AIRCRAFT SECURITY AGREEMENT

EXHIBIT 4.2

AIRCRAFT SECURITY AGREEMENT

Dated as of __________ ___, 2009 ¹

among

AMERICAN AIRLINES, INC.,

U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity, except as expressly stated herein, but solely
as Security Agent

and

U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity, except as expressly stated herein, but solely
as Trustee

Up to Nine Boeing 737-823 Aircraft
(Generic Manufacturer and Model BOEING 737-800),
Up to One Boeing 767-323ER Aircraft
(Generic Manufacturer and Model BOEING 767-300) and
Up to Two Boeing 777-223ER Aircraft
(Generic Manufacturer and Model BOEING 777-200)

Aircraft Security Agreement
AA 2009-2 Secured Notes

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Aircraft Security Agreement
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Aircraft Security Agreement
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Aircraft Security Agreement
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AIRCRAFT SECURITY AGREEMENT

     This AIRCRAFT SECURITY AGREEMENT, dated as of                       ___, 2009 ² , is made by and among AMERICAN AIRLINES, INC., a Delaware corporation (together with its successors and permitted assigns, the “ Company ”), U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as security agent hereunder (together with its permitted successors in such capacity hereunder, the “ Security Agent ”) and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as trustee under the Indenture (such term and other capitalized terms used herein without definition being defined as provided in Article I ) (together with its permitted successors in such capacity under the Indenture, the “ Trustee ”).

W I T N E S S E T H :

     WHEREAS, the Company and the Trustee are parties to the Indenture providing for the issuance of certain Notes by the Company;

     WHEREAS, the parties desire by this Aircraft Security Agreement, among other things, to provide for the assignment, mortgage and pledge by the Company to the Security Agent (for the benefit and security of the Noteholders and the Indemnitees), as part of the Aircraft Collateral hereunder, among other things, of all of the Company’s estate, right, title and interest in and to the Aircraft, to secure, among other things, certain obligations of the Company under the Indenture and the Notes; and

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

GRANTING CLAUSE

     NOW, THEREFORE, to secure ( i ) the prompt and complete payment (whether at stated maturity, by acceleration or otherwise) of principal of, interest on (including interest on any overdue amounts), and Make-Whole Amount, if any, with respect to, and all other amounts due under, the Notes, ( ii ) all other amounts payable by the Company under the Operative Documents and ( iii ) the performance and observance by the Company of all the agreements and covenants to be performed or observed by the

Aircraft Security Agreement
AA 2009-2 Secured Notes

Company for the benefit of the Noteholders and the Indemnitees contained in the Operative Documents, and in consideration of the premises and of the covenants contained in the Operative Documents, and for other good and valuable consideration given by the Noteholders and the Indemnitees to the Company at or before the initial Aircraft Closing Date, the receipt and adequacy of which are hereby acknowledged, the Company does hereby grant, bargain, sell, convey, transfer, mortgage, assign, pledge and confirm unto the Security Agent and its successors in trust and permitted assigns, for the security and benefit of the Noteholders and the Indemnitees, a first priority security interest in, and mortgage lien on, all estate, right, title and interest of the Company in, to and under, all and singular, the following described properties, rights, interests and privileges, whether now owned or hereafter acquired (which, collectively, together with all property hereafter specifically subject to the Lien of this Aircraft Security Agreement by the terms hereof or any supplement hereto, are included within, and are referred to as, the “ Aircraft Collateral ”):

     (1) each Aircraft, including the Airframe and the Engines relating thereto, whether or not any such Engine may from time to time be installed on the related Airframe, any other Airframe or any other airframe or any other aircraft, and any and all Parts relating thereto, and, to the extent provided herein, all substitutions and replacements of, and additions, improvements, accessions and accumulations to, each such Aircraft, including the Airframe, the Engines and any and all Parts (in each case other than any substitutions, replacements, additions, improvements, accessions and accumulations that constitute items excluded from the definition of Parts by clauses (b) , (c) and (d) thereof) relating thereto (each such Airframe and Engines as more particularly described in the applicable Aircraft Security Agreement Supplement executed and delivered with respect to the applicable Aircraft on the applicable Aircraft Closing Date for such Aircraft or with respect to any substitutions or replacements therefor), and together with all flight records, logs, manuals, maintenance data and inspection, modification and overhaul records at any time required to be maintained with respect to such Aircraft in accordance with the rules and regulations of the FAA if such Aircraft is registered under the laws of the United States or the rules and regulations of the government of the country of registry if such Aircraft is registered under the laws of a jurisdiction other than the United States;

     (2) the Warranty Rights relating to each Aircraft, together with all rights, powers, privileges, options and other benefits of the Company under the same;

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     (3) all requisition proceeds with respect to each Aircraft, or the Airframe, any Engine or any Part of such Aircraft, and all insurance proceeds with respect to each Aircraft, or the Airframe, any Engine or any Part of such Aircraft, but excluding all proceeds of, and rights under, any insurance maintained by the Company and not required, or in excess of that required, under Section 7.06(b) ;

     (4) all rents, revenues and other proceeds collected by the Security Agent pursuant to Section 4.02(a) , all moneys and securities from time to time paid or deposited or required to be paid or deposited to or with the Security Agent by or for the account of the Company pursuant to any term of any Operative Document and held or required to be held by the Security Agent hereunder or thereunder, including the Aircraft Securities Account and all monies and securities deposited into the Aircraft Securities Account; and

     (5) all proceeds of the foregoing;

     PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so long as no Event of Default shall have occurred and be continuing, the Company shall have the right, to the exclusion of the Security Agent, ( i ) to quiet enjoyment of each Aircraft, Airframe, Part and Engine, and to possess, use, retain and control each Aircraft, Airframe, Part and Engine and all revenues, income and profits derived therefrom and ( ii ) with respect to the Warranty Rights relating to each Aircraft, to exercise in the Company’s name all rights and powers of the Buyer (as defined in the applicable Aircraft Purchase Agreement) under such Warranty Rights and to retain any recovery or benefit resulting from the enforcement of any warranty or indemnity or other obligation under such Warranty Rights; provided , further , that notwithstanding the occurrence and continuation of an Event of Default, the Security Agent shall not enter into any amendment or modification of any Aircraft Purchase Agreement that would alter the rights, benefits or obligations of the Company thereunder;

     TO HAVE AND TO HOLD all and singular the aforesaid property unto the Security Agent, and its successors and permitted assigns, in trust for the equal and proportionate benefit and security of the Noteholders and the Indemnitees, except as otherwise provided in this Aircraft Security Agreement or the Indenture, including Section 2.13 of the Indenture, the definition of “Outstanding” and Article III of the Indenture, without any priority of any one Note over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (5) inclusive above, subject to the terms and provisions set forth in this Aircraft Security Agreement and the Indenture.

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     It is expressly agreed that notwithstanding anything herein to the contrary, the Company shall remain liable under each Aircraft Purchase Agreement to perform all of its obligations thereunder, and, except to the extent expressly provided in any Operative Document, none of any Noteholder, the Security Agent or any other Indemnitee shall be required or obligated in any manner to perform or fulfill any obligations of the Company under or pursuant to any Operative Document, or to have any obligation or liability under any Aircraft Purchase Agreement by reason of or arising out of the assignment hereunder, 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 amount that may have been assigned to it or to which it may be entitled at any time or times.

     Notwithstanding anything herein to the contrary (but without in any way releasing the Company from any of its duties or obligations under any Aircraft Purchase Agreement), the Noteholders, the Security Agent and the other Indemnitees confirm for the benefit of the Manufacturer that in exercising any rights under the Warranty Rights relating to any Aircraft, or in making any claim with respect to any such Aircraft or other goods and services delivered or to be delivered pursuant to the related Aircraft Purchase Agreement, the terms and conditions of such Aircraft Purchase Agreement relating to such Warranty Rights, including, without limitation, the warranty disclaimer provisions for the benefit of the Manufacturer, shall apply to and be binding upon the Noteholders, the Security Agent and the other Indemnitees to the same extent as the Company. The Company hereby directs the Manufacturer, so long as an Event of Default shall have occurred and be continuing, to pay all amounts, if any, payable to the Company pursuant to the Warranty Rights relating to any Aircraft directly to the Security Agent to be held and applied as provided herein. Nothing contained herein shall subject the Manufacturer to any liability to which it would not otherwise be subject under any Aircraft Purchase Agreement or modify in any respect the contract rights of the Manufacturer thereunder except as provided in the applicable Manufacturer’s Consent.

     Subject to the terms and conditions hereof, the Company does hereby irrevocably constitute the Security Agent the true and lawful attorney of the Company (which appointment is coupled with an interest) with full power (in the name of the Company or otherwise) to ask for, require, demand and receive any and all monies and claims for monies (in each case including insurance and requisition proceeds) due and to become due to the Company under or arising out of any Aircraft Purchase Agreement (to the extent assigned hereby), and all other property which now or hereafter constitutes part of the Aircraft Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Security Agent may deem to be necessary or advisable in the premises;

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provided that the Security Agent shall not exercise any such rights except during the continuance of an Event of Default. The Company agrees that, promptly upon receipt thereof, to the extent required by the Operative Documents, it will transfer to the Security Agent any and all monies from time to time received by the Company constituting part of the Aircraft Collateral, for distribution by the Security Agent pursuant to this Aircraft Security Agreement.

     The Company does hereby warrant and represent that it has not sold, assigned or pledged, and hereby covenants and agrees that it will not sell, assign or pledge, so long as this Aircraft Security Agreement shall remain in effect and the Lien hereof shall not have been released pursuant to the provisions hereof, any of its estate, right, title or interest hereby assigned, to any Person other than the Security Agent, except as otherwise provided in or permitted by any Operative Document.

     The Company agrees that at any time and from time to time, upon the written request of the Security Agent, the Company shall promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Security Agent may reasonably deem necessary to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Security Agent the full benefit of the assignment hereunder and of the rights and powers herein granted; provided that any instrument or other document so executed by the Company will not expand any obligations or limit any rights of the Company in respect of the transactions contemplated by the Operative Documents.

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

ARTICLE I

DEFINITIONS

     Section 1.01. Definitions . For all purposes of this Aircraft Security Agreement, unless the context otherwise requires, capitalized terms used but not defined herein have the respective meanings set forth or incorporated by reference in Annex A .

     Section 1.02. Other Definitional Provisions .

     (a)  Singular and Plural . The definitions stated herein and in Annex A apply equally to both the singular and the plural forms of the terms defined.

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     (b)  References to Parts . All references in this Aircraft Security Agreement to designated “Articles”, “Sections”, “Subsections”, “Schedules”, “Exhibits”, “Annexes” and other subdivisions are to the designated Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision of this Aircraft Security Agreement, unless otherwise specifically stated.

     (c)  Reference to the Whole . The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Aircraft Security Agreement as a whole and not to any particular Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision.

     (d)  Including Without Limitation . Unless the context otherwise, requires, whenever the words “including”, “include” or “includes” are used herein, they shall be deemed to be followed by the phrase “without limitation”.

     (e)  Reference to Government . All references in this Aircraft Security Agreement to a “government” are to such government and any instrumentality or agency thereof.

     (e)  Reference to Persons . All references in this Aircraft Security Agreement to a Person shall include successors and permitted assigns of such Person.

ARTICLE II

REPRESENTATIONS AND WARRANTIES, ETC.

     Section 2.01. Representations and Warranties of the Company . As of the date hereof and as of each Aircraft Closing Date, if any, following the date hereof, with respect to each Aircraft subjected to the Lien of this Aircraft Security Agreement on such date, the Company represents and warrants that:

     (a) Organization; Authority; Qualification . The Company is a corporation duly incorporated and validly existing in good standing under the laws of the State of Delaware, is a Certificated Air Carrier, is a Citizen of the United States, has the corporate power and authority to own or hold under lease its properties and to enter into and perform its obligations under this Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft and the applicable Manufacturer’s Consent relating to such Aircraft and is duly qualified to do business as a foreign corporation in good standing in each other jurisdiction in which the failure to so qualify would have a material adverse effect on the consolidated financial condition of the Company

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and its subsidiaries, considered as a whole, and its jurisdiction of organization (as such term is used in Article 9 of the Uniform Commercial Code as in effect in the State of Delaware) is Delaware.

     (b) Corporate Action and Authorization; No Violations . The execution, delivery and performance by the Company of this Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft and the applicable Manufacturer’s Consent relating to such Aircraft have been duly authorized by all necessary corporate action on the part of the Company, do not require any stockholder approval or approval or consent of any trustee or holder of any indebtedness or obligations of the Company, except such as have been duly obtained and are in full force and effect, and do not contravene any law, governmental rule, regulation, judgment or order binding on the Company or the certificate of incorporation or by-laws of the Company or contravene or result in a breach of, or constitute a default under, or result in the creation of any Lien (other than as permitted under this Aircraft Security Agreement or the Indenture) upon the property of the Company under, any material indenture, mortgage, contract or other agreement to which the Company is a party or by which it or any of its properties may be bound or affected.

     (c) Governmental Approvals . Neither the execution and delivery by the Company of this Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft or the applicable Manufacturer’s Consent relating to such Aircraft, nor the consummation by the Company of any of the transactions contemplated hereby or thereby, requires the authorization, consent or approval of, the giving of notice to, the filing or registration with or the taking of any other action in respect of, the Department of Transportation, the FAA or any other federal or state governmental authority or agency, or the International Registry, except for ( i ) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the Company’s ownership or use of such Aircraft required to be obtained on or prior to such date, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or on such date will be, in full force and effect, ( ii ) the filings referred to in Section 2.01(e) , ( iii ) authorizations, consents, approvals, notices and filings required to be obtained, taken, given or made under securities or Blue Sky or similar laws of the various states and foreign jurisdictions, and ( iv ) consents, approvals, notices, registrations and other actions required to be obtained, given, made or taken only after such date.

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     (d) Valid and Binding Agreements . This Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft and the applicable Manufacturer’s Consent relating to such Aircraft have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity and except as limited by applicable laws that may affect the remedies provided in this Aircraft Security Agreement, which laws, however, do not make the remedies provided in this Aircraft Security Agreement inadequate for the practical realization of the rights and benefits intended to be provided thereby.

     (e) Filings and Recordation . Except for ( i ) the filing for recordation pursuant to the Transportation Code of ( x ) in the case of filings on the date hereof, this Aircraft Security Agreement (with the applicable Aircraft Security Agreement Supplement describing such Aircraft attached) and ( y ) in the case of filings on any subsequent Aircraft Closing Date, the applicable Aircraft Security Agreement Supplement describing such Aircraft, ( ii ) with respect to the security interests created by this Aircraft Security Agreement, together with the applicable Aircraft Security Agreement Supplement describing such Aircraft, the filing of financing statements (and continuation statements at periodic intervals) under the Uniform Commercial Code of the State of Delaware, and ( iii ) the registration on the International Registry of the International Interests (or Prospective International Interests) created under this Aircraft Security Agreement (as supplemented by the applicable Aircraft Security Supplement describing such Aircraft), no further filing or recording of any document is necessary or advisable under the laws of the United States or any state thereof as of such date in order to establish and perfect the security interest in such Aircraft created under this Aircraft Security Agreement in favor of the Security Agent as against the Company and any third parties in any applicable jurisdiction in the United States.

     (f) Title . The Company has good title to such Aircraft, free and clear of Liens other than Permitted Liens. Such Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Indenture. In the case of the date hereof, this Aircraft Security Agreement (with the applicable Aircraft Security Agreement Supplement describing such Aircraft attached), or, in the case of any subsequent Aircraft Closing Date, the applicable Aircraft Security Agreement Supplement describing such Aircraft, as applicable, has been duly filed for recordation (or shall be in the process of being so duly

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filed for recordation) with the FAA pursuant to the Transportation Code. Such Aircraft is duly registered with the FAA in the name of the Company.

     (g) Section 1110 . The Security Agent is entitled to the benefits of Section 1110 with respect to such Aircraft.

     (h) Security Interest . This Aircraft Security Agreement creates in favor of the Trustee, for the benefit of the Noteholders and the Indemnitees, a valid and perfected Lien on such Aircraft, subject to no Lien, except Permitted Liens. There are no Liens of record with the FAA on such Aircraft on such date other than the Lien of this Aircraft Security Agreement. Other than ( x ) the International Interests (or Prospective International Interests) created under this Aircraft Security Agreement (as supplemented by the applicable Aircraft Security Agreement Supplement describing such Aircraft) and ( y ) any International Interests (or Prospective International Interests) that appear on the International Registry as having been discharged, no International Interests with respect to such Aircraft have been registered on the International Registry as of such date.

     Section 2.02. Representations, Warranties and Covenants of U.S. Bank . As of the date hereof and as of each Aircraft Closing Date, if any, following the date hereof, with respect to each Aircraft subjected to the Lien of this Aircraft Security Agreement on such date, each of U.S. Bank, generally, and each of the Security Agent and the Trustee, as it relates to it, represents, warrants and covenants that:

     (a) Organization; Authority . U.S. Bank is a national banking association duly organized and validly existing in good standing under the laws of the United States, is eligible to be the Security Agent under Section 8.01 of this Aircraft Security Agreement, will promptly comply with Section 8.01(a) of this Aircraft Security Agreement and has full power, authority and legal right to enter into and perform its obligations under this Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft and the applicable Manufacturer’s Consent relating to such Aircraft. U.S. Bank is a Citizen of the United States (without the use of a voting trust agreement), and will resign as the Security Agent under this Aircraft Security Agreement promptly after it obtains actual knowledge that it has ceased to be such a Citizen of the United States.

     (b) Due Authorization; No Violations . The execution, delivery and performance by U.S. Bank, individually or in its capacity as Security Agent or Trustee, as the case may be, of this Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft and the

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applicable Manufacturer’s Consent relating to such Aircraft, to the extent it is a party thereto, the performance by U.S. Bank, individually or in its capacity as Security Agent or Trustee, as the case may be, of its obligations hereunder and, to the extent it is a party thereto, thereunder and the consummation on such date of the transactions contemplated hereby and (to the extent it is a party thereto) thereby: ( i ) have been duly authorized by all necessary action on the part of U.S. Bank, the Security Agent or the Trustee, as the case may be, ( ii ) and do not violate any law or regulation of the United States or of the state of the United States in which U.S. Bank is located and which governs the banking and trust powers of U.S. Bank or any order, writ, judgment or decree of any court, arbitrator or governmental authority applicable to U.S. Bank, the Security Agent, the Trustee or any of their assets, ( iii ) will not violate any provision of the articles of association or by-laws of U.S. Bank and ( iv ) will not violate any provision of, or constitute a default under, any mortgage, indenture, contract, agreement or undertaking to which any of U.S. Bank, the Security Agent or the Trustee is a party or by which any of them or their respective properties may be bound or affected.

     (c) Approvals . Neither the execution and delivery by U.S. Bank, individually or in its capacity as Security Agent or Trustee, as the case may be, of this Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft or the Manufacturer’s Consent relating to such Aircraft, to the extent it is a party thereto, nor the consummation by U.S. Bank, the Security Agent or the Trustee of any of the transactions contemplated hereby or (to the extent it is a party thereto) thereby, requires the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, ( i ) any governmental authority or agency of the United States or the state of the United States where U.S. Bank is located and regulating the banking and trust powers of U.S. Bank, or ( ii ) any trustee or other holder of any debt of U.S. Bank.

     (d) Valid and Binding Agreements . This Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft and the applicable Manufacturer’s Consent relating to such Aircraft have been duly executed and delivered by, to the extent it is a party thereto, U.S. Bank, individually and in its capacity as Security Agent and Trustee and, to the extent it is a party thereto, constitute the legal, valid and binding obligations of U.S. Bank, the Security Agent and the Trustee, as the case may be, enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy,

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insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity.

     (e) No Security Agent Liens . It unconditionally agrees with and for the benefit of the Company that it will not directly or indirectly create, incur, assume or suffer to exist any Security Agent Lien attributable to it, and it agrees that it will, at its own cost and expense, promptly take such action as may be necessary to discharge and satisfy in full any such Lien.

     (f) Certain Tax Matters . There are no Taxes payable by U.S. Bank, the Security Agent or the Trustee imposed by the Commonwealth of Massachusetts or any political subdivision or taxing authority thereof, in connection with the execution, delivery or performance by U.S. Bank or the Security Agent of this Aircraft Security Agreement or any Aircraft Security Agreement Supplement, to the extent it is a party thereto (other than franchise or other taxes based on or measured by any fees or compensation received by any such Person for services rendered in connection with the transactions contemplated by hereby or, if applicable, thereby).

     (g) No Proceedings . There are no pending or, to its knowledge, threatened actions or proceedings against U.S. Bank, the Security Agent or the Trustee before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of U.S. Bank, the Security Agent or the Trustee to perform its obligations under this Aircraft Security Agreement, the applicable Aircraft Security Agreement Supplement describing such Aircraft or, to the extent it is a party thereto, the Manufacturer’s Consent relating to such Aircraft.

ARTICLE III

CERTAIN PAYMENTS

     Section 3.01. Payments After Event of Default . Except as otherwise provided in Section 3.02 , all payments received and amounts held or realized by the Security Agent (including any amounts realized by the Security Agent from the exercise of remedies pursuant to Article IV ) after both an Event of Default shall have occurred and be continuing and the Notes shall have become due and payable pursuant to Section 4.02(a) of the Indenture (and the relevant declaration shall not have been rescinded and annulled pursuant to Section 4.02(d) of the Indenture), as well as all payments or amounts then held by the Security Agent as part of the Aircraft Collateral, shall be promptly distributed

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by the Security Agent to the Trustee to be applied in accordance with Section 3.03 of the Indenture.

     Section 3.02. Certain Payments .

     (a)  Distributions by the Security Agent . Any payments or amounts received by the Security Agent for which provision as to the distribution, application or holding thereof is made in this Aircraft Security Agreement other than in this Article III (except for any provision of this Aircraft Security Agreement, with respect to any payments or amounts, expressly stating that such payments or amounts shall be distributed, applied or held, as the case may be, by the Trustee) shall be distributed, applied or held, as the case may be, by the Security Agent as provided in those provisions.

     (b)  Distributions by the Trustee . Any payments or amounts received by the Security Agent not constituting part of the Aircraft Collateral or otherwise for which no provision as to the distribution, application or holding thereof is made in this Aircraft Security Agreement or for which a provision as to the distribution, application or holding thereof is made in the Indenture shall be distributed by the Security Agent to the Trustee to be distributed, applied or held, as the case may be, in accordance with the Indenture or another Operative Document, if applicable.

     (c)  Amounts to be Paid Over . Any payments or amounts received by the Trustee for which provision as to the distribution, application or holding thereof is made in this Aircraft Security Agreement (except for any provision of this Aircraft Security Agreement, with respect to any payments or amounts, expressly stating that such payments or amounts shall be distributed, applied or held by the Trustee), or for which any other Operative Document provides that such payments or amounts are to be distributed, applied or held by the Security Agent, shall be paid by the Trustee over to the Security Agent to be distributed, applied or held, as the case may be, by the Security Agent in accordance with this Aircraft Security Agreement or such other Operative Document, if applicable.

     (d)  Amounts Payable to the Company . Without limiting any of the foregoing, any payments or amounts received by the Security Agent or the Trustee which are payable to the Company pursuant to any of the provisions of this Aircraft Security Agreement other than those set forth in this Article III (including Section 5.06 , Section 7.05(c) and Section 7.06(d) hereof) shall be paid by the Security Agent or the Trustee, as the case may be, to the Company.

     Section 3.03. Payments by the Company . Except to the extent expressly provided herein, all amounts payable by the Company hereunder shall be payable by the

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Company to the Security Agent at the Corporate Trust Office of the Security Agent. The Company shall not have any responsibility for the distribution of any such payment to the Trustee or any Noteholder, if applicable.

     Section 3.04. Payments to the Company . Any amounts payable hereunder by the Security Agent or the Trustee to the Company shall be paid to the Company by wire transfer of funds of the type received by the Security Agent or the Trustee, as the case may be, at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Company to the Security Agent or the Trustee, as the case may be, from time to time.

     Section 3.05. Aircraft Securities Account . U.S. Bank agrees to act as an Eligible Institution under this Aircraft Security Agreement in accordance with the provisions of this Aircraft Security Agreement (in such capacity, the “ Aircraft Securities Intermediary ”). Except in its capacity as Security Agent, U.S. Bank waives any claim or lien against any Eligible Account it may have, by operation of law or otherwise, for any amount owed to it by the Company. The Aircraft Securities Intermediary hereby agrees that, notwithstanding anything to the contrary in this Aircraft Security Agreement, ( i ) any monies (including for the purpose of this Section 3.05 any cash received by the Security Agent pursuant to Section 7.05(c) or Section 7.06(d) or otherwise) held by the Security Agent hereunder as part of the Aircraft Collateral, any investment earnings thereon or other Permitted Investments in which such amounts are invested will be credited to an Eligible Account (the “ Aircraft Securities Account ”) for which it is a “securities intermediary” (as defined in Section 8-102(a)(14) of the NY UCC) and the Security Agent is the “entitlement holder” (as defined in Section 8-102(a)(7) of the NY UCC) of the “security entitlement” (as defined in Section 8-102(a)(17) of the NY UCC) with respect to each “financial asset” (as defined in Section 8-102(a)(9) of the NY UCC) credited to such Eligible Account, ( ii ) all such amounts, Permitted Investments and all other property acquired with cash credited to the Aircraft Securities Account will be credited to the Aircraft Securities Account, ( iii ) all items of property (whether cash, investment property, Permitted Investments, other investments, securities, instruments or other property) credited to the Aircraft Securities Account will be treated as a “financial asset” under Article 8 of the NY UCC, ( iv ) its “securities intermediary’s jurisdiction” (as defined in Section 8-110(e) of the NY UCC) with respect to the Aircraft Securities Account is the State of New York, and ( v ) all securities, instruments and other property in order or registered form and credited to the Aircraft Securities Account shall be payable to or to the order of, or registered in the name of, the Aircraft Securities Intermediary or shall be indorsed to the Aircraft Securities Intermediary or in blank, and in no case whatsoever shall any financial asset credited to the Aircraft Securities Account be registered in the name of the Company, payable to or to the order of the Company or

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specially indorsed to the Company except to the extent the foregoing have been specially indorsed by the Company to the Aircraft Securities Intermediary or in blank. The Security Agent agrees that it will hold (and will indicate clearly in its books and records that it holds) its “security entitlements” to the “financial assets” credited to the Aircraft Securities Account in trust for the benefit and security of the Noteholders and the Indemnitees as part of the Aircraft Collateral as set forth in this Aircraft Security Agreement. The Company acknowledges that, by reason of the Security Agent being the “entitlement holder” in respect of the Aircraft Securities Account as provided above, the Security Agent shall have the sole right and discretion, subject only to the terms of this Aircraft Security Agreement, to give all “entitlement orders” (as defined in Section 8-102(a)(8) of the NY UCC) with respect to the Aircraft Securities Account and any and all financial assets and other property credited thereto to the exclusion of the Company. If any Person asserts any Lien (including, without limitation, any writ, garnishment, judgment, warrant of attachment, execution or similar process) against the Aircraft Securities Account or any financial asset carried therein, U.S. Bank will promptly notify the Security Agent and the Company thereof.

ARTICLE IV

AIRCRAFT SECURITY EVENTS OF DEFAULT;
REMEDIES OF SECURITY AGENT

     Section 4.01. Aircraft Security Events of Default . Each of the following events shall constitute an “ Aircraft Security Event of Default ” whether such event shall be voluntary or involuntary or shall 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 and each such Aircraft Security Event of Default shall be deemed to exist and continue so long as, but only as long as, it shall not have been remedied or explicitly waived:

     (a) the Company shall fail to make payment when the same shall become due of any amount due to the Security Agent under this Aircraft Security Agreement, and such failure shall continue unremedied for 30 days after the receipt by the Company of written notice thereof from the Security Agent or the Trustee;

     (b) the Company shall fail to carry and maintain (or cause to be maintained) insurance or indemnity on or with respect to any Aircraft in accordance with the provisions of Section 7.06 ; provided that no such failure to carry and maintain insurance shall constitute an Aircraft Security Event of Default until the earlier of ( i ) the date such failure shall have continued unremedied for a

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period of 30 days after receipt by the Security Agent of the notice of cancellation or lapse referred to in Section 7.06 or ( ii ) the date such insurance is not in effect as to the Security Agent;

     (c) the Company shall fail to perform or observe any other covenant, condition or agreement to be performed or observed by it under this Aircraft Security Agreement, and such failure shall continue unremedied for a period of 60 days after receipt by the Company of written notice thereof from the Security Agent or the Trustee; provided that, if such failure is capable of being remedied, no such failure shall constitute an Aircraft Security Event of Default for a period of one year after such notice is received by the Company so long as the Company is diligently proceeding to remedy such failure; or

     (d) any representation or warranty made by the Company herein shall prove to have been incorrect in any material respect at the time made, and such incorrectness shall continue to be material to the transactions contemplated hereby and shall continue unremedied for a period of 60 days after receipt by the Company of written notice thereof from the Security Agent or the Trustee; provided that, if such incorrectness is capable of being remedied, no such incorrectness shall constitute an Aircraft Security Event of Default for a period of one year after such notice is received by the Company so long as the Company is diligently proceeding to remedy such incorrectness;

provided that notwithstanding anything to the contrary contained in this Section 4.01 , any failure of the Company to perform or observe any covenant, condition or agreement shall not constitute an Aircraft Security Event of Default if such failure arises by reason of an event referred to in clause (B) of the definition of “Event of Loss” so long as the Company is continuing to comply with all of the terms of Section 7.05 .

     Section 4.02. Remedies .

     (a)  General . If an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, following the acceleration of the Notes pursuant to Section 4.02(a) of the Indenture (so long as the relevant declaration shall not have been rescinded and annulled pursuant to Section 4.02(d) of the Indenture), then and in every such case the Security Agent may, and upon the written instructions of the Trustee, the Security Agent shall, do one or more of the following to the extent permitted by, and subject to compliance with the requirements of, applicable law then in effect ( provided that during any period any Airframe or any Engine is subject to the CRAF Program and is in possession of or being operated under the direction of the United States government or an agency or instrumentality of the United States, the Security Agent shall

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not, on account of any Event of Default, be entitled to exercise or pursue any of the powers, rights or remedies described in this Section 4.02 in such manner as to limit the Company’s control under this Aircraft Security Agreement (or any Permitted Lessee’s control under any Lease) of such Airframe, any Engines installed thereon or any such Engine, unless at least 60 days’ (or such lesser period as may then be applicable under the CRAF Program of the United States government) prior written notice of default hereunder shall have been given by the Security Agent by registered or certified mail to the Company (and any such Permitted Lessee) with a copy addressed to the Contracting Office Representative or other appropriate person for the Air Mobility Command of the United States Air Force under any contract with the Company or such Permitted Lessee relating to the applicable Aircraft):

     (i) cause the Company, upon the written demand of the Security Agent, at the Company’s expense, to deliver promptly, and the Company shall deliver promptly, all or such part of any Airframe or any Engine as the Security Agent may so demand to the Security Agent or its order, or, if the Company shall have failed to so deliver any such Airframe or any such Engine after such demand, the Security Agent, at its option, may enter upon the premises where all or any part of any such Airframe or any such Engine are located and take immediate possession of and remove the same together with any engine which is not an Engine but which is installed on such Airframe, subject to all of the rights of the owner, lessor, lienor or secured party of such engine; provided that any such Airframe with an engine (which is not an Engine) installed thereon may be flown or returned only to a location within the continental United States, and such engine shall be held at the expense of the Company for the account of any such owner, lessor, lienor, secured party or, if such engine is owned by the Company, may at the option of the Company with the consent of the Security Agent (which will not be unreasonably withheld) or at the option of the Security Agent with the consent of the Company (which will not be unreasonably withheld), be exchanged with the Company for an Engine in accordance with the provisions of Section 7.05(b) ;

     (ii) sell all or any part of any Airframe and any Engine at public or private sale, whether or not the Security Agent shall at the time have possession thereof, as the Security Agent may determine, or otherwise dispose of, hold, use, operate, lease to others (including the Company) or keep idle all or any part of any such Airframe or any such Engine as the Security Agent, in its sole discretion, determines, all free and clear of any rights or claims of the Company, and the proceeds of such sale or disposition shall be distributed as set forth in Section 3.01 ; or

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     (iii) exercise any other remedy of a secured party under the Uniform Commercial Code of the State of New York (whether or not in effect in the jurisdiction in which enforcement is sought);

provided that, notwithstanding anything to the contrary set forth herein or in any other Operative Document, ( i ) as permitted by Article 15 of the Cape Town Convention, the provisions of Chapter III of the Cape Town Convention are hereby excluded and made inapplicable to this Aircraft Security Agreement and the other Operative Documents, except for those provisions of such Chapter III that cannot be derogated from; and ( ii ) as permitted by Article IV(3) of the Aircraft Protocol, the provisions of Chapter II of the Aircraft Protocol are hereby excluded and made inapplicable to this Aircraft Security Agreement and the other Operative Documents, except for ( x ) Article XVI of the Aircraft Protocol and ( y ) those provisions of such Chapter II that cannot be derogated from. In furtherance of the foregoing, the parties hereto agree that the exercise of remedies hereunder and the other Operative Documents is subject to other applicable law, including without limitation, the Uniform Commercial Code (as in effect in the State of New York) and the Bankruptcy Code, and that nothing herein derogates from the rights of the Company or the Security Agent under or pursuant to such other applicable law, including without limitation, the Uniform Commercial Code (as in effect in the State of New York) or the Bankruptcy Code.

     Upon every such taking of possession of any of the Aircraft Collateral under this Section 4.02 , the Security Agent may, from time to time, at the expense of the Aircraft Collateral, make all such expenditures for maintenance, insurance, repairs, alterations, additions and improvements to and of the Aircraft Collateral as it deems necessary to cause the Aircraft Collateral to be in such condition as required by the provisions of this Aircraft Security Agreement. In each such case, the Security Agent may maintain, use, operate, store, insure, lease, control, manage or dispose of the Aircraft Collateral and may exercise all rights and powers of the Company relating to the Aircraft Collateral as the Security Agent reasonably deems best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management or disposition of the Aircraft Collateral or any part thereof as the Security Agent may reasonably determine; and the Security Agent shall be entitled to collect and receive directly all tolls, rents, revenues, issues, income, products and profits of the Aircraft Collateral and every part thereof, without prejudice, however, to the rights of the Security Agent under any provision of this Aircraft Security Agreement to collect and receive all cash held by, or required to be deposited with, the Security Agent hereunder. Such tolls, rents, revenues, issues, income, products and profits shall be applied to pay the expenses of the use, operation, storage, insurance, leasing, control, management or disposition of the Aircraft Collateral, and of all maintenance, repairs,

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replacements, alterations, additions and improvements, and to make all payments that the Security Agent is required or elects to make, if any, for Taxes, insurance or other proper charges assessed against or otherwise imposed upon the Aircraft Collateral or any part thereof, and all other payments which the Security Agent is required or expressly authorized to make under any provision of this Aircraft Security Agreement, as well as just and reasonable compensation for the services of the Security Agent, and shall otherwise be distributed as set forth in Section 3.01 .

     If an Event of Default shall have occurred and be continuing and the Notes shall either have been accelerated pursuant to Section 4.02(a) of the Indenture (and the relevant declaration shall not have been rescinded and annulled pursuant to Section 4.02(d) of the Indenture) or have become due at maturity and the Security Agent shall be entitled to exercise rights hereunder, at the request of the Security Agent, the Company shall promptly execute and deliver to the Security Agent such instruments of title and other documents as the Security Agent reasonably deems necessary or advisable to enable the Security Agent or a sub-agent or representative designated by the Security Agent, at such time or times and place or places as the Security Agent may specify, to obtain possession of all or any part of the Aircraft Collateral to which the Security Agent shall at the time be entitled hereunder. If the Company shall for any reason fail to execute and deliver such instruments and documents after such request by the Security Agent, the Security Agent may seek a judgment conferring on the Security Agent the right to immediate possession and requiring the Company to execute and deliver such instruments and documents to the Security Agent, to the entry of which judgment the Company hereby specifically consents to the fullest extent it may lawfully do so. All actual and reasonable expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Aircraft Security Agreement.

     (b)  Notice of Sale; Bids; Etc . The Security Agent shall give the Company at least 30 days’ prior written notice of any public sale or of the date on or after which any private sale will be held, which notice the Company hereby agrees to the extent permitted by applicable law is reasonable notice. Any Noteholder or Noteholders shall be entitled to bid for and become the purchaser of any Aircraft Collateral offered for sale pursuant to this Section 4.02 and to credit against the purchase price bid at such sale by such Noteholders all or any part of the unpaid amounts owing to such Noteholders under the Operative Documents and secured by the Lien of this Aircraft Security Agreement (but only to the extent that such purchase price would have been paid to such Noteholders pursuant to Article III of the Indenture if such purchase price were paid in cash and the foregoing provision of this Section 4.02(b) were not given effect). The Security Agent may exercise such right without possession or production of the Notes or proof of ownership thereof, and as a representative of the Noteholders may exercise such right

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without notice to the Noteholders as party to any suit or proceeding relating to the foreclosure of any Aircraft Collateral. The Company shall also be entitled to bid for and become the purchaser of any Aircraft Collateral offered for sale pursuant to this Section 4.02 .

     (c)  Power of Attorney, Etc . To the extent permitted by applicable law, the Company irrevocably appoints, while an Event of Default has occurred and is continuing, the Security Agent the true and lawful attorney-in-fact of the Company (which appointment is coupled with an interest) in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Aircraft Security Agreement, whether pursuant to foreclosure or power of sale, or otherwise, to execute and deliver all such bills of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Company hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law; provided that if so requested by the Security Agent or any purchaser, the Company shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Security Agent or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may reasonably be designated in any such request.

     Section 4.03. Remedies Cumulative . To the extent permitted under applicable law, each and every right, power and remedy specifically given to the Security Agent herein or otherwise in this Aircraft Security Agreement or in any other Operative Document shall be cumulative and shall be in addition to every other right, power and remedy specifically given herein or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given herein or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Security Agent, 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 Security Agent in the exercise of any right, remedy or power or in the pursuance of any remedy shall, to the extent permitted by applicable law, impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Company or to be an acquiescence therein.

     Section 4.04. Discontinuance of Proceedings . In case the Security Agent shall have instituted any proceedings to enforce any right, power or remedy under this Aircraft Security Agreement by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely

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to the Security Agent, then and in every such case the Company and the Security Agent shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Aircraft Collateral, and all rights, remedies and powers of the Security Agent shall continue as if no such proceedings had been undertaken (but otherwise without prejudice).

     Section 4.05. Waiver of Past Defaults . Upon written instruction from the Trustee, the Security Agent shall waive any past Default hereunder and its consequences, and upon any such waiver such Default shall cease to exist and any Event of Default that is an Aircraft Security Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Aircraft Security Agreement, the Indenture and the other Operative Documents, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

     Section 4.06. Appointment of a Receiver . To the extent permitted by applicable law, if an Event of Default shall have occurred and be continuing, and the Notes either shall have been accelerated pursuant to Section 4.02(a) of the Indenture (and the relevant declaration shall not have been rescinded and annulled pursuant to Section 4.02(d) of the Indenture) or have become due at maturity, the Security Agent shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Security Agent or any successor or nominee thereof) for all or any part of the Aircraft Collateral, whether such receivership be incidental to a proposed sale of the Aircraft Collateral or the taking of possession thereof or otherwise, and, to the extent permitted by applicable law, the Company hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Aircraft Collateral shall be entitled to exercise all the rights and powers of the Security Agent with respect to the Aircraft Collateral.

ARTICLE V

DUTIES OF THE SECURITY AGENT

     Section 5.01. Duties of the Security Agent .

     (a)  Exercise of Rights and Powers During an Event of Default . If an Event of Default has occurred and is continuing, the Security Agent shall exercise such of the rights and powers vested in it by this Aircraft Security Agreement and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

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     (b)  Performance in the Absence of an Event of Default . Except during the continuance of an Event of Default:

     (i) The Security Agent need perform only those duties as are specifically set forth in this Aircraft Security Agreement and the other Operative Documents and no others.

     (ii) In the absence of bad faith on its part, the Security Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee or the Security Agent and conforming to the requirements of the Indenture. However, the Security Agent shall examine the certificates and opinions to determine whether or not they conform to the requirements of the Indenture.

     (c)  Liability, Etc . The Security Agent may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

     (i) This paragraph (c) does not limit the effect of paragraph (b) of this Section 5.01 or of Section 5.02 hereof.

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

     (iii) The Security Agent shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 4.02(b) of the Indenture either directly or through the instruction of the Trustee.

     (d)  Indemnification; Advice of Counsel; Etc . The Security Agent shall not be required to take any action or refrain from taking any action under this Article V or Article IV unless the Security Agent shall have received indemnification against any risks incurred in connection therewith in form and substance reasonably satisfactory to it, including, without limitation, adequate advances against costs that may be actually incurred by it in connection therewith. The Security Agent shall not be required to take any action under this Article V or Article IV , nor shall any other provision of any Operative Document be deemed to impose a duty on the Security Agent to take any action, if the Security Agent shall have been advised by outside counsel that such action is contrary to the terms hereof or is otherwise contrary to law.

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     (e)  Other Provisions . Every provision of this Aircraft Security Agreement that in any way relates to the Security Agent is subject to paragraphs (a) , (b) , (c) and (d) of this Section 5.01 .

     Section 5.02. Rights of Security Agent .

     (a)  Reliance on Documents . The Security Agent may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. Without limiting Section 5.01(c)(ii) , the Security Agent need not investigate any fact or matter stated in the document.

     (b)  Officer’s Certificate or Opinion of Counsel . Before the Security Agent acts or refrains from acting (unless other evidence is provided for herein), it may require an Officer’s Certificate or an Opinion of Counsel (which shall conform to Section 11.04 of the Indenture if the Indenture is qualified under the TIA at the time such Officer’s Certificate or Opinion of Counsel, as the case may be, is to be delivered). The Security Agent shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.

     (c)  Acting Through Agents . The Security Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its attorneys and agents and the Security Agent shall not be responsible for the misconduct or negligence of any agent or attorney appointed by it with due care.

     Section 5.03. Notice from the Trustee . If the Trustee shall have knowledge of an Event of Default or a Payment Default, the Trustee shall promptly give notice thereof to the Security Agent. In addition, if the Trustee has declared the acceleration of the Notes pursuant to Section 4.02(a) of the Indenture or shall have knowledge of the acceleration of the Notes pursuant to the proviso in Section 4.02(a)(i) of the Indenture or if the Trustee shall have received a written notice rescinding and annulling any such declaration pursuant to Section 4.02(d) of the Indenture, in each such case, the Trustee shall promptly give notice thereof to the Security Agent by telegram, cable, facsimile or telephone (to be promptly confirmed in writing). Without limiting any of the foregoing, the Trustee will furnish to the Security Agent, upon request of the Security Agent or the Company, such information and copies of such documents as the Trustee may have as are necessary for the Security Agent to perform the duties of the Security Agent under this Aircraft Security Agreement or any other Operative Document.

     Section 5.04. [ Reserved ].

     Section 5.05. [ Reserved ].

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     Section 5.06. Investment of Amounts Held by the Security Agent . Any monies (including for the purpose of this Section 5.06 any amounts held by the Security Agent pursuant to Section 3.05 or pursuant to any provision of any other Operative Document providing for amounts to be held by the Security Agent which are not distributed pursuant to the other provisions of Article III , or any cash received by the Security Agent pursuant to Section 7.05(c) or Section 7.06(d) or otherwise, or Permitted Investments purchased by the use of such cash pursuant to this Section 5.06 or any cash constituting the proceeds of the maturity, sale or other disposition of any such Permitted Investments) held by the Security Agent hereunder as part of the Aircraft Collateral, until paid out by the Security Agent as herein provided, ( i ) subject to clause (ii) below and Section 3.05 , may be carried by the Security 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 or one of the states thereof having combined capital and surplus and retained earnings of at least $100,000,000, and the Security Agent shall not have any liability for interest upon any such monies except as otherwise agreed in writing with the Company, or ( ii ) at any time and from time to time, so long as no Event of Default shall have occurred and be continuing, at the request of the Company, 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, as provided in Section 3.05 , such Permitted Investments shall be held by the Security Agent in trust for the benefit and security of the Noteholders and the Indemnitees as part of the Aircraft Collateral until so sold; provided that the Company shall upon demand pay to the Security Agent the amount of any loss realized upon maturity, sale or other disposition of any such Permitted Investment and, so long as no Event of Default or Payment Default shall have occurred and be continuing, the Company shall be entitled to receive from the Security Agent, and the Security Agent shall promptly pay to the Company, any profit, income, interest, dividend or gain realized upon maturity, sale or other disposition of any Permitted Investment. All Permitted Investments held by the Security Agent pursuant to this Section 5.06 shall be held pursuant to Section 3.05 . If an Event of Default or Payment Default shall have occurred and be continuing, any net income, profit, interest, dividend or gain realized upon maturity, sale or other disposition of any Permitted Investment shall be held as part of the Aircraft Collateral and shall be applied by the Security Agent at the same time, on the same conditions and in the same manner as the amounts in respect of which such income, profit, interest, dividend or gain was realized are required to be distributed in accordance with the provisions hereof pursuant to which such amounts were required to be held. At such time as there shall not be continuing any such Event of Default or Payment Default, such income, profit, interest, dividend or gain shall be paid to the Company. In addition, if any moneys or investments are held by the Security Agent solely because an Event of Default or Payment Default has occurred and

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is continuing, at such time as there shall not be continuing any such Event of Default or Payment Default, such moneys and investments shall be paid to the Company. The Security Agent shall not be responsible for any losses on any investments or sales of Permitted Investments made pursuant to the procedure specified in this Section 5.06 other than by reason of its willful misconduct or negligence.

ARTICLE VI

APPOINTMENT OF THE SECURITY AGENT

     Section 6.01. Acceptance of Trusts and Duties . The Trustee hereby designates and appoints the Security Agent as the agent of the Trustee and as Security Agent under this Aircraft Security Agreement. U.S. Bank accepts the trusts and duties hereby created and applicable to it and agrees to perform such duties, but only upon the terms of this Aircraft Security Agreement and agrees to receive, handle and disburse all monies received by it as Security Agent constituting part of the Aircraft Collateral in accordance with the terms hereof. In addition, the Security Agent agrees to be bound by, and shall have the benefit of, all provisions of the Indenture and the other Operative Documents stated therein to be applicable to the Security Agent or an agent of the Trustee.

ARTICLE VII

OPERATING COVENANTS OF THE COMPANY

     The Company will comply with the following covenants with respect to each Aircraft or the related Airframe or any related Engine, as applicable:

     Section 7.01. Liens . The Company will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to such Aircraft, its title thereto or any of its interest therein, except:

     (a) the Lien of this Aircraft Security Agreement, the rights of any Permitted Lessee under a Lease permitted hereunder and the rights of any Person existing pursuant to the Operative Documents;

     (b) the rights of others under agreements or arrangements to the extent expressly permitted by this Aircraft Security Agreement;

     (c) Security Agent Liens and Trustee Liens;

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     (d) Liens for Taxes either not yet overdue or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk of the sale, forfeiture or loss of such Airframe or any such Engine or the Security Agent’s interest therein or impair the Lien of this Aircraft Security Agreement;

     (e) materialmen’s, mechanics’, workers’, landlords’, repairmen’s, employees’ or other like Liens arising in the ordinary course of business (including those arising under maintenance agreements entered into in the ordinary course of business) securing obligations that either are not yet overdue for a period of more than 60 days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk of the sale, forfeiture or loss of such Airframe or any such Engine or the Security Agent’s interest therein or impair the Lien of this Aircraft Security Agreement;

     (f) Liens arising out of any judgment or award, so long as such judgment or award shall, within 60 days after the entry thereof, have been discharged, vacated or reversed, or execution thereof stayed pending appeal or other judicial review or shall have been discharged, vacated or reversed within 60 days after the expiration of such stay, and so long as during any such 60 day period there is not, or any such judgment or award does not involve, ( x ) any material risk of the sale, forfeiture or loss of such Aircraft, such Airframe or any such Engine or the interest of the Security Agent therein or ( y ) any impairment of the Lien of this Aircraft Security Agreement;

     (g) any other Lien with respect to which the Company shall have provided a bond, cash collateral or other security adequate in the reasonable opinion of the Security Agent;

     (h) salvage or similar rights of insurers under insurance policies maintained by the Company; and

     (i) Liens approved in writing by the Security Agent with the consent of the Trustee.

Liens described in clauses (a) through (i) above are referred to herein as “ Permitted Liens ”. The Company shall promptly, at its own expense, take (or cause to be taken) such action as may be necessary duly to discharge (by bonding or otherwise) any Lien other than a Permitted Lien arising at any time with respect to such Aircraft, its title thereto or any of its interest therein.

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     Section 7.02. Possession, Operation and Use, Maintenance and Registration .

     (a)  Possession . The Company shall not, without the prior written consent of the Security Agent, lease or otherwise in any manner deliver, transfer or relinquish possession of such Aircraft, such Airframe or any such Engine or install any such Engine, or permit any such Engine to be installed, on any airframe other than another Airframe; provided that, so long as the Company shall comply with the provisions of Section 7.06 , the Company may without the prior written consent of the Security Agent:

     (i) subject such Airframe to interchange agreements or subject any such Engine to interchange or pooling agreements or arrangements, in each case customary in the airline industry and entered into by the Company in the ordinary course of its business; provided that ( A ) no such agreement or arrangement contemplates or requires the transfer of title to such Airframe and ( B ) if the Company’s title to any such Engine shall be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine, and the Company shall comply with Section 7.05(b) in respect thereof;

     (ii) deliver possession of such Airframe or any such Engine to any Person for testing, service, repair, reconditioning, restoration, storage, maintenance, overhaul work or other similar purposes or for alterations, modifications or additions to such Airframe or any such Engine to the extent required or permitted by the terms hereof;

     (iii) transfer or permit the transfer of possession of such Airframe or any such Engine to any Government pursuant to a lease, contract or other instrument;

     (iv) subject such Airframe or any such Engine to the CRAF Program or transfer possession of such Airframe or any such Engine to the United States government in accordance with applicable laws, rulings, regulations or orders (including, without limitation, any transfer of possession pursuant to the CRAF Program); provided , that the Company ( A ) shall promptly notify the Security Agent upon transferring possession of such Airframe or any such Engine pursuant to this clause (iv) and ( B ) in the case of a transfer of possession pursuant to the CRAF Program, shall notify the Security Agent of the name and address of the responsible Contracting Office Representative for the Air Mobility Command of the United States Air Force or other appropriate Person to whom notices must be given and to whom requests or claims must be made to the extent applicable under the CRAF Program;

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     (v) install any such Engine on an airframe owned by the Company (or any Permitted Lessee) free and clear of all Liens, except ( A ) Permitted Liens and Liens that apply only to the engines (other than Engines), appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on such airframe (but not to such airframe as an entirety) and ( B ) the rights of third parties under interchange agreements or pooling or similar arrangements that would be permitted under clause (i) above;

     (vi) install any such Engine on an airframe leased, purchased or owned by the Company (or any Permitted Lessee) subject to a lease, conditional sale and/or other security agreement; provided that ( A ) such airframe is free and clear of all Liens except ( 1 ) the rights of the parties to the lease or any conditional sale or security agreement covering such airframe, or their successors and assigns, and ( 2 ) Liens of the type permitted by clause (v) of this Section 7.02(a) and ( B ) either ( 1 ) the Company shall have obtained from the lessor, conditional vendor or secured party of such airframe a written agreement (which may be the lease, conditional sale or other security agreement covering such airframe), in form and substance satisfactory to the Security Agent (it being understood that an agreement from such lessor, conditional vendor or secured party substantially in the form of the penultimate paragraph of this Section 7.02(a) shall be deemed to be satisfactory to the Security Agent), whereby such lessor, conditional vendor or secured party expressly agrees that neither it nor its successors or assigns will acquire or claim any right, title or interest in any such Engine by reason of such Engine being installed on such airframe at any time while such Engine is subject to the Lien of this Aircraft Security Agreement or ( 2 ) such lease, conditional sale or other security agreement provides that any such Engine shall not become subject to the Lien of such lease, conditional sale or other security agreement at any time while such Engine is subject to the Lien of this Aircraft Security Agreement, notwithstanding the installation thereof on such airframe;

     (vii) install any such Engine on an airframe owned by the Company (or any Permitted Lessee), leased to the Company (or any Permitted Lessee) or purchased by the Company (or any Permitted Lessee) subject to a conditional sale or other security agreement under circumstances where neither clause (v) nor clause (vi) of this Section 7.02(a) is applicable; provided that such installation shall be deemed an Event of Loss with respect to such Engine, and the Company shall comply with Section 7.05(b) in respect thereof, if such installation shall adversely affect the Security Agent’s security interest in any such Engine, the Security Agent not intending hereby to waive any right or interest it may have to

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or in such Engine under applicable law until compliance by the Company with Section 7.05(b) ;

     (viii) lease any such Engine or such Airframe and any such Engine to any United States air carrier as to which there is in force a certificate issued pursuant to the Transportation Code (49 U.S.C. §§41101-41112) or successor provision that gives like authority, or to any manufacturer of airframes or engines (or an Affiliate thereof acting under an unconditional guarantee of such manufacturer), so long as such manufacturer and, if applicable, such Affiliate is domiciled in the United States); provided that no Event of Default shall exist at the time any such lease is entered into; and

     (ix) lease any such Engine or such Airframe and any such Engine to ( A ) any foreign air carrier other than those set forth in clause (B) , ( B ) any foreign air carrier that is at the inception of the lease based in and a domiciliary of a country listed in Exhibit B hereto, ( C ) any foreign manufacturer of airframes or engines (or a foreign Affiliate of a United States or foreign manufacturer of airframes or engines acting under an unconditional guarantee of such manufacturer), so long as such foreign manufacturer or (if applicable) foreign Affiliate is domiciled in a country indicated with an asterisk on Exhibit B hereto, or ( D ) any foreign air carrier consented to in writing by the Security Agent with the consent of the Trustee; provided that ( w ) in the case of a lease to, or guarantee by, any entity pursuant to this Section 7.02(a)(ix) , ( 1 ) other than a foreign carrier principally based in Taiwan, the United States maintains diplomatic relations with the country in which such entity is based and domiciled at the time such lease is entered into, ( 2 ) no Event of Default exists at the time such lease is entered into and ( 3 ) such entity is not then subject to any bankruptcy, insolvency, liquidation, reorganization, dissolution or similar proceeding and shall not have substantially all of its property in the possession of any liquidator, trustee, receiver or similar person, ( x ) in the case of a lease to a foreign air carrier under clause (A) above, the Security Agent receives at the time of such lease an opinion of counsel to the Company (such counsel to be reasonably satisfactory to the Security Agent) to the effect that there exist no possessory rights in favor of the lessee under the laws of such lessee’s country which would, upon bankruptcy or insolvency of or other default by the Company and assuming at such time such lessee is not insolvent or bankrupt, prevent the taking of possession of any such Engine or such Airframe and any such Engine by the Security Agent in accordance with and when permitted by the terms of Section 4.02 upon the exercise by the Security Agent of its remedies under Section 4.02 , and ( y ) in the case of a lease to any foreign manufacturer or foreign Affiliate under clause (C) above, the re-registration

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conditions set forth in Section 7.02(e) shall be satisfied notwithstanding anything to the contrary in such clause (C) ;

provided that the rights of any lessee or other transferee who receives possession of such Aircraft, such Airframe or any such Engine by reason of a transfer permitted by this Section 7.02(a) (other than the transfer of any such Engine which is deemed an Event of Loss) shall be subject and subordinate to, and any permitted lease shall be made expressly subject and subordinate to, all the terms of this Aircraft Security Agreement, including the Security Agent’s rights to repossess pursuant to Section 4.02 and to avoid such lease upon such repossession, and the Company shall remain primarily liable hereunder for the performance and observance of all of the terms and conditions of this Aircraft Security Agreement to the same extent as if such lease or transfer had not occurred, any such lease shall include appropriate provisions for the maintenance and insurance of such Aircraft, Airframe or Engine, and no lease or transfer or possession otherwise in compliance with this Section shall ( x ) result in any registration or re-registration of such Aircraft except to the extent permitted in Section 7.02(e) or the maintenance, operation or use thereof that does not comply with Section 7.02(b) and Section 7.02(c) or ( y ) permit any action not permitted to be taken by the Company with respect to such Aircraft hereunder. The Company shall promptly notify the Security Agent of the existence of any such lease with a term in excess of one year.

     Each of the Security Agent and the Trustee agrees, and each Noteholder by acceptance of a Note is deemed to have agreed, for the benefit of the Company (and any Permitted Lessee) and for the benefit of the lessor, conditional vendor or secured party of such Airframe or engine leased to the Company (or any Permitted Lessee) or leased to or purchased or owned by the Company (or any Permitted Lessee) subject to a conditional sale or other security agreement, that the Security Agent, the Trustee and the Noteholders will not acquire or claim, as against the Company (or any Permitted Lessee) or such lessor, conditional vendor or secured party, any right, title or interest in ( A ) any engine or engines owned by the Company (or any Permitted Lessee) or the lessor under such lease or subject to a security interest in favor of the secured party under any conditional sale or other security agreement as the result of such engine or engines being installed on such Airframe at any time while such engine or engines are subject to such lease or conditional sale or other security agreement or ( B ) any airframe owned by the Company (or any Permitted Lessee) or the lessor under such lease or subject to a security interest in favor of the secured party under any conditional sale or other security agreement as the result of any such Engine being installed on such airframe at any time while such airframe is subject to such lease or conditional sale or other security agreement.

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     Each of the Security Agent and the Trustee acknowledges that any “wet lease” or other similar arrangement under which the Company maintains operational control of an Aircraft shall not constitute a delivery, transfer or relinquishment of possession for purposes of this Section 7.02(a) .

     (b)  Operation and Use . The Company agrees that such Aircraft will not be maintained, used, serviced, repaired, overhauled or operated in violation of any law, rule or regulation of any government of any country having jurisdiction over such Aircraft or in violation of any airworthiness certificate, license or registration relating to such Aircraft issued by any such government, except to the extent the Company is contesting in good faith the validity or application of any such law, rule or regulation or airworthiness certificate, license or registration in any manner that does not involve any material risk of sale, forfeiture or loss of such Aircraft or impair the Lien of this Aircraft Security Agreement; and provided , that the Company shall not be in default under, or required to take any action set forth in, this sentence if it is not possible for it to comply with the laws of a jurisdiction other than the United States (or other than any jurisdiction in which such Aircraft is then registered) because of a conflict with the applicable laws of the United States (or such jurisdiction in which such Aircraft is then registered). The Company will not operate such Aircraft, or permit such Aircraft to be operated or located, ( i ) in any area excluded from coverage by any insurance required by the terms of Section 7.06 or ( ii ) in any war zone or recognized or, in the Company’s judgment, threatened areas of hostilities unless covered by war risk insurance in accordance with Section 7.06 , unless in the case of either clause (i) or (ii) , ( x ) governmental indemnification complying with Section 7.06(a) and Section 7.06(b) has been provided or ( y ) such Aircraft is only temporarily located in such area as a result of an isolated occurrence or isolated series of occurrences attributable to a hijacking, medical emergency, equipment malfunction, weather conditions, navigational error or other similar unforeseen circumstances and the Company is using its good faith efforts to remove such Aircraft from such area as promptly as practicable.

     (c)  Maintenance . The Company shall maintain, service, repair and overhaul such Aircraft (or cause the same to be done) ( i ) so as to keep such Aircraft in as good operating condition as on the applicable Aircraft Closing Date for such Aircraft, ordinary wear and tear excepted, and in such condition as may be necessary to enable the airworthiness certification of such Aircraft to be maintained in good standing at all times (other than during temporary periods of storage, during maintenance or modification permitted hereunder, or during periods of grounding by applicable governmental authorities) under the Transportation Code, during such periods in which such Aircraft is registered under the laws of the United States, or, if such Aircraft is registered under the laws of any other jurisdiction, the applicable laws of such jurisdiction and ( ii ) using the

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same standards as the Company or, in the case of a lease permitted pursuant to Section 7.02(a) , the applicable Permitted Lessee uses with respect to similar aircraft operated by the Company or such Permitted Lessee, as the case may be, in similar circumstances (in any case, without limitation of the Company’s obligations under the preceding clause (i) ). In any case such Aircraft will be maintained in accordance with a maintenance program for Boeing 767-323ER, Boeing 777-200ER or Boeing 737-800 aircraft, as applicable, approved by the FAA or, if such Aircraft is not registered in the United States, ( i ) the EASA or the JAA, ( ii ) the central aviation authority of Australia, Canada, Japan or New Zealand, or ( iii ) the central aviation authority of any country with aircraft maintenance standards that are substantially similar to those of the United States or any of the foregoing authorities or countries. The Company shall maintain or cause to be maintained all records, logs and other documents required to be maintained in respect of such Aircraft by appropriate authorities in the jurisdiction in which such Aircraft is registered.

     (d)  Identification of Security Agent’s Interest . The Company agrees to affix as promptly as practicable after the applicable Aircraft Closing Date for such Aircraft and thereafter to maintain in the cockpit of such Aircraft, in a clearly visible location, and (if not prevented by applicable law or regulations or by any government) on each such Engine, a nameplate bearing the inscription “MORTGAGED TO U.S. BANK TRUST NATIONAL ASSOCIATION, AS SECURITY AGENT” (such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any successor Security Agent). If any such nameplate is damaged beyond repair or becomes illegible, the Company shall promptly replace it with a nameplate complying with the requirements of this Section.

     (e)  Registration . The Company shall cause such Aircraft to remain duly registered, under the laws of the United States, in the name of the Company except as otherwise required by the Transportation Code; provided that each of the Security Agent and the Trustee shall, at the Company’s expense, execute and deliver all such documents as the Company may reasonably request for the purpose of continuing such registration. Notwithstanding the preceding sentence, the Company, at its own expense, may cause or allow such Aircraft to be duly registered under the laws of any foreign jurisdiction in which a Permitted Lessee could be principally based, in the name of the Company or of any nominee of the Company, or, if required by applicable law, in the name of any other Person (and, following any such foreign registration, may cause such Aircraft to be re-registered under the laws of the United States); provided , that in the case of jurisdictions other than those approved by the Security Agent with the consent of the Trustee ( i ) if such jurisdiction is at the time of registration listed on Exhibit B , the Security Agent shall have received at the time of such registration an opinion of counsel to the Company to the effect that ( A ) this Aircraft Security Agreement and the Security

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Agent’s right to repossession hereunder is valid and enforceable under the laws of such country, ( B ) after giving effect to such change in registration, the Lien of this Aircraft Security Agreement shall continue as a valid Lien and shall be duly perfected in the new jurisdiction of registration and that all filing, recording or other action necessary to perfect and protect the Lien of this Aircraft Security Agreement has been accomplished (or if such opinion cannot be given at such time, ( x ) the opinion shall detail what filing, recording or other action is necessary and ( y ) the Security Agent shall have received a certificate from an Officer that all possible preparations to accomplish such filing, recording and other action shall have been done, and such filing, recording and other action shall be accomplished and a supplemental opinion to that effect shall be promptly delivered to the Security Agent subsequent to the effective date of such change in registration), ( C ) the obligations of the Company under this Aircraft Security Agreement shall remain valid, binding and (subject to customary bankruptcy and equitable remedies exceptions and to other exceptions customary in foreign opinions generally) enforceable under the laws of such jurisdiction (or the laws of the jurisdiction to which the laws of such jurisdiction would refer as the applicable governing law) and ( D ) all approvals or consents of any government in such jurisdiction having jurisdiction required for such change in registration shall have been duly obtained and shall be in full force and effect, and ( ii ) if such jurisdiction is at the time of registration not listed on Exhibit B , the Security Agent shall have received (in addition to the opinions set forth in clause (i) above) at the time of such registration an opinion of counsel to the Company to the effect that ( A ) the terms of this Aircraft Security Agreement are legal, valid, binding and enforceable in such jurisdiction (subject to exceptions customary in such jurisdiction, provided , that, subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally, and to general principles of equity, any applicable laws limiting the remedies provided in Section 4.02 do not in the opinion of such counsel make the remedies provided in Section 4.02 inadequate for the practical realization of the rights and benefits provided thereby), ( B ) that it is not necessary for the Security Agent to register or qualify to do business in such jurisdiction, ( C ) that there is no tort liability of the lender of an aircraft not in possession thereof under the laws of such jurisdiction other than tort liability that might have been imposed on such lender under the laws of the United States or any state thereof (it being understood that such opinion shall be waived if insurance reasonably satisfactory to the Security Agent is provided, at the Company’s expense, to cover such risk) and ( D ) (unless the Company shall have agreed to provide insurance covering the risk of requisition of use or title of such Aircraft by the government of such jurisdiction so long as such 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 Dollars for the loss of use or title of such Aircraft in the event of requisition by such government of such use or title. Each of the Security Agent and the

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Trustee will cooperate with the Company in effecting such foreign registration. Notwithstanding the foregoing, prior to any such change in the country of registry of such Aircraft, the following conditions shall be met (or waived as provided in Section 9.02(a) ):

     (i) no Event of Default shall have occurred and be continuing at the effective date of the change in registration; provided , that it shall not be necessary to comply with this condition if the change in registration results in the registration of such Aircraft under the laws of the United States or if the Trustee consents to such change in registration;

     (ii) the Security Agent shall have received evidence of compliance with the insurance provisions contained herein after giving effect to such change in registration; and

     (iii) the Company shall have paid or made provision reasonably satisfactory to the Security Agent for the payment of all reasonable expenses (including reasonable attorneys’ fees) of the Security Agent in connection with such change in registration.

     The Company shall ( i ) take such actions as may be required to be taken by the Company so that any International Interest arising in relation to this Aircraft Security Agreement, such Aircraft, any Replacement Aircraft therefor, any such Engine or any Replacement Engine therefor may be duly registered (and any such registration may be assigned, amended, extended or discharged) at the International Registry, and ( ii ) obtain from the International Registry all approvals as may be required duly and timely to perform the Company’s obligations under this Aircraft Security Agreement with respect to the registration of any such International Interest. The Security Agent shall take all actions necessary with respect to the International Registry to consent to the Company’s initiation of any registrations required under this Aircraft Security Agreement to enable the Company to complete such registrations, including, without limitation, appointing Daugherty, Fowler, Peregrin, Haught & Jenson, a Professional Corporation, as its “professional user entity” (as defined in the Cape Town Treaty) to consent to any registrations on the International Registry with respect to such Airframe or any such Engine.

     Section 7.03. Inspection . At all reasonable times, but upon at least 15 Business Days’ prior written notice to the Company, the Security Agent or its authorized representative may, subject to the other conditions of this Section 7.03 , inspect such Aircraft and may inspect the books and records of the Company required to be maintained by the FAA or the government of another jurisdiction in which such Aircraft is then registered relating to the maintenance of such Aircraft; provided that ( i ) the

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Security Agent or its representative shall be fully insured at no cost to the Company in a manner satisfactory to the Company with respect to any risks incurred in connection with any such inspection or shall provide to the Company a written release satisfactory to the Company with respect to such risks, ( ii ) any such inspection shall be subject to the safety, security and workplace rules applicable at the location where such inspection is conducted and any applicable governmental rules or regulations, ( iii ) any such inspection of such Aircraft shall be a visual, walk-around inspection of the interior and exterior of such Aircraft and shall not include opening any panels, bays or the like without the Company’s express consent, which consent the Company may in its sole discretion withhold, and ( iv ) no exercise of such inspection right shall interfere with the use, operation or maintenance of such Aircraft by, or the business of, the Company and the Company shall not be required to undertake or incur any additional liabilities in connection therewith. All information obtained in connection with any such inspection of such Aircraft and of such books and records shall be Confidential Information and shall be treated by the Security Agent and its representatives in accordance with the provisions of Section 13.18 of the Indenture. Any inspection pursuant to this Section 7.03 shall be at the sole risk (including, without limitation, any risk of personal injury or death) and expense of the Security Agent (or its representative), as the case may be, making such inspection. Except during the continuance of an Event of Default, all inspections by the Security Agent and its representatives provided for under this Section 7.03 shall be limited to one inspection of any kind contemplated by this Section 7.03 for all such Aircraft during any calendar year.

     Section 7.04. Replacement and Pooling of Parts; Alterations, Modifications and Additions; Substitution of Engines .

     (a)  Replacement of Parts . The Company, at its own expense, shall promptly replace all Parts that may from time to time be incorporated or installed in or attached to such Airframe or any such Engine and that may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered permanently unfit for use for any reason whatsoever, except as otherwise provided in Section 7.04(c) or if such Airframe or any such Engine to which a Part relates has suffered an Event of Loss. In addition, the Company, at its own expense, may remove in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered permanently unfit for use; provided that the Company, except as otherwise provided in Section 7.04(c) , at its own expense, will replace such Parts as promptly as practicable. All replacement Parts shall be free and clear of all Liens (except for Permitted Liens and except in the case of replacement property temporarily installed on an emergency basis) and shall have a value and utility at least equal to the Parts replaced, assuming such

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replaced Parts were in the condition and repair required to be maintained by the terms hereof. Except as otherwise provided in Section 7.04(c) , all Parts at any time removed from such Airframe or any such Engine shall remain subject to the Lien of this Aircraft Security Agreement no matter where located until such time as such Parts shall be replaced by parts that have been incorporated or installed in or attached to such Airframe or such Engine and that meet the requirements for replacement Parts specified above. Immediately upon any replacement Part becoming incorporated or installed in or attached to such Airframe or any such Engine as above provided (except in the case of replacement property temporarily installed on an emergency basis), without further act, ( i ) the replaced Part shall thereupon be free and clear of the Lien of this Aircraft Security Agreement and of all rights and interests of the Security Agent (and the other beneficiaries hereof) and shall no longer be deemed a Part hereunder and ( ii ) such replacement Part shall become subject to the Lien of this Aircraft Security Agreement and be deemed a Part of such Airframe or such Engine for all purposes to the same extent as the Parts originally incorporated or installed in or attached to such Airframe or such Engine. Upon request of the Company from time to time, the Security Agent (and, if the Company so requests, the Trustee) shall execute and deliver to the Company an appropriate instrument confirming the release of any such replaced Part from the Lien of this Aircraft Security Agreement.

     (b)  Pooling of Parts . Any Part removed from such Airframe or any such Engine as provided in Section 7.04(a) may be subjected by the Company or a Person permitted to be in possession of such Aircraft to a pooling arrangement customary in the airline industry entered into in the ordinary course of the Company’s or such Person’s business; provided that the part replacing such removed Part shall be incorporated or installed in or attached to such Airframe or such Engine in accordance with Section 7.04(a) as promptly as practicable after the removal of such removed Part. In addition, any replacement Part when incorporated or installed in or attached to such Airframe or any such Engine