Document:

<PAGE>

                                                                    Exhibit 4.14

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                                   INDENTURE

                           Dated as of July 31, 2000

                                    between

                                   AFE TRUST
                                    Issuer

                          STATE STREET BANK AND TRUST
                 COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION
                             as Indenture Trustee

                                      and

                            UNITED AIR LINES, INC.
                               as Swap Provider
                     (solely for purposes of Section 2.14)

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

                               TABLE OF CONTENTS
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                                                                                                       Page
<S>                                                                                                    <C>
RECITALS.............................................................................................   1

GRANTING CLAUSE......................................................................................   1

HABENDUM CLAUSE......................................................................................   2

ARTICLE 1      DEFINITIONS...........................................................................   4
     Section 1.01  Definitions.......................................................................   4

ARTICLE 2      THE AFE TRUST NOTES; OTHER OBLIGATIONS................................................  17
     Section 2.01  AFE Trust Notes; Title and Terms..................................................  17
     Section 2.02  Execution and Authentication......................................................  18
     Section 2.03  Registrar and Paying Agent........................................................  18
     Section 2.04  Transfer and Exchange.............................................................  19
     Section 2.05  Noteholder Lists; Ownership of AFE Trust Notes....................................  20
     Section 2.06  Mutilated, Destroyed, Lost or Stolen AFE Trust Notes..............................  20
     Section 2.07  Cancellation......................................................................  20
     Section 2.08  Payment on Confirmations, AFE Trust Notes and Certificates........................  20
     Section 2.09  Termination of Interest in the Indenture Estate...................................  21
     Section 2.10  Withholding Taxes.................................................................  21
     Section 2.11  Subordination.....................................................................  22
     Section 2.12  Certain Agreements Regarding Liquidity Facilities.................................  23
     Section 2.13  Payments Under Confirmations......................................................  25
     Section 2.14  Agreements of Swap Provider.......................................................  25

ARTICLE 3      ACCOUNTS; DISTRIBUTION AND APPLICATION OF FUNDS.......................................  26
     Section 3.01  Trust Accounts....................................................................  26
     Section 3.02  Basic Distributions...............................................................  27
     Section 3.03  Mandatory Redemption Upon Event of Loss or Optional
                   Termination of Lease..............................................................  28
     Section 3.04  Distributions from Swap Substitute Account........................................  29
     Section 3.05  Payments After Indenture Event of Default.........................................  29
     Section 3.06  Indemnity Payments and Costs and Expenses.........................................  32
     Section 3.07  Other Payments....................................................................  32

ARTICLE 4      COVENANTS OF ISSUER...................................................................  32
     Section 4.01  Payment of Principal and Interest.................................................  32
     Section 4.02  Maintenance of Office or Agency...................................................  32
     Section 4.03  Money for Payments To Be Held in Trust............................................  33
     Section 4.04  Existence.........................................................................  34
     Section 4.05  Protection of the Indenture Estate................................................  34
     Section 4.06  Negative Covenants................................................................  35
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     <S>                                                                                              <C>
     Section 4.08  No Other Business or Additional Debt..............................................  36
     Section 4.09  Further Instruments and Acts......................................................  36
     Section 4.10  Investment Company Act............................................................  36
     Section 4.11  Conduct of Business...............................................................  36

ARTICLE 5      [RESERVED]............................................................................  37

ARTICLE 6      REDEMPTION OF AFE TRUST NOTES AND CERTIFICATES........................................  37
     Section 6.01  Mandatory Redemption of AFE Trust Notes and Certificates
                   upon Certain Events...............................................................  37
     Section 6.02  Notice of Redemption to Noteholders and Certificateholders........................  37
     Section 6.03  Deposit of Redemption Price.......................................................  38
     Section 6.04  AFE Trust Notes and Certificates Payable on Redemption Date.......................  38

ARTICLE 7      MATTERS CONCERNING UNCLAIMED MONIES...................................................  39
     Section 7.01  Repayment of Monies for Payments Held by the Indenture
                   Trustee...........................................................................  39

ARTICLE 8      DEFAULTS AND REMEDIES.................................................................  39
     Section 8.01  Indenture Events of Default.......................................................  39
     Section 8.02  Acceleration; Rescission and Annulment............................................  40
     Section 8.03  Other Remedies Available to Indenture Trustee.....................................  41
     Section 8.04  Waiver of Existing Defaults.......................................................  43
     Section 8.05  Control by Majority in Interest of Noteholders....................................  43
     Section 8.06  Indenture Trustee May File Proofs of Claim........................................  43

ARTICLE 9      INDENTURE TRUSTEE.....................................................................  44
     Section 9.01  Duties of Indenture Trustee.......................................................  44
     Section 9.02  Rights of Indenture Trustee.......................................................  44
     Section 9.03  Individual Rights of Indenture Trustee............................................  45
     Section 9.04  Funds May Be Held by Indenture Trustee or Paying Agent; Investments...............  45
     Section 9.05  Notice of Defaults................................................................  46
     Section 9.06  Compensation and Indemnity........................................................  46
     Section 9.07  Replacement of Indenture Trustee..................................................  46
     Section 9.08  Successor Indenture Trustee, Agents by Merger, etc................................  47
     Section 9.09  Eligibility; Disqualification.....................................................  48
     Section 9.10  Trustee's Liens...................................................................  48

ARTICLE 10     TERMINATION OF TRUST INDENTURE .......................................................  48
     Section 10.01 Termination of Trust Indenture....................................................  48
     Section 10.02 Survival of Certain Obligations...................................................  49

ARTICLE 11     AMENDMENTS AND WAIVERS................................................................  49
     Section 11.01 Amendments to this Agreement Without Consent of the
                   Noteholders or Certificateholders.................................................  49
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     <S>                                                                                               <C>
     Section 11.02  Amendments to this Agreement with Consent of Noteholders..........................  49
     Section 11.03  Revocation and Effect of Consents.................................................  50
     Section 11.04  Notation on or Exchange of AFE Trust Notes or Certificates........................  51
     Section 11.05  Indenture Trustee Protected.......................................................  51
     Section 11.06  Corrective Amendments to Confirmations............................................  51
     Section 11.07  Notices to Liquidity Providers....................................................  51

ARTICLE 12     MISCELLANEOUS..........................................................................  51
     Section 12.01  Notices...........................................................................  51
     Section 12.02  Limitation of Liability...........................................................  53
     Section 12.03  GOVERNING LAW.....................................................................  53
     Section 12.04  Execution in Counterparts.........................................................  53
</TABLE>
<PAGE>

SIGNATURES................................................................ 70

SCHEDULES

     Schedule I    List of Assignment Agreements
     Schedule II   List of Leased Aircraft and Leased Aircraft Indentures
     Schedule III  List of Owned Aircraft and Owned Aircraft Indentures
     Schedule IV   [Intentionally Omitted]
     Schedule V    List of Scheduled Prepayment Amounts

EXHIBITS

     Exhibit A-1   Form of Series A-1 AFE Trust Notes
     Exhibit A-2   Form of Series A-2 AFE Trust Notes
     Exhibit B     Form of Series B AFE Trust Notes
     Exhibit C-1   Form of Series C-1 AFE Trust Notes
     Exhibit D-1   Description of Series A-1 AFE Trust Notes
     Exhibit D-2   Description of Series A-2 AFE Trust Notes
     Exhibit D-3   Description of Series B AFE Trust Notes
     Exhibit D-4   Description of Series C-1 AFE Trust Notes
<PAGE>

                                   INDENTURE

          This INDENTURE dated as of July 31, 2000, is between AFE TRUST, a
Delaware business trust (the "Issuer" or "AFE Trust"), and STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, National Association, a national banking
association, as Indenture Trustee hereunder (the "Indenture Trustee").

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

          WHEREAS, all capitalized terms used and not otherwise defined herein
shall have the respective meanings set forth or referred to in Article 1 hereof;

          WHEREAS, the parties desire by this Agreement, among other things, (i)
to provide for the issuance by the Issuer of the AFE Trust Notes, (ii) to
facilitate the Issuer entering into Confirmations evidencing the Transactions
and to provide for the payment of the Issuer's obligations under each
Confirmation evidencing a Transaction, and (iii) to provide for the transfer,
assignment, and pledge by the Issuer to the Indenture Trustee, as part of the
Indenture Estate hereunder, among other things, of all of the Issuer's right,
title and interest in and to the Leased Equipment Notes and certain payments and
other amounts received hereunder or thereunder in accordance with the terms
hereof, as security for, among other things, the Issuer's obligations in respect
of the AFE Trust Notes, subject to Section 2.11 and Article 3 hereof;

          WHEREAS, all things have been done to make the AFE Trust Notes, when
executed by the Issuer and authenticated and delivered by the Indenture Trustee
hereunder, the valid, binding and enforceable obligations of the Issuer; and

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

                                GRANTING CLAUSE

          NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, to secure the prompt
payment of the principal of, Make-Whole Amount or Break Amount, if any, and
interest on, and all other amounts due with respect to, all AFE Trust Notes from
time to time outstanding hereunder, all other amounts due hereunder and to
secure the performance and observance by the Issuer of all the agreements,
covenants and provisions contained herein, and in the other Indenture Documents
to which it is a party, for the benefit of the Noteholders and each of the
Indenture Indemnitees and the prompt payment of any and all amounts from time to
time owing hereunder by the Issuer to the Noteholders and the Indenture
Indemnitees (the obligations specified above being referred to herein as the
"Secured Obligations") and for the uses and purposes and subject to the terms
and provisions hereof, and in consideration of the premises and of the covenants
herein contained, and of the acceptance of the AFE Trust Notes by the
Noteholders, and of other good and
<PAGE>

valuable consideration the receipt and adequacy whereof are hereby acknowledged,
the Issuer has granted, bargained, sold, assigned, transferred, conveyed,
mortgaged, pledged and confirmed, and does hereby sell, grant, bargain, sell,
assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture
Trustee, its successors and assigns, for the security and benefit of the
Noteholders and the Indenture Indemnitees from time to time, a first priority
security interest in and on all estate, right, title and interest of the Issuer
in, to and under the following described property, rights, interests and
privileges, whether now or hereafter acquired and subject to the Lien hereof
(which collectively, including all property hereafter specifically subjected to
the lien of this Agreement by any instrument supplemental hereto, are herein
called the "Indenture Estate"):

          (1)  all right, title and interest of the Issuer in, to and under the
     Leased Equipment Notes and related Loan Documentation, the Assignment
     Agreements and the Loan Certificate Purchase Agreements, including all
     moneys received on or with respect to the Leased Equipment Notes on and
     after the Closing Date;

          (2)  each Confirmation and the Transaction evidenced thereby and each
     Qualified Substitute, if any;

          (3)  all other proceeds collected by the Indenture Trustee pursuant to
     Section 8.03 and all moneys and securities now or hereafter paid or
     deposited or required to be paid or deposited to or with the Indenture
     Trustee by or for the account of the Issuer pursuant to any term of any
     Indenture Document, including the Trust Accounts, and held or required to
     be held by the Indenture Trustee hereunder; and

          (4)  all proceeds of the foregoing.

                                HABENDUM CLAUSE

          TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, in trust for the benefit and
security of the Indenture Trustee and the Noteholders from time to time, except
as provided in Section 2.11 and Article 3 hereof, without any preference,
distinction or priority of any one AFE Trust Note over any other by reason of
series, priority of time of issue, sale, negotiation, date of maturity thereof
or otherwise for any reason whatsoever, and for the uses and purposes and
subject to the terms and provisions set forth in this Agreement.

          1.   It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Issuer shall remain liable under each Confirmation
and each of the other Indenture Documents to which it is a party to perform all
of the obligations assumed by it thereunder, all in accordance with and pursuant
to the terms and provisions thereof, and the Indenture Trustee and the
Noteholders shall have no obligation or liability under any Confirmation or the
other Indenture Documents to which the Issuer is a party or by reason of or
arising out of the assignment hereunder, nor shall the Indenture Trustee or the
Noteholders be required or obligated in any manner to perform or fulfill any
obligations of the Issuer under any Confirmation or the other Indenture

                                       2
<PAGE>

Documents to which the Issuer is a party, or, except as herein expressly
provided, to make any payment, or to make any inquiry as to the nature or
sufficiency of any payment received by it, or present or file any claim, or take
any action to collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

          2.   The Issuer does hereby constitute the Indenture Trustee the true
and lawful attorney of the Issuer, irrevocably, for good and valuable
consideration and coupled with an interest and with full power of substitution
with full power (in the name of the Issuer or otherwise) subject to the terms
and conditions of this Agreement, to ask, require, demand, receive, sue for,
compound and give acquittance for any and all moneys and claims for moneys due
and to become due to the Issuer under or arising out of the Indenture Estate, to
endorse any checks or other instruments or orders in connection therewith, to
file any claims or take any action or institute any proceedings which the
Indenture Trustee may deem to be necessary or advisable in the premises as fully
as the Issuer itself could do; provided, however, that, subject to Section 4.07,
                               --------  -------
the Indenture Trustee shall not exercise any such rights except upon the
occurrence and during the continuance of an Event of Default hereunder.

          3.   The Issuer agrees that at any time and from time to time, upon
the written request of the Indenture Trustee, the Issuer will promptly and duly
execute and deliver or cause to be duly executed and delivered any and all such
further instruments and documents as the Indenture Trustee may reasonably deem
desirable in obtaining the full benefits of the assignment hereunder and of the
rights and powers herein granted.

          4.   The Issuer does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge, so
long as the Lien of this Indenture has not been discharged in accordance with
the terms hereof, any of its rights, titles or interests hereby assigned to any
Person other than the Indenture Trustee.

          5.   It is hereby further agreed that any and all property described
or referred to in the granting clause hereof which is hereafter acquired by the
Issuer shall ipso facto, and without any other conveyance, assignment or act on
             ---- -----
the part of the Issuer or the Indenture Trustee, become and be subject to the
Lien herein granted as fully and completely as though specifically described
herein.

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

                                   ARTICLE 1

                                  DEFINITIONS

                                       3
<PAGE>

          Section 1.01  Definitions. (a) For all purposes of this Agreement and
                        -----------
the other Indenture Documents, except as otherwise expressly provided or unless
the context otherwise requires:

          (1)  each of "Issuer," "Indenture Trustee," "Noteholder," "Pass
     Through Trustee," "Subordination Agent," "Liquidity Provider," "Swap
     Provider" or any other Person includes, without prejudice to the provisions
     of any Indenture Documents, any successor in interest to it and any
     permitted transferee, permitted purchaser or permitted assignee of it;

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

          (3)  all accounting terms not otherwise defined herein have the
     meanings assigned to them in accordance with generally accepted accounting
     principles in the United States;

          (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 or other subdivision;

          (5)  The terms "including" or "include" shall in all cases mean
     "including, without limitation" or "include, without limitation,"
     respectively; and

          (6)  all references in this Agreement to Articles, Sections and
     Exhibits refer to Articles, Sections and Exhibits of this Agreement.

          (7)  For all purposes of this Agreement, the following capitalized
terms have the following respective meanings:

          "747 Note Purchase Agreement" means the Note Purchase Agreement, dated
           ---------------------------
as of the Closing Date, between State Street Bank and Trust Company, as Owner
Trustee, BancBoston United Leasing LLC, as Owner Participant, and State Street
Bank and Trust Company of Connecticut, National Association, as Pass Through
Trustee, Subordination Agent and Indenture Trustee.

          "AFE Collection Account" means the Eligible Deposit Account
           ----------------------
established by the Issuer with the Indenture Trustee pursuant to Section 3.01
into and from which the Indenture Trustee shall make deposits and withdrawals in
accordance with this Agreement.

          "AFE Note Purchase Agreement" means the Note Purchase Agreement, dated
           ---------------------------
as of the Closing Date, between AFE Trust, United and State Street Bank and
Trust Company of Connecticut, National Association, as Pass Through Trustee,
Subordination Agent and Indenture Trustee.

                                       4
<PAGE>

          "AFE Swap Payment" means, for any Transaction on any Swap Payment
           ----------------
Date, the amount, if any, due from the Issuer to the Swap Provider under the
Confirmation evidencing such Transaction.

          "AFE Trust" means AFE Trust, a Delaware business trust.
           ---------

          "AFE Trust Note" or "AFE Trust Notes" means any note or notes issued
           --------------      ---------------
under this Agreement, including each of the Series A-1, Series A-2, Series B and
Series C-1 AFE Trust Notes issued hereunder, substantially in the form of
Exhibit A-1, A-2, B or C-1 hereto, as such form may be varied pursuant to the
terms hereof and any and all AFE Trust Notes issued in replacement or exchange
therefor in accordance with the provisions hereof.

          "Affiliate" with respect to a specified Person, means any other Person
           ---------
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the 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" means any Paying Agent or Registrar.
           -----

          "Aircraft" means the Boeing Model 757-222 aircraft specified by United
           --------
States Registration Number and Manufacturer's serial number in Schedule II.

          "Amortization Amount" means, with respect to any AFE Trust Note, as of
           -------------------
any Payment Date, the amount determined by multiplying the percentage set forth
opposite such Payment Date on the Amortization Schedule by the original
principal amount of such AFE Trust Note.

          "Amortization Schedule" means, with respect to each Series of AFE
           ---------------------
Trust Notes, the amortization schedule for such Series as set forth on Exhibit
D-1, D-2, D-3 or D-4 as the case may be.

          "Assignment Agreements" means the Assignment Agreements, dated as of
           ---------------------
July 9, 2000, between the Sellers a party thereto and Four Star listed on
Schedule I attached hereto, as amended or supplemented from time to time,
pursuant to which the Sellers sell all of their right, title and interest in and
to the Leased Equipment Notes to Four Star.

          "Average Life Date" means for each AFE Trust Note to be redeemed, the
           -----------------
date which follows the redemption date by a period equal to the Remaining
Weighted Average Life at the redemption date of such Note.

          "Bankruptcy Code" means the United States Bankruptcy Code, Title 11 of
           ---------------
the United States Code, as amended from time to time.

                                       5
<PAGE>

          "Basic Pass Through Trust Agreement" means the Pass Through Trust
           ----------------------------------
Agreement dated as of the Closing Date, between the Issuer and Pass Through
Trustee, but does not include any Pass Through Trust Supplement.

          "Break Amount" means all reasonable out-of-pocket costs, expenses and
           ------------
losses which are incurred by a holder of the Series C-1 AFE Trust Notes, upon
the payment or prepayment of any principal portion of any Series C-1 AFE Trust
Note on a date other than an Interest Payment Date, as a result of the re-
employment of such principal amount during the remaining term of the then
applicable Interest Period at a rate lower than the Eurodollar Rate.

          "Business Day" means any day other than a Saturday or Sunday or a day
           ------------
on which commercial banks are required or authorized to close in: Chicago,
Illinois; New York, New York; and, so long as any AFE Trust Note is outstanding,
the city and state in which the Indenture Trustee, the Subordination Agent or
any Pass Through Trustee has its principal place of business or receives and
disburses funds.

          "Certificate" means a certificate evidencing the beneficial interest
           -----------
of a Certificateholder in the Issuer, substantially in the form of Exhibit A of
the Trust Agreement.

          "Certificate Balance" shall mean, for any Certificate as of any date,
           -------------------
the initial Certificate Balance set forth in the Certificate, reduced by all
distributions with respect to the Certificate Balance on such Certificate
pursuant to Article 3 of this Agreement.

          "Certificateholder" means any holder of one or more Certificates.
           -----------------

          "Certificate Sub-Account" means the sub-account of the AFE Collection
           -----------------------
Account into which amounts not paid to Certificateholders under Section 3.03 are
deposited and applied or withdrawn in accordance with Section 3.03

          "Closing" means the closing of the issuance of the AFE Trust Notes
           -------
contemplated hereby.

          "Closing Date" means July 31, 2000.
           ------------

          "Co-Registrar" shall have the meaning specified therefor in Section
           ------------
2.03.

          "Code" means the Internal Revenue Code of 1986, as amended from time
           ----
to time, and the Treasury Regulations promulgated thereunder.

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

          "Confirmation" means each of the thirteen Confirmations, each dated as
           ------------
of the Closing Date, between AFE Trust and United evidencing a Transaction and
incorporating therein

                                       6
<PAGE>

the terms and provisions of the Swap Agreement, as modified and supplemented by
the Schedule annexed thereto and constituting a part thereof.

          "Corporate Trust Department" means the principal office of the
           --------------------------
Indenture Trustee located at State Street Bank and Trust Company of Connecticut,
225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103, or such other
office at which the Indenture Trustee's corporate trust business shall be
administered which the Indenture Trustee shall have specified by notice in
writing to Issuer and each Noteholder.

          "Debt Rate" means, with respect to any Series of AFE Trust Notes, the
           ---------
rate per annum specified for such Series under the heading "Interest Rate" in
the related Exhibit D for such Series.

          "Eligible Deposit Account" means either (a) a segregated account with
           ------------------------
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), having corporate trust powers
and acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a long-term unsecured debt rating
from each Rating Agency of at least "A- 3" or its equivalent. An Eligible
Deposit Account may be maintained with the Indenture Trustee so long as the
Indenture Trustee is an Eligible Institution; provided, however, that each
                                              --------  -------
institution at which any Eligible Deposit Account is maintained shall agree, for
all purposes of the applicable Uniform Commercial Code ("UCC"), including
                                                         ---
Article 8 hereof, that (a) such account shall be a "securities account" (as
defined in Section 8-501 of the UCC), (b) all property credited to such account
shall be treated as a "financial asset" (as defined in Section 8.102(9) of the
UCC), (c) the Indenture Trustee shall be the "entitlement holder" (as defined in
Section 8-102(7) of the UCC) in respect of such account, (d) such institution
shall comply with all entitlement orders issued by the Indenture Trustee to the
exclusion of any other Person and (e) the "securities intermediary jurisdiction"
(under Section 8-110(e) of the UCC) shall be the State of Illinois.

          "Eligible Institution" means (a) the corporate trust department of the
           --------------------
Indenture Trustee, the Subordination Agent or any Pass Through Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the States thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a long-term unsecured
debt rating from Moody's and Standard & Poor's of at least "A-3" or its
equivalent.

          "Eurodollar Rate" means, for any interest period, the arithmetic
           ---------------
average (rounded upwards to the nearest 1/16 of 1%) of the offered quotation, if
any, to first class banks in the London interbank Eurodollar market by each
Reference Bank (as notified by such Reference Bank to the indenture trustee) for
U.S. dollar deposits of amounts in same day funds comparable to the outstanding
principal amount of the leased equipment note(s) held by such Reference Bank
with maturities comparable to the interest period for which such Eurodollar Rate
will apply as of approximately 11:00 a.m. (London time) on the date two business
days prior to such interest period. If any Reference Bank fails to notify the
indenture trustee of any such offered quotation, the

                                       7
<PAGE>

Eurodollar Rate shall be determined on the basis of the offered quotations by
the other Reference Banks.

          "Event of Loss" with respect to an Aircraft means any of the events
           -------------
defined as such in the related Leased Aircraft Indenture.

          "Exchange Act" means the Securities Act of 1934, as amended.
           ------------

          "Final Payment Date" means, with respect to any Confirmation, the
           ------------------
"Final Payment Date" under and as defined in such Confirmation.

          "Four Star" means Four Star Leasing, Inc., a Delaware corporation.
           ---------

          "Fundamental Documents" means, collectively, the Indenture Documents
           ---------------------
and the Pass Through Documents.

          "Indenture Default" means any event which is, or after notice or
           -----------------
passage of time, or both, would be, an Indenture Event of Default.

          "Indenture Documents" means this Agreement, the Leased Equipment
           -------------------
Notes, the AFE Note Purchase Agreement, the Assignment Agreements, the Loan
Certificate Purchase Agreements, each Confirmation, any Qualified Substitute(s),
the Owned Aircraft Indentures, the Trust Agreement and the AFE Trust Notes.

          "Indenture Estate" shall have the meaning specified therefor in the
           ----------------
Granting Clause hereof.

          "Indenture Event of Default" shall have the meaning specified therefor
           --------------------------
in Article 8.

          "Indenture Indemnitee" means (i) the Indenture Trustee in its
           --------------------
individual capacity and as Indenture Trustee, (ii) each separate or additional
trustee appointed pursuant to this Agreement, (iii) the Subordination Agent,
(iv) each Liquidity Provider, (v) each Pass Through Trustee, and (vi) each of
the respective directors, officers, employees, agents and servants of the
persons described in clauses (i) through (v) inclusive above.

          "Indenture Trustee" means State Street Bank and Trust Company of
           -----------------
Connecticut, National Association and each other Person which may from time to
time be acting as Indenture Trustee in accordance with the provisions of this
Agreement.

          "Instructing Group" means the Majority in Interest of Noteholders.
           -----------------

          "Intercreditor Agreement" means the Intercreditor Agreement, dated as
           -----------------------
of the Closing Date, between the Pass Through Trustees, the Liquidity Providers
and the Subordination Agent; provided that, for purposes of any obligation of
                             --------
Issuer, no amendment, modification or

                                       8
<PAGE>

supplement to, or substitution or replacement of, such Intercreditor Agreement
shall be effective unless consented to by Issuer.

          "Interest Payment Date" means January 1, 2001, and each January 1 and
           ---------------------
July 1 of each year thereafter.

          "Investment Earnings" means investment earnings on funds on deposit in
           -------------------
the Trust Accounts, net of losses and investment expenses of the Indenture
Trustee in making such investments.

          "Issuance Date" means, with respect to each Series of AFE Trust Notes,
           -------------
the date such AFE Trust Notes are issued by the Issuer pursuant to the terms
hereof.

          "Issuer Order" and "Issuer Request" means a written order or request
           ------------       --------------
signed in the name of the issuer by one of its authorized officers and delivered
to the Trustee.

          "Junior Periodic Swap Payment" means, with respect to any
           ----------------------------
Confirmation, the "Junior Periodic Swap Payment" under and as defined in such
Confirmation or any comparable payment under any related Qualified Substitute.

          "Junior Qualified Substitute" means, with respect to any Transaction
           ---------------------------
evidenced by a Confirmation, the "Junior Qualified Substitute" under and as
defined in such Confirmation.

          "Junior Qualified Substitute Purchase Amount" means, with respect to
           -------------------------------------------
any Confirmation, the "Junior Qualified Substitute Purchase Amount" under and as
defined in such Confirmation.

          "Junior Swap Termination Amount" means, with respect to any
           ------------------------------
Confirmation, the "Junior Swap Termination Amount" under and as defined in such
Confirmation or any comparable payment under any related Qualified Substitute.

          "Leased Aircraft" shall mean the six Boeing 757-222 aircraft leased to
           ---------------
United Air Lines, Inc. pursuant to certain lease agreements and listed in
Schedule II attached hereto.

          "Leased Aircraft Indenture" shall mean, with respect to the Leased
           -------------------------
Equipment Notes, each of the one or more trust indenture and security agreements
or trust indenture and mortgages or similar agreements described on Schedule II
attached hereto as such indenture may be amended or supplemented in accordance
with its terms.

          "Leased Equipment Notes" shall mean the notes, certificates or
           ----------------------
instruments issued pursuant to the Leased Aircraft Indentures in respect to the
Leased Aircraft, collectively, and in each case, any Leased Equipment Notes
issued in exchange therefor or replacement thereof, and shall include the Loan
Certificates (as defined in the Assignment Agreements) sold to Four Star under
the Assignment Agreements and to AFE Trust under the Loan Certificate Purchase
Agreements.

                                       9
<PAGE>

          "Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
           ----
exercise of rights, security interest or claim.

          "Liquidity Facilities" means the three Revolving Credit Agreements
           --------------------
(consisting of a separate Revolving Credit Agreement with each Liquidity
Provider with respect to each of the Class A-1 Trust, the Class A-2 Trust and
the Class B Trust) between the Subordination Agent, as borrower, and a Liquidity
Provider, each dated as of the Closing Date; provided that, for purposes of any
                                             --------
obligation of Issuer, no amendment, modification or supplement to, or
substitution or replacement of, any such Liquidity Facility shall be effective
unless consented to by Issuer.

          "Liquidity Providers" means Landesbank Hessen-Thuringen Girozentrale,
           -------------------
as the Liquidity Provider under the Class A-1 Liquidity Facility, Class A-2
Liquidity Facility and the Class B Liquidity Facility (as such terms are defined
in the Intercreditor Agreement) or any successor thereto.

          "Loan Certificate Purchase Agreements" means the Loan Certificate
           ------------------------------------
Purchase Agreements, dated as of the Closing Date, between Four Star and AFE
Trust, pursuant to which Four Star sells all of its right, title and interest in
and to the Leased Equipment Notes to AFE Trust.

          "Loan Documentation" shall have the meaning specified in the Loan
           ------------------
Certificate Purchase Agreements.

          "Majority in Interest of Certificateholders" means as of a particular
           ------------------------------------------
date of determination and subject to Section 2.6 of the Intercreditor Agreement,
the holders of a majority in aggregate unpaid principal amount of all
Certificates outstanding as of such date (excluding any Certificates held by
Issuer, Indenture Trustee or any Affiliate of any such party or any interests of
Issuer therein unless all Certificates shall be held by any such entity or an
Affiliate thereof); provided that for the purposes of directing any action or
casting any vote or giving any consent, waiver or instruction hereunder, any
Certificateholder of a Certificate or Certificates may allocate, in such
Certificateholder's sole discretion, any fractional portion of the principal
amount of such Certificate or Certificates in favor of or in opposition to any
such action, vote, consent, waiver or instruction.

          "Majority in Interest of Noteholders" means as of a particular date of
           -----------------------------------
determination and subject to Section 2.6 of the Intercreditor Agreement, the
holders of a majority in aggregate unpaid principal amount of all AFE Trust
Notes outstanding as of such date (excluding any AFE Trust Notes held by Issuer,
Indenture Trustee or any Affiliate of any such party or any interests of Issuer
therein unless all AFE Trust Notes shall be held by any such entity or an
Affiliate thereof); provided, however, that for the purposes of directing any
                    --------  -------
action or casting any vote or giving any consent, waiver or instruction
hereunder, any Noteholder of an AFE Trust AFE Trust Note or AFE Trust Notes may
allocate, in such Noteholder's sole discretion, any fractional portion of the
principal amount of such AFE Trust Note or AFE Trust Notes in favor of or in
opposition to any such action, vote, consent, waiver or instruction.

                                       10
<PAGE>

          "Make-Whole Amount" means, with respect to each Series A-1, A-2 and B
           -----------------
AFE Trust Note and each Certificate, an amount (as determined by an independent
investment banker of national standing selected by Issuer) equal to the excess,
if any, determined under the following calculation:

          (1)  the present value of the remaining scheduled payments of
               principal and interest from the determination date to maturity of
               such AFE Trust Note or Certificate computed by discounting the
               payments on a semi-annual basis on each Payment Date (assuming a
               360-day year of twelve 30-day months) using a discount rate equal
               to the Treasury Yield, minus

          (2)  the outstanding principal amount of such AFE Trust Note or
               Certificate Balance of such Certificate plus accrued interest to
               the date of determination (after giving effect to any payment of
               such interest on such date of determination).

For purposes of determining the Make-Whole Amount, the "Treasury Yield" means,
                                                        --------------
at the date of determination with respect to any AFE Trust Note or Certificate,
the interest rate (expressed as a semi-annual equivalent and as a decimal and,
in the case of United States Treasury bills, converted to a bond equivalent
yield) determined to be the annual rate equal to the semi-annual yield to
maturity for United States Treasury securities maturing on the Average Life Date
of such AFE Trust Note or Certificate and trading in the public securities
markets either as determined by interpolation between most recent weekly average
yield to maturity for two series of United States Treasury securities trading in
the public securities markets, (1) one maturing as close as possible to, but
earlier than, the Average Life Date of such AFE Trust Note or Certificate and
(2) the other maturing as close as possible to, but later than, the Average Life
Date of such AFE Trust Note or Certificate, in each case as published in the
most recent H.15(519) or, if a weekly average yield to maturity for United
States Treasury securities maturing on the Average Life Date of such AFE Trust
Note or Certificate is reported in the most recent H.15(519), the weekly average
yield to maturity as published in such H.15(519). As used in the definition of
"Treasury Yield", "H.15(519)" means, the weekly statistical release designated
                   ---------
as such, or any successor publication, published by the Board of Governors of
the Federal Reserve System. The date of determination of Make-Whole Amount is
the third (3rd) Business Day prior to the applicable payment date. The "most
                                                                        ----
recent H.15(519)" means the H.15(519) published prior to the close of business
----------------
on the third Business Day prior to the applicable payment or redemption date.

          "Moody's" means Moody's Investors Service, Inc. (or any successor
           -------
thereto).

          "Non-U.S. Person" means any Person other than a United States person,
           ---------------
as defined in Section 7701(a)(30) of the Code.

          "Noteholder" means a person in whose name an AFE Trust Note is
           ----------
registered on the Register (including, so long as it holds any Series A-1,
Series A-2, Series B or Series C-1 AFE Trust Notes issued hereunder, the
Subordination Agent on behalf of the Pass Through Trustee under the applicable
Pass Through Trust Agreement pursuant to the provisions of the Intercreditor
Agreement).

                                       11
<PAGE>

          "Owned Aircraft" shall mean the six Airbus 320-232 aircraft, one
           --------------
Boeing 757-222 aircraft, two Boeing 767-322 aircraft and four Boeing 777-222
aircraft owned by United and listed on Schedule III attached hereto.

          "Owned Aircraft Indenture" shall mean, with respect to the United
           ------------------------
Equipment Notes, each of the one or more trust indenture and security agreements
of trust indenture and mortgages or similar agreements described on Schedule III
attached hereto, as such indenture may be amended or supplemented in accordance
with its terms.

          "Pass Through Certificates" means any of the credit enhanced pass
           -------------------------
through certificates issued pursuant to any of the Pass Through Trust
Agreements.

          "Pass Through Documents" means the Pass Through Trust Agreements, the
           ----------------------
Intercreditor Agreement, the 747 Note Purchase Agreement, the AFE Note Purchase
Agreement, the United Equipment Note Purchase Agreement and the Liquidity
Facilities.

          "Pass Through Trust" means each of the A-1, A-2, B and C-1 pass
           ------------------
through trusts created pursuant to the related Pass Through Trust Agreement.

          "Pass Through Trust Agreements" means each of the A-1, A-2, B and C-1
           -----------------------------
Pass Through Trust Supplements, together in each case with the Basic Pass
Through Trust Agreement, each dated as of the Closing Date and entered into by
and between the Issuer and a Pass Through Trustee.

          "Pass Through Trust Supplement" shall have the meaning specified for
           -----------------------------
the term "Trust Supplement" in the Basic Pass Through Trust Agreement.

          "Pass Through Trustee" means State Street Bank and Trust Company of
           --------------------
Connecticut, National Association in its capacity as trustee under each Pass
Through Trust Agreement, and such other Person that may from time to time be
acting as successor trustee under any such Pass Through Trust Agreement.

          "Past Due Rate" means, with respect to any AFE Trust Note, the rate
           -------------
per annum equal to 2% over the Debt Rate as in effect for such AFE Trust Note.

          "Paying Agent" means any Person acting as Paying Agent hereunder
           ------------
pursuant to Section 2.03.

          "Payment Date" means, with respect to each Series of AFE Trust Notes,
           ------------
each Payment Date listed on the Amortization Schedule for such Series of AFE
Trust Notes set forth in Exhibit D-1, D-2, D-3, or D-4, as the case may be.

          "Periodic Swap Payment" means, with respect to any Confirmation as of
           ---------------------
any Swap Payment Date, the "Periodic Swap Payment," if any, under, as defined in
and payable under such

                                       12
<PAGE>

Confirmation or the aggregate amount, if any, of any comparable periodic payment
under any related Qualified Substitute, in either case payable to the Issuer on
such Swap Payment Date.

          "Permitted Investment" shall have the meaning specified in the Basic
           --------------------
Pass Through Trust Agreement.

          "Permitted Lien" means (i) the rights of the Issuer as herein provided
           --------------
and any other rights of the Issuer existing pursuant to the Indenture Documents,
(ii) Liens attributable to the Indenture Trustee (both in its capacity as
trustee under this Agreement and in its individual capacity), any Pass Through
Trustee (in its individual capacity, as Noteholder and as trustee under the Pass
Through Trust Agreements) and the Subordination Agent (in its individual
capacity, as registered holder of the AFE Trust Notes on behalf of the Pass
Through Trustees and as agent under the Intercreditor Agreement), or (iii) Liens
for Taxes of Issuer either not yet due or being contested in good faith by
appropriate proceeding.

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

          "Qualified Substitute" means, with respect to the Transaction
           --------------------
evidenced by any Confirmation, the Senior Qualified Substitute and/or the Junior
Qualified Substitute, as the case may be.

          "Qualified Substitute Purchase Amounts" means, with respect to any
           -------------------------------------
Confirmation the Senior Qualified Substitute Purchase Amount and the Junior
Qualified Substitute Purchase Amount, as the context may require.

          "Rating Agencies" means, collectively, at any time, each nationally
           ---------------
recognized rating agency that shall have been requested to rate the Pass Through
Certificates and the Certificate issued by AFE Trust and that shall then be
rating such Certificates. The initial Rating Agencies shall be Moody's and
Standard & Poor's.

          "Ratings Confirmation" means, with respect to any action proposed to
           --------------------
be taken, a written confirmation from each of the Rating Agencies that such
action would not result in (i) a reduction of the rating for each class of Pass
Through Certificates or the Certificates or (ii) a withdrawal or suspension of
the rating of the Pass Through Certificates or the Certificates.

          "Record Date" for the interest or Amortization Amount payable on any
           -----------
AFE Trust Note on any Interest Payment Date or Payment Date (other than the
maturity date) for such AFE Trust Note, as the case may be, means the calendar
day (whether or not a Business Day) which is 15 calendar days prior to the
related Interest Payment Date or Payment Date.

          "Redemption Date" means the date on which the AFE Trust Notes or the
           ---------------
Certificates are to be redeemed or purchased pursuant to Section 6.01 or Section
6.02, as the case may be, as specified in the notice delivered pursuant to
Section 6.03.

                                       13
<PAGE>

          "Redemption Price" means the price at which the AFE Trust Notes or the
           ----------------
Certificates are to be redeemed or purchased, determined as of the applicable
Redemption Date, pursuant to Section 6.01 or Section 6.02, as the case may be.

          "Reference Banks" means National Westminster Bank PLC, The Mitsubishi
           ---------------
Trust and Banking Corporation and ABN AMRO Bank N.V.

          "Register" shall have the meaning specified therefor in Section 2.03.
           --------

          "Registrar" means any person acting as Registrar hereunder pursuant to
           ---------
Section 2.03.

          "Regular Distribution Dates" means each January 1 and July 1,
           --------------------------
commencing on January 1, 2001; provided, however, that, if any such day shall
                               --------  -------
not be a Business Day, the related distribution for each Series of AFE Trust
Notes or the Certificates shall be made on the next Business Day without
additional interest accruing at the rate applicable to such Series of AFE Trust
Notes or the Certificates.

          "Remaining Weighted Average Life" means, on the redemption date for an
           -------------------------------
AFE Trust Note which is being redeemed, the number of days equal to the quotient
obtained by dividing (a) the sum of the products obtained by multiplying (i) the
amount of each then remaining installment of principal, including the payment
due on the maturity date of such AFE Trust Note, by (ii) the number of days from
and including the redemption date to but excluding the scheduled payment date of
such principal installment; by (b) the then unpaid principal amount of such AFE
Trust Note.

          "SEC" means the Securities and Exchange Commission.
           ---

          "Secured Obligations" shall have the meaning specified therefor in the
           -------------------
Granting Clause hereof.

          "Senior Noteholder" is defined in Section 2.11(c) hereof.
           -----------------

          "Senior Periodic Swap Payment" means, with respect to any
           ----------------------------
Confirmation, the "Senior Periodic Swap Payment" under and as defined in such
Confirmation or any comparable payment under any related Qualified Substitute.

          "Senior Qualified Substitute" means, with respect to any Transaction
           ---------------------------
evidenced by a Confirmation, the "Senior Qualified Substitute" under and as
defined in such Confirmation.

          "Senior Qualified Substitute Purchase Amount" means, with respect to
           -------------------------------------------
any Confirmation, the "Senior Qualified Substitute Purchase Amount" under and as
defined in such Confirmation.

                                       14
<PAGE>

          "Senior Swap Termination Amount" means, with respect to any
           ------------------------------
Confirmation, the "Senior Swap Termination Amount" under and as defined in such
Confirmation or any comparable payment under any related Qualified Substitute.

          "Series" means any of Series A-1, Series A-2, Series B or Series C-1.
           ------

          "Series A-1" or "Series A-1 AFE Trust Notes" means AFE Trust Notes
           ----------      --------------------------
issued hereunder and designated as "Series A-1", in the original principal
amount and maturities and bearing interest as specified in Exhibit D-1.

          "Series A-2" or "Series A-2 AFE Trust Notes" means AFE Trust Notes
           ----------      --------------------------
issued hereunder and designated as "Series A-2", in the original principal
amount and maturities and bearing interest as specified in Exhibit D-2.

          "Series B" or "Series B AFE Trust Notes" means AFE Trust Notes issued
           --------      ------------------------
hereunder and designated as "Series B", in the original principal amount and
maturities and bearing interest as specified in Exhibit D-3.

          "Series C-1" or "Series C-1 AFE Trust Notes" means AFE Trust Notes
           ----------      --------------------------
issued hereunder and designated as "Series C-1", in the original principal
amount and maturities and bearing interest as specified in Exhibit D-4.

          "Special Distribution Date" means, with respect to any Special
           -------------------------
Payment, the date chosen by the Subordination Agent pursuant to Section 2.4(a)
of the Intercreditor Agreement for the distribution of such Special Payment in
accordance with the Intercreditor Agreement; provided, however, that, if any
                                             --------  -------
such day shall not be a Business Day, the related distribution for each Class of
Certificates shall be made on the next Business Day with additional interest
accruing at the rate applicable to such Class of Certificates.

          "Special Payment" is defined in Section 1.1 of the Intercreditor
           ---------------
Agreement.

          "Standard & Poor's" means Standard & Poor's Ratings Services, a
           -----------------
Division of The McGraw-Hill Companies Inc. (or any successor thereto).

          "State Street" means State Street Bank and Trust Company of
           ------------
Connecticut, National Association.

          "Stipulated Loss Value" shall mean the amount payable by United under
           ---------------------
the lease of any Leased Aircraft if an Event of Loss occurs to such Leased
Aircraft, or if United exercises its right to terminate such lease or to
purchase such Leased Aircraft.

          "Subordination Agent" means State Street, as subordination agent under
           -------------------
the Intercreditor Agreement, or any successor thereto.

                                       15
<PAGE>

          "Swap Agreement" means the ISDA Master Agreement, together with the
           --------------
schedules and addenda attached thereto, as incorporated by reference into each
Confirmation.

          "Swap Obligations" shall have the meaning set forth in the
           ----------------
Intercreditor Agreement.

          "Swap Payment Date" shall have the meaning set forth in the
           -----------------
Intercreditor Agreement.

          "Swap Provider" means United Air Lines, Inc., and its successors and
           -------------
permitted assigns.

          "Swap Substitute Account" means the Eligible Deposit Account
           -----------------------
established by the Issuer with the Indenture Trustee pursuant to Section 3.01
into and from which the Indenture Trustee shall make deposits and withdrawals in
accordance with this Agreement.

          "Swap Termination Amount" means, with respect to any Confirmation, the
           -----------------------
sum of the Senior Swap Termination Amount and the Junior Swap Termination Amount
payable by United, as the swap counterparty, under such Confirmation.

          "Taxes" means any and all present or future fees (including license,
           -----
documentation and registration fees), taxes (including gross or net income,
gross or net receipts, sales, rental, use, turnover, value added, property
(tangible and intangible), excise and stamp taxes), licenses, levies, imposts,
duties, recording charges or fees, charges, assessments, or withholdings of any
nature whatsoever, together with any assessments, penalties, fines, additions to
tax and interest thereon (each individually, a "Tax").

          "This Agreement" or "this Indenture" means this Indenture, as it may
           --------------
from time to time be supplemented, amended or modified.

          "Transaction" means, with respect to any Confirmation, the Transaction
           -----------
under, as defined in and evidenced by such Confirmation.

          "Trust Accounts" shall have the meaning specified in Section 3.01 (a).
           --------------

          "Trust Agreement" means the AFE Trust Agreement, dated as of June 9,
           ---------------
2000, between United Air Lines, Inc., as Trustor, solely for the purpose of
establishing AFE Trust, and Administrator, and Wilmington Trust Company, as
Trustee.

          "Trust Indenture Act" means the Trust Indenture Act of 1939, as
           -------------------
amended.

          "Trustee's Liens" shall have the meaning specified in Section 9.10.
           ---------------

          "United" means United Air Lines, Inc., a Delaware corporation, or its
           ------
successors or assigns.

                                       16
<PAGE>

          "United Equipment Note Purchase Agreement" means the Note Purchase
           ----------------------------------------
Agreement, dated as of the date of the Closing Date, between United and State
Street Bank and Trust Company of Connecticut, National Association, as Pass
Through Trustee, Subordination Agent and Indenture Trustee.

          "United States" or "U.S." means the United States of America.
           -------------      ----

          "United States Government" means the federal government of the United
           ------------------------
States or any instrumentality or agency thereof.

          "U.S. Person" means a United States person within the meaning of
           -----------
Section 7701(a)(30) of the Code.

                                   ARTICLE 2

                    THE AFE TRUST NOTES; OTHER OBLIGATIONS

          Section 2.01  AFE Trust Notes; Title and Terms. The AFE Trust Notes
                        --------------------------------
shall be issued in four separate series designated as Series A-1, Series A-2,
Series B and Series C-1 and shall be dated the applicable Issuance Date with
respect to such Series, and shall be in the maturities and principal amounts and
shall bear interest as specified in Exhibit D-1, D-2, D-3, and D-4, as the case
may be. Each Series A-1, Series A-2, Series B and Series C-1 AFE Trust Note
shall be issued to the Subordination Agent as nominee for the Pass Through
Trustee under the applicable Pass Through Trust Agreement. The Issuance Date for
the Series A-1, Series A-2, Series B and Series C-1 AFE Trust Notes will be the
Closing Date.

          Each Series of AFE Trust Notes shall bear interest at the Debt Rate
for such Series (calculated in the case of the Series A-1, A-2 and B AFE Trust
Notes, on the basis of a year of 360 days comprised of 30-day months and, in the
case of the Series C-1 AFE Trust Notes, on the basis of the actual days elapsed
in a year of 360 days) on the unpaid principal amount thereof from time to time
outstanding, payable in arrears on each Interest Payment Date until maturity and
the date the relevant series of AFE Trust Notes is paid in full. The principal
of the Series A-1, Series B and Series C-1 AFE Trust Notes shall be payable in
installments, on each Payment Date, in amounts equal to the Amortization Amount
for such Payment Date (or such lesser amount as shall equal the then outstanding
principal amount of the relevant series of AFE Trust Notes). The principal of
the Series A-2 AFE Trust Notes shall be payable in one installment on July 1,
2010. Notwithstanding the foregoing, the final payment made under each AFE Trust
Note shall be in an amount sufficient to discharge in full the unpaid principal
amount and all accrued and unpaid interest on, and any other amounts due under,
such AFE Trust Note. Each AFE Trust Note shall bear interest at the Past Due
Rate (calculated on the basis of a year of 360 days comprised of 30-day months)
on any part of the principal amount, Make-Whole Amount, if any, and, to the
extent permitted by applicable law, interest and any other amounts payable
thereunder not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts shall be

                                       17
<PAGE>

overdue if not paid when due (whether as stated maturity, by acceleration or
otherwise). Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any AFE Trust Note becomes due and payable is not
a Business Day, then such payment shall not be made on such scheduled date but
shall be made on the next succeeding Business Day and if such payment is made on
such next succeeding Business Day no additional interest shall accrue on the
amount of such payment during such extension.

          The AFE Trust Notes are not redeemable or subject to purchase prior to
maturity except as provided in this Agreement.

          Section 2.02  Execution and Authentication. (a) AFE Trust Notes shall
                        ----------------------------
be executed on behalf of the Issuer by the manual or facsimile signature of an
authorized officer of the Trustee.

          (1)  If any officer of the Trustee executing an AFE Trust Note no
longer holds that office at the time such AFE Trust Note is executed on behalf
of the Issuer, such AFE Trust Note shall be valid nevertheless.

          (2)  At any time and from time to time after the execution of the AFE
Trust Notes, the Issuer may deliver such AFE Trust Notes to the Indenture
Trustee for authentication and, subject to the provisions of Section 2.10, the
Indenture Trustee shall authenticate the AFE Trust Notes by manual signature
upon written orders of the Issuer. AFE Trust Notes shall be authenticated on
behalf of the Indenture Trustee by any authorized officer or signatory of the
Indenture Trustee.

          (3)  An AFE Trust Note shall not be valid or obligatory for any
purpose or entitled to any security or benefit hereunder until executed on
behalf of the Issuer by the manual or facsimile signature of an officer of the
Trustee as provided in Section 2.02(a) and until authenticated on behalf of the
Indenture Trustee by the manual signature of an authorized officer or signatory
of the Indenture Trustee as provided in Section 2.02(c). Such signatures shall
be conclusive evidence that such AFE Trust Note has been duly executed,
authenticated and issued under this Agreement.

          Section 2.03  Registrar and Paying Agent. The Indenture Trustee shall
                        --------------------------
maintain an office or agency where the AFE Trust Notes may be presented for
registration of transfer or for exchange (the "Registrar") and an office or
agency where (subject to Sections 2.04 and 2.08) the AFE Trust Notes may be
presented for payment or for exchange (the "Paying Agent"). The Registrar shall
keep a register (the "Register") with respect to the AFE Trust Notes and to
their transfer and exchange and the payments of Amortization Amounts thereon, if
any. The Indenture Trustee may appoint one or more co-registrars (the "Co-
Registrars") and one or more additional Paying Agents for the AFE Trust Notes
and the Indenture Trustee may terminate the appointment of any Co-Registrar or
Paying Agent at any time upon written notice. The term "Registrar" includes any
Co-Registrar. The term "Paying Agent" includes any additional Paying Agent.

          The Indenture Trustee shall initially act as Registrar and Paying
Agent.

                                       18
<PAGE>

          Section 2.04   Transfer and Exchange. At the option of the Noteholder
                         ---------------------
thereof, AFE Trust Notes may be exchanged for an equal aggregate principal
amount of other AFE Trust Notes of the same Series, maturity and type and of any
authorized denominations or transferred upon surrender of the AFE Trust Notes to
be exchanged or transferred at the principal corporate trust office of the
Indenture Trustee, or at any office or agency maintained for such purpose
pursuant to Section 2.03. Whenever any AFE Trust Notes are so surrendered for
exchange, the Issuer shall execute, and the Indenture Trustee shall authenticate
and deliver, the replacement AFE Trust Notes, in the same aggregate principal
amount, Series and dated the same date as the AFE Trust Note or AFE Trust Notes
being replaced which the Noteholder making the exchange is entitled to receive.

          All AFE Trust Notes issued upon any registration of transfer or
exchange of AFE Trust Notes shall be the valid obligations of the Issuer,
evidencing the same obligations, and entitled to the same security and benefits
under this Agreement, as the AFE Trust Notes surrendered upon such registration
of transfer or exchange.

          Notwithstanding any provision to the contrary, a Series C-1 AFE Trust
Note may not be transferred to a Non-U.S. Person and any such purported transfer
shall be void ab initio.

          Every AFE Trust Note presented or surrendered for registration of
transfer or exchange shall (if so required by the Registrar) be duly endorsed
by, or be accompanied by a written instrument of transfer in form satisfactory
to the Registrar duly executed by, the Noteholder thereof or his attorney duly
authorized in writing. Indenture Trustee may require such evidence reasonably
satisfactory to it as to the compliance of any such transfer with the Securities
Act, and the securities laws of any applicable state. Each initial Noteholder
and each transferee of an AFE Trust Note, by its acceptance of an AFE Trust
Note, agrees to be bound by and comply with the provisions of this Indenture,
the AFE Note Purchase Agreement and each other Fundamental Document applicable
to a Noteholder.

          The Indenture Trustee shall make a notation on each new AFE Trust Note
of the amount of all payments of Amortization Amount previously made on the old
AFE Trust Note or AFE Trust Notes with respect to which such new AFE Trust Note
is issued and the date to which interest on such old AFE Trust Note or AFE Trust
Notes has been paid. Interest shall be deemed to have been paid on such new AFE
Trust Note to the date on which interest shall have been paid on such old AFE
Trust Note, and all payments of the Amortization Amount marked on such new AFE
Trust Note, as provided above, shall be deemed to have been made thereon.

          No service charge shall be made to a Noteholder for any registration
of transfer or exchange of AFE Trust Notes, but the Registrar may, as a
condition to any transfer or exchange hereunder, require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of AFE Trust Notes.

          The Registrar shall not be required to register the transfer of or to
exchange any AFE Trust Note called for redemption or purchase pursuant to such
Section 6.01 or 6.02.

                                       19
<PAGE>

          Section 2.05  Noteholder Lists; Ownership of AFE Trust Notes. (a) The
                        ----------------------------------------------
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Noteholders, which list shall be available to the Issuer or its
representative for inspection. If the Indenture Trustee is not the Registrar,
the Registrar shall be required to furnish to the Indenture Trustee semi-
annually on or before each Interest Payment Date, and at such other times as the
Indenture Trustee may request in writing, a list, in such form and as of such
date as the Indenture Trustee may reasonably require, containing all the
information in the possession or control of the Registrar as to the names and
addresses of the Noteholders.

          (1)  Ownership of the AFE Trust Notes shall be proved by the Register
kept by the Registrar. Prior to due presentment for registration of transfer of
any AFE Trust Note, the Issuer, the Indenture Trustee, the Paying Agent and the
Registrar may deem and treat the Person in whose name any AFE Trust Note is
registered as the absolute owner of such AFE Trust Note for the purpose of
receiving payment of principal (including, subject to the provisions herein
regarding the applicable Record Dates, Amortization Amounts) of, Make-Whole
Amount, if any, and interest on such AFE Trust Note and for all other purposes
whatsoever, whether or not such AFE Trust Note is overdue, and none of the
Issuer, the Indenture Trustee, the Paying Agent or the Registrar shall be
affected by notice to the contrary.

          Section 2.06  Mutilated, Destroyed, Lost or Stolen AFE Trust Notes.
                        ----------------------------------------------------
If any AFE Trust Note shall become mutilated, destroyed, lost or stolen, the
Issuer shall, upon the written request of the Noteholder of such AFE Trust Note,
issue and execute, and the Indenture Trustee shall authenticate and deliver, in
replacement thereof, as applicable, a new AFE Trust Note of the same Series and
having the same maturity, payable to the same Noteholder in the same principal
amount and dated the same date as the AFE Trust Note so mutilated, destroyed,
lost or stolen. If the AFE Trust Note being replaced has become mutilated, such
AFE Trust Note shall be surrendered to the Indenture Trustee. If the AFE Trust
Note being replaced has been destroyed, lost or stolen, the Noteholder of such
AFE Trust Note shall furnish to the Issuer and the Indenture Trustee such
security or indemnity as may be required by it to save the Issuer and the
Indenture Trustee harmless and evidence satisfactory to the Issuer and the
Indenture Trustee of the destruction, loss or theft of such AFE Trust Note and
of the ownership thereof.

          Section 2.07  Cancellation. The Registrar and any Paying Agent shall
                        ------------
forward to the Indenture Trustee all AFE Trust Notes surrendered to them for
replacement, redemption, registration of transfer, exchange or payment. The
Indenture Trustee shall cancel all AFE Trust Notes surrendered for replacement,
redemption, registration of transfer, exchange, payment or cancellation and
shall destroy canceled AFE Trust Notes.

          Section 2.08  Payment on Confirmations, AFE Trust Notes and
                         ---------------------------------------------
Certificates. The (i) AFE Swap Payment owing to the Swap Provider by the Issuer
------------
under each Confirmation evidencing a Transaction, and (ii) principal amount of,
interest on, Make-Whole Amount or Break Amount, if any, and other amounts due
under each AFE Trust Note, each Certificate or hereunder will be payable in
Dollars by wire transfer of immediately available funds not later than 11:00
a.m., Chicago, Illinois time, on the due date of payment to the Indenture
Trustee at the Corporate Trust

                                       20
<PAGE>

Department for distribution among the Swap Provider, Noteholders and
Certificateholders in the manner provided herein. The Issuer shall not have any
responsibility for the distribution of such payments to the Swap Provider, any
Noteholder or any Certificateholder. Notwithstanding the foregoing or any
provision in any Confirmation, the AFE Trust Note or Certificate to the
contrary, the Indenture Trustee will use reasonable efforts to pay or cause to
be paid, if so directed in writing by the Swap Provider, Noteholder or any
Certificateholder (with a copy to the Issuer), all amounts paid by the Issuer
hereunder and under any Confirmation or such holder's AFE Trust Note or AFE
Trust Notes, Certificate or Certificates to the Swap Provider or such holder or
a nominee therefor (including all amounts distributed pursuant to Article 3 of
this Agreement) by transferring, or causing to be transferred, by wire transfer
of immediately available funds in Dollars, prior to 1:00 p.m., Chicago, Illinois
time, on the due date of payment, to an account maintained by such holder with a
bank located in the continental United States the amount to be distributed to
such holder, for credit to the account of such Swap Provider or holder
maintained at such bank. If the Indenture Trustee shall fail to make any such
payment as provided in the immediately foregoing sentence after its receipt of
funds at the place and prior to the time specified above, the Indenture Trustee,
in its individual capacity and not as trustee, agrees to compensate Swap
Provider or such holders for loss of use of funds at the Debt Rate until such
payment is made and the Indenture Trustee shall be entitled to any interest
earned on such funds until such payment is made. Any payment made hereunder
shall be made free and clear of and without deduction for or on account of all
wire and like charges without any presentment or surrender of any Confirmation,
any AFE Trust Note or Certificate, except that, in the case of the final payment
in respect of any AFE Trust Note or Certificate, such AFE Trust Note or
Certificate shall be surrendered to the Indenture Trustee for cancellation
promptly after such payment. Notwithstanding any other provision of this
Agreement to the contrary, the Indenture Trustee shall not be required to make,
or cause to be made, wire transfers as aforesaid prior to the first Business Day
on which it is practicable for the Indenture Trustee to do so in view of the
time of day when the funds to be so transferred were received by it if such
funds were received after 11:00 a.m., Chicago, Illinois time, at the place of
payment.

          Section 2.09  Termination of Interest in the Indenture Estate. No
                        -----------------------------------------------
Noteholder or Indenture Indemnitee shall have any further interest in, or other
right with respect to, the Indenture Estate when and if the principal amount of,
Make-Whole Amount or Break Amount, if any, and interest on all AFE Trust Notes
held by such Noteholder and all other sums payable to such Noteholder or
Indenture Indemnitee, as the case may be, hereunder, under such AFE Trust Notes
and under the other Indenture Documents shall have been paid in full.

          Section 2.10  Withholding Taxes. The Indenture Trustee, as agent for
                        -----------------
the Issuer, shall exclude and withhold at the appropriate rate from each payment
of principal amount of, interest on, Make-Whole Amount or Break Amount, if any,
and other amounts due hereunder or under each AFE Trust Note or Certificate (and
such exclusion and payment of withholding tax shall constitute payment in
respect of such AFE Trust Note or Certificate) any and all United States
withholding taxes applicable thereto as required by law. The Indenture Trustee
agrees to act as such withholding agent and, in connection therewith, whenever
any present or future United States taxes or similar charges are required to be
withheld with respect to any amounts payable hereunder or in respect of the AFE
Trust Notes or Certificates, to withhold such amounts and timely pay the same to
the

                                       21
<PAGE>

appropriate authority in the name of and on behalf of the Noteholders and the
Certificateholders, that it will file any necessary United States withholding
tax returns or statements when due, and that as promptly as possible after the
payment thereof (but in no event later than 30 days after the due date thereof)
it will deliver to each Noteholder and Certificateholder (with a copy to the
Issuer) appropriate receipts and a U.S. Treasury Form 1042-S and Form 8109 or
Form 8109-B (or similar form at any relevant time in effect) showing the payment
thereof, together with such additional documentary evidence as any such
Noteholder and Certificateholder may reasonably request from time to time.

          If a Noteholder or a Certificateholder which is a Non-U.S. Person has
furnished to the Indenture Trustee a properly completed, accurate and currently
effective U.S. Internal Revenue Service Form W-8 BEN, W-8 IMY, W-8 ECI or W-8
EXP (or such successor form or forms as may be required by the United States
Treasury Department) for the calendar year in which the payment hereunder or
under the AFE Trust Note(s) or Certificate(s) held by such Noteholder or
Certificateholder is made (but prior to the making of such payment), and has not
notified the Indenture Trustee of the withdrawal or inaccuracy of such form
prior to the date of such payment (and the Indenture Trustee has no reason to
believe that any information set forth in such form is inaccurate), the
Indenture Trustee shall withhold only the amount, if any, required by law (after
taking into account any applicable exemptions properly claimed by the Noteholder
or Certificateholder) to be withheld from payments hereunder or under the AFE
Trust Notes or the Certificates held by such Noteholder or Certificateholder in
respect of United States federal income tax (and such payment of withholding tax
shall constitute payment in respect of such AFE Trust Note or Certificate). If a
Noteholder or a Certificateholder which is a U.S. Person has furnished to the
Indenture Trustee a properly completed, accurate and currently effective U.S.
Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder
or under the AFE Trust Notes or the Certificates held by such Noteholder or
Certificateholder, no amount shall be withheld from payments in respect of
United States federal income tax. If any Noteholder or Certificateholder has
notified the Indenture Trustee that any of the foregoing forms or certificates
is withdrawn or inaccurate, or if such Noteholder or Certificateholder has not
filed a form claiming an exemption from United States withholding tax which is
applicable to any relevant period in which a payment is made or if the Code or
the regulations thereunder or the administrative interpretation thereof is at
any time after the date hereof amended to require such withholding of United
States federal income taxes from payments under the AFE Trust Notes or the
Certificates held by such Noteholder or Certificateholder, the Indenture Trustee
agrees to withhold from each payment due to the relevant Noteholder or
Certificateholder withholding taxes at the appropriate rate under law and will,
on a timely basis as more fully provided above, deposit such amounts with an
authorized depository and make such returns, statements, receipts and other
documentary evidence in connection therewith as required by law.

          Issuer shall not have any liability for the failure of the Indenture
Trustee to withhold taxes in the manner provided for herein or for any false,
inaccurate or untrue evidence provided by any Noteholder hereunder.

                                       22
<PAGE>

          Section 2.11  Subordination. (a) The Indenture Trustee and, by
                        -------------
acceptance of its Series of AFE Trust Notes or Certificates, each such
Noteholder or Certificateholder, hereby agree that no payment or distribution
shall be made on or in respect of the Secured Obligations relating to the AFE
Trust Notes or Certificates owed to such Noteholder or Certificateholder,
including any payment or distribution of cash, property or securities after the
commencement of a proceeding of the type referred to in Section 8.01(f) or (g)
hereof, except as expressly provided in Article 3 hereof.

          (1)  By the acceptance of its Series of AFE Trust Notes of any Series
(other than Series A-1 and Series A-2) or Certificates, each Noteholder or
Certificateholder of such Series agrees that in the event that such Noteholder
or Certificateholder, in its capacity as a Noteholder or Certificateholder,
shall receive any payment or distribution on any Secured Obligations in respect
of such Series of AFE Trust Notes or Certificates which it is not entitled to
receive under this Section 2.11 or Article 3 hereof, it will hold any amount so
received in trust for the Senior Noteholder (as defined in Section 2.11(c)
hereof) and will forthwith turn over such payment to the Indenture Trustee in
the form received to be applied as provided in the Article 3 hereof.

          (2)  As used in this Section 2.11, the term "Senior Noteholder" shall
mean (i) the Noteholders of Series A-1 and Series A-2 until the Secured
Obligations in respect of Series A-1 and Series A-2 AFE Trust Notes have been
paid in full, (ii) after the Secured Obligations in respect of Series A-1 and
Series A-2 AFE Trust Notes have been paid in full, the Noteholders of Series B
until the Secured Obligations in respect of Series B AFE Trust Notes have been
paid in full, (iii) after the Secured Obligations in respect of Series A-1,
Series A-2 and Series B AFE Trust Notes have been paid in full, the Noteholders
of Series C-1 until the Secured Obligations in respect of Series C-1 AFE Trust
Notes have been paid in full, and (iv) after the Secured Obligations in respect
of Series A-1, Series A-2, Series B and Series C-1 AFE Trust Notes have been
paid in full, the Certificates; provided, however, that if a Series of AFE Trust
                                --------  -------
Notes or Certificates shall be redeemed pursuant to the provisions of Section
6.01(b), the amounts received by the Indenture Trustee in connection with such
redemption shall be applied in accordance with the provisions of Section 3.03(b)
notwithstanding anything contained in this Section 2.11 to the contrary.

          Section 2.12  Certain Agreements Regarding Liquidity Facilities.
                        -------------------------------------------------
Without duplication of amounts paid by the Issuer or United under the other
Fundamental Documents, the Issuer agrees to pay to the Indenture Trustee for
distribution in accordance with Section 3.06(b) and the terms of the
Intercreditor Agreement:

               (1)  an amount equal to the fees payable to the relevant
Liquidity Provider under the related Fee Letter (as defined in the Intercreditor
Agreement as originally in effect or as amended with the consent of United)
multiplied by a fraction the numerator of which shall be the sum of the then
outstanding aggregate principal amount of the Series A-1 AFE Trust Notes, Series
A-2 AFE Trust Notes and Series B AFE Trust Notes and the denominator of which
shall be the sum of the then outstanding aggregate principal amount of all
Series A-1 United Equipment Notes, Series A-2 United Equipment Notes and Series
B United Equipment Notes (each as defined in the Intercreditor Agreement);

                                       23
<PAGE>

               (2)  (x) the amount equal to interest on any Downgrade Advance
(other than any Applied Downgrade Advance) payable under Section 3.07 of each
Liquidity Facility minus Investment Earnings from such Downgrade Advance
multiplied by (y) the fraction specified in the foregoing clause (i);

               (3)  (x) the amount equal to interest on any Non-Extension
Advance (other than any Applied Non-Extension Advance) payable under Section
3.07 of each Liquidity Facility minus Investment Earnings from such Non-
Extension Advance multiplied by (y) the fraction specified in the foregoing
clause (i);

               (4)  (x) any amounts owed to the Liquidity Providers by the
Subordination Agent as borrower under Section 3.01 (other than in respect of an
Unpaid Advance, an Applied Non- Extension Advance or Applied Downgrade Advance),
3.02, 3.03 (other than in respect of an Unpaid Advance, an Applied Non-Extension
Advance or Applied Downgrade Advance), 7.05 or 7.07 of each Liquidity Facility
(or similar provisions of any succeeding Liquidity Facility) multiplied by (y)
the fraction specified in the foregoing clause (i);

               (5)  if any payment default shall have occurred and be continuing
with respect to interest on any Series A-1 AFE Trust Note, Series A-2 AFE Trust
Notes or Series B AFE Trust Note, (a) the excess, if any, of (1) the sum of (x)
the amount equal to interest on any Unpaid Advance, an Applied Non-Extension
Advance or Applied Downgrade Advance payable under Section 3.07 of each
Liquidity Facility plus (y) any other amounts payable in respect of such Unpaid
Advance, Applied Non-Extension Advance or Applied Downgrade Advance under
Section 3.01, 3.03 or 3.09 of the applicable Liquidity Facility over (2) the sum
of Investment Earnings from any such Unpaid Advance, Applied Non-Extension
Advance or Applied Downgrade Advance plus any amount of interest at the Past Due
Rate actually payable (whether or not in fact paid) by the Issuer on the overdue
scheduled interest on the AFE Trust Notes in respect of which such Unpaid
Advance, Applied Non-Extension Advance or Applied Downgrade Advance was made,
multiplied by (b) a fraction the numerator of which shall be the then aggregate
overdue amounts of interest on the Series A-1 AFE Trust Notes, Series A-2 AFE
Trust Notes and Series B AFE Trust Notes (other than interest becoming due and
payable solely as a result of acceleration of any such AFE Trust Notes) and the
denominator of which shall be the then aggregate overdue amounts of interest on
all Series A-1 United Equipment Notes, Series A-2 United Equipment Notes and
Series B United Equipment Notes (each as defined in the Intercreditor Agreement)
(other than interest becoming due and payable solely as a result of acceleration
of any such United Equipment Notes);

               (6)  Issuer's pro rata share of all compensation and
reimbursement of expenses, disbursements and advances payable by Issuer under
the Pass Through Trust Agreements; and

               (7)  Issuer's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. For purposes of this

                                       24
<PAGE>

paragraph, the terms "Applied Downgrade Advance," "Applied Non-Extension
Advance," "Downgrade Advance," "Final Advance," "Investment Earnings" and
"Unpaid Advance" shall have the meanings specified in each Liquidity Facility or
the Intercreditor Agreement referred to therein. As used herein, "Issuer's pro
rata share" means as of any time a fraction, the numerator of which is the
principal balance then outstanding of AFE Trust Notes and the denominator of
which is the aggregate principal balance then outstanding of all the Trust Owned
Notes (as defined in the Intercreditor Agreement).

         For purposes of this Section 2.12 the amounts payable described in
clause (iii) of First of Section 3.02 shall be treated as Issuer's obligations
                -----
and as payable pursuant to this Section 2.12.

                  Section 2.13  Payments Under Confirmations. (a) Pursuant to
                                ----------------------------
each Confirmation evidencing a Transaction, the Issuer shall, to the extent of
available funds, pay on each Swap Payment Date the AFE Swap Payment, if any, to
the Indenture Trustee for deposit into the AFE Collection Account and
distribution pursuant to and in the order of priority set forth in Article 3.

                  (1) On each Swap Payment Date, the Indenture Trustee shall
deposit all Periodic Swap Payments received by it from the Swap Provider
pursuant to each Confirmation evidencing a Transaction, into the AFE Collection
Account for distribution pursuant to and in the order of priority set forth in
Article 3.

                  (2) If an Additional Termination Event under and as defined in
any Confirmation evidencing a Transaction shall have occurred and as a
consequence thereof the Issuer becomes obligated under Section 6(e) of the Swap
Agreement as incorporated into such Confirmation to use all commercially
reasonable efforts to acquire a Senior Qualified Substitute and/or a Junior
Qualified Substitute, then the Issuer hereby irrevocably authorizes and
instructs the Indenture Trustee to engage, and the Indenture Trustee hereby
agrees to engage, an independent investment banking firm of nationally
recognized standing to use all commercially reasonable efforts to obtain such a
Senior Qualified Substitute and/or Junior Qualified Substitute, at the Issuer's
expense and payable to the extent of monies received therefor under such
Confirmation (such expense to include the fees of any such banking firm and in
any event not to exceed the applicable Senior Swap Termination Amount and/or
Junior Swap Termination Amount set forth in the affected Confirmation for the
associated terminated Transaction). If such a Senior Qualified Substitute and/or
Junior Qualified Substitute is so obtained, the provisions of this Section
2.13(a) and (b) shall apply with respect thereto. If such a Senior Qualified
Substitute and/or Junior Qualified Substitute cannot be so obtained, then any
amounts received by the Indenture Trustee on behalf of the Issuer iin accordance
with such Confirmation constituting either a Senior Swap Termination Amount
and/or a Junior Swap Termination Amount shall be deposited by the Indenture
Trustee into the Swap Substitute Account, and thereafter the Indenture Trustee
shall withdraw funds from the Swap Substitute Account on each Swap Payment Date
in the amounts and to the extent provided in Section 3.04 and distribute such
amounts in accordance with Section 3.04.

                  (3) If the Issuer receives any Senior Swap Termination Amount
or Junior Swap Termination Amount, it shall promptly pay such amounts over to
the Indenture Trustee for

                                       25
<PAGE>

application pursuant to Section 2.13(c), and, until so paid, shall hold such
amounts in trust for the Indenture Trustee.

                  Section 2.14  Agreements of Swap Provider. (a) United, as Swap
                                ---------------------------
Provider, hereby acknowledges and agrees that its rights to receive any AFE Swap
Payment or any other payment under any Confirmation is subject to the priority
of payment and other provisions of Article 3, and that it shall have no right to
any payments except as specified therein.

                  (b) United, as Swap Provider, hereby covenants and agrees that
it will not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States federal
or state bankruptcy or similar law in connection with any obligations relating
to the Certificates, the AFE Trust Notes, this Agreement or any other Indenture
Document.

                                   ARTICLE 3

                ACCOUNTS; DISTRIBUTION AND APPLICATION OF FUNDS

                  Section 3.01  Trust Accounts. (a) On or prior to the Closing
                                --------------
Date, the Indenture Trustee shall establish and maintain in its name (i) the AFE
Collection Account as an Eligible Deposit Account, bearing a designation clearly
indicating that the funds deposited therein are held in trust for the benefit of
the Noteholders and the Certificateholders and (ii) the Swap Substitute Account
as an Eligible Deposit Account, bearing a designation clearly indicating that
the funds deposited therein are held in trust for the benefit of the Noteholders
and the Certificateholders. The AFE Collection Account and the Swap Substitute
Account constitute the "Trust Accounts" hereunder. Each Trust Account shall meet
                        --------------
the requirements of an "Eligible Deposit Account."

                  (b) Funds on deposit in a Trust Account shall be invested and
reinvested by the Indenture Trustee in investments of the type described in
clause (b) of the definition of Permitted Investments selected by the Indenture
Trustee if such investments are reasonably available and have maturities no
later than the Business Day preceding the Regular Distribution Date or any
Special Distribution Date, as the case may be, next following the date of such
investment; provided, however, that upon the occurrence and during the
            --------  -------
continuation of an event of default under any Leased Aircraft Indenture, the
Indenture Trustee shall invest and reinvest such amounts in accordance with the
written instructions of the Majority in Interest of Noteholders. Unless
otherwise expressly provided in this Agreement, any Investment Earnings shall be
deposited in the AFE Collection Account when received by the Indenture Trustee
and shall be applied by the Indenture Trustee in the same manner as the
principal amount of such investment is to be applied and any losses shall be
charged against the principal amount invested, in each case net the Indenture
Trustee's reasonable fees and expenses in making such investments. The Indenture
Trustee shall not be liable for any loss resulting from any investment,
reinvestment or liquidation required to be made under this Agreement other than
by reason of its willful misconduct or gross negligence. Permitted Investments
and any other investment required to be made hereunder shall be held to their
maturities

                                       26
<PAGE>

except that any such investment may be sold (without regard to its maturity) by
the Indenture Trustee without instructions whenever such sale is necessary to
make a distribution required under this Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.

                  (c) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon, except as otherwise
expressly provided herein with respect to Investment Earnings). The Trust
Account shall be held in trust by the Indenture Trustee under the sole dominion
and control of the Indenture Trustee for the benefit of the Trustee, the
Noteholders and the Certificateholders, as the case may be. The Indenture
Trustee shall maintain "control" of the Trust Accounts within the meaning of
Section 8-106 of the U.C.C. If, at any time, any of the Trust Accounts ceases to
be an Eligible Deposit Account, the Indenture Trustee shall within 10 Business
Days establish a new AFE Collection Account or Swap Substitute Account, as the
case may be, as an Eligible Deposit Account and shall transfer any cash and/or
any investments to such new AFE Collection Account or Swap Substitute Account,
as the case may be. So long as State Street Bank and Trust Company of
Connecticut, National Association is an Eligible Institution, the Trust Accounts
shall be maintained with it as Eligible Deposit Accounts.

                  Section 3.02  Basic Distributions. Except as otherwise
                                -------------------
provided in Section 3.05, each Periodic Swap Payment received by the Indenture
Trustee under each Confirmation and/or any Qualified Substitute, each Payment
deposited into the AFE Collection Account in accordance with Section 3.04 and
each periodic payment of principal or interest on the Leased Equipment Notes
received by the Indenture Trustee shall be promptly distributed in the following
order of priority:

First,            (i) so much of such payment as shall be required to pay in
-----
                  full the aggregate amount of the payment or payments of
                  principal amount and interest (as well as any interest on any
                  overdue principal amount and, to the extent permitted by
                  applicable law, on any overdue interest) then due under all
                  Series A-1 AFE Trust Notes and all Series A-2 AFE Trust Notes
                  shall be distributed to each Noteholder of Series A-1 AFE
                  Trust Notes and Series A-2 AFE Trust Notes ratably, without
                  priority of one over the other, in the proportion that the
                  amount of such payment or payments then due under all Series
                  A-1 AFE Trust Notes and all Series A-2 AFE Trust Notes held by
                  such Noteholder bears to the aggregate amount of the payments
                  then due under all Series A-1 AFE Trust Notes and all Series
                  A-2 AFE Trust Notes;

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

                                       27
<PAGE>

                  (iii) after giving effect to paragraph (ii) above, if United
                  shall have failed to make the payments set forth in Sections
                  5(i), 7 and 10 of the AFE Note Purchase Agreement, so much of
                  such payments remaining as shall be required to pay the
                  aggregate amounts owing pursuant to Section 3.06(a); and

                  (iv) after giving effect to paragraph (iii) above, so much of
                  such payment remaining as shall be required to pay in full the
                  aggregate amount of the payment or payments of principal
                  amount and interest (as well as any interest on any overdue
                  principal amount and, to the extent permitted by applicable
                  law, on any overdue interest) then due under all Series C-1
                  AFE Trust Notes shall be distributed to each Noteholder of
                  Series C-1 AFE Trust Notes ratably, without priority of one
                  over the other, in the proportion that the amount of such
                  payment or payments then due under all Series C-1 AFE Trust
                  Notes held by such Noteholder bears to the aggregate amount of
                  the payments then due under all Series C-1 AFE Trust Notes;

Second,           so much of such payment remaining (excluding the amount, if
------
                  any, deposited into the AFE Collection Account from the Swap
                  Substitute Account on such date of distribution) as shall be
                  required to pay in full the aggregate amount of the AFE Swap
                  Payments, if any, shall be paid to the Swap Provider; and

Third,            so much of such payment remaining as shall be required to pay
-----
                  in full on each Regular Distribution Date, the aggregate
                  amount of the payment or payments of Certificate Balance set
                  forth opposite such Regular Distribution Date on Schedule III
                  to the Trust Agreement and interest then due under all
                  Certificates shall, in accordance with Section 5.3 of the
                  Trust Agreement, be distributed to each holder of Certificates
                  ratably, without priority of one over the other, in the
                  proportion that the amount of such payment or payments then
                  due under all Certificates held by such holder bears to the
                  aggregate amount of the payments then due under all
                  Certificates.

                  Section 3.03  Mandatory Redemption Upon Event of Loss or
                                ------------------------------------------
Optional Termination of Lease. Except as otherwise provided in Section 3.05, any
-----------------------------
Prepayment Amount received by the Indenture Trustee in connection with an Event
of Loss with respect to any Leased Aircraft or an optional or other termination
of a lease (other than by reason of a default) relating to any Leased Aircraft,
shall be applied to the mandatory redemption of the AFE Trust Notes and, to the
extent permitted by Section 6.01, the Certificates to the extent and in the
amounts specified in Schedule V attached hereto (and if the Redemption Date is
not a "Payment Date" specified therein, the applicable Prepayment Amount shall
be the amount specified for the Payment Date immediately preceding such
Redemption Date). Such redemption amounts shall be distributed to each holder of
an AFE Trust Note or, to the extent permitted by Section 6.01, a Certificate in
an amount equal to the product of (i) the Prepayment Amount for the applicable
Leased Aircraft in respect of the applicable Series of AFE Trust Notes or
Certificate, as the case may be, as set forth in Schedule V attached hereto and
(ii) a fraction, the numerator of which is the then outstanding principal amount
or Certificate Balance of the applicable Series of AFE Trust Notes or
Certificates held by such holder and the denominator

                                       28
<PAGE>

of which is the aggregate then outstanding principal amount of such Series of
AFE Trust Notes or Certificate Balance of Certificates, as the case may be, in
each case plus accrued but unpaid interest to the date of redemption and the
applicable Make-Whole Amount or Break Amount, if any, specified in Section 6.01
hereof. Any such partial redemption of the AFE Trust Notes or Certificates shall
be applied to the outstanding installment of such AFE Trust Notes or to the
outstanding Certificate Balance, as the case may be, as specified in Schedule V
attached hereto. The "Prepayment Amount" for any Leased Aircraft as of any
Redemption Date that is a "Payment Date" specified in Schedule V attached hereto
shall be the amount of the prepayment to be distributed on each Series of AFE
Trust Notes and Certificates for such Aircraft as set forth in such Schedule V
opposite such Payment Date (and if such Redemption Date is not a "Payment Date"
specified therein, the applicable Prepayment Amount shall be the amount
specified for the Payment Date immediately preceding such Redemption Date).

                  Except to the extent set forth in Section 6.01 hereof, no
Make-Whole Amount or Break Amount shall be due and payable on the AFE Trust
Notes or the Certificates as a consequence of a redemption under this Section
3.03.

         Any amount not paid to holders of Certificates under this Section 3.03
because of the restrictions contained in Section 6.01 shall be held in the
Certificate Sub-Account of the AFE Collection Account until the earlier of (i)
the satisfaction of such restrictions, in which case such amounts shall be
distributed to the holders of the Certificates or (ii) such amounts are
distributed pursuant to Section 3.05.

                  Section 3.04  Distributions from Swap Substitute Account. If
                                ------------------------------------------
the Transaction evidenced by any Confirmation is terminated and a Qualified
Substitute is not obtained in respect of either or both, as the case may be, of
the Senior Swap Termination Amount and the Junior Swap Termination Amount and as
a consequence thereof a Swap Termination Amount is credited to the Swap
Substitute Account as provided in Section 2.13, then on each date on which a
Swap Payment Date would have otherwise occurred under such Confirmation but for
such termination, the Indenture Trustee shall withdraw from the Swap Substitute
Account an amount equal to the lesser of (i) the amount on deposit in the Swap
Substitute Account and (ii) the Periodic Swap Payment, if any, that would
otherwise have been due and payable by the Swap Provider to the Issuer on such
date under such Confirmation had such Transaction not been terminated, and shall
deposit such amount into the AFE Collection Account for distribution pursuant to
Section 3.02; provided, however, that from and after the date of the first
              --------  -------
distribution under Section 3.05, the Indenture Trustee may (and upon
instructions of the Majority in Interest of Noteholders shall) withdraw from the
Swap Substitute Account up to the entire credit balance on deposit in the Swap
Substitute Account on deposit in the Swap Substitute Account and deposit such
amount into the AFE Collection Account for distribution pursuant to Section
3.05.

                  Section 3.05  Payments After Indenture Event of Default.
                                -----------------------------------------
Except as otherwise provided in Section 3.06, all payments received and amounts
held or realized by the Indenture Trustee (including any amounts realized by the
Indenture Trustee from the exercise of any remedies pursuant to Article 8 hereof
and amounts distributed from the Swap Substitute Account) after an

                                       29
<PAGE>

Indenture Event of Default shall have occurred and be continuing and after the
declaration or acceleration specified in Section 8.02, as well as all payments
or amounts then held by the Indenture Trustee as part of the Indenture Estate,
shall be promptly distributed by the Indenture Trustee in the following order of
priority:

First,            so much of such payments or amounts as shall be required to
-----
                  reimburse the Indenture Trustee or State Street for any Tax
                  (except to the extent resulting from a failure of the
                  Indenture Trustee to withhold taxes pursuant to Section 2.10),
                  expense or other loss (including, without limitation, all
                  amounts to be expended at the expense of, or charged upon the
                  proceeds of, the Indenture Estate pursuant to Section 8.03)
                  incurred by the Indenture Trustee or State Street (to the
                  extent not previously reimbursed), the expenses of any sale or
                  other proceeding, reasonable attorneys' fees and expenses,
                  court costs and any other expenditures incurred or
                  expenditures or advances made by the Indenture Trustee, State
                  Street or the Noteholders in the protection, exercise or
                  enforcement of any right, power or remedy or any damages
                  sustained by the Indenture Trustee, State Street or any
                  Noteholder, liquidated or otherwise, upon such Event of
                  Default, shall be applied by the Indenture Trustee as between
                  itself, State Street or the Noteholders in reimbursement of
                  such expenses and any other expenses for which the Indenture
                  Trustee, State Street or the Noteholders are entitled to
                  reimbursement under any Indenture Document; and if the
                  aggregate amount to be so distributed is insufficient to pay
                  as aforesaid, then ratably, without priority of one over the
                  other, in proportion to the amounts owed to each hereunder and
                  under the other Indenture Documents;

Second,           so much of such payments or amounts remaining as shall be
------
                  required to reimburse the then existing or prior Noteholders
                  for payments made pursuant to Section 9.06 (to the extent not
                  previously reimbursed), shall be distributed to such then
                  existing or prior Noteholders ratably, without priority of one
                  over the other, in accordance with the amount of the payment
                  or payments made by each such then existing or prior
                  Noteholder pursuant to Section 9.06;

Third,            (i) so much of such payments or amounts remaining as shall be
-----
                  required to pay in full the aggregate unpaid principal amount
                  of all Series A-1 AFE Trust Notes and all Series A-2 AFE Trust
                  Notes, and the accrued but unpaid interest and other amounts
                  due thereon and all other Secured Obligations owed in respect
                  of the Series A-1 AFE Trust Notes and Series A-2 AFE Trust
                  Notes to the date of distribution, shall be distributed to the
                  Noteholders of Series A-1 AFE Trust Notes and Series A-2 AFE
                  Trust Notes, and in case the aggregate amount so to be
                  distributed shall be insufficient to pay in full as aforesaid,
                  then ratably, without priority of one over the other, in the
                  proportion that the aggregate unpaid principal amount of all
                  Series A-1 AFE Trust Notes and all Series A-2 AFE Trust Notes
                  held by each Noteholder plus the accrued but unpaid interest
                  and other amounts due hereunder or thereunder to the date of
                  distribution, bears to the aggregate unpaid principal amount
                  of all Series A-1 AFE Trust Notes and all Series A-2 AFE Trust
                  Notes held by all such Noteholders

                                       30
<PAGE>

                  plus the accrued but unpaid interest and other amounts due
                  thereon to the date of distribution;

                  (ii) after giving effect to paragraph (i) above, so much of
                  such payments or amounts remaining as shall be required to pay
                  in full the aggregate unpaid principal amount of all Series B
                  AFE Trust Notes, and the accrued but unpaid interest and other
                  amounts due thereon and all other Secured Obligations in
                  respect of the Series B AFE Trust Notes to the date of
                  distribution, shall be distributed to the Noteholders of
                  Series B AFE Trust Notes, and in case the aggregate amount so
                  to be distributed shall be insufficient to pay in full as
                  aforesaid, then ratably, without priority of one over the
                  other, in the proportion that the aggregate unpaid principal
                  amount of all Series B AFE Trust Notes held by each Noteholder
                  plus the accrued but unpaid interest and other amounts due
                  hereunder or thereunder to the date of distribution, bears to
                  the aggregate unpaid principal amount of all Series B AFE
                  Trust Notes held by all such Noteholders plus the accrued but
                  unpaid interest and other amounts due thereon to the date of
                  distribution; and

                  (iii) after giving effect to paragraph (ii) above, so much of
                  such payments or amounts remaining as shall be required to pay
                  in full the aggregate unpaid principal amount of all Series C-
                  1 AFE Trust Notes, and the accrued but unpaid interest and
                  other amounts due thereon and all other Secured Obligations in
                  respect of the Series C-1 AFE Trust Notes to the date of
                  distribution, shall be distributed to the Noteholders of
                  Series C-1 AFE Trust Notes, and in case the aggregate amount
                  so to be distributed shall be insufficient to pay in full as
                  aforesaid, then ratably, without priority of one over the
                  other, in the proportion that the aggregate unpaid principal
                  amount of all Series C-1 AFE Trust Notes held by each
                  Noteholder plus the accrued but unpaid interest and other
                  amounts due hereunder or thereunder to the date of
                  distribution, bears to the aggregate unpaid principal amount
                  of all Series C-1 AFE Trust Notes held by all such Noteholders
                  plus the accrued but unpaid interest and other amounts due
                  thereon to the date of distribution;

Fourth,           on any Swap Payment Date, so much of such payments or amounts
------
                  remaining (excluding any amount deposited into the AFE
                  Collection Account from the Swap Substitute Account (the "SSA
                                                                            ---
                  Proceeds") for distribution under this Section 3.05) as shall
                  --------
                  be required to pay in full to the Swap Provider the aggregate
                  amount of any AFE Swap Payment; and

Fifth,            so much of such payments or amounts remaining, constituting
-----
                  SSA Proceeds or otherwise, as shall be required to pay in full
                  the aggregate unpaid Certificate Balance of all Certificates,
                  and the accrued but unpaid interest and other amounts due
                  thereon shall be distributed to the holders of Certificates,
                  and in case the aggregate amount so to be distributed shall be
                  insufficient to pay in full as aforesaid, then ratably,
                  without priority of one over the other, in the proportion that
                  the aggregate unpaid Certificate Balance of all Certificates
                  held by each Certificateholder plus the accrued

                                       31
<PAGE>

                  but unpaid interest and other amounts due hereunder or
                  thereunder to the date of distribution, bears to the aggregate
                  unpaid Certificate Balance of all Certificates held by all
                  such Certificateholders plus the accrued but unpaid interest
                  and other amounts due thereon to the date of distribution.

                  Payments of principal amounts on each of the Series A-1,
Series B, and Series C-1 Trust Notes above shall be payable to each installment
thereof in inverse order of maturity. No Make-Whole Amount or Break Amount shall
be payable by reason of the occurrence of an Indenture Event of Default.

                  Section 3.06  Indemnity Payments and Costs and Expenses.
                                -----------------------------------------
(a) The Indenture Trustee shall apply all payments received by it (i) pursuant
to Section 7 of the AFE Note Purchase Agreement to reimburse the Indenture
Trustee, the Noteholders and the Certificateholders for any reasonable costs or
expenses incurred in connection with any redemption of the AFE Trust Notes
and/or the Certificates for which they are entitled to reimbursement or
indemnity by United under the AFE Note Purchase Agreement, and (ii) pursuant to
Section 7 of the AFE Note Purchase Agreement to pay any other amount then due
(except as provided in Section 3.02 through Section 3.05) to the Indenture
Trustee, the Noteholders, the Certificateholders and any Indenture Indemnitees
under this Indenture, the AFE Trust Notes or any other Fundamental Document. In
addition, the Indenture Trustee shall apply all payments received by it pursuant
to Sections 5(i) and 10 of the AFE Note Purchase  Agreement to make the payments
required by Section 2.12.

                  (b) Notwithstanding anything to the contrary contained in this
Article 3, the Indenture Trustee shall distribute promptly upon receipt any
indemnity payment received by it from the Issuer or United in respect of the
Indenture Trustee in its individual capacity, any Noteholder or any other
Indenture Indemnitee directly to the Person entitled thereto, except that any
payment under Section 2.12 shall be distributed to the Subordination Agent to be
distributed in accordance with the terms of the Intercreditor Agreement.

                  Section 3.07  Other Payments. Any payments received by the
                                --------------
Indenture Trustee for which no provision as to the application thereof is made
elsewhere in this Agreement shall be distributed by the Indenture Trustee to the
extent received or realized at any time prior to payment of all Secured
Obligations, in the order of priority specified in Section 3.02, and after
payment in full of all amounts then due in accordance with Section 3.02 to the
holder of the Certificates.

                                   ARTICLE 4

                              COVENANTS OF ISSUER

                  So long as any Secured Obligations shall remain outstanding,
the Issuer covenants and agrees as follows:

                                       32
<PAGE>

          Section 4.01   Payment of Principal and Interest. The Issuer shall
                         ---------------------------------
duly and punctually pay the principal and interest, if any, on the AFE Trust
Notes and the Certificates in accordance with the terms of the AFE Trust Notes
and the Certificates and this Indenture, and shall duly perform in full when due
all of its other Secured Obligations. Without limiting the foregoing, the Issuer
shall distribute (or cause to be distributed) the amounts on deposit in the
Trust Accounts on each Payment Date for the benefit of the AFE Trust Notes and
the Certificates as and to the extent provided in Article 3. Amounts properly
withheld under the Code or any applicable State law by any Person from a payment
to any Noteholder of interest and/or principal shall be considered as having
been paid by the Issuer to such Noteholder for all purposes of this Indenture.

          Section 4.02   Maintenance of Office or Agency. The Indenture Trustee
                         -------------------------------
shall maintain in the city of Hartford, Connecticut an office or agency where
AFE Trust Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the AFE Trust
Notes and this Indenture may be served. The Issuer hereby initially appoints the
Indenture Trustee to serve as its agent for the foregoing purposes. The
Indenture Trustee shall give prompt written notice to the Issuer of the
location, and of any change in the location, of any such office or agency. If at
any time the Indenture Trustee shall fail to maintain any such office or agency
or shall fail to furnish the Issuer with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Issuer hereby appoints the Indenture Trustee as its agent to receive all such
surrenders, notices and demands.

          Section 4.03   Money for Payments To Be Held in Trust. As provided in
                         --------------------------------------
Section 3.01(a), all payments of amounts due and payable with respect to any AFE
Trust Notes or Certificates that are to be made from amounts withdrawn from the
Trust Accounts pursuant to Article 3 shall be made on behalf of the Issuer by
the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn
from the Trust Accounts for payments of AFE Trust Notes or Certificates shall be
paid over to the Issuer.

     On or before each Regular Distribution Date and Redemption Date, the Issuer
shall deposit or cause to be deposited in the Trust Accounts an aggregate sum
sufficient to pay the amounts then becoming due to the Swap Provider or under
the AFE Trust Notes or Certificates, such sum to be held in trust for the
benefit of the Persons entitled thereto.

     The Issuer shall cause each Paying Agent (other than the Indenture Trustee)
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 4.03, that such Paying Agent shall:
     ------------

          (i)  hold all sums held by it for the payment of amounts due with
     respect to the AFE Trust Notes and Certificates in trust for the benefit of
     the Persons entitled thereto until such sums shall be paid to such Persons
     or otherwise disposed of as herein provided and pay such sums to such
     Persons as herein provided;

                                       33
<PAGE>

          (ii)   give the Indenture Trustee written notice of any Indenture
     Default by the Issuer (or any other obligor upon the AFE Trust Notes or
     Certificates) of which it has actual knowledge in the making of any payment
     required to be made with respect to the AFE Trust Notes and Certificates;

          (iii)  at any time during the continuance of any such Indenture
     Default, upon the written request of the Indenture Trustee, forthwith pay
     to the Indenture Trustee all sums so held in trust by such Paying Agent;

          (iv)   immediately resign as a Paying Agent and forthwith pay to the
     Indenture Trustee all sums held by it in trust for the payment of AFE Trust
     Notes and Certificates if at any time it ceases to meet the standards
     required to be met by a Paying Agent; and

          (v)    comply with all requirements of the Code with respect to the
     withholding from any payments made by it on any AFE Trust Notes or
     Certificates of any applicable withholding taxes imposed thereon and with
     respect to any applicable reporting requirements in connection therewith.

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

     Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note or Certificate and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and upon Issuer Request shall be deposited by the Indenture Trustee
in the AFE Collection Account; and the Holder of such Note or Certificate shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
                                        --------  -------
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in the City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. The Indenture
Trustee shall also adopt and employ, at the expense of the Issuer, any other
reasonable means of notification of such repayment (including mailing notice of
such repayment to Holders whose AFE Trust Notes or Certificates have been called
but have not been surrendered for redemption or whose right to or interest in
moneys due and payable but not claimed is determinable from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for each
such Holder).

                                       34
<PAGE>

          Section 4.04   Existence. The Issuer shall keep in full effect its
                         ---------
existence, rights and franchises as a business trust under the laws of the State
of Delaware and shall obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Indenture, the AFE Trust Notes,
the Certificates, the Indenture Estate and each other instrument or agreement
included in the Indenture Estate or to enforce its rights with respect to the
Leased Equipment Notes and each Confirmation.

          Section 4.05   Protection of the Indenture Estate. The Issuer intends
                         ----------------------------------
the security interest Granted pursuant to this Indenture in favor of the
Indenture Trustee for the benefit of Noteholders to be prior to all other liens
in respect of the Indenture Estate, and the Issuer shall take all actions
necessary to obtain and maintain, in favor of the Indenture Trustee for the
benefit of the Noteholders, a first lien on and a first priority, perfected
security interest in the Indenture Estate. The Issuer shall from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and shall take such other action necessary or advisable
to:

          (i)    Grant more effectively all or any portion of the Indenture
     Estate;

          (ii)   maintain the Indenture Estate free and clear of all prior
     liens;

          (iii)  maintain or preserve the lien and security interest (and the
     priority thereof) in favor of the Indenture Trustee for the benefit of the
     Noteholders created by this Indenture or carry out more effectively the
     purposes hereof;

          (iv)   perfect, publish notice of or protect the validity of any Grant
     made or to be made by this Indenture;

          (v)    enforce any of the Indenture Estate;

          (vi)   preserve and defend title to the Indenture Estate and the
     rights of the Indenture Trustee and the Noteholders in such Indenture
     Estate against the claims of all Persons; and

          (vii)  pay all taxes or assessments levied or assessed upon the
     Indenture Estate when due.

The Issuer hereby designates the Indenture Trustee as its agent and attorney-in-
fact to execute any financing statement, continuation statement, instrument of
further assurance or other instrument required to be executed to accomplish the
foregoing; provided, however, that the Indenture Trustee shall not be obligated
to execute such instruments except upon written instruction from the Issuer,
except, that such instruction need not be in writing if delivered with respect
to instruments to be executed by the Indenture Trustee on the Closing Date.

                                       35
<PAGE>

          Section 4.06   Negative Covenants. So long as any AFE Trust Notes are
                         ------------------
Outstanding, the Issuer shall not:

          (i)    except as expressly permitted by this Indenture, sell,
     transfer, exchange or otherwise dispose of any of the properties or assets
     of the Issuer, including those included in the Indenture Estate;

          (ii)   claim any credit on, or make any deduction from the principal
     or interest payable in respect of, the AFE Trust Notes (other than amounts
     properly withheld from such payments under the Code or applicable State
     law) or assert any claim against any present or former Noteholder by reason
     of the payment of the taxes levied or assessed upon any part of the
     Indenture Estate;

          (iii)  (A)   permit the validity or effectiveness of this Indenture to
     be impaired, or permit the lien of this Indenture to be amended,
     hypothecated, subordinated, terminated or discharged, or permit any Person
     to be released from any covenants or obligations with respect to the AFE
     Trust Notes under this Indenture except as may be expressly permitted
     hereby, (B) permit any lien, charge, excise, claim, security interest,
     mortgage or other encumbrance (other than the lien of this Indenture) to be
     created on or extend to or otherwise arise upon or burden the Indenture
     Estate or any part thereof or any interest therein or the proceeds thereof
     (other than any liens which are junior to or are otherwise subordinated to
     the lien in favor of the Indenture Trustee (and to which the Indenture
     Trustee has consented in writing) and tax liens and other liens that arise
     by operation of law) or (C) permit the lien of this Indenture not to
     constitute a valid first priority (other than with respect to any such tax
     lien or other lien not considered a lien) security interest in the
     Indenture Estate;

          (iv)   not contract for, create, incur or suffer to exist any Lien
     upon any of its property or assets, whether now owned or hereafter
     acquired, except for Permitted Liens; or

          (v)    consolidate or merge with or into any other Person.

          Section 4.07   Indenture Documents. The Issuer shall not terminate,
                         -------------------
amend or otherwise modify any Confirmation or any other Indenture Documents
except as expressly permitted therein, and hereby agrees that, from and after
the date of this Agreement, the rights and remedies of the Issuer under each
Confirmation and each of the other Indenture Documents may be exercised by the
Indenture Trustee acting in accordance with the terms of this Agreement, and the
Issuer shall take no action in contravention thereof.

          Section 4.08   No Other Business or Additional Debt. The Issuer shall
                         ------------------------------------
not incur any additional indebtedness or engage in any business or activities
other than the performance of its obligations under the Indenture Documents and
as expressly permitted by Section 2.3 of the Trust Agreement.

                                       36
<PAGE>

          Section 4.09   Further Instruments and Acts. Upon request of the
                         ----------------------------
Indenture Trustee, the Issuer shall execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.

          Section 4.10   Investment Company Act. The Issuer shall conduct its
                         ----------------------
operations in a manner that will not subject it to registration as an
"investment company" under the Investment Company Act of 1940, as amended.

          Section 4.11   Conduct of Business. The Issuer shall (a) conduct its
                         -------------------
business solely in its own name through its duly authorized officers or agents
so as not to mislead others as to the identity of the Issuer with which those
others are concerned, and particularly shall use its best efforts to avoid the
appearance of conducting business on behalf of United, any Certificateholder or
any Affiliate thereof, or that the assets of the Issuer are available to pay the
creditors of United, any Certificateholder or any Affiliate thereof, or any
other entity; (b) maintain records and books of account separate from United,
any Certificateholder or any Affiliate thereof, or any other entity; (c) use its
best efforts to maintain an arm's-length relationship with United, any
Certificateholder or any Affiliate thereof, and shall not hold itself out as
being liable for the debts of United, any Certificateholder or any Affiliate
thereof, or any other entity; (d) use its best efforts to keep its assets and
its liabilities wholly separate from those of all other entities, including
United, any Certificateholder or any Affiliate thereof, except as otherwise
anticipated by the Fundamental Documents; (e) not maintain bank accounts or
other depository accounts to which United, any Certificateholder or any
Affiliate is an account party, into which United, any Certificateholder or any
Affiliate thereof makes deposits or from which United, any Certificateholder or
any Affiliate thereof has the power to make withdrawals and; (f) shall
continuously maintain the resolutions, agreements and other instruments
underlying the transactions described in the Indenture Documents as official
records.

                                   ARTICLE 5

                                  [RESERVED]

                                   ARTICLE 6

                REDEMPTION OF AFE TRUST NOTES AND CERTIFICATES

          Section 6.01   Mandatory Redemption of AFE Trust Notes and
                         -------------------------------------------
Certificates upon Certain Events. Each of the Series A-1, Series A-2, Series B
--------------------------------
and Series C-1 AFE Trust Notes shall be redeemed by the Issuer on any date, upon
notice as specified in Section 6.02, if United voluntarily elects to terminate
the lease relating to any Leased Aircraft securing any outstanding Leased
Equipment Notes, or such Leased Equipment Notes are otherwise prepaid in whole
or in part following any other termination of the related lease (including by
reason of any Event of Loss but other than by reason of a United default), and
in such event, each outstanding AFE Trust Note of

                                       37
<PAGE>

such Series shall be redeemed and distributions in respect of the Certificate
Balance on each outstanding Certificate shall be made to the extent and in the
manner set forth in Section 3.03 and Schedule V hereto, together with accrued
and unpaid interest thereon to but excluding the applicable Redemption Date,
plus (in the case of a voluntary termination of the lease of any Leased
Aircraft) Make-Whole Amount or Break Amount, as applicable, payable with respect
to such Series of AFE Trust Notes or Certificates as the case may be; provided,
                                                                      --------
however, that Certificate Balance in respect of the Certificates shall not be
-------
distributed unless and until the aggregate principal amount of each Series of
AFE Trust Notes required to be redeemed pursuant to Section 3.03 and Schedule V
on such Redemption Date shall have been, or shall simultaneously be, redeemed.

          Section 6.02   Notice of Redemption to Noteholders and
                         ---------------------------------------
Certificateholders. Irrevocable notice of redemption shall be given by first-
------------------
class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior
to the Redemption Date, each Noteholder of AFE Trust Notes or Certificateholder
to be redeemed or purchased, at such Noteholder's or Certificateholder's address
appearing in the Register.

          All notices of redemption shall state:

          (1)  the Redemption Date;

          (2)  the applicable basis for determining the applicable Redemption
     Price;

          (3)  that on the Redemption Date, the applicable Redemption Price will
     become due and payable upon each such AFE Trust Note or Certificate, and
     that interest on AFE Trust Notes or Certificates shall cease to accrue on
     and after such Redemption Date;

          (4)  the place or places where such AFE Trust Notes or Certificates
     are to be surrendered for payment of the applicable Redemption Price; and

Notice of redemption of AFE Trust Notes to be redeemed shall be given by the
Indenture Trustee.

          Section 6.03   Deposit of Redemption Price. On or before the
                         ---------------------------
Redemption Date, the Issuer shall to the extent an amount equal to the
Redemption Price for the AFE Trust Notes or Certificates to be redeemed on the
Redemption Date shall not then be held in the Indenture Estate, deposit or cause
to be deposited with the Indenture Trustee or the Paying Agent by 11:00 a.m.,
Chicago time, in immediately available funds the Redemption Price of the AFE
Trust Notes and Certificates to be redeemed on the Redemption Date, together
with accrued interest thereon and, in the case of a redemption pursuant to
Section 6.01, Make-Whole Amount or Break Amount, if any.

          Section 6.04   AFE Trust Notes and Certificates Payable on Redemption
                         ------------------------------------------------------
Date. Notice of redemption or purchase having been given as aforesaid, the AFE
----
Trust Notes and Certificates being redeemed shall, on the applicable Redemption
Date, become due and payable (at the Corporate Trust Department of the Indenture
Trustee or at any office or agency maintained for such purposes pursuant to
Section 2.03 if such Redemption is in whole), and from and after such Redemption
Date (unless there shall be a default in the deposit of the applicable
Redemption Price,

                                       38
<PAGE>

accrued interest, Break Amount or Make-Whole Amount, if any, pursuant to Section
6.03), any AFE Trust Notes or Certificates then outstanding and being redeemed
shall, to the extent such AFE Trust Note or Certificate shall have been
redeemed, cease to bear interest or be deemed to be outstanding for any purpose.
Upon surrender of any such AFE Trust Note or Certificate for any such redemption
in whole in accordance with said notice such AFE Trust Note or Certificate shall
be paid at the Redemption Price.

          If any AFE Trust Note or Certificate called for redemption shall not
be so paid upon surrender thereof for redemption, the principal amount thereof
shall, until paid, continue to bear interest from the applicable Redemption Date
at the interest rate applicable to such AFE Trust Note or Certificate.

                                   ARTICLE 7

                      MATTERS CONCERNING UNCLAIMED MONIES

          Section 7.01   Repayment of Monies for Payments Held by the Indenture
                         ------------------------------------------------------
Trustee. Any money held by the Indenture Trustee or any Paying Agent in trust
-------
for any payment in respect of any Secured Obligation, including without
limitation any money deposited pursuant to Section 6.03 or Article 10 and
remaining unclaimed for two years after the due date for such payment, shall,
subject to applicable escheatment laws, be paid to the Issuer. The Noteholders
of any outstanding AFE Trust Notes, the Certificateholders of any outstanding
Certificates and/or the Swap Provider shall thereafter, as unsecured general
creditors, look only to the Issuer for payment thereof, and all liability of the
Indenture Trustee or any such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Indenture Trustee or such
                       --------  -------
Paying Agent, before being required to make any such repayment, may at the
expense of the Issuer cause to be mailed to each such Noteholder and the Swap
Provider notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of
mailing, any unclaimed balance of such money then remaining will be repaid to
the Issuer as provided herein.

                                   ARTICLE 8

                             DEFAULTS AND REMEDIES

          Section 8.01   Indenture Events of Default. The following events shall
                         ---------------------------
constitute "Indenture Events of Default" under this Agreement (whether any such
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body):

          (a)  any Indenture Event of Default under any Leased Aircraft
     Indenture;

                                       39
<PAGE>

          (b)  Issuer shall fail to pay (i) any amount of interest on or
     principal of any AFE Trust Note when due and payable (whether upon
     redemption or purchase, final maturity, acceleration or otherwise) and such
     failure shall continue unremedied for 10 Business Days after such amount
     shall have become due and payable, (ii) any other amount payable by Issuer
     hereunder or under any other Indenture Document to which the Issuer is a
     party (other than the payment of any Make-Whole Amount or Break Amount or
     other amounts due and payable under Section 3.06(a) and any AFE Swap
     Payment when due and payable and such failure shall continue unremedied for
     more than 20 Business Days after receipt by Issuer of written notice from
     the Indenture Trustee; or

          (c)  an Event of Default by United as Swap Provider occurs under and
     as defined in any Confirmation; or

          (d)  Issuer shall have failed to perform or observe (or caused to be
     performed and observed) in any material respect any other covenant or
     agreement (other than the payment of any Make-Whole Amount or Break Amount
     or other amounts due and payable under Section 3.06(a) and other than any
     AFE Swap Payment to be performed or observed by it hereunder or any
     Indenture Document to which the Issuer is a party, and such failure shall
     continue unremedied for a period of 30 days after receipt by Issuer of
     written notice thereof from Indenture Trustee; or

          (e)  any representation or warranty made by Issuer herein or in any
     Indenture Document to which the Issuer is a party shall prove to have been
     incorrect in any material respect at the time made and shall remain
     material at the time in question; provided, however, such incorrectness
                                       --------  -------
     shall constitute a default hereunder only if such incorrectness shall
     continue uncured for a period of 30 days after the receipt by Issuer of a
     written notice from (x) Indenture Trustee or, (y) subject to Section 2.6 of
     the Intercreditor Agreement, holders of 25% in outstanding principal amount
     of AFE Trust Notes advising Issuer of the existence of such incorrectness;
     or

          (f)  the commencement of an involuntary case or other proceeding in
     respect of Issuer in an involuntary case under the federal bankruptcy laws,
     as now or hereafter constituted, or any other applicable federal or state
     bankruptcy, insolvency or other similar law in the United States or seeking
     the appointment of a receiver, liquidator, assignee, custodian, trustee,
     sequestrator (or similar official) of Issuer or for all or substantially
     all of its property, or seeking the winding-up or liquidation of its
     affairs and the continuation of any such case or other proceeding
     undismissed or unstayed for a period of 90 consecutive days or an order for
     relief under Chapter 11 of the Bankruptcy Code with respect to Issuer as
     debtor or any other order, judgment or decree shall be entered in any
     proceeding by any court of competent jurisdiction appointing, without the
     consent of Issuer, a receiver, trustee or liquidator of Issuer, or for all
     or substantially all of its property, or sequestering of all or
     substantially all of the property of Issuer and any such order, judgment or
     decree or appointment or sequestration shall be final or shall remain in
     force undismissed, unstayed or unvacated for a period of 90 days after the
     date of entry thereof; or

                                       40
<PAGE>

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

          Section 8.02   Acceleration; Rescission and Annulment. If an Indenture
                         --------------------------------------
Event of Default under Section 8.01(f) or 8.01(g) shall have occurred and is
continuing, then the principal of the all AFE Trust Notes, together with accrued
but unpaid interest thereon, and all other amounts due thereunder and hereunder
shall immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived, and if any other Indenture Event of
Default occurs and is continuing, the Indenture Trustee may (and shall, subject
to Section 2.6 of the Intercreditor Agreement, upon receipt of a written demand
therefor from the Majority in Interest of Noteholders), by notice to the Issuer
declare the principal of all the AFE Trust Notes to be immediately due and
payable. Upon such declaration in the case of the AFE Trust Notes, the principal
of all AFE Trust Notes together with accrued interest thereon from the date in
respect of which interest was last paid hereunder to the date payment of such
principal has been made or duly provided for, together with all other sums then
payable hereunder but without Make-Whole Amount or Break Amount by reason of any
such declaration. At any time after such declaration or acceleration and prior
to the sale or disposition of the Indenture Estate, the Indenture Trustee may
(and shall upon receipt of a written demand therefor from the Majority in
Interest Noteholders) by notice to the Issuer, rescind either or both of such
acceleration or declaration and thereby annul its consequences if: (i) an amount
sufficient to pay all principal on any AFE Trust Notes which have become due
otherwise than by such acceleration or declaration and any interest thereon and
interest due or past due, if any, and all sums due and payable to the Indenture
Trustee have been deposited with the Indenture Trustee; (ii) the rescission
would not conflict with any judgment or decree; (iii) all existing Indenture
Defaults and Indenture Events of Default under this Agreement have been cured or
waived except nonpayment of principal of, or interest on, the AFE Trust Notes
that has become due solely because of such acceleration; and (iv) any existing
Indenture Event of Default under Section 8.01(c) has been cured or any such
Confirmation giving rise to any such Indenture Event of Default has been
replaced by a Qualified Substitute or a deposit has been made into the Swap
Substitute Account in accordance with such Confirmation. No such rescission
shall affect any subsequent default or impair any right consequent thereon.

          Section 8.03   Other Remedies Available to Indenture Trustee. (a)
                         ---------------------------------------------
After an Indenture Event of Default shall have occurred and so long as such
Indenture Event of Default shall be continuing, then and in every such case the
Indenture Trustee, as holder of a security interest in the Leased Equipment
Notes, each Confirmation and other property in the Indenture Estate may, and
when required pursuant to the provisions of Article 9 shall, exercise, any or
all of the rights and powers and pursue any and all of the remedies accorded to
a secured party under applicable law, may recover judgment in its own name as
Indenture Trustee against the Indenture Estate and may take

                                       41
<PAGE>

possession of all or any part of the Indenture Estate and may exclude the Issuer
and all Persons claiming under any of them wholly or partly therefrom.

          (b)  After an Indenture Event of Default shall have occurred and so
long as such Indenture Event of Default shall be continuing, the Indenture
Trustee may, if at the time such action may be lawful and always subject to
compliance with any mandatory legal requirements, either with or without taking
possession, and either before or after taking possession and without instituting
any legal proceedings whatsoever, and having first given notice of such sale by
registered mail to the Issuer, at least 30 days prior to the date of such sale,
and any other notice which may be required by law, sell and dispose of the
Indenture Estate, or any part thereof, or interest therein, at public auction or
private sale, in one lot as an entirety or in separate lots, and either for cash
or on credit and on such terms as the Indenture Trustee may determine, and at
any place (whether or not it be the location of the Indenture Estate or any part
thereof) and time designated in the notice above referred to; provided, however,
                                                              --------  -------
that, notwithstanding any provision herein to the contrary, the Indenture
Trustee may not provide the notice provided for above of its intention to sell
any of the Indenture Estate or exercise remedies against the Indenture Estate
seeking to deprive the Issuer of its rights therein unless a declaration of
acceleration has been made pursuant to Section 8.02 or the AFE Trust Notes have
otherwise theretofore become due and payable through acceleration in accordance
with the provisions of Section 8.01, redemption or otherwise. Any such sale or
sales may be adjourned from time to time by announcement at the time and place
appointed for such sale or sales, or for any such adjourned sale or sales,
without further notice, and the Indenture Trustee and the Noteholder or
Noteholders of any AFE Trust Notes, or any interest therein, may bid and become
the purchaser at any such sale and each Noteholder shall be entitled at any sale
to credit against any purchase price bid at such sale by such Noteholder all or
any part of the unpaid Secured Obligations owing to such Noteholder secured by
the Lien of this Agreement (only to the extent that such unpaid Secured
Obligation would have been paid to such Noteholder pursuant to Article 3 if such
purchase price were paid in cash and this sentence, other than this
parenthetical, was not given effect). The Indenture Trustee may exercise such
right without possession or production of the AFE Trust Notes or proof of
ownership thereof, and as representative of the Noteholders may exercise such
right without notice to the Noteholders or including the Noteholders and the
Swap Provider as parties to any suit or proceeding relating to foreclosure of
any property in the Indenture Estate.

          (c)  If an Indenture Event of Default has occurred and is continuing,
the Indenture Trustee shall also be entitled to pursue all or any part of the
Indenture Estate wherever it may be found and may enter any of the premises of
the Issuer or any other Person wherever the Indenture Estate may be or be
supposed to be and search for the Indenture Estate and take possession of any
item of the Indenture Estate pursuant to this Section 8.03(c). In each such
case, the Indenture Trustee shall have the right to control or manage the
Indenture Estate, and to carry on business and exercise all rights and powers of
the Issuer relating to the Indenture Estate as the Indenture Trustee shall deem
appropriate. The Indenture Trustee shall be entitled to collect and receive
directly all rents, issues, profits, revenues or other income pursuant to this
Section 8.03(c). In accordance with the terms of this Section 8.03(c), such
rents, issues, profits, revenues and other income shall be applied to pay the
expenses of controlling or managing the Indenture Estate, and to make all
payments which the Indenture Trustee may be required or may elect to make, if
any, for taxes, assessments or other

                                       42
<PAGE>

proper charges upon the Indenture Estate or any part thereof (including the
employment of accountants to examine, inspect and make reports upon the
properties and books and records of the Issuer), and all other payments which
the Indenture Trustee may be required or authorized to make under any provision
of this Agreement, including this Section 8.03(c), as well as just and
reasonable compensation for the services of the Indenture Trustee, and of all
persons properly engaged and employed by the Indenture Trustee.

          (d)  Subject to Section 8.03(b), the Indenture Trustee may proceed to
protect and enforce this Agreement, the AFE Trust Notes and, to the extent of
any termination right or default existing thereunder, terminate or otherwise
enforce each Confirmation, in each case by suit or suits or proceedings in
equity, at law or in bankruptcy, and whether for the specific performance of any
covenant or agreement herein contained or in execution or aid of any power
herein granted; or for foreclosure hereunder, or for the appointment of a
receiver or receivers for the Indenture Estate or any part thereof, or for the
recovery of judgment for the indebtedness secured by the Lien created under this
Agreement or for the enforcement of any other proper, legal or equitable remedy
available under applicable law.

          (e)  Each and every right, power and remedy herein given to the
Indenture Trustee specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time and as often in
such order as may be deemed expedient by the Indenture Trustee, and the exercise
or the beginning of the exercise of any power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Indenture Trustee in the
exercise of any right, remedy or power or in pursuing any remedy shall impair
any such right, power or remedy or be construed to be a waiver of any default on
the part of the Issuer or to be an acquiescence therein.

          (f)  Notwithstanding anything contained herein to the contrary, so
long as the Subordination Agent (acting on behalf of the Pass Through Trustees)
or any Pass Through Trustee is a Noteholder, the Indenture Trustee is not
authorized or empowered to acquire title to the Indenture Estate, or to take any
action with respect to any of the Indenture Estate so acquired by it, if such
acquisition or action would cause any Pass Through Trust to fail to qualify as a
"grantor trust" for federal income tax purposes.

          Section  8.04  Waiver of Existing Defaults. The Majority in Interest
                         ---------------------------
of Noteholders by notice to the Indenture Trustee may waive on behalf of the
Noteholders an existing Indenture Default or Indenture Event of Default and its
consequences except: (i) an Indenture Default or Indenture Event of Default in
the payment of the principal of or interest on any AFE Trust Note; (ii) a
payment default by the Swap Provider constituting an Event of Default under and
as defined in any Confirmation evidencing a Transaction; or (iii) in respect of
a covenant or provision hereof which pursuant to Section 11.02 cannot be amended
or modified without the consent of each Noteholder affected thereby.

                                       43
<PAGE>

          Section 8.05   Control by Majority in Interest of Noteholders. Except
                         ----------------------------------------------
as otherwise expressly provided herein (but subject always to the provisions of
the Intercreditor Agreement), the Majority in Interest of Noteholders may direct
the time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee or exercising any trust or power conferred on it by
this Agreement. However, the Indenture Trustee may refuse to follow any
direction that conflicts with law or this Agreement that would subject the
Indenture Trustee to personal liability.

          Section 8.06   Indenture Trustee May File Proofs of Claim. The
                         ------------------------------------------
Indenture Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee, the Noteholders and the Issuer allowed in any judicial proceedings
relating to the Issuer, its creditors or its property.

                                   ARTICLE 9

                               INDENTURE TRUSTEE

          Section 9.01   Duties of Indenture Trustee. (a) The Indenture Trustee
                         ---------------------------
may refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense.

          (b)  Subject to the provisions of Sections 2.08 and 9.04, the
Indenture Trustee shall not be liable for interest on any money received except
as otherwise provided in any other Indenture Document. Money held in trust by
the Indenture Trustee need not be segregated from other funds except to the
extent required by law.

          Section 9.02   Rights of Indenture Trustee. (a) The Indenture Trustee
                         ---------------------------
may rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate any
fact or matter stated in the document.

          (b)  Before the Indenture Trustee acts or refrains from acting, it may
consult with counsel or require an officer's certificate or an opinion of
counsel from the Issuer after which it will take such action or refrain from
acting as it deems appropriate. The Indenture Trustee shall not be liable for
any action it takes or omits to take in good faith and in accordance herewith in
reliance on a resolution of the Board of Directors of the Issuer, the written
advice of counsel acceptable to the Issuer skilled in the area for which such
advice is sought and the Indenture Trustee, officer's certificate or opinions of
counsel provided by the Issuer.

          (c)  The Indenture Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any such agent appointed with
due care; provided that, no such agents shall be appointed by the Indenture
          --------
Trustee without the consent of the Issuer, such consent not to be unreasonably
withheld.

                                       44
<PAGE>

          (d)  The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers.

          (e)  If an Indenture Event of Default under this Agreement has
occurred and is continuing, the Indenture Trustee shall exercise its rights and
powers under this Agreement, and shall 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 his own affairs.

          (f)  The Indenture Trustee, in its individual capacity, shall not be
answerable or accountable under any circumstances, except (i) for its own
willful misconduct or gross negligence (other than for the handling of funds,
for which the standard of accountability shall be willful misconduct or
negligence).

          (g)  Except in accordance with written instructions furnished in
accordance with the terms of this Indenture, the Indenture Trustee shall have no
duty to (i) see to any recording or filing of this Trust Indenture or any other
document, or to see to the maintenance of any such registration, record or
filing, (ii) see to the payment or discharge of any lien or encumbrance of any
kind against any part of the Indenture Estate, or (iii) ascertain or inquire as
to the performance or observance of any of the Issuer's covenants in this
Indenture.

          (h)  The Indenture Trustee, in its individual or trust capacities,
does not make, nor shall it be deemed to have made, any representation or
warranty as to the validity, legality or enforceability of this Indenture or any
other Indenture Documents or as to the correctness of any statement contained in
any thereof, except for the representations and warranties of the Indenture
Trustee, in each case expressly made in this Indenture or in the other Indenture
Documents.

          Section 9.03   Individual Rights of Indenture Trustee. The Indenture
                         --------------------------------------
Trustee in its individual or any other capacity may become the owner or pledgee
of AFE Trust Notes and may otherwise deal with the Issuer or an Affiliate of the
Issuer or a subsidiary of the Issuer with the same rights it would have if it
were not the Indenture Trustee. Any Agent may do the same with like rights.

          Section 9.04   Funds May Be Held by Indenture Trustee or Paying Agent;
                         -------------------------------------------------------
Investments. Any monies (including without limitation for purpose of this
-----------
Section 9.04 Permitted Investments constituting the proceeds of the maturity,
sale or other disposition of any Permitted Investment) held by the Indenture
Trustee or the Paying Agent hereunder as part of the Indenture Estate, until
paid out by the Indenture Trustee or the Paying Agent as herein provided, (i)
subject to clause (ii) below, may be carried by the Indenture Trustee or the
Paying Agent on deposit with itself or on deposit to its account with any bank,
trust company or national banking association incorporated or doing business
under the laws of the United States of America or one of the States thereof
having combined capital and surplus and retained earnings of at least
$75,000,000, and neither the Indenture Trustee nor the Paying Agent shall have
any liability for interest upon any such monies except as otherwise agreed in
writing or (ii) at any time and from time to time, at the request

                                       45
<PAGE>

of the Issuer, shall be invested and reinvested in Permitted Investments as
specified in such request (if such investments are reasonably available for
purchase) and sold, in any case at such prices, including accrued interest or
its equivalent, as are set forth in such request, and such Permitted Investments
shall be held by the Indenture Trustee in trust as part of the Indenture Estate
until so sold; provided that the Issuer shall upon demand pay to the Indenture
               --------
Trustee the amount of any loss realized upon maturity, sale or other disposition
of any such Permitted Investment and be entitled to receive from the Indenture
Trustee, and the Indenture Trustee shall promptly pay to the Issuer, any profit,
income, interest, dividend or gain realized upon maturity, sale or other
disposition of any Permitted Investment. The Indenture Trustee shall not be
responsible for any losses on any investments or sales of Permitted Investments
made pursuant to the procedure specified in this Section 9.04 other than by
reason of its willful misconduct or gross negligence. All Permitted Investments
held by the Indenture Trustee or the Paying Agent pursuant to this Section 9.04
shall either be (a) registered in the name of, payable to the order of, or
specially indorsed to, the Indenture Trustee or the Paying Agent, as the case
may be, or (b) held in an Eligible Account. For purposes of this Section 9.04,
"Eligible Account" means an account established by and with an Eligible
Institution at the request of the Indenture Trustee or the Paying Agent, as the
case may be, which institution agrees, for all purposes of the applicable
Uniform Commercial Code ("UCC") including Article 8 thereof, that (a) such
account shall be a "securities account" (as defined in Section 8-501 of the
UCC), (b) all property (other than cash) credited to such account shall be
treated as a "financial asset" (as defined in Section 8-102(9) of the UCC), (c)
the Indenture Trustee or the Paying Agent, as the case may be, shall be the
"entitlement holder" (as defined in Section 8-102(7) of the UCC) in respect of
such account, (d) the Eligible Institution will comply with all entitlement
orders issued by the Indenture Trustee or the Paying Agent, as the case may be,
to the exclusion of the Issuer, and (e) the "securities intermediary
jurisdiction" (under Section 8-110(e) of the UCC) shall be the State of
Illinois. For purposes of this Section 9.04, "Eligible Institution" means the
corporate trust department of (a) State Street, acting solely in its capacity as
a "securities intermediary" (as defined in Section 8-102(14) of the UCC), or (b)
a depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
U.S. branch of a foreign bank), which has a long-term unsecured debt rating from
Moody's and Standard & Poor's of at least A-3 or its equivalent.

          Section 9.05   Notice of Defaults. If an Indenture Default or
                         ------------------
Indenture Event of Default under this Agreement occurs and is continuing and the
Indenture Trustee has actual knowledge of same, the Indenture Trustee shall (i)
promptly send written notice thereof to the Issuer and (ii) within 90 days after
the occurrence of an Indenture Event of Default, mail to each Noteholder and the
Swap Provider notice of all uncured Indenture Events of Default under this
Agreement. Except in the case of a default in the payment of the principal of,
Make-Whole Amount or Break Amount, if any, or interest on any AFE Trust Note,
the Indenture Trustee shall be protected in withholding the notice required
under clause (ii) above if and so long as the executive committee or trust
committee of directors of the Indenture Trustee and/or other responsible
officers thereof in good faith determines that withholding such notice is in the
best interests of the Noteholders.

          Section 9.06   Compensation and Indemnity. The Indenture Trustee shall
                         --------------------------
not be required to take any action or refrain from taking any action under
Section 9.05 (other than the first

                                       46
<PAGE>

sentence thereof) or Article 8 unless the Indenture Trustee shall have been
indemnified to its reasonable satisfaction against any liability, cost or
expense (including counsel fees) that may be incurred in connection therewith
pursuant to a written agreement with one or more Noteholders. The Indenture
Trustee agrees that it shall look solely to the Noteholders for the satisfaction
of any indemnity (except expenses, costs or other amounts reimbursable under
clause "First" of Section 3.05) owed to it pursuant to this Section 9.06. The
Indenture Trustee shall not be under any obligation to take any action under
this Agreement or any other Indenture Document and nothing herein or therein
shall require the Indenture Trustee to expend or risk its own funds or otherwise
incur the risk of any financial ability in the performance of any of its rights
or powers if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. The Indenture Trustee shall not be required to take
any action under Section 9.05 (other than the first sentence thereof) or Article
8, nor shall any other provision of this Agreement or any other Indenture
Document be deemed to impose a duty on the Indenture Trustee to take any action,
if the Indenture Trustee shall have been advised by counsel that such action is
contrary to the terms hereof or is otherwise contrary to law.

          Section 9.07   Replacement of Indenture Trustee. (a) The resignation
                         --------------------------------
or removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee shall become effective only upon the successor Indenture Trustee's
acceptance of appointment as provided in this Section.

          (b)  The Indenture Trustee may resign by giving at least 30 days'
prior written notice to the Issuer. A Majority in Interest of Noteholders may
remove the Indenture Trustee by giving at least 30 days' prior written notice to
the Indenture Trustee and the Issuer and may appoint a successor Indenture
Trustee for such AFE Trust Notes with the Issuer's consent. The Issuer may
remove the Indenture Trustee at any time no Indenture Default under Section
8.01(b), (f) or (g) or any Indenture Event of Default shall have occurred and be
continuing, if the Issuer determines in its reasonable business judgment that
such removal would be appropriate or if:

          (1)  the Indenture Trustee fails to comply with Section 9.09;

          (2)  the Indenture Trustee is adjudged a bankrupt or an insolvent;

          (3)  a receiver or public officer takes charge of the Indenture
     Trustee or its property; or

          (4)  the Indenture Trustee becomes incapable of acting.

          (c)  If a vacancy exists in the office of Indenture Trustee for any
reason, the Issuer shall promptly appoint a successor Indenture Trustee.

          (d)  If a successor Indenture Trustee does not take office within 30
days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or a Majority in Interest of Noteholders may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.

                                       47
<PAGE>

          (e)  If the Indenture Trustee fails to comply with Section 9.09, any
Noteholder may petition any court of competent jurisdiction for the removal of
such Indenture Trustee and the appointment of a successor Indenture Trustee.

          (f)  A successor Indenture Trustee shall deliver a written acceptance
of its appointment to the retiring Indenture Trustee and to the Issuer.
Thereupon, the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the retiring Indenture Trustee for which the successor
Indenture Trustee is to be acting as Indenture Trustee under this Agreement. The
retiring Indenture Trustee shall promptly transfer all property and all books
and records relating to the administration of the Indenture Estate held by it as
Indenture Trustee to the successor Indenture Trustee. The Indenture Trustee
shall give notice of each appointment of a successor Indenture Trustee to the
Noteholders, by mailing written notice of such event by first-class mail to the
Noteholders.

          Section 9.08   Successor Indenture Trustee, Agents by Merger, etc. If
                         ---------------------------------------------------
the Indenture Trustee or any Agent consolidates with, merges or converts into,
or transfers all or substantially all of its corporate trust business assets to,
another corporation, the successor corporation, without any further act, shall
be the successor Indenture Trustee or Agent, as the case may be.

          Section 9.09   Eligibility; Disqualification. This Agreement shall at
                         -----------------------------
all times have an Indenture Trustee which (i) shall have a combined capital and
surplus of at least $75,000,000 or (ii) shall have a combined capital and
surplus in excess of $7,500,000 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, and which, in any case,
shall be a Citizen of the United States. 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 9.09, 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 Indenture Trustee shall cease to be eligible
in accordance with the provisions of this Section 9.09, the Indenture Trustee
shall resign immediately in the manner and with the effect specified in Section
9.07.

          Section 9.10   Trustee's Liens. The Indenture Trustee in its
                         ---------------
individual capacity agrees that it will at its own cost and expense promptly
take such action as may be necessary to duly discharge and satisfy in full all
Liens ("Trustee's Liens") on the Indenture Estate which are either (i)
attributable to the Indenture Trustee in its individual capacity and which are
unrelated to the transactions contemplated by the Indenture Documents, or (ii)
which are attributable to the Indenture Trustee as trustee hereunder or in its
individual capacity and which arise out of acts or omissions which are not
expressly contemplated by this Agreement.

                                       48
<PAGE>

                                  ARTICLE 10

                        TERMINATION OF TRUST INDENTURE

                  Section 10.01  Termination of Trust Indenture. Upon (or at any
                                 ------------------------------
time after) payment in full of the outstanding principal amount of, Make-Whole
Amount or Break Amount, if any, and interest on and all other amounts due under
all AFE Trust Notes and Certificates and provided that all other Secured
Obligations due to the Noteholders, Certificateholders and the Indenture
Indemnitees shall have been satisfied or paid in full, the Issuer shall direct
the Indenture Trustee to execute and deliver to or as directed in writing by the
Issuer an appropriate instrument releasing the Leased Equipment Notes and all
other property included in the Indenture Estate from the Lien of this Agreement
and the Indenture Trustee shall execute and deliver such instrument as
aforesaid; provided, however, that this Agreement and the trusts created hereby
           --------  -------
shall earlier terminate and this Agreement shall be of no further force or
effect upon any sale or other final disposition by the Indenture Trustee of all
property constituting part of the Indenture Estate and the final distribution by
the Indenture Trustee of all monies or other property or proceeds constituting
part of the Indenture Estate in accordance with the terms hereof. Except as
aforesaid otherwise provided, this Agreement and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.

                  Section 10.02 Survival of Certain Obligations. Notwithstanding
                                -------------------------------
the provisions of Section 10.01, the obligations of the Indenture Trustee
contained in Sections 2.01 through 2.12, Section 7.01, Section 9.10 and the
other rights, duties, immunities and privileges hereunder of the Indenture
Trustee shall survive.

                                  ARTICLE 11

                            AMENDMENTS AND WAIVERS

                  Section 11.01  Amendments to this Agreement Without Consent of
                                 -----------------------------------------------
the Noteholders or Certificateholders. The Issuer and the Indenture Trustee may
-------------------------------------
enter into one or more agreements supplemental hereto without the consent of any
Noteholder, Certificateholder or any other Person for any of the following
purposes:

                  (1) to correct any mistake or cure any ambiguity, defect or
         inconsistency herein or in the AFE Trust Notes or to make any change
         not inconsistent with the provisions hereof; provided that such change
                                                      --------
         does not adversely affect the interests of the Swap Provider or any
         Noteholder or Certificateholder;

                  (2) to evidence the succession of a new trustee hereunder, the
         removal of the trustee hereunder or the appointment of any co-trustee
         or co-trustees or any separate or additional trustee or trustees;

                                       49
<PAGE>

                  (3) to correct or amplify the description of any property at
         any time subject to the Lien of this Agreement or better to assure,
         convey and confirm unto the Indenture Trustee any property subject or
         required to be subject to the Lien of this Agreement;

                  (4) to add to the covenants of the Issuer, for the benefit of
         the Noteholders or to surrender any rights or power herein conferred
         upon the Issuer;

                  (5) to add to the rights of the Noteholders; and

                  (6) to include on the AFE Trust Notes any legend as may be
         required by applicable law.

                  Section 11.02  Amendments to this Agreement with Consent of
                                 --------------------------------------------
Noteholders. (a) With the written consent of the AFE Indenture Trustee on behalf
-----------
of the Issuer and a Majority in Interest of Noteholders and a Majority in
Interest of Certificateholders, the Issuer and the Indenture Trustee may enter
into such supplemental agreements to add any provisions to or to change or
eliminate any provisions of this Agreement or of any such supplemental
agreements or to modify the rights of the Noteholders or the Certificateholders;
provided, however, that, an amendment under this Section 11.02 may not without
--------  -------
the consent of each of the Noteholders of the applicable Series of AFE Trust
Notes, each of the Certificateholders and, in the case of the Series A-1, Series
A-2 or Series B AFE Trust Notes, the applicable Liquidity Provider:

                  (1) with respect to the AFE Trust Notes, reduce the principal
         amount of, Make- Whole Amount or Break Amount, if any, or any
         installment of interest on, such Series of AFE Trust Notes and, with
         respect to the Certificates, reduce the Certificate Balance of, Make-
         Whole Amount, if any, or any installment of interest on, such
         Certificates; or

                  (2) change the date on which any principal amount of, any
         Amortization Amount payable with respect to, Make-Whole Amount or Break
         Amount, if any, or interest on such Series of AFE Trust Notes or
         Certificates, is due or payable; or

                  (3) with respect to each Series of AFE Trust Notes, create any
         Lien on the Indenture Estate prior to or pari passu with the Lien
                                                  ---- -----
         thereon under this Agreement except such as are permitted by this
         Agreement, or deprive any Noteholder of the benefit of the Lien on the
         Indenture Estate created by this Agreement; or

                  (4) with respect to such Series of AFE Trust Notes or
         Certificates, reduce the percentage in principal amount of the
         outstanding AFE Trust Notes or Certificate Balance of the outstanding
         Certificates, the consent of whose Noteholders or Certificateholders is
         required for any such supplemental agreement, or the consent of whose
         Noteholders or Certificateholders is required for any waiver (of
         compliance with certain provisions of this Agreement or of certain
         defaults hereunder or their consequences) provided for in this
         Agreement;

                                       50
<PAGE>

                  (5) make any change in Article 3, Article 6, Section 8.01
         (except to add Indenture Events of Default) or this Section 11.02(a);
         or

                  (b) It is not necessary under this Section 11.02 for the
Noteholders, or the Certificateholders to consent to the particular form of any
proposed supplemental agreement, but it is sufficient if they consent to the
substance thereof.

                  (c) Promptly after the execution by the Issuer and the
Indenture Trustee of any supplemental agreement pursuant to the provisions of
this Section 11.02, the Indenture Trustee shall transmit by first-class mail a
notice, setting forth in general terms the substance of such supplemental
agreement, to all Noteholders and Certificateholders, as the names and addresses
of such Noteholders and Certificateholders appear on the applicable Register and
the Swap Provider. Any failure of the Indenture Trustee to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental agreement.

                  Section 11.03  Revocation and Effect of Consents. Until an
                                 ---------------------------------
amendment or waiver becomes effective, a consent to it by a Noteholder or
Certificateholder is a continuing consent by the Noteholder or Certificateholder
and every subsequent Noteholder or Certificateholder, even if notation of the
consent is not made on any AFE Trust Note or Certificate. However, any such
Noteholder or Certificateholder or subsequent Noteholder or Certificateholder
may revoke the consent as to his AFE Trust Note or Certificate if the Indenture
Trustee receives the notice of revocation before the date the amendment or
waiver becomes effective. After an amendment or waiver becomes effective, it
shall bind every Noteholder or Certificateholder affected by such amendment or
waiver.

                  Section 11.04  Notation on or Exchange of AFE Trust Notes or
                                 ---------------------------------------------
Certificates. The Indenture Trustee may place an appropriate notation about an
------------
amendment or waiver on any AFE Trust Note or Certificate thereafter executed.
The Indenture Trustee in exchange for such AFE Trust Notes or Certificates may
execute new AFE Trust Notes or Certificates that reflect the amendment or
waiver.

                  Section 11.05  Indenture Trustee Protected. The Indenture
                                 ---------------------------
Trustee need not sign any supplemental agreement that adversely affects its
rights.

                  Section 11.06  Corrective Amendments to Confirmations. Subject
                                 --------------------------------------
to the provisions of Sections 4.07, 11.01 and 11.02, without the consent of any
Noteholder or any Certificateholder, (a) the Issuer may modify, amend or
supplement any Confirmation in order to cure any ambiguity, to correct or
supplement any provisions thereof which may be defective or inconsistent with
any other provision thereof or of any provision of this Agreement, or to make
any other provision with respect to matters or questions arising thereunder
which shall not be inconsistent with the provisions of this Indenture, and (b)
the Issuer may enter into any Qualified Substitute or modify, amend or
supplement this Indenture in order to give effect to any Qualified Substitute,
provided in each case

                                       51
<PAGE>

that the taking of any such action shall not adversely affect the interests of
the Noteholders or the Certificateholders, and a Ratings Confirmation is
obtained with respect thereto.

                  Section 11.07  Notices to Liquidity Providers. Any request
                                 ------------------------------
made to any Noteholder for consent to any amendment or supplement pursuant to
this Article 11 shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider at its address set forth in the Intercreditor Agreement.

                                  ARTICLE 12

                                 MISCELLANEOUS

                  Section 12.01  Notices.  (a)  Unless otherwise specifically
                                 -------
provided for 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 hand-delivery, overnight courier service, mail, or telecopier (to be
confirmed by hand delivery, overnight courier service or mail) addressed as
indicated below and any such notice shall be effective, in the case of hand-
delivery, when delivered, in the case of overnight courier service, one Business
Day after delivery with charges paid to a courier service with instructions for
overnight delivery, in the case of mail, three Business Days after delivery to
the postal service with certified or registered mail charges paid, and, in the
case of telecopier, upon confirmed transmittal:

                  if to the Issuer, to:

                           United Air Lines, Inc.
                           P.O. Box 66100
                           Chicago, Illinois 60666
                           Attention:   Assistant Treasurer
                           Telecopier:  (847) 700-7117

                  or if by overnight courier, to:

                           1200 East Algonquin Road
                           Elk Grove Township, Illinois 60007
                           Attention:   Assistant Treasurer
                           Telecopier:  (847) 700-7117

                  if to the Indenture Trustee, to:

                                       52
<PAGE>

                           State Street Bank and Trust Company
                           of Connecticut, National Association
                           225 Asylum Street
                           Goodwin Square
                           Hartford, Connecticut 06103
                           Attention:  Corporate Trust Division
                           Telephone:  (860) 244-1844
                           Telecopier: (860) 244-1881

                  with a copy to:

                           State Street Bank and Trust Company
                           2 Avenue de Lafayette, 6/th/ Floor
                           Boston, Massachusetts 02111
                           Attention:  Corporate Trust Department
                           Telephone:  (617) 662-1682
                           Telecopier: (617) 662-1465

                  (b) The Issuer or the Indenture Trustee by notice to the
others may designate additional or different addresses for subsequent notices or
communications.

                  (c) Any notice or communication to the Noteholders shall be
mailed by first-class mail to the respective addresses for the Noteholders shown
on the Register kept by the Registrar and to addresses filed with the Indenture
Trustee for other Noteholders. 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 Noteholders of such AFE Trust Notes of that or any other Series
entitled to receive notice.

                  (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 Issuer mails a notice or communication to the
Noteholders, it shall mail a copy to the Indenture Trustee and to the Paying
Agent at the same time.

                  Section 12.02  Limitation of Liability. It is expressly
                                 -----------------------
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as trustee of the Trust, in the exercise of the powers and authority
conferred and vested in it under the Trust Agreement, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
of binding only the Trust and (c) under no circumstances shall Wilmington Trust
Company be personally liable for the payment of any indebtedness or expenses

                                       53
<PAGE>

of the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement or the other related agreements.

                  Section 12.03  GOVERNING LAW. THIS AGREEMENT AND THE AFE TRUST
                                 -------------
NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF
(OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                  Section 12.04  Execution in Counterparts. This Agreement may
                                 -------------------------
be executed in any number of counterparts, each of which shall be an original
but such counterparts shall together constitute but one instrument.

                                *      *      *

                                       54
<PAGE>

                  IN WITNESS WHEREOF, the Issuer, the Indenture Trustee and
United have caused this Trust Indenture and Mortgage to be duly executed by
their respective officers thereunto duly authorized.

                                          AFE TRUST

                                          By:  WILMINGTON TRUST COMPANY,
                                               not in its individually capacity
                                               but solely as Trustee

                                          By: _________________________________
                                              Name:
                                              Title:

                                          STATE STREET BANK AND TRUST COMPANY
                                          OF CONNECTICUT, NATIONAL ASSOCIATION,
                                          as Indenture Trustee

                                          By: _________________________________
                                              Name:
                                              Title:

                                          UNITED AIR LINES, INC.,
                                          as Swap Provider (solely for purposes
                                          of  Section 2.14)

                                          By: _________________________________
                                              Name:
                                              Title:

                                       55
<PAGE>

                                  SCHEDULE I

                         LIST OF ASSIGNMENT AGREEMENTS

1.   Assignment Agreement (1992 757 V), dated as of July 9, 2000, between the
     Sellers listed on Schedule 1 thereto and Four Star Leasing, Inc.

2.   Assignment Agreement (1992 757 W), dated as of July 9, 2000, between the
     Sellers listed on Schedule 1 thereto and Four Star Leasing, Inc.

3.   Assignment Agreement (1992 757 X), dated as of July 9, 2000, between the
     Sellers listed on Schedule 1 thereto and Four Star Leasing, Inc.

4.   Assignment Agreement (1992 757 Y), dated as of July 9, 2000, between the
     Sellers listed on Schedule 1 thereto and Four Star Leasing, Inc.

5.   Assignment Agreement (1992 757 A), dated as of July 9, 2000, between the
     Sellers listed on Schedule 1 thereto and Four Star Leasing, Inc.

6.   Assignment Agreement (1992 757 AA), dated as of July 9, 2000, between the
     Sellers listed on Schedule 1 thereto and Four Star Leasing, Inc.
<PAGE>

                                  SCHEDULE II

            LIST OF LEASED AIRCRAFT AND LEASED AIRCRAFT INDENTURES

1.    N171UA -   First Amended and Restated Trust Indenture and Security
      ------
                 Agreement (1989 I) dated as of July 31, 2000 between State
                 Street bank and Trust Company, as Owner Trustee and State
                 Street Bank and Trust Company of Connecticut, National
                 Association, as Indenture Trustee.

2.    N567UA -   Trust Indenture and Mortgage (1992 757 V) dated as of December
      ------
                 1, 1992 between The Connecticut National Bank, as Owner Trustee
                 and State Street Bank and Trust Company of Connecticut,
                 National Association, as Mortgagee.

3.    N568UA -   Trust Indenture and Mortgage (1992 757 W) dated as of December
      ------
                 1, 1992 between The Connecticut National Bank, as Owner Trustee
                 and State Street Bank and Trust Company of Connecticut,
                 National Association, as Mortgagee.

4.    N569UA -   Trust Indenture and Mortgage (1992 757 X) dated as of December
      ------
                 1, 1992 between The Connecticut National Bank, as Owner Trustee
                 and State Street Bank and Trust Company of Connecticut,
                 National Association, as Mortgagee.

5.    N570UA -   Trust Indenture and Mortgage (1992 757 Y) dated as of December
      ------
                 1, 1992 between The Connecticut National Bank, as Owner Trustee
                 and State Street Bank and Trust Company of Connecticut,
                 National Association, as Mortgagee.

6.    N571UA -   Trust Indenture and Mortgage (1997 757 Z) dated as of December
      ------
                 15, 1997 between The Connecticut National Bank, as Owner
                 Trustee and State Street Bank and Trust Company of Connecticut,
                 National Association, as Mortgagee.

7.    N572UA -   Trust Indenture and Mortgage (1997 757 AA) dated as of December
      ------     15, 1997 between The Connecticut National Bank, as Owner
                 Trustee and State Street Bank and Trust Company of Connecticut,
                 National Association, as Mortgagee.
<PAGE>

                                 SCHEDULE III

             LIST OF OWNED AIRCRAFT AND OWNED AIRCRAFT INDENTURES

8.    N454UA -   Trust Indenture and Mortgage (2000 A320-1) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

9.    N455UA -   Trust Indenture and Mortgage (2000 A320-2) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

10.   N456UA -   Trust Indenture and Mortgage (2000 A320-3) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

11.   N457UA -   Trust Indenture and Mortgage (2000 A320-4) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

12.   N458UA -   Trust Indenture and Mortgage (2000 A320-5) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

13.   N459UA -   Trust Indenture and Mortgage (2000 A320-6) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

14.   N596UA -   Trust Indenture and Mortgage (2000 757-1) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

15.   N673UA -   Trust Indenture and Mortgage (2000 767-1) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

16.   N674UA -   Trust Indenture and Mortgage (2000 767-2) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

17.   N207UA -   Trust Indenture and Mortgage (2000 777-1) dated as of July 31,
      ------
                 2000 between Untied Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.
<PAGE>

18.   N208UA -   Trust Indenture and Mortgage (2000 777-2) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

19.   N209UA -   Trust Indenture and Mortgage (2000 777-3) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.

20.   N210UA -   Trust Indenture and Mortgage (2000 777-4) dated as of July 31,
      ------
                 2000 between United Air Lines, Inc. as Owner and State Street
                 Bank and Trust Company of Connecticut, National Association, as
                 Indenture Trustee.
<PAGE>

                                  SCHEDULE IV

                            [INTENTIONALLY OMITTED]
<PAGE>

                                  SCHEDULE V

                     LIST OF SCHEDULED PREPAYMENT AMOUNTS
<PAGE>

                                                                     EXHIBIT A-1
                                                                to AFE Indenture

                      FORM OF SERIES  A-1 AFE TRUST NOTES
                      -----------------------------------

                                   AFE TRUST

                      SERIES A-1 AFE TRUST NOTE DUE 2011

No. 1                                                      Date:  July 31, 2000

Original Principal Amount                              Maturity Date:
-------------------------                              -------------

$102,551,777.64                                        July 1, 2011

Debt Rate:  7.783%

                  AFE TRUST, a Delaware business trust ("Issuer" or "AFE Trust")
for value received, hereby promises to pay to State Street Bank and Trust of
Connecticut, National Association, not in its individual capacity but solely as
the Subordination Agent and Pass Through Trustee, or registered assigns, the
principal sum of ONE HUNDRED TWO MILLION FIVE HUNDRED FIFTY-ONE THOUSAND SEVEN
HUNDRED SEVENTY-SEVEN DOLLARS AND SIXTY-FOUR CENTS ($102,551,777.64) in
installments, one such installment to be due and payable on each Payment Date,
each such installment to be in an amount equal to the amount set forth in
Schedule I hereto, together with interest on the unpaid principal amount hereof
from time to time outstanding from and including the date hereof until such
principal amount is paid in full. Interest shall accrue at the Debt Rate
(calculated on the basis of a year of 360 days and twelve 30-day months) and
shall be payable in arrears on each Interest Payment Date and on the date this
AFE Trust Note is paid in full. Notwithstanding the foregoing, the final payment
made on this AFE Trust Note shall be in an amount sufficient to discharge in
full the unpaid principal amount and all accrued and unpaid interest on, and any
other amounts due under, this AFE Trust Note. Notwithstanding anything to the
contrary contained herein, if any date on which a payment under this AFE Trust
Note becomes due and payable is not a Business Day, then such payment shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day no
additional interest shall accrue on the amount of such payment during such
extension.

                  For purposes hereof, the term "Indenture" means the AFE Trust
Indenture, dated as of July 31, 2000, between the Issuer and State Street Bank
and Trust Company of Connecticut, National Association (the "Indenture
Trustee"), as the same may be amended or supplemented from
<PAGE>

time to time. All other capitalized terms used in this AFE Trust Note and not
defined herein shall have the respective meanings assigned in the Indenture.

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

                  This AFE Trust Note shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose unless this AFE Trust
Note has been executed on behalf of the Issuer by the manual or facsimile
signature of an authorized officer of the Issuer, and authenticated by the
Indenture Trustee by the manual signature of an authorized officer or signatory
of the Indenture Trustee, in each case as specified in Section 2.02 of the
Indenture.

                  This AFE Trust Note is one of the AFE Trust Notes referred to
in the Indenture which have been or are to be issued by the Issuer pursuant to
the terms of the Indenture. Reference is made to the Indenture and all
supplements and amendments thereto (a copy of which is on file with the
Indenture Trustee at its Corporate Trust Department) for a more complete
statement of the terms and provisions thereof, including a statement of the
properties thereby conveyed, pledged and assigned, the nature and extent of the
security, the respective rights thereunder of the Issuer, the Indenture Trustee
and the Noteholders of the AFE Trust Notes, and the terms upon which the AFE
Trust Notes are, and are to be, executed and delivered, as well as for a
statement of the terms and conditions of the trust created by the Indenture, to
all of which terms and conditions in the Indenture each Noteholder hereof agrees
by its acceptance of this AFE Trust Note.

                  This AFE Trust Note is subject to redemption, refinancing,
purchase or prepayment as provided in Article 6 of the Indenture but not
otherwise.

                  If an Indenture Event of Default shall occur and be
continuing, the principal amount remaining unpaid of the AFE Trust Notes may be
declared due and payable together with accrued interest thereon in the manner
and with the effect provided in the Indenture.

                  As provided in the Indenture, in certain circumstances this
AFE Trust Note is transferable to U.S. Persons only, and upon surrender of this
AFE Trust Note for registration of transfer at the principal corporate trust
office of the Registrar, or at the office or agency maintained for such purpose,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by, the Noteholder or his attorney
duly authorized in writing, one or more new AFE Trust Notes of the same maturity
and type and of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees.

                  The AFE Trust Notes are issuable only as registered AFE Trust
Notes. As provided in the Indenture and subject to certain limitations therein
set forth, AFE Trust Notes are exchangeable for a like aggregate principal
amount of AFE Trust Notes of the same series, maturity
<PAGE>

and type and of authorized denominations, as requested by the Noteholder
surrendering the same, upon presentation thereof for such purpose at the
principal corporate trust office of the Registrar, or at an office or agency
maintained for such purpose.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment for registration of transfer or exchange of this AFE
Trust Note, the Issuer, the Indenture Trustee, the Paying Agent and the
Registrar may deem and treat the person in whose name this AFE Trust Note is
registered as the absolute owner hereof for the purpose of receiving payment of
the principal of and interest on this AFE Trust Note and for all other purposes
whatsoever whether or not this AFE Trust Note be overdue, and neither the
Issuer, the Indenture Trustee, the Paying Agent nor the Registrar shall be
affected by notice to the contrary.

                  The Noteholder of this AFE Trust Note, by accepting the same,
(a) agrees to and shall be bound by such provisions and each other provision
applicable to it in the Indenture, the AFE Note Purchase Agreement and each
other Fundamental Document, (b) authorizes and directs the Indenture Trustee on
his behalf to take such action as may be necessary or appropriate to effectuate
the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.

                  AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THIS AFE TRUST
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF
(OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                *      *      *

                                      A-3
<PAGE>

                  IN WITNESS WHEREOF, the Issuer has caused this AFE Trust Note
to be duly executed.

                                            AFE TRUST

                                            By: WILMINGTON TRUST COMPANY,
                                                not in its individual capacity
                                                but solely as Trustee

                                            By: _______________________________
                                                Name:
                                                Title:

                                      A-4
<PAGE>

               INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

                                           STATE STREET BANK AND TRUST COMPANY
                                           OF CONNECTICUT, NATIONAL ASSOCIATION,
                                           as Indenture Trustee

                                           By: _________________________________
                                               Authorized officer and signatory

                                      A-5
<PAGE>

                                  SCHEDULE I

                             AMORTIZATION SCHEDULE

                                      Principal Amount (Expressed as a
             Payment Date          Percentage of Original Principal Amount
             ------------          ---------------------------------------

                    [SEE EXHIBIT D-1 TO AFE TRUST INDENTURE
                       WHICH IS INSERTED UPON ISSUANCE]

                                      A-6
<PAGE>

                                                                     EXHIBIT A-2
                                                          to AFE Trust Indenture

                      FORM OF SERIES A-2 AFE TRUST NOTES
                      ----------------------------------

                                   AFE TRUST

                      SERIES A-2 AFE TRUST NOTE DUE 2010

No. 1                                             Date: July 31, 2000

Original Principal Amount                         Maturity Date:
-------------------------                         -------------

$58,200.00                                        July 1, 2010

Debt Rate: 7.730%
---------

          AFE TRUST, a Delaware business trust ("Issuer" or "AFE Trust") for
value received, hereby promises to pay to State Street Bank and Trust of
Connecticut, National Association, not in its individual capacity but solely as
the Subordination Agent and Pass Through Trustee, or registered assigns, the
principal sum of FIFTY-EIGHT THOUSAND TWO HUNDRED DOLLARS ($58,200.00) in one
installment on July 1, 2010, together with interest on the unpaid principal
amount hereof from time to time outstanding from and including the date hereof
until such principal amount is paid in full. Interest shall accrue at the Debt
Rate (calculated on the basis of a year of 360 days and twelve 30-day months)
payable in arrears on each Interest Payment Date and on the date this AFE Trust
Note is paid in full. Notwithstanding the foregoing, the final payment made on
this AFE Trust Note shall be in an amount sufficient to discharge in full the
unpaid principal amount and all accrued and unpaid interest on, and any other
amounts due under, this AFE Trust Note. Notwithstanding anything to the contrary
contained herein, if any date on which a payment under this AFE Trust Note
becomes due and payable is not a Business Day, then such payment shall not be
made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day no
additional interest shall accrue on the amount of such payment during such
extension.

          For purposes hereof, the term "Indenture" means the AFE Trust
Indenture, dated as of July 31, 2000, between the Issuer and State Street Bank
and Trust Company of Connecticut, National Association (the "Indenture
Trustee"), as the same may be amended or supplemented from time to time. All
other capitalized terms used in this AFE Trust Note and not defined herein shall
have the respective meanings assigned in the Indenture.

                                      A-7
<PAGE>

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

          This AFE Trust Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose unless this AFE Trust Note
has been executed on behalf of the Issuer by the manual or facsimile signature
of an authorized officer of the Issuer, and authenticated by the Indenture
Trustee by the manual signature of an authorized officer or signatory of the
Indenture Trustee, in each case as specified in Section 2.02 of the Indenture.

          This AFE Trust Note is one of the AFE Trust Notes referred to in the
Indenture which have been or are to be issued by the Issuer pursuant to the
terms of the Indenture. Reference is made to the Indenture and all supplements
and amendments thereto (a copy of which is on file with the Indenture Trustee at
its Corporate Trust Department) for a more complete statement of the terms and
provisions thereof, including a statement of the properties thereby conveyed,
pledged and assigned, the nature and extent of the security, the respective
rights thereunder of the Issuer, the Indenture Trustee and the Noteholders of
the AFE Trust Notes, and the terms upon which the AFE Trust Notes are, and are
to be, executed and delivered, as well as for a statement of the terms and
conditions of the trust created by the Indenture, to all of which terms and
conditions in the Indenture each Noteholder hereof agrees by its acceptance of
this AFE Trust Note.

          This AFE Trust Note is subject to redemption, refinancing, purchase or
prepayment as provided in Article 6 of the Indenture but not otherwise.

          If an Indenture Event of Default shall occur and be continuing, the
principal amount remaining unpaid of the AFE Trust Notes may be declared due and
payable together with accrued interest thereon in the manner and with the effect
provided in the Indenture.

          As provided in the Indenture, in certain circumstances this AFE Trust
Note is transferable, and upon surrender of this AFE Trust Note for registration
of transfer at the principal corporate trust office of the Registrar, or at the
office or agency maintained for such purpose, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Registrar duly
executed by, the Noteholder or his attorney duly authorized in writing, one or
more new AFE Trust Notes of the same maturity and type and of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.

          The AFE Trust Notes are issuable only as registered AFE Trust Notes.
As provided in the Indenture and subject to certain limitations therein set
forth, AFE Trust Notes are exchangeable for a like aggregate principal amount of
AFE Trust Notes of the same series, maturity and type and of authorized
denominations, as requested by the Noteholder surrendering the same,

                                      A-8
<PAGE>

upon presentation thereof for such purpose at the principal corporate trust
office of the Registrar, or at an office or agency maintained for such purpose.

          No service charge shall be made for any such registration of transfer
or exchange, but the Registrar may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Prior to
due presentment for registration of transfer or exchange of this AFE Trust Note,
the Issuer, the Indenture Trustee, the Paying Agent and the Registrar may deem
and treat the person in whose name this AFE Trust Note is registered as the
absolute owner hereof for the purpose of receiving payment of the principal of
and interest on this AFE Trust Note and for all other purposes whatsoever
whether or not this AFE Trust Note be overdue, and neither the Issuer, the
Indenture Trustee, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.

          The Noteholder of this AFE Trust Note, by accepting the same, (a)
agrees to and shall be bound by such provisions and each other provision
applicable to it in the Indenture, the AFE Note Purchase Agreement and each
other Fundamental Document, (b) authorizes and directs the Indenture Trustee on
his behalf to take such action as may be necessary or appropriate to effectuate
the subordination as provided in the Indenture and (c) appoints the Indenture
Trustee his attorney-in-fact for such purpose.

          AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THIS AFE TRUST NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                    *  *  *

                                      A-9
<PAGE>

          IN WITNESS WHEREOF, the Issuer has caused this AFE Trust Note to be
duly executed.

                                      AFE TRUST

                                      By: WILMINGTON TRUST COMPANY,
                                          not in its individual capacity
                                          but solely as Trustee

                                      By: ________________________________
                                          Name:
                                          Title:

                                     A-10
<PAGE>

               INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

                                           STATE STREET BANK AND TRUST COMPANY
                                           OF CONNECTICUT, NATIONAL ASSOCIATION,
                                           as Indenture Trustee

                                           By: _________________________________
                                               Authorized officer and signatory

                                     A-11
<PAGE>

                                  SCHEDULE I

                             AMORTIZATION SCHEDULE

                                       Principal Amount (Expressed as a
             Payment Date          Percentage of Original Principal Amount
             ------------          ---------------------------------------

                    [SEE EXHIBIT D-2 TO AFE TRUST INDENTURE
                       WHICH IS INSERTED UPON ISSUANCE]

                                     A-12
<PAGE>

                                                                       EXHIBIT B
                                                          to AFE Trust Indenture

                       FORM OF SERIES B AFE TRUST NOTES
                       --------------------------------

                                   AFE TRUST

                       SERIES B AFE TRUST NOTE DUE 2010

No. 1                                                Date: July 31, 2000

Original Principal Amount                            Maturity Date:
-------------------------                            -------------

$33,261,206.04                                       January 1, 2010

Debt Rate: 8.030%
---------

          AFE TRUST, a Delaware business trust ("Issuer" or "AFE Trust") for
value received, hereby promises to pay to State Street Bank and Trust of
Connecticut, National Association, not in its individual capacity but solely as
the Subordination Agent and Pass Through Trustee, or registered assigns, the
principal sum of THIRTY-THREE MILLION TWO HUNDRED SIXTY-ONE THOUSAND TWO HUNDRED
SIX DOLLARS AND FOUR CENTS ($33,261,206.04) in installments, one such
installment to be due and payable on each Payment Date, each such installment to
be in an amount equal to the amount set forth in Schedule I hereto, together
with interest on the unpaid principal amount hereof from time to time
outstanding from and including the date hereof until such principal amount is
paid in full. Interest shall accrue at the Debt Rate (calculated on the basis of
a year of 360 days and twelve 30-day months) payable in arrears on each Interest
Payment Date and on the date this AFE Trust Note is paid in full.
Notwithstanding the foregoing, the final payment made on this AFE Trust Note
shall be in an amount sufficient to discharge in full the unpaid principal
amount and all accrued and unpaid interest on, and any other amounts due under,
this AFE Trust Note. Notwithstanding anything to the contrary contained herein,
if any date on which a payment under this AFE Trust Note becomes due and payable
is not a Business Day, then such payment shall not be made on such scheduled
date but shall be made on the next succeeding Business Day and if such payment
is made on such next succeeding Business Day no additional interest shall accrue
on the amount of such payment during such extension.

          For purposes hereof, the term "Indenture" means the AFE Trust
Indenture, dated as of July 31, 2000, between the Issuer and State Street Bank
and Trust Company of Connecticut, National Association (the "Indenture
Trustee"), as the same may be amended or supplemented from
<PAGE>

time to time. All other capitalized terms used in this AFE Trust Note and not
defined herein shall have the respective meanings assigned in the Indenture.

          This AFE Trust Note shall bear interest, payable on demand, at the
Past Due Rate (calculated on the basis of a year of 360 days and 12 thirty day
months) on any overdue principal amount, Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest and any other amounts
payable hereunder which are overdue, in each case for the period the same is
overdue. Amounts shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).

          This AFE Trust Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose unless this AFE Trust Note
has been executed on behalf of the Issuer by the manual or facsimile signature
of an authorized officer of the Issuer, and authenticated by the Indenture
Trustee by the manual signature of an authorized officer or signatory of the
Indenture Trustee, in each case as specified in Section 2.02 of the Indenture.

          This AFE Trust Note is one of the AFE Trust Notes referred to in the
Indenture which have been or are to be issued by the Issuer pursuant to the
terms of the Indenture. Reference is made to the Indenture and all supplements
and amendments thereto (a copy of which is on file with the Indenture Trustee at
its Corporate Trust Department) for a more complete statement of the terms and
provisions thereof, including a statement of the properties thereby conveyed,
pledged and assigned, the nature and extent of the security, the respective
rights thereunder of the Issuer, the Indenture Trustee and the Noteholders of
the AFE Trust Notes, and the terms upon which the AFE Trust Notes are, and are
to be, executed and delivered, as well as for a statement of the terms and
conditions of the trust created by the Indenture, to all of which terms and
conditions in the Indenture each Noteholder hereof agrees by its acceptance of
this AFE Trust Note.

          This AFE Trust Note is subject to redemption, refinancing, purchase or
prepayment as provided in Article 6 of the Indenture but not otherwise.

          If an Indenture Event of Default shall occur and be continuing, the
principal amount remaining unpaid of the AFE Trust Notes may be declared due and
payable together with accrued interest thereon in the manner and with the effect
provided in the Indenture.

          As provided in the Indenture, in certain circumstances this AFE Trust
Note is transferable, and upon surrender of this AFE Trust Note for registration
of transfer at the principal corporate trust office of the Registrar, or at the
office or agency maintained for such purpose, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Registrar duly
executed by, the Noteholder or his attorney duly authorized in writing, one or
more new AFE Trust Notes of the same maturity and type and of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.

          The AFE Trust Notes are issuable only as registered AFE Trust Notes.
As provided in the Indenture and subject to certain limitations therein set
forth, AFE Trust Notes are exchangeable for a like aggregate principal amount of
AFE Trust Notes of the same series, maturity
<PAGE>

and type and of authorized denominations, as requested by the Noteholder
surrendering the same, upon presentation thereof for such purpose at the
principal corporate trust office of the Registrar, or at an office or agency
maintained for such purpose.

          No service charge shall be made for any such registration of transfer
or exchange, but the Registrar may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Prior to
due presentment for registration of transfer or exchange of this AFE Trust Note,
the Issuer, the Indenture Trustee, the Paying Agent and the Registrar may deem
and treat the person in whose name this AFE Trust Note is registered as the
absolute owner hereof for the purpose of receiving payment of the principal of
and interest on this AFE Trust Note and for all other purposes whatsoever
whether or not this AFE Trust Note be overdue, and neither the Issuer, the
Indenture Trustee, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.

          The indebtedness evidenced by this AFE Trust Note is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of the Series A-1 AFE Trust Notes and Series A-2 AFE
Trust Notes and this AFE Trust Note is issued subject to such provisions. The
Noteholder of this AFE Trust Note, by accepting the same, (a) agrees to and
shall be bound by such provisions and each other provision applicable to it in
the Indenture, the AFE Note Purchase Agreement and each other Fundamental
Document, (b) authorizes and directs the Indenture Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in the Indenture and (c) appoints the Indenture Trustee
his attorney-in-fact for such purpose.

          AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THIS AFE TRUST NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                   *   *   *

                                      B-3
<PAGE>

          IN WITNESS WHEREOF, the Issuer has caused this AFE Trust Note to be
duly executed.

                                        AFE TRUST

                                        By: WILMINGTON TRUST COMPANY,
                                            not in its individual capacity
                                            but solely as Trustee

                                        By: ________________________________
                                            Name:
                                            Title:

                                      B-4
<PAGE>

               INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

                                         STATE STREET BANK AND TRUST COMPANY
                                         OF CONNECTICUT, NATIONAL ASSOCIATION,
                                         as Indenture Trustee

                                         By: _________________________________
                                             Authorized officer and signatory

                                      B-5
<PAGE>

                                  SCHEDULE I

                             AMORTIZATION SCHEDULE

                                         Principal Amount (Expressed as a
               Payment Date          Percentage of Original Principal Amount
               ------------          ---------------------------------------

                    [SEE EXHIBIT D-3 TO AFE TRUST INDENTURE
                       WHICH IS INSERTED UPON ISSUANCE]

                                      B-6
<PAGE>

                                                                     EXHIBIT C-1
                                                                 AFE Trust Notes

                      FORM OF SERIES C-1 AFE TRUST NOTES
                      ----------------------------------

                                   AFE TRUST

                      SERIES C-1 AFE TRUST NOTE DUE 2008

No. 1                                         Date: July 31, 2000

Original Principal Amount                     Maturity Date:
-------------------------                     -------------

$33,130,000.00                                January 1, 2008

Debt Rate: Eurodollar Rate plus 0.90%
---------

          AFE TRUST, a Delaware business trust ("Issuer" or "AFE Trust") for
value received, hereby promises to pay to State Street Bank and Trust of
Connecticut, National Association, not in its individual capacity but solely as
the Subordination Agent and Pass Through Trustee, or registered assigns, the
principal sum of THIRTY-THREE MILLION ONE HUNDRED THIRTY THOUSAND DOLLARS
($33,130,000.00) in installments, one such installment to be due and payable on
each Payment Date, each such installment to be in an amount equal to the amount
set forth on Schedule I hereto, together with interest on the unpaid principal
amount hereof from time to time outstanding from and including the date hereof
until such principal amount is paid in full. Interest shall accrue at the Debt
Rate (calculated on the basis of a year of 360 days and the actual number of
days in the period that interest accrues) payable in arrears on each Interest
Payment Date and on the date this AFE Trust Note is paid in full.
Notwithstanding the foregoing, the final payment made on this AFE Trust Note
shall be in an amount sufficient to discharge in full the unpaid principal
amount and all accrued and unpaid interest on, and any other amounts due under,
this AFE Trust Note. Notwithstanding anything to the contrary contained herein,
if any date on which a payment under this AFE Trust Note becomes due and payable
is not a Business Day, then such payment shall not be made on such scheduled
date but shall be made on the next succeeding Business Day and if such payment
is made on such next succeeding Business Day no additional interest shall accrue
on the amount of such payment during such extension.

          For purposes hereof, the term "Indenture" means the AFE Trust
Indenture, dated as of July 31, 2000, between the Issuer and State Street Bank
and Trust Company of Connecticut, National Association (the "Indenture
Trustee"), as the same may be amended or supplemented from
<PAGE>

time to time. All other capitalized terms used in this AFE Trust Note and not
defined herein shall have the respective meanings assigned in the Indenture.

          This AFE Trust Note shall bear interest, payable on demand, at the
Past Due Rate (calculated on the basis of a year of 360 days and the actual
number of days in the period that interest accrues) on any overdue principal
amount, Make-Whole Amount or Break Amount, if any, and (to the extent permitted
by applicable law) any overdue interest and any other amounts payable hereunder
which are overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise).

          This AFE Trust Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose unless this AFE Trust Note
has been executed on behalf of the Issuer by the manual or facsimile signature
of an authorized officer of the Issuer, and authenticated by the Indenture
Trustee by the manual signature of an authorized officer or signatory of the
Indenture Trustee, in each case as specified in Section 2.02 of the Indenture.

          This AFE Trust Note is one of the AFE Trust Notes referred to in the
Indenture which have been or are to be issued by the Issuer pursuant to the
terms of the Indenture. Reference is made to the Indenture and all supplements
and amendments thereto (a copy of which is on file with the Indenture Trustee at
its Corporate Trust Department) for a more complete statement of the terms and
provisions thereof, including a statement of the properties thereby conveyed,
pledged and assigned, the nature and extent of the security, the respective
rights thereunder of the Issuer, the Indenture Trustee and the Noteholders of
the AFE Trust Notes, and the terms upon which the AFE Trust Notes are, and are
to be, executed and delivered, as well as for a statement of the terms and
conditions of the trust created by the Indenture, to all of which terms and
conditions in the Indenture each Noteholder hereof agrees by its acceptance of
this AFE Trust Note.

          This AFE Trust Note is subject to redemption, refinancing, purchase or
prepayment as provided in Article 6 of the Indenture but not otherwise.

          If an Indenture Event of Default shall occur and be continuing, the
principal amount remaining unpaid of the AFE Trust Notes may be declared due and
payable together with accrued interest thereon in the manner and with the effect
provided in the Indenture.

          As provided in the Indenture, in certain circumstances this AFE Trust
Note is transferable to U.S. Persons only, and upon surrender of this AFE Trust
Note for registration of transfer at the principal corporate trust office of the
Registrar, or at the office or agency maintained for such purpose, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to
the Registrar duly executed by, the Noteholder or his attorney duly authorized
in writing, one or more new AFE Trust Notes of the same maturity and type and of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.

          The AFE Trust Notes are issuable only as registered AFE Trust Notes.
As provided in the Indenture and subject to certain limitations therein set
forth, AFE Trust Notes are
<PAGE>

exchangeable for a like aggregate principal amount of AFE Trust Notes of the
same series, maturity and type and of authorized denominations, as requested by
the Noteholder surrendering the same, upon presentation thereof for such purpose
at the principal corporate trust office of the Registrar, or at an office or
agency maintained for such purpose.

          No service charge shall be made for any such registration of transfer
or exchange, but the Registrar may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Prior to
due presentment for registration of transfer or exchange of this AFE Trust Note,
the Issuer, the Indenture Trustee, the Paying Agent and the Registrar may deem
and treat the person in whose name this AFE Trust Note is registered as the
absolute owner hereof for the purpose of receiving payment of the principal of
and interest on this AFE Trust Note and for all other purposes whatsoever
whether or not this AFE Trust Note be overdue, and neither the Issuer, the
Indenture Trustee, the Paying Agent nor the Registrar shall be affected by
notice to the contrary.

          The indebtedness evidenced by this AFE Trust Note is, to the extent
and in the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Indenture) in respect of the Series A-1 AFE Trust Notes, the Series A-2 AFE
Trust Notes and the Series B AFE Trust Notes and this AFE Trust Note is issued
subject to such provisions. The Noteholder of this AFE Trust Note, by accepting
the same, (a) agrees to and shall be bound by such provisions and each other
provision applicable to it in the Indenture, the AFE Note Purchase Agreement and
each other Fundamental Document, (b) authorizes and directs the Indenture
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Indenture and (c) appoints the
Indenture Trustee his attorney-in-fact for such purpose.

          AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THIS AFE TRUST NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                   *   *   *

                                      C-3
<PAGE>

          IN WITNESS WHEREOF, the Issuer has caused this AFE Trust Note to be
duly executed.

                                         AFE TRUST

                                         By: WILMINGTON TRUST COMPANY,
                                             not in its individual capacity
                                             but solely as Trustee

                                         By: _________________________________
                                             Name:
                                             Title:

                                      C-4
<PAGE>

               INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

                                        STATE STREET BANK AND TRUST COMPANY
                                        OF CONNECTICUT, NATIONAL ASSOCIATION,
                                        as Indenture Trustee

                                        By: __________________________________
                                            Authorized officer and signatory

                                      C-5
<PAGE>

                                  SCHEDULE I

                             AMORTIZATION SCHEDULE

                                         Principal Amount (Expressed as a
              Payment Date           Percentage of Original Principal Amount
              ------------           ---------------------------------------

                    [SEE EXHIBIT D-4 TO AFE TRUST INDENTURE
                       WHICH IS INSERTED UPON ISSUANCE]

                                      C-6
<PAGE>

                                                                     EXHIBIT D-1
                                                          to AFE Trust Indenture

                   DESCRIPTION OF SERIES A-1 AFE TRUST NOTES
                   -----------------------------------------

Original Principal Amount              Maturity Date              Interest Rate
-------------------------              -------------              -------------
    $102,551,777.64                    July 1, 2011                   7.783%

                       SERIES A-1 AMORTIZATION SCHEDULE
                       --------------------------------

      Payment Date                                         Principal Amount
      ------------                                         ----------------
<PAGE>

                                                                     EXHIBIT D-2
                                                          to AFE Trust Indenture

                   DESCRIPTION OF SERIES A-2 AFE TRUST NOTES
                   -----------------------------------------

Original Principal Amount                Maturity Date            Interest Rate
-------------------------                -------------            -------------
       $58,200.00                        July 1, 2010                 7.730%

                       SERIES A-2 AMORTIZATION SCHEDULE
                       --------------------------------

            Payment Date                                   Principal Amount
            ------------                                   ----------------
            July 1, 2010                                       $58,200.00
<PAGE>

                                                                     EXHIBIT D-3
                                                          to AFE Trust Indenture

                    DESCRIPTION OF SERIES B AFE TRUST NOTES
                    ---------------------------------------

Original Principal Amount              Maturity Date               Interest Rate
-------------------------              -------------               -------------
     $33,261,206.04                    January 1, 2010                 8.030%

                        SERIES B AMORTIZATION SCHEDULE
                        ------------------------------

                 Payment Date                               Principal Amount
                 ------------                               ----------------
<PAGE>

                                                                     EXHIBIT D-4
                                                          to AFE Trust Indenture

                   DESCRIPTION OF SERIES C-1 AFE TRUST NOTES
                   -----------------------------------------

Original Principal Amount        Maturity Date               Interest Rate
-------------------------        -------------               -------------
       $33,130,000              January 1, 2008       Eurodollar Rate plus 0.90%

                       SERIES C-1 AMORTIZATION SCHEDULE
                       --------------------------------

                 Payment Date                      Principal Amount
                 ------------                      ----------------<PAGE>

                                                                    EXHIBIT 4.15

                                Aircraft N171UA

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

              FIRST AMENDED AND RESTATED PARTICIPATION AGREEMENT
                                   (1989 I)

                           Dated as of July 20, 2000

                                     Among

                            UNITED AIR LINES, INC.,
                                    Lessee,

                        BANCBOSTON UNITED LEASING LLC,
                              Owner Participant,

                     STATE STREET BANK AND TRUST COMPANY,
                        Not in its Individual Capacity,
                     except as expressly provided herein,
                         but solely as Owner Trustee,

                                      and

              STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
                             NATIONAL ASSOCIATION,
              In its Individual Capacity and as Indenture Trustee

                                  ___________

                            United Air Lines, Inc.
                            1989 I Equipment Trust
                          One Boeing 747-422 Aircraft

                                  ___________

--------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                 Page
<S>                                                                                              <C>
SECTION 1.   Certain Definitions...............................................................     2

SECTION 2.   Lessee's Notice of Delivery Date..................................................     2

SECTION 3.   Instructions to the Owner Trustee and Indenture Trustee...........................     2

SECTION 4.   Conditions........................................................................     2
    (a)      Conditions Precedent to the Participations in the Aircraft........................     2
    (b)      Conditions Precedent to the Obligations of Lessee.................................     3

SECTION 5.   [Intentionally omitted.]..........................................................     3

SECTION 6.   Extent of Interest of Certificate Holders.........................................     3

SECTION 7.   Lessee's Representations, Warranties and Indemnities..............................     3
    (a)      In General........................................................................     3
    (b)      General Tax Indemnity.............................................................     7
    (c)      General Indemnity.................................................................    17

SECTION 8.   Representations, Warranties and Covenants.........................................    22

SECTION 9.   [Intentionally omitted.]..........................................................    40

SECTION 10.  Other Documents; Amendment........................................................    40

SECTION 11.  Certain Covenants of Lessee.......................................................    40

SECTION 12.  Owner for Federal Tax Purposes....................................................    41

SECTION 13.  Notices; Consent to Jurisdiction..................................................    42

SECTION 14.  Change of Situs of Owner Trust....................................................    42

SECTION 15.  Miscellaneous.....................................................................    43

SECTION 16.  [Intentionally omitted]...........................................................    45

SECTION 17.  Optional Redemption of Certificates...............................................    45
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                <C>
SECTION 18.  [Intentionally omitted]...........................................................    48

SECTION 19.  Confidentiality of Purchase Agreement.............................................    48

SECTION 20.  Effectiveness.....................................................................    49
</TABLE>

                                      ii
<PAGE>

                                   SCHEDULES

SCHEDULE I   -   Names and Addresses

                                      iii
<PAGE>

              FIRST AMENDED AND RESTATED PARTICIPATION AGREEMENT
                                   (1989 I)

               THIS FIRST AMENDED AND RESTATED PARTICIPATION AGREEMENT (1989 I)
dated as of July 20, 2000 (this "Agreement") among (i) United Air Lines, Inc., a
Delaware corporation (the "Lessee"), (ii) BancBoston United Leasing LLC, a
Delaware limited liability company (the "Owner Participant"), (iii) State Street
Bank and Trust Company, a Massachusetts trust company, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee under
the Trust Agreement (the "Owner Trustee") as successor to the Original Lessor
(as defined below), and (iv) State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, in its individual capacity
and as Indenture Trustee under the Trust Indenture (the "Indenture Trustee")
amends and restates that certain Participation Agreement (1989 I) dated as of
August 1, 1989 among Lessee, BancBoston United Leasing LLC, as lessor (the
"Original Lessor"), and State Street Bank and Trust Company, as successor to The
Connecticut Bank and Trust Company, National Association, in its individual
capacity and as Indenture Trustee (the "Original Indenture Trustee"), as amended
by that certain First Amendment to Participation Agreement (1989 I) dated as of
February 1, 1990 among Lessee, the Original Lessor, and the Original Indenture
Trustee (such Participation Agreement, as amended as set forth above, being
referred to herein as the "Original Participation Agreement").

                                  WITNESSETH:

               WHEREAS, except as otherwise defined in this Agreement,
capitalized terms used herein shall have the meanings attributed thereto in
Section 1 hereof;

               WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, Lessee executed and delivered to and in favor
of the Owner Participant the Japanese Lease Assignment whereby Lessee assigned
to Owner Participant all of its rights and interests in the Japanese Lease, the
Primary Lessor Mortgage, Sections 11 and 23(b) of the Omnibus Agreement, the
Primary Lessor Comfort Letter and the Aircraft, all as more particularly
described in the Original Participation Agreement; and

               WHEREAS, pursuant to that certain Assignment and Assumption
Agreement (1989 I) dated as of even date herewith, between the Owner Trustee and
the Owner Participant, the Owner Participant assigned to the Owner Trustee, and
the Owner Trustee assumed, all of the rights and obligations of the Owner
Participant under the Operative Documents (as such terms are defined in the
Lease); and

               WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant and State Street Bank and Trust Company, in its
individual capacity, are entering into the Trust Agreement (1989 I) (the "Trust
Agreement") pursuant to which Trust
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

Agreement the Owner Trustee agrees, among other things, to hold the Trust Estate
defined in Section 1.01 thereof (the "Trust Estate") for the use and benefit of
the Owner Participant; and

               WHEREAS, the Indenture Trustee and the Owner Trustee concurrently
with the execution and delivery of this Agreement are entering into the Amended
and Restated Trust Indenture and Mortgage (1989 I) dated as of July 20, 2000
(the "Trust Indenture") pursuant to which the Owner Trustee agrees, among other
things, on the Refinancing Date, to issue one or more Certificates in the form
set forth in Exhibit A to the Trust Indenture to each Pass Through Trustee on
behalf of the related grantor trusts created by the applicable Pass Through
Trust Agreement as evidence of the Owner Trustee's indebtedness to each Pass
Through Trustee, which Certificates are to be secured by the mortgage and
security interest in the Aircraft created pursuant to the Trust Indenture by the
Owner Trustee in favor of the Indenture Trustee; and

               WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee are entering into the Amended and
Restated Lease Agreement (1989 I) dated as of July 20, 2000 (the "Lease
Agreement") whereby, subject to the terms and conditions set forth therein, the
Owner Trustee is leasing to Lessee, and Lessee is leasing from the Owner
Trustee, the Aircraft; and

               WHEREAS, in connection with the foregoing transactions, the
parties hereto desire to amend and restate the Original Participation Agreement
in its entirety; and

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

          SECTION 1.  Certain Definitions. The terms "Lessee," "Owner
                      -------------------
Participant," "Pass Through Trustee," "Owner Trustee" and "Indenture Trustee"
shall have the further meanings attributed thereto in the Lease Agreement
referred to above and, except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease Agreement referred to above. Unless the context otherwise requires, any
reference herein to any of the Operative Documents refers to such document as it
may be amended from time to time in accordance with its terms and the terms of
each other agreement restricting the amendment thereof.

         SECTION 2.   Lessee's Notice of Delivery Date. [Intentionally omitted.]
                      --------------------------------

         SECTION 3.   Instructions to the Owner Trustee and Indenture Trustee.
                      -------------------------------------------------------
[Intentionally omitted.]

         SECTION 4.   Conditions. (a) Conditions Precedent to the Participations
                      ----------      ------------------------------------------
in the Aircraft. It is agreed that the respective obligations of the Original
---------------
Indenture Trustee and the Original Lessor to participate in the payments of
Lessor's Cost were subject to the satisfaction prior to or on the Delivery Date
of the conditions precedent set forth in Section 4(a) of the Original
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

Participation Agreement and the respective obligations of the Owner Participant,
Owner Trustee, Indenture Trustee and the Pass Through Trustees to enter into a
refinancing are set forth in the Note Purchase Agreement.

               (1)  Conditions Precedent to the Obligations of Lessee. It is
                    -------------------------------------------------
agreed that the obligations of Lessee (A) to sell the Aircraft to the Original
Lessor, (B) to accept delivery of the Aircraft under the Original Lease and (C)
to enter into its other Operative Documents, were all subject to the fulfillment
to the satisfaction of Lessee prior to or on the Delivery Date of the conditions
precedent set forth in the Original Participation Agreement and the obligations
of Lessee to enter into a refinancing transaction are set forth in the Note
Purchase Agreement.

          SECTION 5.  [Intentionally omitted.]

          SECTION 6.  Extent of Interest of Certificate Holders. The Indenture
                      -----------------------------------------
Trustee, on behalf of the Certificate Holders, hereby acknowledges that no
Certificate Holder shall have any further interest in, or other right with
respect to, the mortgage and security interests created by the Trust Indenture
when and if the Original Amount of, Make-Whole Amount (on and after the
Refinancing Date only) if any, premium (prior to the Refinancing Date only), if
any, and interest on all Certificates held by such Certificate Holder and all
other sums payable to such Certificate Holder hereunder, under the Trust
Indenture and under such Certificates shall have been paid in full. The
Indenture Trustee, on behalf of the Certificate Holders, further acknowledges
that each of the Certificate Holders, by its acceptance of a Certificate, agrees
that it will look solely to the income and proceeds from the Trust Indenture
Estate to the extent available for distribution to such Certificate Holder as
provided in Section 2.10 of the Trust Indenture and that neither the Owner
Participant nor the Owner Trustee shall be personally liable to any Certificate
Holder for any amounts payable under the Certificates, the Trust Indenture,
hereunder, or under any other Operative Documents (including, without
limitation, on and after the Refinancing Date only, amounts payable as Make-
Whole Amount and, prior to the Refinancing Date only, premium, if any), except
as expressly provided in this Agreement or (in the case of the Owner Trustee) in
the Trust Indenture.

          SECTION 7.  Lessee's Representations, Warranties and Indemnities. (a)
                      ----------------------------------------------------
In General. Without prejudice to the representations and warranties made by
----------
Lessee under the Original Participation Agreement, Lessee represents and
warrants as follows:

                      (i)  Lessee is a corporation duly organized and validly
          existing in good standing pursuant to the laws of the State of
          Delaware; is duly qualified to do business as a foreign corporation in
          each jurisdiction in which its operations or the nature of its
          business requires, except where the failure to be so qualified would
          not have a material adverse effect on Lessee or its business; is a
          Citizen of the United States and a U.S. Air Carrier; has its chief
          executive office (as such term is defined in Article 9 of the Uniform

                                       3
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         Commercial Code) in Elk Grove Township, Illinois; and has the corporate
         power and authority to conduct its business as it is presently being
         conducted, to hold under lease the Aircraft and to enter into and
         perform its obligations under the Lessee Documents;

                           (ii) the execution, delivery and performance by
         Lessee of the Lessee Documents have been duly authorized by all
         necessary corporate action on the part of Lessee, do not require any
         stockholder approval, or approval or consent of any trustee or holders
         of any indebtedness or obligations of Lessee except such as have been
         duly obtained, and none of such Lessee Documents contravenes any law,
         judgment, government rule, regulation or order binding on Lessee or the
         certificate of incorporation or by-laws of Lessee or contravenes the
         provisions of, or constitutes a default under, or results in the
         creation of any Lien (other than Permitted Liens) upon the property of
         Lessee under any indenture, mortgage, contract or other agreement to
         which Lessee is a party or by which it or its properties may be bound
         or affected;

                           (iii) neither the execution and delivery by Lessee of
         the Lessee Documents nor the performance by Lessee of its obligations
         thereunder require the consent or approval of, the giving of notice to,
         or the registration with, or the taking of any other action in respect
         of any federal, state or foreign government authority or agency, except
         for (A) the orders, permits, waivers, exemptions, authorizations and
         approvals of the regulatory authorities having jurisdiction over the
         operation of the Aircraft by Lessee, which orders, permits, waivers,
         exemptions, authorizations and approvals have been duly obtained, and
         are in full force and effect, (B) the registration of the Aircraft
         referred to in Section 4(a)(ix)(3) of the Original Participation
         Agreement and (C) any normal periodic and other reporting requirements
         under the applicable rules and regulations of the FAA to the extent
         required to be given or obtained only after the Delivery Date;

                           (iv) each of the Lessee Documents has been duly
         executed and delivered by Lessee and constitutes legal, valid and
         binding obligations of Lessee enforceable against Lessee in accordance
         with the terms thereof;

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

                           (vi) except for (A) the registration of the Aircraft
         pursuant to the Federal Aviation Act, (B) the filing for recording
         pursuant to said Act of the Trust Agreement, the Lease with the Lease
         Supplement covering the Aircraft, the Trust Indenture and the Trust
         Supplement attached thereto and made a part thereof, (C) the

                                       4
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         filing of financing statements (and continuation statements at periodic
         intervals) with respect to the security and other interests created by
         such documents under the Uniform Commercial Code of Illinois and such
         other states as may be specified in the opinions furnished pursuant to
         Section 4(a)(xi) of the Original Participation Agreement and (D) the
         taking of possession by the Indenture Trustee of the original
         counterparts of the Lease and the Lease Supplement covering the
         Aircraft, no further action, including any filing or recording of any
         document (including any financing statement in respect thereof under
         Article 9 of the Uniform Commercial Code of any applicable
         jurisdiction), is necessary or advisable in order to establish and
         perfect Lessor's interest in and the Indenture Trustee's security
         interest in the Aircraft as against Lessee and as against any third
         parties in any applicable jurisdictions in the United States;

                           (vii) there has not occurred any event which
         constitutes a Default or an Event of Default under the Lease which is
         presently continuing and there has not occurred any event which
         constitutes or would, with the passage of time or the giving of notice,
         or both, constitute an Event of Loss;

                           (viii)   [Intentionally omitted];

                           (ix)  the Owner Trustee has received the U.S.
         Ownership Interest in the Aircraft free and clear of all Liens, except
         the rights created pursuant to the Japanese Lease, the Japanese Lease
         Assignment, the Primary Lessor Mortgage and the rights of Lessee under
         the Lease and Lease Supplement covering the Aircraft, the Lien of the
         Trust Indenture, the beneficial interest of the Owner Participant in
         the Aircraft, and the Liens permitted by clauses (ii) and (iii) (solely
         for taxes not yet due) of Section 6 of the Lease;

                           (x) none of the proceeds from the issuance of the
         Certificates or from the acquisition by the Owner Participant of its
         beneficial interest in the Trust Estate will be used directly or
         indirectly by Lessee to purchase or carry any "margin stock" as such
         term is defined in Regulation T or U of the Board of Governors of the
         Federal Reserve System;

                           (xi)  neither Lessee nor anyone acting on behalf of
         Lessee has (A) directly or indirectly offered any interest in the Trust
         Estate for sale to, or solicited any offer to acquire any of the same
         from, anyone other than the Owner Participant, and not more than
         thirty-five (35) other institutions believed capable of evaluating and
         bearing the risks of investment in the transactions contemplated
         hereby, or (B) directly or indirectly offered any interest in the Trust
         Estate or any Certificate in a manner which would violate the
         Securities Act of 1933, as amended, the rules and regulations
         thereunder, administrative and judicial interpretation thereof or the
         securities laws, rules or regulations of any state; or (C) directly or
         indirectly offered any interest as Primary

                                       5
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         Lessor in the Japanese Lease to any entity other than entities
         organized under the laws of Japan and located in places other than the
         United States;

                           (xii)  Lessee is not and shall not be in material
         default in the performance of any term or condition of the Purchase
         Agreement;

                           (xiii)  no governmental approval of any kind is
         required of the Owner Participant, any Certificate Holder, the Owner
         Trustee or the Indenture Trustee for their respective execution of or
         performance under this Agreement, the Pass Through Documents (on and
         after the Refinancing Date only) or any agreement contemplated hereby
         solely by reason of any fact or circumstance peculiar to: (a) Lessee,
         (b) the nature of the Aircraft, or (c) Lessee's proposed operations or
         use of the Aircraft;

                           (xiv)  all sales or use taxes then due and for which
         Lessee is responsible pursuant to Section 7(b)(i) hereof have been
         paid, other than such taxes which are being contested by Lessee in good
         faith and by appropriate proceedings (and for which Lessee has
         established adequate reserves) so long as such proceedings do not
         involve any material risk of the sale, forfeiture or loss of the
         Aircraft or any interest therein;

                           (xv)  Lessee is solvent and will not be rendered
         insolvent by the consummation of the transactions contemplated herein;
         after such consummation the capital of Lessee will not be unreasonably
         small for the conduct of the business in which Lessee is engaged or is
         about to engage; Lessee has no intention or belief that it is about to
         incur debts beyond its ability to pay as they mature; and Lessee's
         participation in such transactions is made without any intent to
         hinder, delay or defraud either present or future creditors of Lessee;

                           (xvi)  The Aircraft has been duly certified by the
         FAA as to type and airworthiness and such certification remains in full
         force and effect;

                           (xvii)  Owner Trustee, as lessor under the Lease, and
         the Indenture Trustee, as assignee of the Owner Trustee's rights under
         the Lease pursuant to the Trust Indenture, are entitled to the benefits
         of Section 1110 of the United States Bankruptcy Code with respect to
         the Aircraft;

                           (xviii)  neither Lessee nor any subsidiary of Lessee
         is an "investment company" or a company "controlled by an investment
         company" within the meaning of the Investment Company Act of 1940, as
         amended;

                           (xix)  each of Lessee and each "related person" as
         described in Section 414(b) or (c) of the Code has fulfilled its
         respective obligations under the

                                       6
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         minimum funding standards of ERISA and the Code with respect to each
         Plan and is in compliance in all material respects with each Plan and
         is in compliance in all material respects with the presently applicable
         provisions of ERISA and the Code, and have not incurred any liability
         to the Pension Benefit Guaranty Corporation (other than for the payment
         of annual premiums), or any unsatisfied complete or partial withdrawal
         liability with respect to any Multiemployer Plan;

                           (xx)  upon delivery on the Delivery Date, the
         Aircraft will be in a condition as good as the condition it was in when
         delivered by the Manufacturer to Lessee (ordinary wear and tear
         excepted), the Aircraft will be fully equipped to operate in commercial
         service and the Aircraft will comply with all governmental requirements
         governing such service; and

                           (xxi)  none of the transactions contemplated by this
         Agreement (including, without limitation, the use of the proceeds from
         the issuance of the Certificates) will violate or result in a violation
         of Section 7 of the Securities Exchange Act of 1934, as amended, or any
         regulations issued pursuant thereto, including, without limitation,
         Regulations G, T, U and X of the Board of Governors of the Federal
         Reserve System.

                  (b) General Tax Indemnity. (i) Indemnity. Except as provided
                      ---------------------      ---------
in Section 7(b)(ii) hereof, Lessee agrees that each payment of Rent paid by
Lessee pursuant to the Lease, and any other payment or indemnity paid by Lessee
to a Tax Indemnitee under any Operative Document, shall be free of all
withholdings or deductions with respect to Taxes of any nature (other than U.S.
federal, state or local withholding taxes on, based on or measured by gross or
net income), and in the event that Lessee shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Lessee shall
make all such withholdings or deductions, (y) the amount payable by Lessee shall
be increased so that after making all required withholdings or deductions such
Tax Indemnitee receives the same amount that it would have received had no such
withholdings or deductions been made, and (z) Lessee shall pay the full amount
withheld or deducted to the relevant Taxing Authority in accordance with
applicable law. Lessee further agrees that, in the event it is required to
withhold from any payment of Basic Rent, Stipulated Loss Value or Termination
Value (and amounts determined by reference to either), and amounts payable upon
exercise of Lessee's purchase option pursuant to Section 9 of the Lease, any Tax
imposed upon Owner Participant or Owner Trustee (including any withholding Tax
based on income or receipts of Owner Participant or Owner Trustee) and such Tax
is excluded from indemnification pursuant to Section 7(b)(ii), Lessee shall pay
such additional amount, if any, required so that the total amount paid by Lessee
(after making all required withholdings) is equal to (assuming timely payment of
the Certificates prior to the relevant Payment Date) the aggregate principal
amount of scheduled installments due on the Certificates outstanding on the
relevant Payment Date, together with accrued and unpaid interest,

                                         7
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

due on the Certificates; Owner Participant or Owner Trustee, as the case may be,
shall reimburse Lessee for any such additional amounts within two Business Days
after demand therefor. Except as provided in Section 7(b)(ii) hereof, Lessee
shall pay, protect, save and on written demand shall indemnify and hold harmless
each Tax Indemnitee from and against (x) any and all Taxes howsoever asserted or
imposed by any Taxing Authority against any Tax Indemnitee, Lessee or against
any party to the Relevant Documents, all or any part of the Aircraft, the
Airframe, the Engines, the Parts or any part thereof or otherwise upon or in
connection with, relating to, or measured by (A) the construction, assembly,
improvement, location, conditioning, installation, financing, refinancing,
purchase, acquisition, acceptance, rejection, delivery, transport, ownership,
registration, reregistration, possession, repossession, operation, use,
maintenance, repair, sale, return, abandonment, storage, redelivery, leasing,
subleasing, alteration, modification, rebuilding of, transfer of title to,
transfer of registration of, exportation or disposition of, or the imposition of
any Lien (or the incurrence of any liability to refund or pay over any amount as
the result of any Lien) on or in respect of, the Aircraft, the Airframe, the
Engines, the Parts or any part thereof, (B) the rentals, income, proceeds,
receipts or earnings from the Aircraft, the Airframe, the Engines, the Parts or
any part thereof, (C) any amount paid or payable pursuant to any Operative
Documents, Pass Through Documents or any document related thereto, (D) the
Aircraft, the Airframe, the Engines, the Parts or any part thereof, (E) any or
all of the Operative Documents, Pass Through Documents or any other documents
contemplated hereby or thereby and amendments and supplements hereto and thereto
which have been approved by Lessee or the execution, delivery or performance of
any thereof or the issuance, acquisition, holding or subsequent transfer
thereof, (F) otherwise with respect to or in connection with any of the
transactions contemplated by the Operative Documents or the Pass Through
Documents, or (G) any change in the Owner Trustee or the situs of the Trust
Estate made pursuant to Section 8(b) or 14 hereof; and (y) any reasonable
out-of-pocket costs and expenses fairly attributed to any of the foregoing
incurred by any Indemnitee. For purposes of this Section 7(b) the term "Tax
Indemnitee" shall include each Certificate Holder until, but not including, the
day following the Refinancing Date.

                 (ii)  Exclusions from General Tax Indemnity.  The provisions of
                       -------------------------------------
        Section 7(b)(i) shall not apply:

                       (1) in the case of a Tax Indemnitee which is the Owner
                 Participant, Owner Trustee, the Trust Estate or a successor,
                 assign, or Affiliate of any thereof, to any Income Tax (as
                 defined in Section 7(b)(xii) hereof other than an Income Tax
                 which is a withholding tax imposed on payments (whether actual
                 or offset) under the Relevant Documents) imposed by (A) the
                 United States Federal government, (B) any state or local taxing
                 jurisdictions or authorities in the United States; or (C) any
                 foreign government or any political subdivision or taxing
                 authority thereof or any territory or possession of the United
                 States or by any international authority; provided, however,
                 that clauses (B) and (C) shall not

                                       8
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                 apply to any Income Tax imposed by any such jurisdiction solely
                 as a result of the registration, operation, location or use to
                 or in such jurisdiction of the Aircraft, Airframe, Engines, the
                 Parts or any part thereof or by reason of the activities in
                 such jurisdiction of the Lessee or any Lessee Person (as
                 defined in Section 7(b)(xiii)) (but only to the extent
                 attributable to the Aircraft, Airframe, Engines, the Parts or
                 any part thereof or activities in such jurisdiction of the
                 Lessee or any sublessee);

                                (2) in the case of an Indemnitee which is a
                  Certificate Holder or any successor, assign, or Affiliate
                  thereof, to Income Taxes relating to any payments of
                  principal, interest or premium, if any, on the Certificates
                  imposed by any government or taxing authority;

                                (3) to any Tax imposed on a Tax Indemnitee which
                  is the Owner Participant, Owner Trustee, or the Trust Estate,
                  or any successor, assign or Affiliate of any thereof, as a
                  result of a voluntary transfer or disposition by such Tax
                  Indemnitee including, without limitation, the revocation of
                  the Trust Agreement or an involuntary transfer or disposition
                  of all or any portion of its respective equitable or legal
                  ownership interest in the Aircraft, the Airframe, the Engines,
                  the Parts or any part thereof, the Trust Estate or the
                  Operative Documents, unless any such transfer or disposition
                  shall occur, (A) during a period when an Event of Default has
                  occurred and is continuing under the Lease at the time of
                  transfer or disposition and such transfer or disposition is a
                  direct result of such Event of Default, or (B) in connection
                  with the termination of the Lease or action or direction of
                  the Lessee pursuant to Sections 7, 8, 9, 10 or 19 thereof;

                                (4) to any Tax imposed on a Tax Indemnitee which
                  is a Certificate Holder, the Indenture Trustee or the Trust
                  Indenture Estate or any successor, assign or Affiliate of any
                  thereof, as a result of a voluntary or involuntary transfer or
                  other disposition of all or any portion of its respective
                  equitable or legal interests in the Trust Indenture, the
                  Operative Documents or the Pass Through Documents unless, in
                  each case, such transfer or disposition shall occur (A)
                  pursuant to the exercise of remedies under Section 15 of the
                  Lease, or (B) in connection with the termination of the Lease
                  or action or direction of the Lessee pursuant to Sections 7,
                  8, 9, 10 or 19 thereof;

                                (5) to any Tax imposed on the Owner Participant,
                  Trust Estate or Owner Trustee which results from the willful
                  misconduct or gross negligence of (x) the Owner Participant to
                  the extent imposed on the Owner Participant, Trust Estate or
                  Owner Trustee, or (y) the Owner Trustee to the extent imposed
                  on the Owner Trustee;

                                       9
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                                (6) to any Tax imposed on a Tax Indemnitee which
                  is a Certificate Holder, the Indenture Trustee or the Trust
                  Indenture Estate which results from the willful misconduct or
                  gross negligence of a Certificate Holder or the Indenture
                  Trustee;

                                (7) to any Tax based on or measured by any fees
                  received by the Owner Trustee, Indenture Trustee or Pass
                  Through Trustee in connection with any transaction
                  contemplated by the Operative Documents or Pass Through
                  Documents;

                                (8) so long as no Event of Default or event
                  which, with the passage of time or the giving of notice or
                  both, would become an Event of Default, shall be continuing,
                  to any Tax imposed with respect to (A) the portion of any
                  period after the expiration of the Term, (B) the earlier
                  discharge in full of Lessee's obligation to pay the Stipulated
                  Loss Value or the Termination Value and all other amounts due
                  under the Lease or (C) placement in storage of the Aircraft
                  pursuant to Section 5(d)of the Lease; provided, however, that
                  this Section 7(b)(ii)(8) shall not apply to any Tax (x)
                  relating to events occurring or matters arising upon or prior
                  to such expiration, discharge, storage or parking, or (y)
                  imposed on or with respect to any payments of Tax indemnified
                  hereunder which are due after such expiration, discharge,
                  storage or parking until after such payments have been made;

                                (9) in the case of a Tax Indemnitee which is a
                  Certificate Holder, the Trust Indenture Estate or Pass Through
                  Trustee or any successor, assign or Affiliate thereof, to
                  Taxes in the nature of an intangible or similar tax upon or
                  with respect to the value of the interest of any Certificate
                  Holder, the Trust Indenture Estate or in any of the
                  Certificates imposed by any government or taxing authority;

                                (10) to any Tax imposed on or with respect to a
                  transferee (or subsequent transferee) of an original Tax
                  Indemnitee to the extent such Tax would not have been required
                  to be withheld or imposed on or with respect to such original
                  Tax Indemnitee; provided, that the exception in this Section
                  7(b)(ii)(10) shall not apply to any transferee (or subsequent
                  transferee) where such transfer shall have occurred at any
                  time pursuant to the exercise of remedies under Section 15 of
                  the Lease while an Event of Default has occurred and is
                  continuing under the Lease at the time of transfer or
                  disposition;

                                      10
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                                (11)  to any Tax imposed on the Owner Trustee or
                  Owner Participant resulting from, or which would not have
                  occurred but for, a Lessor Lien (including for this purpose
                  Liens that would be Lessor Liens but for the proviso to the
                  definition of Lessor Liens);

                                (12)  to any Tax which Lessee or a Tax
                  Indemnitee is contesting in good faith under the provisions of
                  Section 7(b)(iv) until the conclusion of such contest;

                                (13)  to any Tax which has been included in
                  Lessor's Cost;

                                (14)  to any Tax imposed by any jurisdiction
                  which (A) is imposed on a Tax Indemnitee for activities in
                  such jurisdiction unrelated to the transactions contemplated
                  by the Operative Documents and Pass Through Documents, or (B)
                  is imposed on, based on or measured by transactions of a Tax
                  Indemnitee unrelated to the transactions contemplated by the
                  Operative Documents and Pass Through Documents; and

                                (15)  to any Tax for which Lessee is obligated
                  to pay the Owner Participant under the Tax Indemnity
                  Agreement.

                  The provisions of this Section 7(b)(ii) shall not apply to any
Tax imposed in respect of the receipt or accrual of any indemnity payment made
by Lessee pursuant to this Section 7(b) or Section 7(c) hereof; provided,
however, that this clause shall not result in any duplication of any amounts of
any gross-up payable under Section 7(b)(iii) or Section 7(c) hereof.

                           (iii) Calculation of General Tax Indemnity Payments.
                                 ---------------------------------------------
         Any payment which Lessee shall be required to make to or for the
         account of any Tax Indemnitee with respect to any Tax which is subject
         to indemnification under this Section 7(b) shall be in an amount which,
         after reduction by the amount of all Taxes required to be paid in
         respect of the receipt or accrual of such amount and after
         consideration of any current savings of such Tax Indemnitee resulting
         by way of any deduction, credit or other tax benefit attributable to
         such indemnified Tax that actually reduces any taxes for which Lessee
         is not actually required to indemnify such Tax Indemnitee pursuant to
         Section 7(b) hereof or the Tax Indemnity Agreement, shall be equal to
         the payment otherwise required hereunder.

               If, by reason of any Tax payment made to or for the account of a
         Tax Indemnitee by Lessee pursuant to this Section 7(b), such Tax
         Indemnitee subsequently realizes a tax deduction or credit (including
         foreign tax credit and any reduction in Taxes) not

                                      11
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         previously taken into account in computing such payment, such Tax
         Indemnitee shall promptly pay to Lessee, provided an Event of Default
         shall not have occurred and be continuing, an amount equal to the sum
         of (I) the actual reduction in Taxes, if any, realized by such Tax
         Indemnitee which is attributable to such deduction or credit and (II)
         the actual reduction in Taxes realized by such Tax Indemnitee as a
         result of any payment made by such Tax Indemnitee pursuant to this
         sentence; provided, however, that such Tax Indemnitee shall not be
                   --------  -------
         obligated to make any payment pursuant to this Section 7(b) to the
         extent that the amount of such payment pursuant to (I) above would
         exceed (x) the amount of all prior payments made by Lessee pursuant to
         this Section 7(b) net of any amount paid in respect of Taxes required
         to be paid by such Tax Indemnitee in respect of the receipt or accrual
         of such amounts received by such Tax Indemnitee from Lessee, less (y)
         the portion of all prior payments computed pursuant to (I) above by
         such Tax Indemnitee to the Lessee hereunder.

               For purposes of this Section 7(b)(iii) items of foreign Tax of
         any Tax Indemnitee shall be deemed to be utilized by such Indemnitee as
         credits or deductions for any taxable year in accordance with the
         following priorities:

                           First, all available foreign Taxes, other than those
                  arising out of a leveraged lease transaction, for which such
                  Tax Indemnitee was not indemnified or held harmless by anyone;
                  and

                           Second, all remaining available foreign Taxes (other
                  than those in third below) on a pari passu basis; and
                                                  ---- -----

                           Third, any remaining foreign Taxes arising from any
                  transaction entered into prior to the date hereof in which
                  there is an express agreement that such Taxes shall be
                  utilized after such Taxes described above.

         Once the foreign Tax for which such Tax Indemnitee was indemnified by
         Lessee is deemed to be utilized pursuant to the ordering rules
         contained in this paragraph, it shall not subsequently be
         recharacterized as not having been utilized as a result of a foreign
         tax liability arising in a subsequent year.

                  Any Taxes that are imposed on any Tax Indemnitee as a result
         of the disallowance or reduction of any tax benefit referred to in this
         subsection as to which such Tax Indemnitee has made in full the payment
         to Lessee required hereby (or as to which such Tax Indemnitee would
         have made its payment but for Section 7(b)(vii) hereof) or which tax
         benefit was otherwise taken into account in computing Lessee's
         indemnity obligation pursuant to this Section 7(b), in a taxable year
         subsequent to the utilization by such Tax Indemnitee (including the
         expiration of any tax credit carryovers or carrybacks of such

                                      12
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         Tax Indemnitee that would not otherwise have expired) shall be treated
         as a Tax for which Lessee is obligated to indemnify such Tax Indemnitee
         pursuant to the provisions of this Section 7(b) without regard to the
         exclusions in Section 7(b)(ii) or conditions in Section 7(b)(iv).

                    (iv)  General Tax Indemnity -- Contests. If a written claim
                          ---------------------------------
         shall be made against any Tax Indemnitee for any Tax for which Lessee
         is obligated pursuant to this Section 7(b), such Tax Indemnitee shall
         notify Lessee in writing promptly after receipt thereof (as well as the
         name of independent tax counsel for purposes of this Section 7(b)(iv))
         and shall provide Lessee such information regarding such claim as
         Lessee may reasonably request, but the failure to give such notice or
         to provide such information shall not diminish Lessee's obligation
         hereunder unless such failure materially and adversely affects Lessee's
         ability to (A) require such Tax Indemnitee to contest the Tax or (B)
         contest the Tax itself.

               If a written claim shall be made for any Tax, other than an
         Income Tax, for which Lessee is obligated pursuant to this Section
         7(b), and under applicable law of the Taxing Authority Lessee is
         allowed to directly contest such Tax in its own name, then the Lessee
         shall be permitted, at its expense at no after-tax cost to the Tax
         Indemnitee and in its own name, to contest the imposition of such Tax.

               If requested by Lessee in writing (A) within 30 days of Lessee's
         receipt of notice from a Tax Indemnitee under the first paragraph of
         this Section 7(b)(iv) and (B) with respect to a Tax not described in
         the previous paragraph, such Tax Indemnitee shall in good faith at
         Lessee's expense at no after-tax cost to the Tax Indemnitee contest the
         imposition of any such Tax. After consulting with Lessee and Lessee's
         counsel concerning the forum in which the adjustment is most likely to
         be favorably resolved, such Tax Indemnitee shall, in its sole
         discretion, select the forum for such contest and determine whether any
         such contest shall be by (A) resisting payment of such Tax, (B) paying
         such Tax under protest or (C) paying such Tax and seeking a refund or
         other repayment thereof.

               In no event shall such Tax Indemnitee be requested to contest the
         imposition of any Tax for which Lessee is liable under this Section
         7(b), or in the case of clauses (II) and (VI), shall the Lessee be
         permitted to contest such Tax unless (I) in Lessee's request to the Tax
         Indemnitee to contest such Tax, Lessee shall have agreed to pay such
         Tax Indemnitee on demand and on an after-tax basis all reasonable costs
         and expenses that such Tax Indemnitee actually incurs in connection
         with contesting such claim (including, without limitation, all costs,
         expenses, losses, reasonable legal and accounting fees, disbursements,
         penalties, interest and additions to tax), (II) such action to be taken
         will not result in the risk of an imposition of criminal penalties or
         the material risk of any sale,

                                      13
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         forfeiture or loss of the Aircraft, or the creation of any Lien other
         than Liens for Taxes of Lessee (x) either not yet due or being
         contested in good faith by appropriate proceedings so long as such
         proceedings do not involve the risk of an imposition of criminal
         penalties or the material risk of any sale, forfeiture or loss of the
         Aircraft and (y) for the payment of which such reserves, if any, as are
         required to be provided under generally accepted accounting principles
         have been provided by Lessee and, to the extent permitted by law
         payment may be withheld during the pendency of such contest, (III) if
         such contest shall be conducted in a manner requiring the payment of
         the claim, Lessee shall have paid the amount required directly to the
         appropriate authority or made an advance of the amount thereof to such
         Tax Indemnitee on an interest-free basis and agreed to indemnify the
         Tax Indemnitee against any additional net after-tax cost to such Tax
         Indemnitee with respect to such advance or the interest-free nature
         thereof, (IV) independent tax counsel selected by such Tax Indemnitee
         and reasonably satisfactory to the Lessee shall furnish an opinion,
         prepared at the Lessee's expense, to the effect that there is a
         reasonable basis to contest such claim, (V) prior to the commencement
         of an administrative appeal Lessee shall have delivered to such Tax
         Indemnitee a written acknowledgment of Lessee's obligation to indemnify
         fully such Tax Indemnitee to the extent that the contest is not
         successful; provided, however, that Lessee will not be bound by its
         acknowledgment of liability if and to the extent that the contest
         results in a determination which clearly demonstrates that Lessee is
         not otherwise liable under this Section 7(b) with respect to such Tax,
         (VI) if an Event of Default shall have occurred and be continuing, the
         Lessee shall have, at the option of the Tax Indemnitee, either (i)
         provided security for its obligations hereunder reasonably satisfactory
         to the Tax Indemnitee by placing in escrow sufficient funds to cover
         any such contested Tax or (ii) paid such Tax.

               If any Tax Indemnitee shall obtain a refund of all or any part
         of any Tax paid by Lessee such Tax Indemnitee shall pay Lessee, but not
         before Lessee shall have made all payments theretofore due to such
         Indemnitee pursuant to this Section 7(b) and any other payments
         theretofore due under any of the Operative Documents, an amount equal
         to the sum of (I) the amount of such refund, including interest
         received attributable thereto, net of taxes required to be paid by such
         Tax Indemnitee as a result of any refund or interest received and (II)
         any tax benefit realized by such Tax Indemnitee as a result of any
         payment by such Tax Indemnitee made pursuant to this sentence.

               Nothing contained in this Section 7(b)(iv) shall require any Tax
         Indemnitee to contest, or permit Lessee to contest, a claim with
         respect to the imposition of any Tax if such Tax Indemnitee shall waive
         its right to indemnification under this Section 7 with respect to such
         claim.

                    (v) General Tax Indemnity -- Reports. Lessee will provide
                        --------------------------------
         such information as may be reasonably requested by a Tax Indemnitee or
         required to enable a

                                      14
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         Tax Indemnitee to fulfill its tax filing and audit requirements with
         respect to the transactions contemplated by the Operative Documents. In
         the event any return, statement or report is required to be made or
         filed with respect to any Tax imposed on or indemnified against by
         Lessee under this Section 7(b) (other than with respect to Income
         Taxes), Lessee shall notify the Tax Indemnitee of such requirement and
         (i) to the extent permitted by law or required by law, Lessee shall
         make and file in its own name, and pay the tax shown due on such
         return, statement or report in such manner as will show the ownership
         of the Aircraft in the Owner Trustee and furnish the Tax Indemnitee
         with a copy of such return, statement or report; provided, however,
         that Lessee shall have no obligation under this clause (i) to the
         extent such Tax Indemnitee after receipt of Lessee's written request
         shall have failed to furnish Lessee with such information as is
         peculiarly within such Tax Indemnitee's control and is necessary to
         file such returns, statements or reports, (ii) in the case of a return,
         statement or report required to be in the name of or filed by such Tax
         Indemnitee, Lessee shall prepare and furnish such return, statement or
         report for filing by such Tax Indemnitee in such manner as shall be
         reasonably satisfactory to such Tax Indemnitee and send the same to
         such Tax Indemnitee for filing no later than 20 Business Days prior to
         the due date; provided, however, that Lessee shall have no obligation
         under this clause (ii) to the extent such Tax Indemnitee after receipt
         of Lessee's written request specifying that information is required to
         be provided pursuant to Section 7(b)(v) of this Agreement, shall have
         failed to furnish Lessee with such information as is peculiarly within
         such Tax Indemnitee's control and is necessary to prepare such return,
         statement or report, and (iii) in the case of a return, statement or
         report required to reflect items in addition to Taxes imposed on or
         indemnified against by the Lessee under this Section 7(b), Lessee
         shall, upon the written request of such Tax Indemnitee, provide such
         Tax Indemnitee with such information as is within Lessee's reasonable
         control. Lessee shall hold each Tax Indemnitee harmless from and
         against any liabilities, including, but not limited to penalties,
         additions to tax, fines and interest, arising out of any insufficiency
         or inaccuracy in any such return, statement, report or information if
         such insufficiency or inaccuracy is attributable to Lessee.

                    (vi)  General Tax Indemnity -- Payment. Except as provided
                          --------------------------------
         in Section 7(b)(iv) hereof, Lessee shall pay any Tax directly to the
         appropriate taxing authority if legally permissible and upon demand of
         a Tax Indemnitee shall pay such Tax and any other amounts due hereunder
         to such Tax Indemnitee within 20 Business Days of such demand, but in
         no event shall any such payments be made more than 10 Business Days
         prior to the date the Tax to which any such payment hereunder relates
         is due (unless Lessee has not received such demand at least 15 Business
         Days prior to such date in which case within five Business Days after
         receipt of such demand), in immediately available funds. Any such
         demand for payment from a Tax Indemnitee shall specify in reasonable
         detail, the payment and the facts upon which the right to payment is
         based. Each Tax Indemnitee shall promptly forward to Lessee any notice,
         bill or advice received

                                      15
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         by it concerning any Tax indemnified against hereunder. As soon as
         practicable after each payment by Lessee of any Tax indemnified against
         hereunder, Lessee shall furnish the appropriate Tax Indemnitee the
         original or a certified copy of a receipt for Lessee's payment of such
         Tax or such other evidence of payment of such Tax as is acceptable to
         such Tax Indemnitee. Lessee shall also furnish promptly upon request
         such data as any Tax Indemnitee may reasonably require to enable such
         Tax Indemnitee to comply with the requirements of any taxing
         jurisdiction.

                    (vii)  Application of Payments During Existence of Event of
                           ----------------------------------------------------
         Default or Default. Any amount payable to Lessee pursuant to the terms
         ------------------
         of this Section 7(b) shall not be paid to or retained by Lessee if at
         the time of such payment or retention a Default or an Event of Default
         shall have occurred and be continuing under the Lease. At such time as
         there shall not be continuing any such Default or Event of Default,
         such amount shall be paid to the Lessee to the extent not previously
         applied against Lessee's obligations hereunder as and when due after
         the Owner Trustee shall have declared the Lease in default pursuant to
         Section 15 thereof.

                    (viii)  Reimbursements by Indemnitees Generally. If, for any
                            ---------------------------------------
         reason, Lessee is required to make any payment with respect to any
         Taxes imposed on any Indemnitee in respect of the transactions
         contemplated by the Operative Documents or on the Aircraft, the
         Airframe, the Engines, the Parts or any part thereof, which Taxes are
         not the responsibility of Lessee under this Section 7(b), then such Tax
         Indemnitee shall pay to Lessee an amount which equals the amount paid
         by Lessee with respect to such Taxes plus interest thereon computed at
         an annual interest rate equal to the Base Rate plus one percent.

                    (ix)  Forms, etc. Each Tax Indemnitee agrees to furnish to
                          ----------
         Lessee from time to time and not inconsistent with its filing position,
         at the Lessee's written request and expense, such duly executed and
         properly completed forms as may be necessary or appropriate in order to
         claim any reduction of or exemption from any withholding tax imposed by
         any taxing authority in respect of any payments otherwise required to
         be made by Lessee pursuant to the Operative Documents and Pass Through
         Documents, which reduction or exemption may be available to such Tax
         Indemnitee.

                    (x)  Non-Parties. If a Tax Indemnitee is not a party to this
                         -----------
         Agreement, Lessee may require the Tax Indemnitee to agree to the terms
         of this Section 7(b) prior to making any payment to such Tax Indemnitee
         under this Section 7(b).

                    (xi) Owner Participant. For the purposes of this Section
                         -----------------
         7(b), the term "Owner Participant" shall mean and include BancBoston
         United Leasing, LLC (and its permitted successors and assigns), and
         where appropriate the affiliated group of

                                      16
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         corporations (and each member thereof) making a consolidated or
         combined return of which BancBoston United Leasing, LLC (and its
         permitted successors and assigns), is a member.

                    (xii) Income Tax. For purposes of this Section 7, the term
                          ----------
         "Income Tax" means any Tax based on or measured by or with respect to
         gross or net income (including, without limitation, capital gains
         taxes, minimum taxes, income taxes collected by withholding and taxes
         on tax preference items) or receipts and Taxes which are capital, doing
         business, franchise, excess profits, net worth taxes or Taxes in the
         nature of an Income Tax or such Income Taxes or any of them (excluding
         in each case sales, use, rental, services, license, ad valorem, value-
         added, property, property transfer, air carrier, transportation,
         registration, or aircraft registration Taxes or Taxes in the nature of
         such Taxes or any of them) and interest, additions to tax, penalties,
         or other charges in respect thereof.

                    (xviii) Lessee Person. For purposes of this Section 7(b),
                            -------------
         the term "Lessee Person" shall mean Lessee, any sublessee of the
         Aircraft, or any Affiliate, transferee, agent, sublessee, employee,
         successor or assignee of any of the foregoing, or any party to the
         Relevant Documents or any user of the Aircraft or any person in
         possession of the Aircraft with or without color of right (including
         any trustee, receiver, liquidator, debtor in possession or Affiliate of
         any of the foregoing). The term "Lessee Person" shall not include the
         Lessor or any person claiming from or through it (other than the Lessee
         or any person claiming from or through the Lessee).

               (c)  General Indemnity. Lessee hereby agrees to indemnify each
                    -----------------
Indemnitee against, and agrees to protect, save and keep harmless each of them
from (whether or not the transactions contemplated herein or in any of the other
Operative Documents or, on and after the Refinancing Date only, the Pass Through
Documents are consummated), any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, out-of-pocket costs, expenses and
disbursements (including without limitation reasonable legal fees and expenses
and Transaction Expenses to the extent not required to be paid by Lessor
pursuant to Section 16 hereof and all costs and expenses relating to amendments,
supplements, waivers and consents to and under the Operative Documents, but
excluding internal costs and expenses such as salaries and overhead), of
whatsoever kind and nature (collectively called "Expenses") imposed on, incurred
by or asserted against any Indemnitee or any directors, officers, employees,
servants or agents thereof, in any way relating to or arising out of or which
would not have occurred but for (A) the Operative Documents, and, on and after
the Refinancing Date only, each Pass Through Document (and any amendments
thereto), including without limitation any breach by Lessee of any of its
covenants contained therein, or any sublease or the enforcement of any of the
terms

                                      17
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

thereof, (B) the manufacture, purchase, acceptance or rejection of the Airframe
or any Engine, (C) the ownership, delivery, nondelivery, lease, sublease,
possession, use, operation, maintenance, condition, sale, return or other
disposition of, or any modification or alteration to, the Aircraft including,
without limitation, latent or other defects, whether or not discoverable, strict
tort liability and any loss or damage to any property or the environment, death
or injury to any person and any claim for patent, trademark or copyright
infringement, (D) the offer, sale, holding, transfer or delivery of any
Certificates or the Pass Through Certificates (on and after the Refinancing Date
only), or any other certificates issued pursuant to Sections 17, 18 or 20 hereof
or otherwise with Lessee's consent whether before, on or after the Delivery Date
(the indemnity in this clause (D) to extend also to any person who controls an
Indemnitee, its successors, assigns, employees, servants and agents within the
meaning of Section 15 of the Securities Act of 1933, as amended), (E) the offer
or sale of any interest in the Lessor Aircraft Assets or the Trust Estate or any
similar interest on or prior to the Delivery Date, or (F) the offer or sale of
any interest in the Japanese Lease or any similar interest on or prior to the
Delivery Date; provided, that the foregoing indemnity shall not extend to any
Expense resulting from or arising out of or which would not have occurred but
for one or more of the following: (1) any representation or warranty by such
Indemnitee in the Operative Documents or, on and after the Refinancing Date
only, in any Pass Through Document being incorrect, or (2) the failure by such
Indemnitee to perform or observe any agreement, covenant or condition in any of
the Operative Documents or, on and after the Refinancing Date only, in any Pass
Through Document including, without limitation, the creation or existence of a
Lessor Lien (including for this purpose Liens that would be Lessor Liens but for
the proviso to the definition of Lessor Liens), or (3) the willful misconduct or
the gross negligence of such Indemnitee (other than gross negligence imputed to
such Indemnitee solely by reason of its interest in the Aircraft), or (4) a
disposition (voluntary or involuntary) by Lessor of all or any part of its
interest in the Airframe or any Engine (other than as contemplated by the Lease
or the Trust Indenture), a disposition (voluntary or involuntary) by such
Indemnitee of all or any part of such Indemnitee's interest in the Airframe, any
Engine or in the Operative Documents other than during the continuance of an
Event of Default under the Lease, or (5) except as provided in the two
immediately following paragraphs of this Section 7(c), any Tax (as defined in
Section 7(b) hereof) whether or not Lessee is required to indemnify for such Tax
pursuant to Section 7(b) hereof (it being understood that Section 7(b) hereof,
the two immediately following paragraphs of this Section 7(c) and the Tax
Indemnity Agreement exclusively provide for Lessee's liability with respect to
Taxes), or (6) the offer or sale by Lessor after the Delivery Date of any
interest in the Trust Estate or any similar interest, unless such offer or sale
shall occur, but only to the extent that Lessor has not received payment in full
of the Termination Value, Stipulated Loss Value and all other amounts then owed
to Lessor under the Operative Documents, (A) during a period when an Event of
Default has occurred and is continuing under the Lease at the time of such offer
or sale; provided, however, that in regard to an Event of Default described in
Section 14(a) of the Lease not before the earlier of (x) notice to Lessee of
such Event of Default, or (y) the written declaration of Default under Section
15 of the Lease, or (B) in connection with the termination of the Lease or
action or

                                       18
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

direction of the Lessee pursuant to Sections 8, 9 or 10 thereof, or (7) in the
case of the Indenture Trustee, in its individual capacity, and the successors
and assigns thereof, a failure on the part of the Indenture Trustee to
distribute in accordance with the Trust Indenture any amounts received and
distributable by it thereunder or, in the case of a Certificate Holder, a
failure on the part of the Indenture Trustee to distribute in accordance with
the Trust Indenture any amounts received and distributable by it thereunder to
such Certificate Holder or, on and after the Refinancing Date only, a failure on
the part of any Pass Through Trustee to distribute in accordance with the
applicable Pass Through Trust Agreement any amounts received and distributable
by such Pass Through Trustee under such Pass Through Trust Agreement, or (8) so
long as no Default or Event of Default shall have occurred and be continuing,
the authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any of the Operative Documents
or any Pass Through Document (on and after the Refinancing Date only) which
amendments, supplements, waivers or consents (a) do not require or receive the
approval of Lessee pursuant to the terms of the Operative Documents or any Pass
Through Document and (b) are not required pursuant to the terms of the Operative
Documents or, on and after the Refinancing Date only, any Pass Through Document,
or (9) any loss of tax benefits or increase in tax liability under any tax law
whether or not Lessee is required to indemnify therefor pursuant to this
Agreement or the Tax Indemnity Agreement (it being understood that Section 7(b)
hereof, the two immediately following paragraphs of this Section 7(c) and the
Tax Indemnity Agreement exclusively provide for Lessee's liability with respect
to Taxes), or (10) except to the extent fairly attributable to acts or events
occurring prior thereto, acts or events which occur after the earlier of: (I)
the return of possession of the Airframe or any Engine or any Part to Lessor or
its designee pursuant to the terms of the Lease (other than pursuant to Section
15 thereof, in which case Lessee's liability under this Section 7(c) shall
survive for so long as Lessor shall be entitled to exercise remedies under such
Section 15), (II) the termination of the Term in accordance with Section 9 of
the Lease, (III) the 30th day beyond the end of the Term if Lessor shall have
furnished the notice referred to in Section 10(d) of the Lease and Lessee shall
have failed to return possession to Lessor on such day or (IV) the payment by
Lessee of all amounts required to be paid under the Lease following an Event of
Loss with respect to the Aircraft, or (11) any other Expense which any Person
has expressly agreed to bear pursuant to any of the Operative Documents.

          Lessee further agrees that any payment or indemnity pursuant to this
Section 7(c) in respect of any "Expenses" shall be in an amount which, after
deduction of all Taxes required to be paid by an Indemnitee with respect to such
amount under the laws of any federal, state or local government or taxing
authority in the United States, or under the laws of any taxing authority or
governmental subdivision of a foreign country, or any territory or possession of
the United States or any international authority, shall be equal to the excess,
if any, of (A) the amount of such Expense over (B) the current net reduction in
Taxes required to be paid by such Indemnitee resulting from the accrual or
payment of such Expense.

                                       19
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                  If, by reason of any Expense payment made to or for the
account of an Indemnitee by Lessee pursuant to this Section 7(c), such
Indemnitee subsequently realizes a tax deduction or credit (including foreign
tax credit and any reduction in Taxes) not previously taken into account in
computing such payment, such Indemnitee shall promptly pay to Lessee, but only
if Lessee shall have made all payments then due and owing to such Indemnitee
under the Operative Documents, an amount equal to the sum of (I) the actual
reduction in Taxes, if any, realized by such Indemnitee which is attributable to
such deduction or credit and (II) the actual reduction in Taxes realized by such
Indemnitee as a result of any payment made by such Indemnitee pursuant to this
sentence; provided, however, that such Indemnitee shall not be obligated to make
any payment pursuant to this Section 7(c) to the extent that the amount
calculated pursuant to (I) above would exceed (x) the amount of all prior
Expense payments net of any amount paid in respect of Taxes required to be paid
by such Indemnitee in respect of the receipt or accrual of such amounts received
by such Indemnitee from Lessee pursuant to this Section 7(c), less (y) the
portion of all prior payments computed pursuant to (I) above by such Indemnitee
to Lessee hereunder. Any subsequent loss, disallowance or reduction of any tax
benefit for which an Indemnitee has made a payment to Lessee under this
paragraph (or which was otherwise taken into account in computing Lessee's
indemnity obligation) shall be treated as a Tax for which Lessee is obligated to
indemnify such Indemnitee pursuant to Section 7(b) without regard to Sections
7(b)(ii) or 7(b)(iv).

                  Nothing in this Section 7(c) shall be construed as a guaranty
by Lessee of payments due pursuant to the Certificates or the Pass Through
Certificates (on and after the Refinancing Date only) or of the residual value
of the Aircraft.

                  If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly,
upon receiving such notice, give notice of such claim to Lessee; provided that
the failure to provide such notice shall not release Lessee from any of its
obligations to indemnify hereunder, and no payment by Lessee to an Indemnitee
pursuant to this Section 7(c) shall be deemed to constitute a waiver or release
of any right or remedy which the Lessee may have against such Indemnitee for any
actual damages as a result of the failure by such Indemnitee to give Lessee such
notice. Lessee shall be entitled, at its sole cost and expense, and without
cost, on an after-tax basis, to Lessor, acting through counsel reasonably
acceptable to the respective Indemnitee, (A) in any judicial or administrative
proceeding that involves solely a claim for one or more Expenses, to assume
responsibility for and control thereof, (B) in any judicial or administrative
proceeding involving a claim for one or more Expenses and other claims related
or unrelated to the transactions contemplated by the Operative Documents, to
assume responsibility for and control of such claim for Expenses to the extent
that the same may be and is severed from such other claims (and such Indemnitee
shall use its best efforts to obtain such severance), and (C) in any other case,
to be consulted by such Indemnitee with respect to judicial proceedings subject
to the control of such Indemnitee and to be allowed, at Lessee's sole expense,
to participate therein. Notwithstanding any of the

                                       20
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

foregoing to the contrary, Lessee shall not be entitled to assume responsibility
for and control of any such judicial or administrative proceedings if any
Default or Event of Default shall have occurred and be continuing or if such
proceedings will involve a material risk of the sale, forfeiture or loss of, or
the creation of any Lien (other than a Permitted Lien) on the Aircraft or the
Trust Indenture Estate or any part thereof or any risk of criminal liability or
material risk of civil liability to any Indemnitee unless Lessee shall have
posted a bond or other security satisfactory to the relevant Indemnitee in
respect to such risk. The Indemnitee may participate at its own expense and with
its own counsel in any judicial proceeding controlled by Lessee pursuant to the
preceding provisions.

                  The Indemnitee shall supply Lessee with such information
reasonably requested by Lessee as is necessary or advisable for Lessee to
control or participate in any proceeding to the extent permitted by this Section
7(c). Such Indemnitee shall not enter into a settlement or other compromise with
respect to any Expense without the prior written consent of Lessee, which
consent shall not be unreasonably withheld or delayed, unless such Indemnitee
waives its right to be indemnified with respect to such Expense under this
Section 7(c).

                  Lessee shall supply the Indemnitee with such information
reasonably requested by the Indemnitee as is necessary or advisable for the
Indemnitee to control or participate in any proceeding to the extent permitted
by this Section 7(c).

                  Upon payment of any Expense pursuant to this Section 7(c),
Lessee, without any further action, shall be subrogated to any claims the
Indemnitee may have relating thereto other than claims under Section 9.06 of the
Trust Indenture. The Indemnitee agrees to give such further assurances or
agreements and to cooperate with Lessee to permit Lessee to pursue such claims,
if any, to the extent reasonably requested by Lessee.

                  In the event that Lessee shall have paid an amount to an
Indemnitee pursuant to this Section 7(c), and such Indemnitee subsequently shall
be reimbursed in respect of such indemnified amount from any other person, such
Indemnitee shall promptly pay Lessee, but not before Lessee shall have made all
payments then due to such Indemnitee pursuant to this Section 7(c) and any other
payments then due under any of the Operative Documents, an amount equal to the
sum of (I) the amount of such reimbursement, including interest received
attributable thereto, net of taxes required to be paid by such Indemnitee as a
result of any refund or interest received and (II) any tax benefit realized by
such Indemnitee as a result of any payment by such Indemnitee made pursuant to
this sentence, provided, however, that such amount attributable to (I) above
shall not be in excess of the amount of such Expense payment net of any amount
paid in respect of Taxes required to be paid by such Indemnitee in respect of
the receipt or accrual of such payment or advance made by Lessee to such
Indemnitee plus interest received, if any, from the relevant taxing authority
with respect to any such Expense payment, it being intended that such Indemnitee
shall realize a net benefit pursuant to this Section 7(c) only if Lessee shall
first have been reimbursed for any payments by it to such Indemnitee pursuant to
this Section 7(c).

                                       21
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

                  Lessee agrees to pay the reasonable fees and expenses of the
Indenture Trustee (including, but not limited to, the reasonable fees and
expenses of its counsel and any agent appointed in accordance with Section
9.02(c) of the Trust Indenture) and each Pass Through Trustee (on and after the
Refinancing Date only) (including, but not limited to, the reasonable fees and
expenses of its counsel) and, as provided in Section 6.3 of the Trust Agreement,
the Owner Trustee (including, but not limited to, the reasonable fees and
expenses of its counsel), in each case, without cost, on a net after-tax basis,
to Lessor, for acting as such, other than such fees and expenses which
constitute Transaction Expenses. In the event Lessee believes such fees and
expenses are not reasonable, Lessor agrees to cooperate with Lessee in
considering an alternative trustee to the Indenture Trustee. To the extent
permitted by applicable law, interest at the Past Due Rate shall be paid, on
demand, on any amount or indemnity not paid when due pursuant to this Section 7
until the same shall be paid. Such interest shall be paid in the same manner as
the unpaid amount in respect of which such interest is due.

                  Any amount which is payable to Lessee by any Person pursuant
to this Section 7 shall not be paid to Lessee if an Event of Default shall have
occurred and be continuing or if any payment is due and owing by Lessee under
the Lease or to such Person under any other Operative Document. Any such amount
shall be held by such Person and, if Lessor declares the Lease to be in default
pursuant to Section 15 of the Lease, shall be applied against Lessee's
obligations hereunder to such Person as and when due (and, to the extent that
Lessee has no obligations hereunder to such Person, such amount shall be paid to
the Lessee). At such time as there shall not be continuing any such Event of
Default or there shall not be due and owing any such payment, such amount shall
be paid to Lessee.

         SECTION 8.   Representations, Warranties and Covenants. Without
                      -----------------------------------------
prejudice to the representations and warranties made in Section 8 of the
Original Participation Agreement, the parties hereto represent, warrant and
covenant as follows, except that the representations and warranties are made as
of the Effective Date only, unless expressly made as of another date, in which
case such representation or warranty, as the case may be, is made as of such
other date.

                  (a) The Owner Participant represents that it is acquiring its
interest in the Trust Estate for investment purposes only and not with a present
intent as to any resale or distribution thereof (subject nonetheless to any
requirement of law that the disposition of its properties shall at all times be
and remain within its control) and that neither it nor anyone acting on its
behalf (other than, for purposes of this paragraph, Lessee) has directly or
indirectly offered any interest in the Trust Estate or any Certificates or Pass
Through Certificates or any similar securities for sale to, or solicited any
offer to acquire any of the same from, anyone in a manner which would result in
a violation of either the Securities Act of 1933, as amended, or the securities
laws of any state.

                                       22
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

                  (b) State Street Bank and Trust Company, in its individual
capacity, represents and warrants to the other parties to this Agreement that it
is, and on the Effective Date will be, a Citizen of the United States. The Owner
Participant represents and warrants that the sole member of Owner Participant is
Fleet National Bank, and the manager of Owner Participant is an individual who
is a Citizen of the United States. Owner Participant and Fleet National Bank
have entered into a voting trust arrangement whereby 100% of Fleet National
Bank's membership interest in Owner Participant has been transferred to a voting
trustee so as to permit the registration of the Aircraft under the Federal
Aviation Act in the name of the Lessor and agrees, solely for the benefit of
Lessee and the Certificate Holders, that if during such time as the Aircraft is
registered in the United States (or if Lessee desires to register the Aircraft
in the United States) the Aircraft shall be ineligible for registration in the
name of the Owner Trustee under the Federal Aviation Act and regulations then
applicable thereunder, then the Owner Participant shall (at its own expense and
without any reimbursement or indemnification from Lessee) as soon as is
reasonably practicable but in any event within 60 days of such ineligibility and
of such loss of citizenship (A) effect voting trust or other similar
arrangements or take any other action as may be necessary to prevent any
deregistration or to maintain the United States registration of the Aircraft, or
(B) transfer its beneficial interest in the Trust Estate in accordance with
Section 8(l) hereof. It is understood that: (1) the Owner Participant shall be
liable to any of the other parties hereto for any damages suffered by any such
other party as the result of the representation and warranty of the Owner
Participant in the second sentence of this Section 8(b) proving to be untrue as
of the Effective Date; and (2) the Owner Participant shall be liable to Lessee,
any Sublessee, the Indenture Trustee and any Certificate Holder for any damages
which may be incurred by Lessee, any Sublessee, the Indenture Trustee or such
Certificate Holder as a result of the Owner Participant's failure to comply with
its obligations pursuant to the second sentence of this Section 8(b) (including
any damages suffered by any such party during such 60 day period), unless such
failure is a result of such party's breach of its obligations to cooperate set
forth in the following sentence. Each party hereto agrees, upon the request and
at the sole expense of the Owner Participant, to reasonably cooperate with the
Owner Participant in complying with its obligations under the provisions of the
second sentence of this Section 8(b) and such request shall not be subject to
the indemnity contained in Section 7(c) hereof. State Street Bank and Trust
Company, in its individual capacity, agrees that if at any time a responsible
officer of State Street Bank and Trust Company shall obtain actual knowledge
that State Street Bank and Trust Company has ceased to be a Citizen of the
United States, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at such
time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any adverse effect on a Certificate Holder, the Owner
Trustee, Lessee or the Owner Participant), effective upon the appointment of a
successor Owner Trustee in accordance with Section 9.1 of the Trust Agreement.
If the Owner Participant or State Street Bank and Trust Company, in its
individual capacity, does not comply with the requirements of this Section 8(b),
the Owner Trustee, the Indenture Trustee and the Owner Participant hereby

                                       23
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

agree that a Default or an Event of Default shall not have occurred and be
continuing under the Lease due to non-compliance by Lessee with the registration
requirements in the Lease.

                  (c) State Street Bank and Trust Company, in its individual
capacity represents and warrants that both the principal place of business of
the Owner Trustee and the place where the Owner Trustee's records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are or will be kept is Boston, Massachusetts (other than
such as may be maintained or held by the Indenture Trustee pursuant to the Trust
Indenture) and that it has its chief executive office (as such term is used in
Article 9 of the Uniform Commercial Code) in The Commonwealth of Massachusetts.
State Street Bank and Trust Company, in its individual capacity agrees that it
will not change the location of such office to a location outside of Boston,
Massachusetts, without prior written notice to Lessee, Indenture Trustee and the
Owner Participant.

                  (d) [Intentionally omitted.]

                  (e) Each of Lessor and Owner Participant agrees that, if, at
any time after the Restricted Period and so long as no Default or Event of
Default under the Lease shall have occurred or be continuing, Lessee has
requested its consent to the registration of the Aircraft, in the name of the
Lessor (or, if appropriate under the laws of any jurisdiction referred to below,
in the name of Lessee or a Sublessee as a "lessee" or a "sublessee"), at
Lessee's expense, (i) in a country listed in Exhibit G (which shall not,
however, be Japan so long as the Primary Lessor has any interest in the
Aircraft) to the Lease and with which country the United States maintains
diplomatic relations at the time of such change in registration (the Lessee
having no responsibility to effect a further change in such registration if
diplomatic relations are severed with such country subsequent to such change in
registration), or (ii) in any other country with which the United States
maintains diplomatic relations (which shall not, however, be Japan so long as
the Primary Lessor has any interest in the Aircraft) at the time of such change
in registration (the Lessee having no responsibility to effect a further change
in such registration if diplomatic relations are severed with such country
subsequent to such change in registration) and it has not determined, acting
reasonably, that such other country would not provide substantially equivalent
protection for the rights of lessors in similar transactions as provided under
United States law, neither Owner Participant nor Lessor will, in the case of (i)
withhold its consent, or in the case of (ii) unreasonably withhold its consent
to such change of registration, and, upon giving said consent, each of Owner
Participant and Lessor will permit Lessee to cause such change of registration;
provided, however, that in the case of a change in registry to a country other
than the United States or a country listed on Exhibit G to the Lease, Owner
Participant and, so long as the Lien of the Trust Indenture has not been
released, the Indenture Trustee shall have received:

                      (i) assurances reasonably satisfactory to Owner
         Participant (A) of the payment by Lessee of any expenses of Lessor,
         Owner Participant and the Indenture

                                       24
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

         Trustee, on a net after-tax basis to each such recipient, in connection
         with such change of registry, (B) to the effect that the original
         indemnities in favor of Lessor and the Indenture Trustee, the
         Certificate Holders and the Trust Indenture Estate, under this
         Agreement, the Trust Indenture and the Tax Indemnity Agreement, afford
         each such party substantially the same protection as provided prior to
         such change of registry, (C) that such change will not result in the
         imposition of, or increase in the amount of, any Tax for which Lessee
         is not required to indemnify, or is not then willing to enter into a
         binding agreement to indemnify Owner Participant, Lessor (in its
         individual and trust capacities), the Indenture Trustee and the Trust
         Estate pursuant to Section 7(b) hereof, (D) that such new country of
         registry imposes aircraft maintenance standards not materially less
         stringent than those of the FAA, (E) to the effect that the insurance
         or self-insurance provisions of the Lease have been complied with after
         giving effect to such change of registry, (F) that the appropriate
         documents necessary to effect such reregistration have been executed
         and delivered by the appropriate parties and, to the extent required by
         applicable law, filed or recorded in the appropriate filing or
         recording office, (G) as to the airworthiness of the Aircraft under the
         laws of the new country of registration and (H) such supplements and
         amendments to the Operative Documents as shall be required in order to
         implement the reregistration of the Aircraft and to continue in favor
         of Lessor (in its individual capacity and trust capacities), the
         Indenture Trustee, Owner Participant, the Trust Estate and the Trust
         Indenture Estate substantially similar protection as is provided prior
         to such reregistration; and

                           (ii) a favorable opinion of counsel (reasonably
         satisfactory to the Owner Trustee and Owner Participant) in the new
         jurisdiction of registry (A) that the terms (including, without
         limitation, the governing-law, service-of-process and jurisdictional-
         submission provisions thereof) of the Lease and the Trust Indenture are
         legal, valid, binding and enforceable in such jurisdiction, (B) that it
         is not necessary for Owner Participant, Lessor or the Indenture Trustee
         to register or qualify to do business in such jurisdiction, (C) that
         there is no tort liability of the owner of an aircraft not in
         possession thereof under the laws of such jurisdiction other than tort
         liability which might have been imposed on such owner under the laws of
         the United States or any state thereof (it being understood that, in
         the event such latter opinion cannot be given in a form satisfactory to
         Owner Participant, such opinion shall be waived if insurance reasonably
         satisfactory to Owner Participant is obtained by Lessee, at its sole
         expense, to cover such risk), (D) (unless Lessee shall have agreed to
         provide insurance covering the risk of requisition of use of the
         Aircraft by the government of such jurisdiction so long as the Aircraft
         is registered under the laws of such jurisdiction) that the laws of
         such jurisdiction require fair compensation by the government of such
         jurisdiction payable in currency freely convertible into United States
         Dollars for the loss of use of the Aircraft in the event of the
         requisition by such government of such use, and (E) to such further
         effect with

                                       25
<PAGE>

                 [First Amended and Restated Participation Agreement (1989 I)]

         respect to such other matters as the Owner Trustee or Owner
         Participant may reasonably request.

                  Upon receipt by Owner Participant, Owner Trustee and the
Indenture Trustee of the opinion of counsel referred to in Section 8(e)(ii)
above, Exhibit G to the Lease shall be amended to add such country. If at any
time Owner Participant, with respect to a country then listed on Exhibit G to
the Lease, delivers to Lessee an opinion of a reputable law firm located in such
jurisdiction that such law firm would not, as of the date of such opinion, be
able to deliver an opinion of counsel as to each of those matters listed in
subsections (A) through (D) of subparagraph (ii) of this paragraph 8(e), then
Exhibit G to the Lease shall be amended to delete such country, provided that
such deletion will not impair any registration then in effect. Any change to
Exhibit G to the Lease shall automatically be made in respect of Exhibit F to
the Lease.

                  (f) The Owner Participant represents and warrants as follows:

                      (i) the Owner Participant is a limited liability company
         duly organized and validly existing in good standing under the laws of
         its jurisdiction of organization, and has the power and authority to
         carry on its business as now conducted, to own or hold under lease its
         properties and to enter into and perform its obligations under the
         Owner Participant Documents;

                      (ii) the Owner Participant Documents have been duly
         authorized by all necessary action on the part of the Owner
         Participant, do not require any approval not already obtained of
         members of the Owner Participant or any approval or consent not already
         obtained of any trustee or holders of any indebtedness or obligations
         of the Owner Participant, and have been duly executed and delivered by
         the Owner Participant, and neither the execution and delivery thereof
         by the Owner Participant, nor the consummation of the transactions
         contemplated thereby by the Owner Participant, nor compliance by the
         Owner Participant with any of the terms and provisions thereof will
         contravene any United States federal or state law, judgment,
         governmental rule, regulation or order applicable to or binding on the
         Owner Participant (it being understood that no representation or
         warranty is made with respect to laws, rules or regulations relating to
         aviation or to the nature of the equipment owned by the Owner Trustee,
         other than such laws, rules or regulations relating to the citizenship
         requirements of the Owner Participant under applicable aviation law) or
         contravene or result in any breach of or constitute any default under,
         or result in the creation of any Lien (other than Liens provided for in
         the Operative Documents) upon the Trust Estate under, any indenture,
         mortgage, chattel mortgage, deed of trust, conditional sales contract,
         bank loan or credit agreement, charter, operating agreement or other
         constitutional agreement, or other agreement or instrument to which the
         Owner Participant is a party or by which it or its properties may be
         bound or affected (it being understood that no representation or
         warranty is made in this subsection (f)(ii) with respect to ERISA);

                                       26
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

                           (iii) each of the Owner Participant Documents
         constitutes a legal, valid and binding obligation of the Owner
         Participant enforceable against the Owner Participant in accordance
         with the terms thereof, and the trust intended to be formed by the
         Trust Agreement has been duly and validly formed and the Assignment and
         Assumption Agreement is effective to convey to the Owner Trustee the
         property that it purports to convey;

                           (iv) Neither the execution and delivery by the Owner
         Participant of this Agreement or any other Owner Participant Document,
         nor the consummation by it of any of the transactions contemplated
         hereby or thereby, requires the consent or approval of, the giving of
         notice to, the registration with, the recording or filing of any
         document with, or the taking of any other action in respect of, any
         federal or other governmental authority or agency, except those
         contemplated by the Operative Documents (it being understood that no
         representation or warranty is made with respect to the laws, rules or
         regulations relating to aviation or to the nature of the equipment
         owned by the Owner Trustee, other than such laws, rules or regulations
         relating to the citizenship requirements of the Owner Participant under
         applicable aviation law);

                           (v) there are no pending or, to the knowledge of the
         Owner Participant, threatened actions or proceedings against the Owner
         Participant before any court or administrative agency which, if
         determined adversely to Owner Participant, would materially adversely
         affect the ability of the Owner Participant to perform its obligations
         under the Owner Participant Documents;

                           (vi) on the Effective Date, the Aircraft will be free
         of Lessor Liens (including for this purpose Liens that would be Lessor
         Liens but for the proviso to the definition of Lessor Liens)
         attributable to the Owner Participant;

                           (vii) there has not occurred any event which
         constitutes (or to the best of its knowledge would, with the passage of
         time or the giving of notice or both, constitute) an Event of Default
         as defined in the Trust Indenture which has been caused by or relates
         to Lessor and which is presently continuing; and

                           (viii) on the Delivery Date, Original Lessor received
         whatever interest in the Aircraft was conveyed to it pursuant to the
         Lessor's Purchase Agreement and the Japanese Lease Assignment.

                      (g)  Each of State Street Bank and Trust Company in its
individual capacity and the Owner Participant severally covenants and agrees (i)
that it shall not cause or permit to exist any Lessor Lien attributable to it
with respect to the Aircraft or any other portion of the

                                       27
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

Indenture Estate, (ii) that it will promptly, at its own expense, take such
action as may be necessary duly to discharge such Lessor Lien attributable to it
and (iii) to make restitution to the Indenture Estate for any actual diminution
of the assets of the Indenture Estate resulting from such Lessor Liens
attributable to it. The Owner Participant agrees to make restitution to the
Indenture Estate for any actual diminution of the assets of the Indenture Estate
resulting from any Taxes or Expenses (as such terms are defined in Section 7
hereof) imposed on the Indenture Estate against which Lessee is not required to
indemnify the Indenture Estate pursuant to Section 7 hereof, but excluding Taxes
or Expenses referred to in Section 7(b)(ii)(5) and 7(b)(ii)(7) and excluding any
diminution of the Indenture Estate attributable to or caused by State Street
Bank and Trust Company, in its individual capacity; provided that if the Owner
Participant shall make restitution to the Trust Estate on account of any
diminution of the Indenture Estate attributable to or caused by State Street
Bank and Trust Company in its individual capacity, then State Street Bank and
Trust Company, in its individual capacity, shall reimburse the Owner Participant
for such amount together with interest thereon at the overnight funds rate.

                  (h)  State Street Bank and Trust Company of Connecticut,
National Association, in its individual capacity, covenants and agrees that it
shall not cause or permit to exist any Lien, arising as a result of (i) claims
against the Indenture Trustee not related to its interest in the Aircraft or the
administration of the Indenture Estate pursuant to the Trust Indenture, (ii)
acts of the Indenture Trustee not permitted by, or failure of the Indenture
Trustee to take any action required by, the Operative Documents to the extent
such acts arise or such failure arises from or constitutes gross negligence or
willful misconduct, (iii) claims against the Indenture Trustee relating to Taxes
or Expenses which are excluded from the indemnification provided by Section 7
pursuant to said Section 7, or (iv) claims against the Indenture Trustee arising
out of the transfer by the Indenture Trustee of all or any portion of its
security interest in the Aircraft, the Trust Estate, the Indenture Estate or the
Operative Documents other than (A) a transfer of the Aircraft pursuant to
Section 8, 9, 10 or 19 of the Lease or Article 5 or 8 of the Trust Indenture,
(B) any borrowing pursuant to Section 17 hereof or (C) a transfer of the
Aircraft pursuant to Section 15 of the Lease while an Event of Default is
continuing and prior to the time that the Indenture Trustee has received all
amounts due pursuant to the Trust Indenture.

                  (i)  Lessee agrees and covenants that, if Lessee or any
Affiliate of Lessee owns (directly or indirectly) any Certificates or, on and
after the Refinancing Date only, any Pass Through Certificates, Lessee shall not
exercise any voting control over any such Certificates or Pass Through
Certificates so long as either (x) the Lease has not been terminated pursuant to
Section 9(a)(1) thereof or (y) any Certificates or Pass Through Certificates are
outstanding and held by any entity other than Lessee or an Affiliate thereof.

                  (j) The Indenture Trustee, and by the acceptance of a
Certificate each Certificate Holder (including, on and after the Refinancing
Date only, each Pass Through Trustee, so long as it is a Certificate Holder),
each hereby waives to the fullest extent permitted

                                       28
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

by law the benefit of the provisions of Section 1111(b) of Title 11 of the
United States Code with respect to recourse against the Owner Trustee (in its
individual capacity) and the Owner Participant on account of any amount payable
as principal of, Make-Whole Amount, if any, and interest on the Certificates. If
(i) all or any part of the Trust Estate becomes the property of, or the Owner
Participant becomes, a debtor subject to the reorganization provisions of the
Bankruptcy Code or any successor provision, (ii) pursuant to such reorganization
provisions the Owner Trustee (in its individual capacity) or the Owner
Participant is required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse liability to a
Certificate Holder (including, on and after the Refinancing Date only, each Pass
Through Trustee so long as it is a Certificate Holder) or the Indenture Trustee,
directly or indirectly (other than the recourse liability of the Owner
Participant under this Participation Agreement), to make payment on account of
any amount payable as principal, Make-Whole Amount, if any, or interest on the
Certificates and (iii) such Certificate Holder (including, on and after the
Refinancing Date only, each Pass Through Trustee so long as it is a Certificate
Holder) or the Indenture Trustee actually receives any Excess Payment (as
hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Certificate Holder (including, on and after the Refinancing Date only,
each Pass Through Trustee so long as it is a Certificate Holder) or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee or the Owner Participant (whichever shall have made such payment) such
Excess Payment. For purposes of this Section 8(j), "Excess Payment" means the
amount by which such payment exceeds the amount which would have been received
by such Certificate Holder, such Pass Through Trustee (on and after the
Refinancing Date only) or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 8(j) shall prevent any Certificate Holder, any Pass Through Trustee (on
and after the Refinancing Date only) or the Indenture Trustee from enforcing any
personal recourse obligation (and retaining the proceeds thereof) of the Owner
Trustee (in its individual capacity) or the Owner Participant under this
Participation Agreement or the Trust Indenture (and any exhibits or annexes
hereto or thereto).

                  (k) State Street Bank and Trust Company of Connecticut,
National Association, in its individual capacity ("State Street Connecticut")
and as Indenture Trustee and upon the Pass Through Trustee becoming a party
hereto in accordance with the Note Purchase Agreement, Pass Through Trustee as
provided below, represents as follows:

                       (i)  State Street Connecticut, in its individual
         capacity, agrees that if at any time a responsible officer of State
         Street Connecticut shall obtain actual knowledge that State Street
         Connecticut has ceased to be a Citizen of the United States, it will
         promptly resign as Indenture Trustee (if and so long as such
         citizenship is necessary under the Federal Aviation Act as in effect at
         such time or, if it is not necessary, if and so long as the Indenture
         Trustee's citizenship would have any adverse effect on a Certificate

                                       29
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

         Holder, Lessee or the Owner Participant), effective upon the
         appointment of a successor Indenture Trustee in accordance with Section
         9.07 of the Trust Indenture.

                           (ii) it is a national banking association and has the
         full corporate power, authority and legal right under the laws of the
         United States of America to enter into and perform its obligations
         under the Trust Indenture, this Agreement, the Basic Agreement and each
         of the Pass Through Documents and, in its capacity as Indenture Trustee
         and Pass Through Trustee, respectively, to authenticate the
         Certificates and the Pass Through Certificates;

                           (iii) the Indenture Trustee Documents, and the
         authentication of the Certificates and the Pass Through Certificates
         have been duly authorized by all necessary corporate action on the part
         of State Street Connecticut, the Indenture Trustee and the relevant
         Pass Through Trustee, as it shall be a party thereto in any such
         capacity, and neither the execution (or, in the case of the
         Certificates and the Pass Through Certificates, the authenticatio) and
         delivery thereof in any such capacity nor the performance by it in any
         such capacity of any of the terms and provisions thereof will violate
         any federal or Connecticut law or regulation relating to the banking or
         trust powers of State Street Connecticut or contravene or result in any
         breach of, or constitute any default under its charter or by-laws or
         the provisions of any indenture, mortgage, contract or other agreement
         to which State Street Connecticut, the Indenture Trustee or the Pass
         Through Trustee is a party or by which it or its properties may be
         bound or affected;

                           (iv) each of the Indenture Trustee Documents has been
         duly executed (or, in the case of the Certificates and the Pass Through
         Certificates, authenticated) and delivered by State Street Connecticut,
         the Indenture Trustee and the relevant Pass Through Trustee, as it
         shall be a party thereto in any such capacity, and, assuming that each
         such agreement is the legal, valid and binding obligation of each other
         party thereto (other than State Street Connecticut, the Indenture
         Trustee and the relevant Pass Through Trustee), is the legal, valid and
         binding obligation of State Street Connecticut, the Indenture Trustee
         and the relevant Pass Through Trustee, as it shall be a party thereto
         in any such capacity, enforceable against it in accordance with its
         terms;

                           (v) neither the execution (or, in the case of the
         Certificates and the Pass Through Certificates, the authentication) and
         delivery by State Street Connecticut, the Indenture Trustee or any Pass
         Through Trustee, as it is a party in any such capacity to any of the
         Indenture Trustee Documents, nor the consummation by it in any such
         capacity of any of the transactions contemplated hereby, by the Trust
         Indenture, by the Pass Through Trust Agreements, by the Certificates or
         by the Pass Through Certificates requires the consent or approval of,
         the giving of notice to, or the registration with, or the taking of any
         other action with respect to, any Connecticut state or federal
         governmental

                                       30
<PAGE>

                 [First Amended and Restated Participation Agreement (1989 I)]

         authority or agency regulating the banking, trust or fiduciary powers
         of State Street Connecticut;

                           (vi) there are no Taxes payable by State Street
         Connecticut, the Indenture Trustee or any Pass Through Trustee imposed
         by the State of Connecticut or any political subdivision or taxing
         authority thereof in connection with the execution (or, in the case of
         the Certificates and the Pass Through Certificates, the authentication)
         and delivery by it as a party in any such capacity to any Indenture
         Trustee Document or the performance by it as a party in any such
         capacity of any Indenture Trustee Document (other than franchise or
         other taxes based on or measured by any fees or compensation received
         by State Street Connecticut, the Indenture Trustee or any Pass Through
         Trustee, as the case may be, for services rendered in connection with
         the transactions contemplated thereby), and there are no Taxes payable
         by State Street Connecticut, the Indenture Trustee or any Pass Through
         Trustee imposed by the State of Connecticut or any political
         subdivision thereof in connection with the acquisition, possession or
         ownership by any Pass Through Trustee of any of the Certificates (other
         than franchise or other taxes based on or measured by any fees or
         compensation received by a Pass Through Trustee for services rendered
         in connection with the transactions contemplated by the respective Pass
         Through Trust Agreement) and, assuming that the trust created by the
         respective Pass Through Trust Agreement will not be taxable as a
         corporation, but, rather, will be characterized as a grantor trust
         under subpart E, Part I of Subchapter J of the Code, such trust will
         not be subject to any Taxes imposed by the State of Connecticut or any
         political subdivision thereof;

                           (vii) there are no pending or threatened actions or
         proceedings against any of State Street Connecticut, the Indenture
         Trustee, or the Pass Through Trustees before any court or
         administrative agency which individually (or in the aggregate in the
         case of any group of related lawsuits) purports to affect the legality,
         validity or enforceability of, or which is reasonably likely to
         materially adversely affect the ability of State Street Connecticut,
         the Indenture Trustee, or the Pass Through Trustees to perform its
         obligations as a party in any such capacity under any Indenture Trustee
         Document; and

                           (viii) except for the issuance and sale pursuant to
         the respective Pass Through Trust Agreement of the Pass Through
         Certificates contemplated hereby, neither State Street Connecticut nor
         any Pass Through Trustee has directly or indirectly offered any
         Certificate for sale to any Person, or solicited any offer to acquire
         any Certificate from any Person other than the Owner Trustee and the
         Owner Participant, and neither State Street Connecticut nor any Pass
         Through Trustee has authorized anyone to act on its behalf to offer
         directly or indirectly any Certificate for sale to any Person, or to
         solicit any offer to acquire any Certificate from any Person other than
         the Owner Trustee and the

                                      31
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         Owner Participant, and no Pass Through Trustee is in default under any
         respective Pass Through Trust Agreement.

                  (l) Owner Participant will not sell, assign, convey or
otherwise transfer any of its right, title or interest in and to this Agreement,
the Trust Estate or any proceeds therefrom to any person or entity, unless (i)
the proposed transferee is a "Transferee" (as defined below), (ii) Owner
Participant shall have delivered to Lessee and the Indenture Trustee an opinion
of counsel reasonably satisfactory to the Lessee to the effect that the
agreement referred to in clause (O) below and any guaranty and the guaranty
required by clause (C) below, if any, are the legal, valid, binding and
enforceable obligation of the Transferee and the guarantor, as the case may be,
(subject to the normal exceptions contained in an opinion on such matters), and
(iii) Lessee shall have (1) received an opinion (in form and substance
reasonably satisfactory to Lessee) of counsel to Owner Participant (who shall be
reasonably satisfactory to Lessee) to the effect that such transfer will not
result in an increase in the tax liability of Lessee or (2) received from Owner
Participant indemnification pursuant to an agreement reasonably satisfactory to
Lessee for any loss of tax benefits to or increase in the tax liability of
Lessee. A "Transferee" shall mean either (A) a bank or other financial
institution with a combined capital, surplus and undivided profits of at least
$100,000,000 or any other entity whose net worth is at least $100,000,000, (B)
any subsidiary of such a bank, financial institution or entity, provided that
such bank, financial institution or entity furnishes to the Indenture Trustee
and Lessee a guaranty with respect to Owner Participant's obligations hereunder
and under the Trust Indenture, or (C) any other entity, provided such
obligations are guaranteed by Owner Participant; provided, however, that any
Transferee shall not be an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel transport by air or other
similar person or a corporation or other entity controlling, controlled by or
under common control with such an airline, a commercial air carrier, an air
freight forwarder, an entity engaged in the business of parcel transport by air
or other similar person. Each such transfer to a Transferee shall be subject to
the conditions that (M) upon giving effect to such transfer, the Transferee is a
"citizen of the United States" within the meaning of the Federal Aviation Act or
Transferee shall have entered into a voting trust or similar arrangement which
permits the registration of the Aircraft under the Federal Aviation Act, (N) the
Transferee has the requisite corporate power and authority to enter into and
carry out the transactions contemplated hereby, (O) the Transferee enters into
an agreement or agreements, in form and substance reasonably satisfactory to
Lessee, whereby the Transferee confirms that it shall be deemed a party to this
Agreement and agrees to be bound by all the terms of, and to undertake all of
the obligations of Owner Participant contained in the Owner Participant
Documents (to the extent of the participation so transferred to it), (P) such
transfer does not violate any provision of the Federal Aviation Act, or any
rules or regulations promulgated thereunder or create a relationship which would
be in violation thereof or violate any provisions of the Securities Act of 1933,
as amended, and (Q) the transferor Owner Participant assumes the risk of any
loss of Interest Deductions, MACRS Deductions,

                                       32
<PAGE>

                  [First Amended and Restated Participation Agreement (1989 I)]

Amortization Deductions, State Tax Deductions or any Inclusion Event (each as
defined in the Tax Indemnity Agreement) resulting to it from such transfer; and
Lessee may request such Transferee to provide an opinion of counsel (who shall
be reasonably satisfactory to Lessee) in form and substance reasonably
satisfactory to Lessee as to any matter set forth in clauses (N) or (P) but only
as to matters relating to the Securities Act of 1933, as amended. Upon any such
transfer by Owner Participant as above provided, the Transferee shall be deemed
Owner Participant for all purposes hereof and of the other Operative Documents
and each reference herein to Owner Participant shall thereafter be deemed for
all purposes to be to the Transferee and Owner Participant shall be relieved of
all obligations of Owner Participant under the Owner Participant Documents
arising after the date of such transfer except to the extent fairly attributable
to acts or events occurring prior thereto and not assumed by the Transferee (in
each case, to the extent of the participation so transferred). If Owner
Participant intends to transfer its interests hereunder, it shall give prior
written notice thereof as soon as practicable but in no event less than 6
Business Days prior thereto to the Indenture Trustee and Lessee, specifying the
name and address of the proposed Transferee. Owner Participant shall pay all of
its costs and shall reimburse the reasonable costs and expenses (other than
internal costs and expenses) of the Indenture Trustee and Lessee in connection
with any such transfer. For purposes of this paragraph, "Net Worth" shall mean
the excess of total assets over total liabilities, each to be determined in
accordance with generally accepted accounting principles consistently applied.

                  Any transfer by Owner Participant, as above provided, shall
only be accomplished by Owner Participant's transfer of its entire right, title
and interest in this Agreement and the Trust Estate; provided, however, Owner
Participant may, subject to compliance with the provisions of this Section 8(k),
transfer its residual interest in this Agreement and the Trust Estate so long as
Owner Participant retains the remaining entire right, title and interest in the
same.

                  (m) Notwithstanding the provisions of Section 8(r) hereof,
unless waived by each Certificate Holder, Lessee shall not be entitled to
terminate the Lease or assume the Certificates on a Termination Date if on such
Termination Date a Default or an Event of Default under the Lease shall have
occurred and be continuing.

                  (n) State Street Bank and Trust Company and State Street Bank
and Trust Company of Connecticut, National Association, each in its individual
capacity, agrees for the benefit of Lessee to comply with the terms of the Trust
Indenture with which it is required to comply in its individual capacity.

                  (o) The Owner Participant represents and warrants that its
interest in the Trust Estate was not acquired with assets of any "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of any "plan"

                                       33
<PAGE>

                 [First Amended and Restated Participation Agreement (1989 I)]

within the meaning of Section 4975(e)(1) of the Code (such employee benefit
plans and plans hereinafter referred to as "ERISA Plans").

                  (p) State Street Bank and Trust Company (A) in its individual
capacity ("SSBTC") represents and warrants that:

                           (i) the Trust Agreement and, assuming due
         authorization, execution and delivery of the Trust Agreement by the
         Owner Participant, each of the other Owner Trustee Documents has been
         duly executed and delivered by one of its officers who is duly
         authorized to execute and deliver such instruments on behalf of the
         Owner Trustee;

                           (ii) the Trust Estate is free and clear of Lessor
         Liens attributable to SSBTC, and there are no Liens affecting the title
         of the Owner Trustee to the Aircraft or resulting from any act or claim
         against SSBTC arising out of any event or condition not related to the
         ownership, leasing, use or operation of the Aircraft or to any other
         transaction contemplated by this Agreement or any of the other
         Operative Documents, including any Lien resulting from the nonpayment
         by SSBTC of any Taxes imposed or measured by its net income;

                           (iii) there has not occurred any event which
         constitutes (or to the best of its knowledge would, with the passage of
         time or the giving of notice or both, constitute) an Event of Default
         as defined in the Trust Indenture which has been caused by or relates
         to SSBTC and which is presently continuing;

                           (iv) it is a Massachusetts trust company duly
         organized and validly existing in good standing under the laws of The
         Commonwealth of Massachusetts and (assuming due authorization,
         execution and delivery of the Trust Agreement by the Owner Participant)
         has the corporate power and authority to enter into and perform its
         obligations under the Trust Agreement, and (assuming due authorization,
         execution and delivery of the Trust Agreement by the Owner Participant)
         has full right, power and authority to enter into and perform its
         obligations as Owner Trustee pursuant to the Trust Agreement under each
         of the other Owner Trustee Documents;

                           (v) each of the Owner Trustee Documents has been duly
         authorized by all necessary corporate action on its part, and neither
         the execution and delivery thereof nor its performance of any of the
         terms and provisions thereof will violate any federal or Massachusetts
         Commonwealth law or regulation relating to its banking or trust powers
         or contravene or result in any breach of, or constitute any default
         under, its charter or by-laws or the provisions of any indenture,
         mortgage, contract or other agreement to which it is a party or by
         which it or its properties may be bound or affected;

                                       34
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                           (vi)  assuming due authorization, execution and
         delivery of the Trust Agreement by the Owner Participant, each of the
         Owner Trustee Documents has been duly executed and delivered by it, and
         each of the Trust Agreement and the Participation Agreement (to the
         extent executed by the Owner Trustee in its individual capacity) is a
         legal, valid and binding obligation of SSBTC and as Owner Trustee, as
         the case may be, enforceable against such party in accordance with the
         terms thereof;

                           (vii)  on the Effective Date, the Owner Trustee shall
         have received whatever title to the Aircraft as was conveyed to it by
         the Original Lessor;

                           (viii)  it has not offered any interest in the Trust
         Estate or any Certificates or Pass Through Certificates or any similar
         securities for sale to, or solicited any offer to acquire the same
         from, anyone other than the Indenture Trustee, the Pass Through
         Trustees and the Owner Participant;

                           (ix)  assuming due authorization, execution and
         delivery of each of the Owner Trustee Documents by each of the parties
         thereto (other than the Owner Trustee), each of the Owner Trustee
         Documents is a legal, valid and binding obligation of the Owner
         Trustee, enforceable against the Owner Trustee in accordance with its
         respective terms; and

                           (x) neither the due execution and delivery of the
         Owner Trustee Documents by SSBTC, in its individual capacity or as
         Owner Trustee under the Trust Agreement, as the case may be, nor the
         consummation by it of any of the transactions contemplated thereby
         require the consent or approval of, the giving of notice to, or the
         registration with, any federal or Massachusetts Commonwealth
         governmental authority or agency pursuant to any federal or
         Massachusetts Commonwealth law governing the banking or trust powers of
         SSBTC; and

                     (B)   solely in its capacity as Owner Trustee further
represents and warrants that:

                           (i) SSBTC is a trust company duly organized and
         validly existing in good standing under the laws of The Commonwealth of
         Massachusetts and has the corporate power and authority to enter into
         this Agreement and to perform its obligations hereunder;

                           (ii) assuming due authorization, execution and
         delivery of the Trust Agreement by the Owner Participant, each of the
         Trust Agreement, this Agreement, the Assignment and Assumption
         Agreement, the Trust Indenture, the Lease and the Certificates has
         been, or on the Effective Date will have been, duly executed and

                                       35
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         delivered by it, and each of this Agreement, the Assignment and
         Assumption Agreement, the Trust Agreement, the Lease and the Trust
         Indenture, on the Effective Date, will constitute a legal, valid and
         binding obligation of the Owner Trustee, enforceable against it in
         accordance with the terms thereof;

                    (iii)  the Owner Trustee has never directly or indirectly
         offered any Certificate or any interest in or to the Trust Estate, the
         Trust Agreement, the Assignment and Assumption Agreement, or any
         similar interest for sale to, or solicited any offer to acquire any of
         the same from, any Person other than the Indenture Trustee, each of the
         Pass Through Trustees and the Owner Participant; and it has not
         authorized any Person to act on its behalf (other than for purposes of
         this paragraph, the Lessee and the Underwriters) to offer directly or
         indirectly any Certificate or any interest in and to the Trust Estate,
         the Trust Agreement, the Assignment and Assumption Agreement, or any
         similar interest for sale to, or to solicit any offer to acquire any of
         the same from, any Person; and

                    (iv)   there are no pending or threatened actions or
         proceedings against SSBTC or the Owner Trustee before any court or
         administrative agency which, if determined adversely to it, would
         materially adversely affect the ability of SSBTC or the Owner Trustee,
         as the case may be, to perform its obligations under any of the Owner
         Trustee Documents or any other documents executed by the Owner Trustee
         or SSBTC in connection with the transactions contemplated by the
         Operative Documents.

               (q)   The Owner Participant agrees, solely for the benefit of
Lessee, that it will comply with any obligation expressly required of it under
Section 9(c) of the Lease. The Owner Participant further covenants and agrees to
pay or cause the Owner Trustee to pay those costs and expenses specified to be
paid by the Owner Participant pursuant to the Lease and all costs and expenses
that are for the account of the Lessor pursuant to Sections 5(a), 5(c) and 5(d),
12 and 19(c) of the Lease.

               (r)   Subject to compliance by Lessee with all of its
obligations under the Lessee Documents, each of the Owner Trustee, the Indenture
Trustee, each Certificate Holder (including, on and after the Refinancing Date
only, each Pass Through Trustee so long as it is a Certificate Holder) and the
Owner Participant covenants and agrees that, at Lessee's expense on a net after-
tax basis (including, without limitation, reasonable attorney's fees and
expenses of each of such parties), if Lessee elects to terminate the Lease
pursuant to Section 9(a)(1) of the Lease and to purchase the U.S. Ownership
Interest pursuant to Section 9(b) of the Lease, then each such party will
execute and deliver appropriate documentation transferring all right, title and
interest in the U.S. Ownership Interest to Lessee without recourse or warranty
except as to Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso to the definition of Lessor Liens) with respect to
such party (including without limitation, such bills of

                                       36
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

sale and other instruments and documents as Lessee shall reasonably request to
evidence (on the public record or otherwise) such transfer and the vesting in
Lessee of all of Lessor's right, title and interest in and to the U.S. Ownership
Interest), and the Indenture Trustee shall execute and deliver appropriate
documentation to release its mortgage on the Aircraft, and if Lessee, in
connection with such purchase, elects to assume the obligations of Lessor
pursuant to the Trust Indenture and the Certificates each of the parties shall
execute and deliver appropriate documentation permitting Lessee to assume such
obligations on the basis of full recourse to Lessee, maintaining the security
interest in the Aircraft created by the Trust Indenture, releasing Lessor from
all future obligations in respect of the Certificates, the Trust Indenture and
all other Operative Documents and all such other actions as are reasonably
necessary to permit such assumption by Lessee. Lessor agrees that, should any
provision of the Lease require transfer of legal title to the Aircraft, the
Airframe, or an Engine, to or at the direction of Lessee at a time when the
Japanese Lease is in effect, Lessor shall use its reasonable best efforts to
cause such title to be transferred pursuant to the terms of the Japanese Lease
to or at the direction of the Lessee, at the sole cost of the Lessee, and shall
take, at Lessee's sole cost, all actions as may be reasonably necessary in
connection therewith.

                  (s)  Lessee will 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:

                       (i)     the corporation formed by such consolidation or
         into which Lessee is merged or the Person which acquires by conveyance,
         transfer or lease substantially all of the assets of Lessee as an
         entirety shall be a Citizen of the United States and shall be a U.S.
         Air Carrier;

                       (ii)    the corporation formed by such consolidation or
         into which Lessee is merged or the Person which acquires by conveyance,
         transfer or lease substantially all of the assets of Lessee as an
         entirety shall execute and deliver to the Owner Trustee, the Indenture
         Trustee, the Owner Participant and, on and after the Refinancing Date
         only, the Pass Through Trustees a duly authorized, valid, binding and
         enforceable agreement in form and substance reasonably satisfactory to
         the Owner Participant containing an assumption by such successor
         corporation or Person of the due and punctual performance and
         observance of each covenant and condition of the Operative Documents
         and, on and after the Refinancing Date only, the Pass Through Documents
         to be performed or observe d by Lessee;

                       (iii)   immediately after giving effect to such
         transaction, no Default or Event of Default under the Lease shall have
         occurred and be continuing;

                       (iv)    Lessee shall have delivered to the Owner
         Trustee, the Indenture Trustee, the Pass Through Trustees (on and after
         the Refinancing Date only) and the

                                       37
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

         Owner Participant a certificate signed by the President or any Vice
         President and by the Secretary or an Assistant Secretary of Lessee, and
         an opinion of counsel (which may be Lessee's General Counsel)
         reasonably satisfactory to the Owner Participant, each stating that
         such consolidation, merger, conveyance, transfer or lease and the
         assumption agreement mentioned in clause (ii) above comply with this
         Section 8(s) and that all conditions precedent herein provided for
         relating to such transaction have been complied with; and

                        (v)    the corporation formed by such consolidation or
         into which Lessee is merged or the Person which acquires by conveyance,
         transfer or lease substantially all of the assets of Lessee, shall make
         such filings and recordings with the FAA pursuant to the Federal
         Aviation Act, as shall be necessary or desirable to evidence such
         consolidation, merger, conveyance, transfer or lease with or to such
         entity.

                  Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all of the assets of Lessee as an entirety in
accordance with this Section 8(s), the successor corporation or Person formed by
such consolidation or into which Lessee 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, Lessee under this Agreement and, on and after
the Refinancing Date only, under the Pass Through Documents with the same effect
as if such successor corporation or Person had been named as Lessee herein and
therein. No such conveyance, transfer or lease of substantially all of the
assets of Lessee as an entirety shall have the effect of releasing Lessee or any
successor corporation or Person which shall theretofore have become such in the
manner prescribed in this Section 8(s) from its liability in respect of any
Operative Document to which it is a party or, on and after the Refinancing Date
only, any of the Pass Through Documents. Nothing contained herein shall permit
any lease, sublease or other arrangement for the use, operation or possession of
the Aircraft except in compliance with the applicable provisions of the Lease.

                  (x)   Lessee, at its expense, will, at the request of any
party hereto, take, or cause to be taken, such action with respect to the
recording, filing, re-recording and re-filing of the Trust Agreement, the
Assignment and Assumption Agreement, the Lease, the Lease Supplement, the Trust
Indenture, the Trust Supplement, the Japanese Lease, the Japanese Lease
Supplement, the Japanese Lease Assignment, the Japanese Lease Assignment
Supplement, the Primary Lessor Mortgage and any financing statements or other
instruments as are necessary to maintain, so long as the Trust Indenture or the
Lease is in effect, the perfection of the security interests created by the
Trust Indenture and any security interest that may be claimed to have been
created by the Lease and the ownership interest of the Owner Trustee in the
Aircraft or will furnish to Owner Participant, Lessor and the Indenture Trustee
timely notice of the necessity of such action, together with such instruments,
in execution form, and such other information as may be required to enable them
to take such action.

                                       38
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

               (u) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, Excess Amount, Stipulated Loss Value percentages and Termination Value
percentages, and the Owner Participant hereby agrees to make such recalculations
as and when contemplated by the Lease and subject to all the terms and
conditions of the Lease and promptly to take such further actions as may be
necessary or desirable to give effect to and to cause the Owner Trustee to give
effect to the provisions of Section 3 of the Lease.

               (v) The Owner Participant hereby agrees not to revoke the Trust
Agreement or the trusts created thereunder without the prior written consent of
(i) the Lessee so long as the Lease shall remain in effect and no Event of
Default under the Lease shall have occurred and be continuing and (ii) the
Indenture Trustee so long as the Trust Indenture shall be in effect.

               (w) Lessee covenants and agrees with the Owner Participant, the
Indenture Trustee and the Owner Trustee that at all times during the Term it
will be a U.S. Air Carrier.

               (x) [Intentionally omitted.]

               (y) The Owner Trustee agrees that any profit, income, interest,
dividend or gain realized upon the maturity, sale or other disposition of any
Permitted Investment made by the Indenture Trustee pursuant to Section 9.04 of
the Trust Indenture, and paid to Lessee on behalf of the Owner Trustee by the
Indenture Trustee in accordance with the terms of such Section 9.04, shall be
entirely for the account of, and the sole property of, Lessee who, for such
purposes, shall not be deemed to be acting as agent of the Owner Trustee, and
Lessee shall have no obligation to pay over such income, interest, dividend or
gain to the Owner Trustee, except to the extent the Owner Trustee or Owner
Participant are owed any amounts under the Operative Documents by Lessee and
such amounts are not paid when due, in which event the Owner Participant may
cause the Owner Trustee to distribute and apply such income, interest, dividend
or gain in satisfaction or partial satisfaction of the amounts so due.

               (z) The Owner Participant hereby agrees to instruct the Owner
Trustee to promptly distribute any money received by it pursuant to Section 7.01
or 10.04 of the Trust Indenture to Lessee to the extent such amounts were paid
by Lessee or on behalf of Lessee and the Owner Trustee or the Owner Participant
is not owed any amounts under any of the Operative Documents by Lessee (and if
the Owner Trustee or Owner Participant is owed any such amount, the monies
received under Section 7.01 or 10.04 of the Trust Indenture may be applied in
satisfaction or partial satisfaction thereof). Lessee agrees to hold any money
received by it pursuant to the foregoing sentence in trust for the benefit of
the Owner Participant and may, in its discretion, invest and reinvest all money
so held by it in such Permitted Investments as Lessee deems appropriate. Lessee
will apply such money to the payment of previously unclaimed

                                       39
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

payments with respect to the Certificates when and as claims for payment are
made by the Holders of such Certificates. As compensation for its services
pursuant to this Section 8(z), Lessee shall be entitled to an annual fee from
the Owner Participant in an amount to be agreed to at the time by Lessee and the
Owner Participant but in no event shall such fee exceed at any time the amount
of earnings on the monies so held in trust distributable at such time to the
Owner Participant. Any net losses on such investment shall be for the account of
Lessee. Any net earnings on such investment shall be distributed from time to
time by Lessee to the Owner Participant after deducting therefrom any portion of
such fee then due and unpaid. Upon the date required by applicable law dealing
with unclaimed property, Lessee will distribute to the Owner Participant any
amount held by it pursuant to this Section 8(z) and not previously applied to
the payment of the Certificates, after deducting therefrom any portion of such
fee then due and unpaid.

                  (aa)   The Owner Participant agrees that, at Lessee's expense
(including, without limitation, reasonable attorneys fees and other out-of-
pocket expense of the Owner Trustee and Owner Participant), upon request of the
Lessee, the Owner Participant will negotiate promptly in good faith with respect
to any arrangements pursuant to which the Trust Indenture may be satisfied and
discharged in respect of the Certificates in accordance with subsection (y) of
Section 10.01 of the Trust Indenture, provided, that there shall be no adverse
impact upon the rights or interests of the Owner Participant or Owner Trustee,
and the Owner Trustee agrees to act upon the instructions of the Owner
Participant in connection therewith. The Owner Trustee agrees that it will not,
and the Owner Participant agrees that during such time as an Event of Default
has not occurred under the Lease it will not cause the Owner Trustee to take any
action to effect such satisfaction and discharge except upon the request of the
Lessee made pursuant to this Section 8(aa).

                  (bb)   Each of the parties hereto acknowledges that the
bankruptcy or legal incapacity of the Owner Participant will not terminate the
Trust Agreement, nor entitle such person's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust Estate, nor otherwise affect the rights,
obligations and liabilities of the parties hereto. No creditor of the Owner
Participant shall obtain legal title to or exercise legal or equitable remedies
with respect to the Trust Estate as a result of the Owner Participant's status.
No transfer, by operation of law or otherwise, of any right, title and interest
of the Owner Participant in and to its beneficial interest in the Trust Estate
shall operate to terminate the Trust Agreement or the Trusts created thereby.

         SECTION 9.      [Intentionally omitted.]

         SECTION 10.     Other Documents; Amendment. Each of the Owner
                         --------------------------
Participant and the Owner Trustee hereby (A) agrees with Lessee, the Certificate
Holders and the Indenture Trustee to comply with all of the terms of the Trust
Agreement (as the same may hereafter be amended or

                                       40
<PAGE>

supplemented from time to time in accordance with the terms thereof) applicable
to it, to the extent such non-compliance would be adverse to such party; and (B)
agrees with Lessee, the Certificate Holders and the Indenture Trustee not to
amend, supplement or otherwise modify any provision of the Trust Agreement in a
manner adversely affecting such party without the prior written consent of such
party. Notwithstanding the foregoing, unless an Event of Default shall have
occurred and be continuing and so long as the Lease has not been terminated, the
Indenture Trustee and the Owner Participant hereby agree for the benefit of
Lessee that without the consent of Lessee they will not (and the Owner
Participant agrees that it will not cause the Owner Trustee to) amend,
supplement or otherwise modify any provision of the Trust Indenture in a manner
adversely affecting Lessee. The Indenture Trustee and the Owner Trustee agree to
promptly furnish to Lessee copies of any supplement, amendment, waiver or
modification of any of the Operative Documents to which Lessee is not a party.

         SECTION 11.     Certain Covenants of Lessee.  Lessee covenants and
                         ---------------------------
agrees with the Participants, the Indenture Trustee and the Owner Trustee, in
its capacity as such and in its individual capacity, as follows:

                  (1)    Lessee will cause to be done, executed, acknowledged
and delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of this Agreement and the other Operative
Documents, including, without limitation, the filing in Delaware of appropriate
Uniform Commercial Code financing statements upon or prior to the adoption and
effectiveness in Illinois of revised Article 9 of the Uniform Commercial Code;
provided that any instrument or other document so executed by Lessee will not
expand any obligations or limit any rights of Lessee in respect of the
transactions contemplated by any Operative Documents. Lessee, forthwith upon
execution of the Japanese Lease Assignment, shall cause the Aircraft to be duly
registered, and at all times thereafter to remain duly registered, in the name
of the Owner Trustee, except as otherwise required or permitted hereunder or
under the Lease, under the Federal Aviation Act or under the applicable law of
another permitted government of registry, or shall furnish to the Owner Trustee
such information as may be required to enable the Owner Trustee to make
application for such registration (at the expense of Lessee, including, without
limitation, reasonable attorney's fees and expenses), and shall promptly furnish
to the Owner Trustee such information as may be required to enable the Owner
Trustee to timely file any reports required to be filed by it as the lessor
under the Lease with any governmental authority (including, without limitation,
tax authorities).

                  (2)    Lessee, at its expense, has caused the documents set
forth in clauses first through fifth of the next succeeding sentence
                 -----         -----
(collectively, the "FAA Recorded Documents"), as well as the Amended and
Restated Lease Agreement, the Amended and Restated Trust Indenture, the Trust
Agreement and the Assignment and Assumption Agreement and all supplements and
amendments of such documents to be promptly filed and recorded, or filed for
recording, to the
                                       41
<PAGE>

extent permitted under the Federal Aviation Act, or required under any other
applicable law. Upon the execution and delivery of each of the FAA Recorded
Documents and each of the FAA registration applications, Lessee has caused each
such document and registration application to be filed for recording or
registered, as the case may be, with the Federal Aviation Administration and, in
the case of the FAA Recorded Documents, in the following order of priority;
first, the Japanese FAA Bill of Sale, second, the Japanese Lease with the
-----                                 ------
Japanese Lease Supplement covering the Aircraft, the Lessee's FAA registration
application, and the Primary Lessor's Mortgage covering the Aircraft, third the
                                                                      -----
Japanese Lease Assignment with the Japanese Lease Assignment Supplement covering
the Aircraft, fourth, the Lessor's FAA registration application, fifth, the
              ------                                             -----
Lease with the Lease Supplement covering the Aircraft and the Trust Indenture
with the Trust Supplement covering the Aircraft. Lessee agrees to furnish
Lessor, the Indenture Trustee and Owner Participant with copies of certified
copies of the foregoing documents with recording data as promptly as practicable
following the issuance of same by the FAA.

         SECTION 12. Owner for Federal Tax  Purposes.  It is hereby agreed among
                     -------------------------------
Lessee, the Owner Participant and the Owner Trustee that for U.S. federal income
tax purposes the Owner Participant will be the owner of the Aircraft to be
delivered under the Lease and Lessee will be the lessee thereof, and each party
hereto agrees to characterize the Lease as a lease for U.S. Federal tax
purposes. It is understood and agreed among Lessee, the Owner Participant and
the Owner Trustee that for U.S. federal income tax purposes, the Lease Agreement
shall constitute a substantial modification of the Original Lease, within the
meaning of Treasury Regulations section 1.467-1(f)(5)(ii).

         SECTION 13. Notices; Consent to Jurisdiction. (a) All notices, demands,
                     --------------------------------
instructions and other communications required or permitted to be given to or
made upon any party hereto shall be in writing and shall be personally delivered
or sent by registered or certified mail, postage prepaid, or by telecopier (with
a copy of such notice to follow by registered or certified mail or prepaid
courier), or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or received
or if given by certified mail, three Business Days after being deposited in the
mails, in accordance with the provisions of this Section 13(a). Unless otherwise
specified in a notice sent or delivered in accordance with the foregoing
provisions of this Section 13(a), notices, demands, instructions and other
communications in writing shall be given to or made upon the respective parties
hereto at their respective addresses (or to their respective telecopier numbers)
as follows: (A) if to Lessee, the Owner Trustee, the Indenture Trustee, the Pass
Through Trustees (on and after the Refinancing Date only) or the Owner
Participant, to the respective addresses set forth on Schedule I hereto (and in
the case of Owner Trustee a copy shall be sent to the Owner Participant) or (B)
if to a subsequent Owner Participant, addressed to such subsequent Owner
Participant at such address as such subsequent Owner Participant shall have
furnished by notice to the parties hereto or (C) if to any subsequent
Certificate Holder, addressed to such Certificate

                                       42
<PAGE>

Holder at its address set forth in the Certificate Register maintained pursuant
to Section 2.03 of the Trust Indenture.

                  (1) Each party to this Agreement including (to the extent it
is deemed or has agreed to be a party hereto) each Certificate Holder
(individually a "Party" and collectively "Parties") irrevocably agrees that any
legal suit, action or proceeding brought by any other Party, which arises solely
out of or relates solely to the Operative Documents or any of the transactions
contemplated hereby or thereby or any document referred to herein or therein,
may be instituted in the Circuit Court of the State of Illinois, Cook County or
the United States District Court for the Northern District of Illinois and that
they hereby waive the right to trial by jury in any such proceeding; provided,
however, that the foregoing provisions shall not apply to third party tort
claims (but shall apply to an indemnity claim with respect to such tort claim)
and that the foregoing shall not apply to any right a Party may have to seek
removal of such legal suit, action or proceeding to federal court or to seek
consolidation of any separate legal suits, actions or proceedings brought by any
one or more of the other Parties in the same or different jurisdictions. The
agreement set forth in this Section 13(b) is given solely for the benefit of the
Parties and such agreement is not intended to and shall not inure to the benefit
of any other person.

         SECTION  14.  Change of Situs of Owner Trust.  The Owner Participant
                       ------------------------------
agrees that if, at any time, the Trust Estate becomes subject to any Taxes for
which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence
thereof, Lessee shall request that the situs of the trust be moved to another
state in the United States from the state in which it is then located, the situs
of the trust may be moved with the written consent of the Owner Participant
(which consent shall not be unreasonably withheld) and the Owner Participant
will take whatever action may be reasonably necessary to accomplish such
removal; provided that (A) Lessee shall provide such additional tax
indemnification, as the Owner Participant may reasonably request, (B) the rights
and obligations under the Operative Documents of the Owner Participant shall not
be altered as a result of the taking of such action, (C) the lien of the Trust
Indenture on the Trust Indenture Estate shall not be adversely affected by such
action, and the Lessee shall execute and deliver such documents as may be
requested by the Indenture Trustee to continue the perfection of the lien on the
Trust Indenture Estate, (D) the Owner Participant and the Indenture Trustee
shall have received an opinion or opinions of counsel (reasonably satisfactory
to the Owner Participant) in scope, form and substance reasonably satisfactory
to the Owner Participant to the effect that (I) the trust, as thus removed,
shall remain a validly established trust, (II) any amendments to the Trust
Agreement necessitated by such removal shall have been duly authorized, executed
and delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount of,
any Tax for which Lessee is not required to indemnify the Owner Participant, the
Owner Trustee, the Trust Estate or, on and after the Refinancing Date only, the
Pass Through Trust pursuant to Section 7(b) hereof (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence), (IV) such removal will not, in the Owner Participant's judgment,
result in any Loss of MACRS Deductions, FSC Benefits, Interest Deductions or an
Inclusion Event (as defined in the Tax Indemnity Agreement) with respect to
which Lessee is not required to indemnify the Owner Participant pursuant to
Section 5 of the Tax Indemnity Agreement (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this

                                       43
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

sentence), and (V) covering such other matters as the Owner Participant may
reasonably request, (E) if such removal involves the replacement of the Owner
Trustee, the Owner Participant shall have received an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to the
Owner Participant and (F) Lessee shall indemnify and hold harmless the Owner
Participant on a net after-tax basis against any and all reasonable and actual
costs and expenses including attorneys' fees and disbursements, registration,
recording or filing fees and Taxes incurred by the Owner Trustee or Owner
Participant, in connection with such change of situs.

         SECTION  15.  Miscellaneous.  (a)  Each of the Participants and the
                       -------------
Certificate Holders covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as Lessor, or the
Indenture Trustee under the terms of the Lease, which by its terms is not to be
unreasonably withheld by the Owner Trustee, as Lessor, or by the Indenture
Trustee.

                  (1)  The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Indenture Trustee, the Participants
and the Certificate Holders provided for in this Agreement, and Lessee's, the
Owner Trustee's, Indenture Trustee's, the Participants' and the Certificate
Holders' obligations under any and all thereof, shall survive the making
available of the respective Commitments by the Participants, the delivery or
return of the Aircraft, the transfer of any interest of the Owner Participant in
the Trust Estate or the Aircraft or any Engine or the transfer of any interest
by any Certificate Holder in any Certificate or the Trust Indenture Estate and
the expiration or other termination of this Agreement or any other Operative
Document or, on and after the Refinancing Date only, any of the Pass Through
Documents.

                  (2)  This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Lessee, the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of and shall be enforceable by, Lessee,
the Participants, the Indenture Trustee, the Certificate Holders and the Owner
Trustee. This Agreement shall in all respects be governed by, and construed in
accordance with, the
                                       44
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

internal laws of the State of Illinois, including all matters of construction,
validity and performance. This Agreement is being delivered in the State of
Illinois.

                  (3)  The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies which can be exercised and enforced against the Trust Estate.
Therefore, anything contained in this Agreement or such other agreements to the
contrary notwithstanding (except for any express provisions that the Owner
Trustee is responsible for or is acting in or making representations or
agreements in its individual capacity), no recourse shall be had with respect to
this Agreement or such other agreements against the Owner Trustee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling person or persons of any of them;
provided, however, that this Section 15(d) shall not be construed to prohibit
any action or proceeding against any party hereto for its own willful misconduct
or grossly negligent conduct; and provided, further, that nothing contained in
this Section 15(d) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this Section
15(d) shall survive the termination of this Agreement, the other Operative
Documents and, on and after the Refinancing Date only, the Pass Through Trust
Agreements.

                  (4)  No Participant shall have any obligation or duty to the
Lessee, to any other Participant or to others with respect to the transactions
contemplated hereby except those obligations or duties of such Participant
expressly set forth in this Agreement and the other Operative Documents and no
Participant shall be liable for performance by any other party hereto of such
other party's obligations or duties hereunder. Without limitation of the
generality of the foregoing, under no circumstances whatsoever shall any
Participant be liable to Lessee, nor shall any Participant be liable to any
other Participant, for any action or inaction on the part of the Indenture
Trustee or the Owner Trustee in connection with the transactions contemplated
herein, whether or not such action or inaction is caused by the willful
misconduct or gross negligence of the Indenture Trustee or the Owner Trustee.

                  (5)  This Agreement shall be binding upon and shall inure to
the benefit of and shall be enforceable against, the parties hereto and their
respective successors and permitted assigns including each successive holder of
the Owner Participant's interest and each successive holder of any Certificate
issued and delivered pursuant to this Agreement or the Trust Indenture whether
or not an express assignment to such holder of rights and obligations under this
Agreement has been made.

                                       45
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                  (6)   The Owner Participant hereby consents to the Owner
Trustee's appointment of Lessee as its exclusive agent pursuant to the terms of
Section 7(a)(4) of the Lease.

         SECTION 16.    [Intentionally omitted].

         SECTION 17.    Optional Redemption of Certificates. (a) Subject to
                        -----------------------------------
subparagraph (d) below, in the event that at any time Lessee shall have given
written notice to Lessor, Owner Participant and the Indenture Trustee that there
be effected a voluntary redemption of the Certificates in compliance with the
provisions of Section 6.01(c) of the Trust Indenture by Lessor as part of a
refunding or refinancing transaction Lessor agrees to negotiate promptly in good
faith to conclude an agreement, in form and substance reasonably satisfactory to
Owner Participant, with Lessee as to the terms of such refunding or refinancing
transaction (including the terms of any debt to be issued in connection with
such refunding or refinancing transaction and the documentation to be executed
in connection therewith), and if after such good faith negotiation Lessee and
Owner Participant shall have concluded an agreement, in form and substance
reasonably satisfactory to Owner Participant and Lessee, with respect to such
terms:

                        (1)  within ten Business Days after the reaching of such
         agreement, Owner Participant will deliver to Lessee a certificate of an
         authorized representative of Owner Participant (the "Refinancing
         Certificate") setting forth (i) the proposed date on which the
         outstanding Certificates will be redeemed (such date, the "Refinancing
         Date") and describing the new debt to be issued and the other aspects
         of such refunding or refinancing transaction and (ii) the following
         information calculated pursuant to the provisions of this Section
         17(a): (A) subject to the limitations set forth in this Section 17, the
         proposed adjusted ratio of the debt evidenced by the Certificates to
         Owner Participant's investment in its interest in the Aircraft (such
         ratio, the "Debt/Equity Ratio"), (B) the principal amount of debt to be
         issued by Lessor on the Refinancing Date, (C) the amount, if any, by
         which Owner Participant's aggregate investment in its interest in the
         Aircraft is to be decreased and (D) the proposed revised schedules of
         Basic Rent, Excess Amount, debt amortization, Stipulated Loss Value
         percentages and Termination Value percentages, which shall be
         calculated so as to maintain Net Economic Return. The Refinancing
         Certificate shall not provide for a Debt/Equity Ratio of more than 4:1.
         Within ten Business Days of its receipt of the Refinancing Certificate,
         Lessee may demand a verification pursuant to Exhibit E to the Lease of
         the information set forth in the Refinancing Certificate. Upon the
         acceptance by Lessee of the accuracy of the information set forth in
         the Refinancing Certificate or the determination pursuant to such
         verification procedures of the revised Basic Rent, Excess Amount, debt
         amortization, Stipulated Loss Value percentages and Termination Value
         percentages and the Debt/Equity Ratio (such information, the
         "Refinancing Information") the appropriate parties will take the
         actions specified in paragraphs (ii) through (vi) below;

                                       46
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                    (2)  the appropriate parties will enter into a financing or
         loan agreement in form and substance reasonably satisfactory to Owner
         Participant and Lessee (which may involve an underwriting agreement in
         connection with a public offering of such debt or the purchase of such
         debt by a publicly funded entity (or entities) or, if Owner Participant
         so agrees, the sale of Lessor's interest in the Aircraft and its resale
         to Lessor) with the institution or institutions to be named therein
         providing for (i) the issuance and sale by Lessor to such institution
         or institutions on the Refinancing Date of debt securities in an
         aggregate principal amount specified in the Refinancing Information,
         which amount shall be at least equal to the aggregate principal amount
         of all Certificates outstanding on the Refinancing Date (such debt
         securities, the "New Debt"), (ii) the application of the proceeds of
         the sale of the New Debt to the redemption of all such Certificates on
         the Refinancing Date and (iii) the payment of the excess, if any, of
         such proceeds over the amounts necessary to effect such redemption to
         Lessor;

                    (3)  Lessee and Lessor will amend the Lease to provide that
         (i) Basic Rent and Excess Amount payable in respect of the period from
         and after the Refinancing Date shall be as provided in the Refinancing
         Information and (ii) amounts payable in respect of Stipulated Loss
         Value and Termination Value from and after the Refinancing Date shall
         be as provided in the Refinancing Information;

                    (4)  Lessor will enter into an agreement in form and
         substance reasonably satisfactory to Owner Participant to provide for
         the securing thereunder of the New Debt in like manner as the
         Certificates and will enter into such amendments and supplements to the
         Trust Indenture (or such new indenture or other security agreement) as
         may be necessary to effect such refunding or refinancing;

                    (5)  unless otherwise agreed or required by Owner
         Participant, and whether or not such refunding or refinancing
         transaction is consummated, Lessee shall pay, without cost, on a net
         after-tax basis, to Owner Participant, all of the reasonable expenses
         of all parties to such refunding or refinancing, including without
         limitation, the reasonable fees and expenses of such parties' counsel
         and Owner Participant's, and any related loan or commitment, fees; and

                    (6)  subject to compliance by Lessor with all applicable
         terms and conditions for voluntary prepayment under the Trust Indenture
         and this Agreement (which compliance may be conditioned on compliance
         by Lessee with all applicable provisions of the Lease and payment of
         all amounts due thereunder in connection therewith), no sooner than
         thirty days after the giving of the notice referred to in the lead-in
         paragraph of this Section 17, each Certificate Holder will transfer to
         Lessor the Certificates held by it immediately prior to such refunding
         or refinancing for cancellation

                                       47
<PAGE>

         (and Lessor shall cancel the same), against receipt of the then
         outstanding principal amount of such Certificates, accrued and unpaid
         interest thereon, plus premium, if any, together with payment in full
         of all other amounts then payable to such Certificate Holder and the
         Indenture Trustee hereunder or under the Trust Indenture.

                  (2)  In the case of a refunding or refinancing involving a
public offering of the New Debt, it is expressly understood that Owner
Participant shall have no obligation hereunder to consent thereto if, in its
good faith judgment, such refunding or refinancing increases its, any of its
Affiliates or Owner Participant's exposure to (i) liabilities under federal or
state securities laws, (ii) regulation under state or federal securities laws,
(iii) the need to publicly disclose information that is not generally available
to the public, or (iv) being adversely affected in its respective ability to
engage in any other financing transaction, in each case to a level unacceptable
to it in its good faith judgment. Any trustee of public debt shall be a bank or
trust company having its principal place of business in the Borough of
Manhattan, City and State of New York, or Boston, Massachusetts, or Chicago,
Illinois, or Hartford, Connecticut, and having a combined capital and surplus of
at least $100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of trustee upon reasonable or customary terms.

                  (3)  No such optional redemption shall be permitted until the
fifth anniversary of the Delivery Date, and only two such optional redemptions
shall be permitted during the Basic Term, it being expressly agreed to by Lessee
that the refinancing transaction being consummated on the Refinancing Date
pursuant to this Agreement shall constitute the first of such optional
redemptions. Lessee shall give Owner Participant and the Indenture Trustee at
least thirty days revocable written notice of the proposed date of the optional
redemption. Such notice shall become irrevocable ten days prior to the proposed
date of the optional redemption.

                  (4)  The Certificates shall be subject to voluntary redemption
by the Lessor without the consent of Lessee unless Lessee shall suffer adverse
economic consequences as a result of such redemption. Under no circumstances
shall the preceding sentence be construed to obligate Lessee to provide any
funds for the financing of any such redemption.

                  (5)  Notwithstanding the foregoing, Owner Participant shall
have no obligation to proceed with any refunding or refinancing transaction as
contemplated by this Section 17:

                       (1)  if in Owner Participant's good faith judgment, such
         transaction would have a material adverse impact (including, without
         limitation, the risk of adverse tax consequences) on it;

                       (2)  unless a third party or parties, unaffiliated with
         Lessee and Owner Participant, shall have committed to (and shall)
         provide the financing needed to

                                       48
<PAGE>

         consummate the proposed refunding or refinancing transaction, it being
         understood that Owner Participant shall have no obligation to locate
         any such party or parties; or

                           (3)  unless Lessee (A) indemnifies Owner Participant
         and Lessor by agreement in form and substance satisfactory to it on an
         after-tax basis, for any liability, obligation (other than the
         obligation to pay principal and interest in respect of the New Debt),
         cost or expense (including, without limitation, any tax expense and any
         reasonable attorneys' fees) related to or arising out of any such
         refunding or refinancing transaction, and (B) in connection with any
         refinancing other than the first such refinancing (or the second such
         refinancing if the first such refinancing occurs prior to the
         Commencement Date and is a refinancing with interim debt), pays to
         Owner Participant a nonrefundable fee of $10,000.

         SECTION 18.  [Intentionally omitted].

         SECTION 19.  Confidentiality of Purchase Agreement. Lessor, Owner
                      -------------------------------------
Participant and the Indenture Trustee shall keep the Purchase Agreement
confidential and shall not disclose the same to any Person, except (A) to
prospective and permitted transferees of Lessor's, Owner Participant's or the
Indenture Trustee's interest who agree to hold such information confidential,
(B) to Lessor's, Owner Participant's or the Indenture Trustee's counsel,
independent insurance advisors or other agents who agree to hold such
information confidential or (C) as may be required by any statute, court or
administrative order or decree or governmental ruling or regulation. Any
disclosure as contemplated by clause (A) or (B) of the preceding sentence,
including disclosure to counsel for Lessor, Owner Participant or the Indenture
Trustee, shall include a requirement that the entity to which such information
is disclosed shall make undertakings substantially the same as those contained
herein. For the purposes of this Section 19, disclosure to any counsel or other
agent of Lessor, Owner Participant or the Indenture Trustee by Lessor, Owner
Participant or the Indenture Trustee, or Manufacturer or Lessee, or counsel for
either of them, in connection with the transaction contemplated hereby shall be
deemed to be disclosure by the Manufacturer, Lessee, Lessor, Owner Participant
or the Indenture Trustee, as the case may be.

         SECTION 20.  Effectiveness. As of the Effective Date, this Agreement
                      -------------
shall amend and restate the Original Participation Agreement in its entirety,
and the Original Participation Agreement, except as expressly provided herein,
shall be superseded in it entirety by this Agreement.

                                 *     *     *

                                       49
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

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

                                     UNITED AIR LINES, INC.,
                                       Lessee

                                     By:_________________________________
                                        Name:
                                        Title: Vice President and Treasurer

                                     BANCBOSTON UNITED LEASING LLC,
                                       Owner Participant

                                     By:___________________________________
                                        Name: Steve L. Aalvik
                                        Title: Manager

                                     STATE STREET BANK AND TRUST
                                     COMPANY OF CONNECTICUT, NATIONAL
                                     ASSOCIATION,
                                       Indenture Trustee

                                     By:_____________________________________
                                        Name:
                                        Title:

                                     STATE STREET BANK AND TRUST
                                     COMPANY, not in its individual capacity,
                                     except as expressly provided herein, but
                                     solely as Owner Trustee,
                                       Owner Trustee

                                     By:______________________________________
                                        Name:

                                       50
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                                        Title:

                                       51
<PAGE>

                   [First Amended and Restated Participation Agreement (1989 I)]

                                  SCHEDULE I

                              Names and Addresses

Lessee:
------                                     Overnight Delivery Service
                                           --------------------------
U.S. Mail                                  United Air Lines, Inc.
---------                                  1200 East Algonquin Road
United Air Lines, Inc.                     Elk Grove Township, IL 60007
P.O. Box 66100
Chicago, Illinois  60666                   Attn: Vice President and Treasurer

Attn: Vice President and Treasurer
Telecopy:  (708) 952-7117

Owner Participant:                         Payment Address
-----------------                          ---------------
BancBoston United Leasing LLC              BancBoston United Leasing LLC
c/o Fleet Capital Leasing                  c/o Fleet Capital Leasing
111 Westminster Street, 7th Floor          111 Westminster Street, 7th Floor
Providence, RI  02903                      Providence, RI  02903
Attention: Steven L. Aalvik                Attention: Steven L. Aalvik
Senior Vice President                      Senior Vice President
Telecopy: (401) 453-2536

Indenture Trustee:
-----------------

State Street Bank and Trust Company
of Connecticut, National Association
225 Asylum Street, Goodwin Square
Hartford, CT 06103
Attention: Corporate Trust Department
Telecopy:  (860) 244-1889
Confirmation:  (860) 244-1800

Owner Trustee:                             Overnight Courier
--------------                             -----------------
U.S. Mail                                  2 Avenue de Lafayette
---------                                  Boston, MA 02111-1724
P.O. Box 778                               Attention: Corporate Trust Department
Boston, MA  02102-0778                     Telecopy: (617) 662-1458
Attention: Corporate Trust Department      Confirmation: (617) 662-1704

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