<PAGE>   1

                                                                   EXHIBIT 10.3


                             DATED 19TH JANUARY 1999


              (1) THE BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN
                                  (as Lenders)


                                 (2) HALIFAX PLC
                                   (as Agent)

                                 (3) HALIFAX PLC
                              (as Security Trustee)

                           (4) SIERRA LEASING LIMITED
                                  (as Borrower)

                            (5) AIRCRAFT SPC-9, INC.
                                   (as Parent)

                   (6) INTERNATIONAL LEASE FINANCE CORPORATION
                                 (as Guarantor)

                   (7) INTERNATIONAL LEASE FINANCE CORPORATION
                            (as Subordinated Lender)


                ________________________________________________

                           AIRCRAFT FACILITY AGREEMENT
                      in respect of a term facility in the
                  maximum principal amount of US$4,327,260,000
              for the financing of approximately seventy-five (75)
                                 Airbus Aircraft

                ________________________________________________






                                   WILDE SAPTE
                                  1 Fleet Place
                                 London EC4M 7WS
                               Tel. 0171 246 7000
                               Fax. 0171 246 7777
                           CGA/CET/051297/AF341927.26



<PAGE>   2



                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
CLAUSE      HEADING                                                                 PAGE NO.
------      -------                                                                 --------
<S>                                                                                    <C>
 1. DEFINITIONS.........................................................................2
 2. AVAILABILITY.......................................................................34
 3. UTILISATION OF THE FACILITY........................................................40
 4. REPAYMENT AND PREPAYMENT...........................................................50
 5. GUARANTEE AND INDEMNITY............................................................64
 6. REPRESENTATIONS AND WARRANTIES.....................................................68
 7. UNDERTAKINGS AND COVENANTS.........................................................73
 8. SUBORDINATION......................................................................86
 9. TRIGGER EVENTS.....................................................................89
10. DEFAULT............................................................................93
11. PROCEEDS ACCOUNT...................................................................96
12. APPLICATION OF SUMS RECEIVED BY THE LENDERS........................................97
13. INDEMNITIES.......................................................................101
14. CHANGE IN CIRCUMSTANCES...........................................................109
15. MITIGATION AND CONTEST RIGHTS.....................................................113
16. FEES AND EXPENSES.................................................................117
17. CHANGE OF AGENT AND SECURITY TRUSTEE..............................................118
18. ASSIGNMENTS AND TRANSFERS.........................................................119
19. SET-OFF AND PRO RATA PAYMENTS.....................................................123
20. RIGHTS CUMULATIVE, WAIVERS, SEVERABILITY..........................................125
21. FURTHER ASSURANCE.................................................................126
22. BAYERISCHE HYPO-UND VEREINSBANK AG................................................126
23. NOTICES...........................................................................126
24. GOVERNING LAW AND JURISDICTION....................................................129
25. MISCELLANEOUS.....................................................................130
26. CONFIDENTIALITY...................................................................131
27. COUNTERPARTS AND DELIVERY BY FACSIMILE............................................132
SCHEDULE  1 - THE LENDERS - PART I - THE BRITISH LENDERS..............................133
SCHEDULE  1 - PART II - THE FRENCH LENDERS............................................134
SCHEDULE  1 - PART III - THE GERMAN LENDERS...........................................135
SCHEDULE  2 - FORM OF TRANSFER CERTIFICATE............................................137
SCHEDULE  3 - UTILISATION NOTICE......................................................143
SCHEDULE  4 - PART I - Details of Proposed Aircraft and Proposed Delivery
              Schedule................................................................145
SCHEDULE  4 - PART II - Sample Loan/Lease Profiles as a Percentage of 
              Aircraft Cost...........................................................150
SCHEDULE  5 - GUARANTOR COVENANTS.....................................................151
SCHEDULE  6 - CONDITIONS PRECEDENT AND SUBSEQUENT TO A UTILISATION....................155
              PART I..................................................................155
              PART II.................................................................158
              PART III................................................................161
SCHEDULE  7 - ENGLISH PROCESS AGENTS..................................................163
SCHEDULE  8 - INSURANCE...............................................................164
SCHEDULE  9 - FORM OF CERTIFICATE TO BE GIVEN ON EACH QUARTER DATE....................167
SCHEDULE 10 - BLENDED LASU RATES......................................................168
APPENDIX  A - FORM OF LOAN SUPPLEMENT.................................................172
APPENDIX  B - FORM OF PARTIAL PURCHASE AGREEMENT ASSIGNMENT...........................173
              (INCLUDING AIRFRAME WARRANTIES).........................................173
APPENDIX  C - FORM OF ENGLISH LAW AIRCRAFT MORTGAGE...................................174
APPENDIX  D - PART I FORM OF ASSIGNMENT OF GENERAL TERMS AGREEMENT RE
              ENGINE WARRANTIES.......................................................175
              PART II FORM OF ASSIGNMENT OF GENERAL TERMS AGREEMENT RE
</TABLE>





<PAGE>   3



<TABLE>
<CAPTION>
CLAUSE      HEADING                                                                 PAGE NO.
------      -------                                                                 --------
<S>                                                                                    <C>
              ENGINE WARRANTIES IN RESPECT OF ENGINES MANUFACTURED BY
              UNITED TECHNOLOGIES CORPORATION, PRATT & WHITNEY GROUP..................176
              PART III FORM OF RR ENGINE WARRANTY AGREEMENT...........................177
APPENDIX  E - FORM OF BFE BILL OF SALE................................................178
APPENDIX  F - FORM OF AIRCRAFT BILL OF SALE...........................................180
APPENDIX  G - FORM OF SUB-BORROWER CHARGE OVER SHARES.................................182
APPENDIX  H - FORM OF SUB-BORROWER GUARANTEE..........................................183
APPENDIX  I - FORM OF SUB-BORROWER DEBENTURE..........................................184
APPENDIX  J - FORM OF ACCESSION DEED..................................................185
APPENDIX  K - FORM OF BORROWER DEBENTURE..............................................190
APPENDIX  L - FORM OF CHARGE OVER SHARES OF INTERMEDIATE LESSEE.......................191
APPENDIX  M - FORM OF INTERMEDIATE LESSEE DEBENTURE...................................192
APPENDIX  N - FORMS OF LEASE SECURITY ASSIGNMENT AND INTERMEDIATE LEASE SECURITY
              ASSIGNMENT..............................................................193
APPENDIX  O - FORM OF REPLACEMENT BILL OF SALE........................................195
APPENDIX  P - FORM OF LETTER COMPRISING NOTICE OF CHARGE AND AIRCRAFT 
              MORTGAGE AND QUIET ENJOYMENT COVENANT...................................196
</TABLE>



<PAGE>   4



THIS AIRCRAFT FACILITY AGREEMENT is made the 19th day of January 1999

BETWEEN:-

 (1)    HALIFAX PLC (Lead Manager), a banking institution established under the
        laws of England, whose registered office is at Trinity Road, Halifax,
        West Yorkshire HX1 2RG (herein together with their successors, permitted
        assigns and permitted transferees called the "BRITISH LENDERS");

 (2)    SOCIETE GENERALE (Lead Manager), a banking institution established under
        the laws of France, whose principal place of business is at Tour Societe
        Generale, 17 Cours Valmy 92972 Paris - La Defense 7, Cedex, France
        (herein together with their successors, permitted assigns and permitted
        transferees called the "FRENCH LENDERS");

 (3)    COMMERZBANK AG (Lead Manager) a banking institution established under
        the laws of Germany and whose principal place of business is at Neue
        Mainzer Strasse 32-36, 60311, Frankfurt, Germany acting through its
        office at 633 West Fifth Street, Suite 6600, Los Angeles, CA90071,
        United States of America, BAYERISCHE HYPO-UND VEREINSBANK AG (Co-Lead
        Manager), a banking institution established under the laws of Germany
        and having its principal place of business at Am Tucherpark 1, 80538,
        Munich, Germany and KREDITANSTALT FUR WIEDERAUFBAU, (Parallel Lender) a
        public corporation established under the laws of Germany and having its
        principal place of business at Palmengartenstrasse 5-9, 60325 Frankfurt
        am Main (herein together with their successors, permitted assigns and
        permitted transferees called the "GERMAN LENDERS");

        (the British Lenders, the French Lenders and the German Lenders being
        herein together called the "LENDERS" and severally a "LENDER")

 (4)    HALIFAX PLC, a banking institution established under the laws of
        England, whose registered office is at Trinity Road, Halifax, West
        Yorkshire HX1 2RG in its capacity as Agent for and on behalf of itself
        and the Lenders (herein in such capacity called the "AGENT");

 (5)    HALIFAX PLC, a banking institution established under the laws of
        England, whose registered office is at Trinity Road, Halifax, West
        Yorkshire HX1 2RG in its capacity as security trustee for and on behalf
        of itself and the Lenders (herein in such capacity called the "SECURITY
        TRUSTEE");

 (6)    SIERRA LEASING LIMITED, a company incorporated under the laws of Bermuda
        and having its registered office at 29 Richmond Road, Hamilton HM-AX,
        Bermuda (herein called the "BORROWER");

 (7)    AIRCRAFT SPC-9, INC., a company incorporated under the laws of
        California and having its registered office at c/o International Lease
        Finance Corporation, 1999 Avenue of the Stars, 39th Floor, Los Angeles,
        CA 90067 (herein called the "PARENT");

 (8)    INTERNATIONAL LEASE FINANCE CORPORATION, a corporation incorporated
        under the laws of the State of California and having its principal place
        of business at 1999 Avenue of the Stars, 39th Floor, Los Angeles, CA
        90067 as guarantor (herein in such capacity called the "GUARANTOR");






<PAGE>   5

(9)     INTERNATIONAL LEASE FINANCE CORPORATION, a corporation incorporated
        under the laws of the State of California and having its principal place
        of business at 1999 Avenue of the Stars, 39th Floor, Los Angeles,
        CA90067 as subordinated lender (herein in such capacity called the
        "SUBORDINATED LENDER").

WHEREAS:

This Agreement sets out the terms upon which the Lenders will make available to
the Borrower the Facility described herein to enable the Borrower to purchase
the Aircraft.

NOW IT IS HEREBY AGREED as follows:-

1.      DEFINITIONS

1.1     In this Agreement (including the Recitals, the Schedules and the Annexes
        hereto) except where the context otherwise requires or there is express
        provision to the contrary, the following words and expressions shall
        have the following meanings:-

        "ACCELERATION EVENT" means a Termination Event in respect of which the
        Agent has served a notice in accordance with the provisions of and
        having the effect set out in Clause 10.2 (Acceleration Rights);

        "ACCESSION DEED" means a deed of accession to this Agreement to be
        entered into by the relevant Sub-Borrower and/or Intermediate Lessee in
        the form of Appendix J;

        "ADVANCE" means, in respect of a Utilisation, the aggregate of the sums
        to be advanced by each of the Lenders to the Borrower in respect of that
        Utilisation;

        "AFFECTED LENDER" shall have the meaning given thereto in Clauses 4.12
        (Deductions and Withholdings), 14.1 (Increased Costs), 14.2 (Market
        Disruption) 14.3 (Illegality) and 15.2 (Prepayment of Affected Loans and
        Replacement of Affected Lender);

        "AGREEMENT" means this aircraft facility agreement;

        "AIG" means American International Group, Inc. a corporation duly
        organised and existing under the laws of Delaware whose principal place
        of business is at 70 Pine Street, New York, N.Y. 10270, USA;

        "AIG GROUP COMPANY" means AIG and any person of which or in which AIG
        owns, directly or indirectly, 50% or more of:-

        (a)     the combined voting power of all classes of stock having general
                voting power under ordinary circumstances to elect a majority of
                the board of directors of such person, if it is a corporation;

        (b)     the capital interest or profits interest of such person, if it
                is a partnership, limited liability company, joint venture or
                similar entity; or

        (c)     the beneficial interest of such person, if it is a trust,
                association or other unincorporated organisation;




<PAGE>   6



        "AIRCRAFT" means, as the context may require, any or all of the Eligible
        Aircraft financed hereunder by the Borrower pursuant to a Utilisation
        Notice (and, save where the context otherwise requires, includes any or
        all of the Replacement Aircraft) comprising, with respect to each
        individual aircraft, the Airframe together with the relevant Engines
        (whether or not any of the relevant Engines may from time to time be
        installed on the Airframe) together with the relevant Technical Records;

        "AIRCRAFT OPERATIVE DOCUMENTS" means, in respect of an Aircraft, each
        of:

        (i)     the relevant Loan Supplement, the relevant Utilisation Notice,
                the relevant Bill of Sale, the relevant BFE Bill of Sale, the
                relevant Purchase Agreement (to the extent that it relates to
                the purchase of that Aircraft and the Warranties relating to
                that Aircraft), the relevant Engine Agreement (to the extent
                that it relates to the Engine Warranties relating to that
                Aircraft), the relevant Intermediate Lease (if any), the
                relevant Accession Deed (if any) and each of the Aircraft
                Security Documents (but excluding the Lenders' Agreement); and

        (ii)    (a)     any other document, instrument or memorandum annexed to
                        any of the documents referred to in (i) above,

                (b)     any notice or acknowledgement required pursuant to the
                        terms of any of the documents referred to in (i) above;
                        and

                (c)     any document, instrument or memorandum (x) which is
                        executed and delivered in connection with a
                        restructuring in accordance with the terms of this
                        Agreement, of any or all of the arrangements
                        contemplated by any of the documents referred to in (i)
                        above or (y) which the Guarantor, the Borrower, the
                        relevant Intermediate Lessee or the relevant
                        Sub-Borrower agrees constitutes an Aircraft Operative
                        Document or (z) which is entered into in substitution
                        for or which amends or augments or varies all or any
                        part of any of the documents referred to in this
                        definition (including this part (ii)(c)(z)) in each case
                        in accordance with the terms of this Agreement;

        "AIRCRAFT PURCHASE PRICE" means, in respect of an Aircraft, the final
        contract price for that Aircraft (including any Buyer Furnished
        Equipment) on delivery, after deduction of all credit memoranda in each
        case which are expressed to be capable of being applied against the
        purchase price of that Aircraft as set out in the relevant purchase
        agreement by the Seller and/or the Manufacturer and/or the relevant
        Engine Manufacturer and exclusive of any capitalised interest, together
        with the final contract price for the post-delivery modifications (if
        any) to be carried out on such Aircraft that are invoiced on or prior to
        delivery;

        "AIRCRAFT SECURITY DOCUMENTS" means, in respect of an Aircraft, each of:

        (i)     this Agreement, the Borrower Debenture, the relevant Lease
                Security Assignment (if any), the relevant Intermediate Lease
                Security Assignment (if any), the relevant Mortgage, the
                relevant Sub-Borrower Guarantee (if any), the relevant
                Assignment of General Terms Agreements Re Engine Warranties, the





<PAGE>   7



                relevant Partial Purchase Agreement Assignment, the Charge Over
                Shares of Borrower, the relevant Charge Over Shares of
                Sub-Borrower (if any), the relevant Sub-Borrower Debenture (if
                any), the relevant Intermediate Lessee Debenture (if any), the
                relevant Charge Over Shares of Intermediate Lessee (if any), the
                relevant Notice of Charge (if any);

        (ii)    (a)     any other instrument, document or memorandum annexed to
                        any of the documents referred to in (i) above,

                (b)     any notice or acknowledgement required pursuant to the
                        terms of any of the documents referred to in (i) above;
                        and

                (c)     any document, instrument or memorandum (w) which is
                        executed and delivered in connection with or following a
                        restructuring of any or all of the arrangements
                        contemplated by any of the documents referred to in (i)
                        above or (x) which the Guarantor or the Borrower or any
                        Sub-Borrower or any Intermediate Lessee agrees
                        constitutes an Aircraft Security Document or (y) which
                        secures the obligations of any one or more of the
                        Obligors under any of the Aircraft Operative Documents
                        or (z) which is entered into in substitution for or
                        which amends or augments or varies all or any part of
                        any of the documents referred to in this definition
                        (including this part (ii)(c)(z)) in each case in
                        accordance with the terms of this Agreement;

        "AIRFRAME" means, in respect of an Aircraft, the airframe more
        particularly identified in Schedule 1 to the relevant Mortgage including
        all Parts installed in or on the airframe at the Delivery Date (or
        which, having been removed therefrom, remain the property of the
        Borrower or, if applicable, the relevant Sub-Borrower), and all
        substitutions, renewals and replacements of such Parts from time to time
        made in or to or installed in or on the said airframe including any
        Parts which are for the time being detached from the airframe but remain
        the property of the Borrower or, if applicable, the relevant
        Sub-Borrower;

        "ALTERNATIVE UTILISATION" means, in relation to a Eligible Aircraft, a
        Utilisation which is part of a leveraged or tax-based financing of that
        Eligible Aircraft;

        "ASSIGNMENT OF GENERAL TERMS AGREEMENT RE ENGINE WARRANTIES" means, in
        respect of an Aircraft (other than where such Aircraft is powered by
        Engines manufactured by Rolls-Royce plc), the deed of assignment of the
        relevant Engine Agreement in so far as it relates to the Engine
        Warranties in respect of the Engines relating to that Aircraft to be
        entered into between the Guarantor and the Borrower or a Sub-Borrower
        (as the case may be), and including if applicable the Lessee as a party
        or subject to its rights, in the form agreed by the relevant Engine
        Manufacturer substantially in the form of Appendix D Part I or, in the
        case of Engines manufactured by United Technologies Corporation, Pratt &
        Whitney Group, Appendix D Part II;

        "ASSUMED FINANCED AMOUNT" means, in relation to an Aircraft, the amount
        applicable to that Aircraft in the column headed "Assumed Financed
        Amount" in Schedule 4 Part I;



<PAGE>   8



        "AVAILABILITY PERIOD" means the period from the date hereof up to and
        including March 31, 2002 or such later date as the parties hereto may
        agree, subject to earlier termination as provided for in this Agreement;

        "AVIATION AUTHORITY" means, in respect of an Aircraft, any Government
        Entity which under the laws of the State of Registration may from time
        to time:-

        (i)     have control or supervision of civil aviation in the State of
                Registration; or

        (ii)    have jurisdiction over the registration, airworthiness or
                operation of, or other similar matters relating to, that
                Aircraft;

        "BANKING DAY" means a day (other than a Saturday, Sunday or holiday
        scheduled by law) on which banks are open for the transaction of
        domestic and foreign exchange business and otherwise for the transaction
        of business of the nature required by this Agreement or the other
        Transaction Documents, as applicable, in London, Paris, Frankfurt,
        Luxembourg, Los Angeles and New York City and also, in relation to a day
        on which a payment is required, in the place where such payment is to be
        made in accordance with this Agreement or any of the other Transaction
        Documents, as applicable;

        "BFE BILL OF SALE" means, in respect of an Aircraft, the bill of sale
        executed or to be executed by the Guarantor in favour of the Seller
        substantially in the form of Appendix E pursuant to which title to the
        Buyer Furnished Equipment is transferred from the Guarantor to the
        Seller;

        "BILL OF SALE" means, in respect of an Aircraft, the bill of sale
        executed or to be executed by the Seller in favour of the Borrower or
        any Sub-Borrower (as the case may be) substantially in the form set out
        in Appendix F evidencing the transfer of title to that Aircraft or any
        confirmation of sale if title to the Aircraft is to pass by way of
        physical delivery of the Aircraft from the Seller to the Borrower or any
        Sub-Borrower;

        "BORROWER ACCOUNTS" means each of the Borrower Maintenance Reserve
        Account, the Borrower Rental Account and the Borrower Security Deposit
        Account and "BORROWER ACCOUNT" shall mean any of them;

        "BORROWER CONSTITUTIONAL DOCUMENTS" means the certificate of
        incorporation, the memorandum of association and bye-laws of the
        Borrower;

        "BORROWER DEBENTURE" means the document so entitled of even date
        herewith between the Borrower and the Security Trustee in the form set
        out in Appendix K;

        "BORROWER MAINTENANCE RESERVE ACCOUNT" means the existing Dollar account
        in the name of the Borrower with Wells Fargo Bank or Bank of America in
        California or with such other financial institution as may be approved
        by the Security Trustee (such approval not to be unreasonably withheld);

        "BORROWER RENTAL ACCOUNT" means the existing Dollar account in the name
        of the Borrower with Wells Fargo Bank or Bank of America in California
        or with such other financial institution as may be approved by the
        Security Trustee (such approval not to be unreasonably withheld);




<PAGE>   9



        "BORROWER SECURITY DEPOSIT ACCOUNT" means the existing Dollar account in
        the name of the Borrower with Wells Fargo Bank or Bank of America in
        California or with such other financial institution as may be approved
        by the Security Trustee (such approval not to be unreasonably withheld);

        "BRITISH CREDITS" shall, in respect of an Advance, have the meaning
        given to that term in the relevant Loan Supplement;

        "BUSINESS DAY" means a day (other than a Saturday or Sunday or holiday
        scheduled by law) on which banks are open for the transaction of
        domestic and foreign exchange business and otherwise for the transaction
        of business of the nature required by this Agreement or the other
        Transaction Documents, as appropriate, in London, Paris, Frankfurt,
        Luxembourg, Los Angeles, New York City and Bermuda and, when used in
        respect of an Aircraft of which a Sub-Borrower is or is to be the owner,
        the city in which such Sub-Borrower has its principal place of business;

        "BUYER FURNISHED EQUIPMENT" means, in respect of an Aircraft, the buyer
        furnished equipment relating to that Aircraft supplied by the Guarantor
        to the Seller prior to the Delivery Date or, as the case may be, during
        any post delivery modification period relating to the relevant Aircraft;

        "CANCELLATION NOTICE" shall have the meaning given to such term in
        Clause 9.3.1(g) (Third Trigger Event);

        "CHANGE IN LAW" means, in each case after the date of this Agreement,
        (i) the introduction, abolition, withdrawal or variation of any
        applicable law, regulation, practice or concession or official
        directive, ruling, request, notice, guideline, statement of policy or
        practice statement by the Bank of England, the Banque de France, the
        Deutsche Bundesbank, the Federal Reserve Bank of New York, the European
        Union, European Central Bank or any central bank, tax, fiscal,
        governmental, international, national or other competent authority or
        agency (whether or not having the force of law but in respect of which
        compliance by banks or other financial institutions in the relevant
        jurisdiction is generally considered to be mandatory), or (ii) any
        change in any interpretation, or the introduction or making of any new
        or further interpretation, or any new or different interpretation by any
        court, tribunal, governmental, revenue, international, national, fiscal
        or other competent authority, or (iii) the compliance by banks or other
        financial institutions with any new or different request or direction
        (in each case whether or not having the force of law but in respect of
        which compliance by banks or other financial institutions in the
        relevant jurisdiction is generally considered to be mandatory) from any
        central bank, fiscal, governmental, revenue, international, national,
        monetary or other authority; PROVIDED always that in respect of a
        Lender, any such implementation, introduction, abolition, withdrawal or
        variation, change in interpretation or new or different interpretation
        in relation to any applicable law or regulation and/or practice,
        concession, directive, ruling, request, notice, guideline, statement of
        policy or practice statement having effect in the jurisdiction in which
        the relevant Lender is organised, has its principal place of business or
        has its Lending Office shall not constitute a Change in Law if, prior to
        the date of this Agreement, such implementation, introduction,
        abolition, withdrawal or variation, change in interpretation or new or
        different interpretation had been announced or proposed generally to
        banks and other financial institutions in the jurisdiction in which the
        relevant Lender is organised or has its principal place of business or
        has its Lending Office by way of the publication of any Act of
        Parliament, statute or 



<PAGE>   10



        statutory instrument or the publication or delivery or issue of any
        notice, directive or guideline applicable to banks generally by the
        relevant central bank, a European Union institution or other applicable
        authority, government, department, committee or agency (which under the
        laws of the jurisdiction in which the relevant Lender has its Lending
        Office, is organised or has its principal place of business for the time
        being has control or supervision of banking regulations);

        "CHARGE OVER SHARES OF BORROWER" means the agreement so entitled having
        the same date as this Agreement and made between the Parent and the
        Security Trustee and relating to the shares of the Borrower;

        "CHARGE OVER SHARES OF INTERMEDIATE LESSEE" means any deed of charge
        entered into from time to time between the Borrower or any relevant
        Sub-Borrower (as the case may be) and the Security Trustee in relation
        to the shares of any Intermediate Lessee substantially in the form of
        Appendix L;

        "CHARGE OVER SHARES OF SUB-BORROWER" means any deed of charge entered
        into from time to time between the Borrower and the Security Trustee in
        relation to the shares of any Sub-Borrower substantially in the form of
        Appendix G;

        "CHARGES OVER SHARES" means together the Charge Over Shares of Borrower,
        each Charge Over Shares of Intermediate Lessee and each Charge Over
        Shares of Sub-Borrower;

        "COFACE" means the export credit agency of the French Republic,
        represented by Compagnie Francaise d'Assurance pour le Commerce
        Exterieur;

        "COMMITMENT" means, in relation to a Lender, at any time the amount
        described as such set out opposite the name of such Lender in Schedule 1
        or, as the case may be, the Schedule to the relevant Transfer
        Certificate, as the same may be cancelled or reduced pursuant to the
        terms of this Agreement (including the terms of Clauses 2.5.2 and 2.5.3
        (Reduction and Cancellation of the Facility)) and as further reduced or
        increased pursuant to any Transfer Certificate less the amount of such
        Lender's Relevant Proportion of any Advances made before such time;

        "COMPULSORY ACQUISITION" means, in respect of an Aircraft or an Engine,
        requisition of title or other compulsory acquisition of title (but
        excluding requisition for use or hire) of such Aircraft or Engine, as
        the case may be, by a Government Entity;

        "CONTRACTUAL RATE" means, in relation to a Loan, the single blended rate
        for the aggregate of Tranche A and Tranche B of such Loan as stated in
        clause 4 of the relevant Loan Supplement and, provided that the relevant
        Aircraft is delivered within the same calendar month as its Scheduled
        Delivery Month, such single blended rate shall be the relevant blended
        rate set out in Column 9 of Schedule 10;

        "DEFAULT INTEREST PERIOD" means, in relation to the determination of
        Default Rate LIBOR, each period (not exceeding six months) as the Agent
        selects in its absolute discretion, the first such period commencing on
        the date on which the overdue payment was due and each subsequent period
        commencing on the last day of the preceding period for so long as the
        relevant default continues;




<PAGE>   11



        "DEFAULT RATE" means

        (a)     in relation to any amount of principal or interest in respect of
                a Loan:

                (i)     in the case of the British Credits and the French
                        Credits, the rate of interest per annum equal to the
                        aggregate of one per cent. (1%) per annum and the higher
                        of (1) the relevant Contractual Rate and (2) Default
                        Rate LIBOR; or

                (ii)    in the case of the German Credits, the rate of interest
                        per annum equal to the aggregate of one per cent. (1%)
                        per annum and the higher of (1) the relevant Contractual
                        Rate and (2) as applicable, (y) Default Rate LIBOR or
                        (z) (if the German Credits or part thereof is at the
                        relevant time funded in any currency other than Dollars)
                        the funding cost incurred by the German Lenders; and

        (b)     in relation to any other amount arising under any Transaction
                Document, the aggregate of Default Rate LIBOR and one per cent.
                per annum;

        "DEFAULT RATE LIBOR" means:

        (a)     the rate per annum which is certified by the Agent to be the
                rate (rounded upwards to the nearest one sixteenth of one per
                cent. (1/16%)) for deposits in Dollars in an amount
                substantially equal to the sum in default for a period
                comparable to the Default Interest Period which appears on the
                Telerate/Dow Jones Market Service Page 3750 (or its successor or
                replacement page) at or about 11.00 a.m. London time on the
                first day of the relevant Default Interest Period; or

        (b)     if such rate does not appear on Telerate/Dow Jones Market
                Service Page 3750 (or its successor or replacement page) Default
                Rate LIBOR for the relevant Default Interest Period shall be the
                rate per annum, certified by the Agent as the arithmetic mean
                (rounded upwards to the nearest one sixteenth of one per cent.
                (1/16%)) of the respective rates per annum notified to the Agent
                at which the Reference Banks are offered Dollar deposits by
                prime banks in the London Interbank Euro Currency Market in an
                amount substantially equal to the sum in default and for a
                period having a duration equal to or as close as practicable to
                the Default Interest Period at or about 11.00 a.m. (London time)
                on the first day of the relevant Default Interest Period
                provided that (a) if one of the Reference Banks does not provide
                such rates, Default Rate LIBOR in relation to such Default
                Interest Period shall be determined on the basis of the rate
                notified by the Reference Bank providing such rate, and (b) if
                neither of the Reference Banks provides such a rate, then
                Default Rate LIBOR in relation to such Default Interest Period
                shall be the rate per annum certified by the Agent (acting upon
                the instructions from each Lender) as the arithmetic mean
                (rounded upwards to the nearest one sixteenth of one per cent.
                (1/16%)) of the cost to each of the Lenders of funding (in
                Dollars) an amount substantially equal to that Lender's Relevant
                Proportion of the sum in default for a period having a duration
                equal to or as close as practicable to such Default Interest
                Period at or about 11.00 a.m. (London time) on the first day of
                such Default Interest Period;




<PAGE>   12



        "DELIVERY DATE" means, in respect of an Aircraft, the date upon which
        that Aircraft is delivered to the Borrower, or, as the case may be, a
        Sub-Borrower by the Seller which date shall be the date of the delivery
        of the relevant Bill of Sale;

        "DOLLARS" and "US$" means the lawful currency for the time being of the
        United States of America;

        "ECGD" means Her Britannic Majesty's Secretary of State acting by the
        Export Credits Guarantee Department;

        "ECGD REFERENCE BANKS" means with respect to sub-paragraph (v) of the
        definition of Make-Whole Amount:

        (i)     in the case of a prepayment in accordance with Clauses 4.3
                (Voluntary Prepayment), 4.4 (Prepayment following a Total Loss),
                4.5 (Prepayment on Final Disposition), 4.6 (Prepayment on a
                Sub-Borrower Sale), Clause 4.8 (Prepayment if not leased), the
                three reference banks nominated under Clauses 4.3 (Voluntary
                Prepayment), 4.4 (Prepayment following a Total Loss), 4.5
                (Prepayment on Final Disposition), 4.6 (Prepayment on a
                Sub-Borrower Sale) and Clause 4.8 (Prepayment if not leased) (as
                the case may be); and

        (ii)    in the case of prepayments in accordance with Clause 4.10
                (Mandatory Prepayment Event) or of a declaration by the Agent of
                a Termination Event under Clause 10.2 (Acceleration Rights),
                those reference banks as the Lead Manager of the British Credits
                may select;

        "ELIGIBLE AIRCRAFT" means, as the context may require (a) any or all of
        the Airbus A319, A320, A321, A330 and A340 Aircraft purchased pursuant
        to any Purchase Agreement including the Aircraft referred to in Schedule
        4 Part I during the period from the date hereof to March 31, 2002 or (b)
        such other A319, A320, A321, A330 and A340 Airbus aircraft as may be
        agreed between the Borrower and the Agent (acting upon the instructions
        of the Majority Lenders) or such other Airbus aircraft as may be agreed
        between the Borrower and the Agent (acting upon the unanimous
        instructions of the Lenders and the Export Credit Agencies), subject
        always to Clause 2.7.4 (Amount);

        "ENGINE" or "ENGINES" means, in respect of an Aircraft, (a) each of the
        engines described in Schedule 1 to the relevant Mortgage, whether or not
        from time to time during the term of the relevant Loan installed on the
        Airframe or any other airframe (for so long as it remains property of
        the Borrower or Sub-Borrower) but which, having been removed from the
        Airframe, remains the property of the Borrower or, if applicable, the
        relevant Sub-Borrower (as the case may be), or (b) any other Replacement
        Engine substituted therefor which becomes the property of the Borrower
        or the relevant Sub-Borrower (as the case may be), including, if
        applicable, any other Engine which may from time to time be installed
        upon or attached to the Airframe and which becomes the property of the
        Borrower or, if applicable, the relevant Sub-Borrower, and (c) insofar
        as the same belong to the Borrower or, if applicable, the relevant
        Sub-Borrower, any and all Parts of whatever nature from time to time
        relating to an engine referred to in (a) and (b) above whether or not
        installed on or attached to such engine and (d) insofar as the same
        belong to the Borrower or the relevant Sub-Borrower (as the case may
        be), all substitutions, 




<PAGE>   13



        replacements or renewals from time to time made on or to any item
        referred to in (a), (b) and (c);

        "ENGINE AGREEMENT" means each of:

        (a)     The General Terms Agreement 6-3987 dated June 22, 1984 between
                CFM International S.A. and the Guarantor;

        (b)     The General Terms Agreement 6-5792 dated November 1, 1985
                between General Electric Company and the Guarantor;

        (c)     The General Terms Agreement dated December 9, 1992 between IAE
                International Aero Engines AG and the Guarantor;

        (d)     The PW4168 powered A330 Contract dated May 23, 1996 between
                United Technologies Corporation, Pratt & Whitney Group and the
                Guarantor; and

        (e)     The Terms of Business Agreement DEG2596 (MG 381) dated October
                3, 1997 between Rolls Royce plc and the Guarantor,

        including, in each case, any relevant amendment, modification, letter
        agreements and supplements thereto;

        "ENGINE MANUFACTURERS" means each of CFM International S.A., General
        Electric Company, IAE International Aero Engines AG, United Technologies
        Corporation, Pratt & Whitney Group and Rolls Royce plc, and their
        successors and assigns;

        "ENGINE WARRANTIES" means, in respect of the Engines relating to an
        Aircraft, the warranties, including the conditions and limitations
        applicable thereto, contained in:

        (i)     exhibit B to the Engine Agreement between CFM International S.A.
                and the Guarantor;

        (ii)    exhibit B to the Engine Agreement between General Electric
                Company and the Guarantor;

        (iii)   clause 4 of the Engine Agreement between IAE International Aero
                Engines AG and the Guarantor;

        (iv)    the engine sales warranty and service policy benefits set out in
                the Engine Agreement between United Technologies Corporation,
                Pratt & Whitney Group and the Guarantor or, as the case may be;

        (v)     the Rolls Royce Trent Warranty pursuant to the DEG2596 (MG 381)
                Agreement dated October 3, 1997 between the Guarantor and Rolls
                Royce plc;

        (vi)    together with, in each case, the patent indemnities set forth in
                the relevant Engine Agreement and any and all rights of the
                Guarantor under the relevant Engine Agreement to compel
                performance of the same and the right to claim damages in
                respect thereof but only insofar as such warranties, indemnities
                and rights arise in respect of the Engines relating to the
                relevant Aircraft;








<PAGE>   14

        "EXISTING AIRCRAFT" shall have the meaning given to such term in Clause
        4.7 (Substitution of Aircraft);

        "EXPENSES" means any reasonable out-of-pocket costs and expenses
        (including the agreed or, if not agreed, the reasonable legal fees and
        expenses of United Kingdom, Bermuda and California counsel, or other
        counsel in another jurisdiction of organisation of a Sub-Borrower or
        Intermediate Lessee, acting for the Representatives, the Lenders and the
        Export Credit Agencies as a group and, after a Third Trigger Event or
        Termination Event, any other counsel appointed by the Lenders, the
        Representatives and the Export Credit Agencies as a group and, after a
        Third Trigger Event or Termination Event, insurance fees and expenses
        (if any and to the extent approved by the Borrower, such approval not to
        be unreasonably withheld), and after an Acceleration Event remarketing
        fees and all other advisers' fees and expenses, but, in any event,
        excluding all Taxes) as well as any Value Added Tax thereon, which may
        be reasonably incurred by the Security Trustee, the Agent, the Lenders
        and the Export Credit Agencies as a group in connection with the
        execution and delivery of the Transaction Documents or in connection
        with the performance, enforcement, attempted enforcement or preservation
        of their respective rights and duties hereunder or thereunder PROVIDED
        always that the reference to such out-of-pocket costs and expenses being
        "reasonably" incurred and to legal fees and expenses being "reasonable"
        shall not apply when such out-of-pocket costs and expenses are incurred
        or sustained, after a Termination Event, in connection with the
        enforcement or preservation or attempted enforcement or preservation of
        rights;

        "EXPORT CREDIT AGENCIES" means each of COFACE, ECGD and HERMES;

        "FAA" mean the Federal Aviation Administration (or its successor) of the
        United States of America;

        "FACILITY" means the term loan facility made available by the Lenders to
        the Borrower pursuant to this Agreement;

        "FACILITY AMOUNT" shall have the meaning given to that term in Clause
        2.1 (Facility);

        "FACILITY DOCUMENTS" means each of:

        (i)     this Agreement, the Charge Over Shares of Borrower, the Borrower
                Debenture, Sub-Borrower/Intermediate Lessee Regular Jurisdiction
                Letter Agreement and the other documents, instruments and
                agreements relating thereto referred to in Clause 2.9.1(B)
                (Conditions Precedent) and the Borrower Constitutional Documents
                (but excluding the Lenders' Agreement); and

        (ii)    (a)     any other document, instrument or memorandum annexed to
                        any of the documents referred to in (i) above; and

                (b)     any notice or acknowledgement required pursuant to the
                        terms of any of the documents referred to in (i) above;
                        and

                (c)     any document, instrument or memorandum (x) which is
                        executed and delivered in connection with a
                        restructuring in accordance with the terms of this
                        Agreement of any or all of the arrangements 





<PAGE>   15



                        contemplated by any of the documents referred to in (i)
                        above or (y) which the Guarantor or any of the Borrower
                        or any Sub-Borrower agrees constitutes a Facility
                        Document or (z) which is entered into in substitution
                        for or which amends or augments or varies or novates all
                        or any part of any of the documents referred to in this
                        definition (including this part (ii)(c)(z)) in each case
                        in accordance with the terms of this Agreement;

        "FINAL DISPOSITION" means, in relation to an Aircraft:-

        (a)     the sale by the Borrower or the relevant Sub-Borrower (including
                in each case a sale by a Receiver after an Acceleration Event on
                behalf of the Borrower or the relevant Sub-Borrower, appointed
                under the Borrower Debenture or the relevant Sub-Borrower
                Debenture (as the case may be)) or by the Security Trustee as
                mortgagee against immediate payment in cash or for other
                consideration, whether through an agent on its behalf or
                otherwise, of all its right, title and interest in and to such
                Aircraft (including, without limitation, a sale to the relevant
                Lessee, the Guarantor and/or to any other person other than to
                the Borrower or a Sub-Borrower or a person who becomes the
                Borrower or a Sub-Borrower in accordance with this Agreement and
                whether pursuant to the terms of the relevant Lease or otherwise
                howsoever); or

        (b)     completion by delivery of such Aircraft to the purchaser or
                lessee, as the case may be, of a sale, lease or other
                disposition by or on behalf of the Borrower or the relevant
                Sub-Borrower, (including in each case a sale by a Receiver after
                an Acceleration Event on behalf of the Borrower or the relevant
                Sub-Borrower, appointed under the Borrower Debenture or the
                relevant Sub-Borrower Debenture (as the case may be)), or by the
                Security Trustee as mortgagee, pursuant to a conditional sale,
                hire purchase, full pay-out finance lease or other arrangement
                involving the retention by or on behalf of the Borrower or any
                Sub-Borrower or the Security Trustee as mortgagee of title to,
                or a security or similar interest in, such Aircraft;

        "FINAL DISPOSITION PROCEEDS" means, in relation to an Aircraft, the
        aggregate amount of:-

        (a)     all consideration (whether cash or otherwise) received and
                retained by or on behalf of the Borrower or the relevant
                Sub-Borrower or (after an Acceleration Event) the Security
                Trustee as mortgagee upon or as a result of the Final
                Disposition of such Aircraft;

        (b)     any cash received and retained as a result of the sale by the
                Borrower or the relevant Sub-Borrower or (after an Acceleration
                Event) the Security Trustee as mortgagee of its right, title and
                interest in and to any agreement for the Final Disposition of
                such Aircraft in a manner contemplated by paragraph (b) of the
                definition of Final Disposition or any non-cash consideration
                received by either of them as a result of the Final Disposition
                of such Aircraft (as the case may be);

        (c)     if a Final Disposition proceeds to completion, any
                non-refundable deposit (not otherwise included under clause (a)
                or (b) above) in relation to such Final Disposition paid to or
                for the account of the Borrower or the relevant Sub-




<PAGE>   16



                Borrower or (after an Acceleration Event) the Security Trustee
                as mortgagee by a person acquiring or proposing to acquire such
                Aircraft under a contract or offer to purchase or otherwise
                acquire it which has been withdrawn, terminated or cancelled or
                has lapsed; and

        (d)     if an Acceleration Event has occurred any non-refundable deposit
                paid to or for the account of the Borrower or the relevant
                Sub-Borrower or (after such Acceleration Event) the Security
                Trustee as mortgagee by a person acquiring or proposing to
                acquire such Aircraft under a contract or offer to purchase or
                otherwise acquire it which has been withdrawn, terminated or
                cancelled or has lapsed;

        "FINANCIAL INDEBTEDNESS" shall have the meaning given to such term in
        paragraph 1 of Schedule 5;

        "FIRST TRIGGER EVENT" means the long term debt obligations of the
        Guarantor being rated below A- if and as rated by Standard & Poor's
        Corporation or A3 if and as rated by Moody's Investor Service, Inc., or
        an equivalent by an alternative service of equivalent recognition (if
        neither Standard & Poor's Corporation nor Moody's Investor Service, Inc.
        has assigned any rating);

        "FRENCH CREDITS" shall, in respect of an Advance, have the meaning given
        to that term in the relevant Loan Supplement;

        "FURTHER UTILISATION" has the meaning given to it in Clause 2.10 (Master
        Opinions);

        "GENERAL TERMS AGREEMENT" means, in relation to any of the Aircraft, the
        General Terms Agreement dated November 10, 1988 between the Seller and
        the Guarantor;

        "GERMAN CREDITS" shall, in respect of an Advance, have the meaning given
        to that term in the relevant Loan Supplement;

        "GOVERNMENT ENTITY" means (i) any national, state or local government;
        or (ii) any board, commission, department, division, instrumentality,
        courts or agency or political sub-division thereof, howsoever
        constituted;

        "GUARANTEED OBLIGATIONS" means any and all monies, liabilities and
        obligations (whether actual or contingent, whether now existing or
        hereafter arising, whether or not for the payment of money, and
        including any obligation or liability to pay damages and including any
        interest which, but for the application of bankruptcy or insolvency
        laws, would have accrued on the amounts in question), which are now or
        which may at any time and from time to time hereafter be due, owing,
        payable or incurred or be expressed to be due, owing, payable or
        incurred from or by any or all of the Obligors to the Agent, the
        Security Trustee and/or any of the Lenders under or in connection with
        any of the Transaction Documents and references to "GUARANTEED
        OBLIGATIONS" includes references to any part thereof;

        "HERMES" means the export credit agency of Germany, represented by
        Hermes Kreditversicherungsaktiengesellschaft;

        "HOME COUNTRIES" means the United Kingdom, the French Republic and
        Germany and "HOME COUNTRY" shall mean anyone of them;




<PAGE>   17



        "HOME COUNTRY AIRCRAFT" means an Aircraft which is leased to a TO Lessee
        incorporated in a Home Country;

        "HVB-LUX" means Hypovereinsbank Luxembourg Societe Anonyme of 4 rue
        Alphonse Weicker, L-2099, Luxembourg;

        "INDEMNITEE" means each of the Agent, the Security Trustee and each
        Lender together with their respective officers and employees;

        "INSURANCES" means, in relation to an Aircraft, any and all contracts or
        policies of insurance and reinsurance complying with the provisions of
        Schedule 8 or an indemnity from a Government Entity as indemnitor, as
        appropriate, and required to be effected and maintained in accordance
        with this Agreement;

        "INTEREST PERIOD" means, in respect of a Loan, each period commencing
        from (and including) the Utilisation Date of the relevant Aircraft or as
        the case may be, a Repayment Date to (but excluding) the next subsequent
        Repayment Date;

        "INTERMEDIATE LEASE" means, in respect of an Aircraft, the lease to be
        entered into between the Borrower or a Sub-Borrower or another
        Intermediate Lessee (as the case may be) as lessor and an Intermediate
        Lessee as lessee;

        "INTERMEDIATE LEASE SECURITY ASSIGNMENT" means, in respect of an
        Aircraft, the security assignment relating to the Intermediate Lease in
        each case for that Aircraft to be entered into between the Borrower or,
        as the case may be, any Sub-Borrower or another Intermediate Lessee and
        the Security Trustee substantially in the form of Appendix N;

        "INTERMEDIATE LESSEE" means, in respect of the delivery of a specific
        Aircraft, such person (other than the Borrower or a Sub-Borrower) as the
        Guarantor or the Borrower may determine in accordance with the
        provisions of Clause 3.3.1 (Sub-Borrowers/Intermediate Lessees) shall
        enter into a Lease as lessor with the relevant Lessee or with another
        Intermediate Lessee;

        "INTERMEDIATE LESSEE ACCOUNTS" means, in respect of an Intermediate
        Lessee, collectively the Intermediate Lessee Maintenance Reserve
        Account, the Intermediate Lessee Rental Account and the Intermediate
        Lessee Security Deposit Account;

        "INTERMEDIATE LESSEE DEBENTURE" means, in respect of an Intermediate
        Lessee, a debenture to be granted by such Intermediate Lessee in favour
        of the Security Trustee, in the form of Appendix M;

        "INTERMEDIATE LESSEE MAINTENANCE RESERVE ACCOUNT" means, in respect of
        an Intermediate Lessee the Dollar account with Wells Fargo Bank or Bank
        of America in California, Bank of Ireland in Ireland or such other
        financial institution as may be approved by the Security Trustee (such
        approval not to be unreasonably withheld) in the jurisdiction of
        organisation of the Intermediate Lessee outside the United Kingdom;

        "INTERMEDIATE LESSEE RENTAL ACCOUNT" means, in respect of an
        Intermediate Lessee such Dollar account with Wells Fargo Bank or Bank of
        America in California, Bank of Ireland in Ireland or such other
        financial institution as may be approved by the Security Trustee 




<PAGE>   18



        (such approval not to be unreasonably withheld) in the jurisdiction of
        organisation of the Intermediate Lessee outside the United Kingdom;

        "INTERMEDIATE LESSEE SECURITY DEPOSIT ACCOUNT" means, in respect of an
        Intermediate Lessee, such Dollar account with Wells Fargo Bank or Bank
        of America in California, Bank of Ireland in Ireland or such other
        financial institution as may be approved by the Security Trustee (such
        approval not to be unreasonably withheld) in the jurisdiction of
        organisation of the Intermediate Lessee outside the United Kingdom;

        "IRREGULAR JURISDICTION" means any jurisdiction other than a Regular
        Jurisdiction;

        "LEAD MANAGERS" means each of Halifax plc (in its capacity as lead
        manager for the British Lenders), Societe Generale (in its capacity as
        lead manager for the French Lenders) and Commerzbank AG (in its capacity
        as lead manager for the German Lenders) and "LEAD MANAGER" shall mean
        any one of them;

        "LEASE" means, in respect of an Aircraft, any lease agreement relating
        to that Aircraft to be entered into (including by novation or
        assignment) between the Borrower, a Sub-Borrower or an Intermediate
        Lessee (as the case may be) as lessor and the relevant Lessee as lessee;

        "LEASE SECURITY ASSIGNMENT" means, in respect of an Aircraft, the
        security assignment relating to the Lease in each case for that Aircraft
        to be entered into between the Borrower or, as the case may be, any
        Sub-Borrower or, as the case may be, any Intermediate Lessee and the
        Security Trustee substantially in the form of Schedule 2 to the relevant
        Mortgage;

        "LENDERS' AGREEMENT" means the agreement so entitled of even date
        herewith and made between the Agent, the Security Trustee and each of
        the Lenders;

        "LENDING OFFICE" means, in relation to a Lender, its branch or office at
        the address specified against its name in Schedule 1 or specified in the
        Transfer Certificate whereby such Lender becomes a party hereto or such
        other branch or office determined in accordance with the provisions of
        this Agreement;

        "LESSEE" means, in respect of an Aircraft, the Borrower's, the relevant
        Sub-Borrower's or the relevant Intermediate Lessee's customer who is the
        lessee of that Aircraft;

        "LIBOR" means, in respect of an Interest Period or other relevant
        period:

        (a)     the rate per annum which is conclusively (save for manifest
                error) certified by the Agent to be the rate (rounded upwards to
                the nearest one sixteenth of one per cent. (1/16%)) for deposits
                of Dollars in an amount substantially equal to the relevant
                Advance or other relevant amount for a period equal to, or as
                close as practicable to, the relevant Interest Period or other
                relevant period which appears on the Telerate/Dow Jones Market
                Service Page 3750 (or its successor or replacement page) at or
                about 11.00 a.m. (London time) two (2) London Banking Days prior
                to the commencement of the relevant Interest Period or other
                relevant period; or

        (b)     if such rate does not appear on the Telerate/Dow Jones Market
                Service Page 3750 (or its successor or replacement page), LIBOR
                for the relevant Interest 



<PAGE>   19



                Period or other relevant period shall be the rate per annum,
                conclusively (save for manifest error) certified by the Agent as
                the arithmetic mean (rounded upwards if necessary to the nearest
                one sixteenth of one per cent. (1/16%)), of the respective rates
                per annum notified to the Agent at which the Reference Banks are
                offered Dollar deposits by prime banks in the London Interbank
                Euro Currency Market in an amount substantially equal to the
                relevant Advance or other relevant amount and for a period
                having a duration equal to or as close as practicable to such
                Interest Period or such other relevant period, as the case may
                be, at or about 11.00 a.m. (London time) two (2) London Banking
                Days prior to the commencement of such Interest Period or other
                relevant period provided that if any Reference Bank fails to
                provide a rate, LIBOR in relation to such Interest Period or
                such other relevant period shall be determined on the basis of
                the rate notified by each Reference Bank which does provide such
                a rate and (ii) if no Reference Bank provides a rate, then LIBOR
                in relation to such Interest Period or other relevant period
                shall be the rate per annum certified by the Agent (acting on
                instructions from each Lender) to be the arithmetic mean
                (rounded upwards to the nearest one sixteenth of one percent.)
                of the cost to each Lender of funding (in Dollars) an amount
                substantially equal to that Lender's Relevant Proportion of the
                Advance or other relevant amount for a period having a duration
                equal to or as close as practicable to such Interest Period or
                other relevant period at or about 11.00 a.m. (London time) on
                the first day of such Interest Period or other relevant period;

        "LIEN" means, in relation to an Aircraft, any encumbrance or security
        interest whatsoever, howsoever created or arising including any right of
        ownership, security, mortgage, pledge, charge, lease, lien, statutory
        right in rem, hypothecation, title retention arrangement, attachment,
        levy, claim, right of detention or security interest whatsoever,
        howsoever created or arising or any right or arrangement having a
        similar effect to any of the above;

        "LOAN" means, in respect of an Advance, together the British Credits,
        the French Credits and the German Credits or (as the context may
        require) the aggregate principal amount of the British Credits, the
        French Credits and the German Credits owing to the Lenders in respect of
        the relevant Advance from time to time;

        "LOAN SUPPLEMENT" means, in respect of an Aircraft, the loan supplement
        relating to that Aircraft to be entered into between the Borrower and
        the Agent (for itself and as agent for the Security Trustee and the
        Lenders) substantially in the form set out in Appendix A;

        "LONDON BANKING DAY" means a day (other than a Saturday, Sunday or
        holiday scheduled by law) on which banks are open for general interbank
        business in London (including dealing in Dollar deposits);

        "LOSSES" means any losses, demands, liabilities, claims, actions,
        proceedings, penalties, fines, damages, adverse judgments, orders or
        other sanctions (in each case exclusive of loss of profit or income);

        "MAINTENANCE RESERVES" means, in respect of an Aircraft, the maintenance
        reserves, if any, payable from time to time by the Lessee to the
        Borrower, Sub-Borrower or the Intermediate Lessee (as the case may be)
        then held by the Borrower, the Intermediate Lessee or the Sub-Borrower
        (as the case may be) and unutilised;




<PAGE>   20




        "MAINTENANCE RESERVE ACCOUNTS" means each of the Borrower Maintenance
        Reserve Account, each Sub-Borrower Maintenance Reserve Account and each
        Intermediate Lessee Maintenance Reserve Account and "MAINTENANCE RESERVE
        ACCOUNT" means any of them;

        "MAJORITY LENDERS" means (i) in relation to any decision, discretion,
        action or inaction under any of the Transaction Documents in respect of
        which any Lead Manager either must follow the instructions of the
        relevant Export Credit Agency under the relevant Support Agreement or,
        in its good faith opinion, believes the consent of the relevant Export
        Credit Agency to be necessary, the relevant Lead Manager(s) and (ii) in
        relation to any other decision, discretion, action or inaction under any
        of the Transaction Documents that is provided to be made by the Majority
        Lenders, the simple majority of group votes (that is to say, two to
        one), of the British Lenders, the French Lenders and the German Lenders
        (each such group of Lenders having one vote), it being understood that
        the vote of any one such group of Lenders shall be determined by a
        simple majority (fifty-one per cent. (51%)) vote of the Lenders in that
        group based upon the proportion (expressed as a percentage) which the
        participation of each Lender in such group in the British Credits, the
        French Credits or, as the case may be, the German Credits which have
        been committed or, as the case may be, drawn down at the date such
        calculation is required to be made bears to the aggregate of the
        commitments or, as the case may be, participations of all of the Lenders
        in such group with respect to or, as the case may be, in the British
        Credits, the French Credits or, as the case may be, the German Credits
        on such date;

        "MAKE-WHOLE AMOUNT" means the aggregate of all sums payable by the
        Borrower to the Lenders, the Agent and the Security Trustee in respect
        of the applicable Loan under this Agreement and each of the other
        Aircraft Operative Documents (other than payments of principal and
        interest due hereunder and Expenses) including, with respect to the
        applicable Loan:

        (i)     all amounts payable by the Borrower pursuant to the indemnities
                contained in Clauses 4.12 (Deductions and Withholdings), 13
                (Indemnities), 14 (Change in Circumstances), 15 (Mitigation and
                Contest Rights), (provided that any provision of this Agreement
                which requires payment of the Make-Whole Amount shall not
                require double payment of any amount described in this paragraph
                (i) to the extent that such amount is also payable under any of
                the aforementioned Clauses);

        (ii)    an amount equal to such amount as the Lead Manager of the
                British Credits shall certify as being equal to the aggregate
                instalments of the guarantee fee (in an amount equal to one half
                of one per cent. (0.5%) per annum of the British Credits
                outstanding throughout the immediately preceding Interest
                Period) which would, but for a prepayment required in accordance
                with this Agreement or the declaration by the Agent of a
                Termination Event under Clause 10.2 (Acceleration Rights), as
                the case may be, have fallen due after the date of such
                prepayment or declaration discounted at the rate of interest
                equal to LIBOR for the period of six months as at the date of
                prepayment or declaration, as the case may be (it being
                understood that the repayment of the British Credits to the
                British Lenders is being guaranteed by ECGD and that the British
                Lenders finance the fee payable to ECGD in respect of such
                guarantee from the payments of interest due under Clause 4
                (Repayment and Prepayment) and that the rate of interest
                pursuant to Clause 4 (Repayment and Prepayment) has been




<PAGE>   21




                calculated on the basis of, inter alia, the obligations of the
                British Lenders to make such payments);

        (iii)   an amount equal to the aggregate of:


                (a)     on account of the "LASU" rate support mechanism in
                        relation to the French Credits, an amount equal to the
                        French Lenders' indemnity payment due to the financial
                        institution (nominated by the French governmental
                        authorities to be involved in the "LASU" rate support
                        programme) in relation to the cost of breaking or
                        liquidating any funding or hedging arrangements put in
                        place by that financial institution at any time as a
                        result of the French Lenders' undertaking to it pursuant
                        to the LASU rate support programme, such indemnity being
                        determined by such financial institution on the
                        following basis:-

                        (i)     the outstanding principal of each Loan is
                                sub-divided into tranches of principal having
                                separate maturity dates corresponding to the
                                then remaining Repayment Dates for each tranche;

                        (ii)    the financial institution nominated by the
                                French governmental authorities determines the
                                applicable market placement rate for Dollars in
                                relation to the relevant maturity date for each
                                tranche of principal and the difference (if
                                positive) between the "LASU" rate and that rate
                                accorded to that tranche shall be applied to
                                each relevant tranche for the period between the
                                date of prepayment in accordance with Clause 4
                                (Prepayment and Repayment) or the declaration by
                                the Agent of a Termination Event under Clause
                                10.2 (Acceleration Rights) and the maturity date
                                corresponding to the relevant tranche;

                        (iii)   each amount which results from the calculation
                                made pursuant to sub-paragraph (ii) will be net
                                present valued utilising the applicable market
                                placement rate for Dollars and the aggregate of
                                each amount as net present valued will represent
                                the costs of breaking or liquidating the funding
                                or hedging arrangements referred to in this
                                sub-paragraph (iii); and

                (b)     the unamortised amount of the French Lenders'
                        Reimbursement Exposure to the Up-front Premium and for
                        this purpose "FRENCH LENDER'S REIMBURSEMENT EXPOSURE"
                        means, in relation to the Up-front Premium, the relevant
                        amount set out against each Repayment Date (amortising
                        the Up-front Premium to zero over the ten-year period
                        for repayment of the French Credits) contained in the
                        Schedule described as the "Amortisation of the COFACE
                        Up-front Premium" to be provided by the Agent as soon as
                        practicable after 




<PAGE>   22



                        the date hereof and "UP-FRONT PREMIUM" means, in
                        relation to that portion of the French Credits which is
                        supported by COFACE, an amount equal to the premium
                        stipulated by COFACE two (2) Business Days prior to the
                        Utilisation Date or as soon as practicable thereafter
                        and which is paid to COFACE on, or as soon as
                        practicable, after the Utilisation Date;

                (it being understood that the whole of the credit insurance
                premium owing to COFACE is payable up-front and is to be funded
                during the term of the French Credits at the interest rate for
                the French Credits and that, in the event that the French
                Credits or any part thereof is prepaid in accordance with Clause
                4 (Repayment and Prepayment) or in respect thereof a Termination
                Event is declared under Clause 10.2 (Acceleration Rights), such
                up-front credit insurance premium is not refundable pro rata
                temporis by COFACE),

        (iv)    an amount, described as the credit insurance premium of HERMES,
                equal to the present value of one half of one per cent. (0.5%)
                per annum in relation to the principal then outstanding for the
                German Credits with respect to a period equal to the average
                remaining life of those Repayment Instalments which would have
                fallen due under Clause 3.6.4 (Repayment Schedules) but for a
                prepayment in accordance with Clause 4 (Repayment and
                Prepayment) or the declaration by the Agent of a Termination
                Event under Clause 10.2 (Acceleration Rights), such present
                value being determined by discounting at a rate directed to the
                German Lenders by the Ministry of Economics of the Federal
                Republic of Germany for the period corresponding to the average
                remaining life of the interest owing under the German Credits,

                (it being understood that the repayment of the German Credits to
                the German Lenders is being insured by HERMES and that the
                German Lenders finance the credit insurance premium payable to
                HERMES in respect of such credit insurance from the payments of
                interest due under Clause 4 (Repayment and Prepayment) and that
                the rate of interest pursuant to Clause 4 (Repayment and
                Prepayment) has been calculated on the basis of, inter alia, the
                obligations of the German Lenders to make such payments);

        (v)     an amount, representing the loss to ECGD of losing the benefit
                of receiving the fixed rate interest payment stream in relation
                to the British Credits under the interest make-up arrangement
                between the Agent, the Lenders and ECGD, calculated as being
                equal to:

                (a)     the premium quoted to ECGD by the relevant ECGD
                        Reference Bank (after disregarding the highest and
                        lowest quotations from the ECGD Reference Banks); or

                (b)     if only two of the ECGD Reference Banks provide
                        quotations, the average of the premia quoted to ECGD; or

                (c)     if only one of the ECGD Reference Banks provides a
                        quotation, the premium quoted to ECGD by that ECGD
                        Reference Bank,




<PAGE>   23



                        on or about the date of a prepayment in accordance with
                        Clause 4 (Repayment or Prepayment) or the declaration by
                        the Agent of a Termination Event, as the case may be,
                        that the relevant ECGD Reference Bank(s) would require
                        on entering into an arrangement with ECGD under which
                        ECGD would:

                        (y)     receive a stream of fixed rate interest payments
                                less an amount equal to one half of one percent
                                (0.5%) per annum, but otherwise identical in
                                timing and amount to that which, but for such
                                prepayment, purchase or declaration would have
                                been payable by the Borrower under Clause 4
                                (Repayment and Prepayment) and calculated as if
                                all amounts payable in relation to the British
                                Credits in accordance with Clause 4 (Repayment
                                and Prepayment) (whether on, before or after the
                                date of the relevant prepayment, purchase or
                                declaration, as the case may be) had been, or
                                (as the case may be) would be, paid in full when
                                due; and

                        (z)     pay a corresponding stream of floating rate
                                interest payments calculated on the basis of a
                                rate of interest equal to six month LIBOR for
                                US$ deposits of the appropriate amount and
                                maturity plus such margin as shall be agreed
                                from time to time between the British Lenders
                                and ECGD,

                        PROVIDED that, if none of the ECGD Reference Banks have
                        quoted a premium that it requires from ECGD for entering
                        into the above arrangement such amount shall be zero;

                (vi)    an amount equal to the aggregate of any breakage loss or
                        swap breakage costs incurred by each German Lender
                        calculated as the difference between its cost of funding
                        its respective portion of the German Credits and the
                        proceeds of redeploying an amount equal to its portion
                        of the outstanding principal of the German Credits, it
                        being understood that the Ministry of Economics of the
                        Federal Republic of Germany have the right, on the
                        Utilisation Date and/or on any Repayment Date, to direct
                        each German Lender to fund all or part of its portion of
                        the German Credits either on a floating (six month
                        LIBOR) or a fixed rate basis throughout the tenor of the
                        German Credits or for a shorter period,

        it being understood that:

        (x)     the methods by which the amounts referred to in sub-paragraphs
                (ii) to (vi) inclusive are calculated shall, subject to any
                Change in Law, be the method by which any of the Export Credit
                Agencies (or any governmental ministries or financial
                institution involved in the "LASU" rate support programme) will
                calculate such amounts at the relevant time; and

        (y)     all amounts referred to in sub-paragraphs (ii) to (vi) inclusive
                shall be determined at the relevant time by, as the case may be,
                the Agent, each of the Lenders or the relevant Export Credit
                Agency and each of them shall have certified to the Agent such
                amounts as are necessary to compensate it and provide reasonable
                details of the actual computation of the relevant 




<PAGE>   24



                compensation amount, which certification and details shall be
                given to the Agent who shall in turn make available the same to
                the Borrower;

        "MANUFACTURER" means Airbus Industrie G.I.E. currently of 1 Rond Point
        Maurice Bellonte, Blagnac 31707, France together with its successors and
        assigns;

        "MASTER OPINIONS" means the legal opinions required to be given with
        respect to the applicable Obligors pursuant to sub-paragraphs (a), (b),
        (c), (d) of paragraph 3 of Part I to Schedule 6 on or before the first
        Utilisation under this Agreement, and the legal opinions required to be
        given pursuant to paragraph 4 of Part I to Schedule 6 with respect to a
        relevant Sub-Borrower or Intermediate Lessee concerning its Accession
        Deed and the Aircraft Security Documents to which it is a party at the
        time it accedes to this Agreement, and any replacement opinion given
        hereunder in respect thereof;

        "MATERIAL ADVERSE EFFECT" means a material adverse effect on the
        validity of any of the obligations of any Obligor under this Agreement
        and the other Transaction Documents to which it is a party;

        "MORTGAGE" means, in respect of an Aircraft, the first priority mortgage
        and the deed of assignment of the Warranties in each case relating to
        that Aircraft to be entered into between the Borrower or, as the case
        may be, a Sub-Borrower and the Security Trustee substantially in the
        form of Appendix C;

        "NOTICE OF CHARGE" means, in respect of an Aircraft, a notice of charge
        from the Security Trustee, the Intermediate Lessee (if any) and the
        Borrower or Sub-Borrower (as the case may be) to the Lessee and the
        Sub-Lessee (if any) in the form of Appendix P;

        "OBLIGORS" means any or all of the Parent, the Borrower, each
        Sub-Borrower, each Intermediate Lessee and, where the context so
        permits, the Guarantor, and "OBLIGOR" means any one of them;

        "PART" means, in relation to an Aircraft, each module, appliance, part,
        accessory, instrument, furnishing and other item of equipment of
        whatsoever nature (including the Buyer Furnished Equipment), other than
        a complete Engine or engine, which at any time of determination is
        incorporated or installed in or attached to the relevant Airframe or any
        relevant Engine, in each case title to which is vested in the Borrower
        or the relevant Sub-Borrower (as the case may be) or, having been
        removed therefrom, title to which remains vested in the Borrower or the
        relevant Sub-Borrower (as the case may be);

        "PARTIAL PURCHASE AGREEMENT ASSIGNMENT" means, in relation to an
        Aircraft, the partial purchase agreement assignment to be entered into
        (subject to the consent of the Seller) between the Guarantor and the
        Borrower or, as the case may be, the relevant Sub-Borrower substantially
        in the form set out in Appendix B in respect of the right to take title
        to that Aircraft under the relevant Purchase Agreement, and including
        with respect to the warranties the Lessee as a party or subject to its
        rights;

        "PERMITTED LIENS" means, in relation to an Aircraft:

        (a)     any Lien affecting that Aircraft for Taxes or other governmental
                or statutory charges or levies not yet assessed or, if assessed,
                not yet due and payable or, if due and payable, which the
                Borrower, the relevant Sub-Borrower, the relevant 




<PAGE>   25



                Intermediate Lessee or the relevant Lessee or the relevant
                Sub-Lessee is disputing or contesting in good faith by
                appropriate proceedings (and when required in order to pursue
                such proceedings, an adequate bond has been provided) so long as
                such proceedings, or the continued existence of such Lien, do
                not at that time involve any likelihood of the sale, forfeiture
                or loss of the Aircraft or any relevant Engine or Part; or

        (b)     any Lien affecting the Aircraft for the fees or charges of any
                airport or air navigation authority arising in the ordinary
                course of business by statute or by operation of law, in each
                case for amounts the payment of which either is not yet due and
                payable or, if due and payable, is being disputed or contested
                in good faith by appropriate proceedings (and when required in
                order to pursue such proceedings, an adequate bond has been
                provided) so long as such proceedings, or the continued
                existence of such Lien, do not at that time involve any
                likelihood of the sale, forfeiture or loss of the Airframe or,
                any relevant Engine or Part; or

        (c)     any Lien affecting that Aircraft for the fees or charges of any
                supplier, mechanic, workman, repairer, employee or like lien
                arising in the ordinary course of business by contract or by
                statute or by operation of law, in each case for amounts (i) the
                payment of which is not yet due and payable, or (ii) which are
                not overdue for payment having regard to the custom of the
                relevant trade, in circumstances where no enforcement action
                against the Aircraft has yet been taken by the relevant
                lienholder or (iii) if due and payable is being disputed or
                contested in good faith with the relevant lienholder by
                appropriate proceedings (and when required in order to pursue
                such proceedings, an adequate bond has been provided) so long as
                such proceedings, or the continued existence of such Lien, do
                not at that time involve any likelihood of the sale, forfeiture
                or loss of the Airframe or, any relevant Engine or Part; or

        (d)     any Lien affecting that Aircraft (other than a Lien for Taxes)
                arising out of judgments or awards against the Borrower or the
                relevant Sub-Borrower or the relevant Intermediate Lessee or the
                relevant Lessee or the relevant Sub-Lessee with respect to which
                at the time the period for an appeal has not expired or an
                appeal is being presented in good faith and with respect to
                which within forty (40) days thereafter there shall have been
                secured a stay of execution pending such appeal (and when
                required in order to pursue such proceedings, an adequate bond
                has been provided) so long as such judgment or award, or the
                continued existence of such Lien, does not at that time involve
                any likelihood of the sale, forfeiture or loss of the Airframe,
                any relevant Engine or Part; or

        (e)     any Lien created pursuant to any of the Transaction Documents
                for the relevant Aircraft; or

        (f)     a debt, liability or other obligation (whether financial or
                otherwise) imposed on the Borrower, the relevant Sub-Borrower or
                the relevant Intermediate Lessee (as the case may be) or any
                person claiming through or under the Borrower as purchaser of
                that Aircraft, pursuant to the relevant Partial Purchase
                Agreement Assignment; or





<PAGE>   26



        (g)     Liens permitted, or (so long as no Third Trigger Event has
                occurred and is continuing) which are the responsibility of the
                Lessee, under the relevant Lease including any assignment of the
                relevant Warranties and Engine Warranties thereunder and the
                rights of any Sub-Lessee or charterer of the Aircraft (including
                of any Engine or Part) or any other person under an agreement or
                arrangements permitted by the provisions of the relevant Lease;
                or

        (h)     the rights of insurers; or

        (i)     the interests of a voting or owner trustee, as applicable, in
                connection with the relevant Sub-Borrower or the relevant
                Intermediate Lessee in the United States; or

        (j)     any Lien bonded against by the Borrower, any Sub-Borrower, any
                Intermediate Lessee (unless, in each case, a Third Trigger Event
                has first occurred and is continuing), any Lessee or any
                Sub-Lessee, or other similar third party security (which does
                not itself result in a Lien on the Aircraft or any part thereof)
                is provided with respect to such Lien by any such person
                provided that, after the occurrence and continuation of a Third
                Trigger Event, any such bonding or other similar third party
                security as against any Lessee or any Sub-Lessee is first
                approved by the Security Trustee, acting reasonably; or

        (k)     any other Lien created with the prior written consent of the
                Security Trustee;

        "POST-DELIVERY MODIFICATION PERIOD" means the period of one hundred and
        eighty (180) days following the Delivery Date of an Aircraft;

        "PROCEEDS" means, in relation to an Aircraft:-

        (a)     any and all amounts received or recovered under this Agreement;

        (b)     any Final Disposition Proceeds and any Sub-Borrower Sale
                Proceeds;

        (c)     any and all other proceeds of enforcement of the Aircraft
                Security Documents relating to such Aircraft;

        (d)     any Total Loss Proceeds;

        (e)     any Requisition Proceeds; and

        (f)     any and all other amounts (other than in respect of fees)
                received by the Agent, the Security Trustee or any Lender from
                any of the Obligors (whether directly or through the Borrower)
                pursuant to the provisions of the Transaction Documents;

        "PROCEEDS ACCOUNT" means, in relation to each Aircraft, the Dollar
        account of the Security Trustee with Halifax plc designated by the
        Security Trustee to which any Proceeds will be credited or such other
        account as the Security Trustee may designate from time to time by
        notice to the other parties hereto;




<PAGE>   27


        "PROHIBITED COUNTRY" means, in relation to an Aircraft, any state,
        country or jurisdiction which is subject from time to time to any United
        Nations Sanctions Order, US Export Controls (after obtaining applicable
        consents), the United Kingdom Export of Goods (Control) Order 1992 or
        any statutory modification or re-enactment thereof or any similar or
        corresponding legislation then in effect in France, Spain or Germany,
        the effect of which after obtaining applicable consents or licences
        prohibits the Guarantor or its applicable Subsidiary from exporting to
        and/or consigning for use A319/A320/A321/A330/A340 aircraft (as the case
        may be) in such country;

        "PURCHASE AGREEMENT" means, in relation to an Aircraft each of:

        (a)     the A320 aircraft purchase agreement between the Seller and the
                Guarantor dated November 10, 1988;

        (b)     the A319 aircraft purchase agreement between the Seller and the
                Guarantor dated December 10, 1992;

        (c)     the A321 aircraft purchase agreement between the Seller and the
                Guarantor dated February 14, 1990;

        (d)     the A319/A320/A321 aircraft purchase agreement between the
                Seller and the Guarantor dated August 29, 1997;

        (e)     the A330-200 aircraft purchase agreements between the Seller and
                the Guarantor dated November 10, 1988 and August 29, 1997;

        (f)     the A340-300 aircraft purchase agreement between the Seller and
                the Guarantor dated November 10, 1988;

        pursuant to which the Seller agreed to sell and the Guarantor agreed to
        purchase, inter alia, the Aircraft together with the exhibits thereto
        and all applicable change orders, letter agreements and other amendments
        or supplements thereto;

        "QUARTER DATE" means each March 31, June 30, September 30 and December
        31 in each year;

        "RECEIVER" means any receiver or receiver and manager appointed after an
        Acceleration Event by the Agent, the Security Trustee or the Majority
        Lenders pursuant to any Aircraft Security Document;

        "REFERENCE BANKS" means Halifax plc, Societe Generale, Citibank N.A. and
        Commerzbank AG;

        "REGULAR JURISDICTION" means Bermuda, the United States of America, the
        Cayman Islands and Ireland or any other jurisdiction in which a
        Sub-Borrower or an Intermediate Lessee has already been established and
        such entity has acceded to this Agreement prior to the date of the
        relevant Utilisation Notice;

        "RELEVANT EVENT" means any event which with any one or more of the lapse
        of time, the giving of notice, or the making of a determination, would
        become a Termination Event 




<PAGE>   28



        were a notice to be given by the Agent to the Borrower pursuant to
        Clause 10.2 (Acceleration Rights);

        "RELEVANT PROPORTION" means, with respect to any Lender and a Loan, at
        any time, the proportion which such Lender's share of the British
        Credits, the French Credits or the German Credits (as the case may be)
        bears to the total amount of the Loan at such time;

        "RENTALS" means, in respect of an Aircraft, the rentals payable by the
        Lessee to the Borrower, the Sub-Borrower or the Intermediate Lessee (as
        the case may be) pursuant to the relevant Lease;

        "RENTAL ACCOUNTS" means each of the Borrower Rental Account, each
        Sub-Borrower Rental Account and each Intermediate Lessee Rental Account
        and "RENTAL ACCOUNT" means any of them;

        "REPAYMENT DATE" means, in relation to a Loan, each repayment date as
        set forth in Column 1 of Schedule 2 to the relevant Loan Supplement
        PROVIDED always that if any Repayment Date would otherwise fall on a day
        which is not a Banking Day, such Repayment Date shall be deemed to fall
        on the immediately succeeding Banking Day unless such Repayment Date
        falls in the calendar month next succeeding that in which it would
        otherwise have fallen, in which case it shall fall on the immediately
        preceding Banking Day;

        "REPAYMENT INSTALLMENT" means, in relation to a Loan, with respect to
        each Repayment Date, the principal amount due and payable on such
        Repayment Date, as determined in accordance with Clause 4.2 (Repayment
        of Principal) together with interest thereon payable pursuant to Clause
        4.1 (Payment of Interest) all as set out in schedule 2 to the relevant
        Loan Supplement;

        "REPLACEMENT AIRCRAFT" has the meaning set forth in Clause 4.7
        (Substitution of Aircraft);

        "REPLACEMENT BILL OF SALE" means a bill of sale substantially in the
        form set out in Appendix O as contemplated by Clause 4.7.5 (Substitution
        of Aircraft);

        "REPLACEMENT ENGINE" means an engine of an Engine Manufacturer, of the
        same or an improved model and suitable for use on the Airframe and
        having a utility at least equal to the Engine in respect of which a
        Total Loss or transfer of title has occurred;

        "REPRESENTATIVES" means the Agent and the Security Trustee;

        "REQUIRED INSURED VALUE" means, in relation to an Aircraft, at any time
        of determination 110% of the principal amount outstanding in respect of
        the relevant Loan at such time;

        "REQUISITION PROCEEDS" means, in relation to an Aircraft, any monies
        and/or other compensation received directly by the Borrower, the
        relevant Sub-Borrower or the relevant Intermediate Lessee (if any)
        and/or the Security Trustee in its capacity as mortgagee in respect of
        the Compulsory Acquisition of such Aircraft;

        "RR ENGINE WARRANTY AGREEMENT" means, in the case of an Aircraft powered
        by Engines manufactured by Rolls-Royce plc, the engine warranty
        agreement relating to such 



<PAGE>   29



        Aircraft and Engines to be entered into by Rolls-Royce plc as Engine
        Manufacturer, the Guarantor, the relevant Lessee, the Security Trustee
        and the Borrower or, as appropriate, relevant Sub-Borrower substantially
        in the form of Appendix D Part III;

        "SCHEDULED DELIVERY DATE" means, in respect of an Aircraft, the date
        nominated in the relevant Utilisation Notice for the delivery of that
        Aircraft from the Seller to the Borrower or the Sub-Borrower (as the
        case may be);

        "SCHEDULED DELIVERY MONTH" means, in respect of any Aircraft, the month
        in which that Aircraft is scheduled to be delivered as set out in
        Schedule 4 Part I as the same may be varied by any notice delivered by
        the Borrower to the Agent under Clause 2.5.1 (Reduction and Cancellation
        of the Facility);

        "SECOND TRIGGER EVENT" means the long term debt obligations of the
        Guarantor being rated below BBB+ if and as rated by Standard & Poor's
        Corporation or BAA1 if and as rated by Moody's Investor Service Inc., or
        an equivalent by an alternative service of equivalent recognition (if
        neither Standard & Poor's Corporation nor Moody's Investor Service, Inc.
        has assigned any rating) or the placing of the Guarantor on
        "creditwatch" to fall below BBB+ (if and as rated by Standard and Poor's
        Corporation) or BAA1 (if and as rated by Moody's Investor Service Inc.);

        "SECURED OBLIGATIONS" means together any and all monies, liabilities and
        obligations (whether actual or contingent, whether now existing or
        hereafter arising, whether or not for the payment of money, and
        including any obligation or liability to pay damages and including any
        interest which, but for the application of bankruptcy or insolvency
        laws, would have accrued on the amounts in question) which are now or
        which may at any time and from time to time hereafter be due, owing,
        payable or incurred or expressed to be due, owing, payable or incurred
        from or by the Borrower or any of the other Obligors to any one or more
        of the Lenders, the Agent and/or the Security Trustee under any of the
        Transaction Documents;

        "SECURITY DEPOSIT" means, in respect of an Aircraft, any security
        deposit payable by the Lessee to the relevant Borrower, Sub-Borrower or
        Intermediate Lessee (as the case may be) then held by the Borrower, the
        Intermediate Lessee or the Sub-Borrower (as the case may be) and
        unutilised;

        "SECURITY DEPOSIT ACCOUNTS" means each of the Borrower Security Deposit
        Account, each Sub-Borrower Deposit Account and each Intermediate Lessee
        Deposit Account and "SECURITY DEPOSIT ACCOUNT" shall mean any of them;

        "SECURITY PERIOD" means the period commencing on the date hereof and
        ending on the date upon which the Secured Obligations (exclusive of
        indemnities in respect of which no claims have been, or to the knowledge
        of the Security Trustee will be, asserted) shall have been paid in full;

        "SELLER" means AVSA S.A.R.L., a French societe a responsabilite limitee,
        duly organised and existing under the laws of the Republic of France and
        currently having its registered office at 2 Rond Point Maurice-Bellonte
        31700 Blagnac, France together with its successors and assigns;




<PAGE>   30



        "STATE OF REGISTRATION" means, in relation to an Aircraft, any state or
        territory in which that Aircraft may for the time being be registered
        pursuant to a Lease, Sub-Lease or pursuant to this Agreement (as the
        case may be);

        "SUB-BORROWER" means, in respect of the delivery of a specific Aircraft,
        such person, as the Guarantor or the Borrower may determine or, as the
        case may be, approved by the Agent (acting on the instructions of the
        Majority Lenders) in accordance with the provisions of Clause 3.3
        (Sub-Borrowers/Intermediate Lessees) who shall take title to that
        Aircraft and being in each case, except for shares held by directors,
        trustees or nominees in order to meet local nationality or other local
        requirements and which do not have a Material Adverse Effect on the
        relevant Charge over Shares of Sub-Borrower, a wholly owned direct
        subsidiary of the Borrower;

        "SUB-BORROWER ACCOUNTS" means, in respect of a Sub-Borrower,
        collectively the Sub-Borrower Maintenance Reserve Account, the
        Sub-Borrower Rental Account and the Sub-Borrower Security Deposit
        Account;

        "SUB-BORROWER DEBENTURE" means, in respect of a Sub-Borrower, a
        debenture to be granted by such Sub-Borrower in favour of the Security
        Trustee in the form of Appendix I;

        "SUB-BORROWER GUARANTEE " means, if title to the Aircraft is taken by a
        Sub-Borrower, each guarantee and indemnity to be entered into between
        the Sub-Borrower and the Security Trustee as the context requires in
        respect of all the Secured Obligations;

        "SUB-BORROWER/INTERMEDIATE LESSEE REGULAR JURISDICTION LETTER AGREEMENT"
        means the letter agreement dated the date of this Agreement entered into
        between the Guarantor, the Borrower and the Agent in relation to the
        settlement of pro forma documentation (including the form of Charge over
        Shares of Intermediate Lessee and form of Intermediate Lessee Debenture)
        with respect to a Sub-Borrower or an Intermediate Lessee organised in
        any of the Regular Jurisdictions (other than Bermuda);

        "SUB-BORROWER MAINTENANCE RESERVE ACCOUNT" means, in respect of a
        Sub-Borrower the Dollar account with Wells Fargo Bank or Bank of America
        in California or such other account outside the United Kingdom with
        another financial institution approved by the Security Trustee (such
        approval not to be unreasonably withheld);

        "SUB-BORROWER RENTAL ACCOUNT" means, in respect of a Sub-Borrower, such
        Dollar account with Wells Fargo Bank or Bank of America in California or
        such other account outside the United Kingdom with another financial
        institution approved by the Security Trustee (such approval not to be
        unreasonably withheld);

        "SUB-BORROWER SALE" means, in relation to a Sub-Borrower, the sale by
        the Borrower (including in each case a sale after an Acceleration Event
        by a Receiver on behalf of the Borrower, appointed under the Borrower
        Debenture), or by the Security Trustee against immediate payment in cash
        or for other consideration, whether through an agent on its behalf or
        otherwise, of all the Borrower's right, title and interest in and to the
        shares in such Sub-Borrower (including a sale to the relevant Lessee,
        the Guarantor and/or any other person other than the Parent, the
        Borrower or a Sub-Borrower or person who becomes the Parent, the
        Borrower or the Sub-Borrower in accordance with this Agreement and
        whether pursuant to the terms of the relevant Lease or otherwise
        howsoever);




<PAGE>   31



        "SUB-BORROWER SALE PROCEEDS" means, in relation to a Sub-Borrower, the
        aggregate amount of:-

        (a)     all consideration (whether cash or otherwise) received and
                retained by or on behalf of the Borrower (including a sale after
                an Acceleration Event by a Receiver on behalf of the Borrower
                appointed under the Borrower Debenture or the Security Trustee)
                upon or as a result of the Sub-Borrower Sale of the shares in
                such Sub-Borrower;

        (b)     any cash received and retained as a result of the sale by the
                Borrower (including a sale after an Acceleration Event by a
                Receiver on behalf of the Borrower appointed under the Borrower
                Debenture or the Security Trustee) of its right, title and
                interest in and to any agreement for the Sub-Borrower Sale of
                the shares in such Sub-Borrower or any non-cash consideration
                received by either of them as a result of the Sub-Borrower Sale
                of the shares in such Sub-Borrower;

        (c)     if a Sub-Borrower Sale proceeds to completion, any
                non-refundable deposit (not otherwise included under clause (a)
                or (b) above) in relation to such Sub-Borrower Sale paid to or
                for the account of the Borrower (including a sale after an
                Acceleration Event by a Receiver on behalf of the Borrower
                appointed under the Borrower Debenture or the Security Trustee)
                by a person acquiring or proposing to acquire the shares in such
                Sub-Borrower under a contract or offer to purchase or otherwise
                acquire it which has been withdrawn, terminated or cancelled or
                has lapsed;

        (d)     if an Acceleration Event has occurred, any non-refundable
                deposit paid to or for the account of the Borrower (including a
                sale after an Acceleration Event by a Receiver on behalf of the
                Borrower appointed under the Borrower Debenture or the Security
                Trustee) by a person acquiring or proposing to acquire the
                shares in such Sub-Borrower under a contract or offer to
                purchase or otherwise acquire it which has been withdrawn,
                terminated or cancelled or has lapsed;

        "SUB-BORROWER SECURITY DEPOSIT ACCOUNT" means, in respect of a
        Sub-Borrower, such Dollar account with Wells Fargo Bank or Bank of
        America in California or such other account outside the United Kingdom
        with another financial institution approved by the Security Trustee
        (such approval not to be unreasonably withheld);

        "SUB-LEASE" means, in respect of an Aircraft, any sub-lease agreement
        entered into between a Lessee and a Sub-Lessee;

        "SUB-LESSEE" means, in respect of an Aircraft the sub-lessee as
        permitted by the terms of the relevant Lease;

        "SUBORDINATED LIABILITIES" means all present and future amounts,
        liabilities and obligations payable or owing by any Obligor (other than
        the Guarantor) to the Subordinated Lender or the Guarantor whatsoever
        (whether actual or contingent, jointly or severally or otherwise
        howsoever) other than any amounts, liabilities or obligations payable or
        owing by any Obligor (other than the Guarantor) to the Subordinated
        Lender by virtue of any right of subrogation or indemnity arising as a
        result of the making of a 




<PAGE>   32



        payment by the Guarantor under Clause 5 (Guarantee and Indemnity) of all
        or any part of any amount demanded under Clause 5 (Guarantee and
        Indemnity) (in which case the provisions of Clause 5.7 (Preservation
        Rights) shall apply) but including (a) all amounts owing under all
        intercompany loan arrangements between the Subordinated Lender and the
        Borrower or any other Obligor (other than the Guarantor) by reason of
        the Subordinated Lender (i) paying or being deemed to have been paid the
        balance of the Aircraft Purchase Price for each Aircraft pursuant to
        Clause 2.4 (Purpose), and (ii) making payments of principal and of
        interest on each Loan at the direction of the Borrower in or towards
        satisfaction of the Borrower's obligations under Clause 4 (Repayment and
        Prepayment) and (iii) paying any other amounts in or towards
        satisfaction of any other obligation of the Borrower or any other
        Obligor (other than the Guarantor) under the Transaction Documents, and
        (b) any dividend payable on or other distribution in respect of, shares
        of the Borrower, any Sub-Borrower or any Intermediate Lessee (including
        any payment of surplus);

        "SUBSIDIARY" means any person of which or in which the Guarantor and its
        other Subsidiaries own directly or indirectly more than 50% of:-

        (a)     the combined voting power of all classes of stock having general
                voting power under ordinary circumstances to elect a majority of
                the board of directors of such person, if it is a corporation;

        (b)     the capital interest or profits interest of such person, if it
                is a partnership, limited liability company, joint venture or
                similar entity; or

        (c)     the beneficial interest of such person, if it is a trust,
                association or other unincorporated organisation;

        "SUBSTANTIVE LAW CHANGE" means, in each case after the date of this
        Agreement, the introduction, abolition, withdrawal or variation of any
        applicable law or regulation or any change in any interpretation, or the
        introduction or making of any new or further interpretation, by any
        court, tribunal, governmental, revenue, international, national, fiscal
        or other competent authority such as to affect any Master Opinion and so
        rendering it materially incorrect or misleading;

        "SUPPORT AGREEMENTS" means, in relation to a Utilisation, together (i)
        the Support Agreement to be entered into between ECGD and the British
        Lenders and (ii) the Promesse de Garantie and the Police d'Assurance
        Credit to be entered into between COFACE and the French Lenders and
        (iii) the Finanzkreditgarantie-Erklarung to be entered into between
        HERMES and the German Lenders;

        "TAX" means all present and future taxes, charges, imposts, duties,
        levies, deductions, withholdings or fees of any kind whatsoever, or any
        amount payable on account of or as security for any of the foregoing,
        payable at the instance of or imposed by any statutory, governmental,
        international, state, federal, provincial, local or municipal authority,
        agency, body or department whatsoever, or European Union institution,
        together with any penalties, additions, whether fines, surcharges or
        interest relating thereto; and "TAXES" and "TAXATION" shall be construed
        accordingly;

        "TAX LIABILITY" means, in respect:




<PAGE>   33



        (a)     any liability or any increase in the liability of that person to
                make any payment or payments of or in respect of Tax;

        (b)     the loss or setting off against income, profits or gains or
                against any liability to make a payment or payments of or in
                respect of Tax of any relief, allowance, deduction or credit in
                respect of Tax (a "RELIEF") which would otherwise have been
                available to that person; and

        (c)     the loss or setting off against any liability to make a payment
                or payments of or in respect of Tax of a right to repayment of
                Tax which would otherwise have been available to that person,

        and in any case falling within (b) or (c) above the amount that is to be
        treated as a Tax Liability shall be determined as follows:

        (i)     in a case which falls within (b) above and where the Relief that
                was the subject of the loss or setting off was or would have
                been a deduction from or offset against Tax, the Tax Liability
                shall be the amount of that Relief;

        (ii)    in a case which falls within (b) above and which involves the
                loss of a Relief which would otherwise have been available as a
                deduction from or offset against gross income, profits or gains
                the Tax Liability shall be the amount of Tax which would (on the
                basis of the Tax rates current at the date of the loss and
                assuming that the person has sufficient gross income, profits or
                gains to utilise the Relief) have been saved but for the loss of
                the Relief;

        (iii)   in a case which falls within (b) above and which involves the
                setting off of a Relief which would otherwise have been
                available as a deduction from or offset against gross income,
                profits or gains, the Tax Liability shall be the amount of Tax
                which has been or will be saved in consequence of the setting
                off;

        (iv)    in a case which falls within (c) above, the Tax Liability shall
                be the amount of the repayment that would have been obtained but
                for the loss or setting off;

        and for the purposes of this definition any question of whether or not
        any relief, allowance, deduction, credit or right to repayment of Tax
        has been lost or set off, and, if so, the date on which that loss or set
        off took place, shall be certified by the relevant Lender or, as the
        case may be, the Representative;

        "TECHNICAL RECORDS" means, in respect of an Aircraft, all technical
        data, manuals, computer records, logbooks and other records required to
        be maintained pursuant to any law or regulation or any requirement for
        the time being of the applicable Aviation Authority and relating to that
        Aircraft or, any relevant Engine or Part;

        "TERMINATION EVENT" means each of the events set out in Clause 10.1
        (Termination Events);

        "THIRD TRIGGER EVENT" means the long term debt obligations of the
        Guarantor becoming rated below BBB- if and as rated by Standard & Poor's
        Corporation or BAA3 if and as rated by Moody's Investor Service, Inc.,
        or an equivalent by an alternative service of equivalent 




<PAGE>   34



        recognition (if neither Standard & Poor's Corporation nor Moody's
        Investor Service, Inc. has assigned any rating) or ceasing to be rated
        by any agency;

        "TO LESSEE" shall have the meaning given thereto in Clause 7.2.2;

        "TOTAL COMMITMENTS" means the aggregate from time to time of all of the
        Commitments;

        "TOTAL LOSS" means any of the following in relation to the Aircraft or
        the Airframe and "TOTAL LOSS DATE" means the date set forth in
        parenthesis at the end of each sub-clause:

        (a)     destruction, damage beyond repair or being rendered permanently
                unfit for normal use for any reason (the date such event occurs
                or, if not known, one hundred and eighty (180) days after the
                date on which the Aircraft or Airframe was last heard of);

        (b)     constructive, compromised, arranged or agreed total loss (the
                date on which the insurers make payment of the full amount of
                the total loss proceeds on the basis of a total loss);

        (c)     requisition for title, or other compulsory acquisition of title
                for any reason (exclusive of requisition for use or hire) (the
                date on which the same takes effect);

        (d)     sequestration, confiscation, forfeiture, seizure, restraint,
                detention, hijacking or theft for any reason, in any case
                resulting in loss of possession by the Borrower, any
                Sub-Borrower, any Intermediate Lessee, the Lessee and the
                Sub-Lessee for a period being in excess of one hundred and
                eighty (180) consecutive days (the earlier of the date on which
                the insurers make payment of the total loss proceeds on the
                basis of the total loss and the expiry of such one hundred and
                eighty (180) day period);

        (e)     requisition for use by a Government Entity (other than a
                Government Entity in the state of registration or in the
                jurisdiction in which the Lessee, a Sub-Lessee, Intermediate
                Lessee, the relevant Sub-Borrower or the Borrower has its
                principal place of business) for more than one hundred and
                eighty (180) consecutive days (the earlier of the date on which
                the insurers make payment on the basis of a total loss proceeds
                and the expiry of such one hundred and eighty (180) day period);
                or

        (f)     the completion or closing of any sale of the Aircraft in
                connection with overdue and unpaid Eurocontrol charges (the date
                on which the completion or closing of such sale occurs).

        "TOTAL LOSS PROCEEDS" means the proceeds of the hull Insurances in
        respect of an Aircraft or any compensation for a Compulsory Acquisition
        of an Aircraft, with respect to a Total Loss;

        "TRANCHE A" shall, in relation to a Utilisation, have the meaning given
        thereto in Clause 3.6 (Repayment Schedules);

        "TRANCHE B" shall, in relation to a Utilisation, have the meaning given
        thereto in Clause 3.6 (Repayment Schedules);




<PAGE>   35



        "TRANSACTION" means the transaction contemplated by the Transaction
        Documents;

        "TRANSACTION DOCUMENTS" means, collectively the Facility Documents and
        the Aircraft Operative Documents in respect of each Aircraft financed
        (from time to time) under the Facility;

        "TRANSFER CERTIFICATE" means a certificate in the form set out in
        Schedule 2;

        "TRANSFEREE" shall have the meaning given thereto in Clause 18.3
        (Transfer Certificates);

        "TRANSFEROR" shall have the meaning given to such term in Clause 18.3
        (Transfer Certificates);

        "UNUTILISED FACILITY" means, at any time, the lesser of (i) the Total
        Commitments and (ii) Four billion three hundred twenty seven million two
        hundred and sixty thousand Dollars (US$4,327,260,000) as such amount may
        have been reduced by (a) the amount of each Advance made before such
        time and (b) the amount of each reduction made to the Facility Amount
        pursuant to Clause 2.5.2 or 2.5.3 (Reduction and Cancellation of the
        Facility);

        "UTILISATION" means each utilisation of the Facility pursuant to Clause
        3 (Utilisation of the Facility) or, as the context may require, the
        amount referred to in a Utilisation Notice as being that part of the
        Facility Amount in Dollars allocated by the Borrower for financing of
        the Aircraft referred to in that Utilisation Notice;

        "UTILISATION DATE" means, in relation to a Utilisation, the Banking Day
        upon which the Advance relating to that Utilisation is made available to
        the Borrower in accordance with Clause 3.7 (Disbursement of the Loan) or
        under Clause 3.7.6 (Disbursement of the Loan), and otherwise subject to
        the terms and conditions of this Agreement;

        "UTILISATION DOCUMENTATION" means, in respect of a Utilisation, all
        documents entered into by the relevant parties to give effect to the
        financing of the Aircraft the subject matter of the Utilisation as
        specified in Paragraph 2 Part I of Schedule 6;

        "UTILISATION NOTICE" means any notice given by the Borrower pursuant to
        Clause 3.1 (Utilisation Notices) and substantially in the form of
        Schedule 3;

        "VALUE ADDED TAX" means value added tax as provided for in the United
        Kingdom Value Added Tax Act 1994 and legislation (whether delegated or
        otherwise) supplemental thereto or in any primary or subordinate
        legislation promulgated by the European Union or any body or agency
        thereof and any Tax similar or equivalent to value added tax imposed by
        any country other than the United Kingdom and any similar or turnover
        tax replacing or introduced in addition to any of the same;

        "WARRANTIES" means each of:

        (a)     the benefit of the rights with respect to the Aircraft under
                clause 12 (Warranties and Service Life Policy) of the General
                Terms Agreement;

        (b)     the rights with respect to the Aircraft under clause 13 (Patent
                Indemnity) of the General Terms Agreement; and




<PAGE>   36



        (c)     to the extent actually assigned by the Guarantor in its absolute
                discretion to the Borrower or relevant Sub-Borrower, as the case
                may be, the rights with respect to the Aircraft under the
                Product Support Agreement (Exhibit E) applicable to the Purchase
                Agreement;

        "1994 FACILITY AGREEMENT" means the aircraft facility agreement dated
        28th January 1994 and made between (1) the banks and financial
        institutions named therein, (2) National Westminster Bank Plc (as
        Agent), (3) National Westminster Bank Plc (as Security Agent), (4) Bravo
        Leasing Limited, (5) ILFC (Bermuda) 4, Ltd., (6) ILFC (Bermuda) 5, Ltd.,
        (7) ILFC (Bermuda) 6, Ltd and (8) International Lease Finance
        Corporation as amended and supplemented from time to time; and

        "1995 FACILITY AGREEMENT" means the aircraft facility agreement dated
        14th December, 1994 between (1) the banks and financial institutions
        named therein, (2) National Westminster Bank Plc (as Agent), (3)
        National Westminster Bank Plc (as Security Agent), (4) Encore Leasing
        Limited, (5) ILFC (Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited, (7)
        ILFC (Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited, (9) ILFC (Bermuda)
        6, Ltd and (10) International Lease Finance Corporation as amended and
        supplemented from time to time.

1.2     Any and all other words and expressions defined in this Agreement shall,
        unless the context otherwise requires or there is express provision to
        the contrary, have the same meanings when used in any of the other
        Transaction Documents.

1.3     Clause headings and the table of contents are inserted for convenience
        of reference only and shall be ignored in the interpretation of this
        Agreement.

1.4     In this Agreement and each of the other Transaction Documents unless the
        context otherwise requires:-

        (a)     references to Clauses, Articles, Schedules and Appendices are to
                be construed as references to the Clauses of, Articles of,
                Schedules to, and Appendices to this Agreement, each of the
                other Transaction Documents, as applicable, and references to
                this Agreement, each of the Transaction Documents including
                their respective Schedules and Appendices;

        (b)     references to (or to any specified provision of) this Agreement,
                each of the other Transaction Documents or any other document
                shall be construed as references to this Agreement, that other
                Transaction Document, that document or that provision as in
                force for the time being and as amended, supplemented, novated
                or substituted from time to time in accordance with the terms
                hereof or thereof;

        (c)     references to any law or enactment shall be deemed to include
                references to such law or enactment as re-enacted, amended,
                extended, consolidated or replaced and any orders, decrees,
                proclamations, regulations, instruments or other subordinate
                legislation made thereunder;

        (c)     words importing the plural shall include the singular and vice
                versa;

        (d)     words importing any gender shall be construed as including every
                gender;




<PAGE>   37



        (e)     references to a person shall be construed as including
                references to an individual, company, corporation, firm,
                partnership, consortium, joint venture, association,
                organisation, authority or other unincorporated body of persons,
                trust or any state or government or international organisation
                or agency, European Union institution, committee or department,
                or any instrumentality, agency or political sub-division thereof
                or authority, board or body created or constituted thereby (in
                each case, whether or not having separate legal personality);

        (f)     the words "other" and "otherwise" shall not be construed ejusdem
                generis with any foregoing words where a wider construction is
                possible;

        (g)     the Borrower, each of the other Obligors, the Agent, the
                Security Trustee, and each of the Lenders shall include their
                respective successors and permitted assigns and permitted
                transferees; and

        (h)     the words "including" and "in particular" shall be construed as
                being by way of illustration or emphasis only and shall not be
                construed as, nor shall they take effect as, limiting the
                generality of any foregoing words.

2.      AVAILABILITY

2.1     FACILITY

        Subject to the terms and conditions of this Agreement and in reliance on
        the representations and warranties of the Borrower, each Sub-Borrower,
        the Parent, each Intermediate Lessee and the Guarantor set out in Clause
        6 (Representations and Warranties), the Lenders hereby grant and
        undertake to make available to the Borrower a loan facility in the
        maximum principal amount equal to the lesser of (i) the aggregate of
        eighty-five per cent. (85%) of the Aircraft Purchase Price for each of
        the Eligible Aircraft and (ii) Four billion three hundred twenty seven
        million two hundred and sixty thousand Dollars (US$4,327,260,000) (the
        "FACILITY AMOUNT").

2.2     AVAILABILITY PERIOD

        The Facility shall be available for drawdown at any time during the
        Availability Period on the terms and subject to the conditions of this
        Agreement.

2.3     NUMBER AND COMPOSITIONS OF ADVANCES

2.3.1   The Facility shall be available in multiple Advances, each in respect of
        one Eligible Aircraft.

2.3.2   The maximum amount of an Advance in respect of an Aircraft shall be the
        lesser of:-

        (a)     the Unutilised Facility at the time when the Advance is made;
                and

        (b)     eighty-five per cent. of the Aircraft Purchase Price relating to
                that Aircraft.



<PAGE>   38



2.3.3   Subject to the terms and conditions of this Agreement and the relevant
        Loan Supplement, the British Lenders, the French Lenders and the German
        Lenders shall participate in each Advance through their respective
        Lending Offices in certain proportions, to be determined as follows:-

        (a)     if the Eligible Aircraft and Engine type for each Utilisation is
                as specified in Schedule 4, the proportions of each Advance to
                be provided by the British Lenders, the French Lenders and the
                German Lenders shall be as set out in the columns headed
                "Assumed British Lenders' Portion", "Assumed French Lenders'
                Portion" and "Assumed German Lenders' Portion" (respectively) in
                Schedule 4; and

        (b)     if the Eligible Aircraft type or the Engine type in respect of
                any Utilisation is not as specified in Schedule 4, the
                proportions of the relevant Advance to be provided by the
                British Lenders, the French Lenders and the German Lenders shall
                be determined by agreement pursuant to Clause 3.2.2 (Loan
                Supplements) between the Lead Managers and the Export Credit
                Agencies and the Agent shall notify the Borrower thereof.

2.4     PURPOSE

2.4.1   Each Advance shall be used by the Borrower solely for the purpose of
        financing the acquisition, and contributing towards the Aircraft
        Purchase Price, of an Eligible Aircraft. The balance of the Aircraft
        Purchase Price for each Aircraft in excess of the relevant Advance shall
        be paid or shall have been paid directly to the Seller on or before the
        relevant Delivery Date in accordance with the relevant Purchase
        Agreement, which payment shall be funded or (to the extent that the
        relevant payment has already been made) deemed to have been funded by
        the Subordinated Lender, whose rights in respect of the relevant payment
        shall form part of the Subordinated Liabilities.

2.4.2   If a Sub-Borrower is to take title to an Aircraft, the Borrower will
        fund the Sub-Borrower's purchase of the Aircraft by way of an
        inter-company loan.

2.5     REDUCTION AND CANCELLATION OF THE FACILITY

2.5.1   The availability of Utilisations has been predicated on the basis that
        each of the Eligible Aircraft will be delivered during the Scheduled
        Delivery Month for such Eligible Aircraft specified in Schedule 4 Part I
        and accordingly the Borrower shall promptly, following receipt of notice
        from or agreement with, the Seller, notify the Agent of any change in
        the Scheduled Delivery Month for an Eligible Aircraft. Upon receipt by
        the Agent of such notice, and provided that the new Scheduled Delivery
        Month falls within the Availability Period, the Scheduled Delivery Month
        for the relevant Eligible Aircraft shall be amended accordingly and
        thereafter Schedule 4 Part I shall be read and construed as so amended.

2.5.2   If the Borrower fails to provide a Utilisation Notice with respect to an
        Eligible Aircraft before the relevant Delivery Date, the Facility Amount
        shall be reduced by an amount equal to the Assumed Financed Amount for
        that Eligible Aircraft.

2.5.3   Without prejudice to the provisions of Clause 2.5.2, the Borrower may at
        any time and from time to time give notice to the Agent that it wishes
        to cancel the Facility in relation to any one or more of the Eligible
        Aircraft. Following receipt of such notice by the Agent, 




<PAGE>   39




        the Facility Amount shall be reduced by an amount equal to the Assumed
        Financed Amount for that Eligible Aircraft specified in the Borrower's
        notice and the Borrower shall not thereafter be entitled to serve a
        Utilisation Notice or receive an Advance in respect of any such Eligible
        Aircraft.

2.5.4   Any reduction in the Facility Amount pursuant to Clauses 2.5.2 or 2.5.3
        shall reduce the Commitments of the British Lenders, the French Lenders
        and the German Lenders by the amount specified in the columns in
        Schedule 4 Part I entitled "Assumed British Lenders Proportion",
        "Assumed French Lenders Proportion" and "Assumed German Lenders
        Proportion" in relation to each relevant Eligible Aircraft and the
        Commitment of each Lender shall be reduced by such proportion of the
        reduction in the Commitment of the British Lenders, the French Lenders
        or, as the case may be, the German Lenders as is equal to the proportion
        which the Commitment of such Lender bears to the aggregate Commitments
        of the British Lenders, the French Lenders or, as the case may be, the
        German Lenders. Schedule 4 Part I shall be amended to reflect any
        additions of Airbus aircraft referred to in the definition of Eligible
        Aircraft.

2.5.5   Upon the expiry of the Availability Period, the Unutilised Facility (if
        any) then remaining shall be cancelled.

2.6     CURRENCY

        The Advances shall be made available wholly in Dollars.

2.7     AMOUNT

2.7.1   The British Lenders severally agree to advance the British Credits to
        the Borrower in an aggregate amount not exceeding one billion one
        hundred and twenty-three million Dollars (US$1,123,000,000).

2.7.2   The French Lenders severally agree to advance the French Credits to the
        Borrower in an aggregate amount not exceeding one billion nine hundred
        and seventy-five million dollars (US$1,975,000,000).

2.7.3   The German Lenders severally agree to advance the German Credits to the
        Borrower in an aggregate amount not exceeding one billion two hundred
        and twenty-nine million, two hundred and sixty thousand Dollars
        (US$1,229,260,000).

2.7.4   Subject to the provisions of Clauses 2.7.1, 2.7.2 and 2.7.3, the
        Borrower shall be entitled to finance, pursuant to this Agreement, the
        acquisition of Eligible Aircraft from the Seller which differ from those
        set out in Schedule 4, provided always that the total of all Advances
        shall not exceed the Facility Amount.

2.8     SEVERAL OBLIGATIONS

2.8.1   The obligation of each Lender to make its Commitment or any part thereof
        available and to perform its obligations in respect of any Utilisation
        are several and not joint. The failure of any Lender to perform its
        obligations under this Agreement or any Loan Supplement shall neither:-




<PAGE>   40




        (i)     result in any of the Agent, the Security Trustee or any other
                Lender assuming any additional obligation or liability
                whatsoever; or

        (ii)    relieve the Agent, the Security Trustee or any of the Lenders
                from their respective obligations under any Transaction
                Document.

        PROVIDED that:

        (a)     if a Lender fails to fund its Relevant Proportion of an Advance
                two (2) Business Days prior to the Scheduled Delivery Date, the
                relevant Lead Manager shall use all reasonable endeavours to
                persuade the relevant Lender to fund its Relevant Proportion of
                such Advance; and

        (b)     if, notwithstanding the reasonable endeavours of the relevant
                Lead Manager, a Lender fails to fund its Relevant Proportion of
                an Advance by 5pm (New York time) on the Scheduled Delivery Date
                and such Advance has nevertheless been made available to the
                Borrower either by the relevant Lead Manager (acting in its
                absolute discretion) through the Agent or by the Agent with the
                agreement of the relevant Lead Manager and unless the Lenders
                fails to fund its Advance in the interim (which it will be
                obligated to do), the Borrower shall on the date which is three
                (3) Business Days after receipt by the Borrower of the Agent's
                first written demand, pay (without any Make-Whole Amount and
                Expenses (if any)) to the Agent an amount equal to the
                defaulting Lender's Relevant Proportion of the relevant Advance
                by way of prepayment and if appropriate the Agent shall in turn
                remit the prepayment to the relevant Lead Manager.

        Neither the foregoing nor any other provision hereof shall not be
        construed as relieving a defaulting Lender from liability for failure to
        perform its obligations hereunder and the Borrower shall have all rights
        and remedies available at law or in equity with respect to any Lender's
        failure to perform its obligations hereunder.

2.8.2   Nothing contained in any Transaction Documents shall constitute a
        partnership, association, joint venture or other entity between any two
        or more of the Lenders or Representatives.

2.9     CONDITIONS PRECEDENT PRIOR TO FIRST UTILISATION

2.9.1   The obligations of each of the Lenders, the Agent and the Security
        Trustee under this Agreement shall be subject to the following
        conditions precedent having been fulfilled to the satisfaction of, or
        waived in writing by, the Agent that the Agent shall have received:

        (A)     on or before the date of this Agreement:-

                (a)     evidence of the corporate existence of the Borrower;

                (b)     a definitive draft of a legal opinion from Appleby,
                        Spurling & Kempe, Bermudan counsel to the Lenders;

                (c)     a definitive draft of a legal opinion from Buchalter
                        Nemer, Fields & Younger, Californian counsel to the
                        Lenders;




<PAGE>   41




                (d)     a definitive draft of a legal opinion from in-house
                        counsel to the Guarantor;

                (e)     a definitive draft of a legal opinion from Wilde Sapte,
                        English counsel to the Lenders;

        (B)     no later than five (5) Business Days before the first
                Utilisation:

                (a)     a certificate signed by a director of the Borrower
                        setting out the specimen signature of those persons
                        authorised to sign the Transaction Documents to which
                        the Borrower is or is to be a party and attaching and
                        certifying as true copies of the originals, copies of:

                        (i)     the Borrower's Constitutional Documents;

                        (ii)    the resolutions of the board of directors of the
                                Borrower approving the execution and performance
                                by the Borrower of each Transaction Document to
                                which the Borrower will or may be a party; and

                        (iii)   a power of attorney appointing those persons
                                authorised to sign on behalf of the Borrower
                                each Transaction Document to which the Borrower
                                is, or may, be a party;

                (b)     a secretary's or an assistant secretary's certificate of
                        the Guarantor setting out the specimen signature of
                        those persons authorised to sign the Transaction
                        Documents to which the Guarantor is a party and
                        attaching thereto, and certifying as true copies of the
                        originals:-

                        (i)     the articles of incorporation and bylaws of the
                                Guarantor; and

                        (ii)    the resolutions of the board of directors of the
                                Guarantor approving the entry into by the
                                Guarantor of the Transaction Documents to which
                                the Guarantor is or will be a party;

                (c)     a certificate of the secretary or assistant secretary of
                        the Parent setting out the specimen signature of those
                        persons authorised to sign the Transaction Documents to
                        which the Parent is a party and attaching thereto, and
                        certifying as true copies of the originals:-

                        (i)     the articles of incorporation and by-laws of the
                                Parent; and

                        (ii)    the resolutions of the board of the Parent
                                approving the entry into by the Parent of the
                                Facility Documents to which the Parent is or is
                                to be a party and the entry into by the Parent
                                of each of the Aircraft Operative Documents to
                                which the Parent is or will be a party;




<PAGE>   42




                (d)     extracts of the General Terms Agreement and the Engines
                        Agreements containing the Warranties and the Engine
                        Warranties respectively;

                (e)     a duly executed original of the Charge Over Shares of
                        the Borrower, together with certified copies of the
                        minute books, and the share register (if any) of the
                        Borrower and the originals of the share certificates of
                        the Borrower as referred to therein and duly executed
                        originals of the letters of resignation, irrevocable
                        proxy and undated share transfer forms referred to
                        therein;

                (f)     a duly executed original of the Borrower Debenture;

                (g)     a certificate of tax exemption in respect of the
                        Borrower from the appropriate Bermudan authorities;

                (h)     Bermuda Monetary Authority consent in respect of the
                        Charge Over Shares of the Borrower; and

                (i)     evidence that each of the Borrower Accounts have been
                        opened and that ten Dollars has been deposited in each
                        such Borrower Account.

2.10    MASTER OPINIONS

2.10.1  It is acknowledged and agreed between the parties hereto (including any
        subsequent acceding parties to any of the Transaction Documents) that,
        subject to Clause 2.10.3, when a Utilisation further to the first
        Utilisation (a "FURTHER UTILISATION") is proposed to be drawn by the
        Borrower for the purpose of financing the acquisition of an Eligible
        Aircraft by the Borrower or, as the case may be, a Sub-Borrower on the
        basis of Utilisation Documentation that is in the same form (mutatis
        mutandis) as that which is the subject of the relevant Master Opinion,
        then, provided that no Second Trigger Event has occurred and is
        continuing and that the Borrower has given its certificate in accordance
        with the provisions of Clause 3.1.1(B) in relation to such Further
        Utilisation, subject to paragraph 4 of Part I to Schedule 6, it will not
        be a condition precedent to that Further Utilisation by the Borrower
        that further legal opinions in relation to the Utilisation Documentation
        which relates to that Further Utilisation be provided on or before the
        relevant Utilisation Date.

2.10.2  Subject to Clause 2.10.3, the Borrower and the Agent shall each use all
        reasonable endeavours to procure that its respective counsel which are
        to be the providers of the Master Opinions confirm in their relevant
        Master Opinion that in relation to any Further Utilisation that if the
        Utilisation Documentation which relates to the relevant Further
        Utilisation ("FURTHER UTILISATION DOCUMENTATION") is in the same form
        (mutatis mutandis) as the previous Utilisation which was the subject of
        the relevant Master Opinion and the Borrower gives its certificate in
        accordance with Clause 3.1.1(B) in relation to such Further Utilisation
        Documentation, then the relevant Master Opinion (but subject to the
        assumptions, reservations and qualifications therein contained) shall be
        deemed to relate to such Further Utilisation Documentation. Each of the
        Master Opinions shall be periodically reaffirmed or updated and reissued
        in accordance with the provisions of Clause 7.1(s) (Undertakings and
        Covenants).




<PAGE>   43




2.10.3  If, with respect to a Further Utilisation:

        (a)     there is a breach in the Guarantor's representation and warranty
                contained in Clause 6.1(n) (Guarantor's Representations and
                Warranties) which pursuant to Clause 6.3 (Repetition) is deemed
                to be repeated on the date of the relevant Utilisation Notice;
                or

        (b)     the Borrower is unable to or fails to provide a certificate
                which complies in full with Clause 3.1.1(B) (Utilisation
                Notices); or

        (c)     the provider of any Master Opinion ("PROVIDER") at any time from
                the date of the relevant Utilisation Notice to (but including)
                the date on which the filing or the registration of the relevant
                Mortgage is completed in the jurisdiction of the Borrower or a
                Sub-Borrower (as the case may be), notifies either
                Representative that if the Provider were to issue a legal
                opinion in the terms of its Master Opinion in relation to the
                Further Utilisation, such opinion would be materially incorrect
                or misleading as to the legality, validity or enforceability of
                the relevant Loan, any of the material rights of the Lenders
                and/or Representatives thereunder or of a material element of
                the relevant security package as contemplated by the Aircraft
                Security Documents in relation to the relevant Loan; or

        (d)     any of the Utilisation Documentation proposed to be used for the
                purposes of such Further Utilisation is not in the same form
                (mutatis mutandis) as that which is the subject of a Master
                Opinion;

        then, in any such case, the relevant Master Opinion shall not apply and,
        without prejudice to Clause 14.3 (Illegality), the Borrower shall take
        all such steps within its control as are reasonably required to enable
        the Provider to issue, on the instructions of the Agent, its revised
        opinion (the Expense of which shall be borne by the Borrower) in form
        and substance satisfactory to the Agent. Until a new relevant opinion is
        issued, the inapplicability of the relevant Master Opinion shall
        constitute a failure of a condition precedent for that Utilisation (if
        it has not then been made) and for future Utilisations in relation to
        which the relevant Master Opinion would (but for the operation of this
        Clause 2.10.3) have applied for the purposes of Clause 2.10.1, by giving
        notice in writing to that effect to the Borrower.

2.10.4  Without prejudice to the provisions of Clause 7.1(s) (Undertakings and
        Covenants), if, in its good faith opinion, the Agent has reason to
        believe that a Substantive Law Change has occurred since the date of the
        applicable Master Opinion that would result in Clause 14.3 (Illegality)
        becoming applicable, the Agent may at any time request in writing the
        Provider of the applicable Master Opinion to provide it with a revised
        opinion as to the portion of the Master Opinion affected by any such
        Substantive Law Change in a form and substance satisfactory to the
        Agent, and if such a Substantive Law Change has occurred and if the
        Provider so provides such a revised opinion, the Borrower shall pay the
        Expense of such revised opinion. Subject to Clause 14.3 (Illegality)
        upon such occurrence, the Agent shall be entitled to obtain the re-issue
        of all Master Opinions affected by such revised opinion in replacement
        of the existing Master Opinions and the Borrower shall pay the Expense
        of such replacement Master Opinions so that they relate to all affected
        Aircraft previously delivered (covered by the original Master Opinions)
        as well as to Further Utilisations.





<PAGE>   44



3.      UTILISATION OF THE FACILITY

3.1     UTILISATION NOTICES

3.1.1   In order to effect a Utilisation under this Agreement the Borrower shall
        serve a Utilisation Notice upon the Agent;

        (A)     identifying:

                (i)     the proposed Utilisation Date which shall be a Business
                        Day within the Availability Period not less than five
                        (5) Business Days (or such shorter period as the
                        Majority Lenders, in any particular case, may agree)
                        after the date of service of such notice PROVIDED that
                        if a Sub-Borrower and/or an Intermediate Lessee is to be
                        used in the structure for such Utilisation, the proposed
                        Utilisation Notice shall be served upon the Agent at
                        least twenty (20) Business Days prior to the proposed
                        Utilisation Date unless (i) the proposed Sub-Borrower or
                        Intermediate Lessee shall be established in a Regular
                        Jurisdiction in which case the proposed Utilisation
                        Notice shall be served upon the Agent at least ten (10)
                        Business Days prior to the proposed Utilisation Date, or
                        (ii) the proposed Sub-Borrower or Intermediate Lessee
                        has already acceded to this Agreement prior to the date
                        of the Utilisation Notice, in which case the Utilisation
                        Notice shall be served on the Agent not less than five
                        (5) Business Days prior to the proposed Utilisation
                        Date;

                (ii)    the amount of the proposed Advance;

                (iii)   the relevant Eligible Aircraft (including its
                        manufacturer's serial number, the proposed registration
                        mark and the type and serial numbers of the Engines to
                        be installed);

                (iv)    if known, the identity of the proposed Lessee of the
                        Aircraft and the jurisdiction in which the Aircraft
                        shall be registered and the principal place of business
                        of the Lessee;

                (v)     subject to Clause 3.1.3, whether a Sub-Borrower and/or
                        an Intermediate Lessee (as the case may be) will be in
                        the structure and whether such Sub-Borrower or
                        Intermediate Lessee will be established in a Regular
                        Jurisdiction or an Irregular Jurisdiction. If a
                        Sub-Borrower and/or an Intermediate Lessee (as the case
                        may be) is required, the Borrower shall provide such
                        details as it is then possible for the Borrower to
                        provide as to the identity and jurisdiction of
                        incorporation of such Sub-Borrower and/or an
                        Intermediate Lessee (as the case may be), and shall
                        request the consent of the Lead Managers and the
                        Borrower thereto in accordance with Clause 3.3.1
                        (Sub-Borrowers/Intermediate Lessees) if such
                        Sub-Borrower or Intermediate Lessee is to be established
                        in an Irregular Jurisdiction;




<PAGE>   45



                (vi)    the Aircraft Purchase Price;

                (vii)   the total amount of the Loan; and

        and having attached thereto a certified copy of the latest draft (if
        any) (or, if the same is then available, a certified copy of the
        executed version) of the proposed Lease. A Utilisation Notice shall
        become irrevocable if not revoked on or before the fifth (5th) Business
        Day prior to the proposed Utilisation Date; and

        (B)     certifying (by the signature of an officer or a director of the
                Borrower) in the case of any Utilisation after the first
                Utilisation that:

                (i)     the board minutes of the Borrower and any other relevant
                        Obligor which have previously been the subject of a
                        Master Opinion in respect of a previous Utilisation each
                        remain in effect for the relevant Utilisation or are
                        each in the same form as board minutes which have
                        previously been the subject of a Master Opinion;

                (ii)    the resolutions contained in the minutes referred to in
                        Clause 3.1.1(B)(i) were duly passed in accordance with
                        the Borrower Constitutional Documents or, as the case
                        may be, the constitutional documents of each other
                        relevant Obligor and such resolutions will remain in
                        full force and effect as of the relevant Utilisation
                        Date and any later date on which any Aircraft Security
                        Document is to be entered into in connection with such
                        Utilisation; and

                (iii)   the Transaction Documents in respect of such Utilisation
                        will be signed by one of the officers or directors or
                        attorneys in fact of the Borrower and of each other
                        relevant Obligor as was authorised to sign the
                        Transaction Documents in respect of a previous
                        Utilisation which are the subject of a Master Opinion
                        and the appointments of such officers or directors or
                        attorneys in fact or his or her authority to sign the
                        Transaction Documents in respect of the relevant
                        Utilisation on behalf of the Borrower or any other
                        relevant Obligor has not been or will not be terminated
                        or restricted prior to the due execution of all the
                        Transaction Documents in respect of the relevant
                        Utilisation to which the Borrower or, as the case may
                        be, such other Obligor is or is to be party.

3.1.2   The Borrower may not issue a Utilisation Notice:-

        (a)     if a Relevant Event or Termination Event has occurred and is
                continuing or would result from the drawdown of the relevant
                Advance;

        (b)     in respect of any Eligible Aircraft if the delivery of such
                Eligible Aircraft to the intended Lessee or Sub-Lessee would
                cause the Borrower to breach Clause 7.2.2 (Leasing and Insurance
                Covenants of Borrower, Sub-Borrower and Intermediate Lessee);




<PAGE>   46



        (c)     if the Borrower intends that the Eligible Aircraft which the
                Borrower proposes to be the subject of the relevant Utilisation
                will be registered in a Prohibited Country, or the jurisdiction
                of the principal place of business of the intended TO Lessee
                will be a Prohibited Country, or the jurisdiction of the
                principal place of business of the intended TO Lessee will be
                the United States of America.

3.1.3   The Borrower may issue a Utilisation Notice even if the relevant
        Eligible Aircraft will not be the subject of a Lease or Intermediate
        Lease on the Delivery Date, provided that the provisions of Clause
        7.2.1(b), (c) and (d) (Leasing and Insurance Covenant of Borrower,
        Sub-Borrower and Intermediate Lessee) shall apply to any such Lease or
        Intermediate Lease.

3.1.4   The Agent shall:

        (a)     send to each Lender a copy of each Utilisation Notice received
                from the Borrower which complies with Clause 3.1.1;

        (b)     procure the preparation and circulation to the Lenders and the
                Borrower of the relevant Utilisation Documentation at least
                three (3) Business Days prior to the proposed Utilisation Date;

        (c)     if a Sub-Borrower that has not previously acceded to the
                Agreement is to take title to the Aircraft, procure a definitive
                draft of an opinion from its legal counsel in the jurisdiction
                of organisation of such Sub-Borrower at least three (3) Business
                Days prior to the proposed Utilisation Date regarding the due
                execution and validity of the relevant Accession Deed, of the
                relevant Aircraft Security Documents and of other documents as
                the Representatives may require pursuant to Clause 3.3.3(b)
                (Sub-Borrowers and Intermediate Lessees); and

        (d)     if an Intermediate Lessee that has not previously acceded to the
                Agreement is to be incorporated in a structure in relation to a
                particular Utilisation, procure a definitive draft of an opinion
                from its legal counsel in the jurisdiction of organisation of
                such Intermediate Lessee regarding the due execution and
                validity of the relevant Accession Deed, of the relevant
                Aircraft Security documents and of other documents as the
                Representatives may require pursuant to Clause 3.3.3(b)
                (Sub-Borrowers and Intermediate Lessees).

3.1.5   The Borrower may, at any time on or prior to the Utilisation Date,
        notify the Agent of any change to the registration mark of the Aircraft
        or to the identity of the Lessee (including notification that there will
        not be a Lessee), and any such notification shall not affect the
        validity of the Utilisation Notice.

3.1.6   The Borrower shall provide the Agent with a certified copy of the
        executed Lease (if any) and shall provide the Agent with written
        confirmation of the Aircraft Purchase Price in each case, as soon as the
        same becomes available from the Seller and in any event not less than
        three (3) Business Days prior to the proposed Utilisation Date.




<PAGE>   47




3.2     LOAN SUPPLEMENTS

3.2.1   The Agent shall prepare the Loan Supplement for each Utilisation by
        adding the following information to the form set out in Appendix A:-

        (a)     in clause 1.2, the type and serial number of the relevant
                Aircraft;

        (b)     in clause 2.1(a), the amount of the Advance;

        (c)     in clause 2.1(b), the amount of the British Credits;

        (d)     in clause 2.1(c), the amount of the French Credits;

        (e)     in clause 2.1(d), the amount of the German Credits;

        (f)     in clause 4, the applicable blended rate for the relevant Loan
                (as agreed pursuant to Clause 3.2.2);

        (g)     in clause 5, the proposed Utilisation Date; and

        (h)     in Parts A, B and C of schedule 2, part I, the assumed
                repayments (calculated in accordance with Clause 3.6) for the
                British Lenders, the French Lenders and the German Lenders
                (respectively) and in schedule 2, part II a summary of the
                aggregate amount payable by the Borrower on each Repayment Date.

3.2.2   Not less than three (3) Business Days before the proposed Utilisation
        Date the Agent and the Lead Managers shall (i) confirm the proportions
        of the relevant Advance to be provided by the British Lenders, the
        French Lenders and the German Lenders respectively as set out for the
        relevant Aircraft in Schedule 4 Part I and (ii) confirm the applicable
        interest rate to be provided for in the relevant Loan Supplement. The
        Agent shall provide an execution version of the Loan Supplement to the
        Borrower at least two (2) Business Days prior to the Utilisation Date.

3.2.3   The Agent, the Borrower and any Sub-Borrower or any Intermediate Lessee
        (as applicable) shall, not less than one Business Day prior to the
        proposed Utilisation Date, execute a Loan Supplement and the other
        Utilisation Documents in respect of that Utilisation and the Security
        Trustee and each Lender hereby authorises and instructs the Agent to
        execute each Loan Supplement on its behalf.

3.2.4   The Agent shall notify the Borrower if at any time the Agent has
        determined that all the conditions precedent to funding a particular
        Utilisation will not be satisfied or waived and in such event will
        provide to the Borrower a description of the items which remain to be
        fulfilled.

3.3     SUB-BORROWERS/INTERMEDIATE LESSEES

3.3.1   In respect of the financing of a particular Eligible Aircraft pursuant
        to the Facility, or the substitution of an Existing Aircraft with a
        Replacement Aircraft, subject always, in each case, to the provisions of
        Clause 3.7.4 (Disbursement of the Loan), the Borrower shall be entitled:




<PAGE>   48




        (a)     to cause a Sub-Borrower (which is or is to be established in a
                Regular Jurisdiction) to take title to that Eligible Aircraft
                and/or that an Intermediate Lessee (which is or is to be
                established in a Regular Jurisdiction) be incorporated into the
                structure;

        (b)     to request that a Sub-Borrower (which is or is to be established
                in an Irregular Jurisdiction) take title to that Eligible
                Aircraft and/or that an Intermediate Lessee (which is or is to
                be established in an Irregular Jurisdiction) be incorporated
                into the structure.

        Any such request under paragraph (b) shall be made by the Borrower in
        the relevant Utilisation Notice and the Agent (acting on the
        instructions of the Majority Lenders) shall approve a request under
        Clause 3.3.1(b) in principle or otherwise no later than ten (10)
        Business Days prior to the proposed Utilisation Date. If the proposed
        Sub-Borrower or Intermediate Lessee has already acceded to this
        Agreement prior to the date of the relevant Utilisation Notice, or is
        organised in a Regular Jurisdiction, the approval of the Agent shall not
        be required.


3.3.2   Each such Sub-Borrower and/or such Intermediate Lessee shall be a
        company or trust capable of providing representations and warranties and
        covenants having substantially the same effect as those given by the
        Borrower in Clauses 6 (Representations and Warranties) and 7
        (Undertakings and Covenants) and each shall be a wholly owned direct
        Subsidiary of the Borrower, in the case of the Sub-Borrower or a wholly
        owned direct Subsidiary of a Sub-Borrower or the Borrower in the case of
        the Intermediate Lessee (in each case, except for shares held by
        directors, trustees or nominees in order to meet local nationality or
        other local requirements and which do not have a Material Adverse Effect
        on any of the Charges over Shares, in favour of the Security Trustee).
        The Borrower shall use one Intermediate Lessee in any one jurisdiction
        unless the Borrower has a reason to do otherwise.

3.3.3   If a Sub-Borrower or an Intermediate Lessee has not already acceded to
        this Agreement and is to be incorporated into the structure then on or
        prior to the relevant Advance being made:

        (a)     each such Sub-Borrower and/or each such Intermediate Lessee
                shall accede to this Agreement by executing an Accession Deed
                and such other Transaction Documents as the Agent in its good
                faith opinion considers appropriate so that any such
                Sub-Borrower shall become a party to this Agreement and such of
                the other Transaction Documents as may be appropriate as if
                named therein as a party;

        (b)     if the Sub-Borrower or Intermediate Lessee is or will be
                organised in an Irregular Jurisdiction, each of the applicable
                Obligors and any such Sub-Borrower organised in an Irregular
                Jurisdiction and/or any such Intermediate Lessee organised in an
                Irregular Jurisdiction shall enter into such other documents and
                provide such security as the Security Trustee may, in its good
                faith opinion (after taking legal advice from counsel to the
                Lenders in the jurisdiction of the relevant Sub-Borrower and/or
                the relevant Intermediate Lessee), require in order to ensure
                that (i) the Representatives and each of the Lenders are in a
                position, having a substantially similar effect (including as to
                their security position) with respect to such Sub-Borrower
                and/or Intermediate 




<PAGE>   49



                Lessee as they are in with respect to other Sub-Borrowers or
                other Intermediate Lessees, as the case may be, under the
                Transaction Documents and (ii) the rights of the Representatives
                and the Lenders are not materially different than with respect
                to any Sub-Borrower and/or Intermediate Lessee of a Regular
                Jurisdiction under the Transaction Documents, it being
                acknowledged and agreed for the purpose of determining the
                foregoing matters that (i) any trustee in a United States
                owner/voting trust will be party to the Transaction Documents
                not in its individual capacity but solely as trustee, (ii)
                common law jurisdictions are acceptable and (iii) with respect
                to civil jurisdictions, the Borrower and the Agent shall
                negotiate in good faith, to the extent necessary, alternative
                security to that available in common law jurisdictions which is
                acceptable to the Security Trustee, acting upon the instruction
                of the Majority Lenders;

        (c)     upon receipt by the Agent of the Accession Deed signed on behalf
                of the Borrower, Guarantor, Obligors and by the proposed
                Intermediate Lessee or Sub-Borrower (as the case may be), the
                Agent shall sign the same for itself and on behalf of the
                Lenders and shall as promptly as practicable give notice of such
                execution to all of the parties to the Accession Deed; and.

        (d)     upon execution of any such Accession Deed, it shall take effect
                in accordance with, but subject to, the terms hereof and
                thereof.


3.4     CONDITIONS PRECEDENT TO EACH ADVANCE

        Each Advance shall be subject to the conditions precedent set out in
        Parts I and II of Schedule 6.


3.5     CONDITIONS SUBSEQUENT

        Each Advance shall be subject to the conditions subsequent set out in
        Part III of Schedule 6.

3.6     REPAYMENT SCHEDULES

3.6.1   Each Advance:

        (a)     shall be divided into two tranches, of which the first tranche
                ("TRANCHE A") shall be sixty-two point five per cent. of the
                Aircraft Purchase Price and the second tranche ("TRANCHE B")
                shall be twenty-two point five per cent. of the Aircraft
                Purchase Price; and

        (b)     shall amortise as shown in column (5) in Schedule 4 Part II so
                that the amount outstanding in respect of the Advance (expressed
                as a percentage of the Aircraft Purchase Price) from time to
                time is (i) on the Delivery Date of the relevant Aircraft or on
                a Repayment Date, the percentage shown opposite the Delivery
                Date or the relevant Repayment Date number in column (5) in
                Schedule 4 Part II and (ii) in the case of any date other than
                the Delivery Date or a Repayment Date, the amount (expressed as
                a percentage of the Aircraft 




<PAGE>   50



                Purchase Price) shown opposite the Repayment Date number
                immediately preceding such date in column (1) or, in the case of
                any date preceding the first Repayment Date, the amount
                (expressed as a percentage of the Aircraft Purchase Price)
                specified opposite the Delivery Date.

3.6.2   The contents of Schedule 4 are provided for illustration purposes only
        and are not intended to represent the initial amounts, or the
        amortisation, of any particular Advance. The repayment profile of each
        Advance shall be as provided for in the relevant Loan Supplement.

3.6.3   The repayment profiles shown in schedule 2 of the Loan Supplement shall
        be calculated on the basis of twenty equal repayments of principal on a
        semi-annual basis (except for the first repayment of principal) together
        with interest calculated on the relevant Loan outstanding on the
        relevant Repayment Date at the Contractual Rate.

3.6.4   Each Repayment Instalment and the principal and interest amounts thereof
        determined in accordance with Clause 3.6 and set out in schedule 2 to
        the relevant Loan Supplement will be calculated on the assumption that
        (a) the Utilisation Date will occur on the date specified in the
        relevant Loan Supplement, (b) the interest rate for the relevant Loan is
        the rate per annum specified in the Loan Supplement and (c) the total
        amount of the relevant Loan to be made available to the Borrower on the
        Utilisation Date will be the Advance. If any such assumption proves to
        be incorrect, the Agent shall prepare a substitute schedule 2 to the
        relevant Loan Supplement to replace the existing schedule 2 on the same
        basis as the initial schedule 2 but with reference to the actual
        Utilisation Date, the actual rate of interest applicable to the relevant
        Loan and the actual amount drawn down in respect of the relevant
        Advance. Such substitute schedule 2 shall be signed by the Agent (for
        itself and on behalf of the Lenders and the Security Trustee) and the
        Borrower in substitution for, and shall for all purposes become,
        schedule 2 to the relevant Loan Supplement. Thereafter all payments of
        principal and interest in respect of the relevant Loan shall be made in
        accordance with the substitute schedule 2 to the relevant Loan
        Supplement.

3.7     DISBURSEMENT OF THE LOAN

3.7.1   On the terms and subject to the conditions of this Agreement, the
        Lenders severally agree to advance each Loan to the Borrower on the date
        set forth in the Utilisation Notice as set out below:-

        (a)     the British Lenders severally agree to advance the British
                Credits to the Borrower;

        (b)     the French Lenders severally agree to advance the French Credits
                to the Borrower; and

        (c)     the German Lenders severally agree to advance the German Credits
                to the Borrower.

3.7.2   Each Loan shall be made available in Dollars by payment to the Seller
        (to such account as the Seller may have specified to the Agent) on
        behalf of the Borrower.

3.7.3   All payments by the Lenders in respect of the Loan shall be effected on
        the Delivery Date and as between the British Lenders, the French Lenders
        and the German Lenders, in the 





<PAGE>   51



        proportions described in Clause 2.3.3 (Number and Composition of
        Advances) and provided for in the relevant Loan Supplement.

3.7.4   Subject to Parts I, II and III to Schedule 6 and Clause 3.7.6, the Loan
        shall be made available by each of the British Lenders, the French
        Lenders and the German Lenders in their respective proportions by
        payment to the relevant Lead Manager of its Relevant Proportion of the
        Loan and the Lead Managers shall make the Loan available by one
        disbursement, through the Agent by 10.00 (New York time), on the date
        requested by the Borrower if:

        (a)     such date is the Delivery Date and is a Banking Day which falls
                during the Availability Period; and

        (b)     the Agent shall have received a Utilisation Notice.

3.7.5   Each of the Lead Managers shall send a facsimile to the Agent two (2)
        Business Days prior to the proposed Utilisation Date attaching a copy of
        its payment instructions regarding the disbursement of the British
        Credits, the French Credits and the German Credits (as the case may be).

3.7.6   If, at the Borrower's request (in order that an Aircraft may be
        delivered outside banking hours New York time) and on receipt by the
        Agent of the documents required pursuant to Schedule 6 which appear on
        their face to be in order, the Agent itself delivers or arranges each
        Lead Manager severally to deliver to the Seller an unconditional and
        irrevocable undertaking to pay to the Seller an amount equal to the
        relevant Loan (in the case of an undertaking given by the Agent) or (in
        the case of such an undertaking of each Lead Manager in respect of a
        relevant Loan) an amount equal to the British Credits, the French
        Credits or the German Credits (as the case may be) respectively, on the
        Delivery Date or (if the Aircraft is to be delivered after the close of
        New York banking hours on the Delivery Date or the Delivery Date is
        scheduled to be a day other than a day on which banks in New York are
        open for business) on the Business Day next succeeding the Delivery Date
        then, notwithstanding the provisions of Clause 3.7.5, the relevant Loan
        shall be deemed to have been advanced on the date of such undertaking is
        delivered and released to the Seller. The Agent shall have no obligation
        to give such an undertaking to the Seller unless the Agent shall first
        have received either (i) amounts equal to the British Credits, the
        French Credits and the German Credits or (ii) corresponding undertakings
        from each Lead Manager in respect of the British Credits, the French
        Credits and the German Credits and each Lead Manager shall first have
        received corresponding undertakings from each relevant Lender in respect
        of that Lender's Relevant Proportion of the Loan.

3.8     NON-INVASIVE FEATURES

3.8.1   None of the Transaction Documents (except after the occurrence and
        during the continuation of a Third Trigger Event or a Termination Event)
        shall be registered, recorded or otherwise filed in any jurisdiction
        other than the jurisdiction of organisation of the Parent, the Borrower,
        the relevant Sub-Borrower or relevant Intermediate Lessee. Unless and
        until a Third Trigger Event or a Termination Event shall have occurred
        and be continuing (but without prejudice to (a) the provisions of Clause
        9.2 (Second Trigger Event) with respect to Advances made during the
        continuance of a Second Trigger Event in relation to Aircraft then
        subject to a Lease or an Intermediate Lease and (b) the negative 




<PAGE>   52



        pledge provisions contained in clause 4 of the Borrower Debenture, of
        each Sub-Borrower Debenture and of each Intermediate Lessee Debenture
        and in clause 3.8 of each Mortgage), the Borrower, any relevant
        Sub-Borrower or any relevant Intermediate Lessee shall alone and without
        any requirement for consent from the Security Trustee or any other
        person (but without prejudice to Clause 7.4 (Guarantor Covenants)), have
        all rights, powers, privileges, remedies and other benefits in respect
        of the Leases, Intermediate Leases and Sub-Leases, and the Warranties
        and the Engine Warranties, including to amend, supplement, waive or
        otherwise modify, enforce, extend or terminate a Lease, an Intermediate
        Lease or a Sub-Lease or to enter into or consent to a new Lease,
        Intermediate Lease or Sub-Lease or to use, release or modify any
        Security Deposit, Maintenance Reserves or other support or security,
        and, subject to the provisions of this Agreement, sell or otherwise
        transfer any Aircraft or any Sub-Borrower.

3.8.2   Each of the Representatives and the Lenders covenant with the Borrower,
        any Sub-Borrower and any Intermediate Lessee that, notwithstanding any
        other provision of the Transaction Documents, at any time so long as no
        Acceleration Event shall have occurred, not to take any action or cause
        to be taken any action, or permit any person claiming by, through or on
        behalf of it to take any action or cause any action, that would
        interfere with the possession, use, operation and quiet enjoyment of and
        other rights with respect to any Aircraft and all rents, revenues,
        profits and income therefrom, including, the right to enforce
        manufacturers' warranties, the right to apply or obtain insurance
        proceeds for damage to the Aircraft to the repair of the Aircraft and
        the right to engage in pooling, leasing and similar actions, in each
        case in accordance with the terms of this Agreement.

3.8.3   The Security Trustee agrees to release any Lien it may have upon any
        Engine upon the Borrower providing the Security Trustee with evidence
        reasonably satisfactory to it that a Replacement Engine has been
        obtained or upon the Total Loss payment being received (or Replacement
        Aircraft being provided) or in a case where the Airframe, but not such
        Engine, was the subject of a Total Loss.

3.8.4   The Security Trustee agrees that it will cooperate with the Borrower in
        changing the state of registration of any Aircraft at the Borrower's
        cost and as the Borrower may request provided that such request does not
        conflict with the Borrower's obligations under this Agreement.

3.8.5   The Security Trustee agrees that it will not claim, and upon the request
        of the Borrower the Security Trustee will confirm in writing that it
        does not claim, any right, title or interest in any engine or part
        (including any audio visual, telephonic, entertainment or similar
        equipment) that is installed on an Aircraft which does not constitute an
        Engine or Part.

3.9     ALTERNATIVE UTILISATIONS

3.9.1   The Borrower may, from time to time and by notice to the Agent, request
        that a Utilisation in respect of an Eligible Aircraft be an Alternative
        Utilisation, in which case the Borrower shall provide to the Agent such
        information as the Agent may reasonably request concerning:-

        (a)     the financial structure of the proposed Alternative Utilisation
                including the tenor, the proposed amortisation schedule and
                details of the proposed owner of the relevant Aircraft;




<PAGE>   53



        (b)     the proposed security structure, including details of all Liens
                to be created in respect of the Aircraft or any other property
                in favour of any relevant party; and

        (c)     the documents proposed to be entered into in relation to such
                Alternative Utilisation.

3.9.2   The Agent and the Lenders shall consider in good faith but without
        obligation any request for an Alternative Utilisation provided that the
        proposed structure confers on the Lenders, the Representatives and the
        Export Credit Agencies rights which are not materially different from
        their rights under the Transaction Documents in respect of any other
        Utilisation (including their respective rights under the relevant
        Aircraft Security Documents and the Support Agreements and rights of
        cross-acceleration and cross-collateralisation of Loans), and the
        Borrower acknowledges that (a) no Lender or Representative shall have
        any obligation to participate in any Alternative Utilisation except to
        the extent expressly agreed in any agreement entered into by such Lender
        or Representative in connection with such Alternative Utilisation and
        (b) an Export Credit Agency may be unable to support an Alternative
        Utilisation which utilises tax benefits in its home jurisdiction.

3.10    TAX LEASE

        The Agent and the Lenders will also consider in good faith, any tax
        lease proposed by the Borrower (under which the Borrower or Sub-Borrower
        would, under California law, still be the beneficial owner of the
        Aircraft) that does not involve an Alternative Utilisation but which may
        involve a Lien on the Aircraft, and if approved by the Majority Lenders
        such tax lease shall be permitted hereunder and the representations,
        warranties and covenants in the Transaction Documents shall be deemed
        modified accordingly.


4.      REPAYMENT AND PREPAYMENT

4.1     PAYMENT OF INTEREST

4.1.1   The Borrower shall pay interest on each Loan for each Interest Period at
        the fixed rates per annum specified in the relevant Loan Supplement.

4.1.2   Following receipt by the Agent of the Utilisation Notice, not less than
        two (2) Business Days before the Utilisation Date, the Agent shall
        confirm to the Guarantor, the Borrower and each Lender the blended rate
        applicable to the relevant Loan on the basis of the amount requested in
        the relevant Utilisation Notice.

4.1.3   Interest shall accrue from the Utilisation Date and shall be calculated
        on the outstanding unpaid principal amount of each Loan on the basis of
        a year of three hundred and sixty (360) days and the actual number of
        days elapsed and shall be payable in arrears on each Repayment Date.



<PAGE>   54




4.2     REPAYMENT OF PRINCIPAL

4.2.1   The Borrower shall repay each Loan in twenty (20) consecutive
        semi-annual repayments. Each Repayment Instalment shall comprise
        principal and accrued unpaid interest and the principal portion thereof
        shall:-

        (a)     in the case of the British Credits be the aggregate of the
                amounts set out opposite the relevant Repayment Date in column 4
                of Section A of Schedule 2, Part I to the relevant Loan
                Supplement;

        (b)     in the case of the French Credits be the aggregate of the
                amounts set out opposite the relevant Repayment Date in column 4
                of Section B of Schedule 2, Part I to the relevant Loan
                Supplement; and

        (c)     in the case of the German Credits be the aggregate of the
                amounts set out opposite the relevant Repayment Date in Column 4
                of Section C of Schedule 2, Part I to the relevant Loan
                Supplement;

        it being understood that the first Repayment Date in relation to each
        Loan shall be the first Business Day succeeding the second Quarter Date
        following the Delivery Date for the relevant Aircraft.

4.2.2   The principal amount outstanding in respect of each Loan shall amortise
        to zero in a straight line profile.

4.3     VOLUNTARY PREPAYMENT

4.3.1   The Borrower may voluntarily prepay one or more of the Loans at any time
        PROVIDED that:-

        (a)     the Agent shall have received from the Borrower not less than
                seven (7) Business Days' notice (which once given shall be
                irrevocable) of its intention to make such prepayment specifying
                the date on which such prepayment is to be made;

        (b)     any such prepayment shall be made in Dollars; and

        (c)     the Borrower shall pay to the Agent (i) the unpaid principal
                balance of each relevant Loan being prepaid, (ii) all interest
                on each relevant Loan being prepaid which has accrued to the
                date of actual prepayment and is unpaid and (iii) the Make-Whole
                Amount and (iv) Expenses (if any) in respect of each relevant
                Loan being prepaid as certified in writing by the Agent (which
                certificate shall be conclusive save for manifest error)
                providing reasonable details of the computation of such
                Make-Whole Amount made in accordance with the provisions of
                Clause 4.3.2 and of the Expenses (if any);

        and the Agent shall no later than six (6) Business Days prior to the
        date on which such prepayment is to be made inform each of the Lead
        Managers of its receipt of the Borrower's notice of prepayment.





<PAGE>   55


4.3.2   On the request in writing of the Borrower for a conclusive determination
        of the Make-Whole Amount in respect of a ten (10) Business Day period in
        which any prepayment under this Clause 4.3 (Voluntary Prepayment), or
        Clauses 4.4 (Prepayment following a Total Loss), 4.5 (Prepayment on
        Final Disposition), 4.6 (Prepayment on a Sub-Borrower Sale), 4.8
        (Prepayment if not Leased) or 4.9 (Prepayment if Post-Delivery
        Modifications not Completed Within Post-Delivery Modification Period)
        may be made by the Borrower, the Agent shall, within ten (10) Business
        Days of such request, provide the Borrower with a certificate of its
        conclusive determination of the Make-Whole Amount (consistent with
        paragraphs (x) and (y) of the definition of Make-Whole Amount and
        subject to any necessary rate adjustment referred to below in this
        Clause 4.3.2) applicable to each Business Day in a period of ten (10)
        Business Days commencing on the date of such certificate; and no later
        than one (1) Business Day after the Agent's receipt of such request, the
        Agent shall arrange for the Lead Manager of the British Credits to
        provide a list of banks to the Borrower from which the Borrower shall be
        entitled to nominate three reference banks for the purposes of ECGD's
        computation of any loss under sub-paragraph (v) of the definition of the
        Make-Whole Amount but if the Borrower fails to make a choice within two
        (2) Business Days of its receipt of such list of banks the Lead Manager
        of the British Credits may select such banks as it may think fit; it
        being understood, however, that the computation relating to the
        Make-Whole Amount, in so far as it relates to the French Credits and the
        German Credits, shall be subject to an adjustment as at the date of
        actual prepayment an account of any movement of rates between the date
        of certification and the date of actual prepayment.

4.3.3   No amount prepaid may be re-borrowed.

4.3.4   The Borrower shall pay all amounts due under Clause 4.3.1(c) into the
        Proceeds Account.

4.3.5   Upon irrevocable receipt in full of the amounts set out in Clause 4.2.1
        or Clause 4.3.1 by the Agent, the Security Trustee shall immediately
        release all the Aircraft Security Documents relating to each relevant
        Loan (including, with respect to any Sub-Borrower or Intermediate
        Lessee) and the title to the relevant Aircraft shall immediately be
        transferred by the Borrower or the relevant Sub-Borrower or the shares
        in the relevant Sub-Borrower shall immediately be transferred by the
        Borrower to the Guarantor or to another person which is not a party to
        any of the Transaction Documents. If the Borrower repays or prepays all
        the Loans in accordance with Clause 4.2.1 or Clause 4.3.1 and the
        Secured Obligations (exclusive of indemnities in respect of which no
        claims have been, or to the knowledge of the Security Trustee will be,
        asserted) have been paid in full, the Security Trustee shall release all
        the Aircraft Security Documents.

4.4     PREPAYMENT FOLLOWING A TOTAL LOSS

4.4.1   Subject to Clause 4.7 (Substitution of Aircraft), if at any time a Total
        Loss occurs in relation to an Aircraft the Borrower shall, on or prior
        to the expiry of the period of two hundred and ten (210) days commencing
        on the Total Loss Date or, if earlier, the date upon which the Security
        Trustee receives the Total Loss Proceeds (in this Clause 4.4 the "TOTAL
        LOSS PAYMENT DATE"), either:-

        (a)     pay to the Agent the aggregate of (i) the unpaid principal
                balance of the relevant Loan being prepaid, (ii) all interest on
                the relevant Loan being prepaid accrued to the actual date of
                actual prepayment and is unpaid and (iii) the Make-Whole Amount
                and Expenses (if any) in respect of each relevant Loan 




<PAGE>   56


                being prepaid as certified in writing by the Agent (which
                certificate shall be conclusive save for manifest error)
                providing reasonable details of the computation of such
                Make-Whole Amount made in accordance with the provisions of
                Clause 4.3.2 and of the Expenses (if any); or

        (b)     substitute the relevant Aircraft (or Sub-Borrower) in accordance
                with Clause 4.7 (Substitution of Aircraft),

        and until such repayment or substitution (and, in the case of a
        substitution, thereafter) the Borrower shall continue to make all
        payments of principal and interest in respect of the relevant Loan in
        accordance with this Agreement and the relevant Loan Supplement.

4.4.2   The Borrower shall pay all amounts due under Clause 4.4.1(a) into the
        Proceeds Account and immediately upon irrevocable receipt of such funds,
        the Security Trustee shall release the relevant Mortgage and the
        Borrower Debenture or relevant Sub-Borrower Debenture (as the case may
        be) in so far as it relates to the relevant Aircraft.

4.4.3   If, at any time prior to the Total Loss Payment Date, an Obligor regains
        possession of the Airframe after any event within the definition of
        Total Loss, and, provided the Aircraft is repaired as soon as
        practicable thereafter, the Borrower shall have the right to notify the
        Agent to continue the Aircraft under this Facility as if the event
        giving rise to the Total Loss had never occurred.


4.5     PREPAYMENT ON FINAL DISPOSITION

4.5.1   Subject to Clause 4.7 (Substitution of Aircraft), if the Borrower, or,
        as the case may be, a Sub-Borrower wishes to sell an Aircraft, the
        Borrower shall, on or before the date of completion of the Final
        Disposition, either:-

        (a)     pay to the Agent the aggregate of (i) the unpaid principal
                balance of the relevant Loan being prepaid (ii) all interest on
                the relevant Loan being prepaid accrued to the actual date of
                prepayment that is unpaid and (iii) the Make-Whole Amount and
                Expenses (if any) in respect of each relevant Loan being prepaid
                as certified in writing by the Agent (which certificate shall be
                conclusive save for manifest error) providing reasonable details
                of the computation of such Make-Whole Amount made in accordance
                with the provisions of Clause 4.3.2 and of the Expenses (if
                any); or

        (b)     substitute the relevant Aircraft (or Sub-Borrower) in accordance
                with Clause 4.7 (Substitution of Aircraft),

        and until such repayment or substitution (and, in the case of a
        substitution, thereafter) the Borrower shall continue to make all
        payments of principal and interest in respect of the relevant Loan in
        accordance with the terms of this Agreement and the relevant Loan
        Supplement.

4.5.2   The Borrower shall pay all amounts due under Clause 4.5.1(a) into the
        Proceeds Account and immediately upon irrevocable receipt of such funds,
        the Security Trustee shall release the relevant Mortgage and the
        Borrower Debenture or relevant Sub-Borrower Debenture (as the case may
        be) in so far as it relates to the relevant Aircraft.




<PAGE>   57



4.6     PREPAYMENT ON A SUB-BORROWER SALE

4.6.1   Subject to Clause 4.7 (Substitution of Aircraft), if the Borrower wishes
        to sell the shares in a Sub-Borrower, the Borrower shall, on or before
        the date of completion of the Sub-Borrower Sale, either:-

        (a)     pay to the Agent the aggregate of (i) the unpaid principal
                balance of the relevant Loan being prepaid (ii) all interest on
                the relevant Loan accrued to the actual date of prepayment that
                is unpaid and (iii) the Make-Whole Amount and Expenses (if any)
                in respect of each relevant Loan being prepaid as certified in
                writing by the Agent (which certificate shall be conclusive save
                for manifest error) providing reasonable details of the
                computation of such Make-Whole Amount made in accordance with
                the provisions of Clause 4.3.2 and of the Expenses (if any); or

        (b)     substitute the relevant Aircraft (or Sub-Borrower) in accordance
                with Clause 4.7 (Substitution of Aircraft),

        and until such repayment or substitution (and, in the case of a
        substitution, thereafter) the Borrower shall continue to make all
        payments of principal and interest in respect of the relevant Loan in
        accordance with the terms of this Agreement and the relevant Loan
        Supplement.

4.6.2   The Borrower shall pay all amounts due under Clause 4.6.1(a) into the
        Proceeds Account and immediately upon irrevocable receipt of such funds,
        the Security Trustee shall release the Mortgage in relation to the
        Aircraft owned by the Sub-Borrower, the relevant Sub-Borrower Debenture
        and the relevant Charge over Shares of Sub-Borrower.

4.7     SUBSTITUTION OF AIRCRAFT

4.7.1   Subject to no Relevant Event or Termination Event having occurred and
        continuing, if a Total Loss or a Final Disposition occurs in respect of
        an Aircraft, or the Borrower sells the shares in a Sub-Borrower, the
        Borrower or any Sub-Borrower (as the case may be) may substitute for
        such Aircraft or, as the case may be, the relevant Aircraft owned by
        such Sub-Borrower (the "EXISTING AIRCRAFT") one or more other Airbus
        aircraft (the "REPLACEMENT AIRCRAFT") (including by use of a
        Sub-Borrower) subject always to the provisions of this Clause 4.7.

4.7.2   The Borrower shall give the Security Trustee written notice of its
        intention to substitute an Existing Aircraft at least twenty (20)
        Business Days prior to such substitution and, upon receipt of such
        notice, the Security Trustee shall give a copy of it to the Lead
        Managers. Such notice shall specify the age of the Replacement Aircraft
        since delivery by the Manufacturer and whether a Sub-Borrower or an
        Intermediate Lessee is to be incorporated into the structure.

4.7.3   Each Replacement Aircraft shall be an Airbus aircraft of the same or
        different type not more than five years older than the Existing Aircraft
        and of at least the same fair market value (in the aggregate if more
        than one Replacement Aircraft are being substituted for an Existing
        Aircraft). If a Replacement Aircraft is one year old or less, then its
        fair market value will be deemed to be its Aircraft Purchase Price, and
        if a Replacement Aircraft is 




<PAGE>   58



        more than one year old and the Borrower and the Security Trustee (acting
        reasonably) are unable to agree the fair market value of such
        Replacement Aircraft, the Security Trustee may by written notice request
        the Borrower to appoint an independent aircraft appraiser to assess the
        fair market value of such Replacement Aircraft without reference to the
        amount of gross sale proceeds payable to or received by the Borrower or
        a Sub-Borrower (as the case may be) for the Existing Aircraft or the
        shares in the Sub-Borrower (as the case may be). The assessment of any
        such appraiser appointed by the Borrower shall be conclusive and binding
        on the Borrower and the Security Trustee.

4.7.4   The Borrower shall enter into or shall procure that the relevant
        Sub-Borrower (if any) or relevant Intermediate Lessee (if any) enters
        into all such documents as are required in order for the Replacement
        Aircraft to be an Aircraft including the Aircraft Security Documents in
        substitution for the Existing Aircraft and for the Loan in respect of
        the Existing Aircraft to relate to the Replacement Aircraft.

4.7.5   The effectiveness of the substitution of the Replacement Aircraft shall
        be subject to receipt by the Agent of the following conditions precedent
        in form and substance satisfactory to the Agent:

        (a)     evidence satisfactory to the Security Trustee (including a legal
                opinion from counsel to the Lenders in the jurisdiction in which
                transfer of the Replacement Aircraft takes place) that the
                Borrower or the relevant Sub-Borrower (as the case may be) has
                obtained title to the Replacement Aircraft free and clear of any
                Liens other than Permitted Liens including a certified copy of a
                Replacement Bill of Sale for the Replacement Aircraft, free of
                any Liens, other than Permitted Liens;

        (b)     a Mortgage, if applicable, or an alternative security
                satisfactory to the Security Trustee, acting upon the
                instructions of the Majority Lenders with respect to the
                Replacement Aircraft to be executed by the Borrower or the
                Sub-Borrower (as the case may be) and the Security Trustee;

        (c)     the relevant legal opinions from counsel to the Lenders as
                provided in paragraph 4 of Part I to Schedule 6.

        (d)     a legal opinion from counsel to the Lenders in the jurisdiction
                in which the Borrower or the relevant Sub-Borrower (as the case
                may be) is organised concerning the filing or registration and
                perfection in that jurisdiction of the Mortgage (or alternative
                security) with respect to the Replacement Aircraft, the Charge
                over Shares of Sub-Borrower (if any) and any other Aircraft
                Security Documents which will be entered into by the Borrower
                and/or the relevant Sub-Borrower (if any) and the validity of
                the replacement Sub-Borrower Guarantee;

        (e)     evidence of insurance having been effected in respect of the
                Aircraft with the Security Trustee named as a contract party and
                (to the extent possible under AVN67B, or such other endorsement
                as may be applicable) loss payee;

        (f)     if applicable, copies of the certificate of registration of the
                Replacement Aircraft and airworthiness issued by the Aviation
                Authority;




<PAGE>   59



        (g)     evidence that the existing Support Agreements relating to the
                Existing Aircraft shall have been amended or replaced to such
                extent (if any) as may be necessary to reflect its substitution
                by the Replacement Aircraft;

        (h)     if a Sub-Borrower or Intermediate Lessee is introduced upon a
                substitution into the structure, the following documents:

                (i)     Accession Deed (if such person has not previously
                        acceded to the Transaction Documents);

                (ii)    Sub-Borrower Guarantee (if applicable);

                (iii)   Sub-Borrower Debenture (if applicable);

                (iv)    Intermediate Lessee Debenture (if applicable);

                (v)     Charge Over Shares of Sub-Borrower (if applicable);

                (vi)    Charge Over Shares of Intermediate Lessee (if
                        applicable);

                (vii)   Lease Security Assignment (if applicable);

                (viii)  Intermediate Lease Security Agreement (if applicable);
                        and

        (i)     evidence to the Security Trustee that the Sub-Borrower Accounts
                or the Intermediate Lessee Accounts (as the case may be) have
                been opened and that US$10 has been deposited in each of the
                Sub-Borrower Accounts or Intermediate Lessee Accounts (as the
                case may be) as a condition precedent to the release of the
                Mortgage over the Existing Aircraft.

4.7.6   TIMING OF SUBSTITUTION

(A)     If a substitution is proposed as a result of the Total Loss of an
        Existing Aircraft, such substitution shall occur within two hundred and
        ten (210) days of the Total Loss Date for that Aircraft. In the event
        that the Security Trustee receives Total Loss Proceeds in respect of an
        Existing Aircraft prior to the expiration of such two hundred and ten
        (210) day period, at the Borrower's request, such Total Loss Proceeds
        shall be held for or by the Security Trustee in an interest bearing
        account at the cost of the Borrower in the jurisdiction chosen by the
        Borrower, until such substitution is effected, whereupon they will be
        released with such interest to the Borrower. If such substitution is not
        effected as provided above within such two hundred and ten (210) day
        period such Total Loss Proceeds and such interest shall be applied to
        the prepayment of the amounts set out in Clause 4.4.1 (Prepayment
        following a Total Loss).

(B)     If a substitution is proposed as a result of a transfer of an Aircraft
        or of a Sub-Borrower, the substitution of the Replacement Aircraft for
        the Existing Aircraft or substitution by the shares of a replacement
        Sub-Borrower, (as the case may be) shall occur prior to or at the same
        time as transfer of title in the Existing Aircraft or title in the
        shares of the existing Sub-Borrower shall pass to the transferee.




<PAGE>   60



(C)     The Security Trustee shall release the relevant Aircraft Mortgage, the
        Borrower Debenture or the Sub-Borrower Debenture (as the case may be)
        and the relevant Sub-Borrower Charge Over Shares (if applicable) in so
        far as they relate to the Existing Aircraft immediately upon
        substitution of the shares of a replacement Sub-Borrower or a
        Replacement Aircraft for the existing Sub-Borrower or for the Existing
        Aircraft (as the case may be);

(D)     The Borrower undertakes to indemnify the Security Trustee for any
        Expenses incurred by the Security Trustee under this Clause 4.7.6.

4.7.7   As soon as a substitution has occurred, the Existing Aircraft shall no
        longer be an Aircraft under the Transaction Documents and the
        Replacement Aircraft shall be an Aircraft under the Transaction
        Documents and the Transaction Documents shall be construed accordingly.
        The Loan in respect of the Existing Aircraft shall relate to the
        Replacement Aircraft and shall amortise in accordance with schedule 2 to
        the relevant Loan Supplement. If the shares in a Sub-Borrower are sold
        by the Borrower, such Sub-Borrower shall no longer be a Sub-Borrower
        under the Transaction Documents.

4.7.8   The Borrower shall pay for the cost of obtaining the appraisals referred
        to in Clause 4.7.3 and shall pay all Expenses incurred by the relevant
        parties in connection with the execution of and any amendment of the
        Transaction Documents required as a result of the provisions of this
        Clause 4.7.

4.8     PREPAYMENT IF NOT LEASED

4.8.1   Without prejudice to Clause 4.8.2, if an Aircraft is not delivered to a
        Lessee pursuant to a Lease within one hundred and eighty (180) days
        after the relevant Delivery Date, the Borrower shall, on the first
        Banking Day following the expiry of such one hundred and eighty (180)
        day period, pay into the Proceeds Account the aggregate of (i) the
        unpaid principal balance of the relevant Loan being prepaid (ii) all
        interest on the relevant Loan accrued to the actual date of prepayment
        that is unpaid (iii) Expenses (if any) and (iv) the Make-Whole Amount in
        respect of the relevant Loan being prepaid as certified in writing by
        the Agent (which certificate shall be conclusive save for manifest
        error) providing reasonable details of the computation of such
        Make-Whole Amount made in accordance with the provisions of Clause 4.3.2
        and of the Expenses (if any); and immediately upon irrevocable receipt
        of such funds payable under this Clause 4.8.1 in the Proceeds Account,
        the Security Trustee shall release the relevant Mortgage and the
        Borrower Debenture or relevant Sub-Borrower Debenture (as the case may
        be) in so far as it relates to the relevant Aircraft.

4.8.2   The Borrower may, subject to paragraphs (a), (b), (c) and (d) of Clause
        7.2.1 (Leasing and Insurance Covenants of Borrower, Sub-Borrower and
        Intermediate Lessee), lease an Aircraft to a Subsidiary of the Guarantor
        incorporated outside the United States of America to avoid having to
        prepay the relevant Loan pursuant to Clause 4.8.1.

4.9     PREPAYMENT IF POST-DELIVERY MODIFICATIONS NOT COMPLETED WITHIN
        POST-DELIVERY MODIFICATION PERIOD

        If any post delivery modifications in respect of an Aircraft are not
        carried out within the relevant Post-Delivery Modification Period, the
        Borrower shall, on the first Banking Day following the expiry of the
        relevant Post-Delivery Modification Period repay into the 



<PAGE>   61



        Proceeds Account the proportion of the relevant Loan relating to such
        post delivery modifications together with all interest accrued and
        unpaid thereon, Expenses (if any) and the Make-Whole Amount as certified
        in writing by the Agent (which shall be conclusive save for manifest
        error) providing reasonable details of the computation of such
        Make-Whole Amount made in accordance with the provisions of Clause 4.3.2
        and of the Expenses (if any).

4.10    MANDATORY PREPAYMENT EVENT

4.10.1  A mandatory prepayment event in respect of a particular Loan shall exist
        if:

        (a)     the conditions set out in sub-paragraphs (a) or (b) of paragraph
                (A) of Part III to Schedule 6 have not been fulfilled; or

        (b)     the Borrower has failed to comply with the provisions of Clause
                9.1.1 (First Trigger Event) in relation to such Loan within the
                period stipulated in Clause 9.1.2.

        If the mandatory prepayment event shall occur and be continuing the
        Security Trustee may, without having to resort to any legal procedure,
        demand immediate repayment of the relevant Loan, whereupon the same
        shall become immediately due and payable together with all interest
        accrued thereon, Expenses (if any) and the Make-Whole Amount (as
        certified in writing by the Agent (which shall be conclusive save for
        manifest error)); and immediately upon irrevocable receipt of such funds
        payable under this Clause 4.10.1 in the Proceeds Account, the Security
        Trustee shall release the relevant Mortgage and the Borrower Debenture
        or relevant Sub-Borrower Debenture (as the case may be), in so far as
        each relates to the relevant Aircraft. Failure to pay the amounts
        referred to in this Clause 4.10.1 shall constitute a Termination Event
        in accordance with Clause 10.1(a) (Termination Events).

4.10.2  A mandatory prepayment event shall exist in relation to all Loans if the
        Borrower has failed to comply with the provisions of Clause 9.3.1 (Third
        Trigger Event) within the period stipulated in Clause 9.3.3. If the
        mandatory prepayment event shall occur and be continuing the Security
        Trustee may, without having to resort to any legal procedure, demand
        immediate repayment of all Loans which are then outstanding, whereupon
        the same shall become immediately due and payable together with all
        interest accrued thereon, Expenses (if any) and the Make-Whole Amount in
        respect of each Loan (as certified in writing by the Agent (which shall
        be conclusive save for manifest error)). Failure to pay the amount
        referred to in this Clause 4.10.2 shall constitute a Termination Event
        in accordance with Clause 10.1(a) (Termination Events).

4.10.3  The Borrower shall pay sums due under this Clause 4.10 into the Proceeds
        Account.

4.11    OVERDUE PAYMENTS

4.11.1  If the Borrower fails to pay on the due date any sum payable by the
        Borrower to a Lender or Representative under any Transaction Document
        (or fails to pay on demand any sum which is expressed to be payable on
        demand) the Borrower shall pay interest to the Agent for the account of
        the relevant Lender or Representative on such unpaid amount from (and
        including) the due date or, as the case may be, the date of demand to
        (but excluding) the 





<PAGE>   62



        date of actual payment (after as well as before judgement) at the
        Default Rate for each Default Interest Period.

4.11.2  Interest at the Default Rate for each Default Interest Period shall be
        calculated on the basis of a year of three hundred and sixty (360) days
        and the actual number of days elapsed and shall accrue from day to day
        and be due and payable on the last day of each Default Interest Period
        and, if not paid, shall, to the extent permitted by applicable law, be
        compounded on such date.

4.11.3  The payment of interest by the Borrower pursuant to Clause 4.11.1 shall
        in no way preclude any Lender or Representative from making any other
        claim or pursuing any other right or remedy that may be available to it
        or otherwise prejudice any such claim, right or remedy.

4.12    DEDUCTIONS AND WITHHOLDINGS

4.12.1  All sums payable to the Agent, the Security Trustee and the Lenders
        pursuant to or in connection with any Transaction Document shall be paid
        in full without any set-off or counterclaim whatsoever and free and
        clear of all deductions or withholdings of or on account of Tax
        whatsoever imposed by Bermuda, the United States of America or the
        jurisdiction of incorporation of a Sub-Borrower (or, if different, the
        jurisdiction from which it makes any payment) save only as may be
        required by law.

4.12.2  Without limiting the Borrower's obligations under this Clause 4.12 each
        party which is organised under the laws of a jurisdiction outside the
        United States shall in the case of each initial Lender, and each of the
        Representatives, on or prior to the date of its execution and delivery
        of this Agreement and, in the case of each Transferee, on the date of
        execution of each Transfer Certificate pursuant to which it becomes a
        Lender and in each tax year thereafter, provide the Borrower with the
        United States of America Internal Revenue Service form 1001, 4224, 8709
        or W-8, or any successor or other form prescribed by the Internal
        Revenue Service of the United States of America (the "INTERNAL REVENUE
        SERVICE FORMS") as appropriate (subject to having received the relevant
        form from the Borrower) certifying that such party is exempt or
        otherwise to obtain an exemption from United States withholding tax on
        all payments pursuant to this Agreement or in connection with any
        Transaction Document.

4.12.3  If any deduction or withholding is required by law and is imposed by
        Bermuda, the United States of America or the jurisdiction of
        incorporation of a Sub-Borrower (or, if different, the jurisdiction from
        which it makes any payment) in respect of any payment due (other than
        payments covered by Clause 4.12.4) to the Agent, the Security Trustee or
        any Lender pursuant to or in connection with any Transaction Document,
        the Borrower or the Guarantor or any other Obligor shall:-

        (a)     (if the payment is to be made by the Borrower or the Guarantor
                or any other Obligor), ensure that the deduction or withholding
                is made and that it does not exceed the minimum legal
                requirement therefor;

        (b)     (if the payment is to be made by the Borrower or the Guarantor
                or any other Obligor), pay or procure the payment of the full
                amount deducted or withheld to the relevant Taxation or other
                authority in accordance with the applicable law;



<PAGE>   63




        (c)     (if the payment is to be made by the Borrower or the Guarantor
                or any other Obligor), increase (subject to Clause 4.12.5) the
                payment in respect of which the deduction or withholding is
                required so that the net amount received by the relevant Lender
                or Representative (as the case may be) after the deduction or
                withholding has been made (and after taking account of any
                further deduction or withholding which is required to be made as
                a consequence of the increase) shall equal the amount which that
                Lender, Representative or Export Credit Agency would have been
                entitled to receive in the absence of any requirement to make a
                deduction or withholding;

        (d)     (if the payment is to be made by any person other than the
                Borrower or the Guarantor or any other Obligor), the Borrower
                shall pay (subject to Clause 4.12.5) directly to the Agent for
                the account of the relevant Representative or the relevant
                Lender or the relevant Export Credit Agency (as the case may be)
                such sum (a "COMPENSATING SUM") as will, after taking into
                account any deduction or withholding which the payer is obliged
                to make from the compensating sum, enable the relevant
                Representative, Lender or the relevant Export Credit Agency (as
                the case may be) to receive, on the due date for payment, a net
                sum equal to the sum which it would have received in the absence
                of any requirement to make a deduction or withholding; and

        (e)     (if the payment is to be made by the Borrower or the Guarantor
                or any other Obligor), promptly deliver to the Agent or procure
                the delivery of appropriate receipts evidencing the deduction or
                withholding which has been made

        PROVIDED that where the Guarantor makes any payment on behalf of the
        Borrower and/or any other Obligor in applying Clause 4.12.3(d) above,
        any withholding or deduction arising as a result of the payment being
        due from any of the Obligors and any deduction or withholding arising as
        a result of the payment being made by the Guarantor in its capacity as
        guarantor of the Guaranteed Obligations (as defined in the Agreement)
        will be taken into account in determining the compensating sum.

4.12.4  If a Representative is obliged to make any deduction or withholding from
        any payment to a Lender (an "AGENCY PAYMENT") which relates to an amount
        received by that Representative on a payment from the Borrower, the
        Guarantor or the Sub-Borrower hereunder, for the account of that Lender
        pursuant to this Agreement or any of the Aircraft Operative Documents
        and such deduction or withholding is on account of a Tax imposed by
        Bermuda, the United States of America or the jurisdiction of
        incorporation of a Sub-Borrower, the Borrower or the Guarantor or any
        other Obligor shall, subject to Clause 4.12.5, pay directly to the
        Lender such sum (a "COMPENSATING SUM") as will, after taking into
        account any deduction or withholding which the Borrower is obliged to
        make from the compensating sum, enable the Lender to receive, on the due
        date for payment of the agency payment, an amount equal to the agency
        payment which the Lender would have received in the absence of any
        requirement to make a deduction or withholding.

4.12.5  The Borrower shall not be obliged to make payment to pay an increased
        amount pursuant to Clause 4.12.3(c) or a compensating sum pursuant to
        (and as defined in) Clause 4.12.3(d) or Clause 4.12.4 on account of any
        Tax or Tax Liability to the extent that such Tax or Tax Liability:-



<PAGE>   64



        (a)     is imposed by the United States of America or Bermuda and does
                not arise as a result of a Change in Law occurring after the
                date of this Agreement;

        (b)     arises from any action or omission which constitutes wilful
                misconduct, fraud or reckless disregard with knowledge of the
                probable consequences thereof on the part of such Indemnitee;

        (c)     is caused by such Indemnitee's breach of any express
                representation made by it in any Transaction Document or of any
                express obligation under any Transaction Document (but excluding
                any such breach or failure in consequence (directly or
                indirectly) of a breach by the Borrower or any other Obligor of
                any representation or warranty contained in or of their
                respective obligations under any Transaction Document);

        (d)     comprises a Tax on the overall net income, profit or capital
                gains of any Indemnitee (or, in the case of any Indemnitee
                acting through a branch outside the main jurisdiction in which
                it is resident for Tax purposes, comprises a Tax on the overall
                net income, profit or capital gains of that Indemnitee in the
                jurisdiction to which that Indemnitee's interest in the
                Transaction is properly attributable for Tax purposes)
                attributable to any sums receivable by any Indemnitee pursuant
                to any Transaction Document;

        (e)     comprises any penalty, addition to Tax, fine or interest on or
                in respect of a Tax or Tax Liability which would not have arisen
                but for avoidable delay or failure by such Indemnitee in the
                filing of Tax returns which such Indemnitee was obliged to file
                by any law of the jurisdiction of incorporation or, in the case
                of a Lender, the jurisdiction in which its Lending Office is
                located, and which such Indemnitee ought reasonably to have been
                aware it was so obliged to file in connection with the
                Transaction or the payment of Taxes other than any such delay or
                failure in consequence (directly or indirectly) of a request by
                the Borrower or any Obligor or a delay of or failure by the
                Borrower or any Obligor duly and punctually to perform any of
                their respective obligations under the Transaction Documents or
                in consequence of any event or circumstance outside the
                reasonable control of such Indemnitee or otherwise caused
                (directly or indirectly) by the Borrower or any Obligor;

        (f)     is imposed by a jurisdiction other than the main jurisdiction in
                which such Indemnitee is resident for Tax purposes to the extent
                that it gives rise to a corresponding credit which such
                Indemnitee has retained and utilised against any Tax Liability
                imposed in the main jurisdiction in which such Indemnitee is so
                resident;

        (g)     would not have arisen but for:-

                (i)     any failure by such Indemnitee to file any relevant Tax
                        return or Tax computation which such Indemnitee was
                        obliged to file by any law of the jurisdiction of
                        incorporation or, in the case of a Lender, the
                        jurisdiction in which its Lending Office is located or
                        any documents which such Lender is obliged to file as a
                        result of any applicable law, regulation, practice,
                        concession, official directive, ruling, request, notice,
                        guideline, statement of policy or practice 




<PAGE>   65



                        statement by the Bank of England, the Banque de France,
                        the Deutsche Bundesbank, the European Central Bank, the
                        Federal Reserve Bank of New York, the European Union or
                        any central bank, Tax, fiscal, governmental, local,
                        international, national or other competent authority or
                        agency (whether or not having the force of law but in
                        respect of which compliance by banks or other financial
                        institutions or other persons in the relevant
                        jurisdiction is customary) and in each case which such
                        Indemnitee ought reasonably to have been aware it was so
                        obliged to file in connection with the Transaction
                        except for any such failure caused (directly or
                        indirectly) by any action or inaction of the Borrower or
                        any Obligor or any event or circumstance outside the
                        reasonable control of such Indemnitee; or

                (ii)    any failure (subject to the same exceptions and
                        exclusions as set out in Clause 4.12.5(g)(i)) to file or
                        provide the Borrower or the relevant Lessee with any Tax
                        claims, forms (including the Internal Revenue Service
                        Forms), affidavits, declarations or other like documents
                        which the Borrower or the relevant Lessee has reasonably
                        requested such Indemnitee in writing to file or provide
                        (any such request containing sufficient detail to enable
                        such Indemnitee to comply with the terms thereof)
                        unless:-

                        (aa)    except with respect to the Internal Revenue
                                Service Forms, such Indemnitee determines acting
                                in good faith but nevertheless in its sole
                                discretion that it is unable to file or provide
                                or that it would be illegal or contrary to any
                                applicable law, official regulation, practice,
                                concession, directive, ruling, request, notice,
                                guideline, statement of policy or practice
                                statement by the Bank of England, the Banque de
                                France, the Deutsche Bundesbank, the European
                                Central Bank, the Federal Reserve Bank of New
                                York, the European Union or any central bank,
                                Tax, fiscal, governmental, local, international,
                                national or other competent authority or agency
                                (whether or not having the force of law but in
                                respect of which compliance by banks or other
                                financial institutions or other persons in the
                                relevant jurisdiction is customary) for such
                                Indemnitee so to do or so to do would or may
                                result in the breach of any agreement or
                                confidentiality undertaking or the disclosure of
                                any information about such Indemnitee's Tax
                                affairs which such Indemnitee considers (in its
                                bona fide opinion) to be of a confidential
                                nature; or

                        (bb)    in the case of the Internal Revenue Service
                                Forms, such failure is due to a Change in Law
                                occurring subsequent to the date on which any of
                                the Internal Revenue Service Forms was
                                originally required to be provided; or





<PAGE>   66


                        (h)     is on or arises from any transfer by a Lender of
                                any of its rights, benefits and/or obligations
                                hereunder other than pursuant to Clause 15.2
                                (Prepayment of Affected Loans and Replacement of
                                Affected Lender).

4.12.6  TAX BENEFIT

        If a Lender or Representative (except to the extent that an Export
        Credit Agency becomes a Lender) determines, in its absolute discretion,
        that it has received, realised, utilised and retained a Tax benefit by
        reason of any deduction or withholding in respect of which the Borrower
        has made an increased payment or paid a compensating sum under this
        Clause 4.12, such Lender or Representative shall, provided it has
        received all amounts which are then due and payable by the Borrower, and
        each of the Obligors under the Transaction Documents or, to the extent
        that the Tax benefit exceeds the amounts then due and payable, has
        set-off such amounts against the Tax benefit, pay to the Borrower (to
        the extent that the Lender or Representative can do so without
        prejudicing the amount of such benefit or repayment and the right of
        such Lender or Representative to obtain any other benefit, relief or
        allowance which may be available to it) such amount, if any, as such
        Lender or Representative in its bona fide opinion shall determine will
        leave such Lender or Representative in no worse position than such
        Lender or Representative would have been in if the deduction or
        withholding had not been required (and taking into account any set-off
        as referred to above) PROVIDED that:

        (a)     each Lender and Representative shall have an absolute discretion
                as to the time at which and the order and manner in which it
                realises or utilises any Tax benefit and shall not be obliged to
                arrange its business or its Tax affairs in any particular way in
                order to be eligible for any Tax benefit;

        (b)     no Lender or Representative shall be obliged to disclose any
                information regarding its business, Tax affairs or Tax
                computations;

        (c)     if any Lender or Representative has made a payment to the
                Borrower pursuant to this Clause 4.12 on account of any Tax
                benefit and it subsequently transpires that such Lender or
                Representative did not receive that Tax benefit, or received a
                lesser Tax benefit or has lost or been denied such Tax benefit,
                the Borrower shall pay on written demand to such Lender or
                Representative such sum as such Lender or Representative may
                determine as being necessary to restore the after-Tax position
                of the Lender or Representative to that which it would have been
                had no adjustment under this proviso (c) been necessary; and

        (d)     the Lender or Representative shall not be obliged to make any
                payment under this Clause 4.12 if, by doing so, it would
                contravene the terms of any applicable law or any notice,
                direction or requirement of any governmental or regulatory
                authority (whether or not having the force of law but in respect
                of which compliance by banks or other financial institutions or
                other persons in the relevant jurisdiction is generally
                customary).

4.13    CURRENCY OF PAYMENT

        All amounts payable to the Agent, the Security Trustee and/or the
        Lenders pursuant to or in connection with this Agreement or any of the
        Aircraft Operative Documents shall, 





<PAGE>   67



        unless otherwise provided in the relevant notice or demand for payment,
        be paid in Dollars to the Agent (where appropriate, for the account of
        the relevant Lender or the Security Trustee).

4.14    PERFORMANCE PROCEDURE

4.14.1  On each date on which an amount is due from the Borrower in connection
        with any Loan pursuant to this Agreement or any of the Aircraft
        Operative Documents, the Borrower shall no later than 1.00 pm (New York
        time) on such due date make such amount available to the Agent by
        payment in Dollars in same day funds (or such other funds as may from
        time to time be customary for the settlement in New York City of
        international banking transactions in Dollars) to the Agent's account
        with First Chicago International, New York Branch, Account Title:
        Halifax Plc Treasury, Account No. 1043132 (or to such other account in
        New York City as the Agent may upon not less than five (5) Banking Days'
        written notice from time to time designate), or, if the payment is to be
        made in a currency other than Dollars, to such account as may from time
        to time be nominated in writing by the Agent by not less than five (5)
        Banking Days' notice.

4.14.2  Upon receipt by the Agent of an amount referred to in Clause 4.14.1 the
        Agent shall if such amount is received by 1.00 pm (New York time) on the
        due date make available on such due date (and otherwise on the next
        Banking Day) to the relevant Lead Manager such portion of the amount so
        received as represents the aggregate of the entitlement of the British
        Lenders, the French Lenders or the German Lenders (as the case may be)
        of such amount in such funds as are received by the Agent by payment to
        such account as the relevant Lead Manager may have specified in writing.

4.14.3  Without prejudice to the provisions of Clause 4.14.2, the Agent shall
        not be obliged to make available to any Lead Manager or any Lender any
        sum which it is expecting to receive for the account of such Lead
        Manager or such Lender pursuant to this Agreement or any of the Aircraft
        Operative Documents until it has been able to establish that it has
        received that sum from the Borrower. If and to the extent that the Agent
        does pay such sum to a Lead Manager but it subsequently transpires that
        the Agent had not received the relevant sum:-

        (a)     the relevant Lead Manager shall on request by the Agent refund
                such sum to the Agent; and

        (b)     the relevant Lead Manager shall on request by the Agent pay to
                the Agent the amount (as certified by the Agent) which will
                indemnify the Agent against any funding or other cost, loss,
                expense or liability as a result of making available or paying
                out that sum before receiving it; and

        (c)     each Lender shall indemnify the relevant Lead Manager in respect
                of its Relevant Proportion of the amounts referred to in
                paragraphs (a) and (b) above.

4.14.4  If any amount falls due to be paid to the Agent or any Lender pursuant
        to or in connection with this Agreement or any of the other Transaction
        Documents on a day which is not a Banking Day, then it shall be due and
        payable on the immediately succeeding Banking Day unless such Repayment
        Date falls in the calendar month next succeeding that in which it would
        otherwise have fallen in which case it shall fall on the immediately
        preceding Banking Day and the amount shall not be adjusted.





<PAGE>   68



5.      GUARANTEE AND INDEMNITY

5.1     GUARANTEE AND INDEMNITY

5.1.1   In consideration of the Lenders agreeing to make available the Facility
        to the Borrower, the Guarantor:-

        (a)     as primary obligor and not as surety only, hereby
                unconditionally and irrevocably guarantees to each
                Representative and each Lender the due and punctual observance
                and performance by any or all of the Obligors of all of the
                Guaranteed Obligations;

        (b)     hereby unconditionally covenants with and undertakes to each
                Representative and each Lender that in the event of a default by
                any or all of the Obligors in the observance or performance for
                whatever reason of any of their respective Guaranteed
                Obligations, the Guarantor shall on demand perform such
                Guaranteed Obligation, or cause such Guaranteed Obligation to be
                performed, punctually as if such Guaranteed Obligation were
                performed by the relevant Obligor; and

        (c)     as a primary obligation, undertakes to indemnify each
                Representative and each Lender on demand and on a full indemnity
                basis from and against any and all Losses including, without
                duplication, any Make-Whole Amount or Expenses incurred or
                sustained by any Representative and/or any Lender as a result of
                the whole or any part of the Guaranteed Obligations being or
                becoming void, voidable, unenforceable or ineffective as against
                any or all of the Obligors for any reason whatsoever
                irrespective of whether such reason or any related fact or
                circumstance was known or ought to have been known to either of
                the Representatives, any of the Lenders or any of their
                respective officers, employees, agents or advisers.

5.1.2   Any demand under Clause 5.1.1 shall be in writing and may be made by the
        relevant Lender or Representative or by the Agent on its behalf and
        shall not be made before the last day of the relevant grace period of
        five (5) Business Days or ten (10) Business Days referred to in Clause
        10.1(a) (Termination Events) and the Guarantor shall not be in default
        hereunder for its failure to pay or perform such Guaranteed Obligation,
        as demanded hereunder, unless and until expiration of the applicable
        grace period in Clause 10.1(a) (Termination Events).

5.2     PRINCIPAL DEBTOR

        As a separate and alternative stipulation in addition to its liabilities
        in Clause 5.1, the Guarantor hereby agrees that any part of the
        Guaranteed Obligations which is expressed to be performed by any or all
        of the Obligors under the Transaction Documents but which may not be
        recoverable from, or capable of performance by, the Guarantor on the
        footing of a guarantee (whether by reason of the dissolution of any or
        all of the Obligors or any reconstruction or amalgamation in which or as
        a consequence of which any or all of the Obligors loses its separate
        corporate identity or any other fact or circumstance whatsoever and
        whether or not such fact or circumstance was known or ought to have been
        known to 




<PAGE>   69


        either Representative and/or any of the Lenders or any of their
        respective officers, employees, agents or advisers) shall nevertheless
        be recoverable from, or capable of performance by, the Guarantor as
        provided in Clause 5.1 above as if it were the principal debtor.

5.3     LIABILITY FOR INTEREST

        In addition to its liabilities under Clauses 5.1 and 5.2 above, the
        Guarantor hereby agrees to pay or cause to be paid to the Agent on
        demand (i) interest (including compound interest and both before and
        after judgement) on the amount or any part thereof for the time being
        unpaid and due to either Representative and/or the Lenders under this
        Clause 5, together with any interest which, but for the application of
        bankruptcy or insolvency laws, would have accrued on the amounts in
        question, from the date of demand on the Guarantor for payment until
        payment is made at the Default Rate (unless interest at the Default Rate
        continues to be charged to any or all of the Obligors in respect of that
        same amount under the Transaction Documents and is thereby payable by
        the Guarantor pursuant to Clause 5.1 or 5.2), and (ii) all legal and
        other costs, charges and expenses (on a full indemnity basis) incurred
        by or on behalf of either Representative and/or any of the Lenders
        following an Acceleration Event in enforcing or endeavouring to enforce
        the payment of any sums due under this Clause 5.

5.4     CONTINUING GUARANTEE

        The Guarantor's obligations under this Clause 5 shall constitute a
        continuing guarantee and accordingly:

        (a)     shall not be discharged by any partial payment or performance by
                any Obligor or any other person in respect of the Guaranteed
                Obligations;

        (b)     shall extend to cover the balance due at any time from any
                Obligor to any Lender or Representative in respect of any
                Guaranteed Obligations;

        (c)     shall be in addition to and not in substitution for or
                derogation of any other security which any Lender or
                Representative may at any time hold in respect of the Guaranteed
                Obligations; and

        (d)     shall not be discharged or in any way affected by any action
                taken or not taken by any Lender or Representative.

5.5     WAIVER OF DEFENCES

5.5.1   Any Lender or Representative may, from time to time, whether before or
        after any demand for payment under Clause 5.1.1 and without discharging
        or in any way affecting the Guarantor's liability hereunder, do all or
        any of the following:

        (a)     terminate or amend any Transaction Document (in accordance with
                the terms thereof) in any manner whatsoever;

        (b)     grant to any Obligor or to any other person any time or
                indulgence;





<PAGE>   70



        (c)     deal with, exchange, renew, vary, release, modify or abstain
                from perfecting or enforcing any securities, guarantees or
                rights which any Lender or Representative may now or hereafter
                have from or against any Obligor in respect of the Guaranteed
                Obligations or otherwise in respect of the Transaction
                Documents;

        (d)     compound with, discharge or vary the liability of any Obligor or
                concur in, accept or vary any compromise, arrangement or
                settlement with any Obligor or concur in or vary any deed of
                arrangement or deed of assignment for the benefit of creditors
                of any Obligor;

        (e)     omit to prove or fail to maintain any right of proof for or to
                claim or enforce payment of any dividend or composition; and

        (f)     take or omit to take any security from any Obligor or any other
                person or guarantor in respect of the Guaranteed Obligations or
                otherwise in respect of the Transaction Documents.

5.5.2   The Guarantor waives and agrees not to enforce or claim the benefit of
        any right it has or may from time to time have as surety under any
        applicable law which is or may be inconsistent with any of the
        provisions of this Clause 5.

5.6     IMMEDIATE RECOURSE: NO OBLIGATION TO TAKE ACTION

        No Lender or Representative shall be obliged, before making a demand
        under or taking steps to enforce this Agreement:

        (a)     to take action or obtain judgment against any Obligor or any
                other person in any court or tribunal; or

        (b)     to make or file any claim in a bankruptcy or liquidation of any
                Obligor or any other person; or

        (c)     to exercise diligence against any Obligor or any other person
                under any Transaction Document.

5.7     PRESERVATION OF RIGHTS

        From the date or dates upon which any demand is properly made against
        the Guarantor under this Agreement, until such time as each
        Representative and the Lenders have received payment of the Guaranteed
        Obligations in full (exclusive of indemnities in respect of which no
        claims have been, or to the knowledge of the Security Trustee will be,
        asserted) the Guarantor shall not:-

        (a)     claim any set-off or counterclaim against any one or more of the
                Obligors in respect of any payment by the Guarantor under this
                Clause 5 or in respect of any outstanding actual or contingent
                liability between the Guarantor any one or more of the Obligors;
                or

        (b)     make or enforce any claim or right (including a right of
                subrogation or contribution) against any one or more of the
                Obligors or prove in competition 



<PAGE>   71


                with either Representative and/or any of the Lenders, in the
                event of the liquidation or winding-up of any one or more of the
                Obligors in respect of any payment by the Guarantor under this
                Clause 5 or in respect of any outstanding actual or contingent
                liability between the Guarantor and any one or more of the
                Obligors; or

        (c)     in competition with either Representative and/or the Lenders,
                claim the benefit of any security or guarantee now or hereafter
                held by either Representative and/or the Lenders, for any money
                or liabilities due or incurred by any one or more of the
                Obligors to each Representative and/or the Lenders, or any share
                therein.

5.8     SECURITIES REALISED ACCOUNT

        For the purpose of enabling each Representative and/or the Lenders to
        sue any one or more of the Obligors or to prove in the liquidation or
        insolvency of any one or more of the Obligors or in any similar
        proceedings for any monies due but unpaid by any one or more of the
        Obligors to either Representative and/or the Lenders under any of the
        Transaction Documents, each Representative or the Lenders may at any
        time and for such time as it may think fit place any monies received or
        recovered under this Clause 5 after an Acceleration Event to the credit
        of a securities realised account or accounts (subject to the accrual
        thereon of interest at market rates as conclusively determined by the
        Agent which interest shall be credited to the relevant account) without
        any obligation on the part of the Representative or the Lenders to apply
        the same or any part thereof in or towards the discharge of the
        indebtedness and liabilities of the Guarantor. Upon each Representative
        or the Lenders (as the case may be) reasonably considering the further
        retention of such monies to be unnecessary, the amount standing to the
        credit of the relevant account or accounts shall be paid to the
        Guarantor.

5.9     REINSTATEMENT

        Where any discharge (whether in respect of the obligations of any
        Obligor, any security for such obligations or otherwise) is made in
        whole or in part or any arrangement is made on the faith of any payment,
        security or other disposition which is avoided or must be repaid on
        insolvency, administration, liquidation or otherwise without limitation,
        the liability of the Guarantors under this Clause 5 shall continue as if
        there had been no such discharge or arrangement. Each Representative and
        each Lender shall be entitled to concede or compromise any claim that
        any such payment, security or other disposition is liable to avoidance
        or repayment.

5.10    ADDITIONAL SECURITY

        The Guarantor's obligations under this Clause 5 are in addition to and
        shall not be prejudiced by any other guarantee or security for the
        Guaranteed Obligations now or hereafter held by any Lender or
        Representative and it shall not be necessary for any Lender or
        Representative before claiming payment under this Clause 5, to resort to
        or seek to enforce any other guarantee or security in respect of the
        Guaranteed Obligations.




<PAGE>   72



6.      REPRESENTATIONS AND WARRANTIES

6.1     GUARANTOR'S REPRESENTATIONS AND WARRANTIES

        To induce the Lenders and the Representatives to enter into the
        Transaction Documents, the Guarantor represents and warrants to the
        Lenders and the Representatives that:-

        (a)     it is a corporation duly incorporated and validly existing and
                in good standing under the laws of the State of California (or
                any jurisdiction in which it may subsequently be incorporated)
                and has full power, authority and legal right to own its
                property and carry on its business as presently conducted;

        (b)     it has the power and capacity to execute and deliver, and to
                perform its obligations under the Transaction Documents to which
                it is or will be a party and all necessary action has been taken
                to authorise the execution, delivery and performance of the
                same;

        (c)     it has taken all necessary legal action to authorise the person
                or persons who execute and deliver the Transaction Documents to
                which it is or will be a party to execute and deliver the same
                and thereby bind the Guarantor to all the terms and conditions
                hereof and thereof and to act for and on behalf of the Guarantor
                as contemplated hereby and thereby;

        (d)     the Transaction Documents to which it is or will be a party
                constitute (or will when executed constitute) legal, valid and
                binding obligations of the Guarantor enforceable in accordance
                with their respective terms subject only to the qualifications
                set out in the legal opinions to be provided to the Lenders in
                accordance with the provisions of Clause 2.8 (Several
                Obligations) (in respect of the Transaction Documents) and
                Clause 3.1.4 (Utilisation Notices) and Schedule 6 (in respect of
                the relevant Aircraft Operative Documents);

        (e)     the execution and delivery of, the performance of its
                obligations under, and compliance with the provisions of, the
                Transaction Documents to which it is or will be a party will not
                (i) contravene any existing applicable law to which the
                Guarantor is subject, (ii) conflict with, or result in any
                breach of any of the terms of, or constitute a default under,
                any document, instrument or agreement to which the Guarantor is
                a party or is subject or by which it or any of its assets may be
                bound which would be reasonably expected to have a material
                adverse effect on its financial condition or its payment
                obligations under the Transaction Documents, (iii) contravene or
                conflict with any provision of its constitutional documents, or
                (iv) result in the creation or imposition of, or oblige it to
                create, any Lien on or over any of its assets (other than the
                Liens created pursuant to the Transaction Documents);

        (f)     every consent, registration, licence and qualification required
                by the Guarantor to enable it to carry on its business has been
                duly obtained or made and is in full force and effect and there
                has been no default in the observance or performance of any of
                the conditions or restrictions (if any) imposed on, or in
                connection with, any such consent, registration, licence or
                qualification, in each case, which would be reasonably expected
                to have a material adverse effect on 




<PAGE>   73



                its financial condition or its payment obligations under the
                Transaction Documents;

        (g)     every consent, registration, licence and qualification required
                by the Guarantor to authorise, or required by it in connection
                with, the execution, delivery, legality, validity, priority,
                enforceability, admissibility in evidence or effectiveness of
                the Transaction Documents to which it is or will be a party has
                been duly obtained or made and is in full force and effect and
                there has been no default in the observance or performance of
                any of the conditions or restrictions (if any) imposed on, or in
                connection with, any such consent, licence, registration or
                qualification, in each case, which would be reasonably expected
                to have a material adverse effect on the financial condition of
                the Guarantor or its payment obligations under the Transaction
                Documents or the legality, validity, priority, enforceability,
                admissibility in evidence or effectiveness of such Transaction
                Documents;

        (h)     no litigation, arbitration or administrative proceeding is
                taking place, pending or, to the actual knowledge of its
                officers, threatened against it, or against any of its assets,
                which in any such case would be reasonably expected to have a
                material adverse effect on its financial condition or its
                payment obligations under the Transaction Documents;

        (i)     the Guarantor has not taken any action nor, to its knowledge or
                the knowledge of its officers, have any steps been taken or
                legal proceedings been started for any insolvency-related
                winding-up, dissolution or re-organisation or for the
                appointment of a receiver or administrative receiver, or an
                administrator, trustee or similar officer of it or of any or all
                of its assets;

        (j)     the obligations of the Guarantor under the Transaction Documents
                to which it is or will be a party are, or will when the same are
                executed be, direct, general and unconditional obligations of
                the Guarantor and rank at least pari passu with all other
                present and future unsecured and unsubordinated obligations of
                the Guarantor save for obligations mandatorily preferred by law;

        (k)     no Relevant Event or Termination Event has occurred and is
                continuing;

        (l)     the audited consolidated financial statements of the Guarantor
                for the period ending on December 31, 1997 have been prepared in
                accordance with generally accepted accounting principles and
                standards applicable in the United States of America and in
                conjunction with the notes thereto, fairly present the financial
                position of the Guarantor and its Subsidiaries as at December
                31, 1997;

        (m)     the Guarantor or a Subsidiary of the Guarantor is the legal and
                beneficial owner of the entire share capital of the Parent;

        (n)     there have been no amendments or supplements to the articles of
                incorporation and bylaws of the Guarantor from the form of those
                documents last seen by the Agent that could reasonably be
                expected to have a Material Adverse Effect; and



<PAGE>   74



        (o)     except as otherwise disclosed in writing to the Agent, the board
                resolutions supplied by the Guarantor to the Agent pursuant to
                the provisions of Clause 2.9 (Conditions Precedent) of this
                Agreement remain in full force and effect and have not been
                amended, supplemented, varied or revoked, in whole or in part
                since it was entered into and the authority therein given to the
                persons therein named to agree and execute on behalf of the
                Guarantor the Transaction Documents remains in full force and
                effect and has not been revoked, amended, supplemented or
                varied, in whole or in part.

6.2     REPRESENTATIONS AND WARRANTIES OF THE BORROWER, EACH SUB-BORROWER, THE
        PARENT AND EACH INTERMEDIATE LESSEE

        To induce each of the Lenders and the Representatives to enter into the
        Transaction Documents, the Borrower, each Sub-Borrower, each
        Intermediate Lessee and the Parent represents and warrants to the
        Lenders and the Representatives separately and severally that:-

        (a)     it is duly organised and validly existing under the laws of
                Bermuda (in the case of the Borrower), the State of California
                (in the case of the Parent) and the jurisdiction referred to in
                paragraph 2.1(d) of the relevant Accession Deed (in the case of
                each Sub-Borrower and each Intermediate Lessee), or in each case
                in the jurisdiction in which it may subsequently be
                incorporated, and has full power, authority and legal right to
                own its property and carry on its business as presently
                conducted;

        (b)     it has the power and capacity to execute and deliver, and to
                perform its obligations under the Transaction Documents to which
                it is or will be a party and all necessary action has been taken
                to authorise the execution, delivery and performance of the
                same;

        (c)     it has taken all necessary legal action to authorise the person
                or persons who execute and deliver the Transaction Documents to
                which it is or will be a party to execute and deliver the same
                and thereby bind it to all the terms and conditions hereof and
                thereof and to act for and on behalf of it as contemplated
                hereby and thereby;

        (d)     the Transaction Documents to which it is or will be a party
                constitute or will when executed constitute its legal, valid and
                binding obligations enforceable in accordance with their terms
                subject only to the qualifications set out in the legal opinions
                to be provided to the Lenders in accordance with the provisions
                of Clause 2.9 (Conditions Precedent) (in respect of the
                Aircraft) and Schedule 6 (in respect of the Aircraft Operative
                Documents);

        (e)     the execution and delivery by it of, the performance of its
                obligations under, and compliance with the provisions of, the
                Transaction Documents to which it is or will be a party will not
                (i) contravene any existing applicable law to which it is
                subject, (ii) conflict with, or result in any breach of any of
                the terms of, or constitute a default under, any document,
                instrument or agreement to which it is a party or is subject or
                by which it or any of its assets may be bound, (iii) contravene
                or conflict with any provision of its constitutional documents,
                or (iv) result in the creation or imposition of, or oblige it to
                create, any Lien on or 





<PAGE>   75



                over any of its assets other than those created pursuant to the
                Transaction Documents;

        (f)     every consent, registration, licence and qualification required
                by it to enable it to carry on its business has been duly
                obtained or made and is in full force and effect and there has
                been no default in the observance or performance of any of the
                conditions or restrictions (if any) imposed on, or in connection
                with, any such consent, registration, licence and/or
                qualification in each case which could have a material adverse
                effect on its ability to perform its obligations under any of
                the Transaction Documents to which it is or will be a party;

        (g)     except as provided in the parenthetical proviso in Clause 7.1(f)
                (General Covenants of the Borrower, Sub-Borrower and
                Intermediate Lessee), and except for those that are not
                customary practice in applicable jurisdictions to obtain or make
                at such time, every consent, registration, licence and
                qualification required by it to authorise, or required by it in
                connection with, the execution, delivery, legality, validity,
                priority, enforceability, admissibility in evidence or
                effectiveness of the Transaction Documents to which it is or
                will be a party has been duly obtained or made and is in full
                force and effect and there has been no default in the observance
                or performance of any of the conditions or restrictions (if any)
                imposed on, or in connection with, any such consent, licence,
                registration and/or qualification, in each case, which could
                have a material adverse effect on its ability to perform its
                obligations under this Agreement or the legality, validity,
                priority, enforceability, admissibility in evidence or
                effectiveness of such Transaction Documents;

        (h)     no litigation, arbitration or administrative proceeding is
                taking place, pending or, to the actual knowledge of its
                officers, threatened against it, or against any of its assets,
                which in any such case could have a material adverse effect on
                its ability to perform its obligations under any of the
                Transaction Documents to which it is or will be a party;

        (i)     it has not taken any action nor, to its knowledge or the
                knowledge of its officers, have any steps been taken or legal
                proceedings been started for any insolvency-related winding-up,
                dissolution or re-organisation or for the appointment of a
                receiver or administrative receiver, or an administrator,
                trustee or similar officer of it or of any or all of its assets;

        (j)     its obligations under the Transaction Documents to which it is
                or will be a party are, or will when the same are executed be,
                its direct, general and unconditional obligations and rank at
                least pari passu with all other present and future unsecured and
                unsubordinated obligations save for obligations mandatorily
                preferred by law;

        (k)     no Relevant Event or Termination Event has occurred and is
                continuing;

        (l)     it has not, prior to entering into the Transaction Documents
                engaged in any business or transaction or entered into any
                contract or agreement with any person or otherwise created or
                incurred any liability to, or acquired any asset from, any
                person, other than any such transactions, contracts, agreements
                or liabilities or acquisitions of assets as (i) have been
                necessary solely in order for 




<PAGE>   76



                it to establish itself as a company duly incorporated and
                validly existing under the laws of its state of incorporation or
                (ii) have occurred pursuant to any other Transaction Document or
                (iii) have been necessary to enable the Parent to become the
                legal and beneficial owner of the shares in the Borrower, any
                Sub-Borrower or any Intermediate Lessee or to enable the
                Borrower to become the legal and beneficial owner of the shares
                in any Sub-Borrower or any Intermediate Lessee;

        (m)     except as otherwise permitted hereunder, there have been no
                amendments or supplements to its memorandum of association and
                by-laws or, as the case may be, articles of association from the
                form of those documents last seen by the Agent and the
                memorandum of association and by-laws or, as the case may be,
                articles of association in the form last seen by the Agent
                remain in full force and effect;

        (n)     except as otherwise disclosed in writing to the Agent, the board
                resolutions and, if applicable, power of attorney supplied by it
                to the Agent pursuant to the provisions of Clause 2.9
                (Conditions Precedent) of this Agreement or pursuant to Schedule
                6 (as the case may be) remain in full force and effect and have
                not been amended, supplemented, varied or revoked, in whole or
                in part since they were entered into and the authority therein
                given to the persons therein named to agree and execute on its
                behalf the Transaction Documents remains in full force and
                effect and has not been revoked, amended, supplemented or
                varied, in whole or in part;

        (o)     except as otherwise disclosed in writing to the Agent, no Second
                Trigger Event or Third Trigger Event has occurred and is
                continuing;

        (p)     the Parent further represents that it is the legal and
                beneficial owner of the entire issued share capital of the
                Borrower; and

        (q)     it is the sole legal and beneficial owner of all of the shares
                (except for shares held by directors, trustees or nominees in
                order to meet local nationality or other local requirement and
                which do not have a Material Adverse Effect on the relevant
                Charge Over Shares) comprised in the Existing Securities (as
                defined in each of the Charges over Shares to which it is a
                party) being the entire issued shares in the capital of the
                Borrower (in the case of the Parent), each Sub-Borrower (in the
                case of the Borrower) and the relevant Intermediate Lessees (in
                the case of the Borrower and the Sub-Borrower), that the
                Existing Securities (as defined in each of the Charges over
                Shares to which it is a party) are fully paid up and are not
                subject to any options and none of the Charged Property (as
                defined in each of the Charges over Shares to which it is a
                party) is subject to any Lien other than as created pursuant to
                the relevant Charge over Shares.

6.3     REPETITION

        The representations and warranties set out in Clauses 6.1 and 6.2 shall
        be deemed to be repeated by the relevant party on each date the Borrower
        serves a Utilisation Notice pursuant to Clause 3.1.1 (Utilisation
        Notices) and on each Utilisation Date in each case in relation to the
        Eligible Aircraft which is the subject of the relevant Utilisation
        Notice in 





<PAGE>   77



        respect thereof as though made on each such date with reference to the
        facts and circumstances then existing on such date.


7.      UNDERTAKINGS AND COVENANTS

7.1     GENERAL COVENANTS OF BORROWER, SUB-BORROWER AND INTERMEDIATE LESSEE

        Until all of the Secured Obligations (exclusive of indemnities in
        respect of which no claims have been, or to the knowledge of the
        Security Trustee will be, asserted) have been paid in full, the
        Borrower, each Sub-Borrower and each Intermediate Lessee hereby
        undertakes and covenants with each of the Lenders and the
        Representatives separately and severally that from the date of this
        Agreement:

        (a)     except as provided in Clause 18.1 (Transfers by Obligors), it
                shall remain duly incorporated and validly existing under the
                laws of Bermuda (in the case of the Borrower) and the laws of
                the jurisdiction stated in paragraph 2.1(d) of the relevant
                Accession Deed (in the case of each Sub-Borrower and each
                Intermediate Lessee);

        (b)     at all times, it shall comply and procure the compliance with
                all laws and regulations applicable to it and which are
                necessary in relation to the conduct of its business generally,
                and it shall obtain, maintain in full force and effect and
                comply in all material respects with, any present or future
                authorisations (governmental or otherwise), approvals, licences
                and consents and do, or cause to be done, all other acts and
                things, in each case, which may from time to time be necessary
                for the continued due performance of its obligations under the
                Transaction Documents;

        (c)     it shall inform the Agent of any Relevant Event or Termination
                Event promptly upon becoming aware of the same and shall provide
                the Agent with full details of any steps which it is taking, or
                is considering taking, in order to remedy or mitigate the effect
                of any Relevant Event or Termination Event or otherwise in
                connection therewith;

        (d)     it shall pay and discharge all material Taxes and governmental
                charges prior to the date on which the same become overdue
                unless, and only to the extent that, such Taxes and charges
                shall be contested in good faith by appropriate proceedings,
                pending determination of which payment may lawfully be withheld,
                and there shall be set aside adequate reserves with respect to
                any such Taxes or charges so contested (if required in
                accordance with generally accepted accounting principles);

        (e)     it shall comply with its constitutional documents and neither
                the Parent nor the Borrower nor any Sub-Borrower shall amend any
                provision of the constitutional documents of the Borrower, any
                Sub-Borrower or any Intermediate Lessee respectively except as
                provided in Clause 18.1 (Transfers by Obligors), or with the
                consent of the Security Trustee (not to be unreasonably
                withheld);





<PAGE>   78



        (f)     promptly, upon being requested so to do by either
                Representatives take all such steps and enter into and execute
                all such documents of whatsoever nature in order to enable the
                relevant Representative to effect any registration, recording,
                filing, notarisation or any other action in respect of any of
                the Transaction Documents, in each case, which is required by
                law or reasonably requested by either Representative (provided
                always that notwithstanding any other provision of the
                Transaction Documents the Borrower, the relevant Sub-Borrower or
                the relevant Intermediate Lessee shall not be required to do any
                act or thing or take any step in connection with the
                registration, recording or filing of any instrument creating or
                evidencing a Lien over an Aircraft in the register of the
                Aviation Authority where such Aircraft is registered, or any
                other registration, recording or filing outside the jurisdiction
                of organisation of the Borrower or, if applicable, any
                Sub-Borrower or any Intermediate Lessee or the Parent, or any
                actions with respect to the Lessee or any Sub-Lessee (other than
                any registration, recording or filing of a Lien over an Aircraft
                within the jurisdiction of organisation of the Borrower or, if
                applicable, any Sub-Borrower or any Intermediate Lessee) or with
                respect to its jurisdiction of organisation or principal place
                of business, unless a Third Trigger Event or Termination Event
                has occurred and is continuing) to ensure the validity,
                enforceability or priority of the liabilities and obligations of
                the Borrower, the relevant Sub-Borrower or the relevant
                Intermediate Lessee or the rights of each Representative and/or
                each of the Lenders under any of the Transaction Documents;

        (g)     not, without the prior written consent of the Agent, conduct any
                business other than the acquisition, leasing and sale of the
                Aircraft and the transactions contemplated by the Transaction
                Documents to which it is a party and such activities and matter
                incidental to any of the foregoing;

        (h)     not, without the prior written consent of the Security Trustee
                acting on the instructions of the Majority Lenders incur any
                liability to any person, other than:

                (i)     a liability for Tax or other charges arising under
                        applicable law to a Government Entity; or

                (ii)    a liability to the Subordinated Lender in respect of the
                        Subordinated Liabilities; or

                (iii)   a liability to a Lessee under a Lease or a liability to
                        an Intermediate Lessee under an Intermediate Lease or a
                        liability to a Sub-Lessee under a Sub-Lease; or

                (iv)    any liability under the Transaction Documents; or

                (v)     any liability that is an ordinary operating cost or
                        overhead expense or is otherwise in the ordinary course
                        of its permitted business;

        (i)     ensure that at all times its obligations under the Transaction
                Documents rank at least pari passu with its obligations owed to
                all its unsecured creditors save for obligations mandatorily
                preferred by law;





<PAGE>   79



        (j)     duly observe and perform all of its obligations under each of
                the Transaction Documents to which it is, from time to time, a
                party;

        (k)     it shall not create or acquiesce in the creation or permit to
                exist any Lien (other than any Permitted Lien) on or affecting
                the Aircraft, the Insurances, the Warranties, the Engine
                Warranties in relation to any Aircraft (or any relevant Engine
                or Part);

        (l)     not (without the prior written consent of the Security Trustee,
                which consent shall be exercisable at the discretion of the
                Security Trustee acting on the instructions of the Majority
                Lenders) issue any shares (other than to comply with nationally
                or other local requirements as described in Clause 3.3.2
                (Sub-Borrowers/Intermediate Lessees) to the Guarantor or any
                Subsidiary on terms that any such shares are immediately charged
                to the Security Trustee on terms substantially the same as those
                contained in the Charge Over Shares of the Borrower, the
                relevant Charge Over Shares of Sub-Borrower or the relevant
                Charge Over Shares of Intermediate Lessee (as the case may be)
                or on such terms as may otherwise be agreed by the Security
                Trustee) or pay any dividends on any shares issued by it or
                redeem any shares except as permitted by Clause 8.1
                (Subordination);

        (m)     deliver to the Agent sufficient copies for distribution to each
                of the Lenders of its audited annual financial statements for
                each of its financial years (which shall be prepared in
                accordance with generally accepted accounting principles and
                practices in the United States of America for those Obligors
                incorporated in the United States of America or Bermuda (other
                than principles and practices related to consolidation of
                accounts) and which shall present fairly the profits and losses
                of the Borrower, the relevant Sub-Borrower or the relevant
                Intermediate Lessee (as the case may be) for the relevant
                financial year at the end of such financial year) as soon as
                practicable and not later than one hundred and eighty (180) days
                after the end of the financial year to which they relate;

        (n)     it shall procure that at all times a majority of the members of
                its board of directors shall be officers or employees of the
                Guarantor, a Subsidiary, AIG or an AIG Group Company (unless
                such requirement is contrary to local requirements in its
                jurisdiction of incorporation and such requirement is not likely
                to have a Material Adverse Effect on the relevant Charge over
                Shares, in which case, it shall comply with the requirements of
                its jurisdiction of incorporation) and it shall procure further
                that no member of its board of directors shall be replaced or
                substituted (other than by another officer or employee of the
                Guarantor, a Subsidiary, AIG or an AIG Group Company) without
                the prior written consent of the Security Trustee (which consent
                shall be exercisable in the reasonable discretion of the
                Security Trustee) unless such substitution is required in order
                to comply with the requirement of its jurisdiction of
                incorporation and such substitution is not likely to have a
                Material Adverse Effect on the relevant Charge over Shares;

        (o)     inform the Representatives:



<PAGE>   80



                (i)     of any proposed Final Disposition of an Aircraft or sale
                        of a Sub-Borrower, no less than seven (7) Business Days
                        before the proposed date for completion of such Final
                        Disposition; and

                (ii)    promptly after it becomes aware of the Total Loss of any
                        Aircraft or of any occurrence which, with the lapse of
                        time, would or would be likely to constitute a Total
                        Loss of any Aircraft, the Borrower, the relevant
                        Sub-Borrower or the relevant Intermediate Lessee (as the
                        case may be) shall provide such details of such Total
                        Loss or other occurrence as each Representative may
                        reasonably request;

        (p)     inform the Representative promptly after it becomes aware of
                any:

                (i)     Lien which has arisen over or in respect of any of the
                        Aircraft or any Part thereof other than any Permitted
                        Lien; or

                (ii)    any steps being taken by the holders of any Lien
                        (including any Permitted Lien) to exercise or enforce
                        that Lien or any rights in respect thereof;

        (q)     it shall not voluntarily wind itself up except in connection
                with its solvent liquidation into another Obligor pursuant to
                Clause 18.1 (Transfers by Obligors);

        (r)     the Borrower shall remain a wholly owned Subsidiary of the
                Parent, each Sub-Borrower shall remain a wholly owned Subsidiary
                of the Borrower and each Intermediate Lessee shall remain a
                wholly owned Subsidiary of the Borrower or a Sub-Borrower (as
                the case may be), subject always to the provisions of Clause 3.3
                (Sub-Borrower/Intermediate Lessees);

        (s)     the Borrower shall pay the Expenses of, and where applicable,
                instruct its counsel to render to the Agent on June 30 1999,
                June 30 2000, June 30 2001 and March 31 2002 (i) "bring-down"
                opinions as of June 30 1999, June 30 2000 and June 30 2001,
                with respect to each of the Master Opinions to the effect that
                there has been no Substantive Law Change since the date of the
                applicable Master Opinion that would cause the counsel rendering
                such opinion to change its Master Opinion or, if such a
                Substantive Law Change has occurred, a revised opinion as to the
                portion of the opinion affected by any such Substantive Law
                Change and (ii) reissued Master Opinions as of March 31, 2002.


7.2     LEASING AND INSURANCE COVENANTS OF BORROWER, SUB-BORROWER AND
        INTERMEDIATE LESSEE

7.2.1   Until all of the Secured Obligations (exclusive of indemnities in
        respect of which no claims have been, or to the knowledge of the
        Security Trustee will be, asserted) have been paid in full, the
        Borrower, each Sub-Borrower and each Intermediate Lessee hereby
        undertakes and covenants with each of the Lenders and the
        Representatives separately and severally from the date of this Agreement
        that it shall:




<PAGE>   81


        (a)     ensure that each Lease is in English;

        (b)     not deliver an Aircraft to a TO Lessee (as defined in Clause
                7.2.2) directly under a Lease or indirectly under a Sub-Lease
                which is incorporated or has its principal place of business in
                the United States of America within two years after the Delivery
                Date of that Aircraft (unless the Export Credit Agencies agree
                to a shorter period in their sole discretion);

        (c)     ensure at the time such Lease is entered into that such Aircraft
                is not registered in or leased to a Lessee or a Sub-Lessee whose
                principal place of business is in a Prohibited Country;

        (d)     ensure that no Aircraft is subject to any instalment sale
                agreement, conditional sale agreement or other lease-purchase
                agreement conferring upon the bailee any ownership right, title
                or interest to or in the relevant Aircraft, including, without
                limitation, by means of a purchase option at a nominal price,
                without obtaining the prior written approval of the Security
                Trustee, acting on the instructions of the Majority Lenders;

        (e)     ensure that if a Lease contains, or any Aircraft is subject to,
                a purchase option, such purchase option shall be at a price that
                is either for fair market value or at a fixed price at or above
                one hundred and ten per cent. of the outstanding principal under
                the relevant Loan at the time of Final Disposition (which
                purchase price is acknowledged and agreed as not being nominal
                within the meaning or otherwise in violation of Clause
                7.2.1(d));

        (f)     each Aircraft shall, unless in or imminently scheduled for major
                maintenance or modification or as otherwise agreed between the
                Borrower or a Sub-Borrower (as the case may be) and the Security
                Trustee, be registered in the jurisdiction of incorporation of:

                (i)     the Borrower or a Sub-Borrower, whichever is the owner
                        of the Aircraft (including in the name of an owner trust
                        in the United States of America); or

                (ii)    an Intermediate Lessee; or

                (iii)   a Lessee; or

                (iv)    any Sub-Lessee,

                in each case with the interests of the Borrower or relevant
                Sub-Borrower as owner noted on the register of the relevant
                Aviation Authority to the extent permitted by applicable law;

        (g)     the Borrower shall (at its own cost) take all steps, or procure
                that all steps are taken, which are required by law in the State
                of Registration and the jurisdiction in which the Lessee or any
                Sub-Lessee has its principal place of business to protect and
                perfect the Borrower's or the Sub-Borrower's (as the case may
                be) legal and beneficial ownership interest in the Aircraft;





<PAGE>   82



        (h)     ensure that each Lease provides (y) for the relevant Aircraft to
                be maintained in accordance with the maintenance programme
                described in the relevant Lease and approved by the relevant
                Aviation Authority and (z) that all airworthiness directives
                issued by the relevant Aviation Authority are complied with, as
                stated in such airworthiness directive to the extent required
                during the term of the relevant Lease;

        (i)     ensure that each Lease provides that, in relation to each
                Aircraft, all documentation regarding repairs, maintenance,
                overhauls and modifications is maintained in accordance with the
                requirements of the relevant Aviation Authority;

        (j)     subject to the rights of the Security Trustee upon the
                occurrence and continuation of a Second Trigger Event, ensure
                that the terms of any Lease, in so far as they relate to
                operations, maintenance and insurance shall be no less
                favourable than, or substantially similar in substance to, those
                customarily used by the Guarantor for the leasing of similar
                aircraft in its portfolio to lessees of similar credit standing,
                similar geographic location and under similar circumstances.

7.2.2   The Borrower and (as the case may be) each Sub-Borrower shall not and
        shall not permit an Intermediate Lessee, to deliver an Aircraft to a
        Lessee (if it is a technical operator of aircraft) or a Sub-Lessee (if
        the Lessee is not a technical operator of aircraft and the Sub-Lessee is
        a technical operator of aircraft) ("TO LESSEE") directly under a Lease,
        indirectly under a Sub-Lease or substitute an Aircraft under Clause 4.7
        (Substitution of Aircraft) if such delivery or substitution would breach
        either or both of the limits specified in paragraphs (a) and (b) below,
        namely:-

        (a)     if that TO Lessee is the first TO Lessee of such Aircraft and,
                as a result of delivery of that Aircraft to that TO Lessee or as
                a result of such substitution (if the substitute aircraft has
                never been previously leased or sub-leased), either:-

                (i)     more than eleven (11) Aircraft; or

                (ii)    more than twenty five per cent. of the Aircraft then
                        financed under the Facility (determined by number and
                        not by value),

                whichever is higher, would be Home Country Aircraft; or

        (b)     if, as a result of delivery of that Aircraft to that TO Lessee
                or as a result of such substitution, more than nineteen (19)
                Aircraft would be leased to TO Lessees (whether as first or
                subsequent TO Lessees) incorporated in any one Home Country (it
                being understood that, in aggregate, up to fifty-seven (57)
                Aircraft may be Home Country Aircraft so long as no single Home
                Country accounts for more than nineteen (19) of such Home
                Country Aircraft).

7.2.3   The limits set out in paragraphs (a) and (b) of Clause 7.2.2 shall not:

        (a)     prevent the delivery of an Aircraft to a TO Lessee in breach of
                any such limit following the repossession of such Aircraft by,
                or the delivery or redelivery of such Aircraft to, the Borrower,
                any Sub-Borrower or any Intermediate Lessee 




<PAGE>   83


                (as the case may be) as a result of the termination of the
                leasing of such Aircraft under a previous Lease Agreement prior
                to its scheduled expiry date (other than by reason of the
                exercise by the relevant Lessee of a voluntary right of early
                termination); or

        (b)     require the prepayment of a Loan in respect of a Home Country
                Aircraft if any such limit is breached as a result of (i) the
                prepayment of a Loan in respect of another Aircraft which is not
                a Home Country Aircraft (by reason of the Final Disposition or
                Total Loss of such Aircraft or a Sub-Borrower Sale in relation
                to such Aircraft or for any other reason), or (ii) the
                termination or expiry of the leasing of another Aircraft which
                is not a Home Country Aircraft.

7.2.4   In determining, for the purposes of Clause 7.2.2(a), whether or not a TO
        Lessee is the first TO Lessee of an Aircraft:-

        (a)     no account shall be taken of a previous Lessee or Sub-Lessee of
                that Aircraft:-

                (i)     under a Lease with a Subsidiary contemplated by Clause
                        4.8.2 (Prepayment if not leased) and entered into to
                        avoid an obligation to prepay the relevant Loan under
                        Clause 4.8.1 (Prepayment if not leased); or

                (ii)    subject to paragraph (b) below, under a Lease or
                        Sub-Lease which terminates on or before delivery of the
                        relevant Aircraft occurs thereunder;

        (b)     a previous Lessee or Sub-Lessee of that Aircraft under a Lease
                or a Sub-Lease which terminates less than six months or before
                the date on which delivery of the relevant Aircraft is scheduled
                to occur by reason of a default or failure to satisfy any
                condition precedent by such Lessee or Sub-Lessee by reason of
                the bankruptcy of, or other circumstances affecting (including a
                failure to perform by), such Lessee or Sub-Lessee shall be
                treated as having been a previous TO Lessee of the relevant
                Aircraft PROVIDED that this paragraph (b) shall not operate so
                as to permit (in addition to those Aircraft actually delivered
                to a TO Lessee as a first TO Lessee) more than eight Aircraft to
                be Home Country Aircraft which would not, but for this paragraph
                (b), have been permitted under Clause 7.2.2(b); and

        (c)     in the case of a Replacement Aircraft, the TO Lessee of the
                Existing Aircraft which it replaced shall be treated as having
                been a previous TO Lessee of that Replacement Aircraft.

7.2.5   If the total number of seventy five (75) Eligible Aircraft is increased,
        the limits on numbers of Home Country Aircraft specified in paragraphs
        (a)(i) and (b) of Clause 7.2.2 (namely eleven (11), nineteen (19) and
        fifty-seven (57)) shall be deemed to be increased to fifteen per cent.,
        twenty-five per cent. and seventy-five per cent. (respectively) of the
        increased total number of Eligible Aircraft (in each case rounded up or
        down to the nearest whole number).

7.2.6   The Borrower, the relevant Sub-Borrower or the relevant Intermediate
        Lessee (as the case may be) shall deliver to the Agent a certified true
        copy of:





<PAGE>   84



        (a)     each Lease (and each side letter or other document amending or
                supplementing the terms of any Lease) from time to time entered
                into by the Borrower, the relevant Sub-Borrower or the relevant
                Intermediate Lessee (as the case may be) in respect of an
                Eligible Aircraft; and

        (b)     each legal opinion (if any) provided to the Borrower, the
                relevant Sub-Borrower or the relevant Intermediate Lessee (as
                the case may be) in connection with any such Lease (or in
                connection with any amendment thereto) from legal counsel in the
                jurisdiction in which the relevant Lessee is incorporated or in
                which the Aircraft is or will be registered,

        in each case within thirty (30) days after the later of (i) the relevant
        Utilisation Date and (ii) the date on which such Lease (or the relevant
        side letter or other document) was entered into or, as the case may be,
        the date on which such legal opinion was provided to the Borrower, the
        relevant Sub-Borrower or the relevant Intermediate Lessee (as the case
        may be).

7.2.7   The Borrower, the relevant Sub-Borrower or the relevant Intermediate
        Lessee (as the case may be) shall maintain, or procure that the relevant
        Lessee or the relevant Sub-Lessee (as the case may be) maintains, hull
        and third party liability insurance policies in respect of each Aircraft
        in accordance with the terms of Schedule 8.

7.2.8   The Borrower, the relevant Sub-Borrower or the relevant Intermediate
        Lessee (as the case may be) shall deliver to the Agent (i) a certificate
        evidencing the insurance (and, if applicable, reinsurance) policies
        required by Clause 7.2.7 on or before the Delivery Date of the relevant
        Aircraft and (in the case of a replacement certificate) promptly after
        receipt thereof and (ii) any insurance broker's and reinsurance broker's
        (if applicable) letter of undertaking.

7.2.9   The Borrower or the relevant Sub-Borrower (as the case may be) shall
        deliver a notice to the Agent and the Export Credit Agencies as soon as
        practicable after the Delivery Date of each Aircraft specifying the
        stated country of origin of each item of Buyer Furnished Equipment
        installed on each Aircraft.

7.2.10  Each of the Borrower, the relevant Sub-Borrower or the relevant
        Intermediate Lessee (as the case may be) and the Security Trustee shall,
        immediately following the delivery of an Aircraft to a Lessee or a
        Sub-Lessee (as the case may be) execute a Notice of Charge and the
        Security Trustee shall serve such Notice of Charge on the Lessee or if
        not the technical operator of the relevant Aircraft to the first
        technical operator of the relevant Aircraft and, if the Borrower so
        requests, to any other permitted sub-lessee.

7.2.11  CHANGE OF TITLE HOLDER OF AIRCRAFT OR INTRODUCTION OF AN INTERMEDIATE
        LESSEE

(A)     In respect of the leasing of an Aircraft at any time during the Security
        Period (provided that no Relevant Event or Termination Event has
        occurred and is continuing), the Borrower shall be entitled by giving
        notice (a "STRUCTURAL CHANGE NOTICE") to the Agent and the Security
        Trustee:





<PAGE>   85



        (a)     to cause itself or a Sub-Borrower (which is established in a
                Regular Jurisdiction) to take title to that Aircraft and/or to
                incorporate an Intermediate Lessee (which is established in a
                Regular Jurisdiction) into the structure; or

        (b)     to request that a Sub-Borrower (which is or is to be established
                in an Irregular Jurisdiction) take title to that Aircraft and/or
                that an Intermediate Lessee (which is or is to be established in
                an Irregular Jurisdiction) be incorporated into the structure.

(B)     Any such Structural Change Notice that constitutes a request under
        Clause 7.2.11(A)(b) shall be served at least twenty (20) Business Days
        prior to the proposed transfer of title to the Aircraft or such lesser
        period as the Agent (acting reasonably) shall agree and the Agent
        (acting on the instructions of the Majority Lenders) shall approve such
        request in principle or otherwise no later than ten (10) Business Days
        prior to the proposed transfer of title.

(C)     If the proposed Sub-Borrower or Intermediate Lessee has already acceded
        to this Agreement prior to the date of the relevant Structural Change
        Notice, or is in a Regular Jurisdiction, the approval of the Agent shall
        not be required. Any such other Structural Change Notice that applies to
        a person that has not acceded to this Agreement shall be served at least
        ten (10) Business Days prior to the proposed transfer of title to the
        Aircraft or such lesser period as the Agent shall agree. All other
        Structural Change Notices shall be served at least five (5) Business
        Days prior to the proposed transfer of title to the Aircraft.

(D)     Each such Sub-Borrower and/or such Intermediate Lessee shall be a
        company or trust capable of providing representations and warranties and
        covenants having substantially the same effect as those given by the
        Borrower in Clauses 6 (Representations and Warranties) and 7
        (Undertakings and Covenants) and each shall be a wholly owned direct
        Subsidiary of the Borrower, in the case of a Sub-Borrower, or a wholly
        owned direct Subsidiary of a Sub-Borrower or the Borrower, in the case
        of an Intermediate Lessee (in each case, except for shares held by
        directors, trustees or nominees in order to meet local nationality or
        other local requirements and which do not have a Material Adverse Effect
        on any of the Charges over Shares, in favour of the Security Trustee).
        The Borrower shall use one Intermediate Lessee in any one jurisdiction
        unless the Borrower has a reason to do otherwise.

(E)     If a Sub-Borrower or an Intermediate Lessee has not already acceded to
        this Agreement and is to be incorporated into the structure then on or
        prior to the Security Trustee releasing the relevant Aircraft Security
        Documents (insofar as they relate to the Aircraft) granted by the
        Borrower or the relevant Sub-Borrower (as the case may be) whichever is
        the title holder to the Aircraft:

        (a)     each such Sub-Borrower and/or each such Intermediate Lessee
                shall accede to this Agreement by executing an Accession Deed
                and such other Transaction Documents as the Agent in its good
                faith opinion considers appropriate so that any such
                Sub-Borrower shall be deemed to be a party to this Agreement and
                such of the other Transaction Documents as may be appropriate as
                if named therein as a party;

        (b)     if the Sub-Borrower or Intermediate Lessee is or will be
                organised in an Irregular Jurisdiction, each of the applicable
                Obligor parties to this Agreement 





<PAGE>   86



                and any such Sub-Borrower organised in an Irregular Jurisdiction
                and/or such Intermediate Lessee organised in an Irregular
                Jurisdiction shall enter into such other documents and provide
                such security as the Security Trustee may, in its good faith
                opinion (after taking legal advice from counsel to the Lenders
                in the jurisdiction of the relevant Sub-Borrower and/or relevant
                Intermediate Lessee), require in order to ensure that (i) the
                Representatives and each of the Lenders are in a position having
                a substantially similar effect (including as to their security
                position) with respect to such Sub-Borrower and/or such
                Intermediate Lessee as they are in with respect to other
                Sub-Borrowers or other Intermediate Lessees, as the case may be,
                under the Transaction Documents and (ii) the rights of the
                Representatives and the Lenders is not materially different than
                with respect to any Sub-Borrower and/or Intermediate Lessee of a
                Regular Jurisdiction under the Transaction Documents, it being
                acknowledged and agreed for the purpose of determining the
                foregoing matters that (i) any trustee in a United States
                owner/voting trust will be party to the Transaction Documents
                not in its individual capacity but solely as trustee, (ii)
                common law jurisdictions are acceptable and (iii) with respect
                to civil jurisdictions, the Borrower and the Agent shall
                negotiate in good faith, to the extent necessary, alternative
                security to that available in common law jurisdictions which is
                acceptable to the Security Trustee, acting upon the instruction
                of the Majority Lenders;

        (c)     upon receipt by the Agent of the Accession Deed signed on behalf
                of the Borrower, Guarantors, Obligors and by the proposed
                Intermediate Lessee or Sub-Borrower (as the case may be), the
                Agent shall sign the same for itself and on behalf of the
                Lenders and shall as promptly as practicable give notice of such
                execution to all of the parties to the Accession Deed;

        (d)     upon execution of any such Accession Deed it shall take effect
                in accordance with, but subject to, the terms hereof and
                thereof.

(F)     The effectiveness of the change of title holder to the Aircraft or the
        introduction of an Intermediate Lessee shall be subject to receipt by
        the Agent of the following conditions precedent in form and substance
        satisfactory to the Agent:

        (a)     evidence satisfactory to the Security Trustee (including a legal
                opinion from counsel to the Lenders in the jurisdiction in which
                transfer of title to the Aircraft takes place) that the Borrower
                or the relevant Sub-Borrower (as the case may be) has obtained
                title to the Aircraft free and clear of any Liens other than
                Permitted Liens including a certified copy of the Bill of Sale
                to the Borrower or the relevant Sub-Borrower (as the case may
                be);

        (b)     a legal opinion from counsel to the Lenders in the jurisdiction
                in which the Borrower or the relevant Sub-Borrower, as the case
                may be, is organised concerning the assignment of the Mortgage,
                the filing or registration and perfection in that jurisdiction
                of the Mortgage (or alternative security) with respect to the
                Aircraft, the Charge over Shares of Sub-Borrower (if any) and
                any other Aircraft Security Documents which will be entered into
                by the Borrower or the relevant Sub-Borrower (as the case may
                be) and the validity of the relevant Sub-Borrower's guarantee
                and indemnity (if any) in favour of the Security Trustee;





<PAGE>   87



        (c)     the relevant legal opinions from counsel to the Lenders as
                provided in paragraph 4 of Part I to Schedule 6;

        (d)     evidence of insurance having been effected in respect of the
                Aircraft with the Security Trustee named as a contract party and
                (to the extent possible under AVN67B, or such other endorsement
                as may be applicable) loss payee;

        (e)     if applicable, copies of the certificate of registration of the
                Replacement Aircraft and airworthiness issued by the Aviation
                Authority;

        (f)     if a Sub-Borrower or Intermediate Lessee is introduced into the
                structure, the following signed documents:

                (i)     Accession Deed (if such person has not previously
                        acceded to the Transaction Documents);

                (ii)    the assignment of the Mortgage (if applicable) or
                        alternative security satisfactory to the Security
                        Trustee, acting upon the instructions of the Majority
                        Lenders;

                (iii)   the assignment of the Warranties (to the extent
                        assignable);

                (iv)    the assignment of the Engine Warranties (to the extent
                        assignable);

                (v)     Sub-Borrower Guarantee (if applicable);

                (vi)    Sub-Borrower Debenture (if applicable);

                (vii)   Intermediate Lessee Debenture (if applicable);

                (viii)  Charge Over Shares of Sub-Borrower (if applicable);

                (ix)    Charge Over Shares of Intermediate Lessee (if
                        applicable);

                (x)     Lease Security Assignment (if applicable);

                (xi)    Intermediate Lease Security Agreement (if applicable);

                (xii)   Notice of Charge as amended to record change of title
                        holder or the introduction of an Intermediate Lessee as
                        the case may be;

        (g)     evidence to the Security Trustee that the Sub-Borrower Accounts
                or the Intermediate Lessee Accounts (as the case may be) have
                been opened and that US$10 has been deposited in each of the
                Sub-Borrower Accounts or Intermediate Lessee Accounts (as the
                case may be).

7.3     PARENT COVENANTS

        Until all of the Secured Obligations (exclusive of indemnities in
        respect of which no claims have been, or to the knowledge of the
        Security Trustee will be, asserted) have been 




<PAGE>   88



        paid in full, the Parent hereby undertakes and covenants with each of
        the Lenders, the Agent and the Security Trustee separately and severally
        that from the date of this Agreement:-

        (a)     except as provided in Clause 18.1 (Transfers by Obligors), it
                shall remain duly incorporated and validly existing under the
                laws of the State of California and shall not, without the prior
                written consent of the Security Trustee (which shall not be
                unreasonably withheld), make any amendment to the constitutional
                documents of the Borrower;

        (b)     at all times, it shall comply and procure the compliance with
                all laws and regulations applicable to it and which are
                necessary in relation to the conduct of its businesses
                generally, and it shall obtain, maintain in full force and
                effect and comply in all material respects with, any present or
                future authorisations (governmental or otherwise) approvals,
                licences and consents and do, or cause to be done, all other
                acts and things, in each case which may from time to time be
                necessary for the continued due performance of its obligations
                under the Transaction Documents;

        (c)     it shall inform the Agent of any Relevant Event or Termination
                Event promptly upon becoming aware of the same and shall provide
                the Agent with full details of any steps which it is taking, or
                is considering taking, in order to remedy or mitigate the effect
                of any Relevant Event or any Termination Event or otherwise in
                connection therewith;

        (d)     it shall pay and discharge all Taxes and governmental charges
                which if unpaid would have a Material Adverse Effect prior to
                the date on which the same become overdue unless, and only to
                the extent that, such Taxes and charges shall be contested in
                good faith by appropriate proceedings, pending determination of
                which payment may lawfully be withheld, and there shall be set
                aside adequate reserves with respect to any such Taxes or
                charges so contested (if required in accordance with generally
                accepted accounting principles);

        (e)     it shall comply with its constitutional documents and shall not
                amend any provision of its constitutional documents except as
                provided in Clause 18.1 (Transfers by Obligors) or with the
                consent of the Security Trustee (not to be unreasonably
                withheld);

        (f)     it shall promptly, upon being requested so to do by the Agent
                and/or the Security Trustee take all such steps and enter into
                and execute all such documents and/or agreements of whatsoever
                nature in order to enable the Agent or, as the case may be, the
                Security Trustee to effect any registration, recording, filing,
                notarisation or any other action in respect of any of the
                Transaction Documents, in each case, which are required by law
                or reasonably requested by the Agent, or as the case may be, the
                Security Trustee (provided always that notwithstanding any of
                the provisions of the Transaction Documents the Parent shall not
                be required to do any act or thing or take any step in
                connection with the registration, recording or filing of any
                instrument creating or evidencing a Lien over an Aircraft in the
                register of the Aviation Authority where such Aircraft is
                registered, or any other registration, recording 






<PAGE>   89


                or filing outside California or any actions with respect to a
                Lessee or Sub-Lessee or with respect to its jurisdiction of
                organisation or principal place of business unless a Third
                Trigger Event or Termination Event has occurred and is
                continuing) to ensure the validity, enforceability or priority
                of the liabilities and obligations of any or all of the Obligors
                or the rights of the Borrower, the Agent, the Security Trustee
                and/or each of the Lenders under any of the Transaction
                Documents;

        (g)     the only business of the Parent shall be the legal ownership of
                the issued shares in the Borrower, and entering into the Charge
                Over Shares of the Borrower and the documents incidental thereto
                and the transactions contemplated by the Transaction Documents
                to which it is, or is to be, a party and such activities and
                matters incidental to any of the foregoing and the Parent
                covenants that it shall not, without the prior written consent
                of the Security Trustee (such consent to be exercisable in the
                absolute discretion of the Security Trustee) engage in any other
                business or transaction;

        (h)     it shall not, without the prior written consent of the Security
                Trustee acting on the instructions of the Majority Lenders incur
                any liability to any person, other than (a) any Subordinated
                Liabilities, and (b) such liabilities with respect to Taxes,
                ordinary operating costs and overhead expenses or as have arisen
                or may arise in the ordinary course of carrying on its business
                as referred to in Clause 7.3(g);

        (i)     it shall ensure that at all times its obligations under the
                Transaction Documents rank at least pari passu with its
                obligations owed to all its unsecured creditors save for
                obligations mandatorily preferred by law;

        (j)     it shall duly observe and perform all of the covenants,
                obligations and conditions which are required to be observed and
                performed on its part under each of the Aircraft Operative
                Documents to which it is, or is to be, a party;

        (k)     it shall not create any Lien on or with respect to the Charged
                Property (as that term is defined in the Charge Over Shares of
                the Borrower);

        (l)     it shall not (without the prior written consent of the Security
                Trustee acting on the instructions of the Majority Lenders),
                issue any shares (other than to comply with nationally or other
                local requirements as described in Clause 3.3.2
                (Sub-Borrowers/Intermediate Lessees) or to the Guarantor or a
                Subsidiary of the Guarantor) and the Parent shall not (other
                than pursuant to the Charge Over Shares of the Borrower) sell,
                transfer or dispose of, encumber or create any Lien over or
                alter the rights attaching to any of its shares in the Borrower
                which are owned by the Parent or pay any dividends on any shares
                issued by it or redeem any shares except as permitted by Clause
                8 (Subordination); and

        (m)     it shall procure that at all times a majority of the members of
                its board of directors shall be officers or employees of the
                Guarantor, a Subsidiary, AIG or an AIG Group Company and it
                shall procure further that no member of its board of directors
                shall be replaced or substituted (other than by another officer
                or employee of the Guarantor, a Subsidiary, AIG or an AIG Group
                Company) 





<PAGE>   90



                without the prior written consent of the Security Trustee (which
                consent shall be exercisable in the absolute discretion of the
                Security Trustee).

7.4     GUARANTOR COVENANTS

        Until all of the Secured Obligations (exclusive of indemnities in
        respect of which no claims have been, or to the knowledge of the
        Security Trustee will be, asserted) have been paid in full, the
        Guarantor hereby undertakes and covenants with each of the Lenders, the
        Agent and the Security Trustee separately and severally from the date of
        this Agreement in the terms set out in Schedule 5 and that:

        (a)     subject to the provisions of Clause 9 (Trigger Events) it shall
                ensure that the Borrower, each Sub-Borrower and each
                Intermediate Lessee enter into Leases and Sub-Leases in respect
                of any Aircraft whose terms in respect of maintenance, insurance
                and operations are substantially similar in substance to those
                which are customarily used by the Guarantor for the leasing of
                similar aircraft in its portfolio and leased to lessees of
                similar credit standing, similar geographic location and under
                similar circumstances; and shall administer such Leases and
                Sub-Leases in a manner consistent with those standards applied
                by it with respect to its other owned and/or financed aircraft;

        (b)     subject to the provisions of Clause 9 (Trigger Events), the
                Guarantor shall procure that, when an Aircraft is not the
                subject of a Lease, the Borrower, each Sub-Borrower and each
                Intermediate Lessee shall manage such Aircraft in respect of
                maintenance and insurance consistently with other similar
                aircraft owned and not leased by the Guarantor or any
                Subsidiary;

        (c)     the Guarantor shall ensure that:

                (a)     the Parent remains a wholly owned direct or indirect
                        Subsidiary of the Guarantor;

                (b)     that the Borrower remains a wholly owned direct
                        Subsidiary of the Parent;

                (c)     each Sub-Borrower remains a wholly owned direct
                        Subsidiary of the Borrower (subject to the provisions of
                        Clause 3.3.2 (Sub-Borrower/Intermediate Lessees)); and

                (d)     that each Intermediate Lessee remains a wholly owned
                        direct Subsidiary of the Borrower or a Sub-Borrower
                        (subject to the provisions of Clause 3.3.2
                        (Sub-Borrower/Intermediate Lessees)).

        (d)     promptly after all post-delivery modifications covered by an
                Advance in respect of an Aircraft have been completed, the
                Guarantor shall provide a written notice to the Security Trustee
                confirming that such post-delivery modifications have been
                completed, and the Security Trustee shall, in turn, give a copy
                of such notice to the Lead Managers. If post-delivery
                modifications covered by an Advance in respect of an Aircraft
                are not carried out within the Post-Delivery Modification
                Period, the provisions of Clause 4.9 (Prepayment if




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                Post-Delivery Modifications not completed within Post-Delivery
                Modification Period) shall apply.


8.      SUBORDINATION

8.1     Until all Secured Obligations (exclusive of indemnities in respect of
        which no claims have been, or to the knowledge of the Security Trustee
        will be, asserted) have been paid in full, the Subordinated Lender
        hereby agrees with each of the Lenders, the Agent and the Security
        Trustee that the rights and remedies of the Subordinated Lender in
        respect of any of the Subordinated Liabilities shall, except as provided
        in Clauses 8.2 and 8.4, be subject and subordinate as provided in this
        Clause 8 to all rights and claims, now or hereafter existing, which the
        Agent, the Security Trustee or any Lender may have pursuant to or in
        connection with any Transaction Document.

8.2     Whilst and so long as no Third Trigger Event or Termination Event has
        occurred and is continuing and no Acceleration Event has occurred, and
        no Relevant Event would result therefrom, the Subordinated Lender shall
        be entitled from time to time to make demand on the Borrower or any
        other Obligor (other than the Guarantor) in respect of, and receive
        (free from the Lien of any Aircraft Security Document) from the Borrower
        or any other Obligor (other than the Guarantor), amounts up to (but not
        exceeding) such amounts (comprising all or any part of the Subordinated
        Liabilities) as are actually received or otherwise held by or for the
        credit of such Obligor.

8.3     The Subordinated Lender shall not file or join in any petition to
        commence any insolvency or bankruptcy proceedings against any Obligor
        (other than the Guarantor) until all amounts owing by the Borrower to
        the Lenders, the Agent and the Security Trustee under or in connection
        with the Transaction Documents have been satisfied in full.

8.4     Whilst and so long as no Third Trigger Event or Termination Event has
        occurred and is continuing or no Acceleration Event has occurred, the
        rights of the Subordinated Lender to the payment of any amount of the
        Subordinated Liabilities shall rank pari passu to all rights and claims,
        now or hereafter existing, which the Agent, the Security Trustee or any
        Lender may have pursuant to or in connection with any Transaction
        Document and there are no restrictions whatsoever on the payment (free
        from the Lien of any Aircraft Security Document) or other actions in
        respect of any Subordinated Liabilities save as otherwise set out in
        Clauses 5 (Guarantee and Indemnity), 9.2 (Second Trigger Event), 9.3
        (Third Trigger Event) and 10 (Termination Event) PROVIDED THAT:-

        (a)     the Subordinated Lender shall not at any time assign or transfer
                to any person the whole or any part of the Subordinated
                Liabilities without the prior written consent of the Security
                Trustee acting upon the instructions of the Majority Lenders,
                other than to an AIG Group Company that agrees to be bound by
                the provisions of this Clause 8 by executing an Accession Deed
                on terms acceptable to the Security Trustee and simultaneously
                provides a legal opinion addressed to the Security Trustee (such
                opinion to be satisfactory to the Security Trustee, acting
                reasonably) as to the binding nature of such Accession Deed on
                the acceding party, which transfers shall not require such
                consent, or





<PAGE>   92



        (b)     obtain or otherwise have the benefit of any Lien for or in
                respect of the Subordinated Liabilities other than on the terms
                reasonably specified by the Agent.

8.5     The Subordinated Lender hereby agrees with the Lenders, the Agent and
        the Security Trustee that upon and following the occurrence of a Third
        Trigger Event or Termination Event and for so long as either continues
        or upon the occurrence of an Acceleration Event and until all amounts
        owing to the Lenders, the Agent and the Security Trustee under or in
        connection with the Transaction Documents have been satisfied in full
        the Subordinated Lender shall not:

        (a)     sue upon or collect or receive payment of any moneys (whether
                principal, interest or otherwise) now or hereafter comprising
                all or any part of the Subordinated Liabilities;

        (b)     assign or transfer to any person the whole or any part of the
                Subordinated Liabilities, other than to an AIG Group Company
                that agrees to be bound by the provisions of this Clause 8,
                which transfers shall not require such consent;

        (c)     obtain or otherwise have the benefit of any Lien for or in
                respect of any of the Subordinated Liabilities;

        (d)     exercise or assert any right of set-off or counterclaim against
                any Obligor (other than the Guarantor) in respect of all or any
                part of the Subordinated Liabilities;

        (e)     take any other action whereby the subordination of the
                Subordinated Liabilities or any part thereof to the rights and
                claims of the Lenders, the Agent and the Security Trustee
                pursuant to and in connection with any Transaction Document
                might be terminated, impaired or adversely affected;

        (f)     make any demand in respect of or attempt to obtain repayment of
                any of the Subordinated Liabilities.

8.6     In any bankruptcy or insolvency proceeding of any Obligor (other than
        the Guarantor) any amount payable to the Subordinated Lender in respect
        of any amount of the Subordinated Liabilities shall be subordinated to
        the claims of the Lenders, the Agent and the Security Trustee against
        any Obligor (other than the Guarantor) until such claims have been
        satisfied in full in cash and the Subordinated Lender shall promptly pay
        to the Security Trustee (on behalf of the Lenders) any amount received
        by it on account of any of the Subordinated Liabilities in breach of
        this Clause 8.6.

8.7     This Agreement, inter alia, is a continuing agreement of subordination
        and shall apply notwithstanding any intermediate payment in whole or in
        part of all amounts owing to the Lenders, the Agent and the Security
        Trustee under or in connection with the Transaction Documents. The
        Subordinated Lender shall not by virtue of any payment or distribution
        or other benefit in respect of the Subordinated Liabilities and received
        by any Lender, the Agent or the Security Trustee be entitled to exercise
        any right of subrogation until all amounts owing by the Borrower to the
        Lenders, the Agent and the Security Trustee under or in connection with
        the Transaction Documents have been satisfied in full.





<PAGE>   93



8.8     The Subordinated Lender undertakes that upon and following the
        occurrence of a Third Trigger Event or Termination Event and for so long
        as either continues or upon an Acceleration Event it shall promptly pay
        over to the Security Trustee an amount equal to any sums it receives
        thereafter from any Obligor (other than the Guarantor) in contravention
        of this Clause 8.

8.9     The Subordinated Lender acknowledges that upon and at any time after the
        occurrence of an Acceleration Event, any Proceeds shall be applied in
        accordance with Clause 12.7 (Application of Proceeds following an
        Acceleration Event).

8.10    None of the Obligors (other than the Guarantor) shall, without the prior
        written consent of the Security Trustee acting on the Instructions of
        the Majority Lenders:

        (a)     secure all or any part of the Subordinated Liabilities;

        (b)     redeem, purchase or otherwise acquire any of the Subordinated
                Liabilities other than to the extent permitted by Clause 8.2 or
                8.4;

        (c)     repay any of the Subordinated Liabilities otherwise than in
                accordance with this Agreement; or

        (d)     take any action whereby the subordination of the Subordinated
                Liabilities or any part thereof to the rights and claims of the
                Lenders and the Representatives pursuant to and in connection
                with any Transaction Document might be terminated, impaired or
                adversely affected.


9.      TRIGGER EVENTS

9.1     FIRST TRIGGER EVENT

9.1.1   If a First Trigger Event occurs, upon the request of the Security
        Trustee (acting on the instructions of the Majority Lenders), the
        Borrower shall provide or shall pay or cause to be paid:

        (a)     an amount equal to each Security Deposit then held by the
                Borrower, each Sub-Borrower and each Intermediate Lessee into
                the relevant Security Deposit Account. The Borrower, the
                relevant Sub-Borrower and the relevant Intermediate Lessee shall
                procure that a separate ledger entry in the relevant Security
                Deposit Account is maintained in relation to each Aircraft (if
                applicable). All Security Deposits received by the Borrower,
                each Sub-Borrower and each Intermediate Lessee after the
                occurrence of a First Trigger Event shall be paid into the
                relevant Security Deposit Account;

        (b)     an amount equal to the Maintenance Reserves then held by the
                Borrower, each Sub-Borrower and each Intermediate Lessee into
                the relevant Maintenance Reserve Account. All Maintenance
                Reserves received by the Borrower, each Sub-Borrower and each
                Intermediate Lessee after the occurrence of a First Trigger
                Event shall be paid into the relevant Maintenance Reserve
                Account. The Borrower, the relevant Sub-Borrower and the
                relevant Intermediate Lessee 




<PAGE>   94



                shall procure that a separate ledger is maintained in relation
                to each Aircraft (if applicable) in the relevant Maintenance
                Reserve Account; and

        the Borrower, the relevant Sub-Borrower and the relevant Intermediate
        Lessee shall not remove any sums standing to the credit of either the
        relevant Security Deposit Account or the relevant Maintenance Reserve
        Account for the purpose of co-mingling such sums with the general funds
        of the Guarantor and/or its Subsidiaries (but shall otherwise have sole
        and absolute control over such sums until the occurrence and
        continuation of a Third Trigger Event).

9.1.2   If the payments set out in Clause 9.1.1 are not made in relation to a
        particular Loan to the applicable accounts within ninety (90) days of
        the Security Trustee's request, the Security Trustee may, acting on the
        instructions of the Majority Lenders demand immediate repayment of the
        relevant Loan, whereupon the same shall become immediately due and
        payable and the Borrower shall prepay the amount referred to in Clause
        4.10 (Mandatory Prepayment Event) relating to the First Trigger Event.

9.1.3   If a First Trigger Event ceases by the credit rating of the Guarantor
        for long term debt rising above A- (as applicable) if and as rated by
        Standard and Poor's Corporation and A3 if and as rated by Moody's
        Investor Service Inc., or an equivalent by an alternative service of
        equivalent recognition (if neither Standard and Poor's Corporation nor
        Moody's Investor Service Inc. has assigned any rating) the Borrower's
        obligation to deposit the amounts set out in Clause 9.1.1 shall cease.

9.2     SECOND TRIGGER EVENT

        Upon the occurrence of a Second Trigger Event and for so long as it
        continues, the Lenders shall be under no further obligation to make
        further Advances to the Borrower unless:

        (a)     the Aircraft which the Borrower proposes is to be the subject of
                the proposed further Utilisation, is subject to a Lease or an
                Intermediate Lease; and

        (b)     the Security Trustee, acting on the instructions of the Majority
                Lenders, is satisfied as to the level of Rentals, Security
                Deposit (if any) and Maintenance Reserves (if any) payable under
                the Lease or an Intermediate Lease; and

        (c)     if the Lenders make the Advance requested pursuant to the
                relevant Utilisation Notice, the Borrower shall pay or shall
                procure the payment of (i) an amount equal to the relevant
                Maintenance Reserves then held by it and pay all future
                Maintenance Reserves received by it into the Borrower
                Maintenance Reserves Account and an amount equal to the relevant
                Security Deposit then held by it and pay all future Security
                Deposits received by it into the Borrower Security Deposit
                Account if the relevant Aircraft is to be leased by the
                Borrower, (ii) an amount equal to the relevant Maintenance
                Reserves then held by it and pay all future Maintenance Reserves
                received by it into the relevant Sub-Borrower Maintenance
                Reserves Account and the relevant Security Deposit then held by
                it and pay all future Security Deposits received by it into the
                relevant Sub-Borrower Security Deposit Account if the Aircraft
                is to be leased by a Sub-Borrower and (iii) an amount equal to
                the relevant Maintenance Reserves then held by it and pay all
                future Maintenance Reserves received by it into the





<PAGE>   95


                relevant Intermediate Lessee Maintenance Reserve Account and an
                amount equal to the relevant Security Deposit then held by it
                and pay all future Security Deposits received by it into the
                relevant Intermediate Lessee Security Deposit Account if the
                relevant Aircraft is to be leased by an Intermediate Lessee. The
                Borrower the relevant Sub-Borrower and the relevant Intermediate
                Lessee shall ensure that a separate ledger is maintained in
                relation to each Aircraft (if applicable) in the relevant
                Maintenance Reserve Account.

9.3     THIRD TRIGGER EVENT

9.3.1   Upon the occurrence of a Third Trigger Event:

        (a)     the provisions of Clause 8 (Subordination) (other than the
                provisions of Clauses 8.3, 8.6, 8.7 and 8.10 which shall apply
                in any event) shall apply to the Subordinated Liabilities;

        (b)     the provisions of clause 7.1 of the Borrower Debenture, each
                Sub-Borrower Debenture and each Intermediate Lessee Debenture
                shall apply to all Debts and Credit Balances (as such terms are
                defined in the Borrower Debenture, each Sub-Borrower Debenture
                and each Intermediate Lessee Debenture (as the case may be)) and
                the sums standing to the credit of either the relevant Security
                Deposit Account or the relevant Maintenance Reserve Account
                shall not be withdrawn without the prior consent of the Security
                Trustee, such consent not to be withheld if the Security Trustee
                is satisfied that such withdrawal is for the purposes of
                administering the relevant Lease or maintaining the relevant
                Aircraft;

        (c)     the Borrower, each Sub-Borrower and each Intermediate Lessee
                shall or shall procure that all Rentals and other amounts
                relating to the use or requisition or hull insurance of an
                Aircraft payable under the relevant Lease received by the
                Borrower, each Sub-Borrower and each Intermediate Lessee on or
                after the occurrence of a Third Trigger Event shall be paid into
                the relevant Rental Account, and the sums standing to the credit
                of the relevant Rental Account shall not be withdrawn without
                the prior consent of the Security Trustee, such consent not to
                be withheld if such withdrawal is for the purpose of paying any
                Secured Obligation. The Borrower, the Intermediate Lessee or the
                Sub-Borrower (as the case may be) shall ensure that a separate
                ledger entry in the relevant Rental Account is maintained in
                respect of each Aircraft;

        (d)     the Borrower and each Sub-Borrower shall enter into a Lease
                Security Assignment in accordance with the provisions of clause
                3.2 of each Mortgage and each Intermediate Lessee shall enter
                into an Intermediate Lease Security Assignment in accordance
                with the provisions of paragraph 2.1(g) of the relevant
                Accession Deed;

        (e)     if, notwithstanding the occurrence of such Third Trigger Event,
                the Security Trustee elects not to give a Cancellation Notice,
                the Borrower, each Sub-Borrower and each Intermediate Lessee
                shall enter into a Lease Security Assignment and, as the case
                may be, an Intermediate Lease Security Assignment on the
                Delivery Date of each further Aircraft financed pursuant to 




<PAGE>   96



                the Facility and delivered following the occurrence of such
                Third Trigger Event;

        (f)     if an Aircraft is not leased to a Lessee, then:

                (i)     unless the Security Trustee otherwise agrees (in its
                        sole discretion), the relevant Aircraft shall be
                        registered in the name of the Borrower, or a
                        Sub-Borrower or an Intermediate Lessee in the United
                        States, the United Kingdom, Bermuda or Ireland and to
                        the extent permitted by applicable law, the relevant
                        Aircraft Mortgage shall be registered in the aircraft
                        mortgage register with the Aviation Authority;

                (ii)    the Borrower shall ensure that the relevant Aircraft has
                        a valid certificate of airworthiness issued by the
                        Aviation Authority and that the Aircraft has been
                        maintained in accordance with the maintenance programme
                        approved by that Aviation Authority (including the
                        Manufacturer's maintenance planning document) unless the
                        Aircraft is then undergoing or scheduled for imminent
                        major maintenance or major modifications or is in
                        storage and would not be eligible for an airworthiness
                        certificate from the relevant Aviation Authority; in
                        which event the Borrower shall if requested by the
                        Security Trustee transfer title to a US owner/voting
                        trust so that the Aircraft is US registered for the
                        duration of the major maintenance or major modifications
                        or is in storage even though the Aircraft may not be
                        eligible for an FAA certificate of airworthiness during
                        such major maintenance or major modifications or is in
                        storage; and

        (g)     the Agent acting on the instructions of the Majority Lenders
                shall be entitled to give a written notice to the Borrower
                (copied to the Guarantor) declaring that a Third Trigger Event
                has occurred, in which case if the Agent so specifies in the
                notice (whereupon such notice will be deemed a "CANCELLATION
                NOTICE") the right of the Borrower to serve a Utilisation Notice
                or to require any Advance to be made in relation to any
                Utilisation shall be suspended until the rating of the Guarantor
                for long term debt rises in accordance with Clause 9.3.4 or the
                additional security referred to in paragraph (h)(i) below is
                provided whereupon the Unutilised Facility shall become
                available for further Utilisation on the terms and subject to
                the conditions of this Agreement; and

        (h)     the Security Trustee, acting on the instructions of the Majority
                Lenders, shall be entitled to notify the Guarantor that, in
                order to keep the Facility in effect, the Majority Lenders
                require that the Guarantor shall provide additional security to
                the Lenders in form and substance satisfactory to the Majority
                Lenders, including:

                (i)     a letter of credit issued by an institution acceptable
                        to the Majority Lenders or a guarantee and indemnity
                        from a third party acceptable to the Majority Lenders of
                        all or part of the Guarantor's obligations in respect of
                        principal and interest under the Transaction Documents
                        which letter of credit or guarantee and indemnity shall
                        be in a form and substance satisfactory to the Majority
                        Lenders; and





<PAGE>   97



                (ii)    adequate security in the form of existing bonds and cash
                        reserves for the payment of any Permitted Liens which
                        are being contested in accordance with the definition of
                        Permitted Lien;

                (iii)   the perfection of the Liens created by the Aircraft
                        Security Documents and the receipt of satisfactory legal
                        opinion from counsel in the state of registration of the
                        Aircraft and, if different, in the state in which the
                        Intermediate Lessee, the Lessee or a Sub-Lessee (as the
                        case may be) has its principal place of business as to
                        the recognition in those relevant jurisdictions of the
                        Liens created by the Aircraft Security Documents so
                        perfected in the jurisdiction of incorporation of the
                        parties to the Aircraft Security Documents (other than
                        the Security Trustee).

9.3.2   If the Borrower provides the additional security referred to in
        paragraph h(i) above in form and substance satisfactory to the Majority
        Lenders within one hundred and twenty (120) days of the Security
        Trustee's request no Second Trigger Event or Third Trigger Event shall
        be in effect, the Borrower shall be entitled to issue further
        Utilisation Notices and the provisions of Clause 3 (Utilisation of the
        Facility) shall apply to such Utilisation Notices.

9.3.3   If the Borrower does not provide such additional security within one
        hundred and twenty (120) days, the provisions of Clause 4.10 (Mandatory
        Prepayment) shall apply in relation to the relevant Third Trigger Event.

9.3.4   If a Third Trigger Event ceases by the credit rating of the Guarantor
        for long term debt rising to or above BBB- (if and as rated by Standard
        & Poor's Corporation) and BAA3 (if and as rated by Moody's Investor
        Service, Inc.) or an equivalent by an alternative service of an
        equivalent recognition (if neither Standard and Poor's Corporation nor
        Moody's Investor Service Inc. has assigned any rating) the Borrower's
        obligation to provide the additional security set out in Clause 9.3.1(d)
        and (h) shall cease and the Borrower shall thereafter be entitled to
        issue further Utilisation Notices and the provisions of Clause 3
        (Utilisation of the Facility) shall apply to such Utilisation Notices;
        and the Security Trustee shall promptly (if requested by the Borrower)
        release, reassign and return such additional security granted pursuant
        to Clause 9.3.1(d) and (h) including (if the Borrower so requests) any
        Lease Security Assignments previously perfected and any Mortgages
        registered in the jurisdiction of organisation or principal place of
        business of the relevant Lessee. The Borrower shall pay or reimburse the
        Security Trustee for its Expenses incurred in respect of such release,
        reassignment and return.


10.     DEFAULT

10.1    TERMINATION EVENTS

        A Termination Event shall occur if:-

        (a)     NON-PAYMENT: the Borrower or the Guarantor fails to pay any
                Repayment Instalment payable by it hereunder within five (5)
                Business Days of the due date (other than in the case of the
                Guarantor following a demand made under and in accordance with
                Clause 5 (Guarantee and Indemnity), in which case no further
                grace period shall apply) or, in the case of other amounts due
                under any 




<PAGE>   98



                Transaction Document on demand, the Borrower or the Guarantor
                fails to make such payment within ten (10) Business Days after
                the due date thereof (other than in the case of the Guarantor
                following a demand made under and in accordance with Clause 5
                (Guarantee and Indemnity) in which case no further grace period
                shall apply); or

        (b)     BREACH: the Borrower, any Sub-Borrower, any Intermediate Lessee,
                the Parent or the Guarantor fails to observe or perform its
                obligations under any of the Transaction Documents and, but only
                if such default is capable of remedy, such default shall
                continue for more than thirty (30) days after receipt of notice
                thereof from the Agent without being remedied to the
                satisfaction of the Agent or if at the end of such thirty (30)
                day period such failure has not been so remedied but the
                Borrower, the Parent, the relevant Intermediate Lessee, the
                relevant Sub-Borrower or the Guarantor (as the case may be) has
                demonstrated to the reasonable satisfaction of the Agent that
                there is a reasonable prospect of remedying such failure and the
                Borrower, the Parent, the relevant Intermediate Lessee, the
                relevant Sub-Borrower or the Guarantor (as the case may be) is
                acting in good faith is using all reasonable efforts to remedy
                such failure within such other period as the Agent agrees acting
                reasonably; or

        (c)     REPRESENTATION: any representation or warranty made by the
                Borrower, any Sub-Borrower, any Intermediate Lessee, the Parent
                or the Guarantor in writing herein or in any of the Transaction
                Documents or in any certificate furnished by any of them under
                or in connection with any of the Transaction Documents shall
                prove to have been misleading or incorrect in any material
                respect on the date when made with reference to the facts and
                circumstances then subsisting and, which in the opinion of the
                Agent would materially and adversely affect the interests or
                rights of the Lenders, the Agent or the Security Trustee
                hereunder or thereunder and such material adverse effect is
                incapable of being remedied, or, if capable of being remedied
                within thirty (30) days after notice from the Security
                Trustee/Agent; or

        (d)     INSURANCE: the required Insurances or governmental indemnities,
                (as the case may be) in respect of the relevant Aircraft cease
                to be in full force and effect as to the Security Trustee, the
                Borrower, the relevant Sub-Borrower or the relevant Intermediate
                Lessee; or

        (e)     REPUDIATION OF GUARANTEE: any of the terms contained in Clause 5
                are repudiated by the Guarantor;

        (f)     INSOLVENCY: the Borrower, the Guarantor, any Sub-Borrower, the
                Parent or any Intermediate Lessee (in this Clause 10.1(f), the
                "PARTY") shall (i) admit in writing its inability to pay its
                debts generally as they become due, (ii) file a voluntary
                petition in bankruptcy or a voluntary petition or an answer
                seeking reorganisation in a proceeding under any bankruptcy laws
                (as now or hereafter in effect) or an answer admitting the
                material allegations of a petition filed against the Party shall
                by voluntary petition, answer or consent, seek relief under the
                provisions of any other now existing or future bankruptcy or
                other similar law providing for the reorganisation or winding-up
                of corporations, or providing for an agreement, composition,
                extension or adjustment with its creditors, (iii) make a general
                assignment for the benefit of creditors, or (iv) 




<PAGE>   99



                consent to the appointment of a receiver, administrator,
                administrative receiver, trustee, liquidator or the like of
                itself or substantially all of its property; or

        (g)     APPOINTMENT OF TRUSTEE ETC: proceedings or a case shall commence
                or be commenced, without the application or consent of the
                Borrower, the Guarantor, the relevant Sub-Borrower, the relevant
                Intermediate Lessee or the Parent (in this Clause 10.1(g), the
                "PARTY"), in any court of competent jurisdiction, which shall
                not be struck out within sixty (60) days of commencement and
                which seeks (i) the liquidation, reorganisation, dissolution,
                winding-up, or composition or readjustment of debts of the
                Party, (ii) appointment of a trustee, receiver, administrator,
                administrative receiver, custodian, liquidator or the like of
                the Party or substantially all of the property or assets of the
                Party, or (iii) similar relief in respect of the Party under any
                law providing for the relief of debtors, or any order for relief
                against the Party shall be entered in an involuntary case under
                such bankruptcy law; or

        (h)     ANALOGOUS EVENTS: any event analogous to any of the events
                specified in Clause 10.1(f) or 10.1(g) in any jurisdiction shall
                occur; or

        (i)     CHANGE OR CESSATION OF BUSINESS: the Borrower, any Sub-Borrower,
                any Intermediate Lessee and/or the Guarantor:-

                (i)     materially changes the nature or scope of its aircraft
                        operating leasing and aircraft trading business or
                        aircraft operating leasing ceases to be a core activity
                        of its business; or

                (ii)    suspends a substantial part of its aircraft operating
                        leasing and aircraft trading business operations (other
                        than suspensions of a temporary nature resulting from
                        (i) a strike or (ii) a similar event not within the
                        control of the Borrower, the relevant Sub-Borrower, the
                        relevant Intermediate Lessee or the Guarantor, as the
                        case may be) which it now conducts directly; or

                (iii)   ceases, or threatens to cease, to carry on all or a
                        substantial part of its aircraft operating leasing and
                        aircraft trading business; or

        (j)     CROSS ACCELERATION OF FINANCIAL INDEBTEDNESS: any Financial
                Indebtedness of the Guarantor (other than Financial Indebtedness
                of the Guarantor to a Subsidiary of the Guarantor) exceeding one
                per cent. of the Financial Indebtedness of the Guarantor in
                aggregate (or the equivalent thereof, as determined by the Agent
                by reference to prevailing market exchange rates from time to
                time, in any other currency):-

                (i)     is not paid when due (or within any applicable grace
                        period relating thereto) on stated final maturity; or

                (ii)    is declared to be due or otherwise becomes due and
                        payable before its stated maturity by reason of a
                        default by the Guarantor or an event of default
                        (howsoever described) under the document relating to
                        that Financial Indebtedness; or




<PAGE>   100



        (k)     CROSS ACCELERATION OF ECA FACILITIES: a "LOAN EVENT OF
                TERMINATION" (as that term is defined in the 1994 Facility
                Agreement and the 1995 Facility Agreement) shall occur and be
                continuing or any other termination event (howsoever described)
                shall occur and be continuing in respect of any other loan
                facility to the Guarantor or any Subsidiary which is supported
                by the Export Credit Agencies, and in each case a declaration of
                acceleration shall have been made in respect thereof; or

        (l)     UNINSURED USE: the Borrower, any Sub-Borrower or any
                Intermediate Lessee uses or operates or knowingly permits or
                causes to be used or operated any Aircraft outside the cover
                provided by any of the Insurances (including governmental
                indemnities, as the case may be) except in the case of
                repossessing the Aircraft in connection with a hijacking, act of
                war, impoundment (other than for unpaid charges) or similar
                event to ferry the Aircraft to a jurisdiction where such
                Insurances (or governmental indemnities) will be in effect.

10.2    ACCELERATION RIGHTS

        Without prejudice to any other rights of the Lenders (whether under the
        Transaction Documents or otherwise), at any time after the occurrence of
        a Termination Event and thereafter for so long as any Termination Event
        is continuing, the Agent may (acting upon the instructions of the
        Majority Lenders) give a written notice (an "ACCELERATION NOTICE") to
        the Borrower declaring that a Termination Event has occurred, in which
        case:-

        (a)     each Loan shall be cancelled forthwith whereupon the same shall
                be cancelled and the Commitment of each Lender in respect of
                each Aircraft shall be reduced to zero; and/or

        (b)     the principal amount of each Loan then outstanding and all
                interest accrued thereon, Expenses (if any) and the Make-Whole
                Amount in respect of each Loan (which shall be specified in such
                notice) shall become immediately due and payable and the
                Borrower shall immediately pay the same; and/or

        (c)     each of the Representatives may enforce its rights and those of
                the Lenders under all or any of the Transaction Documents and
                under applicable law.


11.     PROCEEDS ACCOUNT

11.1    On or before the occurrence of any event which will result in the
        payment of any Proceeds or promptly thereafter the Security Trustee
        shall open the Proceeds Account in respect of each Aircraft and shall
        promptly notify all parties to this Agreement of such details of such
        account as they may require in order to comply with their obligations
        under Clause 11.3. Such account shall be held in the name of the
        Security Trustee and all monies from time to time standing to the credit
        thereof shall be the property of the Security Trustee and no party
        hereto other than the Security Trustee shall have any proprietary
        interests in such account or any such monies.

11.2    Any sum received by any party hereto which is required by any provision
        hereof to be paid to the Security Trustee for credit to the Proceeds
        Account shall be received by such party 




<PAGE>   101


        on trust for the Security Trustee PROVIDED that in respect of any Total
        Loss Proceeds, Requisition Proceeds, Final Disposition Proceeds or
        Sub-Borrower Sale Proceeds received by the Borrower or a Sub-Borrower
        prior to a Termination Event such amounts shall not be received in trust
        or be paid to the Proceeds Account but the Borrower or such Sub-Borrower
        shall pay as provided herein the amounts set out in Clauses 4.4.1
        (Prepayment following a Total Loss), 4.5.1(a) (Prepayment on Final
        Disposition) and 4.6.1(a) (Prepayment on Sub-Borrower Sale) to the
        Security Trustee for credit to the Proceeds Account.

11.3    Each Representative and each Lender shall from time to time pay any
        Proceeds (other than any such amounts as may be received by way of
        distribution from the Proceeds Account) to the Security Trustee promptly
        upon receipt thereof for application in accordance with the terms of
        this Agreement.

11.4    All Proceeds received by the Security Trustee (otherwise than by way of
        distribution from the Proceeds Account) shall, if received in Dollars,
        be promptly credited to the Proceeds Account.

11.5    If any Proceeds are received by the Security Trustee (otherwise than by
        way of distribution from the Proceeds Account) in any currency other
        than Dollars, then they shall be applied in purchase of Dollars at the
        spot rate of exchange available to the Security Trustee (in the ordinary
        course of business) in the London foreign exchange market on the date of
        receipt (or, if it is not practicable to effect such purchase on such
        date, the immediately following day on which banks in London are
        generally open for the transaction of such foreign exchange business),
        and the net amount of Dollars so purchased (after the deduction by the
        Security Trustee of any reasonable costs of exchange incurred by it in
        connection with such purchase) shall be credited to the Proceeds
        Account.

11.6    Each Representative or Lender hereto agrees for the benefit of the
        others that it shall promptly pay, without any set-off or counterclaim
        and free and clear of and without any withholding or deduction
        whatsoever (except as required by compulsion of law) to the Security
        Trustee, in the currency of receipt, all Proceeds received by it for
        application by the Security Trustee in accordance with the terms of this
        Agreement (but if any such deduction or withholding is required by law
        then the party affected by such requirement (the "AFFECTED PARTY")
        agrees that it shall consult in good faith with the parties to this
        Agreement who may be affected thereby with a view to mitigating the
        effect of any such deduction or withholding provided that the affected
        party shall not be obliged to incur any additional expense, nor to take
        any course of action other than it would do in relation to any
        counterparty to any of its similar contracts who would be affected by
        the same or any similar legal requirement).

11.7    Interest shall accrue from day to day on the amounts of all Proceeds
        received by the Security Trustee and from time to time standing to the
        credit of the Proceeds Account at the rate or rates and for such
        interest periods and in the manner which the Security Trustee shall
        reasonably select from time to time. Any such interest shall be credited
        to the Proceeds Account at the end of each interest period so agreed.



<PAGE>   102


12.     APPLICATION OF SUMS RECEIVED BY THE LENDERS

12.1    APPLICATION OF PRINCIPAL AND INTEREST PRIOR TO THE OCCURRENCE OF AN
        ACCELERATION EVENT

        Upon receipt by the Agent of the amounts referred to in Clause 4.14.1
        (Performance Procedure) in respect of the relevant Loan, the Agent shall
        make the same available in accordance with the provisions of Clause
        4.14.2 (Performance Procedure) to each of the Lead Managers in the
        proportions specified in the relevant Loan Supplement for application by
        each Lead Manager in or towards the payment of interest and principal
        outstanding to the relevant Lenders in respect of the Loan relating to
        such Aircraft such application by each Lead Manager to be in accordance
        with the terms agreed between that Lead Manager, the relevant Lenders
        and the relevant Export Credit Agency.

12.2    APPLICATION OF AMOUNTS RECEIVED IN RESPECT OF INDEMNITY OBLIGATIONS

        Any and all monies received by the Agent or, as the case may be, the
        Security Trustee, from the Borrower, in respect of any indemnity
        obligations of the Borrower, shall be paid by the Agent or, as the case
        may be, the Security Trustee, promptly upon receipt thereof to the
        relevant Lender or, as the case may be, the relevant Representative in
        respect of whom the indemnity claim was made up to the total amount
        owing to that relevant Lender or the relevant Representative in respect
        of that indemnity claim.

12.3    APPLICATION OF INSURANCE PROCEEDS (OTHER THAN IN RESPECT OF A TOTAL
        LOSS)

        (a)     Any insurance proceeds in respect of any loss of or damage to an
                Aircraft not amounting to a Total Loss of such Aircraft which
                are received by the Security Trustee pursuant to Schedule 8,
                together with such amount of interest as may have accrued
                thereon, shall be paid over to the relevant Sub-Borrower or the
                Borrower or to the relevant Lessee or Sub-Lessee, as instructed
                by the Borrower or the relevant Sub-Borrower, as the case may be
                and as soon as practicable thereafter, the Borrower or such
                Sub-Borrower shall furnish evidence reasonably satisfactory to
                the Security Trustee that all damage has been properly repaired.

        (b)     Any insurance proceeds received in respect of a Total Loss of an
                Engine shall be paid to the Borrower or the relevant
                Sub-Borrower, or as it may instruct, and the Borrower or
                relevant Sub-Borrower shall as soon as reasonably practicable
                thereafter obtain title to a Replacement Engine.

        (c)     Any monies paid under liability insurances shall be paid to the
                person, firm or company to which the liability (or alleged
                liability) covered by such insurances was incurred or if the
                liability (or alleged liability) to such persons has been
                previously discharged, such monies shall be paid to the person
                who has discharged such liability in reimbursement of the monies
                so expended by it in satisfaction of such liability or alleged
                liability.

12.4    APPLICATION OF TOTAL LOSS PROCEEDS

        (a)     If any Total Loss Proceeds in respect of a Total Loss of an
                Aircraft are received prior to the occurrence of an Acceleration
                Event and such Aircraft has been substituted in accordance with
                the provisions of Clause 4.7 (Substitution of 




<PAGE>   103



        Aircraft) such Total Loss Proceeds together with interest thereon as
        provided in Clause 4.7.6(a) (Timing of Substitution) shall be paid
        promptly following receipt by the Security Trustee to the Borrower or
        the relevant Sub-Borrower or their respective designee nominated in
        writing to the Security Trustee.

        (b)     If any Total Loss Proceeds in respect of a Total Loss of an
                Aircraft are received prior to the occurrence of an Acceleration
                Event and such Aircraft has not been and will not be so
                substituted, such Total Loss Proceeds, together with such amount
                of interest as may have accrued thereon shall be applied
                promptly following receipt by the Security Trustee in the
                following order:-

                (i)     in reimbursement of the Representatives and the Lenders
                        of any and all Expenses incurred by them as a group and
                        approved by the Guarantor (acting reasonably) in
                        collecting such Total Loss Proceeds together with
                        interest thereon at LIBOR from the date of payment of
                        such Expenses;

                (ii)    an amount of up to the total amount of principal and
                        interest outstanding in respect of the Loan relating to
                        such Aircraft to each of the Lead Managers in the
                        proportions specified in the Loan Supplement relating to
                        the relevant Aircraft for application by each Lead
                        Manager in or towards payment of interest and principal
                        outstanding to the relevant Lenders in respect of the
                        Loan relating to such Aircraft, such application by each
                        Lead Manager to be in accordance with the terms agreed
                        between that Lead Manager, the relevant Lenders and the
                        relevant Export Credit Agency;

                (iii)   the Make-Whole Amount to each of the Representatives and
                        each of the Lead Managers on behalf of the Lenders;

                (iv)    any balance shall be paid to the Borrower.

        (c)     If the Total Loss Proceeds are received after the occurrence of
                an Acceleration Event, the Total Loss Proceeds, together with
                such amount of interest as may have accrued thereon whilst held
                in the Security Trustee's bank account, shall be applied in
                accordance with Clause 12.7 below.

12.5    APPLICATION OF REQUISITION PROCEEDS

        (a)     If any Requisition Proceeds (other than as a result of a Total
                Loss of an Aircraft) or similar proceeds in respect of an Engine
                are received prior to the occurrence of an Acceleration Event
                such Requisition Proceeds, together with such amount of interest
                as may have accrued thereon, shall be paid promptly following
                receipt by the Security Trustee to the Borrower or any relevant
                Sub-Borrower.

        (b)     If the Requisition Proceeds (other than as a result of a Total
                Loss of an Aircraft) or similar proceeds in respect of an Engine
                are received after the occurrence of an Acceleration Event the
                Requisition Proceeds shall be applied in accordance with Clause
                12.7 below subject to the Lessee's or the Sub-




<PAGE>   104



                Lessee's quiet enjoyment rights to any of such Requisition
                Proceeds or similar proceeds.

12.6    APPLICATION OF SUB-BORROWER SALE PROCEEDS AND FINAL DISPOSITION PROCEEDS

        (a)     If any Final Disposition Proceeds in respect of a Final
                Disposition of an Aircraft or any Sub-Borrower Sale Proceeds in
                respect of a Sub-Borrower Sale (as the case may be) are received
                prior to the occurrence of an Acceleration Event and such
                Aircraft has been substituted in accordance with Clause 4.7
                (Substitution of Aircraft) such Final Disposition Proceeds or
                such-Sub-Borrower Sale Proceeds (as the case may be), together
                with such amount of interest as may have accrued thereon, shall
                be paid promptly following receipt by the Security Trustee to
                the Borrower or the relevant Sub-Borrower or their respective
                designee nominated in writing to the Security Trustee.

        (b)     If any Final Disposition Proceeds in respect of a Final
                Disposition of an Aircraft or any Sub-Borrower Sale Proceeds in
                respect of a Sub-Borrower Sale (as the case may be) are received
                prior to the occurrence of an Acceleration Event, such Final
                Disposition Proceeds or Sub-Borrower Sale Proceeds (as the case
                may be), together with such amount of interest as may have
                accrued thereon, shall be applied promptly following receipt by
                the Security Trustee in the following order:-

                (i)     in reimbursement of the Representatives and the Lenders
                        of any and all Expenses incurred by them as a group and
                        approved by the Guarantor acting reasonably in
                        collecting such Final Disposition Proceeds or
                        Sub-Borrower Sale Proceeds (as the case may be) together
                        with interest thereon at LIBOR from the date of payment
                        of such Expenses;

                (ii)    an amount of up to the total amount of principal and
                        interest outstanding in respect of the Loan relating to
                        such Aircraft to each of the Lead Managers in the
                        proportions specified in the Loan Supplement relating to
                        the relevant Aircraft for application by each Lead
                        Manager in or towards payment of interest and principal
                        outstanding to the relevant Lenders in respect of the
                        Loan relating to such Aircraft, such application by each
                        Lead Manager to be in accordance with the terms agreed
                        between that Lead Manager, the relevant Lenders and the
                        relevant Export Credit Agency;

                (iii)   the Make-Whole Amount to each Representative and each of
                        the Lead Managers on behalf of the Lenders;

                (iv)    any balance shall be paid to the Borrower.

        (c)     If the Final Disposition Proceeds or Sub-Borrower Sale Proceeds
                (as the case may be) are received after the occurrence of an
                Acceleration Event, the Final Disposition Proceeds or
                Sub-Borrower Sale Proceeds (as the case may be), together with
                such amount of interest as may have accrued thereon whilst held
                in the Security Trustee's bank account, shall be applied in
                accordance with Clause 12.7.





<PAGE>   105



12.7    APPLICATION OF PROCEEDS FOLLOWING AN ACCELERATION EVENT

        Any Proceeds in the Proceeds Account relating to an Aircraft or
        otherwise received by the Security Trustee at the time of an
        Acceleration Event, or at any time thereafter, together with such amount
        of interest as may have accrued thereon shall be applied by the Security
        Trustee forthwith or, as the case may be, forthwith upon receipt by the
        Security Trustee as follows:-

        (a)     first, in or towards reimbursing each of the Representatives,
                and/or any Receiver for any Expenses for which the
                Representatives, and/or any Receiver shall not previously have
                been reimbursed or indemnified together with interest thereon at
                LIBOR from the date of payment of such Expenses and in or
                towards payment of any debts or claims which are by statute
                payable in preference to the amounts due to the Representatives
                and/or the Lenders (but only to the extent such debts or claims
                have such preference);

        (b)     second, an amount of up to the total principal and interest
                outstanding in respect of the Loan relating to the relevant
                Aircraft to each of the Lead Managers in the proportions
                specified in the Loan Supplement relating to such Aircraft for
                application by each Lead Manager in or towards the payment of
                interest and principal outstanding to the relevant Lenders in
                respect of the Loan relating to such Aircraft, such application
                by each Lead Manager to be in accordance with the terms agreed
                between that Lead Manager, the relevant Lenders and the relevant
                Export Credit Agency;

        (c)     third, the Make-Whole Amount to each of the Representatives and
                each of the Lead Managers on behalf of the Lenders;

        (d)     fourth, any remaining Proceeds relating to the Aircraft shall be
                distributed first, to the persons, in the order and in respect
                of the matters referred to in sub-clauses (a), (b) and (c) of
                this Clause 12.7 in relation to each of the other Aircraft;

        (e)     fifth, once all of the amounts referred to in sub-clauses (a) to
                (d) inclusive above have been satisfied and discharged in full,
                any balance shall be paid to the Subordinated Lender;

        (f)     sixth, once all of the amounts referred to in sub-clauses (a) to
                (e) inclusive above have been satisfied and discharged in full,
                any balance shall be paid to the Borrower.

12.8    APPLICATION BY LEAD MANAGERS

        Any application by a Lead Manager of funds received from the Security
        Trustee by way of distribution from the Proceeds Account pursuant to any
        provision of this Clause 12 shall be effected in accordance with the
        terms agreed between that Lead Manager, the relevant Lenders and the
        relevant Export Credit Agency, and each Lead Manager shall inform each
        other party hereto, upon such party's request, of the effect of such
        application on the remaining principal and interest due on the relevant
        national portion of the relevant Loan.




<PAGE>   106



13.     INDEMNITIES

13.1    OPERATIONAL INDEMNITY

13.1.1  The Borrower shall indemnify each Indemnitee (within ten (10) Business
        Days of demand accompanied by supporting particulars in reasonable
        detail from the applicable Indemnitee) for, each Loss and each Expense
        which may from time to time be imposed on, incurred or suffered by or
        asserted against any Indemnitee (whether or not such Loss or Expense is
        also indemnified or insured against by any other person, but subject to
        Clause 13.6 (No Double Counting)) resulting from the financing of the
        Borrower's or any Sub-Borrower's acquisition and ownership of any
        Aircraft or from the leasing by the Borrower, any Sub-Borrower or any
        Intermediate Lessee to the relevant Lessee of, or the leasing by the
        relevant Lessee to any other person of, any Aircraft, or in connection
        with or arising directly or indirectly out of or in any way connected
        with the manufacture, acceptance, purchase, delivery, any delay in or
        postponement of delivery, non-delivery, ownership, possession, charter,
        use, leasing, sub-leasing, presence, operation, condition, storage,
        packing, freight, shipping, transportation, modification, alteration,
        maintenance, insurance, overhaul, replacement, refurbishment,
        remarketing, management, sale, registration, de-registration,
        redelivery, servicing or repair of any Aircraft or in connection with or
        arising from any Indemnitee having or being deemed to have any interest
        in any Aircraft, whether or not such claim may be attributable to any
        defect in any Aircraft and regardless of when the same shall arise and
        whether or not such Aircraft is in the possession or control of the
        Borrower or any other person.

13.1.2  The Indemnities contained in Clause 13.1.1 shall not extend to any Loss
        or Expense of any Indemnitee to the extent that such Loss or Expense:-

        (a)     is caused by the wilful misconduct, fraud or reckless disregard
                with knowledge of the probable consequences on the part of such
                Indemnitee;

        (b)     is a Loss or Expense for which such Indemnitee has received and
                is entitled to retain a payment pursuant to another provision of
                any Transaction Document or an insurance payment pursuant to the
                Insurances;

        (c)     is required to be paid or borne by such Indemnitee pursuant to
                the terms of any Transaction Document;

        (d)     is caused by such Indemnitee's breach of any express
                representation made by it in any Transaction Document or of any
                express obligation under any Transaction Document (but excluding
                any such breach in consequence (directly or indirectly) of a
                breach by the Borrower or any other Obligor of any
                representation or warranty contained in or of their respective
                obligations under any Transaction Document); or

        (e)     is upon or is caused by any voluntary transfer of an Indemnitee
                of any of its rights, benefits or obligation hereunder other
                than pursuant to Clause 15.2 (Prepayment of Affected Loans and
                Replacement of Affected Lender).

13.1.3  All payments by way of indemnity under Clause 13.1.1 shall be made in
        the currency of the relevant Loss or Expense.



<PAGE>   107



13.1.4  If a written claim is made against an Indemnitee which is the subject of
        an indemnity by the Borrower under this Clause 13.1, such Indemnitee
        shall promptly notify the Borrower. The Borrower (including a Lessee or
        Sub-Lessee on any Obligor's behalf) at its sole cost and expense, except
        as provided herein, shall have the right to control, investigate and
        prosecute the entire defence and compromise of any Loss or Expense for
        which indemnification is sought (provided that such compromise imposes
        no additional payment obligations on an Indemnitee, which is not
        otherwise indemnified under this Clause 13); PROVIDED, if reasonably
        requested by the Borrower in writing within thirty (30) days following
        receipt by the Borrower of such notice or thereafter if the Borrower
        shall have acknowledged its duty to indemnify such Indemnitee hereunder,
        such Indemnitee shall, at the expense of the Borrower, in good faith
        contest in the name of such Indemnitee the validity, applicability and
        amount of such Loss in appropriate administrative and judicial
        proceedings. If the Borrower (or a Lessee or Sub-Lessee) shall, at its
        sole expense, assume the defence of any Loss, each Indemnitee shall
        cooperate with it at the Borrower's expense, in defending such Loss.
        Each Indemnitee shall supply the Borrower (or a Lessee or Sub-Lessee)
        with such information as is requested and as is necessary or advisable
        for the Borrower (or a Lessee or Sub-Lessee) to control or participate
        in any proceeding. The Borrower shall not have the right to control,
        investigate, prosecute and comprise such Loss so long as a Termination
        Event shall have occurred and be continuing provided, however, that the
        Borrower (or a Lessee or Sub-Lessee) shall have the right to control,
        investigate, prosecute and compromise such Loss in all cases when
        required by the terms of the insurance or insurer applicable thereto. An
        Indemnitee may participate at its own expense and with its own counsel
        in any judicial proceedings defended by the Borrower (or a Lessee or
        Sub-Lessee) pursuant to the preceding provisions so long as such
        participation does not, in the reasonable opinion of the Borrower when
        the Borrower (or a Lessee or Sub-Lessee) has chosen to assume the
        defence of any Loss, materially impair such defence. So long as the
        Borrower (or a Lessee or Sub-Lessee) shall have acknowledged in writing
        its duty to indemnify an Indemnitee hereunder, no such Indemnitee shall
        enter into a settlement or other compromise with respect to any such
        Loss without the prior written consent of the Borrower.

13.1.5  Upon the making of any claim for any Loss by an Indemnitee pursuant to
        this Clause 13.1, and PROVIDED that the Borrower either pays such Loss
        or, if such Indemnitee has not been required to make any payment in
        respect thereof, the Borrower confirms its indemnification obligations
        with respect thereto in writing, the Borrower, without any further
        action, shall be subrogated to any claims, rights and remedies the
        Indemnitee may have relating thereto (except claims under such
        Indemnitee's own insurance policies). Each Indemnitee agrees, at the
        Borrower's expense, to give such further assurances or agreements and to
        cooperate with the Borrower to permit the Borrower to pursue such Loss,
        if any, to the extent reasonably requested by the Borrower. In the event
        that the Borrower shall have paid an amount to an Indemnitee pursuant to
        this Clause 13.1.5, and such Indemnitee subsequently shall be reimbursed
        in respect of such indemnified amount from any other person, such
        Indemnitee shall, so long as no Termination Event has occurred and is
        continuing, promptly pay the Borrower, but not before the Borrower shall
        have made all payments then due to such Indemnitee pursuant to this
        Clause 13.1.5, an amount equal to the sum of (a) the amount of such
        reimbursement, including interest actually received attributable
        thereto, net of taxes required to be paid by such Indemnitee as a result
        of any refund received and (b) any tax benefit realised by such
        Indemnitee as a result of the deductibility for tax purposes of any
        payment by such Indemnitee made pursuant to this sentence.




<PAGE>   108



13.1.6  If any Export Credit Agency were to become a Lender, the provisions of
        Clause 13.1.4 shall not apply to such Export Credit Agency.


13.2    DOCUMENTARY TAXES

13.2.1  Subject to Clause 13.2.2, the Borrower shall pay, and shall indemnify
        each Indemnitee within ten (10) Business Days of demand accompanied with
        supported particulars in reasonable detail for, all present and future
        stamp, documentary or similar duties or registration taxes or fees or
        charges, including any penalties, additions, fines or interest relating
        thereto at any time payable in respect of any of the Transaction
        Documents and/or the Support Agreements to a Government Entity in
        Bermuda, the United States or the jurisdiction of organisation of a
        Sub-Borrower or an Intermediate Lessee or any transaction hereunder or
        thereunder imposed by Bermuda, the United States of America or the
        jurisdiction of incorporation of the Sub-Borrower or after an
        Acceleration Event has occurred, by the jurisdiction in which
        enforcement of the applicable Transaction Document is sought and shall
        indemnify within ten (10) Business Days on demand accompanied with
        supporting particulars in reasonable detail each Indemnitee against any
        liability arising by reason of any delay or omission by the Borrower to
        pay on written demand any such duties, taxes, fees or charges.

13.2.2  The Borrower shall not have any obligation under Clause 13.2.1 in
        respect of any duty, tax, fee or charge to the extent the same is:

        (a)     imposed on or as a result of any transfer (including any partial
                transfer or agreement to transfer) by a Lender, the Agent or the
                Security Trustee other than where such transfer (i) takes place
                at the request of the Borrower or the Guarantor or, (ii) is not
                undertaken voluntarily (and, for the avoidance of doubt, the
                provisions concerning voluntary transfer set out in Clause 18
                (Assignments and Transfers) shall apply for the purposes of this
                Clause 13.2); or

        (b)     imposed as a result of any action or omission of the relevant
                Indemnitee which constitutes wilful misconduct, fraud or
                reckless disregard with knowledge of the probable consequences
                on the part of such Indemnitee; or

        (c)     imposed as a result of a Representative or Lender bringing a
                document into the United Kingdom otherwise than, after a
                Termination Event, for the purposes of enforcement of the
                Representatives' or the Lenders' rights under any of the
                Aircraft Operative Documents; or

        (d)     is caused by the relevant Indemnitee's breach of any express
                representation made by it in any Transaction Document or of any
                express obligations under any of the Transaction Document (but
                excluding any such breach in consequence (directly or
                indirectly) of a breach by the Borrower or any other Obligor of
                any representation or warranty contained in or of their
                respective obligations under any Transaction Document).

13.2.3  If any duty, tax, fee or charge referred to in Clause 13.2.1 arises and
        no such means referred to in Clause 15.3.1 (Mitigation of Documentary
        Taxes) is agreed as a result of the 




<PAGE>   109



        consultation procedure referred to in Clause 15.3.1 then (provided no
        Relevant Event has occurred and is continuing), the Borrower may, having
        given notice in writing to the Agent and the relevant Lender (in this
        Clause 13.2.3 the "AFFECTED LENDER") require such Affected Lender to
        transfer its rights, benefits and obligations pursuant to Clause 18
        (Assignment and Transfers) or prepay to the Agent (for the account of
        the Affected Lender) an amount equal to all amounts outstanding (whether
        of principal, interest, Expenses (if any) and the Make-Whole Amount) in
        respect of the Affected Lender's Relevant Proportion of each Loan
        affected by such circumstances.

13.3    FUNDING INDEMNITIES

13.3.1  If for any reason other than a breach by the relevant Lender of its
        obligations hereunder:-

        (a)     the Utilisation Date for a Loan is postponed or cancelled for
                any reason whatsoever; or

        (b)     a Loan is not advanced (including pursuant to the provisions of
                Clause 3.7.6 (Disbursement of the Loan)) to the Borrower on the
                Delivery Date as a result of any condition precedent provided
                for herein to be fulfilled by an Obligor not being fulfilled to
                the satisfaction of the Agent,

        then the Borrower shall indemnify the Security Trustee, the Agent and
        each Lender within five (5) Business Days of demand accompanied with
        supporting particulars in reasonable detail (which demand, at the
        Borrower's request in expectation of delivery of the Aircraft, the
        Security Trustee will delay making on the Borrower for a period not
        exceeding ten (10) Business Days after the Scheduled Delivery Date)
        against all Losses and Expenses which the Security Trustee, the Agent or
        any Lender may suffer, sustain or incur as a consequence thereof (and,
        in the case of postponement, as a consequence of remaining in readiness
        for and acting in accordance with such postponed Utilisation Date) in
        respect of funds borrowed or mobilised by the Security Trustee, the
        Agent or such Lender in connection with the financing or funding of the
        relevant Loan, the liquidation or redeployment of any deposits taken or
        made and funding costs in relation to any interest exchange or other
        hedging arrangements entered into in connection with its participation
        in the relevant Loan or any part thereof or in connection with any
        foreign exchange business transacted for such purpose, the substitute
        investment (for the then current Interest Period) of such funds with a
        return lower than the cost of such funds or the prepayment of such funds
        to the source from which they were borrowed or mobilised, INCLUDING, if
        delivery of the Aircraft does occur after but not on the Scheduled
        Delivery Date,

                (i)     the German Lenders' actual cost of financing or funding
                        the relevant German Credits as determined two (2)
                        Business Days prior to the Scheduled Delivery Date with
                        respect to the period from (and including) the Scheduled
                        Delivery Date to (but excluding) the Delivery Date;

                (ii)    Losses in an amount equal to the amount by which the
                        British Lenders' and the French Lenders' actual cost of
                        financing or funding the relevant British Credits and
                        the French Credits respectively as determined two (2)
                        Business Days prior to the Scheduled Delivery Date for
                        the period between the Scheduled Delivery Date and the




<PAGE>   110



                        first Repayment Date exceeds the British Lenders' and
                        French Lenders' notional cost of financing or funding
                        the relevant British Credits and French Credits
                        respectively on the Delivery Date (as determined two (2)
                        Business Days prior to the Delivery Date by the Export
                        Credit Agencies or their respective financial
                        institutions involved in the "LASU" rate support
                        programme) with respect to the period between the
                        Delivery Date and the first Repayment Date; and

                (iii)   if, in addition to financing or funding the relevant
                        Loan, the Lenders have separately financed the guarantee
                        fee and credit insurance premia of the Export Credit
                        Agencies payable in respect of the relevant Loan two (2)
                        Business Days prior to the Scheduled Delivery Date,
                        Losses in the amount by which the Lenders' reimbursement
                        exposure (comprising scheduled repayment of portion of
                        principal together with interest) in financing such
                        guarantee fee and credit insurance premia for the period
                        between the Scheduled Delivery Date and the first
                        Repayment Date exceeds that portion of the Repayment
                        Instalment payable in accordance with the terms of this
                        Agreement and the relevant Loan Supplement, which is
                        attributable to the relevant Lenders' reimbursement
                        exposure (as described above) in financing such
                        guarantee fee and credit insurance premia, for the
                        period between the Delivery Date and the first Repayment
                        Date.

        The Agent shall keep the relevant British Credits, French Credits and
        German Credits from the Scheduled Delivery Date proposed in the
        Utilisation Notice in an interest bearing account as agreed between the
        Agent and the Borrower and shall, if delivery of the relevant Aircraft
        occurs within ten (10) Business Days after the Scheduled Delivery Date
        and if no undertaking has been given by the Agent and released to the
        Seller pursuant to Clause 3.7.6 (Disbursement of the Loan) and after
        first having received any payment due under the indemnity in this Clause
        13.3.1, pay to the Borrower all amounts of interest actually accrued
        thereon from (and including) the Scheduled Delivery Date to (but
        excluding) the Delivery Date.

13.3.2  Any profit or gain realised by any Lender in respect of its funding
        arrangements as a result of the circumstances contemplated in
        sub-paragraph (a) or (b) of Clause 13.3.1 shall be for the account of
        and, subject to the provisions of Clause 19 (Set Off and Pro Rata
        Payments) be paid to the Borrower.

13.3.3  The Borrower shall indemnify the Security Trustee, the Agent and each
        Lender within ten (10) Business Days of demand (accompanied by
        supporting particulars in reasonable detail) for all amounts which the
        Security Trustee, the Agent or such Lender certifies to be necessary to
        compensate it for any Loss or Expense suffered or incurred by it
        (together with amounts calculated pursuant to paragraph (ii) to (vi)
        inclusive of the Make-Whole Amount) as a consequence of or in connection
        with:-

        (a)     any prepayment of the Loan or any part thereof or any interest
                accrued thereon;

        (b)     any amount of principal or interest on a Loan payable by the
                Borrower hereunder being paid otherwise than on the due date
                (excluding any grace period in relation to the relevant due
                date); or




<PAGE>   111



        (c)     the occurrence of an Acceleration Event.

        PROVIDED THAT this Clause 13.3.3 shall not require double payment of any
        of the amounts described above to the extent that any Loss or Expense
        form part of the Make-Whole-Amount, and the Borrower shall have no
        liability under this Clause 13.3.3 following payment in full on the due
        date of the aggregate of (i) the Loan, (ii) all interest on the Loan
        accrued to the date of actual payment, (iii) the Make-Whole Amount (if
        applicable) and (iv) Expenses (if any).

13.4    CURRENCY INDEMNITY

13.4.1  Any amount received or recovered by the Agent, the Security Trustee or
        any Lender in respect of any monies due from the Borrower or any other
        Obligor under any of the Transaction Documents (whether as a result of
        any judgment or order of any court (including enforcement thereof) or in
        the bankruptcy, reorganisation, liquidation or dissolution of any of the
        Borrower or any other Obligor (including making or filing a claim or
        proof against the Borrower) or by way of damages for any breach of any
        obligation to make any payment to the Agent, the Security Trustee or
        such Lender) in a currency (the "CURRENCY OF PAYMENT") other than the
        currency in which the payment should have been made pursuant to the
        relevant Transaction Document (the "CURRENCY OF OBLIGATION") in whatever
        circumstances and for whatever reason shall only constitute a discharge
        to the Borrower or any other Obligor to the extent of the amount of the
        Currency of Obligation which the Agent, the Security Trustee or such
        Lender, as the case may be, is able or would have been able, on the date
        or dates of receipt by it of such payment or payments in the Currency of
        Payment (or, in the case of any such date which is not a Banking Day, on
        the next succeeding Banking Day), to purchase in the foreign exchange
        market of its choice with the amount or amounts of the Currency of
        Payment so received.

13.4.2  If the amount of the Currency of Obligation which the Agent, the
        Security Trustee or the relevant Lender is so able to purchase falls
        short of the amount originally due to such party hereunder, the Borrower
        shall indemnify such party on demand against any loss or damage arising
        as a result of paying to such party that amount in the Currency of
        Obligation certified by such party as necessary to indemnify and hold it
        harmless.

13.5    TAX TREATMENT OF INDEMNITY PAYMENTS

13.5.1  Where the Borrower or any other Obligor has an obligation to indemnify
        or reimburse any Lender or Representative in respect of any Loss or
        Expense under Clause 13.1.1 (Operational Indemnity), the calculation of
        the amount payable by way of indemnity or reimbursement shall be based
        upon the likely Tax treatment in the hands of the Lender or the
        Representative (as determined by the Lender or the Representative in its
        bona fide opinion) of the amount payable by way of indemnity or
        reimbursement and of the Loss or Expense under Clause 13.1.1
        (Operational Indemnity) in respect of which that amount is payable so as
        to leave the Lender or the Representative in the same after-Tax position
        (the "AFTER-TAX NEUTRAL POSITION") as it would have been in had the
        payment made to the Lender or the Representative not given rise to a Tax
        Liability and had the Loss or Expense incurred or payment made by the
        Lender or the Representative not been deductible in the accounting
        period in which that Loss, Expense or payment was incurred or made.




<PAGE>   112



13.5.2  If a Lender or Representative determines, in its good faith opinion,
        that as a result of the application of Clause 13.5.1, it has received
        and retained an amount in excess of that required to preserve its
        After-Tax Neutral Position, such Lender or, as the case may be,
        Representative shall, provided it has received all amounts which are
        then due and payable by the Borrower or any other Obligor under any of
        the provisions of the Transaction Documents, pay to the Borrower or any
        other Obligor (to the extent that the Lender or, as the case may be,
        Representative can do so without prejudicing its After-Tax Neutral
        Position and the right of such Lender or, as the case may be,
        Representative to obtain any other benefit, relief or allowance which
        may be available to it) such amount, if any, as such Lender or, as the
        case may be, Representative in its absolute discretion shall determine
        will restore such Lender's or, as the case may be, Representative's
        After-Tax Neutral Position PROVIDED that:-

        (a)     each Lender and Representative shall have an absolute discretion
                as to the time at which and the order and manner in which it
                realises or utilises any Tax benefit and shall not be obliged to
                arrange its business or its Tax affairs in any particular way in
                order to be eligible for any Tax benefit;

        (b)     no Lender or Representative shall be obliged to disclose any
                information regarding its business, Tax affairs or Tax
                computations;

        (c)     if any Lender or Representative has made a payment to the
                Borrower pursuant to this Clause 13.5.2 to restore that person's
                After-Tax Neutral Position and it subsequently transpires that
                the After-Tax Neutral Position of such Lender or Representative
                was not so restored, the Borrower shall pay on demand to such
                Lender or Representative such sum as such Lender or
                Representative may determine as being necessary to restore the
                After-Tax Neutral Position of the Lender or Representative to
                that which it would have been had no adjustment under this
                paragraph (c) been necessary; and

        (d)     the Lender or Representative shall not be obliged to make any
                payment under this Clause 13.5.2 if, by doing so, it would
                contravene the terms of any applicable law or any notice,
                direction or requirement of any governmental or regulatory
                authority (whether or not having the force of law but in respect
                of which compliance by banks or other financial institutions or
                other persons in the relevant jurisdictions is generally
                customary), provided that the provisions of this Clause 13.5
                shall not apply to any Export Credit Agency which may at any
                time become a Lender.

13.6    NO DOUBLE-COUNTING

        No Lender or Representative shall be entitled, pursuant to the terms of
        any of the Transaction Documents, to recover by way of indemnity any
        Loss, Expense, Tax Liability to the extent that payment has previously
        been received and retained by it in respect of such Loss, Expense, Tax
        Liability under any other provision of any Transaction Document.

13.7    SURVIVAL OF INDEMNITIES AND OTHER OBLIGATIONS

        The indemnities contained in this Agreement shall constitute a separate
        and independent obligation from the other obligations contained in this
        Agreement, shall give rise to a 




<PAGE>   113



        separate and independent cause of action, shall apply irrespective of
        any indulgence granted by the Agent, the Security Trustee or any Lender
        from time to time and shall continue in full force and effect
        notwithstanding (a) the termination or expiry of this Agreement or (b)
        the satisfaction in full of all amounts owing to the Security Trustee,
        the Agent and each Lender under the Transaction Documents or (c) any
        judgment or order for a liquidated sum or sums in respect of amounts due
        hereunder or under any such judgment or order.

13.8    VALUE ADDED TAX

13.8.1  If any Indemnitee makes any supply to the Borrower or Representatives
        for Value Added Tax purposes pursuant to or in connection with any of
        the Transaction Documents, the Borrower shall (save to the extent that
        the relevant Indemnitee is entitled to be indemnified in respect of
        Value Added Tax by an increased payment under Clause 13.8.2) pay to the
        relevant Indemnitee within ten (10) Business Days of demand (accompanied
        by supporting particulars in reasonable detail) an amount equal to any
        Value Added Tax which is payable under the laws of Bermuda, the United
        States of America or the jurisdiction of organisation of a Sub-Borrower
        or to the extent provided in Expenses in respect of that supply.

13.8.2  All payments made by the Borrower under the Transaction Documents are
        calculated without regard to Value Added Tax. If any such payment
        constitutes the whole or any part of the consideration for a taxable or
        deemed taxable supply to the Borrower or Representatives by any
        Indemnitee under the laws of Bermuda, the United States of America or
        the jurisdiction of organisation of a Sub-Borrower or to the extent
        provided in Expenses the amount of that payment shall be increased by an
        amount equal to the amount of Value Added Tax which is chargeable in
        respect of the taxable supply in question. The Borrower's obligations
        under this Clause 13.8.2 shall be subject to the delivery on or before
        the due date for that payment to the Borrower of an invoice for Value
        Added Tax purposes made out in accordance with the applicable
        regulations.

13.8.3  No payment or other consideration to be made or furnished by any
        Indemnitee to the Borrower or Representatives pursuant to or in
        connection with any of the Transaction Documents may be increased or
        added to by reference to (or as a result of any increase in the rate of)
        any Value Added Tax which shall be or may become chargeable in respect
        of the taxable supply in question.

13.8.4  If any Indemnitee makes any payment under, or as contemplated in, any of
        the Transaction Documents to the Representatives which under the laws of
        Bermuda, the United States of America or the jurisdiction of
        organisation of a Sub-Borrower or to the extent provided in Expenses
        bears or includes Value Added Tax which such Indemnitee determines to be
        irrecoverable by it, the Borrower shall within ten (10) Business Days of
        demand (accompanied by supporting particulars in reasonable detail)
        indemnify such Indemnitee for such Value Added Tax.




<PAGE>   114


14.     CHANGE IN CIRCUMSTANCES

14.1    INCREASED COSTS

14.1.1  If a Change in Law shall:-

        (a)     subject any Lender to any Tax in connection with its commitment
                to or participation in the Transaction or any part thereof
                (except for changes in the rate of Tax on the overall net income
                of such Lender or Representative or such Lender's lending office
                imposed by any Government Entity of the country in which such
                Lender or Representative is incorporated or in which such
                Lender's lending office is located); or

        (b)     change the basis of Taxation of any Lender in respect of
                payments of principal, interest or any other amount payable to
                any Lender in connection with the Transaction (except for
                changes in the rate of Tax on the overall net income of such
                Lender or Representative or such Lender's lending office imposed
                by any Government Entity of the country in which such Lender or
                Representative is incorporated or in which such Lender's lending
                office is located) (or the treatment for Taxation purposes of
                such payments); or

        (c)     impose or modify any reserve, cash ratio, special deposit,
                capital adequacy, liquidity or any other analogous requirement,
                or require the making of any special deposit, against or in
                respect of any assets or liabilities of, or deposit with or for
                the account of, or loan or commitment by, any Lender in relation
                to the Transaction; or

        (d)     change the manner in which any Lender is required by any
                regulatory authority to allocate capital resources in relation
                to the Transaction; or

        (e)     impose on any Lender any other condition directly affecting its
                participation in the Transaction,

        and the result of any of the foregoing is or will be (i) to increase the
        cost to such Lender of funding, making available or maintaining its
        participation in the Transaction or any part thereof or of funding,
        making or maintaining its participation in any Loan or (ii) to render
        such Lender unable to obtain the rate of return on its overall capital
        reasonably allocated to its obligations hereunder which it would have
        been able to obtain but for such Change in Law or (iii) to reduce any
        amount payable to such Lender by the Borrower hereunder or to reduce its
        return from the Transaction or any part thereof, then and in any such
        case:-

        (y)     such Lender shall notify the Borrower (through the Agent);

        (z)     the Borrower shall (subject to Clause 14.1.2) pay from time to
                time to the Agent (for the account of that Lender) within ten
                (10) Business Days of demand (accompanied by supporting
                particulars in reasonable detail) all amounts which that Lender
                certifies are necessary to compensate that Lender or
                Representative for such charge to Tax or increase in cost or
                reduction in return or reduction in the amount payable.




<PAGE>   115



14.1.2  The provisions of Clause 14.1.1 shall not apply in respect of any charge
        to Tax, increased cost, reduction in the rate of return or reduction in
        an amount payable to the extent that the same:-

        (a)     arises from any action or omission of an Indemnitee which
                constitutes wilful misconduct, fraud or reckless disregard with
                knowledge of the probable consequences on the part of such
                Indemnitee; or

        (b)     is caused by such Indemnitee's breach of any express
                representation made by it in any Transaction Document or of any
                express obligation under any Transaction Document (but excluding
                any such breach in consequence (directly or indirectly) of a
                breach by the Borrower or any other Obligor of any
                representation or warranty contained in or of their respective
                obligations under any Transaction Document); or

        (c)     is a deduction or withholding Tax, Value Added Tax or
                documentary Tax (it being agreed that such Taxes are exclusively
                provided for elsewhere in this Agreement and are not covered by
                Clause 14.1.1) or a charge to Tax for which such Indemnitee has
                received and retained a payment pursuant to other indemnity
                provision of any Transaction Document; or

        (d)     is on or arises from any transfer by a Lender of any of its
                rights, benefits and/or obligations hereunder other than
                pursuant to Clause 15.2 (Prepayment of Affected Loans and
                Replacement of Affected Lender); or

        (e)     arises prior to the date of the relevant notice thereof to the
                Borrower; or

        (f)     arises out of such Indemnitee's own credit or risk based capital
                rating or otherwise due to its own financial condition; or

        (g)     is not charged to the other borrower customers of such Lender;
                or

        (h)     comprises a Tax on the overall net income, profit or capital
                gains of any Indemnitee (or, in the case of any Indemnitee
                acting through a branch outside the main jurisdiction in which
                it is resident for Tax purposes, comprises a Tax on the overall
                net income, profit or capital gains of that Indemnitee in the
                jurisdiction to which that Indemnitee's interest in the
                Transaction is properly attributable for Tax purposes)
                attributable to any sums receivable by any Indemnitee pursuant
                to any Transaction Document; or

        (i)     comprises any penalty, addition to Tax, fine or interest on or
                in respect of a Tax or Tax Liability which would not have arisen
                but for avoidable delay or failure by such Indemnitee in the
                filing of Tax returns which such Indemnitee was obliged to file
                by any law of the jurisdiction of incorporation or, in the case
                of a Lender, the jurisdiction in which its Lending Office is
                located, and which such Indemnitee ought reasonably to have been
                aware it was so obliged to file in connection with the
                Transaction or the payment of Taxes other than any such delay or
                failure in consequence (directly or indirectly) of a request by
                the Borrower or any Obligor or a delay of or failure by the
                Borrower or any Obligor duly and punctually to perform any of
                their respective obligations under the Transaction Documents or
                in consequence of any event or 




<PAGE>   116



                circumstance outside the reasonable control of such Indemnitee
                or otherwise caused (directly or indirectly) by the Borrower or
                any Obligor; or

        (j)     is imposed by a jurisdiction other than the main jurisdiction in
                which such Indemnitee is resident for Tax purposes to the extent
                that it gives rise to a corresponding credit which such
                Indemnitee has retained and utilised against any Tax Liability
                imposed in the main jurisdiction in which such Indemnitee is so
                resident; or

        (k)     would not have arisen but for:-

                (i)     any failure by such Indemnitee to file any relevant Tax
                        return or Tax computation which such Indemnitee was
                        obliged to file by any law of the jurisdiction of
                        incorporation or, in the case of a Lender, the
                        jurisdiction in which its Lending Office is located or
                        any documents which such Lender is obliged to file as a
                        result of any applicable law, regulation, practice,
                        concession, official directive, ruling, request, notice,
                        guideline, statement of policy or practice statement by
                        the Bank of England, the Banque de France, the Deutsche
                        Bundesbank, the European Central Bank, the Federal
                        Reserve Bank of New York, the European Union or any
                        central bank, Tax, fiscal, governmental, local,
                        international, national or other competent authority or
                        agency (whether or not having the force of law but in
                        respect of which compliance by banks or other financial
                        institutions or other persons in the relevant
                        jurisdiction is customary) and in each case which such
                        Indemnitee ought reasonably to have been aware it was so
                        obliged to file in connection with the Transaction
                        except for any such failure caused (directly or
                        indirectly) by any action or inaction of the Borrower or
                        any Obligor or any event or circumstance outside the
                        reasonable control of such Indemnitee; or

                (ii)    any failure (subject to the same exceptions and
                        exclusions as set out in Clause 4.12.5(g)(i)) to file or
                        provide the Borrower or the relevant Lessee with any Tax
                        claims, forms (including the Internal Revenue Service
                        Forms), affidavits, declarations or other like documents
                        which the Borrower or the relevant Lessee has reasonably
                        requested such Indemnitee in writing to file or provide
                        (any such request containing sufficient detail to enable
                        such Indemnitee to comply with the terms thereof)
                        unless:-

                        (aa)    except with respect to the Internal Revenue
                                Service Forms, such Indemnitee determines acting
                                in good faith but nevertheless in its sole
                                discretion that it is unable to file or provide
                                or that it would be illegal or contrary to any
                                applicable law, official regulation, practice,
                                concession, directive, ruling, request, notice,
                                guideline, statement of policy or practice
                                statement by the Bank of England, the Banque de
                                France, the Deutsche Bundesbank, the European
                                Central Bank, the Federal Reserve Bank of New
                                York, the European Union or any 





<PAGE>   117



                                central bank, Tax, fiscal, governmental, local,
                                international, national or other competent
                                authority or agency (whether or not having the
                                force of law but in respect of which compliance
                                by banks or other financial institutions or
                                other persons in the relevant jurisdiction is
                                customary) for such Indemnitee so to do or so to
                                do would or may result in the breach of any
                                agreement or confidentiality undertaking or the
                                disclosure of any information about such
                                Indemnitee's Tax affairs which such Indemnitee
                                considers (in its bona fide opinion) to be of a
                                confidential nature; or

                        (bb)    in the case of the Internal Revenue Service
                                Forms, such failure is due to a Change in Law
                                occurring subsequent to the date on which any of
                                the Internal Revenue Service Forms was
                                originally required to be provided.

14.2    MARKET DISRUPTION

14.2.1  If, in relation to any Interest Period or other relevant period:-

        (a)     the Agent is notified by any Lender (in this Clause 14.2 the
                "AFFECTED LENDER") that deposits in Dollars in amounts
                sufficient to fund such affected Lender's participation in the
                relevant Loan are not, in the ordinary course of business,
                available in the London inter-bank market for a period equal to
                the relevant Interest Period or other relevant period; or

        (b)     the Agent determines that, by reason of circumstances affecting
                the London inter-bank market generally, reasonable and adequate
                means do not or will not exist for ascertaining LIBOR in
                relation to such Interest Period or other relevant period,

        then:-

        (i)     the Agent shall promptly give a notice to the Borrower and each
                Lender in writing advising of such event;

        (ii)    the Borrower shall on each subsequent Repayment Date for so long
                as such circumstances continue pay to the Agent for the account
                of the Affected Lender an amount equal to interest on the
                Affected Lender's Relevant Proportion of the relevant Loan at
                the rate which is agreed between the Borrower and such Lender,
                each acting in good faith, and if no agreement can be reached,
                equal to the cost to such Affected Lender (as certified by such
                Affected Lender and notified to the Agent) of obtaining Dollars
                from whatever source or sources it may in good faith but
                otherwise in its absolute discretion select for funding its
                Relevant Proportion of the Loan during such Interest Period or
                other relevant period.




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14.3    ILLEGALITY

14.3.1  If, at any time as a result of a Change in Law it is or it will become
        unlawful for any Lender (the "AFFECTED LENDER"), to make, fund or allow
        to remain outstanding any part of its Commitment or its participation in
        the Facility or any Loan, then any Affected Lender may deliver to the
        Borrower through the Agent a notice to that effect, whereupon subject to
        Clause 15.1 (Mitigation) the Borrower shall on or before the date the
        Agent notifies the Borrower that the Affected Lender's obligations
        hereunder are unlawful prepay each Loan affected by the relevant
        circumstances together with all interest accrued thereon, the Make-Whole
        Amount and Expenses (if any) to the Affected Lender pursuant to this
        Agreement or any relevant Aircraft Operative Document.

14.3.2  If at any time as a result of a Substantive Law Change any Loan or the
        repayment of any Loan or the payment of interest at the stated
        non-default rate on any Loan or the guarantee by the Guarantor hereunder
        or any material element of the security package as contemplated by the
        Aircraft Security Documents in relation to any Loan shall become illegal
        or unenforceable, then the Agent may deliver to the Borrower a notice to
        that effect, whereupon, subject to Clause 15.1.3 (Mitigation), the
        Borrower shall forthwith prepay each Loan to which such relevant
        circumstances apply together with all interest accrued thereon, the
        Make-Whole Amount and Expenses (if any) pursuant to this Agreement or
        any relevant Aircraft Operative Document.


15.     MITIGATION AND CONTEST RIGHTS

15.1    MITIGATION

15.1.1  If circumstances arise in respect of any Lender which would, or upon the
        giving of notice would, result in the operation of Clause 4.12
        (Deductions and Withholdings), 14.1 (Increased Costs), 14.2 (Market
        Disruption) or 14.3 (Illegality) to the detriment of the Borrower:

        (a)     each such Lender shall promptly upon becoming aware of the same
                notify the Borrower and upon the written request of the Borrower
                shall negotiate in good faith with the Borrower for a period not
                exceeding forty-five (45) days with a view to avoiding or
                minimising the relevant duty, tax, fee or charge including, in
                the case of a Lender, a change in its Lending Office or a
                transfer of its participation in the Loans and its Commitments
                to another bank or financial institution or in the case a
                Representative, including resignation in accordance with the
                provisions of the Lenders' Agreement; and

        (b)     at the request of the Borrower, such Representative will
                negotiate in good faith with the Borrower with a view to
                avoiding or minimising the consequences of such including
                resigning in accordance with the provisions of the Lenders'
                Agreement.

15.1.2  Without limiting or reducing the obligations of the Obligors (or any of
        them) under Clause 4.12 (Deductions and Withholdings), Clause 14.1
        (Increased Costs), Clause 14.2 (Market Disruption), or Clause 14.3
        (Illegality), in relation to Clauses 4.12 (Deductions and Withholdings),
        14.1 (Increased costs), 14.2 (Market Disruption) and 14.3 (Illegality)
        no Lender or Representative shall have any obligation to take any action
        under Clause 15.1.1 




<PAGE>   119



        if, in its good faith opinion, to do so would be likely to (a) have a
        material adverse effect upon its business, operation or financial
        condition, or (b) result in its rights, interests, anticipated financial
        return or position under or in relation to any of the Transaction
        Documents being materially less favourable to it than would have been
        the case in the absence of such action unless indemnified or secured to
        its satisfaction in respect thereof, or (c) involve it in any unlawful
        act or activity or any act or activity that is contrary to any official
        directive, concession, guideline, request or requirement of any
        competent authority (whether or not having the force of law but, in the
        case only of any of the same not having the force of law, in respect of
        which compliance by banks or other institutions of a similar nature to
        the relevant Lender or Representative, as the case may be, is generally
        considered mandatory), or (d) (unless indemnified or secured to its
        satisfaction) involve it in any Tax Liability or any expense which is
        significant in such Lender's or Representative's bona fide opinion or
        (e) unless protected by confidentiality procedures involve it in any
        disclosure of any document or information relating to its business or
        affairs which it considers (in its good faith opinion) to be of a
        confidential nature.

15.1.3  If the circumstances referred to in Clause 14.3.2 (Illegality) arise,
        upon the written request of either the Borrower or the Agent, the
        Borrower and the Representatives shall negotiate in good faith for a
        period not exceeding sixty (60) days (or such shorter period as may be
        required by law) with a view to restructuring each affected Loan and
        rectifying and amending the relevant Transaction Documents in order to
        mitigate the effect of the relevant Substantive Law Change and the
        Borrower shall pay for the Expenses incurred by the Representatives (as
        a group) for such negotiations as well as (if alternative arrangements
        are agreed) to complete all steps required to implement such
        restructuring and all rectifications and amendments to the relevant
        Transaction Documents in relation to each Loan affected by the
        circumstances referred to in Clause 14.3.2 (Illegality). If a resolution
        acceptable to the Borrower and the Representatives is obtained as a
        result of this mitigation procedure, the Borrower shall implement the
        rectification and amendments referred to in Clause 15.1.3 to the
        relevant Transaction Documents, to the satisfaction of the Agent, within
        sixty (60) days from the earlier of the date when such resolution is
        reached and the date upon which the period of sixty (60) days (or such
        shorter period as required by law) is referred to in Clause 15.1.3
        expires. If the Borrower fails to implement such rectification and
        amendment to the relevant Transaction Documents within such period the
        Borrower shall prepay each Loan to which Clause 14.3.2 (Illegality)
        applies as aforesaid.

15.1.4  If any Export Credit Agency were to become a Lender, the provisions of
        Clause 14 (Change of Circumstances) and this Clause 15 shall not apply
        to such Export Credit Agency.

15.2.   PREPAYMENT OF AFFECTED LOANS AND REPLACEMENT OF AFFECTED LENDER

15.2.1  If the circumstances referred to in Clauses 4.12 (Deductions and
        Withholdings), 14.1 (Increased Costs), 14.2 (Market Disruption) and 14.3
        (Illegality) arise, and no resolution acceptable to the parties is
        obtained as a result of the mitigation procedure referred to in Clause
        15.1 (Mitigation and Contest Rights), or if a Lender has defaulted on
        its obligations hereunder (also an "AFFECTED LENDER").

        (a)     if requested by the Borrower, the Agent will consult with the
                Borrower with a view to identifying and approaching bank(s) and
                financial institution(s) acceptable to the Borrower (acting
                reasonably) which may be willing to 




<PAGE>   120



                become a party to this Agreement as "Lender(s)" ("REPLACEMENT
                LENDER") in replacement of the Affected Lender, subject to the
                approval of the relevant Export Credit Agency. Once a suitable
                Replacement Lender has been found and is approved by the
                relevant Export Credit Agency, each Affected Lender shall
                transfer its Relevant Proportion of each Loan affected by such
                circumstances and its right, benefits and obligations under the
                Transaction Documents to another bank which is not affected by
                such circumstances in accordance with the terms of Clause 18
                (Assignment and Transfers). The Borrower shall indemnify the
                Affected Lender (except in the case of a defaulting Lender) and
                the Agent for all Expenses incurred by the Affected Lender and
                the Agent in relation to such transfer; and

        (b)     if the Borrower does not so request the Borrower shall pay to
                the Agent (for the account of each Affected Lender (the
                "AFFECTED LENDER")) each Affected Lender's Relevant Proportion
                of each Loan affected by such circumstances together with all
                accrued interest thereon and, except in the case of a defaulting
                Lender, the Make-Whole Amount and Expenses (if any) owing to the
                Affected Lender in connection with any such Loan or under this
                Agreement or the relevant Aircraft Operative Documents.

15.2.2  (a)     Except in the case of a defaulting Lender, if the Borrower
                wishes to make any payment referred to in Clause 15.2.1(b), such
                payment shall be treated as a voluntary prepayment and
                accordingly the provisions of Clause 4.3 (Voluntary Prepayment)
                shall apply and in particular the Borrower should comply with
                provisions of Clause 4.3.1 and 4.3.3 in relation to any such
                payment referred to in Clause 15.2.1.

        (b)     The Agent shall as soon as reasonably practicable after receipt
                of the Borrower's prepayment notice, unless the Borrower elects
                to prepay the entire Loan in relation to an Aircraft, prepare a
                substitute schedule for schedule 2 to the relevant Loan
                Supplement showing new amounts for the repayment of the relevant
                Loan for the period following such prepayment calculated on the
                same basis and assumptions (other than the assumption as to the
                total principal amount of the relevant Loan) as were used for
                the purpose of preparing the original schedule 2 to such Loan
                Supplement. Upon the Borrower and each Export Credit Agency
                agreeing to the same, such substitute Schedules shall become for
                all purposes schedule 2 to the relevant Loan Supplement and
                shall be binding on all parties with effect from the date of the
                prepayment.

15.3    MITIGATION OF DOCUMENTARY TAXES

15.3.1  Without prejudice to the provisions of Clause 13.2 (Documentary Taxes),
        if (in the opinion of any Lender or Representative) any duties, taxes,
        fees or charges referred to in Clause 13.2 arise and the Borrower so
        requests, the relevant Lender or Representative shall consult for a
        period not exceeding thirty (30) days with the Borrower (at the
        Borrower's cost) with a view to agreeing a means for reducing or
        avoiding the relevant duty, tax, fee or charge (including, in the case
        of a Lender, by transferring its rights and obligations under the
        Transaction Documents to another Lending Office or another person or, in
        the case of a Representative, by resigning in accordance with the
        provisions of the Lenders' Agreement once a suitable Replacement Lender
        has been found and approved by the Export Credit Agencies).




<PAGE>   121



15.3.2  Without limiting or reducing the obligations of the Obligors (or any of
        them) under Clause 13.2 (Documentary Taxes), no Lender or Representative
        shall have any obligation to take any action under Clause 15.3.1 if, in
        its good faith opinion, to do so would be likely to (a) have a material
        adverse effect upon its business, operation or financial condition, or
        (b) result in its rights, interests, anticipated financial return or
        position under or in relation to any of the Transaction Documents being
        materially less favourable to it than would have been the case in the
        absence of the relevant duty, tax, fee or charge unless indemnified or
        secured to its satisfaction in respect thereof, or (c) involve it in any
        unlawful act or activity or any act or activity that is contrary to any
        official directive, concession, guideline, request or requirement of any
        competent authority (whether or not having the force of law but, in the
        case only of any of the same not having the force of law, in respect of
        which compliance by banks or other institutions of a similar nature to
        the relevant Lender or Representative, as the case may be, is generally
        considered mandatory), or (d) (unless indemnified or secured to its
        satisfaction) unless protected by confidentiality procedures involve it
        in any Tax Liability or any expense which is significant in such
        Lender's or Representative's bona fide opinion or (e) involve it in any
        disclosure of any document or information relating to its business or
        affairs which it considers (in its good faith opinion) to be of a
        confidential nature.

15.4    CONTEST RIGHTS

        If requested by the Borrower in a written notice to the relevant
        Indemnitee and the Agent, following a demand by such Indemnitee (or by
        the Agent on its behalf) pursuant to Clause 4.12 (Deductions and
        Withholdings) or Clause 13.2 (Documentary Taxes) in respect of a Tax
        Liability of such Indemnitee, such Indemnitee shall, to the extent that
        (a) it is able and entitled to do so, (b) it is not illegal or contrary
        to any official directive or policy for it to do so, (c) it is
        commercially reasonable for it to do so and (d) to do so would not
        adversely affect its business, operation or financial condition, take
        such action as the Borrower may reasonably request to contest (including
        pursuing all administrative appeals) the validity, applicability or
        amount of such Taxes and shall (x) seek postponement of payment thereof
        if available and practicable, (y) pay the same only under protest, if
        payment under protest is a permitted alternative under the laws and
        procedures of the relevant taxation authority and is in the
        circumstances, reasonable or (z) if payment must be or shall have been
        made, seek a refund thereof in appropriate administrative or judicial
        proceedings PROVIDED THAT:-

        (a)     the Borrower shall indemnify such Indemnitee (and prior to
                taking such action shall if requested by such Indemnitee, acting
                reasonably, provide to such Indemnitee security reasonably
                satisfactory to such Indemnitee in respect of any amounts so
                payable) against all losses, damages, costs and expenses which
                such Indemnitee may incur in connection with or as a result of
                contesting such claim or taking such action (including, without
                limitation, reasonable costs and expenses of legal counsel and
                tax advisors) as well as any Tax Liability arising thereon or in
                connection therewith and the amount of any interest or penalties
                which may be payable and any other loss or damage whatsoever
                which may be incurred as a result of contesting such claim or
                taking such action;

        (b)     if such contest is to be initiated by the payment of, and the
                claiming of a refund for, such Taxes, the Borrower shall have
                advanced to such Indemnitee sufficient funds (on an
                interest-free basis and, if such advance results in taxable




<PAGE>   122


                income to such Indemnitee, on an after-tax basis taking into
                account the timing and incidence of tax payments) to make such
                payment; and

(c)     nothing herein shall require any Indemnitee to disclose any information
        or provide any document such Indemnitee, acting in good faith, considers
        confidential to it, or to take or refrain from taking any action or
        doing anything which would (or might), in the opinion of such
        Indemnitee, acting in good faith, materially adversely affect any of the
        business or commercial interests of such Indemnitee.


16.     FEES AND EXPENSES

16.1    TRANSACTION EXPENSES

        The Borrower shall pay to the Agent within ten (10) Business Days of
        demand and supported by the relevant invoices or receipts in reasonable
        detail (whether or not any Utilisation Documentation is entered into
        and/or any amount is disbursed under the Agreement) all Expenses
        incurred by the Representatives, the Lenders and the Export Credit
        Agencies as a group:-

        (i)     in connection with the negotiation, preparation, execution,
                registration and implementation of each of the Transaction
                Documents and the other documents contemplated hereby or thereby
                or at any time hereafter (including the agreed or, if not
                agreed, the reasonable expenses of the Agent's legal counsel in
                connection with the preparation of each Aircraft Operative
                Document and the collection of the conditions precedent listed
                on Schedule 6, in respect of each Utilisation;

        (ii)    in connection with the granting of any release, waiver or
                consent in connection with any of the Transaction Documents
                PROVIDED that the Borrower shall not be liable for the costs and
                expenses of the Agent, the Security Trustee or the Lenders
                arising in relation to the granting of any release, waiver or
                consent requested by the Lenders (other than any such release,
                waiver or consent required by any of the Export Credit Agencies
                or as a result of or in consequence of a Change in Law or of a
                Substantive Law Change or as a result of the Borrower or any
                other Obligor being in breach of their respective obligations
                hereunder or under any of the other Transaction Documents); and

        (iii)   in connection with any variation, amendment, supplement,
                restructuring, novation, discharge or reassignment of any of the
                Transaction Documents, PROVIDED that the Borrower shall not be
                liable for the costs and expenses of the Agent, the Security
                Trustee or the Lenders arising in relation to a variation,
                amendment, supplement, restructuring, novation, discharge or
                reassignment requested by the Lenders (other than any such
                variation, amendment, supplement, novation, discharge or
                reassignment required by any of the Export Credit Agencies or as
                a result of or in consequence of a Change in Law or of a
                Substantive Law Change or as a result of the Borrower or any
                Obligor being in breach of any of their respective obligations
                under any of the Transaction Documents).




<PAGE>   123



16.2    ENFORCEMENT EXPENSES

        The Borrower shall pay to the Agent within ten (10) Business Days of
        demand and supported by the relevant invoices or receipts in reasonable
        detail all Expenses incurred or sustained by the Representatives, the
        Lenders and the Export Credit Agencies (provided that in the case of
        legal expense, they shall only be incurred as a group) in connection
        with, after a Termination Event, the enforcement or preservation or
        attempted enforcement or preservation of their respective rights, powers
        or duties under this Agreement and/or any of the other Transaction
        Documents or (in the event of a claim against an Export Credit Agency
        arising as a result of an Acceleration Event) under any of the Support
        Agreements.


17.     CHANGE OF AGENT AND SECURITY TRUSTEE

17.1    Each Representative and each Lender undertakes with the Borrower that
        any bank or financial institution appointed as Agent or Security Trustee
        pursuant to the Lenders' Agreement shall be so appointed in respect of
        all of the Transaction Documents.

17.2    If, in accordance with the Lenders' Agreement, the Agent or the Security
        Trustee gives notice of its resignation or is dismissed, then the
        Majority Lenders (after consultation with the Borrower) may appoint any
        reputable and experienced bank or other financial institution approved
        by the Borrower (such approval not to be unreasonably withheld) as a
        successor to the Agent or, as the case may be, the Security Trustee.

17.3    The Borrower shall not be under any obligation to pay any greater amount
        under this Agreement as a result of a change in the Agent or the
        Security Trustee if, in the circumstances existing at the time of such
        change, such greater amount would not have been payable but for the
        change unless and until a Substantive Law Change or Change in Law occurs
        and as a result of such Substantive Law Change or Change in Law
        (excluding any Substantive Law Change or Change in Law which occurs, or
        the intended implementation of which is officially announced or proposed
        before the date of such transfer or change in Lending Office), PROVIDED
        that the provisions of this Clause 17.3 shall not apply if the Agent or
        the Security Trustee is required by any Export Credit Agency to transfer
        its functions to an Export Credit Agency or to another bank or financial
        institution or if such transfer is made pursuant to Clause 15
        (Mitigation and Contest Rights).

17.4    The Lenders and the Representatives represent and warrant to the
        Obligors and agree with the Obligors that the provisions of the Lenders
        Agreement are not and will not be inconsistent with the provisions of
        the Transaction Documents, including with respect to the identity of the
        Agent or Security Trustee or the voting or any other making of
        determinations by the Majority Lenders, the Agent or the Security
        Trustee as provided under the Transaction Documents.




<PAGE>   124



18.     ASSIGNMENTS AND TRANSFERS

18.1    TRANSFERS BY OBLIGORS

        None of the Obligors shall assign any rights or transfer any obligations
        arising from this Agreement without the prior written consent of the
        Security Trustee (acting on the instructions of the Majority Lenders),
        except that (i) the Borrower or any Sub-Borrower may transfer for the
        purposes of merger or solvent liquidation or contractually or by
        operation of law its rights and obligations to a person that becomes the
        Borrower or a Sub-Borrower, and the Parent or an Intermediate Lessee may
        transfer for the purposes of merger or solvent liquidation or
        contractually or by operation of law its rights and obligations to a
        person that becomes the Parent or an Intermediate Lessee, as the case
        may be, and is a Subsidiary of the Guarantor (not incorporated in the
        United States except in the case of the Parent or which in the case of
        the Sub-Borrower or Intermediate Lessee is an owner trust and/or voting
        trust) and (ii) in the case of the Guarantor, to a successor or assign
        permitted under Schedule 5, (in each case the "TRANSFEREE") provided
        that any such transfer is subject to the conditions precedent that:

        (a)     no Relevant Event or Termination Event has occurred and is
                continuing;

        (b)     where the Transferee is the Guarantor, a Sub-Borrower or an
                Intermediate Lessee organised in a Regular Jurisdiction, the
                Transferee shall accede to this Agreement by executing an
                Accession Deed (which shall, in the case of the Guarantor, be
                appropriately amended to the satisfaction of the Agent) and such
                other Transaction Documents as the Agent, in its good faith
                opinion, considers appropriate so that such Transferee shall
                become a party to this Agreement and such of the other
                Transaction Documents as may be appropriate as if named therein
                as a party;

        (c)     if Clause 18.1(b) does not apply (including if the Transferee is
                organised in an Irregular Jurisdiction, if applicable) each of
                the remaining Obligors and, such Transferee shall enter into
                such other documents and provide such security as the Security
                Trustee may, in its good faith opinion (after taking legal
                advice from counsel to the Lenders in the jurisdiction of the
                relevant Transferee), require in order to ensure that (i) the
                Representatives and each of the Lenders are in a position,
                having a substantially similar effect (including as to their
                security position) with respect to such Transferee as they were
                with respect to the transferor under the Transaction Documents
                and (ii) the rights of the Representatives and the Lenders are
                not materially different than with respect to the relevant
                transferor under the Transaction Documents, it being
                acknowledged and agreed for the purpose of determining the
                foregoing matters that (i) any trustee in a United States
                owner/voting trust will be party to the relevant Transaction
                Documents not in its individual capacity but solely as trustee,
                (ii) common law jurisdictions are acceptable and (iii) with
                respect to civil jurisdictions, the Borrower and the Agent shall
                negotiate in good faith, to the extent necessary, alternative
                security to that available in common law jurisdictions which is
                acceptable to the Security Trustee, acting upon the instruction
                of the Majority Lenders;

        (d)     upon receipt by the Agent of the Accession Deed signed on behalf
                of the Borrower, Guarantor, other Obligors and by the proposed
                Transferee, the Agent 




<PAGE>   125



                shall sign the same for itself and on behalf of the Lenders and
                shall as promptly as practicable give notice of such execution
                to all of the parties to the Accession Deed;

        (e)     upon execution of any such Accession Deed, the transfer shall
                take effect in accordance with, but subject to, the terms hereof
                and thereof;

        (f)     evidence satisfactory to the Security Trustee (including a legal
                opinion from counsel to the Lenders in the jurisdiction in which
                transfer of title to the Aircraft takes place) that the
                Transferee (as the case may be) has obtained title to the
                Aircraft free and clear of any Liens other than Permitted Liens
                including a certified copy of the Bill of Sale in relation to
                each Aircraft, if applicable, to the Transferee;

        (g)     a legal opinion from counsel to the Lenders in the jurisdiction
                in which the Transferee is organised which is satisfactory to
                the Security Trustee concerning the relevant Accession Deed or,
                an adaptation thereof pursuant to sub-paragraphs (b) or (c)
                above, any assignment of the Mortgage or, if applicable, the
                relevant Mortgages, the filing or registration and perfection in
                that jurisdiction of the Mortgage or, if applicable, the
                relevant Mortgages, (or alternative security) with respect to
                the Aircraft, the Charge over Shares of Sub-Borrower (if any)
                and any other Aircraft Security Documents which will be entered
                into by the Transferee and the validity of a guarantee and
                indemnity to be entered into by the Transferee (if other than
                the Guarantor) in place of the Sub-Borrower Guarantee (if the
                Transferor is a Sub-Borrower) in favour of the Security Trustee;

        (h)     where the Transferee assumes the obligations of the Guarantor
                under this Agreement, a legal opinion from in-house counsel to
                the Transferee and from external counsel to the Transferee in
                the jurisdiction in which the Transferee is organised in favour
                of the Security Trustee in a form acceptable to it concerning
                the Accession Deed entered into by the Transferee as
                appropriately amended in accordance with sub-paragraph (b)
                above;

        (i)     the relevant legal opinions from counsel to the Lenders as
                provided in paragraph 4 of Part I to Schedule 6;

        (j)     evidence of insurance having been effected in respect of the
                Aircraft with the Security Trustee named as a contract party and
                (to the extent possible under AVN67B, or such other endorsement
                as may be applicable) loss payee;

        (k)     if applicable, copies of the certificate of registration of the
                Replacement Aircraft and airworthiness issued by the Aviation
                Authority;

        (l)     the following signed documents:

                (i)     Accession Deed or an adaptation thereof pursuant to
                        sub-paragraphs (b) or (c) above (if applicable) (if such
                        person has not previously acceded to the Transaction
                        Documents);




<PAGE>   126



                (ii)    the assignment of the Mortgages (if applicable) or
                        alternative security satisfactory to the Security
                        Trustee, acting upon the instructions of the Majority
                        Lenders;

                (iii)   assignment of the Warranties (to the extent assignable);

                (iv)    the assignment of the Engine Warranties (to the extent
                        assignable);

                (v)     Sub-Borrower Debenture (if applicable);

                (vi)    Intermediate Lessee Debenture (if applicable);

                (vii)   Charge Over Shares of Sub-Borrower (if applicable);

                (viii)  Charge Over Shares of Intermediate Lessee (if
                        applicable);

                (ix)    Lease Security Assignment (if applicable);

                (x)     Intermediate Lease Security Agreement (if applicable);

                (xi)    Notice of Charge as amended to record transfer of title
                        to the Aircraft to the Transferee;

        (m)     evidence to the Security Trustee that a maintenance reserve
                account, a rental account and a security deposit account have
                been opened in the name of the Transferee with a financial
                institution acceptable to the Security Trustee and that US$10
                has been deposited in each of such accounts.

18.2    TRANSFERS BY LENDERS

        Any German Lender may at any time after January 19, 1999 and any French
        Lender or British Lender after March 1, 1999, transfer all or any of its
        rights, benefits and obligations under this Agreement or change its
        Lending Office (whether in the same or a different jurisdiction)
        PROVIDED always that:-

        (a)     prior to the transfer or change in Lending Office becoming
                effective, the relevant Lender gives notice to the Guarantor
                (with a copy to the Agent) of the identity of the Transferee or,
                as the case may be, the new Lending Office and the jurisdiction
                of tax residence of the Transferee or, as the case may be, the
                new Lending Office and the jurisdiction of tax residence of the
                persons controlling the Transferee;

        (b)     the Transferee is eligible for support from each of the Export
                Credit Agencies and has been approved by the Borrower (such
                approval not to be unreasonably withheld) or is designated by an
                Export Credit Agency, and in each case has a credit rating with
                Standard and Poor's Corporation of at least BBB or a credit
                rating with Moody's Investor Service Inc. of at least Baa2 or,
                in each case, the equivalent successor rating, and is not on
                negative credit watch to fall below such rating;





<PAGE>   127



        (c)     the Transferee shall be able to file for US tax treaty benefits
                on a zero rate of withholding tax and shall provide US Internal
                Revenue Service Form 1001 (or its equivalent) to the Agent or
                the Transferee shall be able to file for exemption from
                withholding tax on income of a Lender effectively connected with
                the conduct of a trade or business in the United States and
                shall provide US Internal Revenue Service Form 4224 (or its
                equivalent) to the Agent;

        (d)     the Transferee is neither resident in the United Kingdom for
                United Kingdom tax purposes nor controlled by persons who are so
                resident if the transfer to the Transferee would result in
                Advances of Lenders resident in the United Kingdom for United
                Kingdom tax purposes or controlled by persons who are so
                resident constituting fifty per cent. (50%) or more of the
                Advances as at the date of the proposed transfer;

        (e)     all costs and expenses of the Transfer shall be borne by the
                transferring Lender and no Obligor shall be under any obligation
                to pay any greater amount or suffer any other material increase
                in liabilities or material diminution in right or benefit under
                the Transaction Documents following and as a consequence
                (directly or indirectly) of any such transfer or change in
                Lending Office unless and until a Change in Law occurs and as a
                result of such Change in Law (excluding any Change of Law which
                occurs, or the intended implementation of which is officially
                announced or proposed before the date of such transfer or change
                in Lending Office); and

        (f)     such Transfer does not violate any applicable securities or
                other law,

        PROVIDED further that the provisos set out above shall not apply to the
        extent that any Lender has so assigned or transferred its Relevant
        Proportion of any Loan or changed its Lending Office in relation to any
        Loan pursuant to Clause 15 (Mitigation and Contest Rights).

18.3    TRANSFER CERTIFICATES

18.3.1  If any Lender (the "TRANSFEROR") transfers all or any part of its
        rights, benefits and/or obligations to another bank or financial
        institution (the "TRANSFEREE"), such transfer shall be effected by way
        of a novation by the delivery to, and the execution by, the Agent of a
        duly completed Transfer Certificate or in such other manner as all
        parties hereto may agree.

18.3.2  On the date specified in the Transfer Certificate:-

        (i)     to the extent that in the Transfer Certificate the Transferor
                seeks to transfer its rights and obligations hereunder the
                Borrower, each of the Obligors and the Transferor shall each be
                released from further obligations to each other under this
                Agreement and their respective rights against each other shall
                be cancelled (such rights and obligations being referred to in
                this Clause 18.3 as "DISCHARGED RIGHTS AND OBLIGATIONS");

        (ii)    the Borrower, the Agent, the Security Trustee, each of the
                Obligors and the Transferee shall each assume obligations
                towards each other and/or acquire rights against each other
                which, subject to Clause 18.2 above, which differ 




<PAGE>   128



                from the Discharged Rights and Obligations only insofar as the
                Borrower, each of the Obligors, and the Transferee have assumed
                and/or acquired the same in place of the Borrower, each of the
                Obligors and the Transferor;

        (iii)   the Agent, the Security Trustee, each of the Obligors, the
                Borrower, the Transferee and the other Lenders shall acquire the
                same rights and assume the same obligations among themselves as
                they would have acquired and assumed had the Transferee
                originally been a party hereunder as a Lender with the rights
                and/or the obligations acquired or assumed by it as a result of
                the transfer; and

        (iv)    the Transferee, the Agent, the Security Trustee and each of the
                other Lenders shall acquire the same rights and assume the same
                obligations amongst themselves in respect of the Lenders
                Agreement as they would have acquired and assumed had the
                Transferee originally been a party to the Lenders Agreement as a
                Lender in the place of the Transferor.

18.3.3  Each of the Obligors (other than the Borrower) each with respect to
        itself hereby confirm that the execution of any such Transfer
        Certificate by the Borrower, for and on behalf of, inter alia, each of
        the other Obligors shall be binding upon and enforceable against each of
        the other Obligors as if each of the other Obligors had each executed
        the Transfer Certificate itself.

18.3.4  The Agent and the Borrower shall each promptly complete Transfer
        Certificates on written request by a Transferor. Each of the Lenders
        hereby irrevocably authorise the Agent and each Obligor (other than the
        Borrower) hereby irrevocably authorise the Borrower to execute any duly
        completed Transfer Certificate on its behalf provided that such
        authorisation does not extend to the execution of a Transfer Certificate
        on behalf of either the Transferor or the Transferee named therein.

18.4    COSTS AND EXPENSES

        In relation to any transfer contemplated by this Clause 18 which is
        undertaken voluntarily by any Lender, the costs and expenses thereby
        incurred by the Borrower, the Agent, the Security Trustee and each
        Lender shall be for the account of the Transferee or the Transferor (as
        they may agree between themselves). In relation to any other transfer,
        the Borrower shall pay within ten (10) Business Days of demand supported
        by the relevant invoices or receipts in reasonable detail all reasonable
        out-of-pocket Expenses incurred by the Agent, the Security Trustee and
        each Lender in connection with any transfer contemplated by this Clause
        18. For the purposes of this Clause 18.4, a voluntary transfer by any
        Lender shall mean any transfer except a transfer by a non-defaulting
        Lender pursuant to Clause 15 (Mitigation and Contest Rights).


19.     SET-OFF AND PRO RATA PAYMENTS

19.1    SET-OFF

19.1.1  Each Lender and each of the Representatives may, at any time during the
        continuance of a Termination Event, set off from any sum payable by it
        to any one or more of the Obligors under any of the Transaction
        Documents any sum due and unpaid by the relevant Obligor to such Lender
        or Representative in each case under or in relation to any of the 




<PAGE>   129



        Transaction Documents and any document or agreement entered into
        pursuant to or in connection with any of the Transaction Documents.

19.1.2  The Borrower shall not be entitled to deduct any sum which may be due to
        the Borrower from the Lenders (or any of them) howsoever arising from
        any sum payable by the Borrower under or in connection with any of the
        Transaction Documents.

19.1.3  No Obligor shall be entitled to refuse or to postpone performance of any
        payment or other obligation under any of the Transaction Documents by
        reason of any claim which it may have or may consider that it has
        against (i) the Lenders (or any of them) under or in connection with any
        of the Transaction Documents, or any other agreement with any of the
        Lenders and/or (ii) any other party under or in connection with any of
        the Transaction Documents.

19.2    PRO-RATA SHARING

        (a)     Provided that no Acceleration Event has occurred and is
                continuing, if any Lender (the "SHARING LENDER") shall at any
                time obtain (whether by way of voluntary or involuntary payment,
                right of set-off, or otherwise) a proportion of its Loan in any
                sum due from the Borrower or a proportion in respect of its
                participation in any sum due from any one or more of the
                Obligors under any of the Transaction Documents which is greater
                than the proportion obtained by the Lender or Lenders
                respectively obtaining the smallest proportion of its Loan, or
                as the case may be, its participation therein, including a nil
                receipt, (the amount so obtained by the Sharing Lender which is
                attributable to such excess being here called "the excess
                amount"), then:-

                (i)     the Sharing Lender shall promptly pay to the Agent, for
                        the account of the Lenders, an amount equal to the
                        excess amount, whereupon the Agent shall notify the
                        Borrower or, as the case may be, the relevant Obligor of
                        such amount and its receipt by the Agent;

                (ii)    the Agent shall treat such payment as if it were a
                        payment by the Borrower or, as the case may be, the
                        relevant Obligor on account of sums owed to the Lenders;
                        and

                (iii)   as between the Borrower or, as the case may be, the
                        relevant Obligor and the Sharing Lender the excess
                        amount shall be treated as not having been paid, while
                        as between the Borrower or, as the case may be, the
                        relevant Obligor and each Lender it shall be treated as
                        having been paid to the extent any moneys are received
                        by such Lender.

        (b)     Each Lender shall forthwith notify the Agent of any such receipt
                or recovery by it other than by payment through the Agent.

        (c)     If any excess amount subsequently has to be wholly or partly
                refunded to the Borrower or, as the case may be, the relevant
                Obligor by any Sharing Lender which has paid an amount equal
                thereto to the Agent under (a) above, each Lender to which any
                part of that amount was distributed shall on request from the
                Sharing Lender repay to the Sharing Lender such Lender's pro
                rata share of 





<PAGE>   130



                the amount which has to be so refunded by the Sharing Lender.
                Each Lender shall on request supply to the Agent such
                information as the Agent may from time to time request for the
                purpose of this Clause 19. Notwithstanding the foregoing
                provisions of this Clause 19, (i) no Sharing Lender shall be
                obliged to share any excess amount which it receives or recovers
                pursuant to legal proceedings taken by it to recover any sums
                owing to it under any of the Transaction Documents with any
                other party which has a legal right to, but does not, either
                join in such proceedings or commence and diligently pursue
                separate proceedings to enforce its rights in the same or
                another court, unless the proceedings instituted by the Sharing
                Lender are instituted by it without prior notice having been
                given to such party through the Agent and (ii) no Lender shall
                be obliged to exercise any right of set-off it may have against
                any or all of the Borrower or any of the Obligors at any time,
                or to set-off against any obligations of the Borrower, or any of
                the Obligors in relation to the Transaction Documents any sum
                which such Lender may hold on deposit or otherwise from the
                Borrower or any Obligor, or any other right against the Borrower
                or any Obligor in favour of such Lender which sum has been
                received or right has arisen unrelated to and independent from
                the Transaction.


20.     RIGHTS CUMULATIVE, WAIVERS, SEVERABILITY

20.1    CUMULATIVE RIGHTS

        The respective rights of the Agent, the Security Trustee and the Lenders
        pursuant to this Agreement and the other Transaction Documents:-

        (a)     are cumulative, may be exercised as often as they consider
                appropriate and are in addition to their respective rights under
                the general law; and

        (b)     shall not be capable of being waived or varied otherwise than by
                an express waiver or variation in writing.

20.2    WAIVERS

        Any failure to exercise, or any delay in exercising, on the part of any
        Representative or Lender any right under any Transaction Document shall
        not operate as a waiver or variation of that or any other right and any
        defective or partial exercise of any such right shall not preclude any
        other or further exercise of that or any other right, and no act or
        course of conduct or negotiation shall in any way preclude any party
        hereto from exercising any such right or constitute a suspension or any
        variation of any such right.

20.3    SEVERABILITY

        If at any time any provision hereof is or becomes illegal, invalid or
        unenforceable in any respect under the law of any jurisdiction, neither
        the legality, validity nor the enforceability of the remaining
        provisions hereof nor the legality, validity or enforceability of such
        provision under the law of any other jurisdiction shall in any way be
        affected or impaired.





<PAGE>   131



21.     FURTHER ASSURANCE

        The Borrower and each other Obligor shall from time to time and at its
        own cost promptly sign, seal, execute, acknowledge, deliver, file and
        register all such additional documents, instruments, agreements,
        certificates, consents and assurances and do all such other acts and
        things as may be required by law or reasonably requested by the Agent
        from time to time in order to give full effect to each Transaction
        Document or to establish, maintain, protect or preserve the rights of
        the Security Trustee, the Agent and the Lenders under the Transaction
        Documents or to enable any of them to obtain the full benefit of each
        Transaction Document and to exercise and enforce their respective rights
        and remedies under the Transaction Documents PROVIDED that no Obligor
        shall be required to do any act or thing or take any step in connection
        with the registration, recording or filing of any instrument creating or
        evidencing a Lien over an Aircraft in the register of the Aviation
        Authority where such Aircraft is registered, or any other registration,
        recording or filing outside the jurisdiction of organisation of the
        Borrower or, if applicable, any Sub-Borrower or any Intermediate Lessee,
        or any actions with respect to the Lessee or any Sub-Lessee (other than
        any registration, recording or filing of a Lien over an Aircraft within
        the jurisdiction of organisation of the Borrower or, if applicable, any
        Sub-Borrower or any Intermediate Lessee or the Parent) or with respect
        to its jurisdiction of organisation or principal place of business,
        unless a Third Trigger Event or Termination Event has occurred and is
        continuing.


22.     BAYERISCHE HYPO-UND VEREINSBANK AG

        Bayerische Hypo-und Vereinsbank AG in its capacity as a German Lender
        hereby notifies each of the other parties to this Agreement that, for
        the purposes of this Agreement and the other Transaction Documents, it
        has appointed HypoVereinsbank Luxembourg Societe Anonyme ("HVB-LUX") as
        its agent to exercise and/or perform on its behalf any and all rights
        and/or obligations and to take any and all of its decisions (after
        consultation with Bayerische Hypo-und Vereinsbank AG) as a German Lender
        under this Agreement and each of the other Transaction Documents (except
        as the same pertain to the German export credit insurance). Each of the
        parties hereto confirms and acknowledges that the performance by HVB-Lux
        of the rights, obligations and decisions of Bayerische Hypo-und
        Vereinsbank AG shall, subject to the terms and conditions of this
        Agreement and the other Transaction Documents and to the extent so
        performed, be binding on it and each of the parties shall be entitled to
        perform each and every one of their obligations which are expressed to
        be due to be performed in favour of Bayerische Hypo-und Vereinsbank AG
        in favour of HVB-Lux and such performance shall be deemed to constitute
        good performance of the relevant obligations.


23.     NOTICES

23.1    Unless otherwise expressly provided herein, all notices, requests,
        demands or other communications to or upon the respective parties hereto
        in connection with any Transaction Document, the Facility, any
        Utilisation or any Aircraft shall:-

        (a)     in order to be valid be in English and in writing;



<PAGE>   132



        (b)     be deemed to have been duly served on, given to or made in
                relation to a party if it is:-

                (i)     left at the address of that party set out herein or at
                        such other address as that party may notify to the other
                        parties hereto in writing from time to time or to any
                        officer of the addressee; or

                (ii)    sent by facsimile to the facsimile number of that party
                        set out herein or to such other number as that party may
                        notify to the other parties hereto from time to time;

        (c)     be sufficient if:-

                (i)     executed under the seal of the party giving, serving or
                        making the same; or

                (ii)    signed or sent on behalf of the party giving, serving or
                        making the same by any attorney, director, secretary,
                        agent or other duly authorized representative of such
                        party;

        (d)     be effective:-

                (i)     in the case of a letter, when left at the address
                        referred to in Clause 23.1(b)(i) or delivered in person
                        to any officer of the addressee; and

                (ii)    in the case of a facsimile transmission, when receipt is
                        confirmed by return facsimile or by telephone (or on
                        actual receipt if not so confirmed);

23.2    For the purposes of this Clause 23, all notices, requests, demands or
        other communications shall be given or made by being addressed as
        follows:-

        (a)     if to the Borrower to:-

                SIERRA LEASING LIMITED
                29 Richmond Road
                Hamilton HM-AX
                Bermuda

                Facsimile No:   +1 441 298 5274
                Attention:      L. Michael Murphy

                with a copy to the Guarantor



<PAGE>   133



        (b)     if to the Parent to:-

                Aircraft SPC-9 Inc.
                c/o INTERNATIONAL LEASE FINANCE CORPORATION
                1999 Avenue of the Stars
                39th Floor
                Los Angeles
                CA 90067

                Facsimile No:   +1 310 788 1990
                Attention:      Legal Department and Chief Financial Officer

                with a copy to the Guarantor

        (c)     if to the Guarantor or the Subordinated Lender to:-

                INTERNATIONAL LEASE FINANCE CORPORATION
                1999 Avenue of the Stars
                39th Floor
                Los Angeles
                CA 90067
                United States

                Tel:            +1 310 788 1999
                Facsimile No:   +1 310 788 1990
                Attention:      Legal Department and Chief Financial Officer

        (d)     if to the Agent or the Security Trustee to:-

                HALIFAX plc
                Group Treasury
                33 Old Broad Street
                London
                EC2N 1HZ

                Tel:            +44 171 574 8042
                Facsimile No:   +44 171 574 8139
                Attention:      Head of Aircraft Finance

                copy to:

                HALIFAX plc
                Group Treasury Operations
                Trinity Road
                Halifax
                West Yorkshire
                HX1 2RG

                Tel:            +44 1422 333333
                Facsimile No:   +44 1422 391442
                Attention:      Senior Manager - Structured 
                                Finance Administration



<PAGE>   134



        (e)     if to a Lender from any of the Obligors, then to such Lender
                care of the Agent.

        (f)     if to a Lead Manager, then to the address and/or facsimile
                number set out opposite the name of such Lead Manager in the
                relevant Part of Schedule 1.


24.     GOVERNING LAW AND JURISDICTION

24.1    This Agreement shall be governed and construed in accordance with
        English law.

24.2    The Borrower and each other Obligor irrevocably agrees for the benefit
        of each of the Agent, the Security Trustee and the Lenders , and each of
        the Agent, the Security Trustee and each of the Lenders irrevocably
        agree for the benefit of each Obligor, that the courts of England shall
        have jurisdiction to hear and determine any suit, action or proceeding,
        and to settle any disputes, which may arise out of or in connection with
        this Agreement or any other Transaction Document and, for such purposes,
        irrevocably submits to the jurisdiction of such courts.

24.3    Each party irrevocably waives any objection which it might now or
        hereafter have to the courts referred to in Clause 24.2 being nominated
        as the forum to hear and determine any suit, action or proceeding, and
        to settle any disputes, which may arise out of or in connection with
        this Agreement or any other Transaction Document and agrees not to claim
        that any such court is not a convenient or appropriate forum in each
        case whether on the grounds of venue or forum non conveniens or any
        similar grounds or otherwise.

24.4    For the purpose of any suit, action, proceeding or settlement of dispute
        in the English courts (whether under this Agreement or any other
        Transaction Document), the Borrower and each Obligor and each Lender and
        Representative which is not incorporated in England (or registered as an
        oversea company pursuant to the Companies Act 1985):

        (a)     appoints the agent specified in Schedule 7 to accept service of
                process in respect of any such suit, action, proceeding or
                settlement of dispute;

        (b)     confirms that such agent is willing to accept service of such
                process on its behalf in respect of this Agreement and the other
                Transaction Documents; and

        (c)     if the agent specified in Schedule 7 no longer serves as its
                agent, shall promptly appoint another such agent acceptable to
                the Agent and advise the Agent thereof.

24.5    The submission to the jurisdiction of the courts referred to in Clause
        24.2 shall not (and shall not be construed so as to) limit the right of
        any party to take proceedings against any other party in any other court
        of competent jurisdiction nor shall the taking of proceedings in any one
        or more jurisdictions preclude the taking of proceedings in any other
        jurisdiction, whether concurrently or not.

24.6    To the extent that the Borrower or any other Obligor or any of the
        property of the Borrower or any other Obligor is or becomes entitled at
        any time to any immunity on the grounds of sovereignty or otherwise from
        any legal action, suit or proceeding, from set-off or counterclaim, from
        the jurisdiction of any competent court, from service of process, 





<PAGE>   135



        from attachment prior to judgment, from attachment in aid of execution,
        or from execution prior to judgment, or other legal process in any
        jurisdiction, the Borrower and each other Obligor, for itself and its
        property, hereby irrevocably and unconditionally waives, and agrees not
        to plead or claim, any such immunity with respect to its obligations,
        liabilities or any other matter under or arising out of or in connection
        with any of the Transaction Documents.


25.     MISCELLANEOUS

25.1    A certificate given by the Agent, the Security Trustee or any Lender as
        to the amount of any sum required to be paid to it under any provisions
        of this Agreement or any of the other Transaction Documents shall, save
        as otherwise provided for in this Agreement or any of the other
        Transaction Documents and save in the case of manifest error, be
        conclusive evidence of the amounts therein stated for all purposes of
        this Agreement or, as the case may be, any of the other Transaction
        Documents. Any such certificate shall contain a reasonable explanation
        of the way in which the sum required to be paid was calculated, together
        with reasonable supporting evidence, PROVIDED that in providing such a
        reasonable explanation and such evidence, neither the Agent nor the
        Security Trustee nor any of the Lenders shall be required to disclose
        any documents and/or information relating to its business or affairs
        which it considers (in its bona fide opinion) to be of a confidential
        nature.

25.2    The parties hereto agree and acknowledge that this Agreement shall
        continue in full force and effect for all purposes until all Secured
        Obligations (exclusive of indemnities in respect of which no claims have
        been, or to the knowledge of the Security Trustee will be, asserted)
        have been paid in full notwithstanding that the Commitments may at any
        time be reduced to zero.

25.3    Each of the parties hereto agrees that no amendments, variations,
        supplements or modifications may be made to any of the Transaction
        Documents other than by an instrument in writing executed by the
        applicable Obligor(s) and the Agent or the Security Trustee as provided
        in the applicable Transaction Document, or where expressly provided in
        the applicable Transaction Document, the Agent on behalf and on the
        instructions of the Majority Lenders (which consent shall not be
        unreasonably withheld).

25.4    Each of the Borrower, the Guarantor and the Parent hereby acknowledges
        and accepts that under the Support Agreements the Export Credit Agencies
        have certain rights to require the Lenders, the Agent and/or the
        Security Trustee to act, or to omit to act, in accordance with the
        instructions of the Export Credit Agencies. Accordingly, each of the
        Borrower, the Guarantor and the Parent hereby acknowledges and accepts
        that if any of the Lenders, the Agent and/or, as the case may be, the
        Security Trustee have to exercise a right, discretion or power under any
        of the Transaction Documents "reasonably", "in good faith" or "bona
        fide" or with any other restriction of whatsoever nature then such
        Lender, the Agent and/or, as the case may be, the Security Trustee will
        be deemed to be acting "reasonably", "in good faith" or "bona fide" or
        in accordance with such other restrictions (as the case may be) if such
        Lender, the Agent and/or the Security Trustee exercises, or refrains
        from exercising, such right, discretion or power in accordance with the
        instructions of the relevant Export Credit Agency.





<PAGE>   136



26.     CONFIDENTIALITY

26.1    At all times during the Security Period and after the termination
        thereof, each party hereto shall use all reasonable endeavours to ensure
        that its respective officers, directors, employees and agents shall keep
        secret and confidential and not, without the prior written consent of
        the Borrower, the Guarantor, the Agent and the Security Trustee,
        disclose to any third party the terms of any of the Transaction
        Documents, any Lease, Sub-Lease, Insurances, Purchase Agreements or
        Engine Agreements or any of the information, reports, invoices, or
        documents supplied by or on behalf of any of the other parties hereto,
        save that any such party shall be entitled to disclose any such terms,
        information, reports or documents:-

        (i)     in connection with any proceedings arising out of or in
                connection with any of the Transaction Documents to the extent
                that such party may consider necessary to protect its interest;
                or

        (ii)    to any potential permitted assignee or transferee of all or any
                of such party's rights under any of the Transaction Documents or
                any other permitted person proposing to enter into contractual
                arrangements with such party in relation to or in connection
                with the transactions contemplated by any of the Transaction
                Documents, subject to it obtaining an undertaking from such
                potential permitted assignee or permitted other person in the
                terms similar to this Clause 26.1; or

        (iii)   if required to do so by an order of a court of competent
                jurisdiction whether in pursuance of any procedure for
                discovering documents or otherwise; or

        (iv)    pursuant to any law or regulation having the force of law
                (including, without limitation, SEC filing requirements); or

        (v)     to any fiscal, monetary, tax, governmental or other competent
                authority; or

        (vi)    to its auditors, bankers, legal or other professional advisers
                (which are under an ethical obligation to or agree to hold such
                information confidential); or

        (vii)   to any of the Export Credit Agencies; or

        (viii)  in any manner contemplated by any of the Transaction Documents.

26.2    In addition, any party shall be entitled to disclose or use any such
        information, reports or documents if the information contained therein
        shall have emanated in conditions free from confidentiality bona fide
        from some person other than the relevant party hereto and such party
        would, but for the preceding provisions of this Clause 26 have been free
        to disclose or use the same.

26.3    Each party may, notwithstanding any other provision of this Clause 26,
        release to any potential assignee or transferee (permitted in each case
        pursuant hereto or to the relevant Transaction Document), or other
        person proposing to enter into contractual arrangements with such party
        in relation to or in connection with the transactions contemplated by
        any of the Transaction Documents, a copy of any of the Transaction
        Documents, PROVIDED that each such potential assignee or transferee or
        other person confirms in writing to the other 




<PAGE>   137



        parties to this Agreement that it is bound by the terms of this Clause
        26 as if it had been a party to this Agreement.


27.     COUNTERPARTS AND DELIVERY BY FACSIMILE

27.1    This Agreement may be executed in any number of counterparts and by
        different parties thereto on separate counterparts and any single
        counterpart or set of counterparts signed, in either case, by all the
        parties hereto shall be deemed to constitute a full and original
        agreement for all purposes but all counterparts shall constitute but one
        and the same instrument.

27.2    Delivery of an executed counterpart of this Agreement by facsimile will
        be deemed as effective as delivery of an originally executed
        counterpart. Any party delivering an executed counterpart of this
        Agreement will also deliver an originally executed counterpart, but the
        failure of any party to deliver an originally executed counterpart of
        this Agreement will not affect the validity or effectiveness of this
        Agreement.


IN WITNESS whereof this Agreement has been executed by the duly authorised
representatives of the parties hereto (other than the Guarantor) under hand, and
has been executed by the Guarantor as a Deed with the intention that it be
delivered on the day and year first above written.





<PAGE>   138




                               SCHEDULE 1 - PART I

                               THE BRITISH LENDERS


<TABLE>
<CAPTION>
                                                                             AMOUNT OF
                                                            JURISDICTION     BRITISH LENDERS
                    LENDING          ADDRESS FOR            OF               COMMITMENTS
LENDER              OFFICE           NOTICES                INCORPORATION    (US$)
------              -------          -----------            -------------    ---------------

<S>                 <C>              <C>                    <C>              <C>          
HALIFAX plc         Trinity Road     HALIFAX PLC            England and      1,123,000,000
                    Halifax          33 Old Broad Street    Wales
                    West Yorkshire   London
                    HX  2RG          EC2N 1HZ

                                     Tel: +44 171 574 8042
                                     Fax No:+44 171 574
                                     8139
                                     Attention: Head of
                                     Aircraft
                                     Finance

                                     copy to:

                                     HALIFAX plc
                                     Group Treasury
                                     Operations
                                     Trinity Road
                                     Halifax
                                     West Yorkshire
                                     HX1 2RG

                                     Tel:   +44 1422 333
                                     333
                                     Fax No:   +44 1422
                                     391 442
                                     Attention:  Senior
                                     Manager - Structured
                                     Finance
                                     Administration
</TABLE>





<PAGE>   139



                              SCHEDULE 1 - PART II

                               THE FRENCH LENDERS


<TABLE>
<CAPTION>
                                                                                      AMOUNT OF
                                                                     JURISDICTION     FRENCH LENDERS
                    LENDING               ADDRESS FOR                OF               COMMITMENTS
LENDER              OFFICE                NOTICES                    INCORPORATION    (US$)
------              -------               -----------                -------------    ---------------
<S>                 <C>                   <C>                        <C>                  <C>          
Societe Generale    Societe    Generale,  Serge Bozovic               France          1,975,000,000
                    FINT/EXT/BAC,         Tel: +33 1 42 14 41 19
                    17 Cours Valmy,       Fax: +33 1 42 13 04 15
                    92972 Paris,
                    La Defense  cedex 7,  Francoise Refabert
                    France                Tel: +33 1 42 14 03 89
                                          Fax: +33 1 42 14 66 04

                                          with a copy to

                                          Florence       Roussel
                                          Pollet
                                          Tel: +33 1 42 14 24 02
                                          Fax: +33 1 42 14 85 07
</TABLE>






<PAGE>   140



                              SCHEDULE 1 - PART III

                               THE GERMAN LENDERS


<TABLE>
<CAPTION>
                                                                                            AMOUNT OF
                                                                                            GERMAN
                                                                           JURISDICTION     LENDERS
                         LENDING               ADDRESS FOR                 OF               COMMITMENTS
LENDER                   OFFICE                NOTICES                     INCORPORATION    (US$)
------                   -------               -----------                 -------------    ---------------
<S>                      <C>                   <C>                         <C>              <C>          
 Bayerische  Hypo-und    HypoVereinsbank       Bayerische Hypo-und         Germany          399,509,500
 Vereinsbank AG          Luxembourg            Vereinsbank AG, Global
                         Societe Anonyme,      Aircraft Finance (FPA3),
                         4, rue Alphonse       Am Tucherpark 1, 80538
                         Weicker, L-2099       Munich, Germany
                         Luxembourg
                                               Tel: +49 89 37 82 43 03
                                               Fax: +49 89 37 82 03 54
                                               Attention: Michael Trentzsch

                                               copy to:

                                               HypoVereinsbank
                                               Luxembourg Societe
                                               Anonyme,
                                               4, rue Alphonse Weicker,
                                               L-2099 Luxembourg

                                               Tel: +352 4272 2124
                                               Fax: +352 4272 4510
                                               Attention: Credit
                                               Department - Corporate
                                               and Structured Finance

 Kreditanstalt fur       Kreditanstalt         Kreditanstalt fur           Germany          430,241,000
 Wiederaufbau            fur                   Wiederaufbau, Export and
                         Wiederaufbau,         Project Finance -
                         Palmengartenstrasse   Aerospace -
                         5-9,                  Palmengartenstrasse 5-9,
                         60325 Frankfurt       60325 Frankfurt am Main,
                         am Main, Germany      Germany

                                               Tel: +49 69 7431 3741
                                               Fax: +49 69 7431 2944
</TABLE>



<PAGE>   141



<TABLE>
<CAPTION>
                                                                                            AMOUNT OF
                                                                                            GERMAN
                                                                           JURISDICTION     LENDERS
                         LENDING               ADDRESS FOR                 OF               COMMITMENTS
LENDER                   OFFICE                NOTICES                     INCORPORATION    (US$)
------                   -------               -----------                 -------------    ---------------
<S>                      <C>                   <C>                         <C>              <C>          
 Commerzbank             Commerzbank AG,       Commerzbank AG              Germany          399,509,500
 Aktiengesellschaft      Los Angeles           Corporate Finance/
                         Branch,               Aircraft Finance
                         633 West Fifth        60261 Frankfurt am
                         Street,               Main, Germany
                         Suite 6600,
                         Los Angeles,          Tel: +49 69 136-23680
                         CA 90071, USA         Fax: +49 69 136-27896
                                               Attention: Matthias Hommel

                                               with a copy to:

                                               Commerzbank AG,
                                               Los Angeles Branch,
                                               633 West Fifth Street,
                                               Suite 6600,
                                               Los Angeles,
                                               CA 90071, USA

                                               Tel: +1 213 623-8223/

                                               683-5408
                                               Fax: +1 213 623 0039
                                               Attention: Werner
                                               Schmidbaur/Karla Wirth
</TABLE>




<PAGE>   142



                                   SCHEDULE 2

                          FORM OF TRANSFER CERTIFICATE


To:       [Agent]

                              TRANSFER CERTIFICATE


This transfer certificate ("TRANSFER CERTIFICATE") relates to a Agreement dated
19th January 1998 and made between (1) the banks and financial institutions
named therein as Lenders, (2) Halifax plc as Agent, (3) Halifax plc as Security
Trustee, (4) Sierra Leasing Limited (the "BORROWER"), (5) Aircraft SPC-9, INC.
(the "PARENT"), (6) International Lease Finance Corporation as guarantor (the
"GUARANTOR") and (7) International Lease Finance Corporation as subordinated
lender (the "SUBORDINATED LENDER") (the "AGREEMENT" which term shall include any
amendments or supplements thereto) and to each of the Loan Supplements made
between the Agent, the Security Trustee and the Borrower in respect of an
Advance under the Agreement.

Terms defined or incorporated by reference in the Agreement shall, unless
otherwise defined, have the same meanings when used in this Transfer
Certificate.

I.      [Details of the Transferor] (the "TRANSFEROR"):-

1.      confirms that to the extent that details appear in the Schedule to this
        Transfer Certificate under the headings "Transferor's Commitment",
        "Amount of Commitment Transferred and the Related Rights and Obligations
        of the Transferor to be Transferred", "Transferor's Participation" and
        "Amount of Transferor's Participation Transferred and Related Rights and
        Obligations of the Transferor to be Transferred", those details
        accurately summarise its Commitment and its participation in the
        Facility and its participation in each Advance already made all or part
        of which is to be transferred (as more particularly described in the
        Loan Supplements);

2.      requests [Details of Transferee] (the "TRANSFEREE") to accept and
        procure, in accordance with Clause 18.3 (Transfer Certificates) of the
        Agreement, the substitution of the Transferor by the Transferee in
        respect of the amount specified in the Schedule hereto of its Commitment
        and its participation in the Facility and its participation in each
        Advance already made (as more particularly described in the Loan
        Supplements) by signing this Transfer Certificate.

II.     The Transferee hereby requests each of the Obligors, the Lenders, the
        Borrower, the Agent and the Security Trustee to accept this executed
        Transfer Certificate as being delivered under and for the purposes of
        Clause 18.3 (Transfer Certificates) of the Agreement so as to take
        effect in accordance with the terms thereof on the Transfer Date or on
        such later date as may be determined in accordance with the terms
        thereof.

III.    The Transferee:-

        1.      represents that it has received a copy of the Agreement and
                copies of each Loan Supplement together with such other
                documents and information as it has requested in connection with
                this transaction;




<PAGE>   143



        2.      represents that it has not relied and will not rely on the
                Transferor to check or enquire on its behalf into the legality,
                validity, effectiveness, adequacy, accuracy or completeness of
                any such documents or information; and

        3.      agrees that it has not relied and will not rely on any of the
                Transferor, the Agent or any of the Lenders to assess or keep
                under review on its behalf the financial condition,
                creditworthiness, condition, affairs, status or nature of any
                party to any of the Transaction Documents or the legality,
                validity, priority, adequacy, effectiveness or enforceability of
                any of the Transaction Documents.

        4.      represents that its has a credit rating with Standard and Poor's
                Corporation of at least BBB or a credit rating with Moody's
                Investor Service Inc. of at least Baa2 or, in each case, the
                equivalent successor rating, and is not on negative credit watch
                to fall below such rating;

        5.      represents that it is able to file for either (i) US tax treaty
                benefits on a zero rate of withholding tax and agrees to provide
                US Internal Revenue Service Form 1001 (or its equivalent) to the
                Agent or (ii) exemption from withholding tax on income
                effectively connected with the conduct of a trade or business in
                the United States and agrees to provide US Internal Revenue
                Service Form 4224 (or its equivalent) to the Agent;

        6.      represents that it is neither resident in the United Kingdom for
                United Kingdom tax purposes nor controlled by persons who are so
                resident if the transfer hereunder would result in Advances of
                Lenders resident in the United Kingdom for United Kingdom tax
                purposes or controlled by persons whoa re so resident
                constituting fifty per cent. (50%) or more of the Advances as at
                the date of the proposed transfer;

        7.      represents that it is acquiring the Transferor's right, title
                and interest hereunder in the ordinary course of its lending
                business and not with any present view to the distribution
                thereof in violation of the registration requirements of the
                U.S. Securities Act of 1933, as amended, and that the transfer
                is in compliance with all applicable securities and other laws
                (if any); and

        8.      agrees that it will be bound by the provisions of the Facility
                Agreement and the other Transaction Documents and will perform
                in accordance with the terms of the Facility Agreement and the
                other Transaction Documents the obligations which by their terms
                are required to be performed by a Lender.

IV.     The Transferee undertakes with the Transferor and each of the other
        parties to the Agreement that it shall perform in accordance with their
        terms all those obligations which by the terms of Clause V of this
        Transfer Certificate will be assumed by it upon delivery of the executed
        copy of this Transfer Certificate to the Agent and further undertakes
        with the Transferor, each of the other Lenders, the Agent and the
        Security Trustee that it shall perform in accordance with their terms
        all of the obligations of the Transferor under the Lenders' Agreement as
        if the Transferee had originally been a party to the Lenders' Agreement
        and each of the other Lenders, the Agent and the Security 



<PAGE>   144



        Trustee undertake with the Transferee to perform their obligations under
        the Lenders' Agreement to the Transferor in favour of the Transferee as
        if the Transferee had originally been a party to the Lenders' Agreement.

V.      With effect from the Transfer Date as specified in the Schedule hereto
        the parties hereto (including in particular but without limitation the
        Transferee) agree that:

        (i)     to the extent of the Transferor's rights and obligations under
                the Agreement and the other Transaction Documents in respect of
                the participation the Borrower and the Transferor shall each be
                released from further obligations to each other under the
                Agreement and the other Transaction Documents and their
                respective rights against each other shall be cancelled (such
                rights and obligations being referred to in this Clause V as
                "Discharged Rights and Obligations"); and

        (ii)    the Borrower, the Agent, the Security Trustee and the Transferee
                shall each assume obligations towards each other and/or acquire
                rights against each other in respect of the participation which
                differ from the Discharged Rights and Obligations only insofar
                as the Borrower and the Transferee have assumed and/or acquired
                the same in place of the Borrower and the Transferor; and

        (iii)   the Agent, the Security Trustee, the Borrower, the Transferee
                and the other Lenders shall acquire the same rights and assume
                the same obligations among themselves as they would have
                acquired and assumed had the Transferee originally been a party
                to the Agreement and the other Transaction Documents as a Lender
                in respect of the participation; and

        (iv)    the Transferee, the Agent, the Security Trustee and each of the
                other Lenders shall acquire the same rights and assume the same
                obligations amongst themselves in respect of the Lenders
                Agreement as they would have acquired and assumed had the
                Transferee originally been a party to the Lenders' Agreement as
                a Lender in respect of the participation in the place of the
                Transferor.

        (v)     all costs and expenses of the transfer hereunder shall be borne
                by the Transferor or Transferee, as the case may be, and no
                Obligor shall be under any obligation to pay any greater amount
                or suffer any other material increase in liabilities or material
                diminution in right or benefit under the Transaction Documents
                following and as a consequence (directly or indirectly) of any
                such transfer or change in Lending Office unless and until a
                Change in Law occurs and as a result of such Change in Law
                (excluding any Change of Law which occurs, or the intended
                implementation of which is officially announced or proposed
                before the date of such transfer or change in lending Office).

VI.     None of the Transferor, any of the Lenders, the Agent, the Security
        Trustee or the Borrower:-

        1.      makes any representation or warranty or assumes any
                responsibility with respect to the legality, validity,
                effectiveness, adequacy or enforceability of the Agreement; or






<PAGE>   145


        2.      assumes any responsibility for the financial condition of any of
                the Obligors or for the performance and observance by any of the
                Obligors or any other party to any of the Transaction Documents
                or any other document relating thereto of any of the Obligor's
                or such other party's obligations under any of the Transaction
                Documents or any document relating thereto and any and all
                conditions and warranties, whether express or implied by law or
                otherwise, are excluded.

VII.    None of the Obligors assumes any responsibility for the financial
        condition of any party, or for the performance or observance by any
        party, other than the Obligors, of any of the Transaction Documents or
        any other document relating thereto or such party's obligations under
        the Agreement or any document relating thereto (other than those of the
        Obligors) and any and all conditions and warranties whether express or
        implied by law or otherwise, are excluded (other than in relation to the
        performance or observance of the Obligors).

VIII.   The Transferee confirms that its Lending Office and address for notices
        for the purposes of the Agreement are as set out in the Schedule hereto.

IX.     A.      The Transferor hereby gives notice to the Transferee (and the
                Transferee hereby acknowledges and agrees with the Transferor)
                that the Transferor is under no obligation to re-purchase (or in
                any other manner to assume, undertake or discharge any
                obligation or liability in relation to) the transferred
                Commitment, and/or transferred participation in the Advances
                already made (as more particularly described in the Loan
                Supplements) and/or the transferred rights and/or obligations at
                any time after this Transfer Certificate shall have taken
                effect.

        B.      Following the date upon which this Transfer Certificate shall
                have taken effect, without limiting the provisions hereof, each
                of the Transferee and the Transferor hereby acknowledges and
                confirms to the other that in relation to the relative
                Commitment/participation in the Advances already made (as more
                particularly described in the Loan Supplements) and the rights
                and/or obligations under the Agreement assumed by the Transferee
                (or part thereof), variations, amendments or alterations to any
                of the terms of the Agreement and/or any of the Loan Supplements
                arising in connection with any re-negotiation or re-scheduling
                of the obligations hereunder shall apply to and be binding on
                the Transferee alone.

X.      The Transferor hereby gives notice that nothing herein or in the
        Agreement (or any document relating thereto) shall oblige the Lender to
        (i) accept a re-transfer from the Transferee of the whole or any part of
        its rights, benefits and/or obligations under the Agreement transferred
        pursuant hereto or (ii) support any losses directly or indirectly
        sustained or incurred by the Transferee for any reason whatsoever
        including, without limitation, the non-performance by any other party to
        the Agreement (or any document relating thereto) of its obligations
        under any such document. The Transferee hereby acknowledges the absence
        of any such obligation as is referred to in (i) or (ii) above.

XI.     The Transferee hereby confirms, pursuant to and in accordance with the
        provisions of Clause 24.4 (Governing Law and Jurisdiction) of the
        Agreement, that its agent for service of process in England is as set
        out in the Schedule to this Transfer Certificate and 




<PAGE>   146



        confirms that such agent is willing to accept service of such process as
        is described in Clause 24.4 of the Agreement on behalf of the Transferee
        in respect of the Agreement, any other Transaction Document.

XII.    This Transfer Certificate shall be governed by and construed in
        accordance with English Law.


[Transferee]


By:
   ------------------------------
   (Duly Authorised)



[Transferor]



By:
   ------------------------------
   (Duly Authorised)



The Agent on behalf of itself and all other parties to the Agreement (other than
the Transferor and the Obligors).



By:
   ------------------------------
   (Duly Authorised)



The Borrower on behalf of itself and all the other Obligors

By:
   ------------------------------
   (Duly Authorised)



Dated: [              ]




<PAGE>   147



                      SCHEDULE TO THE TRANSFER CERTIFICATE



Transferor's Commitment         Amount of Commitment Transferred and the Related
                                Rights and Obligations of the Transferor to be
                                Transferred


                                
Transferor's Participation      Amount of Transferor's Participation in Advances
 in Advances already made       already made Transferred and Related Rights and
                                Obligations of the Transferor to be Transferred


Date:

[Transferee]


LENDING OFFICE:                 ADDRESS FOR NOTICES:

[___________________]           [________________________________]


                                Telephone:  [______________]
                                Facsimile:  [______________]


JURISDICTION OF INCORPORATION:

[_____________]

English Process Agent:

[_____________]

Transfer Date:  [_________]




<PAGE>   148



                                   SCHEDULE 3

                               UTILISATION NOTICE


To:     (1)     HALIFAX PLC (as Agent)
                Group Treasury
                33 Old Broad Street
                London
                EC2N 1HZ

                Facsimile No: +44 171 574 8139
                Tel No:       +44 171 574 8042
                Attention:    Head of Aircraft Finance

From:     [_____] (the "BORROWER")
          [_____________________________
          ______________________________
          ______________________________
          ______________________________
          ______________________________]


RE:     AIRCRAFT FACILITY AGREEMENT DATED 19TH JANUARY, 1999 AND MADE BETWEEN
        THE BANKS AND FINANCIAL INSTITUTIONS NAMED THEREIN AS LENDERS, HALIFAX
        PLC AS AGENT AND SECURITY TRUSTEE, THE BORROWER, AIRCRAFT SPC 9, INC. AS
        PARENT, AND INTERNATIONAL LEASE FINANCE CORPORATION AS GUARANTOR AND
        SUBORDINATED LENDER AS AMENDED, SUPPLEMENTED OR ACCEDED TO FROM TIME TO
        TIME (THE "AGREEMENT")

The Borrower hereby gives notice in accordance with Clause 3.1.1 of the
Agreement that:-

(i)     the Borrower desires to effect a Utilisation on the Delivery Date, which
        is currently scheduled to be [________];

(ii)    the requested amount of the proposed Advance is US$[_____];

(iii)   the Aircraft the subject of the Utilisation is one Airbus
        [A319/A320/A321/A330/A340] Aircraft with manufacturer's serial number
        [_______], proposed [_______] Registration Mark [_______] and [_______]
        installed Engines;

[(iv)   the proposed [Lessee][Sub-Lessee] of the Aircraft the subject of the
        Utilisation is [_______], a company incorporated in [_______] and having
        its principal place of business in [_______] and it is proposed that the
        Aircraft shall be [registered] in [_______]. The Lessee will [and the
        Sub-Lessee] [will] [will not] require quiet enjoyment covenants from the
        Borrower and the Security Trustee in the form agreed between the
        Borrower, the Security Trustee and the Guarantor.]

        A certified copy of the [executed Lease] [latest draft of the proposed
        Lease] is attached hereto;]




<PAGE>   149


[(v)    the Borrower confirms that [______________], as Sub-Borrower, shall be
        the owner of the Aircraft];

(vi)    the Borrower desires the Lenders to disburse the Loan on
        [____________________________]; and

(vii)   The Aircraft Purchase Price is US$[______________];

The account into which the Loan should be paid is account no. [______________]
with [_______].

The Borrower hereby certifies that as at the date of this notice no Relevant
Event, Termination Event, and except as disclosed to the Agent no Second Trigger
Event or Third Trigger Event, has occurred and is continuing or would result
from the drawdown of the Advance, the subject of this Utilisation.

The Borrower hereby certifies that all representations and warranties on its
part contained in Clause 6.2 of the Facility Agreement remain true and correct
at the date of this notice and shall remain true and correct on the Delivery
Date and no event has occurred which constitutes or, with the passing of time or
the giving of notice or the making of any determination or any combination
thereof would constitute, a Termination Event.

Capitalised terms used herein defined in the Agreement have the same meanings
herein.

[____________________________]

By:                           

Name:

Title:



<PAGE>   150




                                   SCHEDULE 4

                                     PART I

      DETAILS OF PROPOSED AIRCRAFT AND PROPOSED AIRCRAFT DELIVERY SCHEDULE
                              (ALL FIGURES IN US$)


<TABLE>
<CAPTION>
(1)           (2)          (3)      (4)             (5)            (6)                  (7)                
                                                                                                           
                                                                                        NATIONAL
                                                                   ASSUMED              CONTENT
              SCHEDULED                             PROPOSED       FINANCED             (ASSUMED           
AIRCRAFT      DELIVERY              ENGINE          INITIAL        AMOUNT               %)                 
NO.           MONTH        TYPE     TYPE            LESSEE         (MILLIONS)    UK     FRANCE     GERMANY 
<S>           <C>          <C>      <C>             <C>            <C>           <C>    <C>        <C>     
1             Feb-99       A319     CFM56-5A4       Air France     29,652.25     18     51         31      
2             Mar-99       A319     CFM56-5B        TAP            29,652.25     18     51         31      
3             Apr-99       A319     CFM56-5A4       Air France     29,435.50     18     51         31      
4             Apr-99       A319     CFM58-5A4       Air France     29,435.50     18     51         31      
5             May-99       A319     CFM56-5B        Swissair       29,435.50     18     51         31      
6             Jan-99       A320     V2527-A5        Dragonair #5   35,372.75     32     32         36      
7             Mar-99       A320     CFM56-5A3       TAP #4         35,372.75     20     49         31      
8             Apr-99       A320     CFM56-5A3       Star Airlines  35,198.50     20     49         31      
9             May-99       A320     CFM56-5B4       Iberia         35,198.50     20     49         31      
10            Oct-99       A320     CFM56-5B4       Iberia         36,035.75     20     49         31      
11            Nov-99       A320     V2527-A5        BMA #1         36,035.75     32     32         36      
12            Feb-99       A321     V2533-A5        BMA #3         40,415.80     33     32         35      
13            Feb-99       A321     V2533-A5        Aerolloyd #2   40,415.80     33     32         35      
14            Mar-99       A321     V2533-A5        Dragonair #6   40,415.80     33     32         35      
15            Mar-99       A321     CFM56-5B        Aer Lingus     40,415.80     17     52         31      
16            Mar-99       A321     V2533-A5        BMA #4         40,415.80     33     32         35      
17            Apr-99       A321     V2533-A5        Aerolloyd #3   40,073.25     33     32         35      
18            May-99       A321     V2533-A5        Dragonair #7   40,073.25     33     32         35      
19            Jul-99       A321     V2533-A5        Asiana #1      40,366.50     33     32         35      
20            Dec-99       A321     CFM56-5B        Swissair       41,208.00     17     52         31      
</TABLE>


<TABLE>
<CAPTION>
(1)                                      (8)
                            ASSUMED NATIONAL PROPORTIONS
              
              
                ASSUMED
AIRCRAFT        BRITISH           ASSUMED FRENCH     ASSUMED GERMAN
NO.             LENDERS'          LENDERS'           LENDERS'
                PROPORTION        PROPORTION         PROPORTION
<S>              <C>              <C>                <C>         
1                5,337,405.00     15,122,647.50        9,192,197.50
2                5,337,405.00     15,122,647.50        9,192,197.50
3                5,298,390.00     15,012,105.00        9,125,005.00
4                5,298,390.00     15,012,105.00        9,125,005.00
5                5,298,390.00     15,012,105.00        9,125,005.00
6               11,319,280.00     11,319,280.00       12,734,190.00
7                7,074,550.00     17,332,647.50       10,965,552.50
8                7,039,700.00     17,247,265.00       10,911,535.00
9                7,039,700.00     17,247,265.00       10,911,535.00
10               7,207.150.00     17,657,517.50       11,171,082.50
11              11,531,440.00     11,531,440.00       12,972,870.00
12              13,337,214.00     12,933,056.00       14,145,530.00
13              13,337,214.00     12,933,056.00       14,145,530.00
14              13,337,214.00     12,933,056.00       14,145,530.00
15               6,870,686.00     21,016,216.00       12,528,898.00
16              13,337,214.00     12,933,056.00       14,145,530.00
17              13,224,172.50     12,823,440.00       14,025,637.50
18              13,224,172.50     12,823,440.00       14,025,637.50
19              13,320,945.00     12,917,280.00       14,128,275.00
20               7,005,360.00     21,428,160.00       12,774,480.00
</TABLE>


                                    - 147 -


<PAGE>   151



<TABLE>
<CAPTION>
(1)           (2)          (3)      (4)             (5)            (6)                  (7)                
                                                                                                           
                                                                                        NATIONAL
                                                                   ASSUMED              CONTENT
              SCHEDULED                             PROPOSED       FINANCED             (ASSUMED           
AIRCRAFT      DELIVERY              ENGINE          INITIAL        AMOUNT               %)                 
NO.           MONTH        TYPE     TYPE            LESSEE         (MILLIONS)    UK     FRANCE     GERMANY 
<S>           <C>          <C>      <C>             <C>            <C>           <C>    <C>        <C>     
21            Feb-99       A330-200 Trent 772-60    Air Transat    56,960.63     38     34         28      
22            Apr-99       A330-200 Trent 772-60    Air Transat    56,960.63     38     34         28      
23            Feb-99       A330-200 PW4168A         Swissair #2    56,960.63     24     41         35      
24            Feb-99       A330-200 PW4168A         Swissair #3    56,960.63     24     41         35      
25            Mar-99       A330-200 PW4168A         Swissair #4    56,896.17     24     41         35      
26            May-99       A330-200 PW4168A         Swissair #5    56,896.17     24     41         35      
27            May-99       A330-200 CF6-80E1        Canada 3000    56,896.17     22     43         35      
                                                    #3
28            Aug-99       A330-200 PW4168A         Sabena #1      57,128.50     24     41         35      
29            Oct-99       A330-200 PW4168A         Sabena #2      58,964.50     24     41         35      
30            Nov-99       A330-200 PW4168A         Sabena #3      58,964.50     24     41         35      
31            Feb-99       A340-300 CFM56-5C4       Air Canada #4  72,938.50     20     50         30      
32            Jan-00       A319-100 CFM56-5A4       Air France     28,477.83     18     51         31      
33            Jan-00       A319     CFM56-5B5       Iberia         28,477.83     18     51         31      
34            Feb-00       A319     CFM56-5B5       Iberia         28,477.83     18     51         31      
35            Mar-00       A319     CFM56-5A4       Air France     28,477.83     18     51         31      
36            Apr-00       A319     V2524-A5        TBD            27,602.33     28     39         33      
</TABLE>



<TABLE>
<CAPTION>
(1)                                    (8)
                          ASSUMED NATIONAL PROPORTIONS
              
              
              ASSUMED
AIRCRAFT      BRITISH           ASSUMED FRENCH     ASSUMED GERMAN
NO.           LENDERS'          LENDERS'           LENDERS'
              PROPORTION        PROPORTION         PROPORTION
<S>            <C>              <C>                <C>         
21            21,645,039.40     19,366,614.20       15,948,976.40
22            21,645,039.40     19,366,614.20       15,948,976.40
23            13,670,551.20     23,353,858.30       19,936,220.50
24            13,670,551.20     23,353,858.30       19,936,220.50
25            13,655,080.80     23,327,429.70       19,913,659.50
26            13,655,080.80     23,327,429.70       19,913,659.50
27            12,517,157.40     24,465,353.10       19,913,659.50
              
28            13,710,840.00     23,422,685.00       19,944,975.00
29            14,151,480.00     24,175,445.00       20,637,575.00
30            14,151,480.00     24,175,445.00       20,637,575.00
31            14,587,700.00     36,469,250.00       21,881,550.00
32             5,126,009.40     14,523,693.30        8,828,127.30
33             5,126,009.40     14,523,693.30        8,828,127.30
34             5,126,009.40     14,523,693.30        8,828,127.30
35             5,126,009.40     14,523,693.30        8,828,127.30
36             7,728,652.40     10,764,908.70        9,108,768.90
</TABLE>



                                    - 148 -


<PAGE>   152



<TABLE>
<CAPTION>
(1)           (2)          (3)      (4)             (5)            (6)                  (7)                
                                                                                                           
                                                                                        NATIONAL
                                                                   ASSUMED              CONTENT
              SCHEDULED                             PROPOSED       FINANCED             (ASSUMED           
AIRCRAFT      DELIVERY              ENGINE          INITIAL        AMOUNT               %)                 
NO.           MONTH        TYPE     TYPE            LESSEE         (MILLIONS)    UK     FRANCE     GERMANY 
<S>           <C>          <C>      <C>             <C>            <C>           <C>    <C>        <C>     
37            Apr-00       A319-100 CFM56-5A4       Air France     27,602.33     18     51         31      
38            May-00       A319-100 CFM56-5B5       Iberia         27,602.33     18     51         31      
39            Nov-00       A319-100 CFM56-5B5       Iberia         26,809.00     18     51         31      
40            Feb-00       A320     V2527-A5        BMA #2         36,120.75     32     32         36      
41            Mar-00       A320     V2527-A5        BMA #3         36,120.75     32     32         36      
42            Apr-00       A320     CFM56-5B4       Iberia         34,875.50     20     49         31      
43            Apr-00       A320-200 CFM56-5B4       Iberia         34,875.50     20     49         31      
44            May-00       A320     CFM56-5B4       Iberia         34,875.50     20     49         31      
45            Feb-00       A319     CFM56-5B        Air France     28,477.83     18     51         31      
46            Mar-00       A321     V2533-A5        Aerolloyd #4   39,995.33     33     32         35      
47            Apr-00       A321     V2533-A5        Aerolloyd #5   41,297.25     33     32         35      
48            Jul-00       A321     V2533-A5        Asiana #2      41,297.25     33     32         35      
49            Oct-00       A321     V2527-A5        TBD            41,798.33     33     32         35      
50            Nov-00       A321     V2527-A5        TBD            41,825.65     33     32         35      
51            Feb-00       A330-200 PW4168A         Austrian       57,961.50     24     41         35      
52            May-00       A330-200 CF6-80E1        Aer Lingus     57,757.50     22     43         35      
53            May-00       A330-200 Trent 772-60    TBD            57,774.50     38     34         28      
54            Nov-00       A330-200 PW4168A         TBD            57,774.50     24     41         35      
55            Apr-00       A340-300 CFM56-5C4       TBD            75,514.00     20     50         30      
</TABLE>



<TABLE>
<CAPTION>
(1)                                    (8)
                          ASSUMED NATIONAL PROPORTIONS
              
              
              ASSUMED
AIRCRAFT      BRITISH           ASSUMED FRENCH     ASSUMED GERMAN
NO.           LENDERS'          LENDERS'           LENDERS'
              PROPORTION        PROPORTION         PROPORTION
<S>            <C>              <C>                <C>         
37             4,968,419.40     14,077,188.30        8,556,722.30
38             4,968,419.40     14,077,188.30        8,556,722.30
39             4,825,620.00     13,672,590.00        8,310,790.00
40            11,558,640.00     11,558,640.00       13,003,470.00
41            11,558,640.00     11,558,640.00       13,003,470.00
42             6,975,100.00     17,088,995.00       10,811,405.00
43             6,975,100.00     17,088,995.00       10,811,405.00
44             6,975,100.00     17,088,995.00       10,811,405.00
45             5,126,009.40     14,523,693.30        8,828,127.30
46            13,198,458.90     12,798,505.60       13,998,365.50
47            13,628,092.50     13,215,120.00       14,454,037.50
48            13,628,092.50     13,215,120.00       14,454,037.50
49            13,793,448.90     13,375,465.60       14,629,415.50
50            13,802,464.50     13,384,208.00       14,638,977.50
51            13,910,760.00     23,764,215.00       20,286,525.00
52            12,706,650.00     24,835,725.00       20,215,125.00
53            21,954,310.00     19,643,330.00       16,176,860.00
54            13,865,880.00     23,687,545.00       20,221,075.00
55            15,102,800.00     37,757,000.00       22,654,200.00
</TABLE>




                                    - 149 -



<PAGE>   153


<TABLE>
<CAPTION>
(1)           (2)          (3)      (4)             (5)            (6)                  (7)               
                                                                                                          
                                                                                        NATIONAL
                                                                   ASSUMED              CONTENT
              SCHEDULED                             PROPOSED       FINANCED             (ASSUMED          
AIRCRAFT      DELIVERY              ENGINE          INITIAL        AMOUNT               %)                
NO.           MONTH        TYPE     TYPE            LESSEE         (MILLIONS)    UK     FRANCE     GERMANY
<S>           <C>          <C>      <C>             <C>            <C>           <C>    <C>        <C>    
56            Jan-01       A319-100 CFM56-5B5       Iberia         27,746.13     18     51         31     
57            Mar-01       A319     CFM56-5B5       Iberia         27,746.13     18     51         31     
58            Mar-01       A319-100 CFM56-5B5       Iberia         27,746.13     18     51         31     
59            May-01       A319-100 CFM56-5B5       Iberia         27,047.00     18     51         31     
60            Sep-01       A319-100 CFM56-5B5       Iberia         27,055.50     18     51         31     
61            Feb-01       A320     V2527-A5        BMA #4         34,680.00     32     32         36     
62            Feb-01       A320     CFM56-5B4       Iberia         34,680.00     20     49         31     
63            Mar-01       A320-200 V2527-A5        TBD            34,680.00     32     32         36     
64            Mar-01       A320     V2527-A5        BMA #5         34,680.00     32     32         36     
65            Mar-01       A320-200 V2527-A5        BMA #6         34,680.00     32     32         36     
66            May-01       A320     CFM56-5B4       Iberia         32,529.50     20     49         31     
67            Feb-01       A321     V2533-A5        Aerolloyd #6   41,565.00     33     32         35     
68            Apr-01       A321     V2533-A5        Aerolloyd opt  40,564.83     33     32         35     
69            Apr-01       A321-200 V2527-A5        TBD            40,564.83     33     32         35     
70            Apr-01       A330-200 PW4168A         TBD            58,352.50     24     41         35     
71            May-01       A330-200 CF6-80E1        TBD            58,352.50     22     43         35     
72            Sep-01       A330-200 Trent 772-60    Star Airlines  58,522.50     38     34         28     
73            Nov-01       A330-200 PW4168A         Star Airlines  58,718.00     24     41         35     
</TABLE>



<TABLE>
<CAPTION>
(1)                                    (8)
                          ASSUMED NATIONAL PROPORTIONS
              
              
              ASSUMED
AIRCRAFT      BRITISH           ASSUMED FRENCH     ASSUMED GERMAN
NO.           LENDERS'          LENDERS'           LENDERS'
              PROPORTION        PROPORTION         PROPORTION
<S>            <C>              <C>                <C>         
56             4,994,303.40     14,150,526.30        8,601,300.30
57             4,994,303.40     14,150,526.30        8,601,300.30
58             4,994,303.40     14,150,526.30        8,601,300.30
59             4,868,460.00     13,793,970.00        8,384,570.00
60             4,869,990.00     13,798,305.00        8,387,205.00
61            11,097,600.00     11,097,600.00       12,484,800.00
62             6,936,000.00     16,993,200.00       10,750,800.00
63            11,097,600.00     11,097,600.00       12,484,800.00
64            11,097,600.00     11,097,600.00       12,484,800.00
65            11,097,600.00     11,097,600.00       12,484,800.00
66             6,505,900.00     15,939,455.00       10,084,145.00
67            13,716,450.00     13,300,800.00       14,547,750.00
68            13,386,393.90     12,980,745.60       14,197,690.50
69            13,386,393.90     12,980,745.60       14,197,690.50
70            14,004,600.00     23,924,525.00       20,423,375.00
71            12,837,550.00     25,091,575.00       20,423,375.00
72            22,238,550.00     19,897,650.00       16,386,300.00
73            14,092,320.00     24,074,380.00       20,551,300.00
</TABLE>



                                    - 150 -
<PAGE>   154


<TABLE>
<CAPTION>
(1)           (2)          (3)      (4)             (5)            (6)                  (7)               
                                                                                                          
                                                                                        NATIONAL
                                                                   ASSUMED              CONTENT
              SCHEDULED                             PROPOSED       FINANCED             (ASSUMED          
AIRCRAFT      DELIVERY              ENGINE          INITIAL        AMOUNT               %)                
NO.           MONTH        TYPE     TYPE            LESSEE         (MILLIONS)    UK     FRANCE     GERMANY
<S>           <C>          <C>      <C>             <C>            <C>           <C>    <C>        <C>    
74            Apr-01       A340-300 CFM56-5C4       TBD            78,387.00     20     50         30     
75            May-01       A340     CFM56-5C4       TBD            78,387.00     20     50         30     

                                                                   3,169,705,530
</TABLE>



<TABLE>
<CAPTION>
(1)                                     (8)
                           ASSUMED NATIONAL PROPORTIONS
              
              
               ASSUMED
AIRCRAFT       BRITISH           ASSUMED FRENCH     ASSUMED GERMAN
NO.            LENDERS'          LENDERS'           LENDERS'
               PROPORTION        PROPORTION         PROPORTION
<S>             <C>              <C>                <C>         
74             15,677,400.00     39,193,500.00       23,516,100.00
75             15,677,400.00     39,193,500.00       23,516,100.00

               807,161,405.70   1,318,436,938.60  1,044,107,185.70
</TABLE>


NOTE: 1. "*" denotes potential or unconfirmed lessee. ILFC may at its
         discretion, change the identity of the initial lessees and the engine
         type.

NOTE: 2. Aircraft No. and other information may be changed in accordance with
         the definition of Eligible Aircraft.

NOTE: 3. Scheduled Delivery months may be changed.

NOTE: 4. Assumed Financed Amount for each Aircraft is for indicative purposes
         only and is subject to adjustment.



                                    - 151 -



<PAGE>   155




                              SCHEDULE 4 : PART II
          INTERNATIONAL LEASE FINANCE CORPORATION SAMPLE LOAN PROFILES
                        AS A PERCENTAGE OF AIRCRAFT COST
                 FOR AIRBUS A319/A320/A321/A330/A340 DELIVERIES

                           PURCHASE PRICE 120,000,000
         (LASU RATE _____% PER ANNUM CALCULATED ON ACTUAL/360 DAY BASIS)

<TABLE>
<CAPTION>
        (1)                          (2)                    (3)                     (4)                     (5)
REPAYMENT DATE NUMBER           TRANCHE A ECA          TRANCHE B ECA            TOTAL LOAN          ADVANCE OUTSTANDING
(SEMI-ANNUAL REPAYMENTS)                                                                                    (%)
DELIVERY DATE                  
<S>                             <C>                     <C>                   <C>                    <C>
2nd January 1999                75,000,000.00           27,000,000.00         102,000,000.00                85.00
1st July 1999                   71,250,000.00           25,650,000.00          96,900,000.00                80.75
2nd January 2000                67,500,000.00           24,300,000.00          91,800,000.00                76.50
1st July 2000                   63,750,000.00           22,950,000.00          86,700,000.00                72.25
2nd January 2001                60,000,000.00           21,600,000.00          81,600,000.00                68.00
1st July 2001                   56,250,000.00           20,250,000.00          76,500,000.00                63.75
2nd January 2002                52,500,000.00           18,900,000.00          71,400,000.00                59.50
1st July 2002                   48,750,000.00           17,550,000.00          66,300,000.00                55.25
2nd January 2003                45,000,000.00           16,200,000.00          61,200,000.00                51.00
1st July 2003                   41,250,000.00           14,850,000.00          56,100,000.00                46.75
2nd January 2004                37,500,000.00           13,500,000.00          51,000,000.00                42.50
1st July 2004                   33,750,000.00           12,150,000.00          45,900,000.00                38.25
2nd January 2005                30,000,000.00           10,800,000.00          40,800,000.00                34.00
1st July 2005                   26,250,000.00            9,450,000.00          35,700,000.00                29.75
2nd January 2006                22,500,000.00            8,100,000.00          30,600,000.00                25.50
1st July 2006                   18,750,000.00            6,750,000.00          25,500,000.00                21.25
2nd January 2007                15,000,000.00            5,400,000.00          20,400,000.00                17.00
1st July 2007                   11,250,000.00            4,050,000.00          15,300,000.00                12.75
2nd January 2008                 7,500,000.00            2,700,000.00          10,200,000.00                 8.50
1st July 2008                    3,750,000.00            1,350,000.00           5,100,000.00                 4.25
2nd January 2009                         0.00                    0.00                   0.00                 0.00
</TABLE>



                                     - 152 -


<PAGE>   156



                                   SCHEDULE 5

                               GUARANTOR COVENANTS


1.      In this Schedule 5 each of the following words shall have the following
        meanings:-

        "FINANCIAL INDEBTEDNESS" of any Person means, and includes all
        obligations of such Person which in accordance with generally accepted
        accounting principles in the United States of America shall be
        classified upon a balance sheet of such Person as liabilities of such
        Person, and in any event shall include all:-

        (a)     obligations of such Person for borrowed money or which have been
                incurred in connection with the acquisition of property or
                assets (other than security and other deposits on flight
                equipment);

        (b)     obligations secured by any Lien or other charge upon property or
                assets owned by such Person, even though such Person has not
                assumed or become liable for the payment of such obligations;

        (c)     obligations created or arising under any conditional sale, or
                other title retention agreement with respect to property
                acquired by such Person, notwithstanding the fact that the
                rights and remedies of the seller, lender or lessor under such
                agreement in the event of default are limited to repossession or
                sale of property;

        (d)     obligations evidenced by bonds, debentures, notes or other
                similar instruments; and

        (e)     Guarantees by such Person to the extent required pursuant to the
                definition thereof,

        but:

        (i)     shall not include amounts which would otherwise be taken into
                account which are owed by the Guarantor to any of its
                Subsidiaries or by any Subsidiary of the Guarantor to the
                Guarantor or another Subsidiary of the Guarantor;

        (ii)    no amount shall be taken into account more than once in the same
                calculation;

        (iii)   shall not include any aircraft lease rentals received in
                advance;

        (iv)    shall not include any concessions received in advance from
                manufacturers;

        (v)     shall not include any amounts in respect of current or deferred
                Tax;

        "GUARANTEES" by any person means all obligations (other than
        endorsements in the ordinary course of business of negotiable
        instruments for deposit or collection) of such Person guaranteeing or in
        effect guaranteeing any Financial Indebtedness, dividend or other
        obligation of any other Person (the "primary obligor") in any manner,
        whether directly or indirectly, including, without limitation, all
        obligations incurred through an





<PAGE>   157


        agreement, contingent or otherwise, by such Person: (a) to purchase such
        Indebtedness or obligation or any property or assets constituting
        security therefor, (b) to advance or supply funds (i) for the purchase
        or payment of such Indebtedness or obligation or (ii) to maintain
        working capital or other balance sheet condition or otherwise to advance
        or make available funds for the purchase or payment of such Indebtedness
        or obligation, (c) to lease property or to purchase securities or other
        property or services primarily for the purpose of assuring the owner of
        such Indebtedness or obligation of the primary obligor against loss in
        respect thereof; provided, however, that the obligation described in
        clause (c) shall not include (i) obligations of a buyer under an
        agreement with a seller to purchase goods or services entered into in
        the ordinary course of such buyer's and seller's business unless such
        agreement required that such buyer make payment whether or not delivery
        is ever made of such goods or services and (ii) agreements where the
        remaining debt on an aircraft does not exceed the aircraft's net book
        value, determined in accordance with industry standards, except that
        clause (c) shall apply to the amount of remaining debt that exceeds the
        net book value of the aircraft. For the purposes of all computations
        made under this Guarantee, a Guarantee in respect of any Financial
        Indebtedness for borrowed money shall be deemed to be Financial
        Indebtedness equal to the principal amount of such Financial
        Indebtedness for borrowed money which has been guaranteed, and a
        Guarantee in respect of any other obligation or liability or any
        dividend shall be deemed to be Financial Indebtedness equal to the
        maximum aggregate amount of such obligation, liability or dividend.

        "PERSON" means an individual or a corporation, partnership, trust,
        incorporated or unincorporated association, joint venture, joint stock
        company, government (or an agency or political subdivision thereof) or
        other entity of any kind;

        "RELATED PARTY" means any Person (other than a Subsidiary):-

        (i)     which directly or indirectly through one or more intermediaries
                controls, or is controlled by, or is under common control with,
                the Guarantor;

        (ii)    which beneficially owns or holds five per cent. (5%) or more of
                the equity interest of the Guarantor; or

        (iii)   twenty per cent. (20%) or more of the equity interest of which
                is beneficially owned or held by the Guarantor or a Subsidiary.

        The term "control" means, for the purposes of the above definition, the
        possession, directly or indirectly, of the power to direct or cause the
        direction of the management and policies of a Person, whether through
        the ownership of voting securities, by contract or otherwise;


2.      The Guarantor hereby undertakes and covenants with the Agent, the
        Security Trustee, and each of the Lenders separately and severally that
        from the date of this Agreement and until all Guaranteed Obligations
        then payable have been paid in full:-

2.1     the Guarantor shall furnish to the Security Trustee sufficient copies
        for each Lender (which the Security Trustee shall promptly furnish to
        each Lender):-



<PAGE>   158



        (a)     as soon as available, and in any event within ninety-five (95)
                days after the end of each fiscal year of the Guarantor, a copy
                of the audited financial statements and annual audit report of
                the Guarantor and its Subsidiaries for such fiscal year
                beginning with the year ending December 31 1998 prepared on a
                consolidated basis and in conformity with generally accepted
                accounting principles in the United States of America and
                certified by Price Waterhouse Coopers LLP or by another
                independent United States of America certified public accountant
                of recognised national standing in the United States of America
                selected by the Guarantor;

        (b)     as soon as available, and in any event within fifty (50) days
                after the end of each quarter (except the last quarter) of each
                fiscal year of the Guarantor, a copy of the unaudited financial
                statements of the Guarantor and its Subsidiaries for such
                quarter prepared in a manner consistent with the audited
                financial statements referred to in Paragraph 2.1(a) signed by
                the Guarantor's chief financial officer and consisting of at
                least a balance sheet as at the close of such quarter and
                statements of earnings and cash flows for such quarter and for
                the period from the beginning of such fiscal year to the close
                of such quarter;

        (c)     contemporaneously with the furnishing of a copy of each annual
                audit report and of each set of quarterly statements provided
                for in this Paragraph 2.1, a certificate of the Guarantor dated
                the date of such annual report or such quarterly statements and
                signed by the Guarantor's chief financial officer or treasurer,
                to the effect that no Termination Event or Relevant Event has
                occurred and is continuing, or, if there is any such event,
                describing it and the steps, if any, being taken to cure it and
                as to the long term debt rating of the Guarantor as rated by
                Standard & Poor's Corporation and by Moody's Investor Service,
                Inc. or by an alternative service of equivalent recognition (if
                neither Standard & Poor's Corporation nor Moody's Investor
                Service, Inc. has assigned any rating);

        (d)     promptly after the filing or making thereof, copies of all 8-K's
                (other than 8-K's relating solely to the issuance by the
                Guarantor of securities pursuant to an effective registration
                statement), 10-Q's, 10-K's, and other material reports or
                registration statements filed by the Guarantor with or to any
                securities exchange or the Securities and Exchange Commission;

        (e)     from time to time such other information concerning the
                Guarantor as the Agent or the Security Trustee may reasonably
                request;

2.2     promptly after learning of the occurrence of any Termination Event or a
        First Trigger Event, Second Trigger Event or Third Trigger Event, the
        Guarantor shall furnish to the Security Trustee written notice thereof,
        describing the same and the steps being taken by the Guarantor affected
        with respect thereto;

2.3     subject to Paragraph 2.8 the Guarantor will maintain and preserve its
        existence as a corporation or other form of business organisation;

2.4     the Guarantor will engage in substantially the same fields of business
        as it is engaged in on the date hereof;





<PAGE>   159



2.5     the Guarantor will maintain complete and accurate books and records in
        which full and correct entries in conformity with generally accepted
        accounting principles in the United States of America shall be made of
        all dealings and transactions in relation to its respective business and
        activities;

2.6     the Guarantor will not declare or pay any dividends whatsoever or make
        any distribution on any capital stock of the Guarantor (except in shares
        of, or warrants or rights to subscribe for or purchase shares of,
        capital stock of the Guarantor), and not, and not permit any Subsidiary
        to, make any payment to acquire or retire shares of capital stock of the
        Guarantor, at any time when a Termination Event has occurred and is
        continuing provided, however, that notwithstanding the foregoing, this
        Paragraph 2.6 shall not prohibit the payment of dividends on any of the
        Guarantor's money market preferred stock that was sold to the public
        pursuant to an effective registration statement under the United States
        of America Securities Act of 1933 or the payment of dividends within 30
        days of the declaration thereof if such declaration was not prohibited
        by this Section 2.6;

2.7     the Guarantor will not enter into or be a party to any transaction or
        arrangement, including, without limitation, the purchase, sale, lease or
        exchange of property or the rendering of any service, with any Related
        Party, except in the ordinary course of and pursuant to the reasonable
        requirements of the Guarantor's business and upon fair and reasonable
        terms no less favourable to the Guarantor than would be obtained in a
        comparable arm's length transaction with a Person not a Related Party;

2.8     in the event that the Guarantor is a party to any merger or
        consolidation then the successor person, if other than the Guarantor,
        shall assume all of the Guaranteed Obligations.




<PAGE>   160



                                   SCHEDULE 6

              CONDITIONS PRECEDENT AND SUBSEQUENT TO A UTILISATION

                                     PART I


        CONDITIONS PRECEDENT TO EACH UTILISATION

        The obligations of each of the Lenders and the Representatives, under
        this Agreement with respect to each Utilisation shall be subject to the
        following conditions precedent having been fulfilled to the satisfaction
        of, or waived in writing by, the Agent:-

        1.      (A)     no Cancellation Notice shall have been served and still
                        be in effect and no Relevant Event or Termination Event
                        shall have occurred which is continuing on the relevant
                        Utilisation Date; and

                (B)     all representations and warranties made (or deemed
                        repeated) by or on behalf of the Borrower and each other
                        Obligor in Clause 6 (Representations and Warranties) and
                        paragraph 2 of the relevant Accession Deed on the
                        Utilisation Date shall be true and accurate in the light
                        of the circumstances and with reference to the facts
                        existing on the Utilisation Date (except to the extent
                        that the representation in Clause 6.1(l) specifically
                        relates to an earlier date).

        2.      three (3) Business Days prior to the Utilisation Date, or such
                lesser period as the Agent shall have agreed in writing, the
                Agent shall have received:

                (A)     duly executed originals of all previously undelivered
                        Aircraft Operative Documents to which the Agent and the
                        applicable Obligor is to be a party (other than those
                        referred to in Part II of this Schedule 6) comprising
                        the following documents for the relevant Aircraft:

                        (a)     the Partial Purchase Agreement Assignment;

                        (b)     the BFE Bill of Sale;

                        (c)     a certified copy of the Lease (if available);

                        (d)     a certified copy of the assignment of the Lease
                                to the Borrower or the Relevant Sub-Borrower (as
                                the case may be);

                        (e)     the Assignment of General Terms Agreement Re
                                Engine Warranties or as the case may be the RR
                                Engine Warranty Agreement;

                        (f)     if applicable, Assignment of Warranty and
                                Support Rights (Airframe) between the Guarantor
                                and the Lessee;




<PAGE>   161



                        (g)     if applicable, Assignment Agreement (Assignment
                                of Rights (Engines)) between the Guarantor, the
                                Lessee and the relevant Engine Manufacturer;

                        (h)     the Loan Supplement;

                        (i)     the Mortgage (or alternative security
                                satisfactory to the Security Trustee acting upon
                                the instructions of the Majority Lenders);

                        (j)     the Sub-Borrower Debenture (if applicable);

                        (k)     Charge Over Shares of Sub-Borrower (if
                                applicable);

                        (l)     Sub-Borrower Guarantee (if applicable);

                        (m)     Lease Security Assignment (if a Third Trigger
                                Event shall have occurred and be continuing);

                        (n)     Accession Deed (if applicable).

                        (o)     Intermediate Lessee Debenture (if applicable);

                        (p)     Charge Over Shares of Intermediate Lessee (if
                                applicable);

                        (q)     Intermediate Lease Security Assignment (if a
                                Third Trigger Event shall have occurred and be
                                continuing) (if applicable);

                        (r)     Intermediate Lease (if applicable);

                        (s)     Bill of Sale;

                        (t)     Notice of Charge;

                        (u)     the definitive drafts of legal opinions referred
                                to in Clause 3.1.4(c) and (d) (Utilisation
                                Notices), if applicable;

                (B)     payment instructions relating to payments to be made on
                        the Delivery Date under the Aircraft Operative
                        Documents;

                (C)     with respect to such Utilisation, the Support Agreements
                        or the requisite approval of each of ECGD, COFACE and
                        HERMES in lieu of and/or as a precursor to the issue of
                        the relevant Support Agreement;

        3.      on or before the first Utilisation the Agent shall have
                received:





<PAGE>   162



                (a)     a legal opinion from Appleby, Spurling & Kempe, Bermudan
                        counsel to the Lenders;

                (b)     a legal opinion from Buchalter Nemer, Fields & Younger,
                        Californian counsel to the Lenders;

                (c)     a legal opinion from Paul, Hastings, Janofsky & Walker
                        LLP regarding the Guarantor's corporate authority to
                        enter into the Facility Agreement and its due
                        authorisation thereof, and to other matters applicable
                        to the Guarantor or the Parent, from in-house counsel to
                        the Guarantor;

                (d)     a legal opinion from Wilde Sapte, English counsel to the
                        Lenders;

                it being understood that after the occurrence and continuation
                of a Second Trigger Event, the Agent shall be entitled to
                request receipt of such other legal opinions as it in its good
                faith considers appropriate and the reissue of any other Master
                Opinion in addition to the Master Opinions and any "bring-down"
                opinions referred to in Clause 7.1(s) (General Covenants of
                Borrower, Sub-Borrower and Intermediate Lessee) and from counsel
                in the state of registration of the Aircraft;

        4.      on or before each Utilisation in respect of which a Sub-Borrower
                and/or Intermediate Lessee is incorporated in the structure and
                in either or both cases has not previously acceded to the
                Agreement, the Agent shall have received an opinion from legal
                counsel to the Lenders in the jurisdiction of organisation of
                such Sub-Borrower and/or Intermediate Lessee (being a legal
                opinion from Maples & Calder, if the Cayman Islands is the
                relevant jurisdiction or a legal opinion from A&L Goodbody, if
                Ireland is the relevant jurisdiction) regarding the due
                execution and validity of the Accession Deed, of the relevant
                Aircraft Security Documents and of other documents as the
                Representatives may have required pursuant to Clause 3.3.3(b)
                (Sub-Borrowers/Intermediate Lessees).




<PAGE>   163



              CONDITIONS PRECEDENT AND SUBSEQUENT TO A UTILISATION

                                     PART II

                          FURTHER CONDITIONS PRECEDENT


In addition, the Agent shall have received on or before the Utilisation Date all
of the following:-

1.      if applicable, evidence of registration of the Aircraft with the
        applicable Aviation Authority;

2.      a certificate of the insurance broker in respect of the Insurances
        together with a broker's letter of undertaking (if any) and any
        certificate of reinsurance and reinsurance broker's letter of
        undertaking (if any) in form and substance acceptable to the Security
        Trustee;

3.      evidence satisfactory to the Agent that the bills of sale/confirmation
        of transfer by delivery of possession relating to the transfer of title
        to the Aircraft and the installed Buyer Furnished Equipment will be
        delivered by the Seller to the Borrower;

4.      a commercial invoice for the Aircraft (including the installed Buyer
        Furnished Equipment) issued by the Seller specifying the net final
        contract price as described in the relevant Purchase Agreement in
        relation to the Aircraft;

5.      duly executed originals of all of the notices to the Partial Purchase
        Agreement Assignment, the Assignment of General Terms Agreement re
        Engine Warranties, the Mortgage, and duly executed originals of the
        notices to the relevant Sub-Borrower Debenture or the Borrower
        Debenture;

6.      duly executed originals or, as the case may be, certified copies of the
        documents ancillary to any Charge Over Shares entered into in connection
        with the delivery of the Aircraft being certified copies of the
        memorandum of association and bye-laws and the share register (if any)
        of the relevant Sub-Borrower or Intermediate Lessee and the originals of
        the letters of resignation, irrevocable proxy and undated Share Transfer
        forms referred to in such Charge over Shares;

7.      in form and substance satisfactory to the Agent certified copies of all
        consents, authorisations, approvals, filings and registrations (if any)
        of or with any governmental or other competent agency or authority
        (including in relation to exchange control) which any of the legal
        opinions referred to in paragraph 2 of Part I of this Schedule 6 provide
        are required to be obtained or made by any party to the Aircraft
        Operative Documents in connection with the execution, delivery and
        performance of the Aircraft Operative Documents or any documents
        contemplated thereby but subject to the parenthetical proviso in Clause
        7.1(f) (General Covenants of Borrower, Sub-Borrower and Intermediate
        Lessee) and except for those which it is not customary practice in the
        applicable jurisdiction to make or obtain at such time;

8.      copies of all documents (not otherwise required under this annex) as are
        conditions precedent to such Utilisation under any Aircraft Operative
        Document;



<PAGE>   164


 9.     evidence of the Consent and Agreement of the Seller and the Engine
        Manufacturer to the provisions of the warranty assignments pursuant to
        the Partial Purchase Agreement Assignment, the Assignment of General
        Terms Agreement re Engine Warranties and the Mortgage and (where
        appropriate) the service of such documents upon the Seller by huissiers
        de justice in accordance with the provisions of Article 1690 of the
        French Civil Code;

10.     a certified copy of the bill of sale issued by the Guarantor in favour
        of the Seller and relating to the Buyer Furnished Equipment and having
        attached thereto a Schedule describing the nature, the quantity, the
        vendor and the part number of the individual items which comprise the
        Buyer Furnished Equipment;

11.     written confirmation from the Guarantor addressed to the Agent that the
        Buyer Furnished Equipment (excluding that relating to Post-Delivery
        Modifications) has been installed on the Aircraft;

12.     a certificate from the Manufacturer addressed to the Agent confirming
        that the Buyer Furnished Equipment (excluding that relating to
        Post-Delivery Modifications) has been installed on the Aircraft as at
        the Delivery Date in form and substance satisfactory to the Export
        Credit Agencies;

13.     an undertaking from the Guarantor addressed to the Agent that (i) the
        Buyer Furnished Equipment as is scheduled for installation within 180
        days of the Delivery Date will be installed by the end of the
        Post-Delivery Modification Period or that the applicable portion of the
        relevant Loan will be prepaid as required under the Facility Agreement,
        and (ii) it will provide to the Agent a list of the Buyer Furnished
        Equipment installed on the Aircraft (after completion, if applicable, of
        Post-Delivery Modifications) specifying each item's stated country of
        origin as soon as practicable after the Delivery Date;

14.     in the circumstances where the provisions of Clause 3.6.4 (Repayment
        Schedules) apply, substitute schedules to replace schedule 2 to the Loan
        Supplement duly signed for and on behalf of the Borrower and the
        relevant Lessee;

15.     if a Sub-Borrower or an Intermediate Lessee, which has not previously
        acceded to the Transaction Documents, has been incorporated into the
        structure, evidence that the Sub-Borrower Accounts and/or the
        Intermediate Lessee Accounts have been opened and that ten Dollars has
        been deposited in each such Sub-Borrower Account or each such
        Intermediate Lessee Account (as the case may be);

16.     a letter from the relevant Engine Manufacturer to the Agent setting out
        the credit memoranda deductible from the purchase price of the Aircraft
        in respect of the relevant Engines;

17.     evidence satisfactory to it that no proceedings for insolvency of, and
        no petition for winding-up or liquidating, the Borrower, the relevant
        Sub-Borrower or the relevant Intermediate Lessee (as the case may be)
        has been instituted or filed as at the Utilisation Date in a corporate
        or similar register against the Borrower, the relevant Sub-Borrower or
        the relevant Intermediate Lessee (as the case may be) as at the
        Utilisation Date;

18.     with respect to any previous Utilisation (having an analogous structure
        and/or the same jurisdiction as the proposed Utilisation) as to which
        the provisions of Clause 14.3.2 





<PAGE>   165


        (Illegality) have applied, evidence that all mitigating action has been
        completed or the affected Loan has been prepaid pursuant to Clause 14.3
        (Illegality) and that relevant Master Opinions in form and substance
        satisfactory to the Agent have been reissued for the proposed
        Utilisation;




<PAGE>   166



              CONDITIONS PRECEDENT AND SUBSEQUENT TO A UTILISATION

                                    PART III

                     CONDITIONS SUBSEQUENT TO A UTILISATION


It shall be a condition subsequent to each Advance that:-

        (A)     (a)     the Borrower shall within sixty (60) days after delivery
                        and title transfer of the relevant Aircraft from the
                        Seller to the Borrower or the relevant Sub-Borrower (or
                        following the occurrence and continuation of a Second
                        Trigger Event within seven (7) days after such delivery
                        and title transfer) locate the Aircraft (including the
                        Engines) at the time the Mortgage is to come into
                        effect, (i) in England and Wales or Hong Kong or (ii) in
                        United Kingdom or Hong Kong airspace or (iii) in such
                        other location in respect of which the Agent is able to
                        obtain a satisfactory legal opinion of counsel to the
                        Lenders in the jurisdiction of such other location of
                        the Aircraft (including the Engines) that, under the
                        relevant conflicts of laws rules, the Mortgage will be
                        recognised as a valid and binding Mortgage governed by
                        English law, and shall provide within such sixty (60)
                        day period or, as the case may be, seven (7) day period,
                        evidence satisfactory to the Agent that the Aircraft
                        (including the Engines) has been located in one of the
                        three applicable locations; and

                (b)     with respect to a substitution of a Replacement
                        Aircraft, the Borrower or any Sub-Borrower (as the case
                        may be) shall within sixty (60) days after title to the
                        Replacement Aircraft has transferred to the Borrower or
                        the relevant Sub-Borrower (as the case may be) pursuant
                        to Clause 4.7 (Substitution of Aircraft) (or following
                        the occurrence and continuation of a Second Trigger
                        Event within seven (7) days after such delivery and
                        title transfer) locate the Replacement Aircraft
                        (including the Engines) at the time the Mortgage is to
                        come into effect, (i) in England and Wales or Hong Kong
                        or (ii) in United Kingdom or Hong Kong airspace or (iii)
                        in such other location in respect of which the Agent is
                        able to obtain a satisfactory legal opinion of counsel
                        to the Lenders in the jurisdiction of such other
                        location of the Replacement Aircraft (including the
                        Engines) that, under the relevant conflicts of laws
                        rules, the Mortgage will be recognised as a valid and
                        binding Mortgage governed by English law, and shall
                        provide within such sixty (60) day period or, as the
                        case may be, seven (7) day period, evidence satisfactory
                        to the Agent that the Replacement Aircraft (including
                        the Engines) has been located in one of the three
                        applicable locations;

                it being understood, in so far as the Borrower is concerned,
                that failure to fulfil the condition subsequent in sub-paragraph
                (a) or (b) above in respect of a 



<PAGE>   167


                particular Loan shall constitute a mandatory prepayment event in
                accordance with Clause 4.10.1 (Mandatory Prepayment Event); and

                it being understood, in so far as the Lender and the Agent are
                concerned, that:-

                (i)     the Agent shall inform the Lead Managers if and when
                        each (if applicable) condition subsequent is fulfilled;
                        and

                (ii)    within such sixty (60) day period, the Agent shall seek,
                        if applicable, the legal opinion of counsel to the
                        Lenders referred to in sub-paragraph (a)(iii) above or
                        sub-paragraph (b) above within such sixty (60) day
                        period and, at the Expense of the Borrower, shall seek a
                        confirmation from its legal counsel in the jurisdiction
                        in which the Borrower or the relevant Sub-Borrower (as
                        the case may be) is organised as to the recording,
                        filing, registration and perfection of the Mortgage (to
                        the extent permitted under applicable law) in that
                        jurisdiction of the Mortgage;

        (B)     the Borrower shall use all reasonable endeavours to cause the
                Seller to provide to the Security Trustee within thirty (30)
                days after delivery and title transfer of the relevant Aircraft
                from the Seller to the Borrower or the relevant Sub-Borrower (as
                the case may be):-

                (a)     a legal opinion from in-house counsel to the Seller (in
                        relation to its consent and agreement to the Partial
                        Purchase Agreement Assignment and to Mortgage
                        respectively) in form and content satisfactory to the
                        Agent; and

                (b)     a legal opinion from in-house counsel to the relevant
                        Engine Manufacturer (in relation to its consent and
                        agreement to the Assignment of General Terms Agreement
                        Re Engine Warranties and to Mortgage respectively) in
                        form and content satisfactory to the Agent,

                and the Agent shall inform the Lead Managers of the receipt of
                such legal opinions promptly after its receipt.




<PAGE>   168



                                   SCHEDULE 7

                             ENGLISH PROCESS AGENTS


Societe Generale                      Societe Generale
                                      60 Gracechurch Street
                                      London EC3V 0HD

Commerzbank AG                        Commerzbank AG, London Branch
                                      Commerzbank House
                                      23 Austin Friars
                                      London EC2N 2EN

Bayerishe Hypo-und Vereinsbank AG     HypoVereinsbank, London Branch
                                      41 Moorgate
                                      London EC2R 6PP

Kreditanstalt fur Wiederaufbau        Wilde Sapte
                                      1 Fleet Place
                                      London EC4M 7WS
                                      Attention: Managing Partner

Borrower:                             Paul, Hastings, Janofsky & Walker LLP
                                      International Financial Centre
                                      Old Broad Street
                                      London EC2N 1HQ


Parent:                               Paul, Hastings, Janofsky & Walker LLP
                                      International Financial Centre
                                      Old Broad Street
                                      London EC2N 1HQ


Guarantor:                            Paul, Hastings, Janofsky & Walker LLP
                                      International Financial Centre
                                      Old Broad Street
                                      London EC2N 1HQ


Subordinated Lender                   Paul, Hastings, Janofsky & Walker LLP
                                      International Financial Centre
                                      Old Broad Street
                                      London EC2N 1HQ





<PAGE>   169



                                   SCHEDULE 8

                                   INSURANCE


1.      OBLIGATION TO INSURE

        Throughout the Security Period the Borrower or Sub-Borrower will ensure
        that there is effected and maintained appropriate insurances in respect
        of each Aircraft and its operation including insurance for:

        (a)     loss or damage to each part of the Aircraft; and

        (b)     any liability for injury to or death of persons and damage to or
                the destruction of public or private property arising out of or
                in connection with the operation, storage, maintenance or use of
                (in each case to the extent available) the Aircraft and of any
                other part thereof not belonging to the Borrower or Sub-Borrower
                but from time to time installed on the airframe.

2.      SPECIFIC INSURANCES

        The Borrower or Sub-Borrower will maintain or will cause to be
        maintained the following specific insurances with respect to each
        Aircraft (subject to paragraph 3)):

        (a)     All Risks Hull Insurance - All risks hull insurance policy on
                the Aircraft in an amount at least equal to 110% of the
                outstanding principal under the Loan (the "Required Insured
                Value") on an agreed value basis and naming the Security Trustee
                as a "Contract Party" and loss payee for the Required Insured
                Value (provided, however, that to the extent it is possible
                under AVN67B or its then equivalent only to name the Security
                Trustee as a "Contract Party" or one of the "Contract Parties"
                the Lessee will only be required to do so);

        (b)     Hull War Risk Insurance -Hull war risk and allied perils
                insurance, including hijacking, on the Aircraft where the custom
                in the industry is to carry war risk for aircraft operating on
                routes or kept in locations similar to the Aircraft in an amount
                not less than the Required Insured Value on an agreed value
                basis and naming the Security Trustee as a loss payee for the
                Required Insured Value (provided, however, that to the extent it
                is possible under AVN67B or its then equivalent only to name the
                Security Trustee as a "Contract Party" or one of the "Contract
                Parties", the Lessee will only be required to do so);

        (c)     Legal Liability Insurance - Third party legal liability
                insurance for a combined single limit (bodily injured and
                property damage) of not less than $300,000,000 for a
                narrow-bodied aircraft and not less than $500,000,000 for
                wide-bodied aircraft. The Security Trustee on behalf of the
                Agent and the Lenders shall be named as additional insureds on
                such policies.

        (d)     Aircraft Spares Insurance - Insurance for the engines and the
                parts while not installed on the Airframe for their replacement
                cost or an agreed value basis.




<PAGE>   170


3.      VARIATIONS ON SPECIFIC INSURANCE REQUIREMENTS

        In certain circumstances, it is customary that not all of the insurances
        described in paragraph 2 be carried for the Aircraft. For example, when
        an Aircraft is not on lease to a passenger air carrier or is in storage
        or is being repaired or maintained, ferry or ground rather than
        passenger flight coverages for the Aircraft are applicable. Similarly,
        when an Aircraft is being utilised by a Government Entity (as defined in
        each Lease with a Lessee), indemnities may be provided by the Government
        Entity in lieu of particular insurances. The Borrower or Sub-Borrower
        will determine the necessary coverages for the Aircraft in such
        situations consistent with the manner in which the Borrower or
        Sub-Borrower or the Guarantor or the Guarantor's Subsidiaries or
        affiliates does so with respect to its other aircraft.

4.      HULL INSURANCES IN EXCESS OF REQUIRED INSURANCE VALUE

        For the avoidance of doubt, the Borrower or Sub-Borrower and/or Lessee
        may carry hull risks and hull war and allied perils insurance on the
        Aircraft in excess of the Required Insured Value which will not be
        payable to the Security Trustee. Such excess insurances will be payable
        to the Borrower or Sub-Borrower or the Lessee, as the case may be.

5.      CURRENCY

        All insurance and reinsurances effected pursuant to this Schedule 8
        shall be payable in Dollars, save that in the case of the insurances
        referred to in paragraph 2(c) if such denomination is (a) required by
        the law of the state of registration of the Aircraft; or (b) the normal
        practice of airlines in the relevant country that operate aircraft
        leased from lessors located outside such country; or (c) otherwise
        agreed by the Security Trustee.

6.      SPECIFIC TERMS OF INSURANCES

        Insurance policies which are underwritten in the London insurance market
        and which pertain to financed or leased aircraft equipment contain the
        coverage and endorsements described in AVN67B. The present form of
        AVN67B is set forth in an "Exhibit C" to each Lease. Each of the
        Borrower and the Sub-Borrower agrees that, throughout the Security
        Period, the Aircraft will be insured and the applicable insurance
        policies endorsed either (i) in a manner consistent with AVN67B, as it
        may be amended or revised or its equivalent or (ii) as may then be
        customary in the airline industry for aircraft of the same type as the
        Aircraft utilised by operators in the same country and whose operational
        network for such Aircraft and credit status is similar to the type of
        business as the Lessee (if any) and at the time commonly available in
        the insurance market. In all cases, the Borrower or Sub-Borrower will
        set the standards, review and manage the insurances on the Aircraft
        consistent with the manner in which the Borrower or Sub-Borrower or its
        affiliates does so with respect to its other aircraft.

7.      INSURANCE BROKERS AND INSURERS

        In reviewing and accepting the insurance brokers (if any) and
        reinsurance brokers (if any) and insurers and reinsurers (if any)
        providing coverage with respect to the Aircraft, the Borrower or
        Sub-Borrower will utilise standards consistent with those applied by it
        or its affiliates with respect to its other aircraft. It is recognised
        that airlines in certain countries are required to utilise brokers (and
        sometimes even no brokers) or carry insurance with local insurance
        brokers and insurers. If at any time the Aircraft is not subject to a
        Lease or an Intermediate Lease the Borrower or Sub-Borrower will cause
        its insurance brokers to provide the Security 





<PAGE>   171



        Trustee with evidence that the insurances described in this Schedule 8
        are in full force and effect.

8.      DEDUCTIBLE AMOUNTS, SELF-INSURANCE AND REINSURANCE

        With respect to the type of aircraft concerned, the nationality and
        creditworthiness of the airline operator, the airline operator's use and
        operation thereof and to the scope of and the amount covered by the
        insurances carried by the Lessee, the Borrower or Sub-Borrower will
        apply standards consistent with those of its affiliates in reviewing and
        accepting the amount of any insurance deductibles, whether the Lessee
        may self-insure any of the risks covered by the insurances and the scope
        and terms of reinsurance, if any, including a cut-through and assignment
        clause.

9.      RENEWALS

        The Borrower or Sub-Borrower will monitor the insurances on the Aircraft
        and their expiration dates. The Borrower or the Sub-Borrower shall, when
        requested by the Security Trustee, promptly inform the Security Trustee
        as to whether or not, the Guarantor has been advised that renewal
        instructions for any of the insurances have been given by the airline
        operator or its broker prior to or on the scheduled expiry date of the
        relevant insurance. The Borrower or the Sub-Borrower shall promptly
        notify the Security Trustee in writing if it receives notice that any of
        the insurances have in fact expired without renewal. Promptly after
        receipt, the Borrower or Sub-Borrower will provide to the Security
        Trustee evidence of renewal of the insurances and reinsurance (if any).

10.     INFORMATION

        The Borrower or Sub-Borrower shall provide the Security Trustee or shall
        ensure that the Security Trustee is provided with any information
        reasonably requested by the Security Trustee from time to time
        concerning the insurances maintained with respect to the Aircraft or, if
        reasonably available to the Borrower or Sub-Borrower, in connection with
        any claim being made or proposed to be made thereunder.





<PAGE>   172



                                   SCHEDULE 9

              FORM OF CERTIFICATE TO BE GIVEN ON EACH QUARTER DATE


                            QUARTER DATE CERTIFICATE


To:     Halifax PLC as Agent

From:   International Lease Finance Corporation (ILFC) as Guarantor

                                            Date: [Insert relevant Quarter Date]

AIRCRAFT FACILITY AGREEMENT DATED 19TH JANUARY 1999 RELATING TO A TERM FACILITY
IN THE MAXIMUM PRINCIPAL AMOUNT OF US$4,327,260,000 FOR THE FINANCING OF
APPROXIMATELY SEVENTY FIVE (75) AIRBUS AIRCRAFT AND MADE BETWEEN (1) THE BANKS
AND FINANCIAL INSTITUTIONS NAMED THEREIN (AS LENDERS), (2) HALIFAX PLC (AS
AGENT), (3) HALIFAX PLC (AS SECURITY TRUSTEE), (4) SIERRA LEASING LIMITED (AS
BORROWER), (5) AIRCRAFT SPC-9, INC. (AS PARENT), (6) INTERNATIONAL LEASE FINANCE
CORPORATION (AS GUARANTOR) AND (7) INTERNATIONAL LEASE FINANCE CORPORATION (AS
SUBORDINATED LENDER) AS AMENDED, SUPPLEMENTED OR ACCEDED TO FROM TIME TO TIME
(THE "AGREEMENT")

1.      I, [__________] a duly authorised representative of ILFC hereby certify
        that as of the date hereof to the best of my knowledge, after due
        enquiry, [the long term debt rating of ILFC as rated by Standard &
        Poor's Corporation is [__________] and is [__________] as rated by
        Moody's Investor Service Inc.] [The long term debt rating by [a service
        of equivalent recognition] is [__________](1).

[2.     Further, I hereby certify that as of the date hereof to the best of my
        knowledge, after due enquiry, no Termination Event or Relevant Event (as
        each are defined in the Agreement) that has occurred and is continuing.]

[2.     A Termination Event or Relevant Event has occurred and is continuing and
        in accordance with the provisions of paragraph 2.1 (c) of Schedule 5 we
        give you notice that the following steps are being taken to cure the
        same:-. ](2)

Yours faithfully


[______________________________]
FOR AND ON BEHALF OF ILFC


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

(1)     Only use this option if no rating by Standard & Poor's and Moody's is
        available.

(2)     Delete as appropriate.




<PAGE>   173



                                   SCHEDULE 10

                               BLENDED LASU RATES


<TABLE>
<CAPTION>
(1)          (2)         (3)          (4)         (5)            (6)            (7)            (8)           (9)
             SCHEDULED                                           PROPOSED                      LASU RATE
AIRCRAFT     DELIVERY    PRODUCTION               ENGINE         INITIAL        LASU RATE      TRANCHE B     BLENDED LASU
NO.          MONTH       NO.          TYPE        TYPE           LESSEE         TRANCHE A          (1)       RATE
<S>          <C>         <C>          <C>         <C>            <C>            <C>            <C>           <C>   
1            Feb-99      4009         A319        CFM56-5A4      Air France     5.75%          5.76%         5.753%
2            Mar-99      4010         A319        CFM56-5B       TAP            5.75%          5.76%         5.753%
3            Apr-99      4011         A319        CFM56-5A4      Air France     5.75%          5.81%         5.766%
4            Apr-99      4119         A319        CFM58-5A4      Air France     5.75%          5.81%         5.766%
5            May-99      4012         A319        CFM56-5B       Swissair       5.75%          5.81%         5.766%
6            Jan-99      4077         A320        V2527-A5       Dragonair #5   5.75%          5.76%         5.753%
7            Mar-99      4079         A320        CFM56-5A3      TAP #4         5.75%          5.76%         5.753%
8            Apr-99      4080         A320        CFM56-5A3      Star Airlines  5.75%          5.81%         5.766%
9            May-99      4081         A320        CFM56-5B4      Iberia         5.75%          5.81%         5.766%
10           Oct-99      4082         A320        CFM56-5B4      Iberia         5.75%          5.87%         5.782%
11           Nov-99      4078         A320        V2527-A5       BMA #1         5.75%          5.87%         5.782%
12           Feb-99      4114         A321        V2533-A5       BMA #3         5.75%          5.76%         5.753%
13           Feb-99      4115         A321        V2533-A5       Aerolloyd #2   5.75%          5.76%         5.753%
14           Mar-99      4116         A321        V2533-A5       Dragonair #6   5.75%          5.76%         5.753%
15           Mar-99      4117         A321        CFM56-5B       Aer Lingus     5.75%          5.76%         5.753%
16           Mar-99      4123         A321        V2533-A5       BMA #4         5.75%          5.76%         5.753%
17           Apr-99      4118         A321        V2533-A5       Aerolloyd #3   5.75%          5.81%         5.766%
18           May-99      4121         A321        V2533-A5       Dragonair #7   5.75%          5.81%         5.766%
19           Jul-99      4120         A321        V2533-A5       Asiana #1      5.75%          5.81%         5.766%
20           Dec-99      4122         A321        CFM56-5B       Swissair       5.75%          5.87%         5.782%
21           Feb-99      6014         A330-200    Trent 772-60   Air Transat    5.75%          5.76%         5.753%
22           Apr-99      6015         A330-200    Trent 772-60   Air Transat    5.75%          5.81%         5.766%
23           Feb-99      6016         A330-200    PW4168A        Swissair #2    5.75%          5.76%         5.753%
24           Feb-99      6017         A330-200    PW4168A        Swissair #3    5.75%          5.76%         5.753%
</TABLE>



                                    - 170 -


<PAGE>   174


<TABLE>
<CAPTION>
(1)          (2)         (3)          (4)         (5)            (6)            (7)            (8)           (9)
             SCHEDULED                                           PROPOSED                      LASU RATE
AIRCRAFT     DELIVERY    PRODUCTION               ENGINE         INITIAL        LASU RATE      TRANCHE B     BLENDED LASU
NO.          MONTH       NO.          TYPE        TYPE           LESSEE         TRANCHE A          (1)       RATE
<S>          <C>         <C>          <C>         <C>            <C>            <C>            <C>           <C>   
25           Mar-99      6018         A330-200    PW4168A        Swissair #4    5.75%          5.76%         5.753%
26           May-99      6019         A330-200    PW4168A        Swissair #5    5.75%          5.81%         5.766%
27           May-99      6020         A330-200    CF6-80E1       Canada 3000    5.75%          5.81%         5.766%
                                                                 #3
28           Aug-99      6021         A330-200    PW4168A        Sabena #1      5.75%          5.81%         5.766%
29           Oct-99      6022         A330-200    PW4168A        Sabena #2      5.75%          5.87%         5.782%
30           Nov-99      6023         A330-200    PW4168A        Sabena #3      5.75%          5.87%         5.782%
31           Feb-99      6042         A340-300    CFM56-5C4      Air Canada #4  5.75%          5.76%         5.753%
32           Jan-00      4136         A319-100    CFM56-5A4      Air France     5.75%          5.87%         5.782%
33           Jan-00      4124         A319        CFM56-5B5      Iberia         5.75%          5.87%         5.782%
34           Feb-00      4013         A319        CFM56-5B5      Iberia         5.75%          5.87%         5.782%
35           Mar-00      4014         A319        CFM56-5A4      Air France     5.75%          5.87%         5.782%
36           Apr-00      4015         A319        V2524-A5       TBD            5.75%          5.97%         5.808%
37           Apr-00      4137         A319-100    CFM56-5A4      Air France     5.75%          5.97%         5.808%
38           May-00      4138         A319-100    CFM56-5B5      Iberia         5.75%          5.97%         5.808%
39           Nov-00      4139         A319-100    CFM56-5B5      Iberia         5.75%          6.05%         5.829%
40           Feb-00      4083         A320        V2527-A5       BMA #2         5.75%          5.87%         5.782%
41           Mar-00      4084         A320        V2527-A5       BMA #3         5.75%          5.87%         5.782%
42           Apr-00      4085         A320        CFM56-5B4      Iberia         5.75%          5.97%         5.808%
43           Apr-00      4167         A320-200    CFM56-5B4      Iberia         5.75%          5.97%         5.808%
44           May-00      4086         A320        CFM56-5B4      Iberia         5.75%          5.97%         5.808%
45           Feb-00      4178         A319        CFM56-5B       Air France     5.75%          5.87%         5.782%
46           Mar-00      4125         A321        V2533-A5       Aerolloyd #4   5.75%          5.87%         5.782%
47           Apr-00      4126         A321        V2533-A5       Aerolloyd #5   5.75%          5.97%         5.808%
48           Jul-00      4127         A321        V2533-A5       Asiana #2      5.75%          5.97%         5.808%
49           Oct-00      4128         A321        V2527-A5       TBD            5.75%          6.05%         5.829%
50           Nov-00      4129         A321        V2527-A5       TBD            5.75%          6.05%         5.829%
51           Feb-00      6024         A330-200    PW4168A        Austrian       5.75%          5.87%         5.782%
52           May-00      6025         A330-200    CF6-80E1       Aer Lingus     5.75%          5.97%         5.808%
</TABLE>


                                    - 171 -


<PAGE>   175


<TABLE>
<CAPTION>
(1)          (2)         (3)          (4)         (5)            (6)            (7)            (8)           (9)
             SCHEDULED                                           PROPOSED                      LASU RATE
AIRCRAFT     DELIVERY    PRODUCTION               ENGINE         INITIAL        LASU RATE      TRANCHE B     BLENDED LASU
NO.          MONTH       NO.          TYPE        TYPE           LESSEE         TRANCHE A          (1)       RATE
<S>          <C>         <C>          <C>         <C>            <C>            <C>            <C>           <C>   
53           May-00      6050         A330-200    Trent 772-60   TBD            5.75%          5.97%         5.808%
54           Nov-00      6051         A330-200    PW4168A        TBD            5.75%          6.05%         5.829%
55           Apr-00      6043         A340-300    CFM56-5C4      TBD            5.75%          5.97%         5.808%
56           Jan-01      4140         A319-100    CFM56-5B5      Iberia         5.75%          6.05%         5.829%
57           Mar-01      4016         A319        CFM56-5B5      Iberia         5.75%          6.05%         5.829%
58           Mar-01      4142         A319-100    CFM56-5B5      Iberia         5.75%          6.05%         5.829%
59           May-01      4143         A319-100    CFM56-5B5      Iberia         5.75%          6.15%         5.856%
60           Sep-01      4144         A319-100    CFM56-5B5      Iberia         5.75%          6.15%         5.856%
61           Feb-01      4087         A320        V2527-A5       BMA #4         5.75%          6.05%         5.829%
62           Feb-01      4141         A320        CFM56-5B4      Iberia         5.75%          6.05%         5.829%
63           Mar-01      4168         A320-200    V2527-A5       TBD            5.75%          6.05%         5.829%
64           Mar-01      4088         A320        V2527-A5       BMA #5         5.75%          6.05%         5.829%
65           Mar-01      4169         A320-200    V2527-A5       BMA #6         5.75%          6.05%         5.829%
66           May-01      4132         A320        CFM56-5B4      Iberia         5.75%          6.15%         5.856%
67           Feb-01      4130         A321        V2533-A5       Aerolloyd #6   5.75%          6.05%         5.829%
68           Apr-01      4131         A321        V2533-A5       Aerolloyd opt  5.75%          6.15%         5.856%
69           Apr-01      4179         A321-200    V2527-A5       TBD            5.75%          6.15%         5.856%
70           Apr-01      6052         A330-200    PW4168A        TBD            5.75%          6.15%         5.856%
71           May-01      6053         A330-200    CF6-80E1       TBD            5.75%          6.15%         5.856%
72           Sep-01      6054         A330-200    Trent 772-60   Star Airlines  5.75%          6.15%         5.856%
73           Nov-01      6055         A330-200    PW4168A        Star Airlines  5.75%          6.31%         5.898%
74           Apr-01      6044         A340-300    CFM56-5C4      TBD            5.75%          6.15%         5.856%
75           May-01      6045         A340        CFM56-5C4      TBD            5.75%          6.15%         5.856%
</TABLE>




                                    - 172 -
<PAGE>   176


(1) The Tranche B LASU rate is based on the actual delivery month and may change
from this schedule. The delivery months and the associated rates are as follows:

<TABLE>
<CAPTION>
  DELIVERIES               INTEREST
FROM         TO              RATE
<S>          <C>            <C>  
Oct-98       Mar-99         5.76%
Apr-99       Sep-99         5.81%
Oct-99       Mar-00         5.87%
Apr-00       Sep-00         5.97%
Oct-00       Mar-01         6.05%
Apr-01       Sep-01         6.15%
Oct-01       Mar-02         6.31%
</TABLE>



                                    - 173 -


<PAGE>   177




                                   APPENDIX A

                             FORM OF LOAN SUPPLEMENT




<PAGE>   178



                                   APPENDIX B

                  FORM OF PARTIAL PURCHASE AGREEMENT ASSIGNMENT
                         (INCLUDING AIRFRAME WARRANTIES)



<PAGE>   179



                                   APPENDIX C

                      FORM OF ENGLISH LAW AIRCRAFT MORTGAGE




<PAGE>   180



                                   APPENDIX D

                                     PART I

                  FORM OF ASSIGNMENT OF GENERAL TERMS AGREEMENT
                              RE ENGINE WARRANTIES




<PAGE>   181




                                     PART II

                  FORM OF ASSIGNMENT OF GENERAL TERMS AGREEMENT
                   RE ENGINE WARRANTIES IN RESPECT OF ENGINES
                MANUFACTURED BY UNITED TECHNOLOGIES CORPORATION,
                              PRATT & WHITNEY GROUP




<PAGE>   182




                                    PART III

                      FORM OF RR ENGINE WARRANTY AGREEMENT





<PAGE>   183



                                   APPENDIX E

                            FORM OF BFE BILL OF SALE


KNOW ALL MEN BY THESE PRESENTS:

THAT the undersigned, International Lease Finance Corporation, a corporation
incorporated under the laws of the State of California (the "Seller"), is the
owner of the full legal and beneficial title to the buyer furnished equipment
specified in the attached Schedule ("BFE").

THAT for and in consideration of payment to the Seller of the sum of [_______]
United States Dollars (U.S.$[_______]), the Seller does this [_______] day of
[_______] [_______] grant, convey, transfer, bargain and sell, deliver and set
over, all of its right, title and interest in and to the BFE unto AVSA,
S.A.R.L., a French societe a responsabilite limitee (the "Buyer").

THAT the Seller hereby warrants to the Buyer, its successors and assigns, that
there is hereby conveyed to the Buyer on the date hereof good title to the BFE
free and clear of all mortgages, charges, pledges, liens, statutory rights in
rem, rights of possession, attachment or detention, rights of set-off, title
retention arrangements, rights of ownership, hypothecations, leases, levies,
claims or any encumbrances or security interests whatsoever, howsoever created
or arising or any right or arrangement having a similar effect to any of the
above and that the Seller will warrant and defend such title forever against all
claims and demands whatsoever.

THAT this Bill of Sale is and shall be governed by and construed in accordance
with the laws of the State of New York.

IN WITNESS WHEREOF, the Seller has caused this Bill of Sale to be executed by
its duly authorised officer this [_______] day of [_______], [_______].


INTERNATIONAL LEASE FINANCE CORPORATION

By:                                     

Title:                                  


AGREED and ACCEPTED this
[____] day of [__________], [______]

AVSA, S.A.R.L.

By:                                     

Title:                                  




<PAGE>   184



                          SCHEDULE TO BFE BILL OF SALE

           NATURE, QUANTITY, VENDOR AND PART NUMBER IN RESPECT OF BFE





<PAGE>   185




                                   APPENDIX F

                          FORM OF AIRCRAFT BILL OF SALE


Know all men by these presents that AVSA S.A.R.L., a societe a responsabilite
limitee (the "Seller"), is the owner of the full, legal and beneficial title to
the following airframe (the "Airframe"), the attached engines as specified (the
"Engines") and together with all appliances, components, parts, instruments,
appurtenances, accessories, furnishings, modules and other equipment or property
incorporated, installed in or on or attached to the Airframe and Engines on the
date hereof (the "Parts"):


<TABLE>
<S>                                             <C>
Manufacturer of Airframe:                       Manufacturer of Engines:
AIRBUS INDUSTRIE G.I.E.                         [____________________________]

Model:  AIRBUS A3[______________]               Model:      [__________________]

Manufacturer's Serial No: [______________]      Serial Nos: [______________] [______________]
                                                            [______________] [______________]

Registration Letters:     [______________]
</TABLE>


The Airframe, Engines and Parts are hereafter together referred to as the
"Aircraft".

For and in consideration of the payment by [_______] (the "Buyer") to the Seller
of the sum of one US Dollars (US$1.00) and other good and valuable consideration
in hand received, the Seller does this [___] day of [_______] [_______] sell,
transfer and deliver all of its above described rights, title and interest to
the Aircraft to the Buyer and to its successors and assigns forever.

The Seller hereby warrants to the Buyer, its successors and assigns that it has
on the date hereof good and lawful right to sell, deliver and transfer title to
the Aircraft to the Buyer and that there is hereby conveyed to the Buyer on the
date hereof good, legal and valid title to the Aircraft, free and clear of all
liens, claims, charges, encumbrances and rights of others, (save only that in
relation to the buyer furnished equipment (supplied to the Seller by
International Lease Finance Corporation) the Seller hereby conveys to the Buyer
such title to such buyer furnished equipment as was transferred to the Seller by
International Lease Finance Corporation pursuant to a bill of sale dated [ ] [
], and free and clear of all liens, claims, charges and encumbrances and rights
of others created by the Seller) and that the Seller will warrant and defend
such title forever against all claims and demands whatsoever.

THAT this Bill of Sale is and shall be governed by and construed in accordance
with the laws of the state of New York.

IN WITNESS WHEREOF the undersigned has caused this instrument to be executed by
its duly authorised representative this [_______] day of [_______] [_______]




<PAGE>   186


In [_____________________]
                          -------------------

AVSA, S.A.R.L.


By:
   ------------------------------------------

Title:
      ---------------------------------------

Signature:
          -----------------------------------


<PAGE>   187




                                   APPENDIX G

                     FORM OF SUB-BORROWER CHARGE OVER SHARES





<PAGE>   188



                                   APPENDIX H

                         FORM OF SUB-BORROWER GUARANTEE



<PAGE>   189



                                   APPENDIX I

                         FORM OF SUB-BORROWER DEBENTURE



<PAGE>   190



                                   APPENDIX J

                             FORM OF ACCESSION DEED

THIS ACCESSION DEED is dated the _____ day of _______________ and made BETWEEN
(1) [_____] (the "ACCEDING PARTY"), (2) Halifax plc in its capacity as Security
Trustee under the Facility Agreement referred to in Recital (A) hereof and on
behalf of each Lender, (3) Halifax plc in its capacity as Agent under the
Facility Agreement, (4) Sierra Leasing Limited (the "BORROWER"), (5) Aircraft
SPC-9, Inc. (the "PARENT"), (6) International Lease Finance Corporation as
guarantor (the "GUARANTOR"), (7) International Lease Financing Corporation as
Subordinated Lender (the "SUBORDINATED LENDER") and (8) the other Obligors.

WHEREAS:

(A)     The Borrower, the Parent, the Guarantor, the Subordinated Lender and the
        other Obligors which have acceded to the Facility Agreement, the Agent
        and the Security Trustee and the Lenders (each as referred to therein)
        are parties to a Facility Agreement (the "FACILITY AGREEMENT") dated
        19th January, 1999 which term includes any amendments thereto which may
        at any time be made in relation thereto and also any Transfer
        Certificates or Accession Deeds in respect thereof.

(B)     By and upon and subject to the terms of the Facility Agreement a
        facility for the purchase of certain aircraft was made available to the
        Borrower.

(C)     The Acceding Party wishes to become party to the Facility Agreement as a
        [Sub-Borrower][an Intermediate Lessee] and Obligor pursuant to the
        procedures established in clauses 3.3 (Sub-Borrowers/Intermediate
        Lessee), 7.2.11 (Change of Title Holder during Security Period) and 18.1
        (Transfers by Obligors) of the Facility Agreement by the execution of
        this Accession Deed.

NOW IT IS HEREBY AGREED as follows:-

1.      DEFINITIONS

        Terms used herein which are defined in or to which a meaning or
        construction is assigned by or in the Facility Agreement (whether
        expressly or by reference to another document) shall, unless otherwise
        defined herein, have the same meaning and construction herein as
        therein.

2.      AGREEMENTS, CONFIRMATIONS, REPRESENTATIONS AND COVENANTS

2.1     The Acceding Party hereby:-

        (a)     confirms that it has received a copy of the Facility Agreement
                together with such other documents and information as it has
                required in connection herewith and therewith;

        (b)     agrees to become, with effect from the date of this Accession
                Deed, [a Sub-Borrower] [an Intermediate Lessee] and Obligor
                under the Facility Agreement and agrees to be bound in each such
                capacity with effect from such date by the terms of the Facility
                Agreement by its terms applicable to it and undertakes





<PAGE>   191


                accordingly to perform its obligations as [a Sub-Borrower] [an
                Intermediate Lessee] and Obligor thereunder;

        (c)     confirms the accuracy of the information set out under its name
                at the end of this Accession Deed;

        (d)     represents and warrants as [a Sub-Borrower] [an Intermediate
                Lessee] and Obligor to the Security Trustee, the Agent and each
                of the Lenders in the terms of clause 6 (Representations and
                Warranties) of the Facility Agreement by reference to the facts
                and circumstances existing at the date hereof and that it is
                duly organised and validly existing under the laws of [       ];

        (e)     confirms that it has not relied on the Security Trustee, the
                Agent or any of the Lenders to access or inform it as to the
                legality, validity, effect or enforceability of the Facility
                Agreement or any other document referred to therein or the
                accuracy or completeness of any such information as is referred
                to in paragraph (i) above or the creditworthiness, affairs,
                condition or status of any of the parties to the Facility
                Agreement or any such other document;

        (f)     confirms that its registered office is at:

                [_______________________________________]

                and its address for notices pursuant to clause 22 (Notices) of
                the Facility Agreement is as follows:

                [_______________________________________]

        [(g)    as continuing security for the punctual payment and discharge of
                the Secured Obligations, the Acceding Party hereby
                unconditionally and irrevocably agrees and undertakes with the
                Security Trustee as trustee for and on behalf of itself, the
                Agent and each of the Lenders that immediately upon the
                occurrence of a Third Trigger Event it shall execute a Lease
                Security Assignment in favour of the Security Trustee in
                substantially the same form as set out in schedule 2 to the
                Mortgage annexed as Appendix C to the Facility Agreement. If the
                Intermediate Lessee has entered into another Intermediate Lease
                with another Intermediate Lessee, upon the occurrence of a
                Termination Event or a Third Trigger Event, the Mortgagor shall
                execute an Intermediate Lease Security Assignment in favour of
                the Security Trustee in substantially the same form as set out
                in schedule 4 to the Mortgage annexed as Appendix C to the
                Facility Agreement;](3)

        (h)     The Intermediate Lessee hereby covenants that without the prior
                written consent of the Security Trustee (such consent to be
                exercisable in the absolute discretion of the Security Trustee)
                it shall not nor shall it agree or purport to, other than in
                connection with a Permitted Lien or pursuant to a Final
                Disposition of an Aircraft, a Sub-Borrower Sale or a transfer
                permitted under clauses 7.2.11 (Change of Title Holder of
                Aircraft or Introduction of an Intermediate Lessee) or 18.1
                (Transfers by Obligors) of the Facility Agreement, 



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

(3)     For Intermediate Lessee only.

<PAGE>   192



                assign, whether by way of security, absolutely or otherwise,
                sell, transfer, charge or otherwise dispose of, whether by means
                of one or a number of transactions related or not and whether at
                one time or over a period of time, the whole or any part of its
                interest in any Lease or Intermediate Lease, or any Debts (as
                defined in the relevant Intermediate Lessee Debenture) or Credit
                Balances (as defined in the relevant Intermediate Lessee
                Debenture) relating to any Lease or Intermediate Lease.

2.2     Each Obligor (other than the Acceding Party), the Security Trustee, the
        Agent and each Lender hereby agree amongst themselves and with the
        Acceding Party that the Acceding Party shall become party to the
        Facility Agreement as [a Sub-Borrower] [an Intermediate Lessee] and
        Obligor with effect from the date of this Accession Deed.

2.3     [The Borrower][The Parent] represents and warrants that on the date
        hereof it is the legal and beneficial owner of all of the issued share
        capital of the Acceding Party and covenants that it will remain the
        legal and beneficial owner of all of the issued share capital in the
        Acceding Party throughout the Security Period to the extent provided in
        the Facility Agreement.

2.4     The Guarantor hereby confirms that the guarantee and indemnity set out
        in clause 5 (Guarantee and Indemnity) of the Facility Agreement is in
        full force and effect and covers the obligations of the Acceding Party
        under the Transaction Documents to which it is or shall be a party.

3.      LAW

3.1     This Accession Deed shall be governed by and construed in accordance
        with English law.

3.2     The Acceding Party hereby irrevocably designates, appoints and empowers
        Paul, Hastings, Janofsky & Walker LLP of International Financial Centre,
        Old Broad Street, London EC2N 1HQ to receive, for and on behalf of
        itself, service of process out of the English Courts in any proceedings
        with respect to the Facility Agreement and/or this Accession Deed or any
        judgment in connection therewith and agrees that failure by such process
        agent to give notice of such service of process to the Acceding Party
        shall not impair or affect the validity of such service or of any
        judgement based thereon.

4.      COUNTERPARTS

        This Accession Deed may be executed in any number of counterparts and by
        different parties hereto on separate counterparts and any single
        counterpart or set of counterparts signed, in either case, by each of
        the parties hereto shall be deemed to constitute a full and original
        agreement for all purposes but all counterparts shall constitute but one
        and the same instrument.


IN WITNESS WHEREOF the parties hereto have caused this Accession Deed to be duly
executed as a deed and it is intended to be and is hereby delivered the day and
year first written above.




<PAGE>   193




SIGNATURES

SIGNED as a DEED, SEALED                     )
AND DELIVERED                                )
by [ACCEDING PARTY]                          )
attorney-in-fact for and on behalf of        )
[ACCEDING PARTY]                             )
in the presence of:                          )




SECURITY TRUSTEE

SIGNED by HALIFAX PLC                        )
for itself and as Security Trustee for and   )
on behalf of each Lender acting through      )
its authorised signatories                   )
in the presence of:                          )



AGENT

SIGNED by HALIFAX PLC                        )
as Agent                                     )
acting through its authorised signatories    )
in the presence of:




SIGNED as a DEED, SEALED AND DELIVERED by    )
INTERNATIONAL LEASE FINANCE CORPORATION      )
as Guarantor acting through its duly         )
authorised attorney-in-fact                  )
in the presence of:                          )
                                             )
                                             )




<PAGE>   194


SIGNED as a DEED, SEALED AND DELIVERED by    )
INTERNATIONAL LEASE FINANCE CORPORATION      )
as Suborindated Lender acting through its    )
duly authorised attorney-in-fact             )
in the presence of:                          )
                                             )
                                             )



THE COMMON SEAL of                           )
SIERRA LEASING LIMITED                       )
as Borrower for and on behalf of each        )
other Obligor(4) was hereunto affixed        )
in the presence of:                          )
                                             )
                                             )



SIGNED as a DEED, SEALED AND DELIVERED by    )
AIRCRAFT SPC-9, INC.                         )
as Parent acting through its duly            )
authorised attorney-in-fact                  )
in the presence of:                          )
                                             )



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

(4)     Other Obligors will need to appoint Sierra as Agent to do this.




<PAGE>   195



                                   APPENDIX K

                           FORM OF BORROWER DEBENTURE



<PAGE>   196



                                   APPENDIX L

                FORM OF CHARGE OVER SHARES OF INTERMEDIATE LESSEE

          (TO BE FINALISED PURSUANT TO SUB-BORROWER/INTERMEDIATE LESSEE
                                LETTER AGREEMENT)



<PAGE>   197



                                   APPENDIX M

                      FORM OF INTERMEDIATE LESSEE DEBENTURE

          (TO BE FINALISED PURSUANT TO SUB-BORROWER/INTERMEDIATE LESSEE
                                LETTER AGREEMENT)



<PAGE>   198



                                   APPENDIX N

  FORMS OF LEASE SECURITY ASSIGNMENT AND INTERMEDIATE LEASE SECURITY ASSIGNMENT

                                     PART I

                        FORM OF LEASE SECURITY ASSIGNMENT





<PAGE>   199






                                     PART 2

                 FORM OF INTERMEDIATE LEASE SECURITY ASSIGNMENT



<PAGE>   200



                                   APPENDIX O

                        FORM OF REPLACEMENT BILL OF SALE

Know all men by these presents that [_________] (the "Seller"), is the owner of
the full, legal and beneficial title to the following airframe (the "Airframe"),
the attached engines as specified (the "Engines") and together with all
appliances, components, parts, instruments, appurtenances, accessories,
furnishings, modules and other equipment or property incorporated, installed in
or on or attached to the Airframe and Engines on the date hereof (the "Parts"):

<TABLE>
<S>                                             <C>
Manufacturer of Airframe:                       Manufacturer of Engines:
AIRBUS INDUSTRIE G.I.E.                         [__________________________________________]

Model:  AIRBUS A3[______________]               Model:      [______________________________]

Manufacturer's Serial No: [______________]        Serial Nos: [_____________] [____________]
                                                              [_____________] [____________]

Registration Letters:     [______________]
</TABLE>


The Airframe, Engines and Parts are hereafter together referred to as the
"Aircraft".

For and in consideration of the payment by [[_____________] (the "Buyer") to the
Seller of the sum of one US Dollar (US$1.00) and other good and valuable
consideration in hand received, the Seller does this [[______________]] day of
[[______________]] [[______________]] sell, transfer and deliver all of its
above described rights, title and interest to the Aircraft to the Buyer and to
its successors and assigns forever.

The Seller hereby warrants to the Buyer, its successors and assigns that it has
on the date hereof good and lawful right to sell, deliver and transfer title to
the Aircraft to the Buyer and that there is hereby conveyed to the Buyer on the
date hereof good, legal and valid title to the Aircraft, free and clear of all
liens, claims, charges, encumbrances and rights of others, and that the Seller
will warrant and defend such title forever against all claims and demands
whatsoever.

THAT this Bill of Sale is and shall be governed by and construed in accordance
with the laws of the state of New York.

IN WITNESS WHEREOF the undersigned has caused this instrument to be executed by
its duly authorised representative this [[______________]] day of
[[______________]] [[______________]]

In [[______________] ----------------------

[Seller]


By:
   ----------------------------------------

Title:
       ------------------------------------


Signature:
          ----------------------------------




<PAGE>   201



                                   APPENDIX P*

             FORM OF LETTER COMPRISING NOTICE OF CHARGE AND AIRCRAFT
                      MORTGAGE AND QUIET ENJOYMENT COVENANT

To:     [Lessee]
        [Sub-Lessee]
Dated                 19    



1.      Reference is made to [ ] Aircraft Manufacturer's Serial Number [ ] (the
        "AIRCRAFT") and the Aircraft Lease Agreement (the "LEASE") dated [ ] 19[
        ] between [name of Lessor] (the "LESSOR")
        and [name of Lessee] (the "LESSEE").

2.      The Lessor and Halifax plc as security trustee on behalf of itself and
        certain other lenders named therein (the "Security Trustee") hereby give
        you notice that (a) by a Debenture dated [______________________] the
        "DEBENTURE") between the Lessor and the Security Trustee the Lessor has
        charged by way of security to the Security Trustee all the Lessor's
        rights, title and interest in and to the Lease and (b) by an Aircraft
        Mortgage [entered into on [__________________________________]] [to be
        entered into within sixty days of delivery of the Aircraft to the
        Lessor], the Lessor has mortgaged the Aircraft to the Security Trustee
        and has agreed to grant a contingent future security assignment of the
        Lease.

3.      Henceforth all moneys that may be payable to the Lessor under the Lease
        shall continue to be paid to the bank account specified in the Lease or
        as otherwise directed in writing by the Lessor unless and until the
        Security Trustee issues to you a Lessor Trigger Notice as defined in and
        pursuant to paragraph 7(A) below directing you to pay such amounts to
        another account, whereupon the Lessee is authorised and required to
        comply with the Security Trustee's directions. Notwithstanding the
        foregoing sentence, the Lessee shall continue to perform its obligations
        under the Lease in favour of and for the benefit of the Lessor until
        such time as the Security Trustee may issue to you a Lessor Default
        Notice as defined in and pursuant to paragraph 7(B) below. Until such
        Lessor Default Notice is delivered, the Lessee shall continue to deal
        solely with the Lessor with respect to, and the Lessor alone shall have,
        all rights, powers, privileges, remedies and other benefits in respect
        of the Lease, including, without limitation, to amend, supplement, waive
        or otherwise modify the Lease, to enforce the Lease, to extend or
        terminate the Lease, to enter into a new Lease, or to use, apply,
        release or modify any [Security Deposit, Maintenance Reserves or other]
        support or security.

4.      This notice contained in paragraph 2 above and the instructions
        contained in paragraph 3 above are irrevocable. The Lessee is hereby
        authorised to observe and act upon the instructions of the Security
        Trustee expressed to be assumed by it under paragraph 7 to the effect
        that, so far as the same would otherwise be incompatible therewith, the
        Lessee's obligations to the Lessor under the Lease will be modified
        accordingly.

5.      The Security Trustee for and on behalf of the Lenders confirms to you
        that none of the Lenders nor the Security Trustee nor any person
        lawfully claiming through the Lenders or the Security Trustee will
        interfere with the lawful* use, possession and quiet enjoyment of the
        Aircraft by the Lessee in accordance with the Lease so long as no "event
        of default" under and as defined in the Lease has occurred and is
        continuing and the Lessee complies with the provisions contained in
        paragraph 7 below. This undertaking shall not operate as an 




<PAGE>   202



        assumption by the Security Trustee of any obligation of the Lessor,
        unless and until the Security Trustee succeeds to the rights and
        interests of the Lessor in the Lease or a new lease is entered into as
        provided in paragraph 7 below.

6.      The foregoing undertaking is not to be construed as restricting the
        rights of the Security Trustee to dispose of the Aircraft in certain
        circumstances to such persons and on such terms as the Security Trustee
        considers appropriate. However, if the Security Trustee becomes entitled
        to exercise such rights during the term of the Lease and provided that
        the Lessee complies with its obligations under the Lease and with the
        provisions in paragraph 7 below, the Security Trustee will (subject to
        any requirements or restrictions imposed by applicable law) dispose of
        the Aircraft expressly subject to the Lease and on terms that the
        purchaser issues an undertaking to the Lessee that it will not interfere
        with the lawful* use, possession and quiet enjoyment of the Aircraft by
        the Lessee in accordance with the Lease, so long as no "event of
        default" under and as defined in the Lease has occurred and is
        continuing and the Lessee complies with the provisions contained in
        paragraph 7 below.

7.      (A)     If the Security Trustee issues to the Lessee a notice (a "Lessor
                Trigger Notice") that the Security Trustee's rights as assignee
                have become exercisable following the occurrence of a Third
                Trigger Event under a certain Facility Agreement dated January [
                ], 1999 with [name of Borrower] the Lessee agrees that the
                Security Trustee and the Lenders shall not be responsible in any
                way whatsoever for the actions or inactions of the Lessor, and
                after issue by the Security Trustee of any Lessor Trigger Notice
                the Lessee shall pay to the Security Trustee at such account as
                it may nominate all rentals and other amounts from time to time
                payable by the Lessee under the Lease.

        (B)     If the Security Trustee issues to the Lessee a notice (a "Lessor
                Default Notice") that the Security Trustee's rights as assignee
                have become exercisable following the occurrence of an
                Acceleration Event under a certain Facility Agreement dated
                January [ ], 1999 with [name of Borrower] the Lessee agrees that
                the Security Trustee and the Lenders shall not be responsible in
                any way whatsoever for the actions or inactions of the Lessor,
                and after issue by the Security Trustee of any Lessor Default
                Notice the Lessee shall:-

                (a)     pay to the Security Trustee at such account as it may
                        nominate all rentals and other amounts from time to time
                        payable by the Lessee under the Lease;

                (b)     to the exclusion of the Lessor, perform, observe and
                        comply with all other undertakings and obligations of
                        the Lessee under the Lease in favour and for the benefit
                        of the Security Trustee as if the Security Trustee were
                        named as lessor therein; and

                (c)     if the Security Trustee requests, after (i) the Security
                        Trustee succeeds to the interest of a Lessor in the
                        Lease by exercising its rights under the Debenture or
                        any perfected security assignment of the Lease or (ii)
                        the Security Trustee exercises its rights or remedies
                        under the Mortgage, enter into a lease with the Security
                        Trustee or its nominee, on the same terms (mutatis
                        mutandis) as the Lease.

8.      Following the issue of a Lessor Default Notice the Security Trustee
        shall have the benefit of Clause [________] of the Lease (Disclaimer and
        Indemnity); provided, however, neither the 





<PAGE>   203



        foregoing, nor any other provision of this letter nor the assignments
        described herein shall have the effect of increasing the Lessee's
        liabilities or obligations under the Lease.



------------------------------------
[Lessor]






------------------------------------
[Security Trustee]

*

[WHEN APPLICABLE, THIS FORM SHALL BE ADAPTED TO INCORPORATE REFERENCES TO AN
INTERMEDIATE LESSEE AND AN INTERMEDIATE LEASE]


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

* The deletion of the word lawful will only be made on receipt of Californian
legal opinion that the Lessor may terminate the Lease on account of illegality
without facing a claim from the lessee customer as to a breach by the Lessor of
its quiet enjoyment covenant.



<PAGE>   204




THE BRITISH LENDERS


HALIFAX PLC


By: /s/ PETER BARKER
   -------------------------------

Name: Peter Barker
   -------------------------------

Title:
   -------------------------------




THE FRENCH LENDERS

SOCIETE GENERALE


By: 
   -------------------------------

Name:
   -------------------------------

Title:
   -------------------------------



THE GERMAN LENDERS

BAYERISCHE HYPO-UND VEREINSBANK A.G.


By: 
   -------------------------------

Name:
   -------------------------------

Title:
   -------------------------------



<PAGE>   205



THE BRITISH LENDERS


HALIFAX PLC


By: 
   -------------------------------

Name:
   -------------------------------

Title:
   -------------------------------


THE FRENCH LENDERS

SOCIETE GENERALE


By: /s/ FLORENCE ROUSSEL POLLET
   -------------------------------

Name: Florence Roussel Pollet
   -------------------------------

Title: Attorney in Fact
   -------------------------------



THE GERMAN LENDERS

BAYERISCHE HYPO-UND VEREINSBANK A.G.


By: 
   -------------------------------

Name:
   -------------------------------

Title:
   -------------------------------



<PAGE>   206



THE BRITISH LENDERS


HALIFAX PLC


By: 
   -------------------------------

Name:
   -------------------------------

Title:
   -------------------------------


THE FRENCH LENDERS

SOCIETE GENERALE


By: 
   -------------------------------

Name:
   -------------------------------

Title:
   -------------------------------



THE GERMAN LENDERS

BAYERISCHE HYPO-UND VEREINSBANK A.G.


By: [SIG]                              By: /s/ MICHAEL TRENTZSCH     
   -------------------------------        --------------------------------------

Name:                                  Name: Michael Trentzsch
   -------------------------------          ------------------------------------

Title: Managing Director               Title: Vice President Aircraft Finance
   -------------------------------           -----------------------------------





<PAGE>   207


KREDITANSTALT FUR WIEDERAUFBAU


By: /s/ [SIG]                          By: /s/ SILKE RICHLER          
   -------------------------------        --------------------------------------

Name:                                  Name:  Silke Richler             
   -------------------------------          ------------------------------------

Title: First Vice President            Title: Senior Project Manager
   -------------------------------           -----------------------------------



COMMERZBANK AG


By: 
   -------------------------------

Name:
   -------------------------------

Title: 
   -------------------------------




THE AGENT


HALIFAX PLC


By: 
   -------------------------------

Name:
   -------------------------------

Title: 
   -------------------------------




THE SECURITY TRUSTEE


HALIFAX PLC


By: 
   -------------------------------

Name:
   -------------------------------

Title: 
   -------------------------------



<PAGE>   208


KREDITANSTALT FUR WIEDERAUFBAU


By: 
   -------------------------------

Name:
   -------------------------------

Title: 
   -------------------------------



COMMERZBANK AG


By: /s/ [SIG]                       
   -------------------------------

Name:                
   -------------------------------

Title: SVP As Treasurer
   -------------------------------




THE AGENT


HALIFAX PLC


By: 
   -------------------------------

Name:
   -------------------------------

Title: 
   -------------------------------




THE SECURITY TRUSTEE


HALIFAX PLC


By: 
   -------------------------------

Name:
   -------------------------------

Title: 
   -------------------------------



<PAGE>   209


KREDITANSTALT FUR WIEDERAUFBAU


By: 
   -------------------------------

Name:
   -------------------------------

Title: 
   -------------------------------



COMMERZBANK AG


By: 
   -------------------------------

Name:
   -------------------------------

Title: 
   -------------------------------




THE AGENT


HALIFAX PLC


By: /s/ PETER BARKER
   -------------------------------

Name:  Peter Barker
   -------------------------------

Title: 
   -------------------------------




THE SECURITY TRUSTEE


HALIFAX PLC


By: /s/ PETER BARKER
   -------------------------------

Name:  Peter Barker
   -------------------------------

Title: 
   -------------------------------



<PAGE>   210



THE BORROWER


SIERRA LEASING LIMITED



By: /s/ ALAN H. LUND                   By: /s/ PAMELA HENDRY
   -------------------------------        --------------------------------------

Name: Alan H. Lund                     Name: Pamela Hendry
   -------------------------------          ------------------------------------

Title: Director                        Title: Vice-President
   -------------------------------           -----------------------------------



PARENT


AIRCRAFT SPC-9, INC


By: /s/  ALAN H. LUND                  By: /s/ PAMELA HENDRY
   -------------------------------        --------------------------------------

Name: Alan H. Lund                     Name: Pamela Hendry
   -------------------------------          ------------------------------------

Title: Chief Financial Officer         Title: Treasurer
   -------------------------------           -----------------------------------



THE GUARANTOR


EXECUTED, as a DEED AND              )  /s/  ALAN H. LUND  /s/ PAMELA S. HENDRY
SIGNED and DELIVERED by              )  -----------------  ---------------------
INTERNATIONAL LEASE FINANCE          )     Alan H. Lund      Pamela S. Hendry
CORPORATION                          )   Executive Vice       Vice President
as Guarantor acting through its duly )      President         and Treasurer
authorised officer                   )
in the presence of:                  )

                                /s/ LEE McLERNON
                             -----------------------
                                  D.L. McLernon


<PAGE>   211


SUBORDINATED LENDER


INTERNATIONAL LEASE FINANCE
CORPORATION


By: /s/  ALAN H. LUND                  By: /s/ PAMELA S. HENDRY
   -------------------------------        --------------------------------------

Name: Alan H. Lund                     Name: Pamela S. Hendry
    ------------------------------          ------------------------------------

Title: Executive Vice President        Title: Vice President and Treasurer
     -----------------------------           -----------------------------------