<PAGE>

                                    Original

                        AIRCRAFT LEASE AGREEMENT [49587]

                                     between

                                  OLIVIA CORP.,
                                     LESSOR

                                       and

                                 RENO AIR, INC.,
                                     LESSEE

                          dated as of November 16, 1995

                        AIRCRAFT: McDonnell Douglas MD-87
                        MANUFACTURER'S SERIAL NO.: 49587
                          FAA REGISTRATION NO.: N753RA

THE SINGLE EXECUTED ORIGINAL OF THIS LEASE, TOGETHER WITH ANY ORIGINAL LEASE
SUPPLEMENT DELIVERED PURSUANT HERETO, EACH MARKED "ORIGINAL," SHALL BE THE
"ORIGINAL" AND ALL OTHER COUNTERPARTS OF THIS LEASE AND ANY LEASE SUPPLEMENT
SHALL BE MARKED "DUPLICATE ORIGINAL." TO THE EXTENT THAT THIS LEASE AND ANY
LEASE SUPPLEMENT CONSTITUTES CHATTEL PAPER, AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION, NO SECURITY
INTEREST MAY BE CREATED THROUGH TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER
THAN THE "ORIGINAL."
<PAGE>

                                TABLE OF CONTENTS

SECTION 1    DEFINITIONS ................................................... -1-
             
SECTION 2    LEASE OF AIRCRAFT ............................................ -13-
             
SECTION 3    DELIVERY AND ACCEPTANCE; TERM ................................ -13-
             
SECTION 4    LESSEE'S CONDITIONS PRECEDENT ................................ -15-
             
SECTION 5    RENT, SECURITY DEPOSIT AND MAINTENANCE RESERVES............... -17-
             
SECTION 6    REPRESENTATIONS AND WARRANTIES ............................... -20-
             
SECTION 7    POSSESSION, USE, MAINTENANCE,
             TITLE AND REGISTRATION ....................................... -24-
             
SECTION 8    REPLACEMENT OF PARTS: ALTERATIONS,
             MODIFICATIONS AND ADDITIONS .................................. -31-
             
SECTION 9    INSPECTION; FINANCIAL INFORMATION ............................ -35-
             
SECTION 10   COVENANTS OF LESSEE .......................................... -36-
             
SECTION 11   TAXES ........................................................ -38-
             
SECTION 12   EVENT OF LOSS ................................................ -40-
             
SECTION 13   INSURANCE .................................................... -43-
             
SECTION 14   INDEMNIFICATION .............................................. -47-
             
SECTION 15   LIENS ........................................................ -49-
             
SECTION 16   PERFECTION OF TITLE AND FURTHER ASSURANCES ................... -50-
             
SECTION 17   REDELIVERY OF AIRCRAFT AND RECORDS ........................... -51-


                                       -i-
<PAGE>

SECTION 18   EVENTS OF DEFAULT ............................................ -54-
             
SECTION 19   REMEDIES ..................................................... -57-
             
SECTION 20   ALIENATION ................................................... -59-
             
SECTION 21   MISCELLANEOUS ................................................ -60-
             
SECTION 22   SUBLEASE; ASSIGNMENT; CRAF PROGRAM ........................... -63-
             
SECTION 23   RIGHT OF FIRST REFUSAL ....................................... -66-
             
SECTION 24   ENTIRE AGREEMENT ............................................. -66-
             
SECTION 25   CONFIDENTIALITY .............................................. -67-
             
EXHIBIT "A"  AIRCRAFT SPECIFICATIONS ...................................... -69-
             
EXHIBIT "B"  AIRCRAFT DOCUMENTATION ....................................... -70-
             
EXHIBIT "C"  CERTIFICATE OF ACCEPTANCE .................................... -71-
             
EXHIBIT "D"  LEASE SUPPLEMENT [49587] NO. 1 ............................... -73-
             
EXHIBIT "E"  APPOINTMENT AS ATTORNEY-IN-FACT .............................. -78-
             
EXHIBIT "F"  REDELIVERY CERTIFICATE ....................................... -80-
             
EXHIBIT "G"  DELIVERY CONDITIONS .......................................... -82-
             
EXHIBIT "H"  LEASE IDENTIFICATION ......................................... -84-
             
EXHIBIT "I"  REDELIVERY CONDITIONS ........................................ -85-
             
EXHIBIT "J"  CREDIT STANDARDS ............................................. -90-
            
EXHIBIT "K"  ASSIGNMENT OF LEASE AND CONSENT .............................. -91-


                                      -ii-
<PAGE>

                        AIRCRAFT LEASE AGREEMENT [49587]

            THIS AIRCRAFT LEASE AGREEMENT [49587], made as of this 16th day of
November, 1995 (the "Lease"), by and between OLIVIA CORP., a corporation formed
under the laws of Delaware ("LESSOR"), and RENO AIR, INC., a corporation formed
under the laws of Nevada ("LESSEE").

            WHEREAS, LESSEE desires to lease the Aircraft (as hereinafter
defined) from LESSOR and LESSOR is willing to lease the Aircraft to LESSEE, in
accordance with and subject to the terms and conditions of this Lease.

            NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is acknowledged by the parties hereto, LESSOR
and LESSEE agree as follows:

                                    SECTION I

                                   DEFINITIONS

            The following terms shall have the following respective meanings for
all purposes of this Lease and shall be equally applicable to both the singular
and the plural forms of the terms herein defined. Any agreement referred to
below shall mean such agreement, as amended, supplemented and modified from time
to time:

            "Act" shall mean Subtitle VII of Title 49 of the United States Code
and the rules and regulations promulgated thereunder.

            "Affiliate" shall mean, with respect to any Person, any other Person
which, directly or indirectly, controls or is controlled by or is under common
control with such Person.

            "Agreed Value" shall mean Fourteen Million Dollars ($14,000,000.00)
with respect to the Aircraft.
<PAGE>

            "Air Authority" shall mean, as applicable, the DOT, the FAA and/or
the Administrator of the FAA, or any predecessor or successor thereto.

            "Aircraft" shall mean the Airframe, together with the two (2)
Engines (or any Replacement Engine substituted for either of such Engines
hereunder), all as more particularly described on Exhibit "A" hereto, whether or
not any of such initial or Replacement Engines may, from time to time, be
installed on such Airframe or may be installed on any other airframe or any
other aircraft.

            "Aircraft Documents" shall mean the items identified in Exhibit "B"
hereto.

            "Airframe" means (i) the McDonnell Douglas model MD-87 aircraft
(excluding Engines or engines from time to time installed thereon) bearing U.S.
registration no. N753RA and manufacturer's serial no. 49587, and (ii) any and
all Parts, so long as the same shall be incorporated in such Airframe, and any
and all Parts removed from such Airframe, so long as title to such Parts shall
remain vested in LESSOR in accordance with the terms of Section 8(A).

            "Airframe Reserve" shall have the meaning set forth in the Lease
Supplement.

            "Approved Insure " shall mean any reputable insurance company or
insurance broker, approved by LESSOR, for the purpose of providing or confirming
the existence of any insurance required under this Lease.

            "APU" means (i) the auxiliary power unit listed in the Lease
Supplement, (ii) any and all Parts, so long as such Parts are incorporated in,
installed on or attached to such auxiliary power unit or so long as title to
such Parts is vested in LESSOR in accordance with the terms of Section 8(A)
after removal from such auxiliary power unit, and (iii) insofar as the same
belong to LESSOR, all substitutions, replacements or renewals from time to time
made in or to such auxiliary power unit or to any of the Parts referred to in
clause (ii) above, as required or permitted under this Lease.

            "Authorized Maintenance Performer" shall mean any FAA authorized
repair station or any authorized FAA Part 121 air carrier having the authority
to perform maintenance and repairs to aircraft of the same type as the Aircraft.
The identity of the Authorized Maintenance Performer and such other information
about such party shall be disclosed by LESSEE to LESSOR upon LESSOR's reasonable
request.


                                       -2-
<PAGE>

            "Basic Rent" shall mean the amount payable for the period commencing
on the First Basic Rent Date through the remaining period of the Term in
accordance with Section 5(A)(2) hereof and the Lease Supplement.

            "Business Day" shall mean any day other than a Saturday, Sunday or
day on which banks are required or authorized to close in the States of New York
or Nevada.

            "Certificate of Acceptance" shall mean the written certificate of
LESSEE, in substantially the form of Exhibit "C" hereto, pursuant to which
LESSEE accepts delivery of the Aircraft from LESSOR and confirms that the
Aircraft is in the condition required by this Lease.

            "Code" shall mean the United States Internal Revenue Code of 1986,
as amended from time to time.

            "Compensation" shall have the meaning set forth in Section 12(D)
hereof.

            "Covered Maintenance" shall have the meaning set forth in Section
7(D)(iii) hereof.

            "CRAF Program" shall mean the Civil Reserve Air Fleet Program
authorized under 10 U.S.C. ss. 9511 et seq.

            "Credit Standards" shall have the meaning set forth on Exhibit "J"
hereto.

            "Cycle" shall mean one takeoff and landing of the Aircraft, Airframe
or, with respect to any Engine not installed on the Airframe, of the airframe on
which such Engine is installed.

            "Default" means any event which, upon the giving of notice or the
lapse of time would constitute an Event of Default.

            "Delivery Location" shall mean Will Rogers Airport, Oklahoma City,
Oklahoma or such other location in the continental United States as may be
mutually agreed to by the parties.

            "Dollars" or "$" shall mean the legal currency of the United States
of America.


                                       -3-
<PAGE>

            "DOT" shall mean the United States Department of Transportation or
any governmental person, agency or authority succeeding to the functions of such
Department of Transportation.

            "Effective Date" shall mean the date on which LESSEE signs and
delivers to LESSOR Lease Supplement No. 1 to this Lease.

            "Engine" means (i) each of the two (2) Pratt & Whitney model
JT8D-217C engines bearing manufacturer's serial numbers and otherwise as
described in the Certificate of Acceptance and Lease Supplement No. 1, whether
or not from time to time installed on the Airframe or installed on any other
airframe or any other aircraft, and (ii) any Replacement Engine, whether or not
from time to time installed on the Airframe or any other airframe or any other
aircraft, together, in each case, with any and all Parts incorporated in such
Engine and any and all Parts removed from such Engine, so long as title to such
Parts shall remain vested in LESSOR in accordance with the terms of Section
8(A). At such time as a Replacement Engine shall be substituted hereunder and
the Engine for which the substitution is made shall be released, such
Replacement Engine shall constitute an Engine hereunder and such replaced Engine
shall cease to be an Engine hereunder. The term "Engines" means, as of any date
of determination, all Engines leased hereunder.

            "Engine Manufacture" means United Technologies Corporation, Pratt &
Whitney Group, Commercial Products Division, a Delaware corporation, in its
capacity as manufacturer of the Engines, and its successors and assigns.

            "Engine Reserves" shall have the meaning set forth in the Lease
Supplement.

            "Equipment Change" shall have the meaning set forth in Section 8(C)
hereof.

            "Event of Default" shall have the meaning set forth in Section 18
hereof.

            "Event of Loss" shall mean, with respect to the Aircraft, Airframe
or any Engine, any of the following events with respect to such property: (i)
loss of such property due to destruction, damage beyond repair or rendition of
such property unfit for normal use by LESSEE by any cause whatsoever, or any
damage to such property which results in an insurance settlement with respect to
such property on the basis of a total loss or a constructive total loss or a
compromised total loss; (ii) the disappearance, loss, theft,


                                       -4-
<PAGE>

hijacking, condemnation, confiscation or seizure of, or requisition of use or
title of, such property for a period in excess of sixty (60) days, other than a
requisition for use by the U.S. Government, provided that such requisition of
use does not extend beyond the end of the Term; (iii) any divestiture of title
to an Engine treated as an Event of Loss pursuant to Section 12(B) or any other
provision hereof; or (iv) the operation or location of such property, while
under requisition for use by the U.S. Government, in any area excluded from
coverage by any insurance policy in effect with respect thereto required by the
terms of Section 13, if LESSEE shall be unable to obtain an indemnity in lieu
thereof from the U.S. Government on the terms provided in Section 13. An Event
of Loss with respect to the Aircraft shall be deemed to have occurred if an
Event of Loss occurs with respect to the Airframe, as set forth in Lease
Supplement No. 1.

            "Expiration Date" shall mean the originally scheduled last day of
the Term, as set forth in Lease Supplement No. 1.

            "FAA" shall mean the Federal Aviation Administration of the DOT or
any governmental person, agency or other authority succeeding to the functions
of the Federal Aviation Administration.

            "FAR" shall mean the United States Federal Aviation Regulations
currently in effect or as hereafter amended or modified.

            "First Basic Rent Date" shall mean January 15, 1996.

            "First Interim Rent Date" shall mean the earlier of (i) the date the
Aircraft is placed in revenue service by the Lessee and (ii) fourteen (14) days
from the Effective Date.

            "Flight Hour" shall mean each hour or fraction thereof elapsed from
the moment the wheels of the Aircraft leave the ground through the moment the
wheels of the Aircraft, Airframe or, with respect to any Engine not installed on
the Airframe, of the airframe on which such Engine is installed, touch down upon
the ground.

            "Governmental Entity" shall mean and include: (i) any national
government and any political subdivision thereof or local jurisdiction therein;
(ii) any board, commission, department, division, organ, instrumentality, court
or agency of the foregoing, however constituted; and (iii) any association,
organization or institution of which any of the foregoing is a member, or to
whose jurisdiction any of the foregoing is subject, or in whose activities any
of the foregoing is a participant, but only to the extent


                                       -5-
<PAGE>

that any such association, organization or institution has jurisdiction over the
Aircraft or its operations.

            "Hourly Rent" shall mean Five Hundred ($500.00) Dollars for each
Flight Hour or fraction thereof that the Aircraft is operated for any period in
which Hourly Rent is required to be calculated hereunder.

            "Indebtedness" shall mean, with respect to any Person, all
obligations of such Person for the payment or repayment of money, whether
present or future, actual or contingent.

            "Indemnitee" means LESSOR, Mortgagee, their respective affiliated
entities (and the successors, assigns, directors, officers, shareholders,
employees and agents of such affiliated entities), successors and permitted
assigns and their respective directors, officers, shareholders, employees and
agents.

            "Interim Period" shall mean the period commencing on the First
Interim Rent Date through and including January 14, 1996.

            "Interim Rent" shall mean the amount payable by LESSEE to LESSOR
pursuant to Section 5(A)(1) hereof.

            "Landing Gear" means (i) each of the three landing gear listed in
the Lease Supplement, (ii) any and all Parts, so long as such Parts are
incorporated in, installed on, attached to or appurtenant to any such landing
gear assemblies or so long as title to such Parts is vested in LESSOR in
accordance with the terms of Section 8(A) after removal from any such landing
gear, and (iii) all substitutions, replacements or renewals from time to time
made in or to any such landing gear or to any of the Parts referred to in clause
(ii) above as required or permitted under this Lease.

            "Landing Gear Reserves" shall have the meaning set forth in the
Lease Supplement.

            "Law" shall mean and include: (i) any statute, decree, constitution,
regulation, order or other directive of any Governmental Entity; (ii) any
treaty, pact, compact or other agreement to which any Governmental Entity is a
signatory or party; (iii) any judicial or administrative interpretation or
application of any of the foregoing; and (iv) any amendment or revision of any
of the foregoing.


                                       -6-
<PAGE>

            "Lease," "this Lease," "this Agreement," "hereby," "herein,"
"hereof," "hereunder" or other like words shall mean this Aircraft Lease
Agreement, as the same may be supplemented or amended, in writing, from time to
time.

            "Lease Assignment" shall mean the Assignment of Lease and Consent
between Lessor, Lessee and Mortgagee, substantially in the form of Exhibit "K"
hereto.

            "Lease Documents" shall mean this Lease, each Lease Supplement, the
Certificate of Acceptance, the Power of Attorney and the Lease Assignment.

            "Lease Supplement" means a supplement to this Lease, substantially
in the form attached as Exhibit "D" hereto, subjecting the property described
therein to this Lease.

            "LESSEE's Address" shall mean 220 Edison Way, Reno, Nevada 89502,
Attention: Paul H. Tate, Vice President Finance, Treasurer and Chief Financial
Officer; Telefax No.: +1-702-829-5754.

            "LESSOR's Address" shall mean c/o Interadvice Anstalt, Landstrasse
25, FL-9490, Vaduz, Liechtenstein, Attention: Georg Kieber; Telefax No.:
+41-75-232-0542.

            "LESSOR's Liens" means the Liens of any Person claiming by, through,
against or under LESSOR, which arise as a result of (i) claims by any such
Person not related to, or expressly permitted by, the Lease, (ii) any act or
omission of any Person claiming by, through, against or under LESSOR which is
not expressly permitted by the Lease, (iii) taxes or expenses imposed against
any such Person (or the consolidated group of taxpayers of which it is a member)
for which LESSEE is not obligated to indemnify pursuant to Section 11, or (iv)
claims against any such Person arising out of any transfer by such Person of its
interest in the Aircraft, other than a transfer resulting from LESSOR's exercise
of remedies, pursuant to Section 19, while an Event of Default has occurred and
is continuing.

            "LIBID" means LIBOR minus 1/4%.

            "LIBOR" means the rate per annum at which deposits in Dollars are
being offered to prime banks in the London interbank market at 11:00 a.m. in
London by the British Bankers' Association designated banks which appears on the
Telerate page 3750 on the second London Banking Day prior to any Rent Date for
the period of one month (or such other page as may replace the Telerate page
3750 on that system for the purpose


                                       -7-
<PAGE>

of displaying London Interbank Offered Rates of leading reference banks). If the
LESSOR shall be unable to ascertain LIBOR when LIBOR is required to be
calculated hereunder, then LIBOR shall equal the rate per annum equal to
Lender's actual cost of funds in Dollars for the time remaining during the Term
measured from such Rent Date.

            "Lien" shall mean any mortgage, pledge, lien, encumbrance, security
interest or other claim affecting the title to, or any interest in, property.

            "Loan Agreement" means the Secured Loan Agreement dated as of
November __, 1995 between Lessor and Mortgagee pursuant to which the Mortgagee
has provided financing for the Aircraft.

            "London Banking Day" shall mean any day (excluding a Saturday, a
Sunday or a day on which banks are required to close in London, England) on
which deposits in Dollars are being offered to prime banks in the London
interbank market by the British Bankers' Association designated banks.

            "Maintenance Program" shall mean LESSEE's McDonnell Douglas MD-80
FAR Part 121 FAA-approved maintenance program encompassing scheduled
maintenance, condition-monitored maintenance and on-condition maintenance of
airframe, engines and components of the Aircraft, including, but not limited to,
servicing, testing, preventive maintenance, repairs, structural inspections,
system checks, overhauls, approved modifications, mandatory service bulletins,
mandatory engineering orders, airworthiness directives, corrosion control
inspections and treatments.

            "Maintenance Reserve Date" means the 10th day after each Rent Date
(other than the First Interim Rent Date) and the date of the Return Occasion.

            "Manufacturer" shall mean McDonnell Douglas Corporation, a Maryland
corporation, in its capacity as manufacturer of the Airframe, and its successors
and assigns.

            "Minimum Basic Rent" shall have the meaning set forth in the Lease
Supplement.

            "Minimum Liability Coverage" shall mean Three Hundred Fifty Million
($350,000,000.00) Dollars per occurrence.


                                       -8-
<PAGE>

            "Mortgage" shall mean that certain Aircraft Chattel Mortgage and
Security Agreement, dated as of the date of this Lease, made by LESSOR and
delivered to Mortgagee.

            "Mortgagee" shall mean Credit Lyonnais/PK AIRFINANCE, New York
Branch ("AIRFINANCE"), a corporation formed under the laws of the Grand Duchy of
Luxembourg, or any transferee of AIRFINANCE in accordance with the terms of the
Loan Agreement.

            "Officer's Certificate" shall mean a certificate signed by the
chairman, the president, any vice president, the treasurer, any assistant
treasurer, the secretary or any assistant secretary of the Person providing such
certificate.

            "Overdue Rate" shall mean the rate of interest announced or
published from time to time by Citibank, N.A., New York, New York as its base or
prime lending rate plus three percent (3%) per annum.

            "Parts" means all appliances, parts, instruments, avionics,
appurtenances, accessories, furnishings and other equipment or components, of
whatever nature (other than complete Engines or Engines and other than removable
Parts and any items owned by LESSEE or leased by LESSEE from a third party,
other than LESSOR, in accordance with Section 8(C)), which are, from time to
time, incorporated in the Airframe or any Engine, or so long as title to such
Parts shall remain vested in LESSOR, in accordance with Section 8(A) hereof,
after removal from the Airframe or any Engine.

            "Passenger Convenience Equipment" shall mean components or systems
installed on, carried in or affixed to the Aircraft which are used to provide
individual air-to-ground telephone communications for hire or electronic
entertainment to passengers aboard the Aircraft and which were not originally
incorporated or installed in or attached to the Aircraft at the time of delivery
under this Lease.

            "Permitted Liens" shall mean, with respect to the Aircraft, the
Airframe or any Engine (a) the respective rights of the parties under this Lease
and each Lease Supplement; (b) LESSOR's Liens; (c) (i) liens for taxes,
assessments or other governmental charges which are not yet due, or (ii) liens
for taxes, assessments or other governmental charges which are due and are being
contested in good faith by appropriate proceedings, so long as such proceedings
do not involve any material danger of the sale, forfeiture or loss of the
Aircraft, the Airframe or any Engine and so long as such liens, assessment or
governmental charges do not exceed $500,000.00 in the aggregate;


                                       -9-
<PAGE>

provided, however, that in the event such liens, assessments or governmental
charges exceed $500,000.00 in the aggregate, same shall constitute a Permitted
Lien, provided that LESSEE posts a bond issued by a reputable surety or bonding
company in an amount equal to at least one and one-half (1-1/2) times the amount
of the lien, assessment or governmental charge claimed (including all penalties
and interest thereon) or, alternatively, provides LESSOR with security in an
amount and form reasonably acceptable to LESSOR; (d) (i) materialmen's,
mechanic's, worker's, repairer's, employee's or other like liens for amounts the
payment of which is not yet delinquent for more than thirty (30) days, or (ii)
materialmen's, mechanic's, worker's, repairer's, employee's or other like liens
which are being contested in good faith by appropriate proceedings, so long as
such proceedings do not involve any material danger of the sale, forfeiture or
loss of the Aircraft, the Airframe or any Engine and so long as such liens do
not exceed $500,000.00 in the aggregate; provided, however, that in the event
such liens exceed $500,000.00 in the aggregate, same shall constitute a
Permitted Lien, provided that LESSEE posts a bond issued by a reputable surety
or bonding company in an amount equal to at least one and one-half (1-1/2) times
the amount of the lien claimed (including all penalties and interest thereon)
or, alternatively, provides LESSOR with security in an amount and form
reasonably acceptable to LESSOR; (e) liens arising out of any judgment or award,
unless the judgment secured shall not, within thirty (30) days after entry
thereof, have been discharged or vacated or execution thereof stayed pending
appeal or shall not have been discharged, vacated or reversed within thirty (30)
days after the execution of such stay, and provided such lien presents no
material danger of the sale, forfeiture or loss of the Aircraft, the Airframe or
any Engine or of LESSOR's interest therein and so long as such liens do not
exceed $500,000.00 in the aggregate; provided, however, that in the event such
liens exceed $500,000.00 in the aggregate, same shall constitute a Permitted
Lien, provided that LESSEE posts a bond issued by a reputable surety or bonding
company in an amount equal to at least one and one-half (1-1/2) times the amount
of the lien claimed (including all penalties and interest thereon) or,
alternatively, provides LESSOR with security in an amount and form reasonably
acceptable to LESSOR; or (f) the Lien, created by the Mortgage and Lease
Assignment.

            "Person" shall mean and include any individual, corporation,
partnership, firm, joint venture, trust, unincorporated organization,
association, Governmental Entity, or any organization or association of which
any of the foregoing is a member or participant.

            "Power of Attorney" shall mean that certain power of attorney from
LESSEE to LESSOR and Mortgagee, to be executed in the form attached hereto as
Exhibit "E", pursuant to which LESSEE designates each of LESSOR and Mortgagee as


                                      -10-
<PAGE>

attorney-in-fact, upon the occurrence and continuation of an Event of Default,
to do all things which LESSEE could do under this Lease in the event LESSEE
fails to fulfill such obligations hereunder, including, but not limited to,
executing and delivering such releases or terminations of this Lease upon the
occurrence and continuation of an Event of Default or at the Expiration Date, as
LESSOR or Mortgagee shall deem necessary or desirable.

            "Redelivery Certificate" shall mean the written certificate of
LESSOR, in substantially the form of Exhibit "F" hereto, pursuant to which
LESSOR accepts redelivery of the Aircraft from LESSEE and confirms that the
Aircraft is in the condition required by this Lease on the Redelivery Occasion.

            "Redelivery Location" shall mean Reno/Tahoe International Airport,
Reno, Nevada or such other location in the continental United States as may be
mutually agreed to by the parties.

            "Redelivery Occasion" shall have the meaning set forth in Section
17(A) hereof.

            "Related Aircraft" shall mean any or all of the aircraft leased by
LESSOR to LESSEE pursuant to the Related Lease Agreement.

            "Related Lease Agreement" means the Aircraft Lease Agreement [49641]
to be entered into between Boxen Corp. and LESSEE with respect to the leasing by
Boxen Corp. to LESSEE of one (1) McDonnell Douglas MD-87 aircraft bearing
manufacturer's serial number 49641, as such aircraft is more particularly
described in such agreement and as such agreement may, from time to time, be
supplemented or amended pursuant to a written agreement entered into between
Boxen Corp. and LESSEE.

            "Related Lease Default" shall mean a "Default," as defined in the
Related Lease Agreement.

            "Related Lease Event of Default" shall mean an "Event of Default,"
as defined in the Related Lease Agreement, which shall occur and be continuing
in accordance with the terms of such Related Lease Agreement.

            "Related Security Deposit" shall mean the "Security Deposit" payable
by LESSEE to Boxen Corp. in the Related Lease Agreement.


                                      -11-
<PAGE>

            "Rent" shall mean Interim Rent, Basic Rent and Supplemental Rent.

            "Rent Adjustment" shall have the meaning set forth on the Lease
Supplement.

            "Rent Date" shall mean each date on which a payment of Interim Rent
and Basic Rent, as the case may be, is due. The first Rent Date shall be the
First Interim Rent Date. If a Rent Date shall in any month not be a Business
Day, then the Rent Date shall be the immediately following Business Day.

            "Rent Period" means any period commencing on any given Rent Date and
ending on the day immediately preceding the next succeeding Rent Date, provided,
however, that the last Rent Period shall end on the Expiration Date.

            "Second Interim Rent Date" shall have the meaning set forth in
Section 5(A)(1)(i) hereof.

            "Security Deposit" shall mean the amount set forth in the Lease
Supplement.

            "Supplemental Rent" shall mean all amounts, liabilities and
obligations (other than Interim Rent and Basic Rent) which LESSEE assumes or
agrees to pay to LESSOR or any other Person hereunder, including, without
limitation, all amounts required to be paid by LESSEE under its indemnification
pursuant to Section 14 hereof.

            "Taxes" shall mean any and all sales, withholding, use, excise,
personal property, ad valorem, value added, stamp, interest equalization or
other taxes levied upon LESSOR's or LESSEE's gross levies, customs or other
duties, or other charges of any nature, together with any penalties, fines or
interest thereon, imposed, levied or assessed by, or otherwise payable to, U.S.
Tax Authorities.

            "Term" means the period commencing on the Effective Date and
expiring on the Expiration Date unless shortened in accordance with the
provisions of this Lease.

            "U.S. Air Carrier" shall mean any air carrier operating under a
certificate of convenience and necessity issued by the Air Authority or, in the
event such certification is no longer issued to air carriers, an air carrier
permitted to engage in air transportation of passengers to, from or within the
United States.


                                      -12-
<PAGE>

            "U.S. Government" shall mean and include: (i) the Federal Government
of the United States of America and any political subdivision thereof or local
jurisdiction therein; (ii) any board, commission, department, division, organ,
instrumentality, court or agency of the foregoing, however constituted; and
(iii) any association, organization or institution of which any of the foregoing
is a member, or to whose jurisdiction any of the foregoing is subject, or in
whose activities any of the foregoing is a participant, but only to the extent
that any such association, organization or institution has jurisdiction over the
Aircraft or its operations.

            "U.S. Tax Authorities" shall mean and include: (i) the Internal
Revenue Service and any other taxing authority of the Federal Government of the
United States of America; and (ii) any taxing authority of any state, county,
city or local municipality of the United States of America.

            "Wet Lease" shall mean any arrangement whereby LESSEE agrees to
furnish the Aircraft, Airframe or any Engine to a third party, pursuant to which
such Aircraft, Airframe or Engine (i) shall remain in the exclusive possession
and operational control of LESSEE's personnel, and (ii) shall be maintained
exclusively by LESSEE or an Authorized Maintenance Performer in accordance with
the maintenance provisions of this Lease.

                                    SECTION 2

                                LEASE OF AIRCRAFT

            LESSOR hereby agrees to lease the Aircraft to LESSEE, and LESSEE
hereby agrees to lease the Aircraft from LESSOR, pursuant to the provisions of
this Lease.

                                    SECTION 3

                          DELIVERY AND ACCEPTANCE; TERM

            (A) Date of Delivery. Subject to the Aircraft conforming to the
conditions set forth in Exhibit "G", LESSEE shall take delivery of the Aircraft
and Aircraft Documents on the Effective Date. Lessor shall deliver the Aircraft
to Lessee on no later than November 20, 1995. In the event LESSOR is unable to
deliver the Aircraft


                                      -13-
<PAGE>

to LESSEE on or before November 20, 1995, and no other provision of this Lease
applies which would either excuse the delay or which would provide LESSOR with
any additional time to cause delivery of the Aircraft, then, in such event,
LESSEE may terminate this Lease without any liability or obligation to the other
hereunder.

            (B) Place of Delivery and Acceptance. The Aircraft and Aircraft
Documents shall be delivered to and accepted by LESSEE at the Delivery Location,
unless LESSOR and LESSEE otherwise agree in writing upon another location
subsequent to the execution of this Lease. The parties agree that the Delivery
Location will be selected to minimize the possibility of taxes to be assessed
against LESSEE and/or LESSOR.

            (C) Casualty to Aircraft Preceding Delivery.

                  (i) In the event that any Event of Loss occurs with respect to
            the Aircraft prior to the Effective Date hereof, this Lease shall
            terminate and neither the LESSOR nor LESSEE shall have any liability
            or obligation to the other hereunder.

                  (ii) In the event that on the proposed Effective Date the
            Aircraft fails to conform to the conditions set forth in Exhibit
            "G", LESSOR shall, within thirty (30) days from the date of the
            proposed Effective Date, take such reasonable action as shall be
            necessary to repair the Aircraft so that it conforms to the
            conditions set forth in Exhibit "G". If at the end of such thirty
            (30) day period of time the Aircraft fails to conform to the
            conditions set forth in Exhibit "G", notwithstanding LESSOR's
            reasonable actions pursuant to the foregoing sentence, either LESSOR
            or LESSEE shall have the right to terminate this Lease without any
            liability or obligation to the other hereunder.

            (D) Acceptance of Aircraft. The Aircraft to be leased hereunder
shall be delivered to LESSEE in its "AS IS," "WHERE IS" condition, SUBJECT TO
EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN
SUBSECTION 6(A) HEREOF, except that the Aircraft shall comply with the
conditions set forth on Exhibit "G". LESSEE shall indicate and confirm its
acceptance of the Aircraft by delivery to LESSOR of a (i) Lease Supplement, and
(ii) Certificate of Acceptance, dated on such Effective Date.


                                      -14-
<PAGE>

            (E) Term of Lease. The term of this Lease, as to the Aircraft, shall
be for the Term.

            (F) No LESSOR Liability. LESSOR will not be liable for any loss or
expense, or any loss of profit, arising from any delay or failure in delivery to
LESSEE unless such delay or failure arises as a direct consequence of the
willful misconduct of LESSOR, and in no event will LESSOR be liable for any
delay or failure which is caused by any breach or delay on the part of
Manufacturer.

                                    SECTION 4

                          LESSEE'S CONDITIONS PRECEDENT

            LESSOR's obligation to lease the Aircraft hereunder to LESSEE shall
be subject to the receipt by LESSOR, on or before the Effective Date (or such
other date as provided for herein), of the following from LESSEE, all of which
shall be satisfactory in form and substance to LESSOR:

            (1) Certified copy of a resolution of LESSEE's Board of Directors,
authorizing the entering into and performance of this Lease together with an
incumbency certificate as to the person or persons authorized to execute and
deliver this Lease and the other Lease Documents on behalf of LESSEE;

            (2) LESSEE's articles or certificate of incorporation and by-laws
certified by an officer of LESSEE;

            (3) A favorable opinion of counsel of LESSEE, addressed to LESSOR,
dated the Effective Date, as to the matters set forth in clauses (1) through (5)
and (7) of Subsection 6(D) hereof, provided however, the opinion shall be to the
best of such counsel's knowledge as to primarily factual matters;

            (4) A favorable opinion of Daugherty, Fowler & Peregrin, special FAA
counsel, addressed to LESSOR, opining on such matters as LESSOR shall reasonably
require, including, but not limited to, that under the Act: (i) the Aircraft is
eligible for registration in the name of LESSOR; (ii) that this Lease and the
Lease Assignment are eligible for recording; and (iii) that this Lease and the
Lease Assignment have been filed for recording;


                                      -15-
<PAGE>

            (5) An Officer's Certificate of LESSEE, dated as of the Effective
Date, stating that to the best of such officer's knowledge after due inquiry and
investigation:

                  (a) The representations and warranties contained in Subsection
            6(D) hereof are true and accurate on and as of such date as though
            made on and at such time (except to the extent that such
            representations and warranties relate solely to an earlier date);
            and

                  (b) No event has occurred and is continuing, or would result
            from the leasing of the Aircraft, which constitutes an Event of
            Default or would constitute an Event of Default with the giving of
            notice or the passage of time or both;

            (6) Not less than three (3) Business Days prior to the Effective
Date, certificates signed by an Approved Insurer(s) as to due compliance with
the insurance provisions of Section 13 hereof with respect to the Aircraft;

            (7) The Power of Attorney, fully signed, notarized and dated on the
Effective Date, together with an original certified copy of the resolutions of
LESSEE's Board of Directors (which resolutions shall be delivered on or before
December 31, 1995), pursuant to which the entering into of the Power of Attorney
by the holder thereof was authorized. LESSEE shall, on those dates which shall
be the second, fourth, sixth and seventh anniversary dates of the Effective
Date, deliver to LESSOR a currently dated replacement Power of Attorney and
original certified copy of resolutions of LESSEE's Board of Directors, in form
and substance satisfactory to LESSOR, whereupon LESSOR shall return to LESSEE
any Powers of Attorney previously delivered by LESSEE to LESSOR;

            (8) Such UCC-1 financing statements as LESSOR shall reasonably
request;

            (9) The Lease Assignment, as executed by LESSEE; and

            (10) Such other documents which LESSOR or its counsel may reasonably
require.


                                      -16-
<PAGE>

                                    SECTION 5

                 RENT, SECURITY DEPOSIT AND MAINTENANCE RESERVES

            (A) Rent. LESSEE covenants and agrees to pay to LESSOR, or to any of
LESSOR's assigns designated to LESSEE in writing by LESSOR, the Rent. Time is of
the essence with respect to each payment of Rent to be paid by LESSEE to LESSOR
hereunder.

                  (1) Interim Rent.

                        (i) Interim Rent shall equal the Hourly Rent for each
                  Rent Period during the Interim Period. Notwithstanding the
                  foregoing, in no event shall the Interim Rent be less than the
                  Minimum Basic Rent other than as set forth in paragraph (ii)
                  of this Section.

                        (ii) Minimum Basic Rent shall be paid by LESSEE to
                  LESSOR in respect of the Aircraft, in advance, on the First
                  Interim Rent Date. Thereafter, on the corresponding date in
                  the immediately following month (the "Second Interim Rent
                  Date"), LESSEE shall pay to LESSOR a pro rata portion of the
                  Minimum Basic Rent based on the number of days remaining in
                  the period from the Second Interim Rent Date through (but not
                  including) the First Basic Rent Date.

                        (iii) In addition to Minimum Basic Rent, LESSEE shall
                  pay to LESSOR the following: (a) no later than five days after
                  the Second Interim Rent Date, an amount equal to the
                  difference, if positive, between (x) the Minimum Basic Rent
                  and (y) Hourly Rent calculated for the period from the First
                  Interim Rent Date through (but excluding) the Second Interim
                  Rent Date; and (b) no later than five days after the First
                  Basic Rent Date, an amount equal to the positive difference,
                  if any, between: (x) the pro rated Minimum Basic Rent paid for
                  the previous Rent Period and (y) Hourly Rent calculated for
                  the period from the Second Interim Rent Date through (but
                  excluding) the First Basic Rent Date.


                                      -17-
<PAGE>

                  (2) Basic Rent; Rent Adjustment. (i) Basic Rent shall be paid
            by LESSEE to LESSOR in respect of the Aircraft, in advance,
            commencing on the First Basic Rent Date and continuing on the
            corresponding date in each consecutive month during the remainder of
            the Term. Basic Rent shall be payable in the amount set forth on the
            Lease Supplement, subject to the Rent Adjustment as set forth
            therein.

                  (3) Supplemental Rent. LESSEE agrees to pay to LESSOR, or to
            whomsoever shall be entitled thereto, any and all Supplemental Rent
            promptly as the same shall become due and owing, and in the event of
            any failure on the part of LESSEE to pay any Supplemental Rent,
            LESSOR shall have all rights, powers and remedies provided for in
            this Lease or by Law or equity or otherwise in the case of
            nonpayment of Interim Rent or Basic Rent. LESSEE will also pay to
            LESSOR, on demand, as Supplemental Rent, to the extent permitted by
            applicable Law, interest at the Overdue Rate on any part of any
            installment of Interim Rent or Basic Rent not paid within five
            Business Days when due for the period from and including the Rent
            Date to and including the date of actual payment in full, and on any
            Supplemental Rent not paid when due or demanded by LESSOR for any
            period for which the same shall be overdue.

            (B) Security Deposit. LESSEE shall deliver to LESSOR the Security
Deposit, on the Effective Date, to secure LESSEE's obligations under the Lease.
Upon the occurrence and continuation of an Event of Default hereunder or a
Related Lease Event of Default, LESSOR may use all or any part of the Security
Deposit, in addition to the Related Security Deposit, together with all interest
accrued thereon, in the manner provided for in this Lease.

            (C) Form of Payment. Payment of Rent, the Security Deposit and any
other payments due under this Lease, shall be made in Dollars by wire transfer
of immediately available funds to LESSOR or its assignee at such address and
account as LESSOR may specify in writing, provided that such address shall be an
address in the continental United States. Payment shall be made on the Rent
Date, or the Business Day thereafter if the Rent Date is not a Business Day, so
as to reach LESSOR or its designated depository not later than 1:00 p.m. local
time, New York, New York, on the Rent Date or the Business Day thereafter, as
the case may be.

            (D) Rent Not Reduced by Taxes. LESSEE agrees that each payment of
Rent pursuant to this Lease shall be free of all Taxes and, in the event that
any such Taxes


                                      -18-
<PAGE>

are imposed, levied, assessed by, or otherwise payable with respect to or
arising out of the leasing or operation of the Aircraft by LESSEE, LESSEE shall
pay such amounts as are necessary to enable LESSOR and each assignee of LESSOR
to whom payments of Rent are to be made by LESSEE, to receive each payment of
Rent hereunder, under any circumstances and in any event, in the full amounts
required hereunder on an after-tax basis, without any reduction whatsoever;
provided, however, that this Section 5(D) shall not apply to Taxes not
indemnified against pursuant to Section 11(B) hereof.

            (E) Maintenance Reserve. LESSEE shall pay to LESSOR, on each
Maintenance Reserve Date, the Airframe Reserves, the Engine Reserves and the
Landing Gear Reserves for the previous Rent Period (each a "Reserve" and
collectively, the "Reserves"). Commencing on the first anniversary of the
Effective Date and continuing on the anniversary of the Effective Date in each
consecutive year during the Term, the per Cycle amount payable by LESSEE to
LESSOR with respect to Engine Reserves shall be increased by three and one-half
(3.5%) percent from the per Cycle amount of Engine Reserves payable in the
preceding year. All Reserves paid by LESSEE to LESSOR will be held by LESSOR in
separate accounts for each of the Airframe Reserves, Engine Reserves and Landing
Gear Reserves, respectively, and shall be disbursed by LESSOR only to pay for
Covered Maintenance pursuant to Section 7(D) hereof. Interest shall accrue on
the Reserves at a rate equal to LIBID minus one-quarter percent per annum (the
"Reserve Interest"). The Reserve Interest shall form a part of the Airframe
Reserves, Engine Reserves and Landing Gear Reserves, respectively.
Notwithstanding anything set forth herein to the contrary, if on any Maintenance
Reserve Date (i)(a) the Flight Hours for the Airframe, (b) the aggregate Cycles
with respect to the Engines, and (c) the aggregate Cycles for the Landing Gear,
in each case, respectively, remaining to the next scheduled overhaul (assuming
no change in intervals between checks under the Maintenance Program not approved
by LESSOR, such approval not to be unreasonably withheld) are more than on the
Effective Date, and (ii) LESSEE meets the Credit Standards, then LESSEE shall
not be required to pay any Reserves for such Rent Period with respect to such
category of Reserves. Time is of the essence with respect to the payment by
LESSEE to LESSOR of Reserves. Upon the termination of the Lease with respect to
the Aircraft, provided LESSEE has complied with Section 17 hereof and no Default
or Related Lease Default has occurred and is continuing, all Reserves held by
LESSOR and not used to reimburse LESSEE for Covered Maintenance shall become the
property of LESSEE.

            (F) Net Lease, LESSEE's Obligations; No Set off or Counterclaim.
This is a net lease. It is the intent of the parties hereto that this Lease be a
"true lease" and an agreement treated as a "lease" under the provisions of the
Code. Except as otherwise


                                      -19-
<PAGE>

provided herein (including, without limitation, in Section 5(C)), and without
limiting LESSEE's rights in the event of a breach of Section 21(G), LESSEE's
obligation to pay all Rent payable hereunder shall be absolute and unconditional
and shall not be affected by any circumstance, including, without limitation,
(i) any Set off, counterclaim, recoupment, defense or other right which LESSEE
may have against LESSOR; (ii) any defect in the title, airworthiness, condition,
design, operation or fitness for use of, or any damage to or loss or destruction
of, the Aircraft, Airframe or any Engine, or any interruption or cessation in
the use or possession thereof by LESSEE for any reason whatsoever; (iii) any
insolvency, bankruptcy, reorganization or similar proceedings by or against
LESSEE; or (iv) any restriction, prevention or curtailment of, or interference
with, any use of the Aircraft, Airframe or any Engine.

                                    SECTION 6

                         REPRESENTATIONS AND WARRANTIES

            (A) Disclaimer of Warranties. EXCEPT FOR THE EXPRESS REPRESENTATIONS
OF LESSOR SET FORTH IN SECTION 6(B), NEITHER LESSOR NOR ANY OF ITS DIRECTORS,
OFFICERS, EMPLOYEES OR REPRESENTATIVES HAS MADE OR WILL BE DEEMED TO HAVE MADE
ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED
(WHETHER STATUTORY OR OTHERWISE) AS TO (I) THE CAPACITY, AGE, AIRWORTHINESS,
VALUE, QUALITY, DURABILITY, CONFORMITY TO THE PROVISIONS OF THIS LEASE,
DESCRIPTION, CONDITION (WHETHER OF THE AIRCRAFT, ANY ENGINE, ANY PART THEREOF OR
THE AIRCRAFT DOCUMENTATION), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE,
CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE,
FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR
REGISTER THE AIRCRAFT OR USE THE AIRCRAFT DOCUMENTATION IN ANY OR ALL
JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE
ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR
UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (II) THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY
RIGHTS, (III) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF
DEALING OR USAGE OF TRADE OR (IV) ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS
OR

                                      -20-
<PAGE>

IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, ALL OF WHICH ARE
HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED.

            (B) LESSOR's Representations. As an exception to the foregoing,
LESSOR represents, warrants and covenants as follows:

                  (1) LESSOR has the lawful right to lease the Aircraft to
            LESSEE in accordance with the terms of this Lease;

                  (2) LESSOR is a corporation duly organized and existing in
            good standing under the laws of Delaware and has the corporate power
            and authority to carry on its business as presently conducted and to
            execute, deliver and perform its obligations under this Lease and
            all other Lease Documents to which LESSOR is a party;

                  (3) This Lease and all other Lease Documents to which LESSOR
            is a party have been duly authorized by all necessary corporate
            action on the part of LESSOR, do not require any approval of the
            stockholder of LESSOR (or if such approval is required, such
            approval has been obtained), and neither the execution and delivery
            hereof nor the consummation of the transactions contemplated hereby
            nor compliance by LESSOR with any of the terms and provisions hereof
            will contravene any Law applicable to LESSOR or result in any breach
            of, or constitute any default under, or result in the creation of
            any Lien other than to the Mortgagee upon any property of LESSOR
            under, any indenture, mortgage, chattel mortgage, deed of trust,
            conditional sales contract, bank loan or credit agreement, corporate
            charter or by-law, or other agreement or instrument to which LESSOR
            is a party or by which LESSOR or its properties or assets may be
            bound or affected;

                  (4) This Lease and all other Lease Documents to which LESSOR
            is a party have been duly entered into and delivered by LESSOR and
            constitute the valid, legal and binding obligations of LESSOR,
            enforceable in accordance with their terms, except as such
            enforceability may be limited by bankruptcy, moratorium,
            reorganization and similar Laws and by general principles of equity,
            whether considered in a proceeding at Law or in equity; and

                  (5) LESSOR has good title to the Aircraft.


                                      -21-
<PAGE>

                  THE REPRESENTATIONS, WARRANTIES AND COVENANTS SET FORTH IN
            THIS SECTION 6(B) CONSTITUTE THE SOLE EXCEPTION TO SUBSECTION 6(A)
            AND ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS AND
            WARRANTIES OF LESSOR EXPRESS OR IMPLIED.

            (C) Manufacturer's Warranties. So long as LESSEE is not in default
under this Lease, LESSOR agrees to assign or otherwise make available to LESSEE
such rights as LESSOR may have under any warranty, express or implied, with
respect to the Aircraft made by the Manufacturer, Engine Manufacturer, any
subcontractor or supplier thereof, to the extent that the same may be assigned
or otherwise made available to LESSEE and, to the extent that the same may not
be assigned or otherwise made available to LESSEE, LESSOR agrees, upon the
written request of LESSEE, to exert its efforts, at LESSEE's sole cost and
expense, to enforce such rights as LESSOR may have with respect thereto for the
benefit of LESSEE; provided, however, that upon an Event of Default all such
rights shall, without further action or notice, immediately revert to LESSOR,
including all claims thereunder, whether or not perfected. On the date of the
Redelivery Occasion, the benefit of any warranty assigned by LESSOR to LESSEE
pursuant hereto will be reassigned automatically to LESSOR or its designee.
LESSEE's rights under such warranties (including LESSEE's claims and rights to
payment thereunder) will revert to LESSOR during any period in which an Event of
Default is continuing upon the provision of notice by LESSOR to LESSEE. LESSEE
at its own cost and expense will do all such things and execute such documents
as may be required for this purpose. LESSEE will diligently and promptly pursue
any valid claims it may have against Manufacturer and others under such
warranties with respect to the Aircraft and will provide notice of the same to
LESSOR.

            (D) LESSEE's Representations and Warranties. LESSEE represents and
warrants, as of the Effective Date, and all such representations and warranties
being continuing, that:

                  (1) LESSEE is a corporation duly organized and existing in
good standing under the Laws of Nevada and has the corporate power and authority
to carry on its business as presently conducted and to perform its obligations
under this Lease;

                  (2) This Lease and all other Lease Documents to which LESSEE
is a party have been duly authorized by all necessary corporate action on the
part of LESSEE, does not require any approval of the stockholders of LESSEE (or
if such approval is required, such approval has been obtained), and neither the
execution and


                                      -22-
<PAGE>

delivery hereof nor the consummation of the transactions contemplated hereby nor
compliance by LESSEE with any of the terms and provisions hereof will contravene
any Law applicable to LESSEE or result in any breach of, or constitute any
default under, or result in the creation of, any lien, charge or encumbrance
upon any property of LESSEE under any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement,
corporate charter or by-law, or other agreement or instrument to which LESSEE is
a party or by which LESSEE or its properties or assets may be bound or affected;

                  (3) LESSEE has received or has complied with every required
consent, approval, order, or authorization of, or registration with, or the
giving of prior notice to, any Governmental Entity having jurisdiction with
respect to the execution and delivery of this Lease and all other Lease
Documents to which LESSEE is a party or the validity and enforceability hereof
and thereof;

                  (4) This Lease and all other Lease Documents to which LESSEE
is a party have been duly entered into and delivered by LESSEE and constitutes a
valid, legal and binding obligation of LESSEE, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy,
reorganization, moratorium or other similar Laws and by general principles of
equity, whether considered in a proceeding at Law or in equity;

                  (5) There are no suits or proceedings pending, or to the
knowledge of LESSEE, threatened against or affecting LESSEE, which are
reasonably expected to have a material adverse effect on the financial condition
or business of LESSEE or upon LESSEE's ability to perform its obligations
hereunder;

                  (6) LESSEE has filed or caused to be filed all material tax
returns which are required to be filed by LESSEE and has paid or caused to be
paid all Taxes shown to be due or payable on said returns or on any assessment
received by LESSEE, except those the validity of which is contested by LESSEE in
good faith by appropriate proceedings duly instituted and diligently prosecuted;

                  (7) LESSEE is an "air carrier operating under a certificate of
convenience and necessity," as such quoted language is used and defined under 11
U.S.C. ss. 1110 ("Section 1110"), and this Lease constitutes a "lease" under
Section 1110 and LESSEE is a Certificated Air Carrier pursuant to chapter 447 of
Title 49 of the United States Code;


                                      -23-
<PAGE>

                  (8) The obligations of LESSEE under the Lease Documents
constitute direct, general and unconditional obligations of the LESSEE; and

                  (9) No event has occurred which constitutes, or with the
giving of notice or passage of time or both would constitute, an Event of
Default under this Lease.

            (E) Notification. During the Term of this Lease, LESSEE shall notify
LESSOR in writing of any condition that materially changes the content of the
representations and warranties made as of the Effective Date under Section 6(D)
hereof, within five (5) days of LESSEE's knowledge thereof.

                                    SECTION 7

              POSSESSION, USE, MAINTENANCE, TITLE AND REGISTRATION

            (A) Possession. Except as expressly provided in Subsection 8(B) and
Section 22, LESSEE shall not transfer possession of the Aircraft or any Engine
or part thereof to any Person without the prior written consent of LESSOR, which
consent shall not be unreasonably withheld, provided that, so long as no Default
shall have occurred and be continuing and so long as LESSEE shall comply with
the provisions of Section 13 hereof, LESSEE may, so long as the action to be
taken shall not deprive LESSOR of its title to and interest in the Aircraft, the
Airframe or any Engine and shall not adversely affect the registration of the
Aircraft under the Laws of the U.S. Government, without the prior written
consent of LESSOR, deliver possession of the Aircraft, the Airframe or any
Engine or other Part thereof to the Manufacturer, the Engine Manufacturer or
Authorized Maintenance Performer, as appropriate, for testing, service, repair,
maintenance or overhaul work on the Aircraft, the Airframe, any Engine or Part,
or for alterations, modifications, or additions thereto, to the extent required
or permitted by the terms of Subsection 7(D) hereof.

            (B) Use. LESSEE shall use the Aircraft solely in commercial
passenger carrying operations and normal training, maintenance, ferry and other
such related operations in accordance with all Laws applicable to it and shall
not use or permit the Aircraft to be used for any purpose for which the Aircraft
is not designed or reasonably suited.

            (C) Lawful Insured Operations. LESSEE shall not permit the Aircraft
to be maintained, used, or operated in violation of any Law of any Governmental
Entity


                                      -24-
<PAGE>

having jurisdiction, or contrary to the Manufacturer's or Engine Manufacturer's
operating manuals and instructions, or in violation of any airworthiness
certificate, license, or registration relating to the Aircraft issued by the
U.S. Government, unless the validity thereof is being contested in good faith
and by appropriate proceedings duly instituted and diligently prosecuted, but
only so long as such proceedings will not result in the sale, forfeiture, loss
of valid insurance coverage upon, or loss of, the Aircraft, the Airframe, any
Engine or any Part. LESSEE shall comply with the foregoing at its sole cost and
expense and shall maintain the Aircraft in proper condition for operation under
such Laws. LESSEE agrees not to operate the Aircraft, or to permit or suffer the
Aircraft to be operated, within or into any geographic area:

                  (1) unless the Aircraft is at all such times covered by
            insurance as required by the provisions of Section 13 hereof or the
            indemnity given by the United States Government pursuant to Section
            22(F) hereof;

                  (2) contrary to the terms of such insurance, as required by
            the provisions of Section 13 hereof or the indemnity given by the
            United States Government pursuant to Section 22(F) hereof; and

                  (3) in violation of any Law, rule, order or regulation of any
            Governmental Entity.

LESSEE shall deliver to LESSOR such documents and assurances as LESSOR may
request under the provisions of Section 16 hereof to evidence compliance with
the foregoing.

            (D) Maintenance.

                  (i) LESSEE, at its own cost and expense shall:

                        (a) service, repair, maintain, overhaul, test, or cause
            the same to be done to the Aircraft so as to keep the Aircraft in as
            good operating condition as when delivered to LESSEE hereunder,
            ordinary wear and tear excepted, in accordance with Manufacturer's
            type design and in such operating condition as required by the
            Maintenance Program and as may be necessary to enable the United
            States airworthiness certification of the Aircraft to be maintained
            in good standing at all times under FAR Part 121 standards and the
            applicable Laws of the U.S. Government;


                                      -25-
<PAGE>

                        (b) perform all routine and non-routine services,
             checks, inspections, including any structural inspections
             requirements (SSID's) and "A", "B", "C," "15,000 Hour" or "30,000
             Hour" checks (or the equivalent thereof) required by the
             Maintenance Program or the FAA;

                        (c) maintain all records, logs and other materials
            required by applicable Laws of any Governmental Entity and the FAA
            to be maintained in respect of the Aircraft, including, but not
            limited to, serviceable component tags required by the FAA;

                        (d) throughout the Term of this Lease, provide LESSOR
            with not less than two weeks prior written notice of the scheduled
            commencement date of each "C", "15,000 Hour" or "30,000 Hour" check
            (or their equivalent) to be performed on the Aircraft and the
            location where such checks will be performed;

                        (e) designate representatives to coordinate with LESSOR
            or LESSOR's representatives on maintenance and warranty matters;

                        (f) incorporate in the Aircraft prior to the terminating
            or compliance date all applicable airworthiness directives or
            equivalent (referenced to in this Lease as "Airworthiness
            Directives") of the FAA, all alert service bulletins of the
            Manufacturer, Engine manufacturer and other vendors or manufacturers
            of Parts incorporated on the Aircraft and any service bulletins
            which must be performed in order to maintain the warranties on the
            Aircraft, Engines and Parts;

                        (g) incorporate in the Aircraft all other service
            bulletins of the Manufacturer, the Engine manufacturer and other
            vendors which LESSEE schedules to adopt within the Term for the rest
            of its MD87 aircraft fleet. It is the intent of the parties that the
            Aircraft will not be discriminated from the rest of LESSEE's fleet
            in service bulletin compliance (including method of compliance) or
            other maintenance matters. LESSEE will not discriminate against the
            Engines with respect to overhaul build standards and life limited
            part replacements;

                        (h) incorporate in the Maintenance Program for the
            Aircraft a corrosion prevention and control program as recommended
            by Manufacturer and approved by the FAA, and correct any
            discrepancies in


                                      -26-
<PAGE>

            accordance with the recommendations of Manufacturer and the
            Structural Repair Manual. In addition, all inspected areas will be
            properly treated with corrosion inhibitor as recommended by
            Manufacturer;

                        (i) provide LESSOR will written summaries of all
            sampling programs involving or affecting the Aircraft;

                        (j) properly document all repairs, modifications and
            alterations and the addition, removal or replacement of equipment,
            systems or components in accordance with the rules and regulations
            of the FAA and reflecting such items in the Aircraft Documentation.
            In addition, all repairs to the Aircraft will be accomplished in
            accordance with Manufacturer's Structural Repair Manual (or
            FAA-approved data supported by FAA Form 8110-3 or equivalent). All
            modifications and alterations will also be accomplished in
            accordance with FAA-approved data supported by FAA Form 8110-3 or
            equivalent.

                  (ii) All maintenance of the Aircraft and Engines shall be
            performed by an Authorized Maintenance Performer.

                  (iii) (A) "Covered Maintenance" means, at any time, (1) the
            structural inspection portion (including CPCP) of the 15,000 Hour
            and 30,000 Hour (or their equivalent) maintenance checks under the
            Maintenance Program, (2) the performance restoration or replacement
            of life limited parts or permanent repair of on-condition parts in
            the bare Engine during completed shop visits and (3) the full
            refurbishment of the landing gear (excluding maintenance in respect
            of compliance with airworthiness directives and elective parts
            replacement), respectively, pursuant to the Maintenance Program
            including, in each case, without limitation, associated inspections,
            breakdown and assembly occurring during such overhauls. The cost of
            Covered Maintenance shall be limited to the actual cost of
            replacement parts plus the cost of the associated labor at LESSEE's
            in-house labor rates if the work is performed by LESSEE, excluding
            any LESSEE charges for handling, packaging and shipping, or at
            third-party cost charged to LESSEE if the work is performed by third
            parties, and shall in no event include late charges, interest or
            other similar amounts as a result of late payment.


                                      -27-
<PAGE>

                  (B) Unless a Default or a Related Lease Default shall have
occurred and be continuing, the LESSOR shall pay to the LESSEE, within five
Business Days after receipt of:

                        (a) an invoice stating that Covered Maintenance has been
            performed on the Airframe, an Engine or a Landing Gear,
            respectively, and the cost thereof; and

                        (b) appropriate documentation with respect to such work
            or payments, an amount equal to the actual cost of such work up to
            the then current balance of the Airframe Reserves for such Covered
            Maintenance on the Airframe, up to the then current balance of the
            Engine Reserves for such Covered Maintenance on any Engine and up to
            the then current balance of the Landing Gear Reserves for such
            Covered Maintenance on a Landing Gear; provided, however, that at no
            time shall the amount of any Reserve to be made available by LESSOR
            for Covered Maintenance exceed the amount remaining in such Reserve.

                        (f) LESSEE agrees that it will not discriminate against
            the Aircraft (as compared to other aircraft of the same type owned
            or operated by LESSEE) in the performance of maintenance, including,
            but not limited to, in contemplation of the expiration or
            termination of this Lease with respect to the maintenance of the
            Aircraft.

            (E) Airworthiness Directives: Service Bulletins. If the FAA, the
Manufacturer or the Engine Manufacturer, or the manufacturer of any Parts,
publishes an airworthiness directive or mandatory service bulletin after the
Effective Date of this Lease, which has a useful life beyond the Term, requiring
completion or termination during the Term (a "Post-Effective Mandatory
Modification"), LESSEE shall as required in Section 7(D)(i) above take all such
action as is necessary to comply with such Post-Effective Mandatory Modification
prior to the return of the Aircraft by LESSEE to LESSOR. To the extent the cost
of completing or terminating any such Post-Effective Mandatory Modification
exceeds $50,000.00, LESSOR shall pay to LESSEE a portion of such excess equal to
the following:

                  (LESSEE's Cost - $50,000) x A/240

                  Where:


                                      -28-
<PAGE>

                  A =   240 minus the number of months (rounded upward or
                        downward, as the case may be, to the nearest month) from
                        the date the relevant Post-Effective Mandatory
                        Modification was completed or terminated by LESSEE to
                        the Expiration Date.

Any amounts payable by LESSOR to LESSEE pursuant to this Section 7(E) shall not
be payable to the LESSEE until the later of (i) the Expiration Date, or (ii) the
date on which the LESSEE has complied with all the terms of this Lease.

            (F) Title, Registration and Insignia. LESSEE acknowledges and agrees
that title to the Aircraft shall remain vested in LESSOR during the Term in
accordance with the terms of this Lease. The Aircraft shall, at all times during
the Term, be registered in the United States in the name of LESSOR or such
Person as LESSOR may designate, in accordance with the Laws of the U.S.
Government. LESSEE agrees that it shall take no action which shall cause the
Aircraft to cease to be so registered in the name of LESSOR with the FAA under
the Act. Unless otherwise requested, within fifteen (15) days of the Effective
Date, LESSEE shall fasten or cause to be fastened in the cockpit, in a location
reasonably adjacent to and not less prominent than the airworthiness certificate
for such Aircraft and on each Engine, an insignia plate supplied by LESSOR and
in the form set forth in Exhibit "H" hereto or in any other form subsequently
designated by LESSOR.

                  LESSEE will not allow the name of any Person to be placed on
the Aircraft or an Engine as a designation that might be interpreted as a claim
of ownership; provided, however, that LESSEE may cause the Aircraft to be
lettered in an appropriate manner for convenience of identification of the
interest of LESSEE therein, including but not limited to, the customary livery
of LESSEE.

            (G) Maintenance Reports and Records.

                  (a) During the Term, LESSEE shall provide maintenance
            information and reporting requirements to LESSOR and any other party
            so designated by LESSOR including but not limited to: (i) written
            notification within thirty (30) days after issuance of any
            airworthiness directive or legal requirement affecting the Aircraft,
            Airframe, Engines or Parts; (ii) annual and quarterly written
            projections of scheduled Airframe, landing gear and Engine heavy
            maintenance; (iii) prompt written notification of damage to the
            Aircraft, Airframe, Engines or Parts where the estimated cost of
            repair is in excess of $250,000 (iv) prompt written notification of
            Engine removals,


                                      -29-
<PAGE>

            exchanges or foreign object damage (said report to include details
            of circumstances and plan of action to repair); (v) reports of
            Flight Hours and Cycles on a monthly basis; (vi) reporting of all
            service bulletins completed; and (vii) copies of all material
            reports sent to the FAA or Air Authority concerning the Aircraft.

                  (b) LESSEE will, during the Term, maintain all records, logs
            and other materials required to be maintained with respect to the
            Aircraft by Persons in operational control of the Aircraft under any
            applicable rules, Laws or regulations and shall supply all such
            records, logs and other materials to LESSOR or third parties as
            reasonably requested by LESSOR and as shall be necessary in order to
            implement the Maintenance Program and any and all warranties and
            guarantees that apply to the Aircraft. LESSEE will provide LESSOR
            with copies of all records of maintenance performed during the Term
            as requested by LESSOR. All such records shall be kept as required
            under FAR Part 121 and in English.

            (H) Passenger Convenience Equipment. Notwithstanding any other
provision herein to the contrary, LESSEE may install or remove or permit to be
installed or removed aboard the Aircraft, without the prior written consent of
LESSOR, Passenger Convenience Equipment so long as the installation, use and
removal of such Passenger Convenience Equipment does not impair the value,
utility or airworthiness the Aircraft would have had at any time had the
installation, use or removal not occurred.

                  Without further action of LESSEE or LESSOR, title to such
Passenger Convenience Equipment, upon installation, shall vest in LESSOR and
shall become subject to this Lease, free of all liens, charges and encumbrances,
provided, however, that so long as an Event of Default shall not have occurred
and be continuing during the Term, LESSEE may, at any time prior to return of
the Aircraft, remove such Passenger Convenience Equipment or component thereof,
at which time title thereto shall, without further act, vest in LESSEE, and such
Passenger Convenience Equipment or component thereof shall no longer be deemed
part of the Aircraft from which it was removed.

                  Notwithstanding the foregoing paragraph, if the Passenger
Convenience Equipment is (i) owned by any third party and leased to LESSEE, (ii)
sold to LESSEE subject to a conditional sales contract or other security
interest, (iii) leased to LESSEE pursuant to a lease which is subject to a
security interest in favor of any third party, or (iv) installed aboard the
Aircraft subject to a license granted by LESSEE to a


                                      -30-
<PAGE>

Immediately upon any replacement Parts becoming incorporated or installed in or
attached to the Aircraft as above provided, and without further act:

                  (1) title to the removed Part shall vest in LESSEE, free and
            clear of all rights of LESSOR;

                  (2) title to the replacement Parts shall vest in LESSOR, free
            and clear of all rights of third parties, including, but not limited
            to, LESSEE; and

                  (3) such replacement Parts shall become subject to this Lease
            and shall be deemed part of the Aircraft into which such Parts were
            incorporated or with respect to which such Parts were required, for
            all purposes hereof to the same extent as the Parts originally
            incorporated or installed in, or attached or related to such
            Aircraft.

            (B) Pooling; Etc.

                  (i) LESSEE may subject any Engine or APU to normal interchange
            agreements customary in the United States domestic commercial
            airline industry entered into by the LESSEE in the ordinary course
            of its business, and may subject any Engine to pooling arrangements
            customary in the United States domestic commercial airline industry
            and entered into by the LESSEE in the ordinary course of its
            business.

                  (ii) LESSEE may install an Engine or APU on an airframe owned
            by the LESSEE provided such airframe is free and clear of all liens
            and encumbrances, except

                  (a) Liens of the type or equivalent to those set forth in the
            definition of "Permitted Liens"; and

                  (b) the rights of air carriers under normal interchange
            arrangements which are customary in the United States domestic
            commercial airline industry and which do not contemplate, permit or
            require the transfer of title to the airframe or Engines installed
            thereon.


                                      -32-
<PAGE>

                  (iii) LESSEE may install an Engine or APU on an airframe
            leased to, or purchased by the LESSEE, subject to a lease,
            conditional sale, trust indenture or other security agreement, but
            only if

                  (a) such airframe is clear of all liens and encumbrances,
            except Permitted Liens or Liens of the type or equivalent to those
            set forth in the definition of "Permitted Liens" and the rights of
            the parties to the lease, conditional sale, trust indenture or other
            security agreement covering such airframe; and

                  (b) LESSOR shall have received from the lessor, conditional
            seller, indenture trustee, or secured party of such airframe, a
            written agreement (which may be the lease, conditional sale, trust
            indenture or other security agreement covering such airframe),
            whereby such lessor, conditional seller, indenture trustee or
            secured party expressly agrees that neither it nor its successors or
            assigns will acquire or claim any right, title or interest in any
            Engine or APU by reason of such Engine or APU being incorporated in
            such airframe at any time while such Engine or APU is subject to
            this Lease.

                  (iv) No permitted interchange or pooling agreement, transfer
            or other relinquishment of possession permitted hereunder shall
            affect the title to, or registration of or effect any transfer of
            the Aircraft, Airframe, Engines or APU or shall constitute consent
            to any action not permitted to the LESSEE in this Lease.

                  (v) LESSOR hereby agrees for the benefit of LESSEE and any
            lessor, conditional vendor or secured party of any engine leased to
            LESSEE, purchased by LESSEE pursuant to a conditional sale agreement
            or owned by LESSEE subject to a security agreement that neither
            LESSOR nor its assignees will acquire or claim, as against LESSEE,
            such lessor, conditional vendor or secured party or any of their
            respective assignees any right, title or interest in any engine
            owned by such lessor under such lease, sold by such conditional
            vendor under such conditional sale agreement or subject to a
            security interest in favor of such secured party under such security
            agreement as a result of such engine being installed on the
            Airframe.


                                       -33-
<PAGE>

            (C) Equipment Changes. LESSEE, at its own expense, shall make such
alterations and modifications in and additions to ("Equipment Changes") the
Aircraft as may be required from time to time to meet the standards of the FAA
and the Air Authority and of the Governmental Entity in the jurisdiction of
which LESSEE elects to fly the Aircraft and whose approval or consent is
required to permit LESSEE to fly over and/or into any geographical area with
respect to which the Governmental Entity exercises authority. In addition, the
term "Equipment Changes" shall mean modifications to or additions to the
Aircraft that LESSEE, at its own expense, may from time to time deem desirable
in the proper conduct of its business, provided that no such Equipment Change
diminishes the value, utility, condition or airworthiness of the Aircraft below
the value, utility, condition and airworthiness thereof immediately prior to
such Equipment Change, assuming the Aircraft was then in the condition required
to be maintained by the terms of this Lease, and provided further that LESSEE
shall not change the configuration of the Aircraft during the Term (except the
passenger seating configuration) unless such configuration is approved by the
LESSOR and the Air Authority. Any Equipment Change other than the Equipment
Changes relating to the installation of TCAS, Windshear detection system and the
upgrade of the Engines from model JT8D-217C to JT8D-219 with an estimated cost
in excess of Two Hundred Fifty Thousand ($250,000.00) Dollars must be approved
in advance by LESSOR, which approval will not be unreasonably withheld.

                  Title to all Parts incorporated, installed in, attached or
added to the Aircraft as the result of any such Equipment Change shall, without
further act, vest in LESSOR; provided, however, that during the Term, LESSEE may
remove any such Part if: (1) such Part is in addition to any Part originally
incorporated or installed in or attached to such Aircraft at the time of
delivery thereof hereunder; and (2) such Part is not required to be
incorporated, installed in, attached or added to the Aircraft; and (3) such Part
can be removed from the Aircraft or can be replaced with a part of equal value
to the Part installed upon delivery without diminishing or impairing the value,
utility or airworthiness which the Aircraft would have had at such time, had
such Equipment Change not occurred. Upon the removal by LESSEE of any Part as
above provided, title thereto shall, without further act, vest in LESSEE and
such Part shall no longer be deemed part of the Aircraft from which it was
removed. Any Part not removed from the Aircraft by LESSEE as provided above
prior to a Redelivery Occasion shall remain the property of LESSOR.

                  LESSOR shall bear no liability in respect of, or cost for, any
Equipment Change, grounding of the Aircraft, suspension of certification
thereof, or loss of revenue therefrom.


                                      -34-
<PAGE>

                                    SECTION 9

                        INSPECTION; FINANCIAL INFORMATION

            (A) During the Term, LESSEE shall furnish to LESSOR and Mortgagee
such information concerning the location, condition, use and operation of the
Aircraft as LESSOR or Mortgagee may reasonably request. LESSEE shall also
furnish to LESSOR and Mortgagee copies of its reports on Forms 10-K and 10-Q
promptly upon same becoming available for public distribution.

            (B) The right of LESSOR and Mortgagee, or their designated
representatives, at LESSOR's expense, to inspect the Aircraft during any "C",
"15,000 Hour" or "30,000 Hour" check or equivalent (as defined in the
Maintenance Program), performed by or on behalf of LESSEE during the Term shall
be absolute. LESSEE shall also provide LESSOR and Mortgagee with maintenance
schedules relating to the Aircraft upon the delivery of the Aircraft to LESSEE,
and from time to time as such maintenance schedules are adjusted or updated.
LESSEE further agrees to notify LESSOR and Mortgagee of any change in the date
of scheduled "C," "15,000 Hour" and "30,000 Hour" checks, which notice shall be
given within a reasonable time, to enable LESSOR and Mortgagee to inspect the
Aircraft at the time and place such checks occur. During such checks, LESSEE
agrees to allow LESSOR and Mortgagee, or their authorized representative, to
inspect any area of the Aircraft which LESSOR or Mortgagee requests to inspect
which would normally require inspection during such major checks. LESSEE also
shall permit any Person designated by LESSOR or Mortgagee in writing to:

                  (1) visit and inspect the Aircraft, its condition, use and
            operation, and the records maintained in connection therewith;

                  (2) visit and inspect the properties of LESSEE;

                  (3) discuss, to the extent reasonable, the finances and
            accounts of LESSEE with the principal officers of LESSEE,

                  (4) obtain such other financial information as LESSOR or
            Mortgagee may reasonably request; in this regard, during the Term,
            LESSEE shall deliver to LESSOR and Mortgagee annual financial
            statements prepared in accordance with generally accepted accounting
            principles consistently applied and audited by recognized,
            independent


                                      -35-
<PAGE>

            certified public accountants reasonably satisfactory to LESSOR and
            Mortgagee as soon as practicable and in any event within 120 days
            after the end of LESSEE's fiscal year, as well as quarterly
            unaudited financial statements, within 60 days following the close
            of each of LESSEE's fiscal quarters; and

                  (5) inspect LESSEE's Maintenance Program for the Aircraft.

all at such times and frequencies as LESSOR and Mortgagee, or the assignee of
LESSOR or Mortgagee, may reasonably request without interfering with LESSEE's
normal business operations; neither LESSOR nor Mortgagee shall have any duty to
make any such inspection and neither LESSOR nor Mortgagee shall incur any
liability or obligation by reason of not making any such inspection.

LESSOR hereby agrees that if LESSOR or Mortgagee exercises any of the rights
listed in clauses (1) through (5) above, it shall do so at LESSOR's sole cost
and expense and in such a manner so as not to unreasonably interfere with the
business and operations of LESSEE.

                  Notwithstanding the foregoing, LESSOR and Mortgagee shall
incur no liability nor be deemed to have waived any of their rights under this
Lease by reason of LESSOR's or Mortgagee's failure to exercise any of its rights
under this Section 9(B).

            (C) LESSEE shall also furnish any other information or records on
the Aircraft that LESSOR or Mortgagee may reasonably request.

                                   SECTION 10

                               COVENANTS OF LESSEE

            LESSEE represents, warrants, covenants and agrees that:

            (A) Maintenance of Corporate Existence. LESSEE shall preserve and
maintain its existence, valid legal status, and all of its rights, privileges,
and franchises under the Laws of the U.S. Government necessary to the conduct of
its business.

            (B) Payment of Taxes. LESSEE shall:


                                      -36-
<PAGE>

                  (1) Pay or cause to be paid all taxes upon LESSEE or its
            income or profits, or upon any property or assets belonging to or
            used by it, prior to the date on which penalties attach thereto;

                  (2) Pay or otherwise discharge all lawful claims, which, if
            not paid, might become a Lien or charge upon the property of LESSEE
            (provided, however, that LESSEE shall not be required to pay any
            such Taxes or claims, the payment of which is being contested in
            good faith and by appropriate proceedings, except that LESSEE will
            pay or cause to be paid all such Taxes or claims forthwith in the
            event LESSEE is unable to stay or suspend enforcement or execution
            of a warrant of restraint or foreclosure of any Liens which attach
            as security therefor).

            (C) Sale of Assets, Merger, etc. Without the prior written consent
of LESSOR, which consent shall not be unreasonably or arbitrarily withheld,
LESSEE will not sell, lease, assign, transfer or otherwise dispose of
substantially all of its assets, whether now owned or hereafter acquired, except
in the ordinary course of its business as presently conducted and for a full and
adequate consideration, and will not merge or consolidate with or into, or
acquire substantially all of the assets and assume substantially all of the
liabilities of, any corporation or other entity unless the surviving entity, as
a result of such sale, purchase, merger or consolidation, is the LESSEE or the
surviving entity (i) assumes this Lease; (ii) is a U.S. Air Carrier; and (iii)
has and will have, immediately following any such sale, purchase, merger or
consolidation, a tangible net worth (as determined in accordance with United
States generally accepted accounting practices) equal to or greater than that
which the LESSEE had immediately prior to such sale, merger or consolidation.

            (D) U.S. Air Carrier. Throughout the Term, LESSEE shall, at all
times, be a U.S. Air Carrier.

            (E) Communications.

                  (i) LESSEE shall promptly deliver to LESSOR any communications
            received by LESSEE from the Air Authority which materially affects
            the Aircraft and which are not applicable to all aircraft of the
            same make and model as the Aircraft; and

                  (ii) LESSOR shall promptly deliver to LESSEE any
            communications received by LESSOR from the Manufacturer which


                                      -37-
<PAGE>

            materially affects the maintenance, operation or airworthiness of
            the Aircraft and which are not applicable to all aircraft of the
            same make and model as the Aircraft.

            (F) No Security Interests. LESSEE will not create or agree or permit
to arise any Lien (other than Permitted Liens) on or with respect to the
Aircraft, title thereto or any interest therein. LESSEE will forthwith, at its
own expense, take all action as may be necessary to discharge or remove any such
Lien if it exists at any time. LESSEE will promptly, but in no event later than
seventy-two (72) hours after becoming aware of the existence of any such Lien
give written notice thereof to LESSOR.

                                   SECTION 11

                                      TAXES

             (A) LESSEE agrees to pay and to indemnify and hold harmless the
Indemnitees from all Taxes assessed against or upon any Indemnitee, LESSEE, the
Aircraft, or any part thereof during the Term and arising out of this Lease, or
upon the leasing, possession, use, operation, repair, maintenance, overhaul,
settlement of any insurance claim, or return thereof, or upon any Rent, receipts
or earnings arising from the operation thereof, or upon or with respect to this
Lease unless, and to the extent only that, any such Tax is being contested by
LESSEE in good faith and by appropriate proceedings duly instituted and
diligently prosecuted and only so long as such proceedings do not involve any
danger of the sale, forfeiture or loss of the Aircraft. Notwithstanding the
foregoing, Lessee shall not be liable to pay (1) any Taxes based solely on or
measured by the net income of any Indemnitee, (2) any Taxes imposed by any
taxing authority other than the United States of America or any political
subdivision thereof unless such Taxes would not have been imposed but for (a)
the operation or presence in such jurisdiction of the Aircraft, (b) the presence
in such jurisdiction of a permanent establishment or fixed place of business of
Lessee or any user or Person in possession of the Aircraft, or (c) the payment
from such jurisdiction of any amount due under this Lease. In case any report or
return is required to be made with respect to any obligation of LESSEE under or
arising out of this Section 11, LESSEE shall either make such report or return
in such manner as will show the ownership of the Aircraft in LESSOR and send a
copy of such report or return to LESSOR, or shall notify LESSOR of such
requirement and make such report or return in such manner as shall be
satisfactory to LESSOR. If claim is made against LESSOR for any Taxes arising
during the term of this Lease, LESSOR shall promptly notify LESSEE. LESSOR
shall, at LESSEE's expense, take such action as LESSEE may


                                      -38-
<PAGE>

reasonably request in writing with respect to such asserted liability, and if
reasonably requested by LESSEE and upon the prior payment to LESSOR by LESSEE of
an amount equal to such Tax, any payment by LESSOR of such Tax shall be made
under protest. If payment is made, LESSOR shall, at LESSEE's expense, take such
action as LESSEE may reasonably request to recover such payment and shall, if
requested, permit LESSEE in LESSOR's name to file a claim or prosecute an action
to recover such payment. All of the obligations of LESSEE in this Section 11
with respect to Taxes imposed or accrued before the expiration or other
termination of this Lease shall continue in full force and effect
notwithstanding such expiration or other termination, and are expressly made for
the benefit of, and shall be enforceable by, LESSOR. LESSEE further agrees that,
with respect to any payment or indemnity hereunder, such payment or indemnity
shall include any amount necessary to hold the recipient of the payment or
indemnity harmless on an after-tax basis from all Taxes required to be paid by
such recipient with respect to such payment or indemnity under the Laws of any
Governmental Entity.

            (B) In the event the LESSEE determines there is a substantial risk
of a change in the Code, or the Regulations issued pursuant thereto, which
clearly results in a Tax of the LESSOR indemnified against pursuant to this
Section 11 being imposed against an Indemnitee (a "Change"), the LESSEE shall
have the right to terminate this Lease and return the Aircraft to the LESSOR
pursuant to the provisions of Section 17. LESSEE shall notify LESSOR of any
Change and its intent to terminate the Lease in writing 270 days prior to the
date that the Lease is to be terminated and the Aircraft returned to LESSOR. If
LESSOR elects to waive any indemnification pursuant to this Section 11 in
respect of any Taxes which are attributable to such Change within 30 days of
such notice (a "LESSOR Waiver"), the Lease shall not be terminated but LESSEE
shall have no obligation under this Section 11 in respect of such Taxes arising
due to such Change. However, at any time subsequent to such LESSOR Waiver,
LESSOR may, on 270 days' prior notice to LESSEE, elect to terminate this Lease
and require the LESSEE to return the Aircraft to the LESSOR pursuant to the
provisions of Section 17, in which event LESSEE may elect to irrevocably
reinstate its indemnification pursuant to this Section 11 in respect of any
Taxes which are attributable to such Change, within 30 days of such notice from
LESSOR.

            (C) LESSOR will act in good faith to minimize the obligations of the
LESSEE under this Section 11.


                                      -39-
<PAGE>

                                   SECTION 12

                                  EVENT OF LOSS

            (A) Event of Loss Regarding the Aircraft. In the event that an Event
of Loss occurs with respect to the Aircraft (other than a requisition of use by
the U.S. Government while the United States pays to LESSOR or LESSEE
compensation for such requisition in an amount equal to or in excess of the Rent
payable with respect to such Aircraft), LESSEE shall forthwith (and, in any
event, not later than five (5) days after the occurrence of the Event of Loss)
give LESSOR written notice of such Event of Loss and, not later than the earlier
of: (a) the ninetieth (90th) day following the occurrence of such Event of Loss;
or (b) the day of receipt of insurance proceeds in respect of such Event of
Loss; pay to LESSOR or its assignees, in funds of the type specified in
Subsection 5(B) hereof, the sum of all unpaid Rent and all other amounts due
hereunder with respect to such Aircraft and which have accrued through and
including the date of payment of the Agreed Value, plus an amount equal to the
Agreed Value. In the event of payment in full of such Agreed Value, together
with all such amounts due or accrued hereunder on or prior to the date of such
payment, the obligation of LESSEE to pay Rent with respect to the Aircraft as to
which such payments have been made shall terminate. LESSEE agrees that it shall
promptly file all necessary claim forms or other documents required by any
insurer in connection with any claim arising from an Event of Loss and shall
diligently pursue such claim.

                  Upon payment of all Rent due and the Agreed Value, LESSOR
shall transfer to LESSEE (subject to the rights of the Insurers) all of LESSOR's
right, title, and interest in and to: (i) the Aircraft which sustained such
Event of Loss, as well as all of LESSOR's right, title, and interest in and to
any Engines constituting part of such Aircraft; and (ii) all claims for damages
to such Aircraft and/or Engines, if any, against third Persons arising from such
Event of Loss (unless any insurance carrier requires that such claims be
assigned to it), without any representation, warranty, or recourse of any kind
whatsoever, express or implied, except a warranty that such Aircraft is free and
clear of any LESSOR Liens.

                  In the event of an Event of Loss involving the Aircraft
wherein one or more of the Engines are not attached to the Airframe, the
Aircraft, for purposes of this Section 12(A), shall be deemed to include all
Engines on lease hereunder and LESSOR shall cooperate in transferring title to
such non-attached Engines, free and clear of all LESSOR Liens, to the owner of
the engine attached to the Airframe at the time of the Event of Loss.


                                      -40-
<PAGE>

             (B) Event of Loss With Respect to an Engine. Upon any Event of Loss
with respect to an Engine not then installed on the Aircraft, or an Event of
Loss with respect to only an Engine installed on the Aircraft not involving an
Event of Loss to the Aircraft, LESSEE shall give LESSOR prompt written notice
thereof and LESSEE shall replace such Engine as soon as reasonably possible
after such Event of Loss by duly conveying to LESSOR, as a replacement for such
Engine, title to another engine owned by LESSEE of the same or an improved make
and model, which engine shall be free and clear of all Liens and shall have a
value and utility at least equal to, be in as good operating condition as
(including time in service, hours and cycles since new and hours and cycles
available to the next overhaul or scheduled removal), and be in equivalent or
better service bulletin and modification status than the Engine which sustained
such Event of Loss (assuming the Engine which sustained such Event of Loss was
maintained in the condition in which LESSEE was required to maintain such Engine
pursuant to this Lease). Such replacement engine, after approval and acceptance
by LESSOR, shall be deemed an "Engine" as defined herein. If the replacement
engine is in substantially better condition than the Engine which sustained such
Event of Loss, Lessor will consider an appropriate adjustment to the Engine
Reserves. LESSEE agrees to take such action as LESSOR may reasonably request in
order that any such replacement engine shall be duly and properly leased
hereunder to the same extent as the Engine subject to the Event of Loss and
shall be titled in LESSOR. LESSEE's obligation to pay Rent hereunder shall
continue in full force and effect regardless of the occurrence of an Event of
Loss with respect to an Engine, but LESSEE shall be entitled to be reimbursed by
LESSOR the amount of insurance or condemnation proceeds, if any, received by
LESSOR with respect to such Engine. Upon receipt of title by LESSOR to the
replacement engine as hereinabove provided, LESSOR shall convey to LESSEE, free
and clear of all LESSOR Liens, title to the Engine which sustained such Event of
Loss.

             (C) Damage or Requisition Not Constituting an Event of Loss. In the
event of material damage or requisition of the Aircraft or any Engine not
constituting an Event of Loss, LESSEE shall promptly notify LESSOR in writing of
such damage or requisition and shall remain obligated to make all payments of
Rent in respect to such Aircraft or Engine which may become due hereunder in the
same manner as if such damage or requisition had not occurred. All payments at
any time received by LESSEE, or by LESSOR from any Person other than LESSEE,
with respect to any such damage or requisition shall be paid over to, or
retained by, LESSOR, and shall be paid to LESSEE upon repair of the Aircraft or
Engine.

             (D) Receipt and Application of Compensation. Following an Event of
Loss with respect to which payments, including insurance proceeds, are made by
or are


                                      -41-
<PAGE>

due from any Person (any such payments or proceeds being hereinafter referred to
as "Compensation"), LESSOR shall be entitled to receive, and shall receive, and
LESSEE hereby assigns to LESSOR any right or interest which LESSEE may have or
may hereafter acquire, in such Compensation, in trust, to be applied as follows:

                  (1) If such Compensation is received with respect to the
            Aircraft under the circumstances described in Subsection 12(A), so
            much thereof as shall not exceed the Agreed Value and other amounts
            due under Subsection 12(A) shall be retained by LESSOR, in reduction
            of LESSEE's obligation to pay such Agreed Value and other amounts
            due as was not theretofore paid by LESSEE, or, if such Agreed Value
            and other amounts have already been paid to LESSOR, such
            Compensation shall be applied to reimburse LESSEE for its payment of
            such Agreed Value, and may be paid to LESSEE.

                  (2) If such Compensation is received with respect to an Engine
            under the circumstances described in Subsection 12(B), such
            Compensation shall be held in an account established for LESSOR with
            a bank or trust company as depository, as designated by LESSOR, such
            sums to be held, invested and distributed as provided below. All of
            LESSEE's interest in all monies and investments standing to the
            credit of such account are hereby pledged to LESSOR, and LESSOR is
            hereby granted a general lien upon and security interest in all of
            LESSEE's interest in all such monies and investments as security for
            the performance in full of all of LESSEE's covenants contained in
            this Lease. The bank or trust company holding such Compensation
            shall be deemed to be LESSOR's agent for the purpose of perfecting
            LESSOR's security interest in such sums. If LESSEE shall replace
            such Engine in accordance with the provisions of Subsection 12(B),
            LESSOR shall, so long as no Event of Default or Default shall have
            occurred and be continuing, return all monies and investments then
            held in such account to LESSEE.

            (E) Payments During Existence of an Event of Default. Any payment
referred to in Subsection 12(A), (B), (C) or (D) hereof which is payable to
LESSEE hereunder shall not be paid to LESSEE, or, if previously paid directly to
LESSEE, shall not be retained by LESSEE, if at the time of such payment a
Default or a Related Lease Default shall have occurred and be continuing, but
shall be paid to and retained by LESSOR as security for the obligations of
LESSEE under this Lease until such time as


                                      -42-
<PAGE>

such a Default or a Related Lease Default shall have been remedied, whereupon
such payment shall be made to LESSEE.

                                   SECTION 13

                                    INSURANCE

            (A) Public Liability and Property Damage Insurance. LESSEE will
carry and maintain in effect, at its own expense, with Approved Insurers, public
liability insurance (including, without limitation, contractual liability, and
passenger legal liability), and property damage insurance with respect to the
Aircraft, in amounts per occurrence of not less than the Minimum Liability
Coverage, or such greater amounts as LESSEE may carry from time to time on other
similar aircraft in its fleet. LESSEE shall not discriminate against the
Aircraft in providing such insurance. Each and any policy of insurance carried
in accordance with this Subsection (A), and each and any policy obtained in
substitution or replacement for any of such policies, (i) shall designate each
Indemnitee as additional insureds as their interests may appear (but without
imposing upon any obligation imposed upon the insured, including, without
limitation, the liability to pay any premiums for any such policies, but the
Indemnitees shall have the right to pay such premiums if it shall so elect), and
(ii) shall expressly provide that, in respect of the interests of the
Indemnitees in such policies, the insurance shall not be invalidated by any
action or inaction of the LESSEE or any other Person (other than the
Indemnitees, each for their respective interests), and shall insure, regardless
of any breach or violation by LESSEE or any other Person (other than the
Indemnitees, each for their respective interests) of any warranty, declaration
or condition contained in such policies, (iii) shall provide that if such
insurance is canceled for any reason whatsoever, or is adversely changed in any
way with respect to the interests of the Indemnitees, or if such insurance is
allowed to lapse for nonpayment of premium, such cancellation, change or lapse
shall not be effective as to the Indemnitees for thirty (30) days (seven (7)
days in the case of any war risks and allied perils coverage or such lesser time
which may be standard in the insurance industry and ten (10) days in the event
of nonpayment of premium), in each instance, after receipt by each of the
Indemnitees of written notice by such insurer or insurers sent to the
Indemnitees of such prospective cancellation, change or lapse, (iv) shall
include coverage for any country in which the Aircraft is located, (v) shall
provide that, as against the Indemnitees, the insurer shall waive any rights of
set-off, counterclaim or any other deduction, whether by attachment or
otherwise, and waives any rights it may have to be subrogated to any right of
any insured against the Indemnitees, with respect to the Aircraft, (vi) shall
provide war risk and allied perils coverage pursuant


                                      -43-
<PAGE>

to the AVN52 extended coverage endorsement or its equivalent, and (vii) shall
insure (to the extent of the risks covered by the policies) the indemnity
provisions of Section 14. Each liability policy shall be primary without right
of contribution from any other insurance which may be carried by any Indemnitee,
and shall expressly provide that all of the provisions thereof (except the
limits of liability) shall operate in the same manner as if there were a
separate policy covering each insured. No liability policy shall permit any
deductible or self-insurance provision except for baggage as is customary in the
industry and such other deductibles only with the consent of the LESSOR, which
consent shall not be unreasonably withheld or delayed, which from time to time
LESSEE can demonstrate are standard in comprehensive liability insurance and, in
particular, public liability risks (including, inter alia, contractual liability
and passenger liability coverage) for U.S. Air Carriers in the then current
United States insurance market.

            (B) Aircraft Hull War Risks and Allied Perils Insurance. LESSEE will
carry and maintain in effect with Approved Insurers, at its own expense, all
risks hull war risks and allied perils insurance on the Aircraft (which shall
include, but not be limited to, coverage for hijacking, declared or undeclared
war, insurrections, strikes, riots, commotions or labor disturbances, malicious
acts or acts of sabotage and unlawful seizure or wrongful exercise of control of
the Aircraft in flight by a person on board such Aircraft acting without the
consent of LESSEE) in an amount not less than the Agreed Value or such greater
amounts as LESSOR or Mortgagee may reasonably request from time to time (and for
which LESSOR shall reimburse LESSEE for its cost of increased premium, if any,
for such greater amounts of insurance) and covering those perils which, from
time to time, are customarily covered by similar insurance maintained by similar
carriers in the U.S. airline industry operating aircraft on international
routes.

            (C) All Risks Hull Insurance. LESSEE, at its own expense, will
maintain in effect with Approved Insurers all risks ground and flight aircraft
hull insurance covering the Aircraft, and fire, transit, extended coverage,
spares and all risks war and allied perils insurance with respect to Engines and
Parts while not installed on such Aircraft or an aircraft, which in each case is
of the type maintained by U.S. Air Carriers similarly situated to LESSEE and
operating similar aircraft and engines which comprise LESSEE's fleet. At all
times while the Aircraft is subject to this Lease, such insurance shall be for
an amount not less than the Agreed Value or such greater amounts as LESSOR may
reasonably request from time to time (and for which LESSOR shall reimburse
LESSEE at its own cost of increased premium, if any, for such greater amounts of
insurance).


                                       -44-
<PAGE>

                  Notwithstanding anything above, each and any policy of
insurance obtained and maintained pursuant to Subsection (B) and this Subsection
(C), and each and any policy obtained in substitution or replacement for any
such policies, (i) shall designate LESSOR as owner of the Aircraft covered
thereby, and shall designate each Indemnitee as additional insureds and
Mortgagee as sole loss payee, as their respective interests may appear (but
without imposing upon any Indemnitee any obligation imposed upon the insured,
including, without limitation, the liability to pay any premiums for any such
policies, but any Indemnitee shall have the right to pay such premiums if they
shall so elect), (ii) shall expressly provide that, in respect of the interests
of any Indemnitee in such policies, the insurance shall not be invalidated by
any action or inaction of LESSEE or any other Person (other than any Indemnitee,
each for their respective interests) and shall insure the Indemnitees,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by LESSEE or any other Person (other than the
Indemnitees, each for their respective interests), (iii) shall provide that if
such insurance is cancelled for any reason whatsoever, or is adversely changed
in any way with respect to the interest of any Indemnitee, or if such insurance
is allowed to lapse for nonpayment of premium, such cancellation change or lapse
shall not be effective as to the Indemnitees, for thirty (30) days (seven (7)
days in the case of any war risks or allied perils coverage or such lesser time
which may be standard in the insurance industry and ten (10) days in the event
of nonpayment of premium) after receipt by the Indemnitees of written notice by
such insurer or insurers to the Indemnitees; as the case may be, of such
prospective cancellation, change or lapse, (iv) shall include coverage for the
territorial limits or any country in which such Aircraft may at any time be
located, (v) shall provide that, as against the Indemnitees, the insurer shall
waive any rights of set-off, counterclaim or any other deduction, whether by
attachment or otherwise, and waives any rights it may have to be subrogated to
any right of any insured against the Indemnitees, with respect to such Aircraft,
(vi) shall provide that in the event of any damage or loss which is an Event of
Loss hereunder and which results in a payment, such payment shall be payable
solely and directly to Mortgagee for the account of all interests, (vii) shall
provide that in the event of any damage or loss which is not an Event of Loss
hereunder and which results in a payment for any one occurrence in excess of
$500,000.00, such payment shall be payable solely and directly to Mortgagee for
the account of all interests, (viii) shall provide that payments for any one
occurrence not in excess of $500,000.00 shall be payable directly to LESSEE
provided there exists no Event of Default or Related Lease Event of Default by
LESSEE, and (ix) shall provide for a standard 50/50 clause between the all risks
hull and war risks underwriters. Each such policy shall be primary without right
of contribution from any other insurance which may be carried by the
Indemnitees.


                                      -45-
<PAGE>

                  LESSEE shall have the right to carry insurance in excess of
the amounts required hereunder and the proceeds of such excess insurance shall
be payable to LESSEE. Similarly, LESSOR shall have the right to carry additional
and separate insurance for its own benefit at its own expense, without, however,
thereby limiting LESSEE's obligations under this Section 13.

                  LESSEE shall at all times maintain a deductible amount in its
all risks hull insurance policies which is no more than Seven Hundred Fifty
Thousand ($750,000.00) Dollars. There shall be no deductible under LESSEE's war
risks insurance policies.

            (D) Application of Insurance Proceeds Not In Excess of $500,000.00.
LESSEE shall be entitled to receive any hull insurance proceeds not in excess of
Five Hundred Thousand ($500,000.00) Dollars as soon as such funds are paid by
the insurance company and shall promptly receive such additional insurance
proceeds, if any, upon presentation to Mortgagee of a vendor's invoice, provided
that such repair work is complete. All insurance proceeds received by LESSEE
pursuant to this Subsection 13(D) shall be used by the LESSEE for the repair of
any damage to the Aircraft or Engines on account of which the insurance proceeds
were paid. Any amount referred to in this Subsection 13(D) which is payable to
LESSEE shall not be paid to LESSEE if at the time of such payment any Default or
Related Lease Default shall have occurred and be continuing, but shall be held
by Mortgagee as security for the obligations of LESSEE under this Lease and such
amount shall be paid to LESSEE at such time as there shall not be continuing any
such Default or Related Lease Default.

            (E) Application in Default. Any insurance proceeds referred to in
this Lease which are otherwise payable to LESSEE, or, if it has been previously
paid to LESSEE, and not yet applied by LESSEE as permitted or required
hereunder, shall be delivered from LESSEE to Mortgagee, if at the time of such
payment, a Default or Related Lease Default shall have occurred and be
continuing. In such case, all such amounts shall be paid to and held by
Mortgagee as security for the obligations of LESSEE hereunder.

            (F) Certificates. Not less than three (3) Business Days prior to the
Effective Date, and thereafter on each renewal by the LESSEE of the insurance
required hereby, LESSEE will furnish to the Indemnitees a certificate and a
broker's letter of undertaking executed and delivered by the Approved Insurer,
appointed by LESSEE, describing in reasonable detail, and in accordance with
customary practice, insurance carried on the Aircraft and certifying that the
insurance then maintained on the Aircraft


                                      -46-
<PAGE>

complies with the terms of this Lease. LESSEE will cause such Approved Insurer
to agree to hold all insurance contracts and slips for the benefit of the
Indemnitees and to advise the Indemnitees in writing at least thirty (30) days
(seven (7) days in the case of any war risk and allied perils coverage and ten
(10) days in the event of nonpayment of premium) prior to the non-renewal,
termination, or cancellation for any reason (including, without limitation,
failure to pay premiums therefor) of any such insurance.

                  In the event LESSEE shall fail to maintain insurance as herein
provided, LESSOR may at its option provide such insurance and, in such event,
LESSEE shall, upon demand, reimburse LESSOR, as Supplemental Rent for the cost
thereof.

            (G) Changes in Industry Practice. If there shall be a fundamental
change in generally accepted industry-wide practice with respect to the
insurance of aircraft (whether relating to all or any of the types of insurance
required to be effected pursuant to the terms of this Section 13) and, as a
consequence thereof, LESSOR shall be of the reasonable opinion that the
insurance required pursuant to the provisions of this Section 13 shall be
insufficient to protect the interests of LESSOR, the insurance requirements set
forth in this Section 13 shall be varied as may be mutually agreed so as to
include such additional or varied requirements to be effected pursuant to the
terms of this Section 13, and as so varied, shall provide substantially the same
protection to LESSOR as it would have done had such change in generally accepted
industry-wide practice not occurred. If any such change in generally accepted
industry-wide practice would enable LESSEE, but for the requirements in this
Section 13, to reduce its expenditures in relation to all or any of the types of
insurance required to be effected pursuant to the terms of this Section 13
without, in the reasonable opinion of LESSOR, prejudicing the interest of
LESSOR, the insurance requirements in this Section 13 shall be amended to take
account of such change in generally accepted industry-wide practice to the
extent required to enable LESSEE to reduce such expenditures, provided, however,
that in no event shall such public liability insurance coverage set forth in
Section 13 be less than $350,000,000.00.

                                   SECTION 14

                                 INDEMNIFICATION

            (A) LESSEE agrees to indemnify, reimburse, and hold harmless the
Indemnitees from and against any and all claims, damages, losses, liabilities,
demands, suits, judgments, causes of action, legal proceedings, whether civil or
criminal, penalties, fines, other sanctions, and any reasonable costs and
expenses in connection herewith,


                                      -47-
<PAGE>

including attorney's fees and expenses (any and all of which are hereafter
referred to as "Claims") which in any way may result from, pertain to, or arise
in any manner out of, or are in any manner related to the Aircraft or this
Lease, arising out of events occurring on or subsequent to the Effective Date,
or the breach of any representation, warranty or covenant made by LESSEE
hereunder, including, but not limited to, (i) the condition, manufacture,
delivery, lease, acceptance, rejection, possession, return, disposition, use, or
operation of the Aircraft (including, but not limited to, latent and other
defects whether or not discoverable by LESSEE or LESSOR) either in the air or on
the ground; or (ii) any defect in the Aircraft arising from the material or any
articles used therein or from the design, testing, or use thereof or from any
maintenance, service, repair, overhaul, or testing of such Aircraft, regardless
of when such defect shall be discovered, whether or not such Aircraft is at the
time in the possession of LESSEE, and regardless of where such Aircraft may then
be located; or (iii) this Lease or any other transaction, approval, or document
contemplated hereby or given or entered into in connection herewith; provided,
however, that LESSEE shall be subrogated to all rights and remedies which LESSOR
may have against the Manufacturer or Engine Manufacturer.

                  LESSEE hereby waives and releases any claim now or hereafter
existing against any Indemnitee, on account of any Claims for or on account of
or arising or in any way connected with injury to or death of personnel of
LESSEE or loss or damage to property of LESSEE or the loss of use of any
property which may result from or arise in any manner out of or in relation to
the leasing, condition, use, or operation of the Aircraft, either in the air or
on the ground during the Term, or which may be caused during the Term by any
defect in such Aircraft from any material or any article used therein or from
the design or testing thereof, or use thereof or from any maintenance, service,
repair, overhaul, or testing of such Aircraft regardless of when such defect may
be discovered, whether or not such Aircraft is at the time in the possession of
LESSEE, and regardless of the location of such Aircraft at any such time.

                  Without limitation upon LESSEE's liability under this Section
14, LESSEE hereby agrees to indemnify, reimburse, and hold each Indemnitee
harmless from any Claims in any manner imposed upon or accruing against each
Indemnitee because of the manufacture, use, or operation of the Aircraft, any
design, article, or material therein or relating thereto, because of
infringement of patent or any other right. LESSEE hereby agrees, and shall have
the right, to assume and conduct promptly and diligently at its sole cost and
expense, the entire defense of any Indemnitee against any such claim, and any
claim, suit, or action for which any Indemnitee is required to assume liability
and to settle such claims and pay any amounts in connection with such agreed
upon settlement.

                                      -48-
<PAGE>

                  LESSOR agrees to give LESSEE prompt notice of any claims
hereunder following LESSOR's actual knowledge of such Claims, but the failure of
LESSOR to give the notice required by this Section 14 shall not constitute a
release by LESSOR or the Indemnitees of any obligations of LESSEE to any
Indemnitees in respect of any such Claim, unless LESSEE is materially adversely
affected solely by such failure of LESSOR to give such notice. Without the prior
consent of LESSEE, LESSOR shall not settle or compromise any Claims that LESSEE,
within a reasonable time after notice from LESSOR, has either (i) confirmed to
LESSOR are subject to indemnification pursuant to this Clause 14, or (ii) agreed
to assume, and to conduct promptly and diligently at its sole cost and expense,
the entire defense thereof.

                  The indemnifications contained in this Section 14 shall
continue in full force and effect notwithstanding any expiration or other
termination of this Lease and are expressly made for the benefit of and shall be
enforceable by each Indemnitee.

            (B) Exceptions. In no event shall the indemnity provided for in
Section 14(A) extend to any Claim or disbursement of any Indemnitee resulting
from, pertaining to or arising in any manner out of, or in any manner relating
to the willful misconduct of any Indemnitee; or to the extent accruing either
before the Effective Date or after the Aircraft has been returned to or
repossessed by LESSOR; or which is a cost or expense required to be paid by
LESSOR hereunder; or which would not have been incurred by LESSOR if LESSOR had
not been in breach of its representations, warranties and covenants in this
Lease; or which results from LESSOR's Liens or Taxes (without prejudice to
LESSEE's obligations set forth in this Lease concerning Taxes).

                                   SECTION 15

                                      LIENS

            LESSEE shall not directly or indirectly create, incur, assume, or
suffer to exist any Lien on or with respect to the Aircraft, title thereto, or
any interest therein, except Permitted Liens. LESSEE shall promptly, at its own
expense, take such action as may be necessary to duly discharge any Lien (except
for Permitted Liens) directly or indirectly created, incurred, assumed or
suffered to exist by LESSEE if the same shall arise at any time with respect to
the Aircraft, title thereto or any interest therein.


                                      -49-
<PAGE>

                                   SECTION 16

                   PERFECTION OF TITLE AND FURTHER ASSURANCES

            (A) Except through the action or inaction of LESSOR, if, at any
time, any filing or recording is reasonably necessary to protect the interest of
Mortgagee or LESSOR, LESSEE shall, at its own cost and expense, cause this
Lease, the Lease Assignment financing statements with respect hereto, and any
and all additional instruments which shall be executed pursuant to the terms
hereof, so far as permitted by applicable Law, to be kept, filed and recorded
and to be re-executed, re-filed and re-recorded at all times in the appropriate
office pursuant or in relation to any Laws of any Governmental Entity, as LESSOR
or Mortgagee may request, to perfect, protect, and/or preserve the rights and
interests of LESSOR or Mortgagee hereunder and in the Aircraft, and LESSEE shall
furnish to LESSOR evidence satisfactory to LESSOR and Mortgagee of each such
filing, re-filing, recordation and re-recordation.

            (B) Without limiting the foregoing, LESSEE shall do or cause to be
done, at LESSEE's cost and expense, any and all acts and things which may be
required under the terms of the Convention on the International Recognition of
Rights in Aircraft ("Mortgage Convention") to perfect and preserve the title of
LESSOR to the Aircraft within the jurisdiction of any signatory which has
ratified the Mortgage Convention, as LESSOR may reasonably request. LESSEE shall
also do or cause to be done, at its own expense, any and all acts and things
which may be required under the terms of any other Law involving any
jurisdictions in which LESSEE will operate, or any and all acts and things which
LESSOR may reasonably request to perfect and preserve LESSOR's ownership rights
regarding the Aircraft within any such jurisdiction and Mortgagee's first
priority lien and security interest in and to the Aircraft and Lease as
evidenced by the Mortgage and Lease Assignment.

            (C) LESSEE will not suffer any matter or thing whatsoever whereby
the LESSOR's title in and to the Aircraft may be impaired on account of LESSEE's
or any transferee's lease or operation of the Aircraft.


                                      -50-
<PAGE>

                                   SECTION 17

                       REDELIVERY OF AIRCRAFT AND RECORDS

            (A) Redelivery. Upon termination of the Lease with respect to the
Aircraft, or pursuant to Section 19 hereof (such event being hereinafter
referred to as a "Redelivery Occasion"), LESSEE, at its own expense prior to the
Redelivery Occasion, shall return such Aircraft to LESSOR at the Redelivery
Location or such other location as may be mutually agreed upon by LESSOR and
LESSEE, fully equipped as delivered or modified as provided hereunder with all
required Engines installed thereon.

            (B) Records. Upon a Redelivery Occasion applicable to the Aircraft,
LESSEE, at its own expense, shall deliver to LESSOR all Aircraft Documents
listed in Exhibit "B", as updated, amended or supplemented along with such other
records and documents in such form as are necessary to qualify the Aircraft for
the issuance of a Certificate of Airworthiness by the FAA and to be eligible to
operate under FAR Part 121 specifications issued by the FAA. Such records and
manuals shall be current and shall constitute an accurate representation of the
condition of the Aircraft.

            (C) Condition of Aircraft. Upon a Redelivery Occasion applicable to
the Aircraft, LESSEE shall return the Aircraft to LESSOR in such condition that
the Aircraft shall: (1) comply with each and every return condition requirement
set forth in Exhibit "I" hereto; (2) have a valid certificate of airworthiness
or, at LESSOR's request, a valid certificate of airworthiness for export to a
jurisdiction designated by LESSOR; and (3) shall be free and clear of all Liens,
except LESSOR's Liens.

            (D) Final Inspection. Upon or next preceding a Redelivery Occasion
with respect to the Aircraft hereunder, LESSEE shall make such Aircraft
available to LESSOR and Mortgagee not more than five (5) days or less than three
(3) days prior to the date of the Redelivery Occasion for detailed inspection in
order to verify that the condition of such Aircraft complies with the
requirements set forth above (such inspection being hereinafter referred to as
the "Final Inspection"). Such Final Inspection may be scheduled at an
appropriate maintenance facility of the Authorized Maintenance Performer then
performing maintenance of such Aircraft, pursuant to Subsection 7(D) hereof, and
LESSEE shall give LESSOR and Mortgagee not less than ten (10) days' prior
written notice of the location and commencement date of such Final Inspection.
The last "C" Check (or the equivalent thereof under the Maintenance Program) and
the period allowed for the Final Inspection shall have such duration as to
permit LESSOR to inspect the Aircraft and the Aircraft Documents in accordance
with this Section 17 and Exhibit "I".


                                      -51-
<PAGE>

            (E) No more than three (3) of LESSOR's and Mortgagee's
representatives shall be permitted to attend each phase of activity required to
be conducted during the last "C" Check and the Final Inspection. The Final
Inspection shall commence on the dates designated pursuant to Sections 17(D) and
17(G) with respect to the Aircraft and Aircraft Documents, respectively, and
shall continue on consecutive days until all activity required above to be
performed during the Final Inspection has been concluded. During the maintenance
checks performed immediately prior to the Redelivery Occasion and at the actual
return of the Aircraft, LESSOR, Mortgagee and/or their representatives will have
an opportunity to conduct a complete inspection of the Aircraft's physical
condition including a full operational inspection of the Aircraft systems,
including the opening, in order to verify any aspect, of the condition of any
area of the Aircraft which would normally be accessible during the maintenance
check being performed, or at LESSOR's request and expense any other area,
provided that the Final Inspection, excluding time to correct deficiencies, does
not extend for more than seventy-two (72) hours beyond the Final Inspection. In
addition, a maintenance record review may also be performed to evaluate the
extent to which the Aircraft has been maintained in an airworthy condition in
accordance with requirements of this Lease. Any deficiencies from the Aircraft
return condition requirements set forth in this Section 17 and in Exhibit "I"
will be corrected by LESSEE at its cost prior to the Acceptance Flight as
hereinafter defined. Immediately prior to the proposed redelivery of the
Aircraft, LESSEE will carry out for LESSOR, Mortgagee and/or LESSOR's
representatives an Aircraft acceptance flight (the "Acceptance Flight") (which
may be the ferry flight to the Return Location) in accordance with LESSEE's
comprehensive test flights procedures or, if agreed to in writing by LESSOR, in
accordance with an airline acceptance flight procedure, either of which will be
for the duration necessary to perform such check flight procedures but in any
event not more than one and one-half (1 1/2) hours. Flight costs and fuel will
be furnished by and at the expense of LESSEE. Any deficiencies from the Aircraft
return condition requirements set forth in this Section 17 and Exhibit "I" will
be corrected by LESSEE at its cost prior to return of the Aircraft.

            (F) To the extent that any portion of the Final Inspection extends
beyond the date of a Redelivery Occasion, the Term shall be deemed to be
automatically extended, and the LESSEE shall be obligated to continue to insure
the Aircraft, in accordance with the provisions of this Lease, and to pay Rent
hereunder, on a daily basis, calculated at a daily rate equal to 100% of the per
diem Basic Rent for the first five days and at a daily rate equal to 150% of the
per diem Basic Rent thereafter until the Final Inspection shall have been
concluded. All storage expenses attributable to any extension of the Term
pursuant to the preceding sentence shall be payable by LESSEE. Notwithstanding
the foregoing, in the event that the Final Inspection evidencing that the


                                      -52-
<PAGE>

Aircraft and Aircraft Documents are in conformity with the provisions of this
Lease has not been or, in LESSOR's reasonable judgment, will not be concluded by
the tenth (10th) day from the scheduled end of the Term, then, in such event,
LESSOR shall have the right to elect to take possession of the Aircraft and
Aircraft Documents and perform, or cause to be performed, such repairs as are
necessary to bring the Aircraft and Aircraft Documents into conformity with the
provisions of this Lease with respect to redelivery of the Aircraft and Aircraft
Documents on a Redelivery Occasion. In the event LESSOR makes the election set
forth in the immediately preceding sentence, then, in such event, (i) the Term
shall be deemed extended until the Aircraft and Aircraft Documents are in
conformity with the provisions of this Lease with respect to redelivery but the
obligation of LESSEE to pay Rent hereunder shall terminate, except that LESSEE
shall pay Supplemental Rent in an amount equal to the costs reasonably incurred
by LESSOR to bring the Aircraft and Aircraft Documents into conformity with the
provisions of this Lease; and (ii) the amount of Supplemental Rent payable by
LESSEE to LESSOR may, at the election of LESSOR, be deducted from the Security
Deposit or Related Security Deposit then held by LESSOR and, to the extent that
such Security Deposit or Related Security Deposit is insufficient to pay such
Supplemental Rent (or if LESSOR has not elected to apply such Security Deposit
or Related Security Deposit as provided for herein), LESSEE shall, upon demand
made by LESSOR, pay to LESSOR such additional amounts as shall be necessary to
fully pay the Supplemental Rent.

            (G) Aircraft Documentation. In order to enable LESSOR to prepare for
its Final Inspection of the Aircraft, (i) upon LESSOR's request, LESSEE will
make copies available of (a) drawings of the interior configuration of the
Aircraft both as it presently exists and as it will exist at return, (b)
airworthiness directive status list, (c) service bulletin incorporation list,
(d) rotable controlled, hard time and life limited component listings, (e)
interior material burn certificates, (f) complete workscope for the checks,
inspections and other work to be performed prior to return, and (g) current
Engine disk sheets, and (ii) LESSEE agrees to make available at LESSEE's
maintenance base to LESSOR, not later than ten (10) days prior to the
commencement of such Final Inspection, the Aircraft Documents listed in Exhibit
"B" hereto, together with such other documentation regarding the condition, use,
maintenance, operation and history of the Aircraft as LESSOR may request.

            (H) LESSEE's Correction and Subsequent Corrections. To the extent
that the Aircraft, any Engine or any of the Aircraft Documents fails upon a
Redelivery Occasion to conform to any requirement imposed by Section 17 hereof,
LESSOR may, at its option:


                                      -53-
<PAGE>

                  (1) continue the Lease in effect in the manner provided for in
            Subsection 17(F) above with regard to automatic extension with
            respect to such Aircraft until such time as the nonconforming items
            are corrected; or

                  (2) request LESSEE to pay, and LESSEE shall pay to LESSOR, an
            amount equal to the amount required (labor and materials) by the
            then current Authorized Maintenance Performer or any other Person,
            as the case may be, agreed upon by LESSOR and LESSEE on the date of
            such Redelivery Occasion, to correct such nonconforming items. Any
            such amount payable by LESSEE to LESSOR for such correction shall
            become Supplemental Rent, payable by LESSEE within five (5) days
            following the submission of a written statement by LESSOR to LESSEE
            identifying the items corrected or to be corrected and setting forth
            the expense of such correction. LESSEE's obligation to pay such
            Supplemental Rent shall survive the passage of the early termination
            of the Term or other termination of this Lease. In addition to the
            preceding, and under the same payment terms, LESSEE, with regard to
            any time-limited component installed on such Aircraft which does not
            satisfy the return condition requirements of this Section 17 upon a
            Redelivery Occasion, LESSEE shall pay LESSOR, at the time of a
            Redelivery Occasion, an amount equal to the amount which would be
            required to be paid to the Person selected by the then current
            Authorized Maintenance Performer or any other person, as the case
            may be, agreed upon by Lessor and Lessee on the date of such
            Redelivery occasion, for putting such item in such condition.

            (I) Dispute as to Compliance with Return Conditions. Should there be
any dispute as to whether the Aircraft meets the return conditions, the matter
shall be resolved by an independent knowledgeable aviation maintenance expert
reasonably acceptable to both parties. The standard to be applied in
ascertaining compliance with the redelivery conditions set out in this Section
17 shall be that applied after taking into account the levels of tolerance set
out in the Maintenance Program.

                                   SECTION 18

                                EVENTS OF DEFAULT

            Each of the following events shall constitute an Event of Default:


                                      -54-
<PAGE>

            (A) LESSEE shall fail to make any payment of Rent when due under
this Lease and such payment shall be overdue for a period of three (3) Business
Days after written notice by Lessor to Lessee;

            (B) LESSEE shall fail to carry and maintain insurance on or with
respect to the Aircraft and this Lease in accordance with the provisions of
Section 13 hereof or shall operate the Aircraft or permit the Aircraft to be
operated in violation of any insurance policy required to be provided pursuant
to Section 13 hereof;

            (C) Except as otherwise expressly provided in this Section 18 and
Subsection 18(B) above for which no notice is required, LESSEE shall fail to
perform or observe any covenant, condition or agreement to be performed or
observed by LESSEE under the Lease or any other Lease Document to which LESSEE
is a party and such failure shall continue for a period of thirty (30) days
after written notice thereof from LESSOR to LESSEE, provided that such right of
remedy shall only exist in respect of not more than three (3) cumulative
failures (not including any breach or default by the LESSEE of performance of
its obligations under Subsection 18(L) after the date hereof);

            (D) Any representation or warranty made by LESSEE herein, or in any
notice, certificate or other document furnished by or on behalf of LESSEE herein
to LESSOR or its assigns, shall prove to have been incorrect in any material
respect when made;

            (E) LESSEE shall consent to the appointment of a receiver, trustee
or liquidator for itself or for a substantial part of its property, or LESSEE
shall admit in writing its inability to pay its debts generally as they become
due, or shall make a general assignment for the benefit of creditors, or LESSEE
shall file a voluntary petition in bankruptcy or a voluntary petition or answer
seeking reorganization in a proceeding under any Laws dealing with bankruptcy,
insolvency, moratorium or creditors' rights generally (any or all of which are
hereinafter referred to as "Bankruptcy Laws"), or an answer admitting the
material allegations of a petition filed against LESSEE in any such proceeding,
or LESSEE shall by voluntary petition, answer or consent to or seek relief under
the provisions of any Bankruptcy Laws;

            (F) An order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of LESSEE, a receiver,
trustee or liquidator for LESSEE or any substantial part of its property, or any
substantial part of the property of LESSEE shall be sequestered, and any such
order, judgment, decree or


                                      -55-
<PAGE>

appointment, or sequestration, shall remain in force undismissed, unstayed or
unvacated for a period of sixty (60) days after the date of entry thereof;

            (G) A petition against LESSEE in a proceeding under the Bankruptcy
Laws of any Governmental Entity shall be filed and shall not be withdrawn or
dismissed within sixty (60) days thereafter, or if, under the provisions of any
Bankruptcy Laws which may apply to LESSEE, any court of competent jurisdiction
shall assume jurisdiction, custody or control of LESSEE or of any substantial
part of its property, and such jurisdiction, custody or control shall remain in
force unrelinquished, unstayed or unterminated for a period of ninety (90) days;

            (H) LESSEE shall be dissolved or liquidated, shall terminate its
existence or suspend its operations, shall lose any right, privilege or
franchise necessary to maintain its corporate existence, or shall dispose of all
or substantially all of its properties to any Person (in each case, except as
otherwise permitted hereunder);

            (I) LESSEE shall make or permit any assignment or transfer of this
Lease or of possession of the Aircraft other than as permitted hereunder;

            (J) Any license, permit, authorization, consent, approval,
notification, registration or filing now or hereafter necessary to enable LESSEE
to perform or comply with its obligations under the Lease shall fail to be
timely issued, granted or made, or shall expire or lapse and shall not be
forthwith renewed or extended or shall be revoked, withdrawn, withheld or
adversely modified, or shall cease to be in full force and effect;

            (K) All or a substantial part of the properties of LESSEE shall be
condemned, seized or otherwise appropriated for custody or control, or such
property shall be assumed by any Governmental Entity or any court or other
Person purporting to act under the authority of any Governmental Entity, or
LESSEE shall be prevented from exercising normal control over all or a
substantial part of its properties, if such events as set forth in this
Subsection 18(K) are not remedied within sixty (60) days after they occur;

            (L) The LESSEE fails to pay any Indebtedness exceeding $500,000.00
individually or in the aggregate when due (giving affect to all applicable grace
periods) or any Indebtedness exceeding $500,000.00 individually or in the
aggregate of the LESSEE becomes or is declared to be due and is accelerated,
unless LESSEE is contesting its liability in respect of such Indebtedness by
proceedings being contested in good faith and diligently prosecuted and for
which appropriate reserves have been made by the LESSEE,


                                      -56-
<PAGE>

all as evidenced to the reasonable satisfaction of the LESSOR, and the LESSOR is
reasonably of the view that its interest in the Aircraft is not adversely
prejudiced thereby;

            (M) This Lease or any Lease Document is or becomes wholly or partly
invalid, ineffective or unenforceable and the LESSOR determines that such
invalidity, ineffectiveness or unenforceability will or may have a material
adverse effect upon the rights of the LESSOR or the ability of the LESSEE to
perform its obligations under this Lease or such Lease Document and alternative
arrangements satisfactory to the LESSOR are not entered into by the LESSEE; or

            (N) If any Related Lease Event of Default shall occur and be
continuing.

                                   SECTION 19

                                    REMEDIES

            Upon the occurrence of any Event of Default, and at any time
thereafter so long as the same shall be continuing, LESSOR may, at its option,
declare this Lease to be in default, and at any time thereafter, so long as
LESSEE shall not have remedied any outstanding Event of Default, LESSOR may
exercise one or more of the following remedies with respect to the Aircraft as
LESSOR in its sole discretion shall elect, to the extent available and permitted
by, and subject to compliance with, any mandatory requirements of applicable Law
then in effect; provided, however, that upon the occurrence of any Event of
Default specified in paragraphs (F), (G) or (H) of Section 18, LESSOR shall be
entitled automatically, as of the day prior to such occurrence, to exercise any
of the following remedies without declaring this Lease to be in default or
making demand or giving notice or the taking of any other action:

            (A) Demand that LESSEE, and LESSEE shall, upon the written demand of
LESSOR, at LESSEE's expense, return the Aircraft and Aircraft Documents promptly
to LESSOR in the manner and condition required by, and otherwise in accordance
with all of the provisions of, Section 17 hereof; or LESSOR, at its option and
to the extent permitted by applicable Law, may enter upon the premises where all
or any part of the Aircraft and Aircraft Documents are located and take
immediate possession of and remove the same, by summary proceedings or
otherwise, all without liability accruing to LESSOR for or by reason of such
entry or taking of possession, whether for the restoration of damage to property
caused by such taking or otherwise;


                                      -57-
<PAGE>

            (B) Sell the Aircraft at public or private sale, as LESSOR may
determine, or otherwise dispose of, hold, use, operate, lease to others, or keep
idle the Aircraft, as LESSOR in its sole discretion may determine, all free and
clear of any rights of LESSEE and without any duty to account to LESSEE with
respect to such action or inaction, or for any proceeds with respect thereto;

            (C) Demand (whether or not LESSOR, pursuant to Subsection 19(B)
hereof, may have sold the Aircraft) that LESSEE pay LESSOR, and LESSEE shall
upon such demand pay to LESSOR, as liquidated damages for loss of a bargain and
not as a penalty (in lieu of the Rent for such Aircraft due after such payment
occurs), any accrued and unpaid Rent for such Aircraft due up to the time LESSOR
demands such payment, plus the amount by which the Agreed Value of such Aircraft
exceeds the net cash proceeds of any sale of such Aircraft, together with
interest at the Overdue Rate on such Agreed Value or portion thereof and such
unpaid Rent from the date of LESSOR's demand to the date such payment is made;

            (D) Proceed by appropriate court action or actions, either at Law or
in equity, to enforce performance by LESSEE of the applicable covenants of this
Lease (including, but not limited to, LESSEE's obligation to pay Rent for the
Term) and to recover damages for the breach thereof, or to rescind this Lease as
to the Aircraft (which rescission shall not release LESSEE from its financial
obligations hereunder);

            (E) Terminate this Lease or any of LESSEE's rights hereunder by
written notice, and repossess the Aircraft and Aircraft Documents, provided such
termination shall not release LESSEE from its financial obligations hereunder;

            (F) Use and apply the Security Deposit or the Related Security
Deposit to satisfy any of the obligations of LESSEE set forth in this Lease or
in the Related Lease Agreement;

            (G) Should the LESSEE fail to return the Aircraft and Aircraft
Documents upon termination of the Lease for any reason whatsoever except due to
an Event of Loss and as set forth in Subsection 17(D)(3) without prejudice to
LESSOR's rights hereunder to demand return of the Aircraft in the condition
required by this Section, LESSEE shall continue to pay Rent to LESSOR for each
day the Aircraft remains in LESSEE's possession at the rate of 1/ 15 of the
monthly Basic Rent then in effect.


                                      -58-
<PAGE>

                  In addition, LESSEE shall be liable for any and all unpaid
Rent due hereunder before or during the exercise of any of the foregoing
remedies and for the time remaining in the Term without giving effect to any
early termination of this Lease, together with interest thereon at the Overdue
Rate from the date such Rent was due, and for all reasonable attorneys' fees,
legal expenses and other costs and expenses incurred by reason of the occurrence
of any Event of Default or the exercise of LESSOR's remedies with respect
thereto, including all costs and expenses incurred in connection with the return
of the Aircraft, in accordance with the terms of Section 17 hereof, or with
placing such Aircraft in such condition.

                  Except as otherwise expressly provided above, no remedy
referred to in this Section 19 is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy referred to above or otherwise
available to LESSOR under any applicable Law, and the exercise or commencement
of exercising by LESSOR of any one or more of such remedies shall not preclude
the simultaneous or later exercise by LESSOR of any or all such other remedies.
No express or implied waiver by LESSOR of any Event of Default shall in any way
be, or be construed to be, a waiver of any future or subsequent Event of
Default. LESSEE hereby agrees that, except as provided in this Section 19, any
financing profit or savings accruing to LESSOR by virtue of LESSEE's default and
LESSOR's subsequent sale, re-letting, or award shall in no way reduce, offset or
mitigate the damages for which LESSEE is liable hereunder.

                  If the Lease is terminated in accordance with Subsection
19(E), LESSEE hereby appoints LESSOR as LESSEE's irrevocable agent and
attorney-in-fact, as set forth in Exhibit "E", to execute all documents deemed
necessary to release, terminate and void LESSEE's interest in the Aircraft
leased hereunder, and to file said documents for recordation with the Air
Authority and the appropriate Governmental Entity following the occurrence of an
Event of Default, where LESSOR, at its sole discretion, may deem use of such
agency necessary to effect any remedy which LESSOR chooses to exercise.

                                   SECTION 20

                                   ALIENATION

            (A) There shall be no restriction upon LESSOR's right to assign,
sell, transfer, pledge, hypothecate or encumber any interest of LESSOR
(hereinafter referred to generally as "Alienation") to the Mortgagee in the
Aircraft, this Lease, and or the


                                      -59-
<PAGE>

proceeds thereof and hereof, subject to rights of the LESSEE under the
provisions of the Lease Assignment. Any other assignment by LESSOR hereunder
shall be subject to the prior written consent of LESSEE which consent shall not
be unreasonably withheld or delayed. To effect or facilitate any such
assignment, sale, transfer, pledge, hypothecation or encumbrance, LESSEE agrees
to provide LESSOR or LESSOR's designee or assignee with such agreements,
consents, conveyances or documents as may be reasonably requested by LESSOR. The
agreements, covenants, obligation and liabilities contained herein, including,
but not limited to, all obligations to pay Rent and indemnify LESSOR, are made
for the benefit of LESSOR, Mortgagee and their respective successors and
assigns, notwithstanding the possibility that any such Person was not originally
a party to this Lease or may, at the time such enforcement is sought, not be a
party to this Lease.

            (B) In the case of any Alienation or assignment by LESSOR pursuant
to the provisions of Section 20, LESSEE shall execute and deliver to LESSOR
promptly (at LESSOR's cost except that LESSEE shall pay the cost of its
attorney), upon request of LESSOR, any consents or agreements required for the
perfection of such assignment provided that such consent or other documents does
not affect LESSEE's rights under Subsection 21(G) below.

                                   SECTION 21

                                  MISCELLANEOUS

            (A) Severability. Amendment and Construction. Any provision of this
Lease which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. No term or
provision of this Lease may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing expressed to be a supplement to
this Lease, signed by an officer of the party against which the enforcement of
the change, waiver, discharge or termination is sought. This Lease shall
constitute an agreement of lease for the Term of the Lease, and nothing herein
shall be construed as conveying to LESSEE any right, title or interest in the
Aircraft, the Airframe, any Engine or Part except as a LESSEE only, for such
Term. The headings in this Lease are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof. Unless the context
otherwise requires, all references in this instrument to designated Sections or
other subdivisions hereof are to such designated Sections or subdivisions; and
the words


                                      -60-
<PAGE>

"herein", "hereof', "hereto", "hereunder", and other words of similar import
refer to this instrument as a whole and not to any particular Section or
subdivision. In construing any provision of this Lease, no account shall be
taken as to the party who drafted same and no presumption shall arise or result
therefrom.

            (B) Governing Law. This Lease shall in all respects be governed by
and construed in accordance with the Laws of the State of New York applicable to
contracts entered into in such State by residents thereof and to be performed
entirely within such State.

            (C) Waiver of Jury Trial. LESSEE AND LESSOR HEREBY WAIVE, TO THE
FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW, ALL RIGHT TO A TRIAL BY JURY IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT BY EITHER PARTY HERETO WITH RESPECT TO
THE CONSTRUCTION OR ENFORCEMENT OF THIS LEASE OR OF ANY PROVISION HEREOF.

            (D) Notice. Except as otherwise specified herein, notice, requests,
demands, consents or other communications to, upon or by the respective parties
hereto shall be in the English language and in writing, sent by express courier
or telefax, and shall be deemed to have been duly given or made when received by
the party if sent by telefax or when received by the party, if sent by express
courier, addressed to the party to which such notice, request, demand or other
communication is required or permitted to be given or made hereunder, at the
LESSEE'S Address or LESSOR'S Address, as the case may be, or at such other
address of which such Person shall have notified in writing the party giving
such notice. Copies of all notices to the LESSOR shall also be sent to the
Mortgagee pursuant to the Lease Assignment and to Feltman, Karesh, Major &
Farbman, 152 West 57th Street, New York, New York 10019, Attn.: Loren M. Dollet,
Esq., Telefax No.: (212) 586-0951.

            (E) LESSOR's Right to Perform for LESSEE. If LESSEE fails to make
any payment of Supplemental Rent or fails to perform or comply with any
covenant, agreement or obligation contained herein, LESSOR shall have the right,
but not the obligation, to make such payment or perform or comply with such
agreement, covenant or obligation, and the amount of such payment and the amount
of the reasonable expenses of LESSOR incurred in connection with such payment or
the performance thereof or compliance therewith, together with interest thereon
at the Overdue Rate, shall be deemed Supplemental Rent, payable by LESSEE upon
demand. The taking of any such action by LESSOR pursuant to this Subsection
21(E) shall not constitute a waiver or release of any


                                      -61-
<PAGE>

obligation of LESSEE under the Lease, nor a waiver of any Event of Default which
may arise out of LESSEE's nonperformance of such obligation, nor an election or
waiver by LESSOR of any remedy or right available to LESSOR under or in relation
to this Lease.

            (F) Counterparts. This Lease may be executed simultaneously in one
or more counterparts, all of which together shall constitute one and the same
Lease. To the extent that this Lease constitutes chattel paper in any
jurisdiction, no security interest herein may be created through the transfer of
possession of any counterpart other than the counterpart marked "Original."
Other than the counterpart of this Lease marked "Original," all other original
executed counterparts of this Lease shall be marked "Duplicate Original."

            (G) Quiet Enjoyment and Lessor Covenant. LESSOR covenants that if,
and as long as, LESSEE keeps and performs each and every covenant and agreement
to be performed or observed by it hereunder and/or no Event of Default has
occurred and is continuing, LESSEE shall quietly enjoy the Aircraft without
interference by LESSOR or by any Person claiming by, through or against LESSOR,
including, but not limited to, Mortgagee and any other security assignee of
LESSOR, and none of the LESSOR or any Person claiming by, through or against
LESSOR, including, but not limited to, any assignee of LESSOR, will, as long as
LESSEE keeps and performs each and every covenant to be performed or observed by
it hereunder, take any action which adversely affect the registration of the
Aircraft. LESSOR further covenants that it will maintain all legal right, power
and authority, and all licenses and authorizations, necessary to lease the
Aircraft for the Term.

            (H) Brokers. LESSOR and LESSEE each agree that there has been no
third party as broker or finder involved in this Lease and each party hereby
indemnifies the other party from liability for fees, commissions or other claims
made upon such other party due to such claims arising through it.

            (I) Jurisdiction. Service of Process. The parties hereto hereby
expressly submit to the non-exclusive jurisdiction of the United States District
Court for the Southern District of New York or the Supreme Court of the State of
New York in the Borough of Manhattan, City of New York with respect to any
action arising out of or relating to this Lease. The parties hereto, to the
fullest extent available under applicable Law, waive any claim that venue or
jurisdiction is improper in such courts or that such courts constitute an
inconvenient forum. Service of summons, complaint and other legal process on
LESSOR or LESSEE with respect to any action arising out of or relating to this
Lease may be made by mailing (registered mail, return receipt requested) a copy
of


                                      -62-
<PAGE>

any summons or other legal process to said Party at the LESSEE's address or
LESSOR's address, as the case may be, or by any other procedure permitted under
the Laws of the United States of America.

                  The mailing, as herein provided, of such summons or other
legal process shall be deemed personal service and accepted by LESSEE or LESSOR
as such, and shall be legal, effective and binding upon LESSEE or LESSOR for all
the purposes of the suit.

                  Nothing in this Subsection 21(I) shall in any way be deemed to
limit the ability of LESSOR or LESSEE to serve any such summonses or legal
process in any other manner permitted by applicable Law or to obtain
jurisdiction over the other party in such other jurisdictions, and in such
manner, as may be permitted by applicable Law.

                                   SECTION 22

                       SUBLEASE; ASSIGNMENT; CRAF PROGRAM

            (A) LESSEE shall not sublease the Aircraft or assign its rights in
this Lease to any other party without the prior written consent of LESSOR which
consent shall not be unreasonably withheld or delayed. LESSEE agrees that it
will be reasonable for LESSOR to withhold its consent if such sublease or
assignment will impair or adversely affect Mortgagee's security interest in the
Aircraft.

            (B) Any sublease or assignment consented to by LESSOR shall contain,
among other things, the following terms and conditions:

                  (1) That such sublease or assignment is subject to and
subordinate to this Lease;

                  (2) The sublease or assignment shall not relieve the LESSEE of
its obligations under this Lease and the LESSEE shall continue to be primarily
liable hereunder; and

                  (3) The rights of the LESSOR in any sublease shall be assigned
to LESSOR as security for the performance of the obligations of LESSEE under
this Lease and further assigned by LESSOR to Mortgagee.


                                      -63-
<PAGE>

            (C) In connection with any request by LESSEE to LESSOR to sublease
the Aircraft or assign its rights in this Lease to any other party, LESSEE
agrees to pay on demand to LESSOR all reasonable costs and expenses incurred by
LESSOR in connection with such request, including, but not limited to, legal
fees and expenses of counsel to LESSOR (such legal fees for which LESSEE shall
be responsible shall include, but not be limited to, the cost of counsel
reviewing all documents which LESSEE proposes to enter into in connection with
such sublease or assignment).

            (D) All of LESSEE's obligations hereunder may be performed by any
approved sublessee or assignee, provided however that the LESSEE shall not be
released from its obligations hereunder.

            (E) LESSEE may subject the Aircraft to a Wet Lease without LESSOR's
prior written consent.

            (F) So long as no Default or Event of Default shall have occurred
and be continuing under this Lease, LESSEE may transfer possession of the
Aircraft to the U.S. Government pursuant to the CRAF Program. In the event of
(i) a requisition for use by the U.S. Government of the Aircraft during the Term
for the purpose of an Air Mobility Command Solicitation pursuant to the CRAF
Program (a "CRAF Requisition") or (ii) notice to the LESSEE from the Government
to the effect that the Aircraft may be subject to a CRAF Requisition (a "CRAF
Activation"), LESSEE shall promptly notify LESSOR and Mortgagee and, except as
otherwise specified herein, all of LESSEE's obligations under this Lease shall
continue to the same extent as if such CRAF Requisition or CRAF Activation had
not occurred. LESSEE agrees that no CRAF Requisition or CRAF Activation shall
continue beyond the end of the Term and that, if the Airframe or any Engine is
not returned by the U.S. Government prior to the end of the Term, then:

                  (1) such failure shall constitute an Event of Loss, and LESSEE
            and LESSOR shall comply with the provisions of Section 12; and

                  (2) the Term (including LESSEE's obligation to pay Basic Rent)
            shall be deemed extended to, and shall not expire until, the date
            LESSEE performs fully its obligations pursuant to Section 12.

            (G) Notwithstanding any provision in this Lease to the contrary,
LESSOR and LESSEE hereby expressly acknowledge and agree that during any CRAF
Requisition or CRAF Activation:


                                      -64-
<PAGE>

                  (1) the Aircraft shall be registered in the United States;

                  (2) LESSEE may transfer possession of the Aircraft to the U.S.
            Government, provided that the rights of any transferee of the
            Aircraft shall be subject and subordinate to all of the terms of
            this Lease and the Mortgage, including the right of LESSOR and
            Mortgagee to terminate this Lease and immediately repossess the
            Aircraft following an Event of Default;

                  (3) LESSEE shall have exclusive control of the Aircraft and
            shall remain primarily liable for the performance of all of the
            terms of this Lease to the same extent as if such CRAF Requisition
            or CRAF Activation had not occurred;

                  (4) there shall be no limitation on the geographic area in
            which the Aircraft may be operated; and

                  (5) LESSEE shall provide LESSOR and Mortgagee with the name
            and address of the Contracting Office Representative for the
            Military Airlift Command of the United States Air Force to whom
            notice must be given in connection with the enforcement of remedies
            under this Lease, and LESSOR shall give such representative prior
            written notice of its enforcement of any remedies under this Lease.

            (H) LESSOR shall accept U.S. Government indemnification in lieu of
insurance during a CRAF Requisition or CRAF Activation, and LESSEE's failure to
maintain insurance in accordance with Section 13 hereof during a CRAF
Requisition or CRAF Activation shall not constitute an Event of Default,
provided, however, that in the event that LESSEE is able to maintain existing
insurance coverage on the Aircraft during a CRAF Requisition or CRAF Activation,
as the case may be, and the maintenance of such existing insurance during a CRAF
Requisition or CRAF Activation will not result in any additional cost to Lessee
which is materially in excess of the cost for the existing insurance coverage on
the Aircraft immediately prior to the CRAF Requisition or CRAF Activation, as
the case may be, Lessee shall not take any action or inaction which results in
the termination or cancellation of such insurance. LESSEE shall promptly notify
LESSOR and Mortgagee as to the existence of such indemnification and promptly
furnish to LESSOR and Mortgagee a copy of such indemnification agreement and a
certificate of its independent aircraft insurance brokers certifying that such
indemnification and other insurance maintained by LESSEE is in full compliance
with all the requirements of


                                      -65-
<PAGE>

Section 13. All payments received by LESSOR or LESSEE from the U.S. Government
for the use of the Aircraft during or after the Term shall be paid over to or
retained by LESSEE unless (i) an Event of Default has occurred and is continuing
hereunder, or (ii) a deemed Event of Loss has occurred hereunder and LESSEE has
not complied with all of its obligations set forth in Section 12 hereof, in
either of which cases such payments shall be paid over to or retained by LESSOR
to be applied in satisfaction of LESSEE's obligations hereunder.

                                   SECTION 23

                             RIGHT OF FIRST REFUSAL

            If LESSOR proposes to sell the Aircraft, which LESSOR may choose to
do or not to do in LESSOR's sole discretion, and LESSOR agrees on the terms of
such sale with an unaffiliated third party, then LESSOR shall send LESSEE a
written notice (the "LESSOR Notice") specifying the proposed terms of such sale.
LESSEE shall have the option to purchase the Aircraft on the same terms as
specified in the LESSOR Notice by exercising such option in a written notice to
be delivered to LESSOR within fifteen (15) Business Days of receipt of the
LESSOR Notice by LESSEE, including to post within such 15 days period any
deposits for performance. If the LESSEE fails to accept the offer in accordance
with this Section 23 within the 15 days period, the LESSEE shall conclusively be
deemed to have rejected such offer and the LESSOR may, at any time within three
months thereafter, sell the Aircraft on the terms of the offer. If the LESSEE
accepts the offer, LESSOR and LESSEE shall negotiate in good faith to sell the
Aircraft by not later than 30 days after the LESSEE's acceptance.

                                   SECTION 24

                                ENTIRE AGREEMENT

            This Lease (including all Exhibits hereto) embodies the entire
agreement and understanding between LESSOR and LESSEE relating to the subject
matter hereof and supersedes all prior agreements and understandings relating
hereto and neither of the parties hereto shall be bound by or charged with any
oral or written agreements, representations, warranties, statements, promises or
understandings not specifically set forth herein. This Lease may not be changed
and no right granted or obligation imposed


                                      -66-
<PAGE>

hereunder may be waived orally, but only by an instrument in writing signed by
the party against whom enforcement of any waiver, change, modification or
discharge is sought.

                                   SECTION 25

                                 CONFIDENTIALITY

            LESSOR and LESSEE agree to keep this Lease and all Lease Documents
and any and all documents of a financial or proprietary nature received pursuant
to the provisions of this Lease confidential, and shall not disclose the
existence or any portion of this Lease and any Lease Document and any and all
documents of a financial or proprietary nature received pursuant to the
provisions of this Lease to any person or entity, except in accordance with the
terms hereof. LESSOR and LESSEE may disclose this Lease and any Lease Document
on a need to know basis to: (i) its counsel, accountants, banks, financial
institutions, maintenance providers, independent insurance advisors or other
advisors or agents who are under a duty to or agree to hold such information
confidential, (ii) if the document or information was filed as a matter of
public record with a Governmental Entity or was generally available to the
public at the time of disclosure (other than as a result of a disclosure by such
person or entity), or (iii) as may be required by any statute, court or
administrative order or decree or governmental rule or regulation or by any
regulatory or supervisory governmental authority or agency or by generally
accepted accounting principles.

                            [signature page follows]


                                      -67-
<PAGE>

            IN WITNESS WHEREOF, LESSOR and LESSEE, each pursuant to due
corporate authority, have caused this Aircraft Lease Agreement [49587] to be
executed by their duly authorized officers as of the day and year first above
written.

LESSOR:                                LESSEE:

OLIVIA CORP.                           RENO AIR, INC.


By: /s/ Aaron Mendelsohn               By:
    -------------------------               ----------------------------
Name: Aaron Mendelsohn                 Name:
Title: President                       Title:


                                      -68-
<PAGE>

            IN WITNESS WHEREOF, LESSOR and LESSEE, each pursuant to due
corporate authority, have caused this Aircraft Lease Agreement [49587] to be
executed by their duly authorized officers as of the day and year first above
written.

LESSOR:                                LESSEE:

OLIVIA CORP.                           RENO AIR, INC.


By:                                    By: /s/ Robert M. Rowen
    -------------------------              ----------------------------
Name:                                  Name: Robert M. Rowen
Title:                                 Title: Vice President and General Counsel


                                      -68-
<PAGE>

                                 EXHIBIT "A"

                          AIRCRAFT SPECIFICATIONS

Manufacturer:            McDonnell Douglas
Model                    MD-87
Serial No.               49587
Line No.                 N/A
Reg. No.                 N753RA
Date of Mfgr.            1988

                                 AIRFRAME STATUS

Time as of               11/16/95
Total Hours              14129
Total Cycles             7448
Time Since Last C Ck     13321 hours
Time to Next Overhaul    N/A hours/

                               ENGINE STATUS

             Model #          Serial #      REMAINING       Limiter
             -------          --------      ---------       -------

#1.          Pratt & Whitney   708147        3155 cyc       LPT Shaft
             JT8D-217C
#2.          Pratt & Whitney   708177        5704 cyc       LPT Shaft
             JT8D-217C

                           LANDING GEAR STATUS

                   Hrs. Remaining               Cycles Remaining
                   --------------               ----------------

Nose                    N/A                          N/A
Main                    N/A                          N/A


                                      -69-
<PAGE>

                                   EXHIBIT "B"

                             AIRCRAFT DOCUMENTATION

Delivery of Manuals/Documents

o     AD Status
o     Present Certificate of Airworthiness
o     Copy of Original Certificate of Airworthiness or Export ex USA
o     Copy of Noise Certificate
o     Copy of Radio Lisence
o     Packing Sheet from MDC
o     Engine Records and Modification Status
o     Status Engine S.B., ASB, AD
o     Test Cell Run Sheets
o     Inventory of Loose Equipment at Date of Delivery
o     Weight and Balance Records (Status at Delivery)
o     Weight and Balance Manual
o     S.B., AOL, I.A. - Status
o     Time controlled Component Inventory List (PA 061 INVORT)
o     Historical records:

o     Log Books
o     OTI'S, OTA'S, EO's and AD's
o     None Routine Job Cards
o     Briefing Cards

o     HIL-Lists/Line Maintenance/Heavy Maintenance
o     FAA/FAO approved Flight Manual
o     Wiring Diagram Manual (Microfilm)
o     IPC (Microfilm)
o     MAI (Microfilm)
o     Last X-Ray Pictures
o     APU Log Book/Shop Findings ex UTA
o     AOM (Operational Manual)
o     Certificate of Airworthiness for Export issued by Swiss Federal Air Office


                                      -70-
<PAGE>

                                   EXHIBIT "C"

                            CERTIFICATE OF ACCEPTANCE

      This Certificate of Acceptance is delivered on and as of the date set
forth below by RENO AIR, INC. (hereinafter referred to as "LESSEE") to OLIVIA
CORP. (hereinafter referred to as "LESSOR") pursuant to that Aircraft Lease
Agreement [49587] dated as of November _, 1995 between LESSOR and LESSEE
(hereinafter referred to as the "Agreement"):

      A. Details of Acceptance

            LESSEE hereby indicates and confirms to LESSOR, its successors and
assigns, that the LESSEE has at ______ o'clock _.M., at this __ day of November,
1995, at Zurich International Airport, Zurich, Switzerland, accepted the
following in accordance with the provisions of the Agreement:

            1.  (a) McDonnell Douglas Model: NM-87

                (b) Manufacturer's Serial No.: 49587

                (c) U.S. FAA Registration Number: N753RA

      Manufacturer
 Engine     Model Number      Total       Total         Hours      Cycles
   No.      Serial Number     Hours       Cycles     Remaining    Remaining
   ---      -------------     -----       ------     ---------    ---------

  (1) Pratt & Whitney
      JT8D-217C
      708147

  (2) Pratt & Whitney
      JT8D-217C
      708177


                                      -71-
<PAGE>

Each of the above-described Engines having 750 or more rated take-off horsepower
or the equivalent thereof.

Airframe

      Total Time:   ____ hrs.
      Total Cycles: ____ Cycles

Fuel

      ____ lbs.

      B. Confirmation of Undertakings

            LESSEE confirms that the above described Aircraft and Engines have
been examined by its duly appointed and authorized representative(s), that such
Aircraft and Engines conform to the information set forth above, that there have
been fixed to the Aircraft the markings required by the Agreement (or that such
markings shall be affixed to the Aircraft within fifteen (15) days of the date
hereof). LESSEE confirms and acknowledges that the date set forth above
constitutes the Effective Date, as such term is defined in the Agreement, and
that LESSEE's execution and delivery of this Certificate represents LESSEE's
acceptance of the above described Aircraft and Engines for all purposes of the
Agreement.

      IN WITNESS WHEREOF, LESSEE has caused this Certificate of Acceptance to be
executed in its name, by its duly authorized officer(s) or representative(s),
pursuant to due corporate authority, all as of the date written in Section A
above.

                  LESSEE:     RENO AIR, INC.


                              By:_________________________

                              Title:______________________

                              Date:_______________________


                                      -72-
<PAGE>

                                   EXHIBIT "D"

                         LEASE SUPPLEMENT [49587] NO. 1

      LEASE SUPPLEMENT [49587] NO. 1, dated November _, 1995, between OLIVIA
CORP. ("LESSOR") and RENO AIR, INC. ("LESSEE").

      LESSOR and LESSEE have heretofore entered into that certain Aircraft Lease
Agreement [49587], dated as of November _, 1995, relating to one (1) McDonnell
Douglas MD-87 Aircraft (herein called the "Lease" and the defined terms therein
being hereinafter used with the same meanings). The Lease provides for the
execution and delivery of a Lease Supplement for the purpose of subjecting the
Aircraft and other property described in such Lease Supplement (collectively,
the "Equipment"), as and when delivered by LESSOR to LESSEE, to the terms of the
Lease.

      The Lease relates to the Equipment described below and a counterpart of
the Lease is attached hereto and made a part hereof, and this Lease Supplement,
together with such attachment, is being filed for recordation on the date hereof
with the FAA as one document.

      NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, LESSOR and LESSEE hereby agree as follows:

      1. LESSOR hereby delivers and leases to LESSEE under the Lease, and LESSEE
hereby accepts delivery of and leases from LESSOR under the Lease, the following
described Equipment, which Equipment, as of the date hereof, is acknowledged and
accepted by LESSEE:

            (i)   Airframe: one (1) McDonnell Douglas MD-87 airframe, bearing
                  FAA Registration No. N753RA and Manufacturer's Serial No.
                  49587;

            (ii)  Engines: two (2) Pratt & Whitney Model JT8D-217C aircraft
                  engines, each of which has 750 or more rated takeoff
                  horsepower and bearing Manufacturer's Serial Nos. 708147 and
                  708177, respectively; and


                                      -73-
<PAGE>

            (iii) The Aircraft Documents.

      2. The Effective Date for the Equipment is the date of this Lease
Supplement set forth in the opening paragraph hereof.

      3. The Term is from the date of this Lease Supplement through and
including January 15, 2003.

      4. LESSEE hereby confirms it has paid the Security Deposit to LESSOR in
the amount set forth on Schedule "1" attached hereto and forming a part hereof.

      5. LESSEE hereby confirms its agreement to pay LESSOR Interim Rent and
Basic Rent, as applicable, for the Equipment throughout the Term, in the
installments and in the amounts provided for on Schedule "1", on each Rent Date.

      6. LESSEE hereby confirms its agreement to pay LESSOR Reserves on each
Maintenance Reserve Date, subject to the provisions of 5(E) and in the amounts
provided for on Schedule "1".

      7. LESSEE hereby confirms to LESSOR that LESSEE has accepted the Equipment
for all purposes hereof and of the Lease.

      8. All of the terms and provisions of the Lease are hereby incorporated by
reference in this Lease Supplement to the same extent as if fully set forth
herein.

      9. This Lease Supplement may be executed by the parties hereto in separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.


                                      -74-
<PAGE>

      IN WITNESS WHEREOF, LESSOR and LESSEE have caused this Lease Supplement
[49587] No. 1 to be duly executed and delivered as of the date and year first
above written.

LESSOR:                                   LESSEE:

OLIVIA CORP.                              RENO AIR, INC.


By:_____________________________          By:_____________________________
Name:                                     Name:
Title:                                    Title:


                                      -75-
<PAGE>

                                 Schedule "1"

1. Security Deposit. The Security Deposit shall equal $300,000.

2. Interim Rent. Interim Rent shall be payable by LESSEE to LESSOR in the amount
set forth in Section 5(A) of the Lease. The Minimum Basic Rent shall equal
$40,000.

3. Basic Rent.

      (i) Basic Rent shall be paid by LESSEE to LESSOR, in advance, as set forth
in Section 5(A)(ii) of the Lease.

      (ii) The monthly Basic Rent for each Rent Period during the periods set
forth below shall equal the amounts set forth next to such periods assuming that
LIBOR for such Rent Period is 5.8% per annum:

            January 15, 1996 - July 14, 1996 - $87,500
            July 15, 1996 - Expiration Date - $150,000

            To the extent LIBOR on any given Rent Date (provided, however, if
such Rent Date is not a London Banking Day, then on the immediately following
London Banking Day), on which Basic Rent is to be paid is less than or greater
than 5.8% per annum, the Basic Rent payable by LESSEE to LESSOR on the next Rent
Date shall be adjusted upward (in the event that LIBOR is greater than 5.8% per
annum) or downward (in the event that LIBOR is less than 5.8% per annum) in
accordance with the following formula (the "Rent Adjustment"):

             ((L-5.8) x A) + B

                  L =   the actual 30-day LIBOR rate for the preceding Rent
                        Date, however, L shall never be greater than 8.0 nor
                        less than 3.6

                  B =   the Basic Rent

                  A =   an adjustment factor equal to the amount set forth
                        below corresponding to the relevant Rent Period:


                                      -76-
<PAGE>

                   Rent Period                           A
                   -----------                           -

                   Jan-15-1996 to Jan-14-1997          7,450
                   Jan-15-1997 to Jan-14-1998          6,700
                   Jan-15-1998 to Jan-14-1999          5,800
                   Jan-15-1999 to Jan-14-2000          4,900
                   Jan-15-2000 to Jan-14-2001          3,850
                   Jan-15-2001 to Jan-14-2002          2,750
                   Jan-15-2002 to Jan-15-2003          1,550

            Notwithstanding anything set forth herein to the contrary, with
respect to the Basic Rent payable for the last Rent Period, the Rent Adjustment
shall be made on the Expiration Date. To the extent the Basic Rent is adjusted
upward for such Rent Period, LESSEE shall pay the Rent Adjustment to LESSOR on
the Expiration Date. To the extent the Basic Rent is adjusted downward for such
period and provided no Default or Related Lease Default has occurred and is
continuing, LESSOR shall pay LESSEE the Rent Adjustment on the later of the
Expiration Date or the date on which LESSEE has complied with all provisions
hereof.

4. Reserves.

      (i) The Airframe Reserves shall be payable in an amount equal to thirty
($30.00) Dollars for each Flight Hour incurred on the Airframe for the previous
Rent Period;

      (ii) The Engine Reserves shall be payable in an amount equal to seventy
($70.00) Dollars per each Cycle incurred on each Engine for the previous Rent
Period; and

      (iii) the Landing Gear Reserves shall be ten ($10.00) Dollars per each
Cycle incurred on the Landing Gear for the previous Rent Period.


                                      -77-
<PAGE>

                                   EXHIBIT "E"

                         APPOINTMENT AS ATTORNEY-IN-FACT

      Pursuant to the terms of Subsection 19 of the Lease (as hereinafter
defined), RENO AIR, INC. ("Reno") hereby irrevocably appoints OLIVIA CORP.
("LESSOR"), or its representatives, agents or assigns, as its true and lawful
attorney-in-fact, to act in all respects, do such acts and take such actions as
Reno could do or authorize itself under the Lease with respect to the use,
operations, maintenance and possession of the McDonnell Douglas MD-87 Aircraft,
Serial Number 49587, U.S. Registration No. N753RA (the "Aircraft"), which LESSOR
has leased to Reno by Aircraft Lease Agreement [49587] dated as of November _,
1995 (the "Lease"). The appointment is made as part of and in consideration of
the leasing of the Aircraft to Reno by LESSOR and shall remain in full force and
effect until all obligations of Reno under the Lease shall be fully discharged
or satisfied. The power given to LESSOR herein may only be exercised upon the
occurrence and continuation of an Event of Default under the Lease but LESSOR
shall not be required to deliver any evidence to any party as to the existence
of such Event of Default in connection with the exercise of the power hereunder.

Executed this ___ day of November, 1995.

                              RENO AIR, INC.


                              By:_______________________
                              Name:
                              Title:

                              Attested by:


                              __________________________
(PLACE CORPORATE                    Secretary
SEAL HERE)


                                      -78-
<PAGE>

STATE OF                     )
                       ) ss.:
COUNTY OF                    )

      On the __ day of _________, 199_, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he resides at _____________________; that he is the ________ of
_______________, the corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.


                              ______________________________
                              Notary Public

[Seal]


                                      -79-
<PAGE>

                                   EXHIBIT "F"

                             REDELIVERY CERTIFICATE

      This Redelivery Certificate is delivered on and as of the date set forth
below by Olivia Corp. (hereinafter referred to as "LESSOR"), to Reno Air, Inc.
(hereinafter referred to as "LESSEE") pursuant to the Aircraft Lease Agreement
[49587], dated as of November __, 1995, between LESSOR and LESSEE (hereinafter
referred to as the "Agreement"):

      A. Details of Redelivery. LESSOR hereby indicates and confirms to LESSEE,
its successors and assigns, that the LESSOR has, at ____ o'clock _.M., on this
__ day of _________, 199_, at ____________, accepted the following in accordance
with the provisions of the Agreement:

            1.  (a) McDonnell Douglas Model: MD-87;

                (b) Manufacturer's Serial No.: 49587; and

                (c) U.S. FAA Registration No.: N753RA.

      Manufacturer
 Engine     Model Number      Total       Total         Hours      Cycles
   No.      Serial Number     Hours       Cycles      Remaining   Remaining
   ---      -------------     -----       ------      ---------   ---------

  (1) Pratt & Whitney
      JT8D-219
      [_____]

  (2) Pratt & Whitney
      JT8D-219
      [_____]

Each of the above-described Engines having 750 or more rated take-off horsepower
or the equivalent thereof.


                                      -80-
<PAGE>

Airframe

       Total Time:   ____ hrs.
       Total Cycles: ____ Cycles

Fuel

      _____ lbs.

      B. Confirmation of Acceptance. LESSOR confirms that the above-described
Aircraft and Engines have been examined by its duly appointed and authorized
representative(s) and that such Aircraft and Engines conform to the information
set forth above. LESSOR's execution and delivery of this Redelivery Certificate
represents LESSOR's acceptance of the above-described Aircraft and Engines for
all purposes of this Agreement.

      IN WITNESS WHEREOF, LESSOR has caused this Redelivery Certificate to be
executed in its name, by its duly authorized officer(s) or representative(s),
pursuant to due corporate authority, all as of the date written in Section A
above.

                              LESSOR:

                              OLIVIA CORP.


                              By:___________________________
                              Name:
                              Title:


                                      -81-
<PAGE>

                                   EXHIBIT "G"

                               DELIVERY CONDITIONS

      Upon delivery of the Aircraft to the LESSEE, the Aircraft shall comply
with the following (except to the extent any such items are to be accomplished
during the "C" check to be performed by LESSEE immediately following the
delivery of the Aircraft):

      1. The Aircraft shall be delivered in an airworthy condition and have a
valid Swiss Aviation Authority certificate of airworthiness for export.

      2. There shall be no deferred maintenance items on the Airframe or
Engines.

      3. All AD notes and mandatory service bulletins modifications due for
compliance as of the Effective Date shall have been performed.

      4. Immediately prior to delivery, LESSOR shall, at its cost, perform a
test flight of the Aircraft, not to exceed one and one-half (1 1/2) hours in
duration, for the purpose of demonstrating the serviceability of the Aircraft
and its systems. To the extent that any of the systems of the Aircraft which
affect the airworthiness thereof are not functioning in accordance with the
standards of the Manufacturer, LESSOR shall, at its sole cost and expense,
repair, or cause to be repaired, such systems.

      5. As of the Effective Date, each Engine will have not less than 3,000
Cycles remaining until the next scheduled removal in accordance with Swissair's
standard engine maintenance program and no discrepancies noted in a borescope
inspection. In computing the time remaining with respect to the Engines, at any
time when same is required to be calculated under the provisions of this Lease,
the most time limited component shall be used as the measure.

      6. All life limited components, other than Engine components, installed on
the Aircraft shall have not less than 12 months or 2,000 Cycles remaining, as
determined under the Swissair maintenance program.

      7. All technical records and manuals will be up to date and complete and
in English with no deferred maintenance items.


                                      -82-
<PAGE>

      8. Any modifications necessary to integrate the Aircraft into LESSEE's
fleet shall be performed by LESSEE and LESSEE shall be solely responsible for
all such costs.

      9. All documents listed on Exhibit "B" hereof shall have been delivered to
Lessee and any other documents necessary to obtain a United States Certificate
of Airworthiness and to be operable in compliance with Part 121.

      10. Lessee shall pay Lessor for all fuel on board the Aircraft at delivery
of the Aircraft on the Effective Date.


                                      -83-
<PAGE>

                                   EXHIBIT "H"

                              LEASE IDENTIFICATION

OWNER:       Olivia Corp.

LESSEE:      Reno Air, Inc.

MORTGAGEE:   Credit Lyonnais/PK AIRFINANCE, New York Branch


                                      -84-
<PAGE>

                         LEASE SUPPLEMENT [49587] NO. 1

      LEASE SUPPLEMENT [49587] NO. 1, dated November 16, 1995, between OLIVIA
CORP. ("LESSOR") and RENO AIR, INC. ("LESSEE").

      LESSOR and LESSEE have heretofore entered into that certain Aircraft Lease
Agreement [49587], dated as of November 16, 1995, relating to one (1) McDonnell
Douglas MD-87 Aircraft (herein called the "Lease" and the defined terms therein
being hereinafter used with the same meanings). The Lease provides for the
execution and delivery of a Lease Supplement for the purpose of subjecting the
Aircraft and other property described in such Lease Supplement (collectively,
the "Equipment"), as and when delivered by LESSOR to LESSEE, to the terms of the
Lease.

      The Lease relates to the Equipment described below and a counterpart of
the Lease is attached hereto and made a part hereof, and this Lease Supplement,
together with such attachment, is being filed for recordation on the date hereof
with the FAA as one document.

      NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, LESSOR and LESSEE hereby agree as follows:

      1. LESSOR hereby delivers and leases to LESSEE under the Lease, and LESSEE
hereby accepts delivery of and leases from LESSOR under the Lease, the following
described Equipment, which Equipment, as of the date hereof, is acknowledged and
accepted by LESSEE:

            (i)   Airframe: one (1) McDonnell Douglas MD-87 airframe, bearing
                  FAA Registration No. N753RA and Manufacturer's Serial No.
                  49587;

            (ii)  Engines: two (2) Pratt & Whitney Model JT8D-217C aircraft
                  engines, each of which has 750 or more rated takeoff
                  horsepower and bearing Manufacturer's Serial Nos. 708147 and
                  708177, respectively; and

            (iii) The Aircraft Documents.

      2. The Effective Date for the Equipment is the date of this Lease
Supplement set forth in the opening paragraph hereof.
<PAGE>

      3. The Term is from the date of this Lease Supplement through and
including January 15, 2003.

      4. LESSEE hereby confirms it has paid the Security Deposit to LESSOR in
the amount set forth on Schedule "1" attached hereto and forming a part hereof.

      5. LESSEE hereby confirms its agreement to pay LESSOR Interim Rent and
Basic Rent, as applicable, for the Equipment throughout the Term, in the
installments and in the amounts provided for on Schedule "1", on each Rent Date.

      6. LESSEE hereby confirms its agreement to pay LESSOR Reserves on each
Maintenance Reserve Date, subject to the provisions of 5(E) and in the amounts
provided for on Schedule "1".

      7. LESSEE hereby confirms to LESSOR that LESSEE has accepted the Equipment
for all purposes hereof and of the Lease.

      8. All of the terms and provisions of the Lease are hereby incorporated by
reference in this Lease Supplement to the same extent as if fully set forth
herein.

      9. This Lease Supplement may be executed by the parties hereto in separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.


                                        2
<PAGE>

      IN WITNESS WHEREOF, LESSOR and LESSEE have caused this Lease Supplement
[49587] No. 1 to be duly executed and delivered as of the date and year first
above written.

LESSOR:                                LESSEE:

OLIVIA CORP.                           RENO AIR INC.


By: /s/ Aaron Mendelsohn               By:
    ---------------------------            ---------------------------
Name: Aaron Mendelsohn                 Name:
Title: President                       Title:


                                        3
<PAGE>

      IN WITNESS WHEREOF, LESSOR and LESSEE have caused this Lease Supplement
[49587] No. 1 to be duly executed and delivered as of the date and year first
above written.

LESSOR:                                LESSEE:

OLIVIA CORP.                           RENO AIR INC.


By:                                    By: /s/ Robert M. Rowen
    ---------------------------            ---------------------------
Name:                                  Name: Robert M. Rowen
Title:                                 Title: Vice President and General Counsel


                                        3
<PAGE>

                                  Schedule "1"

1. Security Deposit. The Security Deposit shall equal $300,000.

2. Interim Rent. Interim Rent shall be payable by LESSEE to LESSOR in the
amount set forth in Section 5(A) of the Lease. The Minimum Basic Rent shall
equal $40,000.

3. Basic Rent.

      (i) Basic Rent shall be paid by LESSEE to LESSOR, in advance, as set forth
in Section 5(A)(ii) of the Lease.

      (ii) The monthly Basic Rent for each Rent Period during the periods set
forth below shall equal the amounts set forth next to such periods assuming that
LIBOR for such Rent Period is 5.8% per annum:

            January 15, 1996 - July 14, 1996 - $87,500
            July 15, 1996 - Expiration Date - $150,000

            To the extent LIBOR on any given Rent Date (provided, however, if
such Rent Date is not a London Banking Day, then on the immediately following
London Banking Day), on which Basic Rent is to be paid is less than or greater
than 5.8% per annum, the Basic Rent payable by LESSEE to LESSOR on the next Rent
Date shall be adjusted upward (in the event that LIBOR is greater than 5.8% per
annum) or downward (in the event that LIBOR is less than 5.8% per annum) in
accordance with the following formula (the "Rent Adjustment"):

            ((L-5.8) x A) + B

                  L =   the actual 30-day LIBOR rate for the preceding Rent
                        Date, however, L shall never be greater than 8.0 nor
                        less than 3.6

                  B =   the Basic Rent

                  A =   an adjustment factor equal to the amount set forth
                        below corresponding to the relevant Rent Period:


                                        4
<PAGE>

                   Rent Period                           A
                   -----------                           -

                   Jan-15-1996 to Jan-14-1997          7,450
                   Jan-15-1997 to Jan-14-1998          6,700
                   Jan-15-1998 to Jan-14-1999          5,800
                   Jan-15-1999 to Jan-14-2000          4,900
                   Jan-15-2000 to Jan-14-2001          3,850
                   Jan-15-2001 to Jan-14-2002          2,750
                   Jan-15-2002 to Jan-15-2003          1,550

            Notwithstanding anything set forth herein to the contrary, with
respect to the Basic Rent payable for the last Rent Period, the Rent Adjustment
shall be made on the Expiration Date. To the extent the Basic Rent is adjusted
upward for such Rent Period, LESSEE shall pay the Rent Adjustment to LESSOR on
the Expiration Date. To the extent the Basic Rent is adjusted downward for such
period and provided no Default or Related Lease Default has occurred and is
continuing, LESSOR shall pay LESSEE the Rent Adjustment on the later of the
Expiration Date or the date on which LESSEE has complied with all provisions
hereof.

4. Reserves.

      (i) The Airframe Reserves shall be payable in an amount equal to thirty
($30.00) Dollars for each Flight Hour incurred on the Airframe for the previous
Rent Period;

      (ii) The Engine Reserves shall be payable in an amount equal to seventy
($70.00) Dollars per each Cycle incurred on each Engine for the previous Rent
Period; and

      (iii) the Landing Gear Reserves shall be ten ($10.00) Dollars per each
Cycle incurred on the Landing Gear for the previous Rent Period.


                                        5
<PAGE>

                                   EXHIBIT "I"

                              REDELIVERY CONDITIONS

      A. The Aircraft will be redelivered in accordance with Section 17 of the
Lease and in accordance with the following provisions:

      1) The Aircraft shall have a valid U.S. Certificate of Airworthiness or,
at LESSOR's request, a valid U.S. Certificate of Airworthiness for Export to a
jurisdiction designated by Lessor. If the Aircraft is to be registered in a
country other than in the United States after return from LESSEE, LESSOR may in
it's discretion require that LESSEE at its expense (to the extent such expense
is no greater than that LESSEE would have incurred in connection with this
subparagraph A(l), with any additional expense for LESSOR's account) put the
Aircraft in a condition to meet the requirements for issuance of a certificate
of airworthiness of the aviation authority of the next country of register,
provided, however, in the event that the foregoing causes a delay in the
redelivery of the Aircraft to Lessor, Lessee shall not be liable for any costs
associated with the delay in redelivery.

      2) The Aircraft shall be in good operating condition and airworthy in
accordance with the Maintenance Program applicable to the Aircraft and the
Manufacturer's structural repair manual. All of the Aircraft equipment,
components, and systems shall be functioning in accordance with the Maintenance
Program.

      3) The Aircraft shall be in passenger cabin configuration with 12F and
105Y seats.

      4) The Aircraft shall be clean by international commercial airline
standards.

      5) No special or unique Manufacturer, Engine manufacturer or FAA
inspection or check requirements which are specific to the Aircraft or Engines
(as opposed to all aircraft or engines of their types) will exist with respect
to the Airframe, Engines and Aircraft equipment, components and systems unless
there is no terminating action rectification available from any source.


                                      -85-
<PAGE>

      6) All Airworthiness Directives and other instructions of the FAA
applicable to the Aircraft which are issued prior to the date of return of the
Aircraft and require compliance (either by means of repetitive inspections,
modifications or terminating action) prior to return of the Aircraft to LESSOR
will have been complied with on the Aircraft on a terminating action basis.
Airworthiness Directives and instructions which do not have a terminating action
will be accomplished at the level of inspection or modification required to
clear the Aircraft for the lesser of the longest available interval between
inspections or one (1) year after the Expiration Date. If, after using best
efforts, LESSEE is unable to acquire the material, parts or components necessary
to accomplish such Airworthiness Directive, LESSEE will pay to LESSOR upon
return of the Aircraft the estimated cost of terminating such Airworthiness
Directive. If the estimated cost cannot be mutually agreed upon by LESSEE and
LESSOR, LESSEE and LESSOR will each obtain a reasonable estimate from reputable
FAA approved maintenance facility and the estimated cost will be the average of
the two estimates.

      7) The Aircraft will be in compliance with Manufacturer's Corrosion
Prevention and Control Program (CPCP) specified for the model type by
Manufacturer.

      8) All no-charge vendor and Manufacturer's service bulletin kits received
by LESSEE for the Aircraft but not installed thereon will be on board the
Aircraft as cargo. At LESSOR's request, any other service bulletin kit which
LESSEE paid for will also be delivered to LESSOR on board of the Aircraft, but
LESSOR will reimburse LESSEE for its actual out-of-pocket costs for such kit.

      9) The Aircraft will be free of any system-related leaks and any damage
resulting therefrom. All repairs will have been performed on a permanent basis
in accordance with the applicable manufacturer's instructions.

      10) If any waivers, alternate means of compliance (unless there exists no
permanent terminating action repair and such alternate means of compliance is
transferrable to other operators of the Aircraft), dispensations, extensions or
carry-overs with respect to Airworthiness Directives or operating or maintenance
requirements are granted by the FAA or permitted by the Maintenance Program,
LESSEE at its sole cost and expense will nonetheless perform such Airworthiness
Directives and other operating or maintenance requirements on a terminating
action basis as if such waivers, alternate means of compliance, dispensations or
extensions did not exist, provided, however, if such waivers, alternative means
of compliance, dispensations or extensions are generally available to operators
of MD-87 aircraft, Lessee shall not be required to terminate such Airworthiness
Directives and/or other operating or maintenance requirements but shall be


                                      -86-
<PAGE>

required to perform such maintenance and inspections as it is performing on its
MD-87 fleet on a non-discriminatory basis.

      11) At LESSOR's request, LESSEE will provide LESSOR with a written summary
of all sampling programs involving or affecting the Aircraft.

      12) Lessee's livery shall be removed and the Aircraft shall be painted
over white.

      13) At the time of redelivery of the Aircraft, the Aircraft shall:

            (a) have installed the full complement of Engines, which Engines
shall be Pratt & Whitney JT8D-219 Engines, and Parts and other equipment,
accessories and loose equipment as would remain installed in such Aircraft and
shall be in a condition suitable for operation in commercial service;

            (b) have performed, within the last 500 Flight Hours, by an
FAA-approved repair station, a full and complete zonal, systems and structural
check ("C" or its equivalent), the corresponding lower checks ("A" and "B" or
equivalent) and any other maintenance and inspections tasks, all in accordance
with the Maintenance Program. LESSEE will also weigh the Aircraft. Any
discrepancies revealed during such inspection will be corrected in accordance
with Manufacturer's maintenance and repair manuals or FAA-approved data. LESSEE
agrees to perform during such check any other work reasonably required by LESSOR
(and not otherwise required under this Lease) and LESSOR will reimburse LESSEE
for such work at LESSEE's preferred customer rates. LESSEE shall pay LESSOR
$25.00 per Flight Hour incurred on the Aircraft since the last "C" check.

            (c) have had performed on it when required an internal and external
corrosion inspection in accordance with the CPCP and correct any discrepancies
in accordance with the recommendations of Manufacturer and the Structural Repair
Manual. In addition, all inspected areas will be properly treated with corrosion
inhibitor as recommended by Manufacturer; and

            (d) comply with the Manufacturer's and Engine Manufacturer's
original specifications therefor and/or supported by relevant documentation
approved by the Manufacturer and Engine Manufacturer, as the case may be.


                                      -87-
<PAGE>

      14) The Aircraft shall, on the Redelivery Occasion, meet the requirements
of FAR Part 36, Appendix C, Stage 3 noise regulations without the need to obtain
a waiver or exemption therefrom.

      15) LESSEE shall, at its sole cost and expense, immediately prior to
return of the Aircraft, perform a borescope inspection of the Engines (hot and
cold sections). All items beyond the applicable Engine Manufacturer's
maintenance manual limits will be rectified at LESSEE's sole cost and expense.
No Engine will be "on watch" for any reason requiring special or out of sequence
inspection.

      16) In accordance with the applicable maintenance manual, accomplish a
maximum power assurance run and condition, acceleration and bleed valve
scheduling checks on the Engines. LESSEE will record and evaluate the Engine
performance, with LESSOR and/or its representative entitled to be present. The
performance and all operating parameters of each Engine will be within the
limits specified in the Manufacturer's maintenance manual.

      17) Each APU shall be delivered in a serviceable condition having
completed a hot section inspection not earlier than during the last "C" check.

      18) Each of the Engines shall have the same number of Cycles remaining
until the next scheduled removal as when the Engines were delivered to LESSEE.
The Aircraft shall be returned with the same Engines as installed at delivery
(except as otherwise permitted by the Lease). To the extent that the number of
Cycles remaining until the next scheduled removal of the Engines are either
fewer than or greater than the amount of Cycles remaining on such Engines as
existed on the Effective Date for same, a financial adjustment of $70.00 per
Cycle difference will be made by the party receiving the benefit to the other
party hereunder. Notwithstanding the foregoing, LESSOR shall not be obligated to
pay compensation for more than 500 Cycles. In computing the time remaining with
respect to the Engines, at any time when same is required to be calculated under
the provisions of this Lease, the most time limited component shall be used as
the measure.

      19) Each Landing Gear will have not less than 6 months or 2,000 Cycles
remaining to operate pursuant to the Maintenance Program. To the extent that the
number of Cycles remaining to operate the Landing Gear are either fewer than or
greater than the amount of Cycles remaining on the Landing Gear as existed on
the Effective Date for same, a financial adjustment of $10.00 per Cycle
difference will be made by the party receiving the benefit to the other party
hereunder.


                                      -88-
<PAGE>

      20) Each component or Part of the Aircraft which has a hard time limit to
overhaul and each life-limited component or Part will have not less than the
lesser of (a) twelve (12) months or 2,000 Cycles remaining to operate pursuant
to the Maintenance Program, or (b) 100% of its total approved life remaining to
operate as of the "C" Check immediately preceding the Return Occasion.

      21) Each component or Part which has a calendar limit will have remaining
to operate as of the "C" check immediately preceding redelivery at least (i) one
year from the date of return of the Aircraft to LESSOR or (ii) 100% of its total
approved life, whichever is less, pursuant to the Maintenance Program, except
that emergency equipment will have remaining to operate at least six (6) months
from the date of return of the Aircraft or 100% of its total approved life as of
the "C" check immediately preceding redelivery, whichever is less.

      22) To the extent, on the Redelivery Occasion, the number of Flight Hours
on the Aircraft until the next "15,000 Hour" and "30,000 Hour" (or their
equivalent) heavy maintenance checks is either less than or greater than the
number of Flight Hours on the Aircraft on the Effective Date until the next
"15,000 Hour" and "30,000 Hour" heavy maintenance checks (assuming no change
after the Effective Date in the intervals between such checks not approved by
LESSOR), a financial adjustment of (i) $20.00 per Flight Hour difference with
respect to the next "30,000 Hour" check, and (ii) $10.00 per Flight Hour
difference with respect to the next "15,000 Hour" check, will be made by the
party receiving the benefit to the other party hereunder.

      23) The Aircraft fluid reservoirs (including oil, oxygen, hydraulic and
water) will be serviced to full and the waste tank serviced in accordance with
Manufacturer's instructions. Each fuel tank will be at least as full as at
Delivery. Lessor will compensate Lessee for the fuel on board the Aircraft on
the Redelivery Occasion.

      24) All technical records and manuals shall be up to date, in English and
with no deferred maintenance items outstanding unless normally deferred until
the next heavy maintenance visit under the Maintenance Program.

      25) The Aircraft shall be equipped with TCAS and windshear alert systems.


                                      -89-
<PAGE>

                                   EXHIBIT "J"

                                CREDIT STANDARDS

      LESSEE shall be deemed to have satisfied the Credit Standards provided
LESSEE maintains (1) a Fixed Charge Coverage Ratio equal to not less than 1.05.
The "Fixed Charge Coverage Ratio" shall be the ratio of net income (excluding
any extraordinary or one-time items) before interest, taxes, depreciation,
amortization and operating lease rentals divided by the sum of interest expense,
operating lease rentals and mandatory principal payments on debt classified as
long term, all determined in accordance with Generally Accepted Accounting
Principles consistently applied and on a rolling twelve month basis, and (2) a
minimum tangible net worth of $4,000,000 at the end of each month in the rolling
twelve month period.


                                      -90-
<PAGE>

                                   EXHIBIT "K"

                         ASSIGNMENT OF LEASE AND CONSENT


                                      -91-
<PAGE>

                         ASSIGNMENT OF LEASE AND CONSENT

      This ASSIGNMENT OF LEASE AND CONSENT dated as of November 16, 1995 (this
"Agreement") among OLIVIA CORP., a Delaware corporation (hereinafter "Lessor"),
CREDIT LYONNAIS/PK AIRFINANCE, New York Branch, a Luxembourg corporation
(hereinafter the "Lender"), and RENO AIR, INC., a Nevada corporation
(hereinafter "Lessee").

                                    RECITALS:

      (1) Pursuant to that certain Aircraft Lease Agreement [49587] dated as of
November 16, 1995 between Lessor and Lessee (the "Lease"), which Lease is being
filed with the Aircraft Registry of the Federal Aviation Administration
simultaneously herewith, Lessor has agreed to lease to Lessee, among other
things, the following:

            Airframe: One (1) McDonnell Douglas Model MD-87 Aircraft;
            Registration No.: N753RA
            Manufacturer's Serial No.: 49587; and

            Engines: Two (2) Pratt & Whitney JT8D-217C engines;
            Manufacturer's Serial Nos.: 708147 and 708177;

(collectively, the "Aircraft"); and

      (2) Lessor has obtained financing from the Lender in connection with the
Aircraft which is the subject of the Lease; and

      (3) In order to secure the performance by Lessor of its obligations under,
among other things, that certain Secured Loan Agreement dated as of November 16,
1995 between the Lessor, as borrower, and the Lender, as lender (the "Loan
Agreement") and the Promissory Note (the "Note") made by Lessor and delivered to
the Lender in connection with the making of the loan pursuant to the Loan
Agreement, the Lender has required Lessor to, among other things, assign to the
Lender all of Lessor's right, title and interest in and to the Lease (but none
of its obligations) including, but not limited to, all amounts payable by Lessee
to Lessor under the Lease.

Transaction No. RNO51


                                        1
<PAGE>

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agree as follows:

      1. Capitalized terms used but not defined in this Agreement shall have the
meaning ascribed to such terms in the Lease.

      2. To secure the payment of the principal of, all interest and other sums
payable under the Loan Agreement, as from time to time amended or supplemented,
the Note and that certain Aircraft Chattel Mortgage and Security Agreement dated
as of November 16, 1995, between the Lender, as mortgagee, and Lessor, as
mortgagor, as from time to time amended or supplemented (the "Mortgage"), and
all other documents executed in connection therewith or contemplated thereby,
and the performance of, and compliance with, all of the terms of the Loan
Agreement and the Mortgage, Lessor hereby assigns, transfers, conveys and sets
over to the Lender, all of the Lessor's right, title and interest in, to and
under the Lease (but except as expressly set forth in Sections 6 and 7 below
none of its obligations thereunder) except for Lessor's right, title and
interest in Excluded Amounts (as defined in the Mortgage), including, without
limitation, the right to collect all rental payments, Reserves, the Security
Deposit, income, proceeds (including, but not limited to insurance proceeds),
awards, revenues and other sums payable by Lessee to Lessor pursuant to the
Lease and all of the Lessor's rights under Section 1110 of the U.S. Bankruptcy
Code 11 U.S.C. ss.ss. et seq. or any subsequently enacted statute of similar
import and, after an Event of Default (as defined in the Mortgage) has occurred
and is continuing, to enforce all of Lessor's rights and remedies under the
Lease.

      3. The Lessee hereby acknowledges and consents, in accordance with the
terms hereof, to the assignment as herein provided of Lessor's rights under the
Lease to the Lender.

      4. Lessor hereby directs Lessee and Lessee hereby agrees to pay directly
to the Lender, until such time as the Lender otherwise directs in writing, to
the account listed below all sums which are due and subsequently will become due
and payable by the Lessee to Lessor in accordance with the terms of the Lease.
All such payments shall be made by wire transfer in good, immediately available
funds to:

            Credit Lyonnais, New York
            Federal Routing No.: 026008073
            Account No.: 01-22403-0001-00
            In Favor Of: CL/PK AIRFINANCE
            UID No.: 357771
            Reference: RNO51


                                        2
<PAGE>

      5. Lessee hereby represents, warrants and agrees as follows:

            (a) The Lease and the other Lease Documents (as defined in the
Lease) constitute the entire agreement of lease with respect to the Aircraft and
the Lease has not been amended, modified or supplemented;

            (b) the Lease is in full force and effect;

            (c) there is no Default or Event of Default under the Lease;

            (d) there has been no prepayment of any Rent (as defined in the
Lease) payable under the Lease and the Rent is payable in the amounts set forth
in the Lease;

            (e) Lessee will not permit any written amendments or waivers to the
Lease or permit any material provisions thereof to be amended or waived without
the prior, written consent of Lender, which will not be unreasonably withheld or
delayed;

            (f) Lessee will promptly send to Lender all notices or demands which
Lessee shall be permitted or required to send to Lessor under the provisions of
the Lease or which Lessee receives from Lessor;

            (g) Lessee acknowledges that the Lender has not made any
representations or warranties of any kind, nature or description in respect of
the Aircraft and that the Lender has not assumed any of the Lessor's duties or
obligations under the Lease and the Lessee shall continue to look solely to
Lessor for the performance and fulfillment of the terms, covenants and
conditions on Lessor's part to be performed under the Lease;

            (h) Lessee will make all of the payments required to be paid under
the Lease in accordance with the terms of the Lease to the Lender as required in
paragraph 4 hereof;

            (i) the Lender shall be entitled to the benefit of all
representations, warranties, covenants, indemnities and obligations to be made
or performed by Lessee pursuant to the Lease to the same extent as if the Lender
was originally named as "Lessor" in the Lease; and

            (j) This Agreement has been duly authorized by all necessary action
and constitutes a valid, legal and binding obligation of the Lessee enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, reorganization,


                                        3
<PAGE>

moratorium or other similar laws and by general principles of equity, whether
considered in a proceeding at law or in equity.

      6. Lender and Lessee agree as follows: (a) wherever in the Lease rights
are granted to the Lender, whether as "Lender" or "Mortgagee" under the Lease,
the Lender hereby shall be entitled directly to exercise such rights in
accordance with the terms of the Lease and without relying on its rights as a
third party beneficiary; and (b) wherever in the Lease the consent of the Lessor
is required but is provided not to be unreasonably withheld by the Lessor, if
the Lessor requires the consent of the Lender in such matter under the Loan
Agreement, the Mortgage or any other document, such consent of the Lender shall
not be unreasonably withheld.

      7. The Lender confirms to and agrees with the Lessee that the Lender's
rights and remedies as respects the Aircraft are subject in all respects to the
rights of the Lessee under the Lease and that so long as no Event of Default (as
defined in the Lease) has occurred and is continuing, neither the Lender nor any
person claiming by, through or under the Lender will disturb Lessee in the quiet
use, possession and enjoyment of the Aircraft in accordance with the Lease. The
Lender agrees that the terms and conditions of the Lease shall apply to, and be
binding upon, the Lender to the same extent as Lessor. The Lender shall not be
deemed to have assumed any obligations of Lessor under the Lease and Lender's
right to exercise any rights under the Lease shall not be adversely affected by
any failure of Lessor to have fulfilled its obligations thereunder; provided,
however, that in order for the Lender to exercise any right under the Lease, the
Lender shall be required to comply with all of the terms of the Lease pertaining
to the exercise of such right which would otherwise be binding on Lessor.

      8. In the event that Lessor shall pay and discharge all of its obligations
under the Loan Agreement, Note and Mortgage, then at the request of Lessor,
Lender hereby agrees to send written notice to Lessee directing Lessee to make
all payments due and payable under the Lease to Lessor or such other party as
Lessor shall advise Lessee of in writing.

      9. In the event that the Lender sends any notice to Lessor required to be
sent in accordance with the terms of the Loan Agreement in connection with a
Default or an Event of Default thereunder, Lender shall send a copy of any such
notice to Lessee.

      10. (a) Every notice or demand under this Agreement shall be in writing
and may be given or made by telefax or by internationally recognized overnight
courier service.

            (b) Every notice or demand under this Agreement or to the Lender
under the Lease shall be sent, in the case of overnight courier, to the Lender,
Lessor or Lessee,


                                        4
<PAGE>

at their respective addresses and in the case of telefax, to their respective
telefax numbers, as follows:

                  To Lender:

                  Credit Lyonnais/PK AIRFINANCE, New York Branch
                  152 West 57th Street
                  New York, NY 10019
                  Attention: Mr. Anders Hebrand
                  Vice President Contracts
                  Telephone No.: 212-245-2575
                  Telefax No.: 212-397-9393

                  To Lessor or Lessee: to their address, telephone number and
telefax number as set forth in Section 21(D) of the Lease.

            (c) Every notice or demand shall, except so far as otherwise
expressly provided by this Agreement, be deemed to have been received, in the
case of a telefax, at the time of actual receipt thereof, and in the case of an
internationally recognized overnight courier service, upon acknowledgment of
receipt or as of the date on which receipt of such notice delivered by overnight
courier is refused or such courier advises that such letter is not deliverable
at the address set out in paragraph 9(b).

            (d) Lessor, Lessee or Lender may change its address by giving notice
in accordance with this paragraph 9.

      A copy of every notice sent to Lender shall be sent to:

                  Credit Lyonnais/PK AIRFINANCE
                  10 rue de la Greve
                  L-1643 Luxembourg
                  Attention: Vice President Contracts
                  Telephone No.: 011-352-402-1721
                  Telefax No.: 011-352-482-544

                  Feltman, Karesh, Major & Farbman
                  152 West 57th Street
                  New York, New York 10019
                  Attention: Loren M. Dollet, Esq.
                  Telephone No.: 212-586-3800
                  Telefax No.: 212-586-0951


                                        5
<PAGE>

            (e) Lessor and Lessee agree that where the Lease permits actions to
be taken or notices to be given by the "Mortgagee", the Lessee shall be entitled
to rely that any such action or notice taken or given by the "Mortgagee" is
taken or given in accordance with the Loan Documents (as defined in the Loan
Agreement) and may be treated by the Lessee as the action or notice of the
Lessor.

      11. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original and all of such counterparts shall constitute
one and the same Agreement.

      12. LENDER, LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF OR IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF ANY OF THE PARTIES
HERETO.

      13. This Agreement and the rights and obligations evidenced hereby shall
be binding upon and inure to the benefit of the successors and permitted assigns
of the parties hereto. Neither the Lessor nor Lessee may assign any of their
rights or obligations hereunder without the express prior written consent of the
Lender.

      14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO IN AND BY
RESIDENTS OF THE STATE OF NEW YORK AND TO BE PERFORMED ENTIRELY WITHIN THE STATE
OF NEW YORK. The Lessor, Lessee and Lender consent to the jurisdiction and venue
of the New York State Supreme Court for the Borough of Manhattan, New York
County, New York and the United States District Court for the Southern District
of New York, in any action arising out of or connected in any way with this
Agreement, and the parties hereto further agree that the service of process or
of any other papers upon them or any of them by certified or registered mail,
return receipt requested, at their respective addresses set forth herein shall
be deemed good, proper and effective service upon them. The parties hereto
expressly consent to the jurisdiction of and venue in each of the aforementioned
courts and expressly waive any claim to lack of jurisdiction thereof or that
either such court is an inconvenient forum or that venue therein is improper.


                                        6
<PAGE>

      IN WITNESS WHEREOF, Lessor, Lessee and Lender have caused this Assignment
Of Lease and Consent to be duly executed by their duly authorized officers as of
the day and year first above written.


CREDIT LYONNAIS/PK AIRFINANCE             OLIVIA CORP.
NEW YORK BRANCH


By:__________________________             By:_______________________

Title:_______________________             Title:____________________

                                          RENO AIR, INC.


                                          By:_______________________

                                          Title:____________________


                                        7
<PAGE>

                         LEASE SUPPLEMENT [49587] NO. 1

      LEASE SUPPLEMENT [49587] NO. 1, dated November 16,1995, between OLIVIA
CORP. ("LESSOR") and RENO AIR, INC. ("LESSEE").

      LESSOR and LESSEE have heretofore entered into that certain Aircraft Lease
Agreement [49587], dated as of November 16, 1995, relating to one (1) McDonnell
Douglas MD-87 Aircraft (herein called the "Lease" and the defined terms therein
being hereinafter used with the same meanings). The Lease provides for the
execution and delivery of a Lease Supplement for the purpose of subjecting the
Aircraft and other property described in such Lease Supplement (collectively,
the "Equipment"), as and when delivered by LESSOR to LESSEE, to the terms of the
Lease.

      The Lease relates to the Equipment described below and a counterpart of
the Lease is attached hereto and made a part hereof, and this Lease Supplement,
together with such attachment, is being filed for recordation on the date hereof
with the FAA as one document.

      NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, LESSOR and LESSEE hereby agree as follows:

      1. LESSOR hereby delivers and leases to LESSEE under the Lease, and LESSEE
hereby accepts delivery of and leases from LESSOR under the Lease, the following
described Equipment, which Equipment, as of the date hereof, is acknowledged and
accepted by LESSEE:

            (i)   Airframe: one (1) McDonnell Douglas MD-87 airframe, bearing
                  FAA Registration No. N753RA and Manufacturer's Serial No.
                  49587;

            (ii)  Engines: two (2) Pratt & Whitney Model JT8D-217C aircraft
                  engines, each of which has 750 or more rated takeoff
                  horsepower and bearing Manufacturer's Serial Nos. 708147 and
                  708177, respectively; and

            (iii) The Aircraft Documents.

      2. The Effective Date for the Equipment is the date of this Lease
Supplement set forth in the opening paragraph hereof.
<PAGE>

      3. The Term is from the date of this Lease Supplement through and
including January 15, 2003.

      4. LESSEE hereby confirms it has paid the Security Deposit to LESSOR in
the amount set forth on Schedule "1" attached hereto and forming a part hereof.

      5. LESSEE hereby confirms its agreement to pay LESSOR Interim Rent and
Basic Rent, as applicable, for the Equipment throughout the Term, in the
installments and in the amounts provided for on Schedule "1", on each Rent Date.

      6. LESSEE hereby confirms its agreement to pay LESSOR Reserves on each
Maintenance Reserve Date, subject to the provisions of 5(E) and in the amounts
provided for on Schedule "1".

      7. LESSEE hereby confirms to LESSOR that LESSEE has accepted the Equipment
for all purposes hereof and of the Lease.

      8. All of the terms and provisions of the Lease are hereby incorporated by
reference in this Lease Supplement to the same extent as if fully set forth
herein.

      9. This Lease Supplement may be executed by the parties hereto in separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.


                                        2
<PAGE>

      IN WITNESS WHEREOF, LESSOR and LESSEE have caused this Lease Supplement
[49587] No. 1 to be duly executed and delivered as of the date and year first
above written.

LESSOR:                                LESSEE:

OLIVIA CORP.                           RENO AIR INC.


By: /s/ Aaron Mendelsohn               By:
    ---------------------------            ---------------------------
Name: Aaron Mendelsohn                 Name:
Title: President                       Title:


                                        3
<PAGE>

      IN WITNESS WHEREOF, LESSOR and LESSEE have caused this Lease Supplement
[49587] No. 1 to be duly executed and delivered as of the date and year first
above written.

LESSOR:                                LESSEE:

OLIVIA CORP.                           RENO AIR INC.


By:                                    By: /s/ Robert M. Rowen
    ---------------------------            ---------------------------
Name:                                  Name: Robert M. Rowen
Title:                                 Title: Vice President and General Counsel


                                        3
<PAGE>

                                  Schedule "1"

1. Security Deposit. The Security Deposit shall equal $300,000.

2. Interim Rent. Interim Rent shall be payable by LESSEE to LESSOR in the
amount set forth in Section 5(A) of the Lease. The Minimum Basic Rent shall
equal $40,000.

3. Basic Rent.

      (i) Basic Rent shall be paid by LESSEE to LESSOR, in advance, as set forth
in Section 5(A)(ii) of the Lease.

      (ii) The monthly Basic Rent for each Rent Period during the periods set
forth below shall equal the amounts set forth next to such periods assuming that
LIBOR for such Rent Period is 5.8% per annum:

            January 15, 1996 - July 14, 1996 - $87,500 
            July 15, 1996 - Expiration Date - $150,000

            To the extent LIBOR on any given Rent Date (provided, however, if
such Rent Date is not a London Banking Day, then on the immediately following
London Banking Day), on which Basic Rent is to be paid is less than or greater
than 5.8% per annum, the Basic Rent payable by LESSEE to LESSOR on the next Rent
Date shall be adjusted upward (in the event that LIBOR is greater than 5.8% per
annum) or downward (in the event that LIBOR is less than 5.8% per annum) in
accordance with the following formula (the "Rent Adjustment"):

            ((L-5.8) x A) + B

                  L =   the actual 30-day LIBOR rate for the preceding Rent
                        Date, however, L shall never be greater than 8.0 nor
                        less than 3.6

                  B =   the Basic Rent

                  A =   an adjustment factor equal to the amount set forth
                        below corresponding to the relevant Rent Period:


                                        4
<PAGE>

                  Rent Period                        A
                  -----------                        -

                  Jan-15-1996 to Jan-14-1997       7,450
                  Jan-15-1997 to Jan-14-1998       6,700
                  Jan-15-1998 to Jan-14-1999       5,800
                  Jan-15-1999 to Jan-14-2000       4,900
                  Jan-15-2000 to Jan-14-2001       3,850
                  Jan-15-2001 to Jan-14-2002       2,750
                  Jan-15-2002 to Jan-15-2003       1,550

            Notwithstanding anything set forth herein to the contrary, with
respect to the Basic Rent payable for the last Rent Period, the Rent Adjustment
shall be made on the Expiration Date. To the extent the Basic Rent is adjusted
upward for such Rent Period, LESSEE shall pay the Rent Adjustment to LESSOR on
the Expiration Date. To the extent the Basic Rent is adjusted downward for such
period and provided no Default or Related Lease Default has occurred and is
continuing, LESSOR shall pay LESSEE the Rent Adjustment on the later of the
Expiration Date or the date on which LESSEE has complied with all provisions
hereof

4. Reserves.

      (i) The Airframe Reserves shall be payable in an amount equal to thirty
($30.00) Dollars for each Flight Hour incurred on the Airframe for the previous
Rent Period;

      (ii) The Engine Reserves shall be payable in an amount equal to seventy
($70.00) Dollars per each Cycle incurred on each Engine for the previous Rent
Period; and

      (iii) the Landing Gear Reserves shall be ten ($10.00) Dollars per each
Cycle incurred on the Landing Gear for the previous Rent Period.


                                        5