purpose is required;

          (ii)  such Placement Agent will comply with all applicable laws and
     regulations in each jurisdiction in which it acquires, offers, sells or
     delivers Certificates or has in its possession or distributes either
     Memorandum or any such other material, in all cases at its own expense;

          (iii) the Certificates have not been and will not be registered under
     the Securities Act and may not be offered or sold within the United States
     or to, or for the

                                       15
<PAGE>

     account or benefit of, U.S. persons except in accordance with Regulation S
     under the Securities Act or pursuant to an exemption from the registration
     requirements of the Securities Act;

          (iv)   such Placement Agent has offered the Certificates and will
     offer and sell the Certificates (A) as part of its distribution at any time
     and (B) otherwise until 40 days after the later of the commencement of the
     offering of the Certificates and the Closing Date, only in accordance with
     Rule 903 of Regulation S or another exemption from the registration
     requirements of the Securities Act. Accordingly, neither such Placement
     Agent, its Affiliates nor any persons acting on its or their behalf have
     engaged or will engage in any directed selling efforts (within the meaning
     of Regulation S) with respect to the Certificates, and any such Placement
     Agent, its Affiliates and any such persons have complied and will comply
     with the offering restrictions requirements of Regulation S;

          (v)    such Placement Agent (A) has not offered or sold and will not
     offer or sell any Certificates to persons in the United Kingdom prior to
     the expiring of the period six months from the issue date of the
     Certificates except to persons whose ordinary activities involve them in
     acquiring, holding, managing or disposing of investments (as principal or
     agent) for the purposes of their businesses or otherwise in circumstances
     which have not resulted and will not result in an offer to the public in
     the United Kingdom within the meaning of the Public Offers of Securities
     Regulations 1995 (the "Regulations"); (B) has complied and will comply with
     all applicable provisions of the Financial Services Act 1986 and the
     Regulations with respect to anything done by it in relation to the
     Certificates in, from or otherwise involving the United Kingdom; and (C)
     has only issued or passed on and will only issue or pass on in the United
     Kingdom any document received by it in connection with the issue of the
     Certificates to a person who is of a kind described in Article 11(3) of the
     Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
     1996 or is a person to whom such document may otherwise lawfully be issued
     or passed on;

          (vi)   such Placement Agent understands that the Certificates have not
     been and will not be registered under the Securities and Exchange Law of
     Japan, and represents that it has not offered or sold, and agrees that it
     will not offer or sell, any Certificates, directly or indirectly in Japan
     or to any resident of Japan except (A) pursuant to an exemption from the
     registration requirements of the Securities and Exchange Law of Japan and
     (B) in compliance with any other applicable requirements of Japanese law;
     and

          (vii)  it agrees that, at or prior to confirmation of sales of the
     Certificates, it will have sent to each distributor, dealer or person
     receiving a selling concession, fee or other remuneration that purchases
     Certificates from it during the restricted period a confirmation or notice
     to substantially the following effect:

                 The Securities covered hereby have not been registered under
                 the U.S. Securities Act of 1933 (the "Securities Act") and may
                 not be offered or sold within the United States or to, or for
                 the account or benefit of, U.S. persons (i) as part

                                       16
<PAGE>

                 of their distribution at any time or (ii) otherwise until 40
                 days after the later of the commencement of the offering and
                 the closing date, except in either case in accordance with
                 Regulation S (or Rule 144A if available) under the Securities
                 Act. Terms used above have the meanings given to them by
                 Regulation S.

Terms used in this Section 6 have the meanings given to them by Regulation S.

          7.  Indemnification and Contribution. (a) The Company agrees to
              --------------------------------
indemnify and hold harmless each Placement Agent, and each person, if any, who
controls such Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, such Placement Agent, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Placement Agent 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 either Memorandum (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein
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 furnished to
the Company in writing by such Placement Agent through Morgan Stanley & Co.
Incorporated expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Memorandum 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 Memorandum (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 Memorandum (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 5(a) hereof.

          (b)    Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred 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 either
Memorandum, 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, but only with reference to information relating to any
Placement Agent furnished to the Company in writing by such Placement Agent
through Morgan Stanley & Co. Incorporated expressly for use in either
Memorandum.

                                       17
<PAGE>

          (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 (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 counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of an indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated in the case of
parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) above. 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 any 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) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 7 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 (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Placement Agents, on the other hand, from the
offering of such Certificates or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Placement Agents
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 benefits received by the Company on the
one hand and the Placement Agents on the other hand in connection with the
offering of such Certificates shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Certificates (before
deducting expenses) received by the Trusts and the total discounts and
commissions received by the Placement Agents in respect thereof bear to the
aggregate offering price of such Certificates.

                                       18
<PAGE>

The relative fault of the Company on the one hand and of the Placement Agents on
the other hand 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 Placement Agents and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Placement Agent's respective obligations to contribute pursuant to
this Section 7 are several, and not joint, in proportion to the respective
principal amounts of Certificates they have purchased hereunder.

          (e) The Company and the Placement Agents agree that it would not be
just or equitable if contribution pursuant to this Section 7 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 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 7, no Placement Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the
Certificates resold by it in the initial placement of such Certificates were
offered to investors exceeds the amount of any damages that such Placement Agent
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 Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The indemnity and contribution provisions
contained in this Section 7 and the representations and warranties of the
Company contained in this Agreement 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 the Placement Agents or any person
controlling any Placement Agent or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Certificates. The remedies provided for in this Section 7
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.

          8.  Termination. This Agreement shall be subject to termination by
              -----------
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Certificates on the terms and in the manner contemplated in the Final
Memorandum. If this Agreement is terminated by the Placement Agents in
accordance with the provisions of this Section 8, the Company shall reimburse
the Placement

                                       19
<PAGE>

Agents for all their reasonable out-of-pocket expenses, including the fees and
disbursements of counsel for the Placement Agents.

          9.  Effectiveness; Defaulting Placement Agents. (a) This Agreement
              ------------------------------------------
shall become effective upon the execution and delivery hereof by the parties
hereto.

          (b) If, on the Closing Date, any one or more of the Placement Agents
shall fail or refuse to purchase Certificates that it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Certificates which such defaulting Placement Agent or Placement Agents agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of Certificates to be purchased on such date, the non-
defaulting Placement Agent shall be obligated to purchase the Certificates that
such defaulting Placement Agent has agreed but failed or refused to purchase on
such date; provided that in no event shall the principal amount of Certificates
that any Placement Agent has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 9(b) by an amount in excess of one-ninth of
such principal amount of Certificates without the written consent of such
Placement Agent. If, on the Closing Date any Placement Agent or Placement Agents
shall fail or refuse to purchase Certificates which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of
Certificates with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Certificates to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such
Certificates are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Placement
Agent or the Company. In any such case either you or the Company shall have the
right to postpone the Closing Date, but in no event for longer than seven days,
in order that the required changes, if any, in the Final Memorandum or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Placement Agent from liability in
respect of any default of such Placement Agent under this Agreement.

          10. Notices. All notices and other communications under this Agreement
              -------
shall be in writing, and, if sent to the Placement Agents, shall be mailed,
delivered or sent by facsimile transmission to:

          Morgan Stanley & Co. Incorporated
          1585 Broadway
          New York, New York 10036
          Attention: Chris Chaput
          Facsimile number: (212) 761-0786

or, if sent to the Company, will be mailed, delivered or sent by facsimile
transmission to it at:

          Midway Airlines Corporation
          2801 Slater Drive, Suite 200
          Morrisville, NC 27560
          Attention: Jonathan S. Waller
          Facsimile number: (919) 595-1705

                                       20
<PAGE>

with a copy to:

          Fulbright & Jaworski L.L.P.
          666 Fifth Avenue
          New York, New York 10023
          Attention: Sean F. Corrigan
          Facsimile number: (212) 318-3400

          11.  Miscellaneous. This Agreement may be signed in any number of
               -------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

          If this Agreement shall be terminated by the Placement Agents, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Placement Agents or such Placement
Agents as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Placement Agents in connection
with this Agreement or the offering contemplated hereunder.

          This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.

          The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.

                                       21
<PAGE>

          Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.

                                             Very truly yours,

                                             MIDWAY AIRLINES CORPORATION

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

Agreed, as of the date first written above.

MORGAN STANLEY & CO. INCORPORATED
SEABURY SECURITIES LLC

By Morgan Stanley & Co. Incorporated

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

                                       22
<PAGE>

                                  SCHEDULE I

   Pass Through            Aggregate                             Final Expected
   Certificate             Principal            Interest         Distribution
   Designation              Amounts               Rate               Date
   ------------            ---------            --------         --------------

     2000-1A             $129,801,000             8.82%          April 1, 2019
     2000-1B             $ 51,110,000            10.07%          April 1, 2014
     2000-1C             $ 16,661,000            11.19%          April 1, 2006

<PAGE>

                                  SCHEDULE II

                                            Principal Amount of Certificates
                                                    To Be Purchased
                                                    ---------------
Placement Agent                           Class A       Class B     Class C
                                        Certificates  Certificates Certificates
Morgan Stanley & Co. Incorporated...... $ 64,901,000   $25,555,000  $ 8,331,000
Seabury Securities LLC................. $ 64,900,000   $25,555,000  $ 8,330,000
   Total............................... $129,801,000   $51,110,000  $16,661,000

     Placement fees, discounts, commissions or other compensation: $1,975,720.
This sum represents 1% of the aggregate principal amount of the Certificates.

<PAGE>

                                   EXHIBIT A
                                   ---------

                         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.

                                       25
<PAGE>

          "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

                                       26
<PAGE>

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

                                      27
<PAGE>

      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

                                       28
<PAGE>

     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

                                       29
<PAGE>

     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

                                       30
<PAGE>

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;

                                       31
<PAGE>

          (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

                                       32
<PAGE>

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;

                                       33
<PAGE>

          (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

                                       34
<PAGE>

     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

                                       35
<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;

                                       36
<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

                                       37
<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

                                       38
<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

                                       39
<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

                                       40
<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

                                       41
<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

                                       42
<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.

                                       43
<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.

                                       44
<PAGE>

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

                               MIDWAY AIRLINES CORPORATION

                                By  ____________________________

                                    Name:
                                    Title:

                               ALLFIRST BANK,

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

                                By  ____________________________

                                    Name:
                                    Title:

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

                                       45

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