<PAGE>

                                                                   Exhibit 10.68

                                                               EXECUTION VERSION

            TO THE EXTENT THAT THIS AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL
            PAPER (AS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
            APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS AIRCRAFT
            LEASE AGREEMENT MAY BE CREATED THROUGH TRANSFER OR POSSESSION OF ANY
            COUNTERPART OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE
            IDENTIFIED AS THE COUNTERPART DESIGNATED AS THE ORIGINAL ON THE
            SIGNATURE PAGE OF THIS AGREEMENT BY GE CAPITAL AVIATION SERVICES,
            INC.

                            AIRCRAFT LEASE AGREEMENT

                            DATED AS OF MAY 12, 2000
                                     BETWEEN

                        AVIATION FINANCIAL SERVICES INC.
                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE

                  IN RESPECT OF AIRCRAFT: BOEING MODEL 737-700
                                SERIAL NO: 28641
                          U.S. REGISTRATION NO.: N741AL

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

                        INCORPORATING THE PROVISIONS OF A

                             COMMON TERMS AGREEMENT
                             DATED AS OF MAY 12,2000


<PAGE>


                            AIRCRAFT LEASE AGREEMENT

    THIS AIRCRAFT LEASE AGREEMENT is made as of May 12,2000 and is

    BETWEEN:

    (1)     AVIATION FINANCIAL SERVICES INC., a corporation incorporated under
            the Laws of the State of Delaware having its principal place of
            business and chief executive office at 201 High Ridge Road,
            Stamford, Connecticut 06927 ("LESSOR"); and

            ALOHA AIRLINES, INC., a corporation incorporated under the Laws of
            the State of Delaware with its principal place of business and chief
            executive office at 371 Aokea Street, Honolulu, Hawaii 96819
            ("LESSEE").

    WHEREAS:

    (A)      Lessee wishes to lease the Aircraft (as defined below) from Lessor,
             and Lessor wishes to lease the Aircraft to Lessee, on the terms and
             subject to the conditions provided herein;

    (B)      General Electric Capital Corporation ("GECC"), an Affiliate of
             Lessor, and Lessee have entered into the Common Terms Agreement (as
             defined below) in respect of aircraft that may be leased from time
             to time by Lessee or one of its Affiliates from GECC or one of its
             Affiliates; and

    (C)      Lessor and Lessee wish to incorporate by reference such Common
             Terms Agreement, as well as Schedules A and B attached hereto, into
             this Aircraft Lease Agreement for the Aircraft and a true and
             complete copy of such Common Terms Agreement is attached hereto as
             Schedule C;

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

    1.       INTERPRETATION

    1.1      DEFINITIONS: In this Aircraft Lease Agreement, the following
             capitalized words and expressions have the respective meanings set
             forth below:

             AIRCRAFT means the Airframe and Engines described on Schedule A
             hereto.

             AIRFRAME STRUCTURAL CHECK, AIRFRAME SUPPLEMENTAL RENT, ANNUAL
             SUPPLEMENTAL RENT ADJUSTMENT, APU SUPPLEMENTAL RENT AND ASSUMED
             RATIO are not applicable.

             COMMON TERMS AGREEMENT means the "Aircraft Lease Common Terms
             Agreement" dated as of May 12, 2000 executed by Lessor and Lessee
             (as in effect on the date hereof


                                      -1-
<PAGE>

             without, unless Lessor and Lessee otherwise expressly agree, giving
             any effect to any subsequent amendment, supplement, waiver or other
             modification thereto), and which forms part of this Aircraft Lease
             Agreement.

             DELIVERY CONDITION REQUIREMENTS means the requirements specified in
             Part II of Schedule A.

             DELIVERY LOCATION means Seattle, Washington or such other location
             as Lessor and Lessee mutually agree in order to minimize any Taxes
             that may be applicable to the Delivery.

             DEPOSIT means all amounts payable pursuant to Section 3.1 hereof.

             ENGINE SUPPLEMENTAL RENT AND ENGINE LLP SUPPLEMENTAL RENT are not
             applicable.

             FINAL DELIVERY DATE means the date that is 90 days after the last
             day of the Scheduled Delivery Month.

             FINANCING DOCUMENTS means the documents, if any, relating to any
             indebtedness of Lessor secured, in whole or in part, by Lessor's
             interest in the Aircraft and this Aircraft Lease Agreement.

             FINANCING DOCUMENTS CONTEST RIGHTS, FINANCING DOCUMENTS INDEMNITY
             AMOUNTS AND FINANCING DOCUMENTS TAX AMOUNTS are all inapplicable.

             FINANCING PARTIES means the Persons, if any, that hold the
             indebtedness of Lessor evidenced by the Financing Documents, and
             shall include the Financing Parties Representative.

             FINANCING PARTIES' REPRESENTATIVE the Person, if any, identified by
             Lessor to Lessee in writing as the representative of the Financing
             Parties and the beneficiary of the Security Interest in the
             Aircraft and this Aircraft Lease Agreement created by the Financing
             Documents, and its successors and assigns.

             GUARANTOR is inapplicable.

             INDEMNITEE means each of Lessor, Owner, GECC, GECAS, the Financing
             Parties and their respective successors and permitted assigns, and
             each of their respective shareholders, subsidiaries, affiliates,
             partners, contractors, directors, officers, representatives, agents
             and employees.

             LANDING GEAR SUPPLEMENTAL RENT is not applicable.



                                      -2-
<PAGE>

            MANUFACTURER means the manufacturer of the Airframe or an Engine, as
            the case may be, as set forth on Schedule A hereto.

            OWNER means Lessor.

            PRE-APPROVED BANK means (i) First Hawaiian Bank for so long as its
            long-term unsecured Dollar denominated debt carries a rating from
            S&P of A- or better, and (ii) any bank organized under the laws of
            the United States or any State thereof, or the New York branch of a
            major international bank for only so long as its long-term Dollar
            denominated unsecured debt (or if it does not have long-term
            unsecured Dollar denominated debt, its parent corporation's
            long-term unsecured Dollar denominated debt) carries a rating from
            S&P of A or better.

            REDELIVERY LOCATION means any location in the State of Washington,
            Oregon or California as Lessor may designate to Lessee or such other
            location as may be agreed in writing by Lessor and Lessee.

            RENT COMMENCEMENT DATE means the date on which Lessor tenders the
            Aircraft under Clause 4.3.(a) of the Common Terms Agreement and the
            Lessee Conditions Precedent are met or could reasonably be expected
            to be met if the Delivery of the Aircraft had occurred.

            SCHEDULED DELIVERY DATE means the date that Aircraft is scheduled to
            be delivered by Lessor to Lessee under the Lease, as notified by
            Lessor to Lessee pursuant to Section 4.1 of the Common Terms
            Agreement, and, notwithstanding any subsequent delays in delivery,
            the "Scheduled Delivery Date" shall remain the first such date
            notified by Lessor to Lessee pursuant to Section 4.1 of the Common
            Terms Agreement.

            SCHEDULED DELIVERY MONTH means March 2001.

            SCHEDULED DELIVERY WEEK means the week during which the Scheduled
            Delivery Date is anticipated to fall, as the same is notified by
            Lessor to Lessee pursuant to Section 4.1 of the Common Terms
            Agreement.

            SCHEDULED EXPIRY DATE means the day immediately preceding the
            fifteenth ( 15th) anniversary of the Rent Commencement Date (or in
            the event that such date is a day that is not a Business Day, the
            immediately preceding Business Day), which date shall be
            specifically set forth in Lease Supplement No. 1; provided, however,
            that Lessee shall receive a credit for Rent actually paid by Lessee
            to Lessor, on a per diem basis, against other obligations owed by
            Lessee to Lessor at the Return Occasion in respect of any
            non-Business Days which are truncated from the Term based on this
            provision.

            STATE OF DESIGN means the United States.



                                      -3-
<PAGE>

             TAX INDEMNITEE means each of Owner, Lessor, and each member of the
             consolidated group of which Lessor or Owner is a member for United
             States Federal Income Tax purposes, and their successors and
             permitted assigns.

    1.2      INTERPRETATION: Unless otherwise defined herein, words and
             expressions defined in the Common Terms Agreement have the same
             respective meanings for the purposes of this Aircraft Lease
             Agreement. The construction provisions of Section 1.2 of the Common
             Terms Agreement shall apply to this Aircraft Lease Agreement.

    2.       LEASING

    2.1      AGREEMENT TO LEASE: Subject to the terms and conditions of the
             Lease, Lessor will lease the Aircraft to Lessee and Lessee will
             take delivery of and lease the Aircraft from Lessor in accordance
             with the Lease for the duration of the Term.


    2.2      TERM: Subject to Sections 4.1 through 4.4 of the Common Terms
             Agreement, Delivery of the Aircraft will occur at the Delivery
             Location, whereupon Lessee shall accept the Aircraft hereunder and
             evidence such Delivery and acceptance by executing and delivering
             Lease Supplement No. 1 as provided in Section 4.3 of the Common
             Terms Agreement. The Term will commence on the Delivery Date, which
             Delivery Date is scheduled to occur in the Scheduled Delivery
             Month, and will expire on the Scheduled Expiry Date unless
             terminated earlier in accordance with the provisions of the Lease.

    2.3      [Not applicable].

    3.       PAYMENTS

    3.1      DEPOSIT AND LETTER OF CREDIT: Lessee shall pay to Lessor the
             Deposit in cash (to which Deposit Section 5.13 of the Common Terms
             Agreement shall apply) in the amount and at the times provided in
             Schedule B hereto. Lessee shall be permitted to deliver to Lessor
             an irrevocable Letter of Credit in lieu of a portion of the Deposit
             in an amount up to the amount provided in Schedule B as the LC
             Amount, which Letter of Credit shall comply with the provisions of
             Section 5.14 of the Common Terms Agreement

    3.2      RENT: Lessee shall pay Rent to Lessor on each Rent Date during the
             Term in the amount provided in Schedule B hereto and as provided
             in Sections 5.2 and 5.3 of the Common Terms Agreement. The first
             installment of Rent shall be due and payable on the Rent
             Commencement Date as defined herein.

    3.3      SUPPLEMENTAL RENT: Lessee shall have no obligation to pay
             Supplemental Rent.


                                      -4-
<PAGE>

    3.4      LESSOR'S MAINTENANCE CONTRIBUTION: Lessor shall have no obligation
             to make Maintenance Contribution payments.

    3.5      LESSOR'S BANK ACCOUNT: For the purposes of Section 5.5 of the
             Common Terms Agreement, Lessor's bank account and wire transfer
             particulars, to which all payments to Lessor shall be made, are at
             the date hereof. Bankers Trust Company, New York, ABA 021 001 033,
             For the account of: Aviation Financial Services Inc., Account
             Number: 50-259-862.

    3.6      MACRS: Lessor has assumed that MACRS Deductions shall be available
             in respect of the leasing of the Aircraft and accordingly the
             provisions of Section 5.7(d) of the Common Terms Agreement and the
             related provisions of Schedule B shall apply under this Agreement.

    4.       CONDITION OF THE AIRCRAFT AT DELIVERY

    4.1      On the Delivery Date, as a condition to Lessee's obligation to
             accept delivery thereof, the Aircraft shall be in the condition
             provided in Part III of Schedule A hereto.

    5.       CONDITION OF THE AIRCRAFT AT REDELIVERY

    5.1      On the Return Occasion, Lessee shall redeliver the Aircraft to
             Lessor at the Redelivery Location and at such redelivery the
             Aircraft shall be in the condition provided in Part II of
             Schedule A hereto and in the Common Terms Agreement, including
             Schedule 6 of the Common Terms Agreement.

    6.       ADDRESSES FOR NOTICES

             The addresses and facsimile and telephone numbers of Lessor and
             Lessee are as follows:

             Lessor:           Aviation Financial Services Inc.
             Address:          c/o GE Capital Aviation Services
                               201 High Ridge Road
                               Stamford, CT 06927
             Attention:        Executive Vice President Risk and Portfolio
                               Management
             Facsimile:        (203) 357-4585
             Telephone:        (203) 357-3776
             Lessee:           Aloha Airlines, Inc.
             Address:          371 Aokea Street
                               Honolulu, Hawaii 96819
             Attention:        Executive Vice President and Chief Financial
                               Officer
             Facsimile:        (808) 833-3100
             Telephone:        (808) 836-4245

                                      -5-
<PAGE>

    7.       THE SCHEDULES AND COMMON TERMS AGREEMENT

             ALL THE PROVISIONS OF SCHEDULE A HERETO, SCHEDULE B HERETO, AND THE
             COMMON TERMS AGREEMENT, ARE INCORPORATED BY REFERENCE HEREIN AND
             ARE PART OF THIS AIRCRAFT LEASE AGREEMENT AS IF THEY WERE SET OUT
             IN FULL HEREIN. WITHOUT LIN41TING THE GENERALITY OF THE FOREGOING,
             BY ITS SIGNATURE BELOW, THE LESSEE ACKNOWLEDGES AND AGREES THAT THE
             LEASE OF THE AIRCRAFT HEREUNDER IS ON AN "AS IS, WHERE IS" BASIS
             AND THAT THE DISCLAIMERS, EXCULPATIONS AND LIMITATIONS OF
             LIABILITY, INDEMNITEES, THE CHOICE OF NEW YORK LAW AS THE GOVERNING
             LAW, THE LESSEE'S SUBMISSION TO PERSONAL JURISDICTION IN NEW YORK,
             AND THE WAIVER OF ANY RIGHT TO A TRIAL BY JURY PROVIDED FOR IN THE
             COMMON TERMS AGREEMENT ARE INCORPORATED HEREIN BY SUCH REFERENCE
             AND ARE PART OF THIS AIRCRAFT LEASE AGREEMENT AS IF THE SAME WERE
             SET OUT IN FULL HEREIN.

    8.       NO AMENDMENT EXCEPT IN WRITING

             No provision of this Lease, including any provision of Schedule A,
             Schedule B or the Common Terms Agreement, may be amended,
             rescinded, changed, waived, discharged, terminated or otherwise
             modified in any way whatsoever, except by a writing signed by the
             party to be charged. Lessor and Lessee acknowledge their agreement
             to the provisions of this Section 8 by their signatures below.

          [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. THE
                             SIGNATURE PAGE FOLLOWS]



                                      -6-
<PAGE>

 IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
 Agreement, each by their duly authorized representative(s), as of the date
 shown at the beginning of this Aircraft Lease Agreement.

 LESSOR:                                          LESSEE:

 AVIATION FINANCIAL                              ALOHA AIRLINES, INC.
 SERVICES INC.

 By:       [ILLEGIBLE]                      By:
       -----------------------------              -----------------------------
 Name:          Norm Liu                    Name:
       -----------------------------              -----------------------------
 Title:          Vice President             Title:
       -----------------------------              -----------------------------


                                             By:
                                                  -----------------------------
                                             Name:
                                                  -----------------------------
                                             Title:
                                                  -----------------------------


<PAGE>


 IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
 Agreement, each by their duly authorized representative(s), as of the date
 shown at the beginning of this Aircraft Lease Agreement.

 LESSOR:                                            LESSEE:
 AVIATION FINANCIAL                                 ALOHA AIRLINES, INC.
 SERVICES INC.

 By:                                         By:    /s/ Brenda F. Cartwright
       -----------------------------              -----------------------------
 Name:                                       Name:       Brenda F. Cutwright
       -----------------------------              -----------------------------
 Title:                                      Title: Exec. Vice President & CFO
       -----------------------------              -----------------------------

                                              By:   /s/ James M. King
                                                  -----------------------------
                                              Name:      James M. King
                                                  -----------------------------
                                              Title:  VP Planning & Development
                                                  -----------------------------


<PAGE>


                                   SCHEDULE A

                     PART I-AIRFRAME AND ENGINES DESCRIPTION

    AIRCRAFT

         Manufacturer:              Boeing

         Model:                     737-700 ETOPS

         Serial Number:             28641

         U.S. Registration No.      To be advised at Delivery and included in
                                  Lease Supplement No. 1

    ENGINES (each of which has 750 or more rated takeoff horsepower or the
    equivalent of such horsepower)

         Engine Type:               CFM56-7B24
         Serial Nos:                To be advised at Delivery and included in
                                    Lease Supplement No. 1






                                       A-1


<PAGE>

                                   SCHEDULE A

                     PART II-DELIVERY CONDITION REQUIREMENTS

    Set forth below is a description of the condition in which the Aircraft must
    be in order for Lessee to be obligated to accept the Aircraft under the
    Lease. It is solely a description of such condition precedent and shall not
    be construed as a representation, warranty or agreement of any kind
    whatsoever, express or implied, by Lessor with respect to the Aircraft or
    its condition, all of which have been disclaimed by Lessor and waived by
    Lessee as set forth in the Lease, including in the Common Terms Agreement.

    DELIVERY CONDITION REQUIREMENTS:

    This "DELIVERY CONDITION REQUIREMENTS" are as follows:

        Airframe,              New from Manufacturer, configured in
        Engines,               accordance with GECAS Detail Specification
        Components:            D6-38808-34 (Revision D), except as modified
                               in accordance with the specification changes
                               noted on the Appendix to this Schedule A -
                               Part II

        Livery Painting:       Lessee's current livery as in effect on the date
                               of this Aircraft Lease Agreement, or such other
                               livery as Lessee may specify in writing to
                               Lessor so long as Lessee provides to Lessor,
                               reasonably in advance of the Scheduled
                               Delivery Month so as to permit Lessor to make
                               all necessary arrangements for such painting, all
                               technical specifications necessary in order to
                               complete the painting of the Aircraft in such
                               livery




                                       A-2



<PAGE>


                                                                     APPENDIX TO
                                                             SCHEDULE A, PART II

                              SPECIFICATION CHANGES

    The following table outlines those specification items which the Lessee has
    identified as requiring modification to make the GEF specification
    compatible with those aircraft currently in operation by Lessee. Each of the
    items listed under the column marked GECAS (left) shall be modified during
    production to reflect the configuration listed in the Aloha column (right).
    All such modifications shall be accomplished at Lessor's expense.

    Notwithstanding the above, it is further agreed that Lessee will afford
    Lessor or its designated representative the opportunity to discuss alternate
    proposals with regard to those modifications below which cause BFE vendor
    changes to Lessor's baseline specification (ref D6-38808-34);


<Table>
<Caption>
    <S>    <C>                                                       <C>                       <C>
    01     GENERAL AIRPLANE DESCRIPTION                              GECAS                     ALOHA
           Manuals/Instrumentation Units                             Metric                    English

    03     GENERAL AIRPLANE CRITERIA
           Operational Capabilities
             Max Taxi Weight                                         133,500 lbs               155,000 lbs
             Max Takeoff Weight                                      133,000 lbs               154,500 lbs

    11     PLACARDS and MARKINGS
           Exterior Registry Markings                                No                        Yes

    21     AIR CONDITIONING
           Cabin Ascent Rate (ft/min)                                600                       750
           Cabin Descent Rate (ft/min)                               350                       500

    22     AUTOMATIC FLIGHT CONTROL
           DFCS Features
             Control Wheel Steering Reversion in Approach            Yes                       No
             Mode
           Altitude Alert (ft)                                       300/900                   200/900

    23     COMMUNICATION
           Voice Recorder                                            (1) Allied Signal 980-    (1) Loral Fairchild
                                                                     6022-001 ARINC            2100-1020-00
                                                                     557
             Man ON/Auto OFF Switch                                  YA607-YA670               Yes
           Audio Entertainment                                       None                      Matsushita (MPES)
                                                                                               RDAX1302-11
           Video Entertaininent                                      None                      SONY/PSU
                                                                                               mounted
</Table>


                                       A-3


<PAGE>



<Table>
<Caption>
   <S>    <C>                                                       <C>                       <C>
            Monitors                                                Structural Provs 5        VCC same as GEF
                                                                    Centerline Ovhd
            Video Control Center (VCC)                              Structural Provs Aft
                                                                    RH Stow Bin
          HF System                                                 Single/Complete           Dual
                                                                    Provs for second
            Transceiver                                             (1) Rockwell 822-         (2) Rockwell 822-
                                                                    0990-001 ARINC            0330-001
                                                                    719/753

          VHF System                                                Dual/Complete Provs       Triple
                                                                    for Third

            Transceiver                                             (2) Allied Signal 064-    (3) Rockwell 822-
                                                                    50000-0110 ARINC          1047-002
                                                                    716
            8.33 KHZ Spacing
              Capable                                               YA601-YA606               Yes
              Activated                                             YA607-YA670               No
            ACARS                                                   Part Provisions for       Rockwell 822-0666-
                                                                    ARINC 724B                003
          ELT                                                       No                        Artex 453-0004

   24     ELECTRICAL POWER
          Standby Power Load Additions
            Captain's Pilot Heat                                    YA607-YA670               No
            ATC No. 1                                               No                        Yes

   25     EQUIPMENT/FURNISHINGS                                                               See NOTE 1
          Interior Layout (See Attached)                            LOPS-377-0201             LOPS-377-0203
                                                                                              12F@38"/112Y@
                                                                                              31" with fixed
                                                                                              class
                                                                                              divider.
          Overwater Equipped                                        No, Lifevests Only        Yes, 3 x 46 man
            Lifeline                                                Yes                       Liferafts
          Installed Positions                                       G1, G4B                   G1, G2, G4B
          Provisions                                                G2 (Seat Track-3/         G2 half galley
                                                                    Power/Water/Drain/        underbin (Jamco)
                                                                    Ovhd Ties)
          Windscreen(s)                                             Fwd RH Sta 336.75         Fwd Left Hand with
                                                                                              emerg. Equip.
                                                                                              stowage and closet
                                                                                              at BS350
          Class Divider(s)                                                                    Fixed
            Rails                                                   Yes (Basic)               Yes (Basic)
            Stow Bin Cutout                                         YA610-YA670 Yes           No
          Center Overhead Stowage Bins                              No                        Yes (3)
                                                                                              (1) Forward
                                                                                              (2) Center
</Table>


                                       A-4


<PAGE>

<Table>
<Caption>
   <S>    <C>                                                        <C>                       <C>
   28     FUEL
          Measuring Sticks
            Conversion Tables                                        NDU to Kilograms          NDU to Pounds

   29     HYDRAULIC POWER
          Engine Driven Pump                                         Abex                      Vickers
                                                                     10-62167-2
          AC Electric Pump                                           Abex
                                                                     10-60556-30

   31     INDICATING/RECORDING SYSTEMS
          Flight Data Recorder                                       AlliedSignal 980-         L-3
                                                                     4700-042 ARINC            Communications
                                                                     747                       2100-4043-00
          Digital Flight Data Acquisition Unit                       Teledyne 2233000-85       AlliedSignal 967-
                                                                     ARINC 717                 0212-002
          Printer                                                    Part Provs Half           Full Format
                                                                     Format
          Data Loader                                                Connector                 AlliedSignal 964-
                                                                                               0401-016
          Display Format                                             EFIS/MAP                  PFD/ND
          Engine Instrument Display                                  Side-by-Side              Over/Under
          Engine Fuel Flow                                           N/A                       Full Time Display
          Radio Altitude Display                                     Below ADI                 Above ADI
          Round Dial & Digital Radio Altitude                        N/A                       Yes
          Ground Speed - Below Airspeed Tape                         N/A                       Yes
          Landing Altitude Reference Bar                             N/A                       Yes
          Baro Mins Pointer                                          N/A                       Yes
          Radio Altitude Height Alert Display                        No                        2500 Feet
          ADF Pointers in NAV Mode Display                           Suppressed
          TCAS 3 NM Range Ring - Nav Display                         No                        Yes
          FMC/ADIRU Position Difference Display                      Exceedence
          Weather Radar Range Area                                   Yes                       Yes
          TCAS Resolution Advisory                                   ADI                       ADI
          ILS Failure Flags                                          Inhibited
          ILS Localizer Deviation Expanded Scale                     Autopilot & Flt Dir       Autopilot & Flt Dir
          Oil Quantity Display                                       % Full Quantity           Quarts
          Approach Minimums                                          Radio Based
          Airspeed Bug #5                                            Disabled                  80 Knots
          Control Surface Position - System Display                  N/A                       Yes

   32     NOSE GEAR TAXI LIGHT                                       250 Waft                  450 Watt

   33     LIGHTING
          Passenger Cabin Lighting (Zone)                            Single                    Two
</Table>


                                       A-5


<PAGE>

<Table>
<Caption>
   <S>    <C>                                                       <C>                       <C>
          Escape Path Lighting                                                                Seat Mounted

   34     NAVIGATION
          Standby Altitude Indicator                                (1) BF Goodrich 501-      Sextent
                                                                    1657-02

          Ground Proximity Warning Computer                         AlliedSignal 965-         AlliedSignal 965-
                                                                    0976-003-204-204          0976-003-204-204
                                                                    (Enhanced)                (Enhanced)
            Callouts                                                Bank Angle (Basic)        Bank Angle (Basic)
                                                                                              "Plus 100
                                                                                              Minimums"
          VHF Nav (VOR)/Marker Beacon Receiver                      (2) AlliedSignal 066-     Rockwell 822-0297-
                                                                    50012-0101 ARINC          001
                                                                    711
          Multi-Mode Receiver (MMR)(ILS/GPS)                        (2) AlliedSignal 066-     Rockwell 822-1152-
                                                                    50029-1101                002
          ATC Transponder                                           (2) AlliedSignal 066-     Rockwell 822-0336-
                                                                    01127-1301 ARINC          001
                                                                    718
            TCAS Change 7                                           AlliedSignal 066-         No
                                                                    01127-1601 YA609-
                                                                    YA670
          DME Interrogator                                          (2) AlliedSignal 066-     Rockwell 822-0329-
                                                                    50013-0101 ARINC          001
                                                                    709
          ADF Receiver                                              (1) AlliedSignal 066-     (2) Rockwell 822-
                                                                    50014-0101 ARINC          0299-001
                                                                    712
            Dual                                                    Provisions
          WAS Computer                                              (1) AlliedSignal 066-     Rockwell 622-8971-
                                                                    50000-1508 ARINC          020
                                                                    735
            WAS Change 7                                            AlliedSignal 066-         No
                                                                    50000-2220 YA609-
                                                                    YA670
          Flight Management Computer System
            Computer                                                (1) Smiths Indust 10-     (2) Smiths Indust
                                                                    62225-003                 10-62225-003
            2nd   Computer                                          Partial Provisions        Installed
          CDU/MCDU                                                  CDU                       MCDU
          Date Base Size
            1 MEG                                                   YA601
            2 MEG                                                   YA602-YA670               Yes
          Built-In Test Equip Printer Receptacles                   No                        No
          FMCS Definition
            Runaway Offset Position                                 Feet                      Feet
            Alternate Destinations Predictions                      Inhibit                   Yes
</Table>


                                       A-6


<PAGE>

<Table>
<Caption>
    <S>   <C>                                                        <C>                       <C>
            Retention of Original Waypoints                          Inhibit                   Yes
            Message Recall                                           Inhibit                   Yes
          LRRA Transceiver                                           (2) AlliedSignal 066-     Rockwell 822-0334-
                                                                     50007-0101                002
          Weather Radar Transceiver                                  (1) AlliedSignal 066-     Rockwell 622-5132-
                                                                     50008-0405                633
            Predictive Windshear                                     Activated                 Activated

    35    OXYGEN
          Flight Crew System - Press Breathing                       Yes                       No
    38    WATER/WASTE
          Potable Water: Cap/Vol (US Gallons)                        40/40                     60/50
    39    E6 PANEL                                                                             Yes

    52    DOORS
          Airstairs, Forward                                         Part Provisions +         Installed
                                                                     Install Data Kit
</Table>


                                       A-7



<PAGE>


                                   SCHEDULE A

           PART III- PROCEDURES AND OPERATING CONDITION AT REDELIVERY

     On the Return Occasion the Aircraft, subject to ordinary wear and tear of a
     kind and to an extent consistent with similar aircraft engaged in
     commercial airline operations, will be redelivered to Lessor by Lessee in
     accordance with the procedures and in any event in the condition set out
     below. For the avoidance of doubt, any damage assessment and/or
     rectification criteria used in assessing the redelivery condition shall be
     as prescribed in the Manufacturer's structural repair manual ("SRM") and/or
     the Manufacturer's Maintenance Planning Document, as appropriate. Any
     damage outside the scope of the SRM shall require FAA 8110-3 certification.

1.1  FINAL INSPECTION

     Immediately prior to the Return Occasion, Lessee will make the Aircraft
     available to Lessor and Owner for inspection ("FINAL INSPECTION") in order
     to verify that the condition of the Aircraft complies with the Lease. The
     Final Inspection will include, and be long enough to permit Lessor to:

     (a)  inspect the Aircraft Documents and Records;

     (b)  inspect the Aircraft (with Lessee to open or remove panels as
          reasonably requested by Lessor or Owner based on Lessor's or Owner's
          visual observation of the Aircraft and/or their respective review of
          the Aircraft Documents and Records), uninstalled Parts and the APU
          (including a complete video borescope inspection of the APU);

     (c)  inspect the Engines, including (i) a complete video borescope
          inspection of (A) the low pressure and high pressure compressors and
          (B) turbine area and (ii) power assurance runs (including full
          take-off power engine run-up performed in accordance with the
          performance test in the Engine Manufacturer's test specifications, and
          the Engines shall not exceed corrected limits for all parameters using
          temperature corrected charts); and

     (d)  observe a two hour demonstration flight at Lessee's cost (with up to
          three (to the extent permitted by FARS) of Lessor's and Owner's
          representatives as on-board observers).

     Furthermore, Lessee acknowledges that a purchaser or the next operator of
     the Aircraft may need to inspect the Aircraft, the Engines and the Aircraft
     Documents and Records prior to redelivery and Lessee hereby agrees to
     cooperate reasonably at all times during the Term

                                       A-8


<PAGE>


     with Lessor, Owner and/or such purchaser or such next operator in order to
     coordinate, assist and grant access for the above inspections and/or sale
     or subsequent lease as applicable.

     Lessor or Owner, as the case may be, is responsible for and will indemnify
     Lessee against all Losses arising from the death or injury to any observer
     or any employee of Lessor or Owner, as the case may be, in connection with
     the inspection of the Aircraft under this Section 1.1.

1.2  GENERAL CONDITION

     The Aircraft will:

     (a)  be in the same configuration as at Delivery after giving effect to any
          post-Delivery modifications to the Aircraft paid for or otherwise
          provided by or on behalf of Lessor (or as permitted by the Lease or as
          otherwise mutually agreed), be in as good operating condition and
          appearance as when delivered to Lessee (after giving effect to any
          such post-Delivery modifications), except for ordinary wear and tear
          and alterations and modifications authorized or required under the
          Lease and paid for by Lessee or a Sub-Lessee, and be clean by major
          passenger airline standards;

     (b)  have installed the full complement of equipment, parts, accessories,
          furnishings and loose equipment as when originally delivered to Lessee
          (subject to Lessee's rights under Section 8.12 to reverse certain
          Equipment Changes, after giving effect to all modifications, repairs
          or maintenance performed during the Term, regardless of whether paid
          for by Lessee or Lessor) and the Aircraft (including the Aircraft
          Documents and Records) shall be in a condition suitable for immediate
          registration with the FAA (assuming that the Owner qualifies for such
          registration) and immediate operations under FAR Part 121 with a new
          operator, without waiver, unless the benefit of such waiver is
          applicable to the next operator of the Aircraft; and if any of the
          engines or parts tendered for redelivery with the Aircraft is not one
          of the Engines or Parts referred to in the Certificate of Technical
          Acceptance or a Replacement Engine installed pursuant to Section 8.11
          (b) following an Engine Event of Loss, Lessor shall have no obligation
          to accept such engine or part unless Lessee furnished to Lessor all
          the documents and evidence in respect of such engine or part in
          accordance with Section 8.11 (b), as if such engine were a Replacement
          Engine or replacement Part, and otherwise complies with such Section
          8.11 (b) with respect thereto;

     (c)  have in existence a valid and effective certificate of airworthiness
          (and if required by Lessor, a valid and effective export certificate
          of airworthiness) with respect to

                                       A-9


<PAGE>

          the Aircraft issued by the Air Authority (in the case of an export
          certificate of airworthiness no earlier than 30 days prior to the
          redelivery);

     (d)  comply with the Manufacturer's original specifications as at the
          Delivery, except as modified during the Term in accordance with the
          Manufacturer's service bulletins or letters, Airworthiness Directives,
          Air Authority approved data or otherwise as permitted by the Lease;

     (e)  be fresh out of a "C" Check (or higher check if applicable) in block
          format (which shall be the next sequential "C" Check under Lessee's
          Maintenance Program following the last regularly scheduled "C" Check
          performed by Lessee prior to the Return Occasion if Lessee's
          Maintenance Program is based on the then current Manufacturer's
          Maintenance Planning Document in block format. If Lessee's Maintenance
          Program is not based on the Manufacturer's Maintenance Planning
          Document in block format, then Lessee shall integrate the Aircraft
          Maintenance Program onto the then current Manufacturer's Maintenance
          Planning Document Block Maintenance Program such that all airframe
          inspections falling due within the "C" check interval (which shall not
          be less than 4,000 Flight Hours) as defined in and in accordance with
          the Manufacturer's Maintenance Planning Document have been
          accomplished;

     (f)  have had accomplished all outstanding Airworthiness Directives
          affecting that model of Aircraft issued by the FAA requiring action
          during the Term or within 180 days after the Return Occasion or the
          Scheduled Expiry Date, whichever is later; for this purpose,
          compliance shall be by terminating action if:

          (i)  Lessee has complied by terminating action for sixty-five percent
               (65%) of the aircraft of the same model and series then operated
               by Lessee; or

          (ii) the latest date permitted by such Airworthiness Directive for
               required compliance by terminating action falls within 180 days
               after the Return Occasion or the Scheduled Expiry Date, whichever
               is later.

          (iii) In no event shall there be any non-transferable time extensions,
               waivers, deviations or alternative means of compliance with any
               Airworthiness Directions or other Regulations.

     (g)  have installed all applicable vendor's and Manufacturer's service
          bulletin kits received free of charge by Lessee during the Term that
          are appropriate for the Aircraft and to the extent not installed,
          those kits will be furnished free of charge to Lessor;

                                      A-10

<PAGE>


     (h)  have the fuselage, empennage, wings and pylons stripped (or sanded if
          only three or less coats of paint) and painted in such livery as
          Lessor may designate in accordance with standard industry practice;

     (i)  have all signs and decals clean, secure and legible;

     (j)  [NOT APPLICABLE];

     (k)  have no open, deferred, continued, carry over or placarded maintenance
          items or watch items or placarded log book items, and all other log
          book discrepancies shall be cleared;

     (1)  all discrepancies discovered during the inspections described above
          which exceed the Manufacturer's maintenance manual allowable limits
          for in-service aircraft shall have been repaired in accordance with
          FAA-approved procedures;

     (m)  all repairs of a temporary or interim nature, requiring repetitive
          inspections or future upgrading, including external doublers with
          blind fasteners, shall be upgraded to permanent repair in accordance
          with the Manufacturer's Maintenance Planning Document or structural
          repair manual; and

     (n)  all systems shall be fully operational for their intended functions in
          accordance with the Manufacturer's Maintenance Planning Document
          specifications.

1.3  COMPONENTS

     (a)  If the Aircraft Lease Agreement specifies Minimum Component Flight
          Hours and/or Minimum Component Cycles, each Airframe Flight Hour and
          Cycle controlled Hard Time Component (other than the APU) shall have
          not less than the Minimum Component Flight Hours and the Minimum
          Component Cycles of life remaining to the next scheduled removal, in
          accordance with the Lessee's Maintenance Program and shall be
          supported by appropriate certification documentation indicating TSN,
          CSN, TSO and CSO such as FAA form 8130-1; for this purpose "Hard Time
          Component" means any component which has a limited on-wing life in
          accordance with the Manufacturer's Maintenance Planning Document and
          which can have life fully restored through appropriate maintenance;

     (b)  If the Aircraft Lease Agreement specifies a Minimum Component Calendar
          Life, each calendar-limited component including safety equipment will
          have not less than its Minimum Component Calendar Life remaining to
          the next scheduled removal in accordance with the Lessee's Maintenance
          Program;

     (c)  Each "on-condition" and "condition-monitored" component will be
          serviceable;

                                      A-11

<PAGE>

     (d)  The installed components as a group will have an average of total
          flight time since new of not more than that of the Airframe;

     (e)  If the Aircraft Lease Agreement specifies Minimum Component Flight
          Hours and/or Minimum Component Cycles, each Airframe Life-Limited
          Component will have not less than the Minimum Component Flight Hours
          and the Minimum Component Cycles remaining to next scheduled removal
          and will be supported by certification documentation necessary to
          demonstrate back-to-birth traceability; for this purpose "Airframe
          Life-Limited Componenf" means a component with an ultimate life which
          cannot be restored through appropriate maintenance.

1.4  ENGINES

     Each Engine (or a Replacement Engine as and to the extent permitted by
     Section 1.2(b)) will be installed on the Aircraft and comply with the
     following:

     (a)  If the Aircraft Lease Agreement specifies a Minimum Engine Flight
          Hours and/or Minimum Engine Cycles, each Engine will have not less
          than the Minimum Engine Flight Hours and Minimum Engine Cycles
          expected life remaining to the next scheduled removal. The expected
          life remaining will be determined by third party mutually acceptable
          to both Lessor and Lessee (at Lessor's cost) or by the Engine
          Manufacturer, in each case based on the inspection and checks to be
          performed at the Return Occasion in accordance with the Lease;

     (b)  Each Engine shall have just completed at the location for Lessor's
          acceptance on the Return Occasion a hot (including combustion chamber)
          and cold section video borescope inspection, which inspection shall be
          performed at Lessor's expense, and a power assurance run performed at
          Lessee's expense in accordance with the Lessee's Maintenance Program
          or Manufacturer's Maintenance Planning Document and any defects
          discovered in such inspections which exceed the Engine manufacturer's
          in-service limits shall be corrected at Lessee's expense. Lessee shall
          cause such borescope inspections to be performed and to be recorded on
          videotape by an agency selected by Lessor and shall provide Lessor
          with a copy of such videotape on the Return Occasion. No Engine shall
          be on "watch" for any reason, requiring any special or out of sequence
          inspection. Each Engine shall comply with the operations specification
          of Lessee without waiver or exceptions. All items beyond the Engine
          manufacturer's in-service limits shall be repaired;

     (c)  If the Aircraft Lease Agreement specifies Minimum Component Cycles,
          each Engine Life-Limited Component will have not less than the Minimum
          Component Cycles remaining per the manufacturer's then current
          limitations for the part

                                      A-12


<PAGE>

          number in question, and will be supported by certification
          documentation necessary to demonstrate back-to-birth traceability; for
          this purpose "Engine Life-Limited Component" means a component with an
          ultimate life which cannot be restored through appropriate
          maintenance; and

1.5  FUSELAGE, WINDOWS AND DOORS

     (a)  The fuselage will be free of major dents and abrasions in excess of
          the limits specified in Manufacturer's Maintenance Planning Document
          or structural repair manual; loose or pulled or missing rivets shall
          be replaced;

     (b)  Windows will be free of delamination, blemishes and crazing, in excess
          of the limits specified in the Manufacturer's Maintenance Planning
          Document or structural repair manual and will be properly sealed; and

     (c)  Doors will be free moving, correctly rigged and be fitted with
          serviceable seals.

1.6  WINGS AND EMPENNAGE

     (a)  Leading edges will be free from damage in excess of the limits
          specified in the Manufacturer's Maintenance Planning Document or
          structural repair manual; and

     (b)  Unpainted surfaces of the wings and empennage will be polished.

1.7  INTERIOR AND COCKPIT

     All soft furnishings, including but not limited to carpets, seat covers and
     curtains, will be in good condition, clean and free of stains and meet FAR
     fire resistance regulations.

1.8  LANDING GEAR; WHEELS AND BRAKES

     (a)  The Landing Gear and wheel wells will be clean, free of leaks and
          repaired as necessary;

     (b)  Each installed Landing Gear shall have no more Cycles accumulated than
          the Airframe and, if the Aircraft Lease Agreement specifies Minimum
          Landing Gear Flight Hours and/or Minimum Landing Gear Cycles and
          Minimum Landing Gear Calendar Time, not less than the Minimum Landing
          Gear Flight Hours and the Minimum Landing Gear Cycles and the Minimum
          Landing Gear Calendar Time shall be remaining to the next scheduled
          overhaul or removal, as the case may be, of each installed Landing
          Gear in accordance with the then current Manufacturer's Maintenance
          Planning Document and Lessee's Maintenance Program; and

     (c)  The wheels and brakes will have not less than half of their useful
          life remaining.

                                      A-13


<PAGE>


1.9  RETURN OF AUXILIARY POWER UNIT (APU)

     The APU shall have just completed a borescope inspection and shall meet all
     air outputs and temperature limitations under load in accordance with the
     Lessee's Maintenance Program and the APU manufacturer's maintenance manual,
     and any defects discovered in such inspection, which exceed the APU
     manufacturer's in-service limits, shall be corrected at Lessee's expense.
     If the Aircraft Lease Agreement specifies a Minimum APU Limit, the APU
     shall have not more than the Minimum APU Limit since the last gas path
     refurbishment. If the Aircraft Lease Agreement specifies a Minimum APU LLP
     Limit, APU Life Limited Parts shall have not less than the Minimum APU LLP
     Limit of useful life remaining on average.

1.10 CORROSION

     (a)  The Aircraft shall be in compliance with the Manufacturer's corrosion
          prevention and control program (CPCP) requirements. All CPCP
          inspections which would normally be accomplished while access is
          provided during structural inspection in accordance with the Lessee's
          Maintenance Program during the Term shall have been accomplished;

     (b)  The entire fuselage will be substantially free from corrosion and will
          be adequately treated in accordance with Lessee's corrosion prevention
          program and the Manufacturer's Maintenance Planning Document; and

     (c)  Fuel tanks will be free from contamination and corrosion and a tank
          treatment program will be in operation.

1.11 FUEL

     If the Aircraft Lease Agreement specifies a Minimum Measurable Fuel
     Requirement, at redelivery, the Aircraft fuel tanks shall contain at least
     enough fuel to meet the Minimum Measurable Fuel Requirement.

1.12 MAINTENANCE PROGRAM

     (a)  Prior to the Return Occasion and upon Lessor's or Owner's request,
          Lessee will provide Lessor or Owner or its agent reasonable access to
          the Lessee's Maintenance Program and the Aircraft Documents and
          Records in order to facilitate the Aircraft's integration into any
          subsequent operator's fleet; and

     (b)  Lessee will, if requested by Lessor or Owner to do so, provide
          sufficient access to Lessee's Maintenance Program in order to
          integrate the Aircraft to the next operator's maintenance program.
          Lessor and any Person to whom Lessor grants

                                      A-14


<PAGE>

          access to Lessee's Maintenance Program shall agree that it will not
          disclose the contents of the Lessee's Maintenance Program to any
          Person except to the extent necessary to monitor Lessee's compliance
          with the Lease and/or to bridge the maintenance program for the
          Aircraft from the Lessee's Maintenance Program to another program
          after the Return Occasion.

1.13 AIRCRAFT DOCUMENTS

     At redelivery Lessee will deliver to Lessor and Owner all current and
     complete historical records required to be maintained relevant to the
     Aircraft, including documents, manuals, data, overhaul records, life
     limited part traceability to "zero time since new", log books, original
     delivery documents serviceable parts tags, FAA forms, modification records
     and inspection records, and including each of the Aircraft Documents and
     Records.

1.13. ETOPS:

     The Aircraft shall be certified by the FAA for 180 minutes ETOPS operation
     or shall be in such condition as to be eligible for certification by the
     FAA for 180 minutes ETOPS operation.

                                      A-15


<PAGE>

                                   SCHEDULE B
                                COMMERCIAL TERMS

             Lessor and Lessee hereby agree that the definitions and other
     commercial and financial terms set forth in this Schedule B shall apply to
     the leasing of the Aircraft under the Lease.

             In addition, Lessor and Lessee understand and agree that the
     commercial and financial information contained in this Schedule B are
     considered by Lessor and Lessee as proprietary and confidential. Lessor and
     Lessee each hereby agree, and any of their assignees, upon becoming such
     shall agree that it will treat this Schedule B as proprietary and
     confidential and will not, without the prior written consent of the other,
     disclose or cause to be disclosed, the terms hereof or thereof to any
     Person, except to its agents, representatives, advisors, employees,
     counsel, underwriters, auditors, investors, financing parties, head lessors
     and sub-lessees as necessary or appropriate for the leasing transaction
     which is the subject hereof, or except (a) as may be required by applicable
     Law or pursuant to an order, or a valid and binding request, issued by any
     court or other Government Entity having jurisdiction over Lessor, Lessee or
     the assignee of either of them, as the case may be, or (b) as necessary to
     enable Lessor or its assignee to make transfers, assignments or other
     dispositions to potential transferees, assignees or participants of its
     interest in and to the Lease.

             In connection with any such disclosure or any filing of the
     information contained herein or therein pursuant to any such applicable
     Law, Lessor, Lessee or the assignee of either of them, as the case may be,
     shall request and use its best reasonable efforts to obtain confidential
     treatment of this Schedule B and the other party will cooperate in making
     and supporting any such request for confidential treatment.

     PART I           CASUALTY OCCURRENCE DEFINITIONS

             [This provision has been omitted as confidential information, and
             is separately filed with the Commission.]


                                       B-1


<PAGE>


     PART 11           DEPOSIT; DISCOUNT RATE; LC AMOUNT; INTEREST RATE

             [This provision has been omitted as confidential information, and
             is separately filed with the Commission.]


     PART III          RENT

             [This provision has been omitted as confidential information, and
             is separately filed with the Commission.]


                                       B-2


<PAGE>


     PART IV          TAX DEFINITIONS; SPECIAL TAX INDEMNITY

             [This provision has been omitted as confidential information, and
             is separately filed with the Commission.]


                                       B-3


<PAGE>


     PART V            SUPPLEMENTAL RENT - NOT APPLICABLE

             [This provision has been omitted as confidential information, and
             is separately filed with the Commission.]


     PART VI           MAINTENANCE AND RETURN CONDITION DEFINITIONS;
                       AIRWORTHINESS DIRECTIVE SHARING PAYMENTS

             [This provision has been omitted as confidential information, and
             is separately filed with the Commission.]


                                       B-4


<PAGE>


      PART VII SUBLEASE FEE

             [This provision has been omitted as confidential information, and
             is separately filed with the Commission.]

      PART VIII UTILIZATION RATIO

             [This provision has been omitted as confidential information, and
             is separately filed with the Commission.]


                                       B-6


<PAGE>


                                                              EXECUTION VERSION
                                                              -----------------





                      ____________________________________


                                 AIRCRAFT LEASE

                             COMMON TERMS AGREEMENT

                      ____________________________________

                             DATED AS OF MAY 12,2000







                                     BETWEEN


                      GENERAL ELECTRIC CAPITAL CORPORATION


                                       And


                              ALOHA AIRLINES, INC.


<PAGE>


                                    CONTENTS

<Table>
<Caption>
 SECTION                                                                                PAGE
 <S>     <C>                                                                            <C>

  1.     INTERPRETATION .................................................................1

  2.     REPRESENTATIONS AND WARRANTIES .................................................2

  3.     CONDITIONS PRECEDENT ...........................................................2

  4.     COMMENCEMENT ...................................................................3

  5.     PAYMENTS .......................................................................5

  6.     MANUFACTURER'S WARRANTIES .....................................................19

  7.     LESSOR'S COVENANTS ............................................................20

  8.     LESSEE'S COVENANTS ............................................................20

  9.     INSURANCE .....................................................................38

  10.    INDEMNITY .....................................................................39

  11.    EVENTS OF LOSS ................................................................41

  12.    RETURN OF AIRCRAFT ............................................................42

  13.    DEFAULT .......................................................................45

  14.    TRANSFER ......................................................................52

  15.    MISCELLANEOUS .................................................................54

  16.    DISCLAIMERS AND WAIVERS .......................................................58

  17.    BROKERS AND OTHER THIRD PARTIES ...............................................61
</Table>

<PAGE>


 Schedule 1       Definitions
 Schedule 2       Representations and Warranties
 Schedule 3       Conditions Precedent
 Schedule 4       Pre-Delivery Procedures and Delivery Condition
 Schedule 5       Certificate of Technical Acceptance
 Schedule 6       [NOT APPLICABLE]
 Schedule 7       Insurance Requirements
 Schedule 8       Form of Lessee's Legal Opinion
 Schedule 9       Events of Default
 Schedule 10      [NOT APPLICABLE]
 Schedule 11      Form of Lease Termination Certificate
 Schedule 12      Form of Lease Supplement No. 1
 Schedule 13      Form of Letter of Credit
 Schedule 14      Maintenance Performers
 Schedule 15      Technical Report




<PAGE>


                             COMMON TERMS AGREEMENT

 THIS COMMON TERMS AGREEMENT (this "CTA") is made as of May 12, 2000 BETWEEN:

 (1)      GENERAL ELECTRIC CAPITAL CORPORATION ("GE CAPITAL") and

 (2)      ALOHA AIRLINES, INC. ("ALOHA")

 WHEREAS:

          (A)       From time to time, Aloha or one of its Affiliates may wish
                    to lease commercial aircraft from GE Capital or one of its
                    Affiliates, and GE Capital or one of its Affiliates may wish
                    to lease commercial aircraft to Aloha or one of its
                    Affiliates;

          (B)       Each party hereto wishes to provide in one document for
                    certain common terms and conditions, as hereinafter provided
                    in this CTA, that will be applicable, unless otherwise
                    stated, to each such lease referred to in Recital (A); and

          (C)       Each such lease transaction will be concluded only on the
                    terms of an agreement entitled "Aircraft Lease Agreement,"
                    which together with this CTA (which will be incorporated
                    into and become part of such Aircraft Lease Agreement), will
                    constitute the lease for the applicable aircraft as
                    identified therein;

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

 1.       INTERPRETATION

 1.1      Definitions

          All references herein to "Lease" mean the integrated agreement
          consisting of the various documents comprising the Lease as defined in
          Schedule 1. In the Lease, capitalized words and expressions have the
          meanings set out for them in Schedule 1 and in the Aircraft Lease
          Agreement.

 1.2      Construction

          (a)     In the Lease, unless otherwise stated, a reference to:

                    (i)       "Lessor," "Lessee," "GECAS," "Owner" or any other
                              Person includes any of their successors and
                              assignees;

                    (ii)      plural concepts shall include the singular and
                              vice versa;


<PAGE>


                    (iii)     any document (except this CTA unless Lessor and
                              Lessee otherwise expressly agree) shall include
                              any changes to that document and any replacement
                              for it;

                    (iv)      a Section or a Schedule is a reference to a clause
                              of or a schedule to this CTA;

                    (v)       any Regulation shall include any changes to that
                              Regulation and any replacement for it;

                    (vi)      an obligation of a Person refers to any obligation
                              that Person has under or in relation to the Lease;
                              and

                    (vii)     "includes," "including", "include" or similar
                              terms shall not be construed as limiting and shall
                              mean "including, without limitation."

          (b)       Headings to Sections and Schedules in the Lease are not
                    intended to affect their meaning.

 2.       REPRESENTATIONS AND WARRANTIES

 2.1      Lessee's Representations and Warranties

          Lessee hereby makes the representations and warranties set out in
          Section 1.1 of Schedule 2 as of the date of execution of the Aircraft
          Lease Agreement and as of the Delivery Date, and Lessee understands
          that these statements must be true, both when the Aircraft Lease
          Agreement is executed and on the Delivery Date.

 2.2      Lessor's Representations and Warranties

          Lessor hereby makes the representations and warranties set out in
          Section 1.2 of Schedule 2 as of the date of execution of the Aircraft
          Lease Agreement and as of the Delivery Date, and Lessor understands
          that these statements must be true, both when the Aircraft Lease
          Agreement is executed and on the Delivery Date.

 3.       CONDITIONS PRECEDENT

 3.1      Conditions Precedent

          Lessor need not deliver and start the leasing of the Aircraft under
          the Lease unless each of the Lessor Conditions Precedent is satisfied
          or waived in writing by Lessor. Lessee need not accept and start the
          leasing of the Aircraft under the Lease unless each of the Lessee
          Conditions Precedent is satisfied or waived in writing by Lessee;
          provided, however, in the event that Lessee fails to accept and start
          the leasing of the Aircraft under the Lease, any Lessee Condition
          Precedent which reasonably could be expected to be met if the Delivery
          of the Aircraft had


                                      -2-
<PAGE>


          occurred shall be deemed to have been satisfied or waived for purposes
          of determining Lessee's liability for Rent in respect of the Aircraft
          in accordance with Section 4.1(b) below.

 3.2      Waiver

          If any Lessor Condition Precedent is not satisfied, or waived in
          writing by Lessor, on or before the Delivery Date, and Lessor (in its
          absolute discretion) nonetheless agrees to deliver the Aircraft to
          Lessee and to start the leasing of the Aircraft, Lessee will ensure
          that such Lessor Condition Precedent is fulfilled within 15 days after
          the Delivery Date, and Lessor may treat as an Event of Default the
          failure of Lessee to do so.

 4.       COMMENCEMENT

 4.1      Leasing

          (a)       Lessor shall notify Lessee of the Scheduled Delivery Week as
                    soon as possible, but no later than at least thirty (30)
                    days prior to the Scheduled Delivery Month, and Lessor shall
                    notify Lessee of the Scheduled Delivery Date as soon as
                    possible, but no later than at least one (1) week prior to
                    the Scheduled Delivery Week. Subject to Sections 3.1 and
                    4.4, Lessor will lease the Aircraft to Lessee and Lessee
                    will take the Aircraft on lease for the Term, which shall
                    commence on the Delivery Date, and which shall be evidenced
                    by Lessee's execution of Lease Supplement No. 1.

          (b)       If (i) Lessee is unwilling or unable to accept delivery of
                    the Aircraft on the date on which Lessor tenders the
                    Aircraft for Delivery to Lessee under and in accordance
                    with Section 4.3(a), or Lessee fails to fulfil any Lessor
                    Condition Precedent on or before such date, and (ii) the
                    Lessee Conditions Precedent are met (or could reasonably be
                    expected to be met if Delivery had occurred), then the Rent
                    Commencement Date for the Aircraft shall be deemed to have
                    occurred on the date on which it is tendered by Lessor for
                    Delivery in accordance with subclause (ii) of this Section
                    4.1(b), and Lessee shall be obligated to pay Rent for the
                    Aircraft on and from such date regardless of whether the
                    Delivery Date occurs or whether Lessee executes Lease
                    Supplement No. 1, but Lessor shall have no obligation to
                    deliver, and Lessee shall have no lease interest in the
                    Aircraft or other right to possession of the Aircraft,
                    unless and until Lessee fulfils all Lessor Conditions
                    Precedent as and when provided in the Lease and Lessee
                    accepts delivery of the Aircraft as evidenced by its
                    execution of Lease Supplement No. 1, and so long as no
                    Default has occurred and is continuing.

          (c)       Lessee will be responsible for all risks associated with any
                    loss of or damage to the Aircraft from the Rent Commencement
                    Date until possession of the Aircraft is returned


                                      -3-
<PAGE>

                    to Lessor on the Return Occasion and Lessor executes and
                    delivers to Lessee the acknowledgement contemplated by
                    Section 12.4.

 4.2      Procedure before Delivery

          Lessor and Lessee will follow the Pre-Delivery Procedure.

 4.3      Delivery and Acceptance

          (a)       After the Pre-Delivery Procedure has been carried out:

                    (i)       Subject to Section 3.1, Lessor will tender
                              delivery of the Aircraft to Lessee at the Delivery
                              Location.

                    (ii)      Subject to Section 3.1, Lessee will accept the
                              Aircraft. Upon such acceptance, Lessee must also
                              provide evidence of its acceptance by signing
                              Lease Supplement No. 1 and delivering it to
                              Lessor.

          (b)       Lessee's acceptance of the Aircraft shall be regarded as
                    absolute, unconditional and irrevocable.

 4.4      Delayed Delivery

          If Delivery takes place after the Scheduled Delivery Date or does not
          happen due to an Unforeseen Event or for any other reason (other than
          Lessor's willful misconduct in the performance of its obligation to
          deliver the Aircraft under and subject to the conditions in the
          Lease):

          (a)       Lessor will not be responsible for any Losses that Lessee
                    suffers resulting from the delay or from the non-delivery of
                    the Aircraft;

          (b)       Lessee will not, except in the circumstances described in
                    Section 4.4(c), be entitled to terminate the Lease or to
                    reject the Aircraft when it is offered for Delivery because
                    of the delay.

          (c)       If the Aircraft has not been tendered for Delivery, in
                    accordance with Section 4.3, by the Final Delivery Date,
                    either party may terminate the Lease by delivering notice to
                    the other party within 10 days of such Final Delivery Date
                    (and if such notice is not delivered within such 10-day
                    period the Final Delivery Date will be deemed extended for
                    one additional period of 90 days). Upon the delivery of any
                    such notice or automatically on the expiration of such
                    90-day period if no such notice has been delivered, all
                    obligations of each party under the Lease will end on the
                    date of such notice or the date of the


                                      -4-
<PAGE>

                    expiration of such period, as the case may be, except that
                    Lessor will repay to Lessee the Deposit (if any) or return
                    to Lessee or cancel any Letter of Credit and Lessee will
                    remain obligated under its indmenity set forth in Section 3
                    of Schedule 4.

          (d)       Lessee hereby agrees that its only right or remedy for a
                    delay in or failure of delivery of the Aircraft due to an
                    Unforeseen Event or for any other reason (other than
                    Lessor's willful misconduct in the performance of its
                    obligation to deliver the Aircraft under and subject to the
                    conditions in the Lease) is the remedy set forth in Section
                    4.4(c) above and Lessee hereby waives any rights it may have
                    under Section 2A-406 of the UCC or otherwise for any delay
                    in or failure of delivery.

 5.       PAYMENTS

 5.1      Deposit

          Lessee shall pay Lessor any Deposit that is specified in Section 3 of
          the Aircraft Lease Agreement.

 5.2      Rental Periods

          The first Rental Period will start on the Rent Commencement Date and
          each subsequent Rental Period will start on the date immediately
          following the last day of the previous Rental Period. Each Rental
          Period will end on the date immediately before the numerically
          corresponding day in the next month, except that:

          (a)       if there is no numerically corresponding day in that month,
                    it will end on the last day of that month; and

          (b)       if a Rental Period would otherwise overrun the Expiry Date,
                    it will end on the Expiry Date.

 5.3      Rent

          (a)       TIME OF PAYMENT: Lessee will pay to Lessor or its order Rent
                    in advance on each Rent Date. Lessor must receive value for
                    the payment on each Rent Date. If a Rental Period begins on
                    a day which is not a Business Day, the Rent payable in
                    respect of that Rental Period shall be paid on the Business
                    Day immediately following that day.

          (b)       AMOUNT: The Rent payable during the Term shall be calculated
                    in accordance with Schedule B of the Aircraft Lease
                    Agreement.


                                      -5-
<PAGE>

 5.4      Supplemental Rent

          (a)       AMOUNT: If, under the Aircraft Lease Agreement, Lessee is
                    required to pay Supplemental Rent, Lessee will pay that
                    Supplemental Rent, at the rates referred to in Section 3 of
                    the Aircraft Lease Agreement, to Lessor in relation to each
                    calendar month (or part of a month) of the Term, on the
                    fifteenth day following the end of that calendar month
                    (except that the last payment of Supplemental Rent during
                    the Term shall be paid on the Expiry Date).

          (b)       ADJUSTMENT: If, under the Aircraft Lease Agreement, Lessee
                    is required to pay Supplemental Rent, the Supplemental Rent
                    rates shall be adjusted after the Delivery Date in the
                    manner provided in the Aircraft Lease Agreement.

          (c)       LESSOR'S PROPERTY: Lessee acknowledges and agrees that
                    Supplemental Rent is additional rent for the leasing of the
                    Aircraft and not cash collateral or other collateral
                    security for Lessee's maintenance obligations under the
                    Lease. Once paid all Supplemental Rent is the property of
                    Lessor, it is not refundable to Lessee under any
                    circumstances whatsoever and Lessee has no interest therein
                    whatsoever.

 5.5      Payments

          All payments by Lessee to Lessor under the Lease will be made for
          value on the due date in Dollars and in immediately available funds by
          wire transfer to the Lessor's Account as specified in the Aircraft
          Lease Agreement.


 5.6      Withholding and Tax Credit

          (a)       WITHHOLDING: Lessee must not deduct any amount from any of
                    its payments under the Lease, for or on account of any
                    Taxes, unless it is required by law to do so, in which case
                    Lessee must:

                    (i)       deduct the minimum amount necessary to comply with
                              the Law;

                    (ii)      pay Lessor an extra amount so that Lessor receives
                              a net amount on the relevant payment date, that is
                              equal to the amount that it would have received if
                              the reduction had not been made (provided that
                              Lessee shall have no obligation to pay Lessor an
                              extra amount on account of withholding in relation
                              to any Taxes with respect to which Lessee is not
                              required to indemnify Lessor under Section 5.7).
                              The amount of any such payment to Lessor must take
                              into account the tax treatment of that payment to
                              Lessor applying the principles of Section 5.10
                              such that Lessor shall be in no worse position
                              than it would have been if the deduction had not
                              applied in the first place;


                                      -6-
<PAGE>

                    (iii)     pay the Tax to the relevant taxing authority
                              according to the relevant Law; and

                    (iv)      obtain a receipt (if one is available) from the
                              relevant taxing authority and give it to Lessor.

          (b)       TAX CREDIT: If Lessor, in good faith, determines that it has
                    realized a tax benefit (by way of deduction, credit or
                    otherwise) as a result of any payment for which Lessee is
                    liable under Section 5.6(a), Section 5.7, Section 5.10,
                    Section 5.21 or Section 10, Lessor shall pay to Lessee as
                    soon as practicable after the tax benefit has been realized
                    (but not before Lessee has made all payments and indemnities
                    to Lessor required under this Section or Section 5.7), an
                    amount which will ensure that (after taking account of the
                    payment itself) Lessor is in no better and no worse
                    position than it would have been if the Tax giving rise to
                    the payment hereunder had not been incurred.

                    Nothing in this Section 5.6(b) shall:

                    (i)       interfere with the right of Lessor to arrange its
                              tax affairs in whatever manner it thinks fit; or

                    (ii)      oblige Lessor to disclose any information relating
                              to its Tax affairs or any Tax computations (other
                              than information reasonably necessary for Lessee
                              to verify Lessor's determination, which
                              information may be supplied on a confidential
                              basis to an independent third party reasonably
                              acceptable to Lessor and Lessee).

 5.7      Tax Indemnity

          (a)       General:

                    (i)       Except as provided in Section 5.7(c), Lessee will
                              on demand pay and indemnify each Tax Indemnitee
                              against any and all Taxes levied or imposed
                              against or upon or payable by such Tax Indemnitee
                              or Lessee and arising from, with respect to or in
                              connection with the transactions pursuant to the
                              Lease, including all Taxes relating or
                              attributable to Lessee, the Lease or the Aircraft,
                              directly or indirectly, in connection with the
                              importation, exportation, registration, ownership
                              (but only to the extent relating to or
                              attributable to or arising as a result of the
                              possession, operation, use or maintenance of the
                              Aircraft by Lessee), leasing, sub-leasing,
                              purchase, delivery, possession, use, operation,
                              repair, maintenance, overhaul, transportation,
                              landing, storage, presence or redelivery of the
                              Aircraft or any part thereof or any rent,
                              receipts, insurance proceeds, income,
                              indemnification payment or other amounts arising
                              therefrom, or the making of any Equipment Change
                              or the permanent replacement of any Engine.


                                      -7-
<PAGE>

                    (ii)      All Taxes indemnified pursuant to this Section
                              5.7(a) shall be paid by Lessee directly to the
                              appropriate taxing authority (to the extent
                              permitted by applicable Law) at or before the time
                              prescribed by applicable Law. After any payment by
                              Lessee of any Tax directly to a taxing authority,
                              Lessee shall furnish to Lessor, on request, a
                              certified copy of a receipt for Lessee's payment
                              of such Tax or such other evidence of payment of
                              such Tax as is reasonably obtainable by Lessee and
                              reasonably acceptable to Lessor.

                    (iii)     Any amount payable by Lessee to a Tax Indemnitee
                              pursuant to Section 5.7(a) shall be paid within
                              ten days after receipt of a written demand
                              therefor from the relevant Tax Indemnitee
                              accompanied by a written statement describing in
                              reasonable detail the basis for such indemnity and
                              the computation of the amount so payable, provided
                              that if an amount of any indemnified Tax is being
                              contested in accordance with Section 5.9 and
                              Lessee shall have duly performed (and shall
                              continue to perform) all its obligations under
                              Section 5.9 with respect to such contest, then
                              payment of the indemnity with respect to such Tax
                              under Section 5.7(a) shall, at Lessee's election,
                              be deferred until the date the contest has been
                              completed.

          (b)       Sales and Use Taxes:

                    (i)       Without limiting Section 5.7(a) above, Lessee
                              shall pay to Lessor (or, if permitted by
                              applicable Law and if requested by Lessor, Lessee
                              shall pay to the relevant tax authority for the
                              account of Lessor):

                              (y)       all sales, use, excise, rental, value
                                        added, goods and services and similar
                                        taxes ("SALES TAXES") required to be
                                        paid to the tax authority of the
                                        jurisdiction in which the Delivery
                                        Location is situated or to the
                                        jurisdiction of the Habitual Base or the
                                        State of Incorporation with respect to
                                        the lease of the Aircraft to Lessee
                                        pursuant to the Lease unless Lessee
                                        delivers to Lessor on or prior to the
                                        Delivery Date such exemption certificate
                                        or other document as may be required by
                                        applicable law to evidence Lessor's
                                        entitlement to exemption from all Sales
                                        Taxes imposed by each such jurisdiction
                                        with respect to the lease of the
                                        Aircraft pursuant to the Lease; and

                              (z)       all Sales Taxes required to be paid to
                                        the tax authority of any jurisdiction in
                                        which the Aircraft may be used, operated
                                        or otherwise located from time to time
                                        unless Lessee deliver to Lessor such
                                        exemption certificates or other
                                        documents as may be required by
                                        applicable law to evidence Lessee's
                                        entitlement to exemption from all Sales
                                        Taxes imposed by each


                                      -8-
<PAGE>

                                        such jurisdiction with respect to the
                                        lease of the Aircraft pursuant to the
                                        Lease.

                    (ii)      Lessee and Lessor will cooperate with each other
                              in connection with the preparation and filing of
                              any exemption application or similar document that
                              is reasonably necessary or desirable under
                              applicable Law to avoid the imposition of any
                              Sales Taxes with respect to the transactions
                              contemplated by the Lease.

                    (iii)     The specific obligations with respect to sales and
                              use taxes set forth in this Section 5.7(b) are in
                              addition to, and are not in substitution for,
                              Lessee's obligation to indemnify for sales and use
                              taxes pursuant to Section 5.7(a).

          (c)       Lessee is not required to indemnify a Tax Indemnitee under
                    Section 5.7(a) or Section 5.7(b) to the extent that the Tax
                    arises because of:

                    (i)       the willful misconduct or gross negligence of the
                              Tax Indemnitee seeking indemnity under Section
                              5.7;

                    (ii)      a Tax liability a Tax Indemnitee has which would
                              have arisen even if the Lease had not been entered
                              into;

                    (iii)     a Tax liability charged on or measured by a Tax
                              Indemnitee's net income, profits or gains by any
                              Government Entity in the United States; but
                              excluding any Tax (A) that is a Sales Tax (other
                              than a Sales Tax that is enacted by a Government
                              Entity as a substitute for or replacement of a Tax
                              charged on or measured by net income, profits, or
                              gains as a revenue source for that Government
                              Entity (a "Replacement Sales Tax")) or (B) that is
                              imposed by any government or taxing authority of
                              any jurisdiction (other than the United States
                              federal government) if and to the extent that such
                              Tax (including a Replacement Sales Tax) results
                              from (x) the use, operation, presence,
                              registration or location of the Aircraft, the
                              Airframe, any Engine or any Part in the
                              jurisdiction imposing the Tax, or (y) the situs of
                              organization, any place of business or any
                              activity of Lessee or any other Person having use,
                              possession or custody of the Aircraft, the
                              Airframe, any Engine or any Part in the
                              jurisdiction imposing the Tax;

                    (iv)      a Tax liability charged with respect to the
                              period, or an event occurring, (x) prior to the
                              Delivery Date or (y) after the Expiry Date and, in
                              either case, unrelated to Lessor's dealings with
                              Lessee or to the transactions contemplated by the
                              Lease;

                    (v)       a Tax liability arising out of any voluntary
                              transfer or disposition by a Tax Indemnitee of any
                              equitable or legal interest in the Aircraft or any
                              part thereof or


                                      -9-
<PAGE>

                              this Agreement to any Person (including a transfer
                              or disposition by way of security but excluding a
                              transfer or disposition pursuant to the exercise
                              of remedies in connection with an Event Default),
                              provided, however, that Lessor shall in connection
                              with an Event of Default comply with any request
                              as Lessee shall make concerning the appropriate
                              jurisdiction in which such disposition shall be
                              made unless Lessor reasonably determines (and
                              advises Lessee) that compliance with such request
                              by Lessee would generate an adverse consequence or
                              prejudice Lessor; or

                    (vi)      a Tax liability with respect to a Tax based on or
                              measured by the value or principal amount of any
                              loan or promissory note (or security therefor)
                              entered into by a Tax Indemnitee or anyone
                              claiming an interest in the Aircraft or any
                              portion thereof through a Tax Indemnitee; or

                    (vii)     a Tax liability arising out of a Replacement Sales
                              Tax as described in Section 5.7(c)(iii), but
                              excluding a Replacement Sales Tax described in
                              Section 5.7(c)(iii)(B).

          (d)       Lessee will also indemnify each Tax Indemnitee, on an
                    After-Tax Basis, as set forth in the Section entitled
                    "Special Tax Indemnity" in Schedule B of the Aircraft Lease
                    Agreement, and the provisions of Section 5.9 (TAX CONTEST
                    AND INFORMATION) shall apply thereto.

 5.8      [NOT APPLICABLE]

 5.9      Tax Contest and Information

          (a)       If a Tax Indemnitee receives a notice of an audit or a
                    written claim for any Tax for which Lessee would be required
                    to pay an indemnity pursuant to Section 5.6 or Section 5.7,
                    Lessor or such Tax Indemnitee shall notify Lessee promptly
                    of such audit or claim, provided that any failure to provide
                    such notice will not relieve Lessee of any indemnification
                    obligation pursuant to Section 5.6 or 5.7 except to the
                    extent that such failure precludes the right to contest such
                    Taxes. If requested by Lessee in writing promptly after
                    receipt of notice hereunder, Lessor shall or Lessor shall
                    cause, to the extent that it has the ability to do so
                    through relationship or contractual privity, such Tax
                    Indemnitee to, upon receipt of indemnity satisfactory to it
                    and at the expense of Lessee (including all costs, expenses,
                    legal and accountants' fees and disbursements, and
                    penalties, interest and additions to tax incurred in
                    contesting such claim) permit Lessee to contest such audit
                    or claim, or, if such contest (w) relates to an income tax,
                    (x) involves Taxes in addition to those for which Lessee is
                    responsible hereunder, (y) may not, under applicable law be
                    conducted by Lessee, or (z) is one for which Lessee requests
                    in writing


                                      -10-
<PAGE>

                    that Lessor or the Tax Indemnitee conduct such contest,
                    Lessor shall, or Lessor shall cause, to the extent that it
                    has the ability to do so through relationship or contractual
                    privity, the appropriate Tax Indemnitee to in good faith
                    contest such audit or claim, by (i) resisting payment
                    thereof if practicable and appropriate, (ii) not paying the
                    same except under protest if protest is necessary and
                    proper, or (iii) if payment is made, using reasonable
                    efforts to obtain a refund of such Taxes in appropriate
                    administrative and judicial proceedings. Lessor or the Tax
                    Indemnitee shall determine the method of any contest
                    conducted by Lessor or the Tax Indemnitee and (in good faith
                    consultation with Lessee) control the conduct thereof,
                    except that with respect to matters described in clause (y)
                    or in clause (z) above which are not also described in
                    clause (w) or clause (x) above Lessor shall and Lessor shall
                    cause, to the extent that it has the ability to do so
                    through relationship or contractual privity, the Tax
                    Indemnitee to comply with the reasonable instructions of
                    Lessee regarding the method of any contest conducted by
                    Lessor or the Tax Indemnitee and Lessee shall (in good faith
                    consultation with Lessor) control the conduct thereof.
                    Lessee shall determine the method of any contest conducted
                    by Lessee and (in good faith consultation with Lessor or the
                    Tax Indemnitee) control the conduct thereof. Lessee shall
                    pay in full all payments of Rent and other amounts payable
                    pursuant to the Lease, without reduction for or on account
                    of any Tax (except as provided in Section 5.6), while such
                    contest is continuing. Lessor shall not be required to
                    contest, or to continue to contest, a claim for Taxes under
                    this Section 5.9 if (x) such contest would result in a risk
                    of criminal penalties or risk of a sale, forfeiture or loss
                    of, or the imposition of a Security Interest (other than a
                    Permitted Lien) on, the Aircraft, or (y) Lessee shall not
                    have furnished, at Lessee's expense, an opinion of
                    independent tax counsel selected by Lessor and reasonably
                    satisfactory to Lessee, that a reasonable basis exists for
                    such contest, or (z) a Default shall be continuing (unless
                    Lessee shall have provided security reasonably satisfactory
                    to Lessor securing Lessee's performance of its obligations
                    under this Section 5.9). If Lessor or any Tax Indemnitee
                    contests any claim for Taxes by making a payment and seeking
                    a refund thereof, then Lessee shall advance to Lessor or
                    such Tax Indemnitee, on an interest-free basis, an amount
                    equal to the Taxes to be paid by Lessor or such Tax
                    Indemnitee in connection with the contest and shall
                    indemnify Lessor or such Tax Indemnitee on an After-Tax
                    Basis for any adverse tax consequences to Lessor or such Tax
                    Indemnitee of such interest-free advance. Upon the final
                    determination of any contest pursuant to this Section 5.9 in
                    respect of any Taxes for which Lessee shall have made an
                    advance to Lessor or a Tax Indemnitee in accordance with the
                    immediately preceding sentence, the amount of Lessee's
                    obligation shall be determined as if such advance had not
                    been made; any indemnity obligation of Lessee to Lessor or a
                    Tax Indemnitee under this Section 5.9 and Lessor's or such
                    Tax Indemnitee's obligation to repay the advance will be
                    satisfied first by setoff against each other, and any
                    difference owing by either party shall be paid within ten
                    days after such final determination.


                                      -11-
<PAGE>

          (b)       If Lessor or any Tax Indemnitee obtains a refund or
                    reimbursement of all or any part of any Taxes for which a
                    full indemnity was paid by Lessee, Lessor shall and Lessor
                    shall cause such Tax Indemnitee to pay Lessee the amount of
                    such refund or reimbursement, reduced by any Taxes imposed
                    on Lessor or such Tax Indemnitee on receipt or accrual of
                    such refund or reimbursement and increased by any Taxes
                    saved by Lessor or such Tax Indemnitee by reason of the
                    deductibility of such payment by Lessor or such Tax
                    Indemnitee. If, in addition to such refund or reimbursement,
                    Lessor or such Tax Indemnitee receives an amount of interest
                    on such refund or reimbursement or a recovery of costs or
                    attorney's fees with respect thereto that were paid by
                    Lessee, Lessor or such Tax Indemnitee shall pay to Lessee
                    the portion of such interest or recovered costs or
                    attorney's fees which is fairly attributable to such refund,
                    reduced by any Taxes imposed by Lessor or such Tax
                    Indemnitee on receipt or accrual of such interest and
                    increased by any Taxes saved by reason of the deductibility
                    of such payment by Lessor or such Tax Indemnitee. Neither
                    Lessor nor the Tax Indemnitee shall be required to make any
                    payment to Lessee pursuant to this Section 5.9 if, and for
                    so long as, a Default shall have occurred and be continuing.

          (c)       Lessor or a Tax Indemnitee in its sole discretion (by
                    written notice to Lessee) may waive its rights to
                    indemnification pursuant to Section 5.7 with respect to any
                    claim for any Tax and may refrain from contesting or
                    continuing the contest of such claim, in which event Lessee
                    shall have no obligation to indemnify Lessor for the Taxes
                    that are the subject of such claim. If Lessor agrees to a
                    settlement of any contest conducted pursuant to this Section
                    5.9 without the prior written consent of Lessee, which
                    consent shall not be unreasonably withheld, then Lessor
                    shall be deemed to have waived its rights to the
                    indemnification provided for in Section 5.7 with respect to
                    the Tax liability accepted in such settlement or with
                    respect to which Lessee's ability to avoid or minimize,
                    directly or by instruction to the Lessor or such Tax
                    Indemnitee regarding how to avoid or minimize, Taxes has
                    been materially impaired as a result of failure of the
                    Lessor or such Tax Indemnitee to so contest or continue to
                    contest.

          (d)       Information:

                    (i)       If Lessee is required by any applicable Law, or by
                              any third party, to deliver any report or return
                              in connection with any Taxes for which Lessee
                              would be obligated to indemnify Lessor or any
                              other Tax Indemnitee under the Lease, Lessee will
                              complete the same and, on request, supply a copy
                              of the report or return to Lessor.

                    (11)      If any report, return or statement is required to
                              be made by Lessor or any other Tax Indemnitee with
                              respect to any Tax for which there is an indemnity
                              obligation of Lessee under the Lease, and Lessee
                              knows of, or reasonably should


                                      -12-
<PAGE>

                              have known of, such return, report or statement,
                              Lessee will promptly notify Lessor of the
                              requirement and:

                              (Y)       if permitted by applicable Law, make and
                                        timely file such report, return or
                                        statement (except for any report, return
                                        or statement that Lessor has notified
                                        Lessee that Lessor or any other Tax
                                        Indemnitee intends to prepare and file),
                                        prepare such return in such manner as
                                        will show Lessor as lessor of the
                                        Aircraft and the ownership of the
                                        Aircraft in Lessor if required or
                                        appropriate, and provide Lessor upon
                                        request a copy of each such report,
                                        return or statement filed by Lessee, or

                              (z)       if Lessee is not permitted by applicable
                                        Law to file any such report, return or
                                        statement, Lessee will prepare and
                                        deliver to Lessor a proposed form of
                                        such report, return or statement within
                                        a reasonable time prior to the time such
                                        report, return or statement is to be
                                        filed.

                    (iii)     Lessee will provide such information and documents
                              as Lessor may reasonably request to enable Lessor
                              or any other Tax Indemnitee to comply with its tax
                              filing, audit and litigation obligations. Lessor
                              or any other Tax Indemnitee will provide such
                              information or documents, at Lessee's expense,
                              that Lessee does not otherwise have as Lessee may
                              reasonably request and which are necessary to
                              enable Lessee to comply with its obligations under
                              the Lease (including Sections 5.6 and 5.7 of the
                              CTA and Schedule B of the Aircraft Lease
                              Agreement) or to minimize Taxes that are the
                              subject of any filing, audit, or contest under
                              this Section 5.9.

 5.10     Indemnity Payments - After-Tax Basis

          The amount of any payment made under Section 5.7 (TAX INDEMNITY)
          (including Section 5.7(d)), Section 5.21 (EXPENSES) or Section 10
          (INDEMNITY) to or for the benefit of any Indemnitee, shall include
          such amount as may be necessary to hold such Indemnitee harmless on an
          After-Tax Basis from all Taxes required to be paid by such Indemnitee
          with respect to such payment or indemnity (including any payments
          pursuant to this Section 5.10.

 5.11     Lessor Obligations Following Expiry Date

          Within 91 days (or such shorter period after the Expiry Date to which
          Lessor may agree after Lessee demonstrates to Lessor's reasonable
          satisfaction that Lessee has a net worth, determined in accordance
          with GAAP, of not less than Five Million Dollars ($5,000,000.00) as of
          the Expiry Date) after:


                                      -13-
<PAGE>

          (a)       redelivery of the Aircraft to Lessor in accordance with and
                    in the condition required by the Lease; or

          (b)       payment to Lessor of the Agreed Value following an Event of
                    Loss after the Delivery Date;

          and in each case so long as all amounts which may then be due and
          payable under the Lease and the Other Agreements shall have been paid
          in full and (no other Default has occurred and is continuing:

                    (i)       Lessor will pay to Lessee the balance of the
                              Deposit (if any);

                    (ii)      Lessor will pay to Lessee the amount of any Rent
                              received in respect of any period falling after
                              the date of redelivery of the Aircraft or payment
                              of the Agreed Value, as the case may be; and

                    (iii)     Lessor will return to Lessee or cancel any Letter
                              of Credit.

 5.12     Net Lease

          The Lease is a net lease. The Lessee's obligation to pay Rent and to
          perform all of its other obligations under the Lease is absolute and
          unconditional no matter what happens and no matter how fundamental or
          unforeseen the event, including any of the following: (a) any right of
          set-off, counterclaim, recoupment, defense or other right which either
          party to the Lease may have against the other (including any right of
          reimbursement) or which Lessee may have against the Manufacturer, any
          manufacturer or seller of or any Person providing services with
          respect to the Aircraft, any Engine or any Part or any other Person,
          for any reason whatsoever; (b) any unavailability of the Aircraft for
          any reason, including a requisition of the Aircraft or any prohibition
          or interruption of or interference with or other restriction against
          Lessee's use, operation or possession of the Aircraft (whether or not
          the same would, but for this provision, result in the termination of
          the Lease by operation of law); (c) any lack or invalidity of title or
          any other defect in title, airworthiness, merchantability, fitness for
          any purpose, condition, design, or operation of any kind or nature of
          the Aircraft for any particular use or trade, or for registration or
          documentation under the Laws of any relevant jurisdiction, or any
          Event of Loss in respect of or any damage to the Aircraft; (d) any
          insolvency, bankruptcy, reorganization, arrangement, readjustment of
          debt, dissolution, liquidation or similar proceedings by or against
          Lessor, Lessee or any other Person; (e) any invalidity or
          unenforceability or lack of due authorization of, or other defect in,
          the Lease; (f) any Security Interests or Taxes; and/or (g) any other
          cause or circumstance which but for this provision would or might
          otherwise have the effect of terminating or in any way affecting any
          obligation of Lessee under the Lease. Lessee acknowledges and agrees
          that it has used its own judgement in selecting the Aircraft, and has
          not relied on Lessor or


                                      -14-
<PAGE>

          on any information supplied by Lessor, that Lessor is not a
          manufacturer of or dealer in aircraft and that Lessor has all of the
          rights and benefits of a lessor under a lease to which Section 2A-407
          of the UCC applies as provided in such Section 2A-407.

          Except as expressly set forth elsewhere in the Lease, Lessee hereby
          waives, to the extent permitted by applicable Law, any and all right
          which it may now have or which at any time hereafter may be conferred
          upon it, by statute or otherwise, to terminate, abate, cancel, quit,
          reduce, defer, suspend or surrender the Lease or the Aircraft or any
          obligation imposed upon Lessee under the Lease (including payment of
          Rent or Supplemental Rent).

          Each payment of Rent or Supplemental Rent made by Lessee shall be
          final. Lessee will not seek to recover all or any part of any payment
          of Rent or Supplemental Rent for any reason whatsoever except manifest
          error.

          If for any reason whatsoever the Lease shall be terminated in whole or
          in part by operation of Law, except as specifically provided in the
          Lease, Lessee waives all rights (if any) to any termination or
          diminution in its Rent or Supplemental Rent obligations hereunder and
          nonetheless agrees to pay to Lessor, an amount equal to each Rent and
          Supplemental Rent payment at the time such payments would have become
          due and payable in accordance with the terms thereof had the Lease not
          been terminated in whole or in part and so long as such payments are
          made and all other terms and conditions hereof are complied with by
          Lessee, Lessor and Lessee will deem the Lease to remain in full force
          and effect and Lessee shall continue in possession of the Aircraft
          under the terms and conditions of the Lease

          Nothing in this Section 5.12 will be construed to limit Lessee's right
          to institute separate legal proceedings against Lessor in the event of
          Lessor's breach of the Lease as and to the extent permitted by
          Sections 7.1 and 16.3 of this CTA, or to limit Lessee's rights and
          remedies against any other Person.

 5.13     Further Provisions regarding Deposit

          (a)       If, under the Lease, Lessee is required to pay a Deposit,
                    Lessee hereby grants a security interest in the Deposit to
                    Lessor and the remaining provisions of this Section shall
                    apply. Lessee agrees that Lessor shall be entitled to
                    commingle the Deposit with Lessor's general or other funds,
                    Lessor will have no obligation to pay any interest thereon
                    and Lessor will not hold any such funds as agent or in trust
                    for Lessee or in any similar fiduciary capacity. In this
                    regard, Lessee acknowledges and agrees that it is not
                    located in the State of New York within the meaning of
                    Section 7-101 1-c. (b) of the New York General Obligations
                    Law and, therefore, the requirements of Section 7-101 of the
                    New York General Obligations Law to the effect that Lessor
                    hold the Deposit in a separate, interest bearing account do
                    not apply.


                                      -15-
<PAGE>

          (b)       If any Event of Default or any Default under clause (g) of
                    Schedule 9 shall have occurred and be continuing, in
                    addition to all rights and remedies accorded to Lessor
                    elsewhere in the Lease or under Law in respect of the
                    Deposit, Lessor may immediately or at any time thereafter,
                    without prior notice to Lessee, apply all or part of the
                    Deposit in or towards the payment or discharge of any
                    matured obligation owed by Lessee or any affiliate or
                    associate of Lessee under the Lease or the Other Agreements,
                    in such order as Lessor sees fit, and/or exercise any of the
                    rights of set-off described in Section 5.20 against all or
                    part of the Deposit.

          (c)       If Lessor exercises the rights described in Section 5.13(b)
                    above, Lessee shall, following a demand in writing from
                    Lessor, immediately restore the Deposit to the level at
                    which it stood immediately prior to such exercise.

 5.14     Letter of Credit

          (a)       If, under the Lease, Lessee is required or elects to provide
                    Lessor with a Letter of Credit, the provisions of this
                    Section shall apply. Any Letter of Credit provided by Lessee
                    to Lessor will be issued and payable by a Pre-Approved Bank
                    or another bank acceptable to Lessor in its sole and
                    absolute discretion and in substantially the form of
                    Schedule 13, or in another form and substance acceptable to
                    Lessor in its sole and absolute discretion, and, if not
                    issued by a Pre-Approved Bank or by the New York branch of a
                    major international bank acceptable to Lessor in its sole
                    and absolute discretion from time to time, will be confirmed
                    by and payable at the New York branch of a major
                    international bank acceptable to Lessor in its sole and
                    absolute discretion from time to time, and will be issued as
                    security for all payment obligations of Lessee or any its
                    Affiliates under the Lease and each Other Agreement
                    (including any and all Losses suffered or incurred by Lessor
                    or any of its Affiliates in respect of which Lessee or any
                    if its Affiliates is obligated under the Lease or each Other
                    Agreement), which shall remain in full force and effect
                    until the Required LC Expiry Date and may be drawn down by
                    Lessor upon demand at any time or times prior to the
                    Required LC Expiry Date following (i) the occurrence of an
                    Event of Default or a Default under clause (g) of Schedule
                    9, or (ii) the receipt by Lessor of notice of non-renewal of
                    the Letter of Credit under Section 5.14(b) below.

          (b)       The Letter of Credit may have a validity period or periods
                    ending prior to the Required LC Expiry Date, provided that
                    (i) the Letter of Credit shall be renewed automatically,
                    without further act or deed by any party, until such time as
                    Lessor receives notice of non-renewal of the Letter
                    Credit, (ii) notice of non-renewal of the Letter of Credit
                    shall be provided to Lessor no less than 30 Business Days
                    prior to its then scheduled expiry date, (iii) Lessor
                    shall be entitled to draw the full amount of the Letter of
                    Credit immediately in


                                      -16-
<PAGE>

                    the event that Lessor receives any notice of non-renewal of
                    the Letter of Credit; and (iv) a Letter of Credit shall
                    remain in force at all times up to the Required LC Expiry
                    Date.
          (c)       If at any time during the Term, the current issuing or
                    confirming bank for the Letter of Credit ceases to meet the
                    requirements set forth in the definition of Pre-Approved
                    Bank, Lessee shall within five (5) Business Days after the
                    date of notice from Lessor of such decrease in credit
                    rating, cause the Letter of Credit to be replaced by a
                    Letter of Credit issued by another bank that meets the
                    definition of a Pre-Approved Bank and (if requested by
                    Lessor in its sole and absolute discretion) that such
                    replacement Letter of Credit is confirmed by another bank
                    that meets the requirement of a Pre-Approved Bank.

          (d)       If Lessor makes a drawing under the Letter of Credit, Lessee
                    shall, following a demand in writing by Lessor, immediately
                    cause the maximum amount available for drawing under the
                    Letter of Credit to be restored to the level at which it
                    stood immediately prior to such drawing.

 5.15     Guarantee

          If, under the Aircraft Lease Agreement, Lessee is required to provide
          Lessor with a Guarantee, Lessee will on or prior to the Delivery Date
          provide Lessor with the Guarantee.

 5.16     Late Payment Interest

          If Lessee fails to pay any amount payable under the Lease on the due
          date, Lessee will pay on demand from time to time to Lessor interest
          (both before and after judgement) on that amount, from the due date to
          the date of payment in full by Lessee to Lessor, at the Interest Rate.
          All such interest will be compounded monthly and calculated on the
          basis of the actual number of days elapsed in the month, assuming a 30
          day month and a 360 day year.

 5.17     Currency

          (a)       Except for Losses and expenses suffered or incurred by
                    Lessor, which shall be payable by Lessee to Lessor in the
                    currency and in the amount in which such Loss is suffered or
                    incurred, all amounts payable to Lessor under the Lease
                    shall be payable in Dollars in New York and payment in
                    Dollars in New York is of the essence. Lessee must indemnify
                    Lessor against any Loss Lessor suffers if:

                    (i)       Lessor receives an amount relating to Lessee's
                              obligations in a different currency from that in
                              which payments should be made under the Lease; or

                    (ii)      Lessee pays a judgement or claim in a different
                              currency from that in which payments should be
                              made under the Lease.


                                      -17-
<PAGE>

          (b)       Lessee relinquishes any right to pay any amount under the
                    Lease in a currency which is different from the currency
                    provided in the Lease. Notwithstanding any such receipt,
                    judgement or claim described in Section 5.17(a), Lessee
                    shall have a separate obligation to pay, and Lessor shall
                    have a separate claim against Lessee for, amounts to be
                    indemnified by Lessee under this Section 5.17.

 5.18     Certificates

          Except where expressly provided in the Lease, any certificate or
          determination by Lessor as to any rate of interest or as to any other
          amount payable under the Lease will, in the absence of manifest error,
          be presumed to be correct.

 5.19     Appropriation

          If any sum paid or recovered by Lessor in respect of the liabilities
          of Lessee under the Lease is less than the amount then due, Lessor may
          apply that sum to amounts due under the Lease in such proportions and
          order and generally in such manner as Lessor may determine in its sole
          discretion.

 5.20     Set-off

          (a)       In this sub-clause, references to Lessee will also include
                    Lessee Affiliates.

          (b)       Lessor may, without notice, set-off any obligations owed by
                    Lessee under the Lease or under the Other Agreements against
                    any obligation Lessor or any of its Affiliates owes Lessee
                    under the Lease or under the Other Agreements, regardless of
                    the place of payment or currency. Promptly after making any
                    such set-off, Lessor shall notify Lessee thereof, including
                    in such notice such information about the set-off as may be
                    reasonably required to enable a reasonable person to
                    identify the claims so set off and to verify the calculation
                    of the set-off, but neither failure to give such notice nor
                    any alleged defect in such notice shall affect the
                    effectiveness of any such set-off.

          If the obligations are in different currencies, Lessor may convert
          either obligation at the market rate of exchange available in New
          York. If the amount of an obligation is unknown, Lessor may estimate
          the amount. Any difference between the estimated obligation and the
          actual obligation will be paid by either Lessor or Lessee, as
          appropriate, when the amount becomes known.

 5.21     Expenses

          Lessee will pay to Lessor on demand all reasonable expenses (including
          all legal fees and expenses and the fees and expenses of other
          professional advisers) that the Lessor suffers or incurs:


                                      -18-
<PAGE>

          (a)       to deal with any amendments, extensions, consents or waivers
                    that are required in connection with the Lease (but
                    excluding any expenses incurred by Lessor or Owner in
                    connection with any change in the ownership or financing of
                    the Aircraft or a change in the Lease that is otherwise
                    requested by Lessor or Owner, and in each case unrelated to
                    any consent, waiver or amendment requested by Lessee or any
                    other act or omission of Lessee) or to deal with any
                    replacement of any Engine or Part (except for the
                    replacement of an Engine by or at the request of Lessor
                    prior to the Delivery Date);

          (b)       for FAA counsel and otherwise to act upon any advice and
                    obtain assistance to perfect the Lease in the State of
                    Registry and the State of Incorporation (and any other
                    appropriate place); and

          (c)       in contemplation of, or otherwise in connection with, the
                    enforcement or preservation of any of Lessor's rights under
                    the Lease (including under Section 10) or in respect of the
                    repossession of any Aircraft.

          All amounts payable pursuant to this Section 5.21 will be paid in the
          currency in which they are incurred by Lessor.

 6.       MANUFACTURER'S WARRANTIES

          (a)       So long as no Default has occurred which is continuing,
                    Lessor shall make available to Lessee during the Term the
                    benefit of all manufacturer's warranties in relation to the
                    repair or remedy of any defect in the Aircraft (including
                    compensation for loss of use of the Aircraft) to the extent
                    that it is permitted to do so. In furtherance of the
                    foregoing, Lessor shall take such actions, at Lessee's cost
                    and expense, as Lessee may reasonably request to make such
                    warranties available to Lessee.

          (b)       If a Default has occurred and is continuing Lessor may
                    immediately recover from Lessee the proceeds of any warranty
                    claims previously paid to Lessee to the extent that such
                    claims relate to any defect in the Aircraft not fully and
                    completely rectified by Lessee before such Default and
                    Lessor may:

                    (i)       retain for its own account any such proceeds
                              previously paid to Lessor which would have been
                              remitted to Lessee under this Section 6 in the
                              absence of such Default; and

                    (ii)      cause any proceeds of any pending claims to be
                              paid to Lessor, rather than Lessee.


                                      -19-
<PAGE>

          (c)       Lessee will take all steps at the end of the Term as may be
                    reasonably required to ensure that the benefit of any
                    warranties relating to the Aircraft which have not expired
                    is vested in Lessor.

 7.       LESSOR'S COVENANTS

 7.1      Quiet Enjoyment

          So long as no Default has occurred and is continuing, Lessor will not
          interfere with Lessee's right to quiet use and possession of the
          Aircraft during the Term. Exercise by Lessor of its rights of
          inspection or other rights provided to it under the Lease in the
          absence of a Default shall not be considered to be a breach of the
          foregoing covenant. Lessee agrees that its only right with respect to
          a default by Lessor under the Lease is to make a claim against Lessor
          for actual damages resulting directly therefrom and in any event
          subject to Section 16.3 hereof, and Lessee hereby waives any and all
          other rights or remedies it may have under Section 2A-211 of the UCC
          or Sections 2A-508 through 2A-522 of the UCC or otherwise.

 7.2      Maintenance Contributions

          If, under the Aircraft Lease Agreement for the Aircraft, Lessee is
          required to pay Supplemental Rent, then provided no Default has
          occurred and is continuing, Lessor will pay such amounts, if any, as
          may be specified in the Aircraft Lease Agreement to Lessee by way of
          contribution to the cost of maintenance of the Aircraft, which
          payments, if any, shall be made in the amounts and in the manner
          specified in the Aircraft Lease Agreement.

 8.       LESSEE'S COVENANTS

 8.1      Duration: Lessee shall perform and comply, or cause its Permitted
          Sub-Lessee or maintenance contractor to perform and comply, with its
          undertakings and covenants in the Lease at all times during the Term.
          All such undertakings and covenants shall, except where expressly
          otherwise stated, be performed at the expense of Lessee.

 8.2      Information

          Lessee will:

          (a)       provide Lessor with a Technical Report for the Aircraft
                    within 15 days after the end of each calendar month
                    throughout the Term and otherwise provide Lessor with a
                    Technical Report for the Aircraft within thirty (30) days
                    after Lessor's request therefor;

          (b)       provide Lessor with the Financial Information;


                                      -20-
<PAGE>

          (c)       (i) notify Lessor of any Event of Loss and of any event
                    which is likely to result in an insurance claim in excess of
                    the Damage Notification Threshold promptly after the
                    occurrence of any such event, (ii) consult with Lessor in
                    the course of, and keep Lessor fully apprised as to the
                    details of, any negotiations with its insurers or insurance
                    brokers (and, in the case of repairable damage, with any
                    applicable repair facility) with respect to any insurance
                    claim arising out of such event, and (iii) obtain Lessor's
                    prior approval before agreeing to any disposition of any
                    insurance claim in excess of the Damage Notification
                    Threshold;

          (d)       upon the occurrence of any event which is likely to give
                    rise to an insurance claim under any of the Insurances
                    relating to the Aircraft, Lessee shall promptly execute and
                    deliver all documents and instruments and take all such
                    other action as may reasonably be required to initiate and
                    process any such claim under the applicable insurance, and
                    in any event, Lessee shall initiate such claim, execute such
                    documents or instruments and take such other action promptly
                    following a written request by Lessor that Lessee initiate
                    such claim, execute such document or instrument or take such
                    other action;

          (e)       provide Lessor, upon request, with evidence that all Taxes
                    and charges that are due and payable and were incurred by
                    Lessee in connection with the Aircraft, its location and its
                    operations, including those invoiced by airports and air
                    traffic control authorities have been paid in full (or are
                    being contested in good faith by appropriate proceedings in
                    respect of which adequate reserves have been provided by
                    Lessee and non-payment of which does not give rise to any
                    risk of the Aircraft or any interest therein being sold,
                    forfeited or otherwise lost or of criminal liability on the
                    part of Lessor or Owner);

          (f)       provide Lessor with such other information concerning the
                    location, condition, use and operation of the Aircraft or
                    concerning the business or financial affairs of Lessee, as
                    Lessor may from time to time reasonably request;

          (g)       [NOT APPLICABLE];

          (h)       [NOT APPLICABLE];

          (i)       notify Lessor promptly as to any material modification to
                    Lessee's Maintenance Program (including, without limitation,
                    any change from maintenance on a block format to maintenance
                    on a phase-basis); provided, however, that Lessee shall not
                    make any modifications to Lessee's Maintenance Program which
                    may adversely affect the return conditions specified in Part
                    III of Schedule A to the Aircraft Lease Agreement without
                    prior consultation with Lessor. For the avoidance of doubt,
                    changes to Lessee's Maintenance Program extending or
                    shortening times between scheduled overhaul of Parts


                                      -21-
<PAGE>

                    shall not be deemed to be material modification or to
                    adversely affect the return conditions;

 8.3      Lawful and Safe Operation

          Lessee will operate the Aircraft for commercial purposes from the
          Delivery Date until the Return Occasion from a base within the State
          of Registry or from such other base outside the State of Registry
          pursuant to a sub-lease or a wet-lease complying with Section 8.4(a),
          provided, always that Lessee must not use or operate the Aircraft or
          suffer or permit the Aircraft to be used or operated:

          (a)       in violation of any applicable Regulations or in a manner
                    causing Lessor, Owner, any Financing Party or GECAS to be in
                    violation of (i) any applicable Regulations of the United
                    States, (ii) any applicable Regulations of any jurisdiction
                    of which Lessee is notified in writing by Lessor as a
                    jurisdiction applicable to Lessor, Owner, GECAS or any
                    Financing Party, or (iii) any applicable Regulations of any
                    other jurisdiction into which or over which the Aircraft is
                    operated; provided, however, that nothing in Section
                    8.3(a)(ii) shall be deemed to require Lessee to comply with
                    any Regulations of any jurisdiction other than the United
                    States which pertain to the maintenance or modification of
                    aircraft.

          (b)       for any purpose for which the Aircraft was not designed or
                    which is illegal;

          (c)       to carry cargo which could reasonably be expected to damage
                    the Aircraft;

          (d)       in any circumstances or place where the Aircraft is not
                    covered by the Insurances; or

          (e)       for purposes of training, qualifying or re-confirming the
                    status of cockpit personnel except for the benefit of
                    Lessee's or a Permitted Sub-Lessee's cockpit personnel,
                    and then only if the use of the Aircraft for such purpose
                    is not disproportionate to the use for such purpose of
                    other aircraft of the same type operated by Lessee or
                    such Permitted Sub-Lessee, as the case may be.

 8.4      Subleasing

          (a)       AT NO TIME PRIOR TO THE RETURN OCCASION WILL LESSEE
                    SUB-LEASE, WET-LEASE OR OTHERWISE GIVE POSSESSION OR CONTROL
                    OF THE AIRCRAFT OR ANY ENGINE TO, OR OTHERWISE PERMIT THE
                    AIRCRAFT OR ANY ENGINE TO BE IN THE POSSESSION OR CONTROL
                    OF, ANY PERSON EXCEPT:


                                      -22-
<PAGE>

                    (i)       when the prior written consent of Lessor has been
                              obtained, which consent shall not be unreasonably
                              withheld (it being expressly acknowledged by
                              Lessor and Lessee that the withholding of Lessor's
                              consent in respect of any sub-lease or wet lease
                              shall not be deemed to be unreasonable if the
                              terms of such sub-lease do not comply with the
                              conditions set out in Section 8.4(b) or the terms
                              of such wet lease do not comply with Section
                              8.4(c), as the case may be); or

                    (ii)      where the Aircraft or Engine is delivered to a
                              manufacturer or maintenance facility for work to
                              be done on it as required or permitted under the
                              Lease; or

                    (iii)     to a sub-lessee of the Aircraft to which Lessor
                              consents in writing (a "PERMITTED SUB-LESSEE"),
                              pursuant to a sub-lease to which Lessor consents
                              in (a "PERMITTED SUB-LEASE"), which complies with
                              the conditions set out in Section 8.4(b), and
                              provided that no Default shall have occurred and
                              be continuing at the commencement of such
                              sub-lease;

                    (iv)      on a wet-lease which complies with Section 8.4(c);
                              or

                    (v)       with respect to an Engine, as permitted under
                              Section 8.11.

          (b)       If Lessor grants its consent to a proposed sub-lessee and a
                    proposed sub-lease, in addition to any conditions required
                    by Lessor as part of any such consent of Lessor, each of the
                    following conditions shall be required to be satisfied in
                    relation to any Permitted Sub-Lease prior to any sub-leasing
                    pursuant to this Section:

                    (i)       NOTIFICATION: at least 30 days prior to entering
                              into any Permitted Sub-Lease, Lessee shall give
                              Lessor written notice, specifying the identity of
                              the Permitted Sub-Lessee, the term of the
                              Permitted Sub-Lease, the delivery date under the
                              Permitted Sub-Lease and the habitual base of the
                              Permitted Sub-Lessee;

                    (ii)      TERM: the term of the Permitted Sub-Lease shall
                              not be capable of extending beyond one month (or
                              such shorter period as Lessor may agree (which
                              agreement shall not be unreasonably withheld) in
                              giving its consent to such Permitted Sub-Lease)
                              before the Scheduled Expiry Date;

                    (iii)     FORM: a Permitted Sub-Lease shall:

                              (aa)      not contain provisions inconsistent with
                                        the provisions of the Lease (but may
                                        impose additional or more stringent
                                        obligations on any Permitted Sub-Lessee
                                        than are imposed on Lessee under the
                                        Lease);


                                      -23-
<PAGE>

                              (bb)      provide that no further subleases of the
                                        Aircraft by such Permitted Sub-Lessee
                                        are permitted; and

                              (cc)      include provisions substantially
                                        identical to or having substantially the
                                        same effect as Sections 2.1, 5.6, 5.7,
                                        5.10, 5.12, 5.16, 5.17, 5.21, 8, 9, 10,
                                        11, 13, 15.1, 15.8 and 16 and Schedules
                                        2 (Section 1.1), 7 and 9 of the Lease
                                        (but the Permitted Sub-Lease may impose
                                        additional or more stringent obligations
                                        on any Permitted Sub-Lessee than are
                                        imposed on Lessee under the Lease);

                    (iv)      SUBORDINATION AND ASSIGNMENT: the Permitted
                              Sub-Lease shall provide that (aa) the Permitted
                              Sub-Lease is subject and subordinate to the Lease
                              in all respects and the rights of the Permitted
                              Sub-Lessee under the Permitted Sub Lease are
                              subject and subordinate in all respects to the
                              rights of Lessor under the Lease; and (bb) prior
                              to delivery of the Aircraft to the Permitted
                              Sub-Lessee (as a condition precedent thereof), the
                              Permitted Sub-Lessee shall provide an
                              acknowledgement to Lessor and Owner in a form
                              reasonably satisfactory to Lessor, confirming its
                              agreement to this provision and confirming that,
                              except to the extent, if any, that it receives a
                              quiet enjoyment letter from Lessor pursuant to
                              Section 8.4(b)(v) below, its rights to possession
                              of the Aircraft under the Permitted Sub-Lease will
                              terminate immediately upon the termination of the
                              Lease, and that it will redeliver the Aircraft to
                              Lessor, upon notification from Lessor that an
                              Event of Default has occurred and that it has, as
                              a result thereof, terminated Lessee's right to
                              possession of the Aircraft under the Lease (the
                              "SUBORDINATION ACKNOWLEDGEMENT"). The Permitted
                              Sub-Lease shall be assigned, as security, to
                              Lessor for Lessee's obligations under the Lease,
                              pursuant to an agreement reasonably acceptable to
                              Lessor (the "SUB-LEASE ASSIGNMENT") (and, if
                              applicable, Lessor's interest in such Sub-Lease
                              Assignment may be reassigned, as security, to
                              Owner and/or the Financing Parties'
                              Representative);

                    (v)       QUIET ENJOYMENT: the Permitted Sub-Lease shall
                              provide that the Permitted Sub-Lessee shall have
                              the right to quiet enjoyment of the Aircraft for
                              so long as no Event of Default has occurred under
                              the Lease; provided, however, that, upon request
                              by a Permitted Sub-Lessee, Lessor shall, and shall
                              cause the Financing Parties Representative (if
                              applicable) to, execute and deliver to the
                              Permitted Sub-Lessee a letter of quiet enjoyment
                              in respect of the Permitted Sub-Lessee's use and
                              possession of the Aircraft for so long as no event
                              of default occurs under the Permitted Sub-Lease,
                              notwithstanding the occurrence of an Event of
                              Default under the Lease, in a form substantially
                              similar to Section 7.1 hereof if Lessor is
                              satisfied in its sole discretion as to (i) the
                              creditworthiness of the Proposed Sub-


                                      -24-
<PAGE>

                              Lessee at the time of such request, (ii) the
                              sufficiency of the rentals and other payment
                              obligations, including indemnities under the
                              Permitted Sub-Lease to discharge in full the Rent
                              and the indemnity obligations of Lessee under the
                              Lease, (iii) the installment frequency of the rent
                              payable under the Permitted Sub-Lease, (iv) the
                              acknowledgment of and agreement by the Permitted
                              Sub-Lessee to be bound by the provisions of
                              Section 16 hereof, (v) the acknowledgment by
                              each of the Permitted Sub-Lessee and the Lessee
                              that Lessor shall have no greater liability to
                              either Permitted Sub-Lessee or the Lessee in
                              respect of Lessor's obligations under Section
                              7.1 hereof or under such letter than Lessor
                              would have had under Section 7.1 in the absence
                              of the Permitted Sub-Lease, (vi) the form and
                              substance of the Subordination Acknowledgment,
                              and (vii) the terms of the Permitted Sub-Lease
                              in respect of the matters contemplated by this
                              Section 8.4(b);

                    (vi)      OBLIGATIONS OF LESSEE: Lessee shall remain
                              primarily liable under the Lease for the
                              performance and observance of all its obligations
                              to the same extent as if no Permitted Sub-Lease
                              had been entered into. To the extent that the
                              Permitted Sub-Lessee properly performs an
                              obligation under the Permitted Sub-Lease, Lessor
                              agrees that such performance shall also be
                              regarded as discharging (to such extent) Lessee's
                              corresponding obligation;

                    (vii)     INSURANCES: all insurance requirements herein
                              shall be complied with either by Lessee or by the
                              Permitted Sub-Lessee as if references in the
                              insurance provisions of the Lease to "Lessee" were
                              references to "the Permitted Sub-Lessee", and
                              Lessee shall provide or cause the Permitted
                              Sub-Lessee to provide the insurance certificate
                              and brokers' letter of undertaking referred to in
                              Section 9.3(c)(ii) at least five (5) Business Days
                              prior to the commencement of the Permitted
                              Sub-Lease;

                    (viii)    REGISTRATION: there shall be no change in the
                              registration of the Aircraft from its State of
                              Registry;

                    (ix)      REPOSSESSION OR POLITICAL RISK INSURANCE: if
                              reasonably required by Lessor or if required of
                              Lessor by Owner or the Financing Parties'
                              Representative, repossession or political risk
                              insurance, as the case may be, shall be obtained
                              by Lessor at Lessee's cost, provided that
                              repossession or political risk insurance, as the
                              case may be, will not be required if the Permitted
                              Sub-Lessee meets the requirements of Sections
                              8.7(iv) and (v). If repossession or political risk
                              insurance is required, the Permitted Sub-Lease
                              must provide that, if any such repossession or
                              political risk, as the case may be, insurance
                              cannot be obtained or renewed, a termination event
                              will occur upon notice by Lessor to Lessee or the


                                      -25-
<PAGE>

                              Permitted Sub-Lessee of an inability to procure
                              repossession or political risk, as the case may
                              be, insurance;

                    (x)       LEGAL OPINIONS: as a condition precedent to the
                              effectiveness of the Permitted Sub-Lease, Lessee
                              shall provide to Lessor the following legal
                              opinions (at Lessee's or Permitted Sub-Lessee's
                              expense) addressed to Lessor, Owner and the
                              Financing Parties' Representative from counsel
                              reasonably acceptable to Lessor;

                              (aa)      a legal opinion in relation to the
                                        Permitted Sub-Lease in form and
                                        substance reasonably satisfactory to,
                                        and containing such other matters set
                                        out in Schedule 8 requested by, Lessor
                                        and confirming further that each of the
                                        Subordination Acknowledgement, the
                                        Permitted Sub-Lease and the Sub-Lease
                                        Assignment is valid, binding and (except
                                        as limited by any equitable principles
                                        and applicable bankruptcy, insolvency,
                                        reorganization, moratorium or similar
                                        laws affecting creditors' or lessors'
                                        rights generally) enforceable against
                                        Permitted Sub-Lessee and, in the case of
                                        the Sub-Lease Assignment, properly
                                        perfected as against Lessee;

                              (bb)      if the Habitual Base is not in the
                                        United States, one or more legal
                                        opinions in form and from counsel
                                        reasonably acceptable to Lessor to the
                                        effect, inter alia, that Lessor's,
                                        Owner's and Financing Parties'
                                        Representative's interests in the
                                        Aircraft will be recognized under the
                                        laws of such country or countries (it
                                        being expressly understood that there
                                        shall be no requirement that any single
                                        legal point or issue be covered in
                                        opinions from more than one counsel
                                        except to the extent, if any, that the
                                        laws of more than one jurisdiction may
                                        be at issue); and

                              (cc)      such opinions as may be required under
                                        the Financing Documents.

                              Final forms of the foregoing opinion or opinions
                              (x) shall be forwarded promptly to Lessor at least
                              five Business Days prior to the effective date of
                              the Permitted Sub-Lease, and (y) may, if different
                              opinions are required hereunder, be made by a
                              single counsel qualified to render opinions in
                              each such country;

                    (xi)      FILINGS: Lessee shall co-operate with Lessor (at
                              no cost to Lessor) in connection with the
                              execution and filing of any documents reasonably
                              required by Lessor to be executed and filed from
                              time to time with any registry or authority in the
                              Habitual Base, the State of Registration and State
                              of Incorporation (of each of Lessee and the
                              Permitted Sub-Lessee) in order to protect the
                              interests of Lessor, Owner and Financing Parties'
                              Representative in and to the Aircraft, the Lease
                              or


                                      -26-
<PAGE>

                              the Permitted Sub-Lease and/or to ensure the
                              validity, enforcement or priority thereof;

                    (xii)     EXPENSES: Lessee will pay to Lessor on demand all
                              reasonable out of pocket expenses (including
                              legal, survey and other costs) and Taxes payable
                              or incurred by Lessor, Owner or Financing Parties'
                              Representative in connection with the review and
                              approval of the documentation required pursuant to
                              this Section or otherwise incurred in connection
                              with any requested sub-lease or the sub-leasing of
                              the Aircraft thereunder, and will pay any
                              Sublease Fee specified in the Aircraft Lease
                              Agreement for such Aircraft;

                    (xiii)    PERMITTED SUB-LEASE: Promptly after its execution,
                              Lessee shall provide Lessor with a copy of the
                              signed Permitted Sub-Lease;

                    (xiv)     ACKNOWLEDGEMENT BY GUARANTOR: If a Guarantee is
                              required under the Aircraft Lease Agreement,
                              Lessee shall provide to Lessor at least five
                              Business Days prior to the effective date of the
                              Permitted Sub-Lease an acknowledgement by
                              Guarantor of the Permitted Sub-Lease and
                              confirmation that the Guarantee will remain in
                              full force and effect during the term of such
                              Permitted Sub-Lease;

                  (xv)     FINANCING RESTRICTIONS AND REQUIREMENTS: If Lessee
                           requests Lessor's consent to a sub-lease, it will not
                           be unreasonable for Lessor to decline its consent to
                           such sub-lease, if such sub-lease would result in a
                           breach by Lessor of the restrictions contained in or
                           give rise to any liability or adversely affect
                           Lessor's rights or obligations or otherwise result in
                           a detriment under any of the Financing Documents; and

                  (xvi)    MAINTENANCE PROGRAM: Lessee shall, or shall cause the
                           Permitted Sub-Lessee to, provide Lessor with such
                           information as Lessor may reasonably request with
                           respect to the Maintenance Program of the Permitted
                           Sub-Lessee, and Lessor shall be reasonably satisfied
                           with the Maintenance Program of the Permitted
                           SubLessee.

          (c)       Notwithstanding Section 8.4(a), Lessee shall be permitted
                    to wet lease the Aircraft provided such wet lease
                    constitutes an arrangement whereby Lessee agrees to furnish
                    the Aircraft to a third party pursuant to which the Aircraft
                    (i) shall be operated solely by regular employees of Lessee
                    possessing all current certificates and licenses that are
                    required by applicable Regulations, including by the State
                    of Registry, and shall remain in the operational control and
                    possession of Lessee, (ii) shall be subject to insurance
                    coverage as provided for in the Lease, (iii) shall be used
                    and operated in accordance with the Lease and shall be
                    maintained or caused to be maintained by Lessee in
                    accordance


                                      -27-
<PAGE>

                    with Lessee's Maintenance Program and Lessee's normal
                    maintenance practices, (iv) shall not be subject to any
                    change in its State of Registry, and (v) shall not be
                    operated out of a Habitual Base located outside the United
                    States; and provided always that, such arrangement is
                    expressly subordinated to the Lease and the rights of Lessor
                    and Owner thereunder and to the Aircraft, and Lessee
                    provides Lessor with all opinions, certificates and other
                    documents requested by Lessor which are required to be
                    provided, and takes all other action requested by Lessor
                    which is required of Lessee or Lessor under any Financing
                    Document in connection with such a wet lease.

 8.5      Inspection

          (a)       Lessee will permit Lessor's, Owner's and the Financing
                    Parties' Representative representatives to inspect the
                    Aircraft at any time. Unless a Default has occurred and is
                    continuing, any such Person will give Lessee reasonable
                    notice of inspection and will ensure that it does not result
                    in a disruption to the scheduled operation or maintenance of
                    the Aircraft. Lessee shall comply with the reasonable
                    requests of Lessor's, Owner's and the Financing Parties'
                    Representative representatives during the course of an
                    inspection, including any request to travel on the flight
                    deck of the Aircraft as an observer, subject, to any
                    applicable Regulations and insurance requirements.

          (b)       The cost of conducting an inspection shall be borne by
                    Lessor, Owner or the Financing Parties, as the case may be,
                    unless, as a result of that inspection, Lessee is found to
                    be in material default of its obligations under the Lease in
                    which case the cost shall be borne by Lessee.

          (c)       No liability or obligation will be incurred by Lessor,
                    Owner, Financing Parties' Representative or the Financing
                    Parties, as the case may be, by reason of non-exercise by
                    any of them of the inspection rights referred to in this
                    Section.

 8.6      Ownership; Property Interests; Related Matters

          (a)       Lessee will:

                    (i)       fix and maintain Nameplates containing the
                              Nameplate Inscription in a prominent position in
                              the cockpit or cabin of the Aircraft and on each
                              Engine;

                    (ii)      in any circumstance where such interests are
                              relevant, take all reasonable steps to make sure
                              that all relevant persons know about the interests
                              of Owner, Lessor and Financing Parties
                              Representative in the Aircraft; and

                    (iii)     pay all navigation charges, air traffic control
                              charges, landing charges or other amounts of any
                              nature imposed by any Government Entity with
                              respect to


                                      -28-
<PAGE>

                              Lessee, the Aircraft and/or the Lease except to
                              the extent that, in the reasonable opinion of
                              Lessor, such payment is being contested in good
                              faith by appropriate proceedings in respect of
                              which adequate reserves have been provided by
                              Lessee and non-payment of which does not give rise
                              to any material likelihood of the Aircraft or any
                              interest therein being sold, forfeited or
                              otherwise lost or of criminal liability on the
                              part of Lessor or Owner.

          (b)       Lessee will not:

                    (i)       represent that it is the owner of the Aircraft or
                              that it has an economic interest (equivalent to
                              ownership) in the Aircraft for Tax treatment or
                              other purposes;

                    (ii)      take any action or fail to take any action, other
                              than action required under the Lease (including
                              under Section 7.1) to be taken by Lessor,
                              Affiliates of Lessor, Owner or a Financing Party,
                              if such action or omission could result in a
                              forfeiture or seizure of the Aircraft or otherwise
                              similarly put Owner's and/or Lessor's and/or
                              Financing Parties' Representative's rights or
                              interests at risk;

                    (iii)     represent to others that Owner, Lessor or
                              Financing Parties' Representative is associated
                              with or responsible for the business activities
                              and/or flight operations of Lessee;

                    (iv)      allow the Aircraft or Owner's, Lessor's or
                              Financing Parties' Representative's interest in it
                              or the Lease to, become or remain subject to any
                              Security Interest (other than a Permitted Lien);
                              or

                    (v)       allow the name of any Person to be placed on the
                              Aircraft or any Engine as a designation that could
                              reasonably be interpreted as a claim of ownership
                              or as a Security Interest; provided, that Lessee
                              may place thereon, or allow a Permitted Sub-Lessee
                              to place thereon, its customary livery, insignia
                              and colors.

 8.7      General

                    Lessee will:

                    (i)       maintain its business as a commercial scheduled
                              airline, will preserve its corporate existence
                              (other than as permitted in Section 8.7(vii)
                              below) and will maintain all rights, privileges,
                              licenses and franchises material thereto or
                              material to performing its obligations under the
                              Lease;

                    (ii)      not operate, maintain, insure or deal with, or
                              keep records with respect to, the Aircraft in a
                              manner which discriminates against the Aircraft
                              adversely insofar as


                                      -29-
<PAGE>

                              Lessor's, Owner's or Financing Parties' interests
                              are concerned, when compared with the manner in
                              which Lessee operates, maintains, insures or deals
                              with, or keep records with respect to, similar
                              aircraft, engines or parts in Lessee's fleet;
                              provided, however, in the event that Lessee
                              determines that any particular expenditure or
                              modification may not be prudent during the last
                              nine months prior to the Scheduled Expiry Date,
                              then Lessor and Lessee shall discuss the issue and
                              negotiate in good faith to agree on a mutually
                              acceptable solution.

                    (iii)     not change the location of its chief executive
                              office from that described in the heading of
                              the Aircraft Lease Agreement or otherwise be
                              located (as defined in Section 9-103(3)(d) of
                              the UCC) at any place in the United States
                              other than the location described the heading
                              of the Aircraft Lease Agreement, except upon 30
                              days prior written notice thereof to Lessor;

                    (iv)      remain a Certificated Air Carrier and maintain its
                              status so as to fall within the purview of Section
                              1110 of Title 11 of the U.S.C. or any analogous
                              statute;

                    (v)       remain a "citizen of the United States" as defined
                              in Section 40102(a)(15)(c) of Title 49 of the
                              U.S.C.;

                    (vi)      not liquidate or dissolve; and

                    (vii)     not consolidate with or merge into or with any
                              other corporation or other Person, and not convey,
                              transfer, lease or otherwise dispose of all or
                              substantially all of its property and other assets
                              to, or acquire all or any substantial part of the
                              property or other assets or capital stock of (if
                              such acquisition is analogous in either purpose or
                              effect to a consolidation or merger), any
                              corporation or other Person, unless Lessee
                              provides Lessor with written notice of such
                              transaction promptly following Lessee's execution
                              of a binding agreement or commitment to enter into
                              any such transaction, which notice shall in any
                              event be provided no later than 30 days prior to
                              the effectiveness or consummation of any such
                              transaction and which notice shall describe such
                              transaction in reasonable detail and contain or be
                              accompanied by evidence reasonably satisfactory to
                              Lessor demonstrating that such transaction will
                              comply with the following requirements of this
                              Section and unless:

                              (x)       such transaction shall not have any
                                        material adverse effect on the rights of
                                        Lessor, Owner or the Financing Parties'
                                        Representative under or in respect of
                                        the Lease or the Aircraft; and all
                                        applicable requirements of the Financing
                                        Documents shall have been complied with
                                        in connection therewith;


                                      -30-
<PAGE>


                              (y)       the Person formed by or surviving such
                                        consolidation or merger or the Person
                                        which acquires by conveyance, transfer,
                                        lease or other disposition all or
                                        substantially all of such property and
                                        other assets or stock (the "SUCCESSOR
                                        ENTITY"): (A) shall be a corporation
                                        organized and existing under the laws of
                                        the United States or any State thereof
                                        or the District of Columbia; (B)
                                        immediately after giving effect to such
                                        transaction, shall be Lessee or shall
                                        have acquired or succeeded to all or
                                        substantially all of the property and
                                        other assets of Lessee (if such assets
                                        are being transferred) as an entirety,
                                        and shall have a tangible net worth
                                        (determined in accordance with GAAP) of
                                        not less than Lessee's tangible net
                                        worth (determined in accordance with
                                        GAAP) immediately prior to such
                                        transaction; (C) shall be a "citizen of
                                        the United States" of America as defined
                                        in Section 40102(a)(15)(c) of Title 49
                                        of the U.S.C. and a Certificated Air
                                        Carrier; and (D) shall execute and
                                        deliver to Lessor such recordations and
                                        filings with any Governmental Entity and
                                        such other documents as Lessor
                                        determines shall be reasonably necessary
                                        or advisable to evidence, or in
                                        connection with, such consolidation,
                                        merger, sale, lease, transfer or other
                                        disposition and an agreement, in form
                                        and substance reasonably satisfactory to
                                        Lessor which is a legal, valid, binding
                                        and enforceable assumption by such
                                        Successor Entity of the due and punctual
                                        performance and observance of each
                                        covenant and condition of the Lease and
                                        the other related documents to which
                                        Lessee is a party, and an officer's
                                        certificate to such effect and to the
                                        effect that the other requirements of
                                        this Section have been satisfied, and
                                        a legal opinion from counsel to such
                                        effect and otherwise in such form and
                                        substance reasonably satisfactory to
                                        Lessor; and

                              (z)       no Default shall have occurred and be
                                        continuing or shall occur as a result
                                        thereof.

 8.8      Records

          Lessee will keep all Aircraft Documents and Records:

          (a)       in English;

          (b)       according to good United States airline practice; and

          (c)       so they meet the requirements of applicable Regulations
                    (including FAR 91.417) and Lessee's Maintenance Program.


                                      -31-
<PAGE>

 8.9      Protection

          Lessee will:

          (a)       take all actions requested by Lessor that are within
                    Lessee's control to keep the Aircraft registered with the
                    Air Authority in the name of Owner and, if applicable,
                    subject to the first-priority Security Interest in favor of
                    Financing Parties' Representative; and

          (b)       make any and all filings required to be made with the Air
                    Authority registry that are within its control and take all
                    other actions within its control that are necessary or
                    advisable to reflect on the Air Authority registry any
                    change in the ownership of the Aircraft, or in the interests
                    of Lessor, Owner or the Financing Parties' Representative in
                    the Lease or the Aircraft, any modification to the Aircraft
                    (such as the permanent replacement of any Engine or Part in
                    accordance with the Lease) or as a result of any change in
                    applicable Regulation. Lessor will bear any costs incurred
                    as a consequence of a transfer by Lessor, Owner or the
                    Financing Parties' Representative of the interests of
                    Lessor, Owner or the Financing Parties' Representative in
                    the Lease or the Aircraft or a change in the identity of
                    Lessor, Owner or the Financing Parties' Representative (in
                    each case, unrelated to the replacement of any Engine or
                    Part or a Default), and Lessee will bear any other costs
                    incurred in complying with this Section, including in
                    connection with the replacement of any Engine or Part.

 8.10     Maintenance and Repair

          Lessee will maintain, overhaul and repair the Aircraft (or arrange for
          the Aircraft to be maintained, overhauled and repaired, through the
          Maintenance Performer), so that:

          (a)       the Aircraft is kept in as good operating condition and
                    repair as the condition of the Aircraft as at Delivery and
                    after giving effect to any post-Delivery modifications,
                    repairs or maintenance paid for or otherwise provided by or
                    on behalf of Lessor, except for ordinary wear and tear;

          (b)       the Lessee has a current certificate of airworthiness
                    (issued by the Air Authority in the appropriate public
                    transport category) for the Aircraft;

          (c)       the Aircraft complies with (i) all applicable Regulations
                    including the standard stipulated by FAR Part 121 Subpart
                    L and any other rules and regulations of the FAA and,
                    subject to the provisions of Section 8.10(d), in at least
                    the same manner and with at least the same care,
                    including record keeping, maintenance scheduling,
                    modification status and technical condition, as is the
                    case with respect to similar aircraft owned or otherwise
                    operated by Lessee and as if Lessee were to retain and
                    continue operating the Aircraft in its fleet after


                                      -32-
<PAGE>

                    the Expiry Date, including all maintenance to the Airframe,
                    any Engine or any Part required to maintain all warranties,
                    performance guaranties or service life policies that are
                    assigned by Lessor to Lessee in full force and effect; and
                    (ii) the requirements of all Airworthiness Directives and
                    all service bulletins designated by the State of Design or
                    State of Registry as "mandatory," and to be carried out
                    before the Return Occasion or the Scheduled Expiry Date,
                    whichever is later, or within a period of 180 days after the
                    Return Occasion or the Scheduled Expiry Date, whichever is
                    later; and

          (d)       all maintenance is carried out according to Lessee's
                    Maintenance Program in at least the same manner and with at
                    least the same care, including maintenance scheduling,
                    modification status and technical condition, as is the case
                    with respect to similar aircraft owned or otherwise operated
                    by Lessee; provided, however, in the event that Lessee
                    determines that any particular expenditure or modification
                    may not be prudent during the last nine months prior to the
                    Scheduled Expiry Date, then Lessor and Lessee shall discuss
                    the issue and negotiate in good faith to agree on a mutually
                    acceptable solution.

 8.11     Removal of Engines and Parts

          (a)       GENERAL: Lessee must replace, within one hundred and five
                    (105) days thereof, any Engine that has suffered an Engine
                    Event of Loss in accordance with Section 8.11(b), and any
                    Part which is permanently removed from the Aircraft must be
                    replaced in accordance with Section 8.11(b). Any Part which
                    otherwise is lost, stolen, destroyed, seized, obsolete,
                    confiscated, damaged beyond repair or permanently rendered
                    unfit for any reason, must be replaced in accordance with
                    Section 8.11(b). Any Engine or Part may be installed on
                    another aircraft Lessee owns or leases in accordance with
                    Section 8.11(c). Lessee may temporarily install an engine
                    or part in accordance with Section 8.11(d). Lessee shall
                    obtain from any Person to whom possession of an Engine is
                    given (other than (i) any Maintenance Performer to whom an
                    Engine is delivered for maintenance, repair or overhaul,
                    (ii) the Engine Manufacturer, or (iii) any other Person to
                    whom an Engine is given solely for purpose of transporting
                    the Engine), and from the lessor of any airframe on which an
                    Engine is installed and from any holder of a Security
                    Interest in any airframe on which an Engine is installed, an
                    agreement in writing (which agreement, in the case of a
                    lease or Security Interest, may be contained in the
                    applicable lease or Security Interest agreement covering
                    such airframe) that such Person will not acquire or claim
                    any rights, title or interest in such Engine as a result of
                    such Engine being installed on such other airframe at any
                    time while such Engine is subject to the Lease. In the event
                    Lessee shall have received from a lessor of or secured party
                    holding a Security Interest in any airframe leased to Lessee
                    or owned by Lessee a written agreement pursuant to the
                    foregoing sentence and the lease or Security Interest
                    covering such airframe also covers an engine or engines
                    owned by the lessor under such lease or subject to such
                    Security


                                      -33-
<PAGE>

                    Interest in favor of the secured party under such Security
                    Interest, Lessor hereby agrees for the benefit of such
                    lessor or secured party that Lessor will not acquire or
                    claim as against such lessor or secured party, any rights,
                    title or interest in any such engine as a result of such
                    engine being installed on the Airframe at any time while
                    such engine is owned by such lessor and subject to such
                    lease or such Security Interest in favor of such secured
                    party.

          (b)       PERMANENT REPLACEMENT: If Lessee permanently replaces an
                    Engine or Part:

                    (i)       in the case of an Engine, the replacement engine
                              must be of the same manufacturer and model, or at
                              Lessee's option an engine of an improved model,
                              and have equivalent or better remaining useful
                              life and modification status as the Engine it
                              replaces, and is otherwise of an equivalent or
                              better value and utility and suitable for
                              installation and use on the Airframe without
                              impairing the value or utility of the Airframe and
                              compatible with the remaining installed Engine(s);

                    (ii)      in the case of a Part, the replacement part must
                              be in good operating condition, have a value and
                              utility the same or better than the Part it is
                              replacing, be of the same or a more advanced make
                              and model and be of the same interchangeable
                              modification status as the Part it is replacing;

                    (iii)     the replacement engine or part must have become
                              and remain, until replaced in accordance with this
                              Section, the property of Owner free from Security
                              Interests (other than Permitted Liens), and
                              subject to the applicable Financing Documents;

                    (iv)      Lessee must have full details of the source and
                              maintenance records of the replacement engine or
                              part and in the case of serialized rotable parts,
                              also have a complete service history; and

                    (v)       Lessee must comply with the requirements of the
                              Financing Documents in connection with any such
                              replacement including to provide such legal
                              opinions and other documents as may be required
                              under the Financing Documents.

          (c)       OTHER AIRCRAFT: An Engine or Part may be installed on an
                    aircraft which Lessee owns or leases if:

                    (i)       no Event of Default has occurred and is
                              continuing;

                    (ii)      Lessee or a Permitted Sub-Lessee has operational
                              control over the aircraft;

                    (iii)     Owner keeps the ownership of the Engine or Part
                              concerned until replaced in accordance with
                              Section 8.11(b);


                                      -34-
<PAGE>

                    (iv)      the Engine or Part does not become subject to a
                              Security Interest and the applicable airframe is
                              not subject to any Security Interest except a
                              Permitted Lien or a lease or Security Interest
                              described in Section 8.11(a) above; and

                    (v)       the Engine or Part is replaced in accordance with
                              Section 8.11(b) or is removed from the aircraft
                              as soon as practicable under Lessee's engine
                              rotation program but not later than the Expiry
                              Date.

          (d)       TEMPORARY REPLACEMENT: Lessee may install any engine or part
                    on the Aircraft as a temporary replacement if:

                    (i)       no Event of Default has occurred and is
                              continuing;

                    (ii)      there is not available an engine or part complying
                              with the requirements of the Lease for a
                              replacement Engine or Part;

                    (iii)     it would result in an unreasonable disruption of
                              the operation of the Aircraft or the business of
                              Lessee to have the Aircraft grounded until such
                              time as an engine or part complying with the
                              requirements of the Lease for a replacement Engine
                              or Part becomes available for installation;

                    (iv)      as soon as practicable (under Lessee's engine
                              rotation program in the case of an engine) after
                              an engine or part is installed on the Aircraft,
                              but before the earlier of sixty (60) days after
                              such temporary replacement or the Expiry Date,
                              Lessee removes that engine or part and replaces it
                              with the original Engine or Part (or by an engine
                              or part which is allowed by Section 8.11(b)); and

                    (v)       the Insurances for the Aircraft are not adversely
                              affected.


          (e)       POOLING/INTERCHANGE: Lessee shall not subject any Engine or
                    Part to any pooling, interchange, lease or similar
                    arrangement unless Lessee obtains Lessor's prior written
                    consent thereto, which consent shall not be unreasonably
                    withheld.

          (f)       ENGINES: Notwithstanding anything to the contrary set forth
                    in Sections 8.11(c) and (d) above, so long as no Default
                    shall have occurred and be continuing, any Engine may remain
                    installed on an aircraft other than the Aircraft, and any
                    auxiliary power unit may remain installed on the Aircraft
                    indefinitely during the Term; provided, however, (i) upon
                    the occurrence of any Default, Lessee shall promptly, and in
                    any case within sixty (60) days following the occurrence of
                    such Default, cause each Engine to be re-installed on the
                    Aircraft, or, at Lessee's election, cause any of the Engines
                    to be replaced by a replacement Engine meeting the
                    requirements of, and in accordance with, Section 8.11(b),
                    and (ii) in any event Lessee shall cause such Engine to be
                    either re-installed on the Aircraft or


                                      -35-
<PAGE>

                    replaced by a replacement Engine meeting the requirements
                    of, and in accordance with, Section 8.11(b) on or before
                    the Expiry Date.

          (g)       APU: Notwithstanding anything to the contrary set forth in
                    Sections 8.11(c) and (d) above, so long as no Default shall
                    have occurred and be continuing, the APU may remain
                    installed on an aircraft other than the Aircraft, and any
                    auxiliary power unit may remain installed on the Aircraft
                    indefinitely during the Term; provided, however, (i) upon
                    the occurrence of any Default, Lessee shall promptly, and in
                    any case within sixty (60) days following the occurrence of
                    such Default, cause the APU to be re-installed on the
                    Aircraft, or, at Lessee's election, cause the APU to be
                    replaced by a replacement auxiliary power unit meeting the
                    requirements of, and in accordance with, Section 8.11(b),
                    and (ii) in any event Lessee shall cause the APU to be
                    either re-installed on the Aircraft or replaced by a
                    Replacement APU meeting the requirements of, and in
                    accordance with, Section 8.11(b) on or before the Expiry
                    Date.

 8.12     Equipment Changes

          Lessee will not make any modification or addition to the Aircraft
          (each an "EQUIPMENT CHANGE"), except for an Equipment Change which:

                    (i)       is expressly permitted or required by the Lease;
                              or

                    (ii)      has (x) a cost (including labor) of less than the
                              Modification Approval Amount or (y) the prior
                              written approval of Lessor, and (z) in either
                              case, does not diminish the condition, utility,
                              airworthiness or value of the Aircraft.

          So long as no Default has occurred and is continuing, Lessee may
          remove or reverse any Equipment Change provided that the Equipment
          Change is not required pursuant to the terms of the Lease or to
          maintain the Insurances and removal or reversal does not diminish the
          value, utility, airworthiness or condition of the Aircraft assuming
          that such Equipment Change was not made and that Aircraft is
          maintained in accordance with the Lease. Furthermore, Lessor may
          require Lessee to remove or reverse any Equipment Change on the Expiry
          Date and to restore the Aircraft to its condition prior to that
          Equipment Change. Any Equipment Change not so removed or reversed
          becomes the property of Lessor or Owner, as the case may be, at the
          Expiry Date.

 8.13     Title on an Equipment Change

          Title to any equipment that is installed on the Airframe shall, except
          in the case of an engine or an auxiliary power unit or a temporary
          replacement of a Part or any In-Flight Equipment, vest in Owner solely
          by virtue of its attachment to the Airframe or an Engine and it shall
          then be subject


                                      -36-
<PAGE>

          to the Lease and, if applicable, the Financing Documents, as if it
          were attached to the Aircraft at Delivery. In the case of any
          replacement of an Engine or the APU pursuant to Section 8.11(b), and
          otherwise if so requested by Lessor, Lessee will provide a properly
          executed bill of sale or similar instrument to evidence the vesting of
          good and marketable title, free and clear of Security Interest (except
          Lessor Liens), to any such Replacement Engine, Replacement APU or
          other equipment in Owner and all documents required under the
          Financing Documents. After Lessor has determined that Lessee has
          permanently replaced an Engine or the APU in accordance with Section
          8.11(b) and this Section 8.13, Lessor will, or will procure that Owner
          will, without recourse or warranty (except as to the absence of
          Lessor's Liens), transfer to Lessee or will procure that Owner will
          transfer to Lessee all of Lessor's or Owner's, as the case may be,
          rights to the engine or the auxiliary power unit that has been
          replaced, on an AS IS, WHERE IS basis, and will at Lessee's expense
          provide or will procure that Owner provides a bill of sale or similar
          instrument as Lessee may reasonably request to evidence such transfer.
          Lessee shall indemnify, on an After-Tax Basis, Lessor, Owner and each
          other Tax Indemnitee for all fees, expenses and Taxes incurred by
          Lessor, Owner or any other Tax Indemnitee in connection with any such
          transfer.

 8.14     Inflight Equipment

          (a)       Notwithstanding any other provision of this Agreement,
                    Lessor acknowledges that Lessee may at any time during the
                    Term install a telephone system and/or an inflight
                    entertainment system for passenger use (collectively, the
                    Inflight Equipment) on the Aircraft notwithstanding that
                    the Inflight Equipment may not be owned by Lessee provided
                    that:

                    (i)       Lessee shall give Lessor notice of the
                              installation of any Inflight Equipment on the
                              Aircraft and the name and address of the owner of
                              such Inflight Equipment;

                    (ii)      the documents pursuant to which the owner of the
                              Inflight Equipment installs same on the Aircraft
                              shall provide that such owner shall not have any
                              lien, security interest, claim or other
                              encumbrance on or against the Aircraft, and such
                              owner only right with respect to the Aircraft
                              shall be to remove the Inflight Equipment from the
                              Aircraft and, such documents shall also provide
                              that such owner shall remove the Inflight
                              Equipment from the Aircraft not later than the
                              earlier of (A) thirty (30) days after notice from
                              Lessor of the occurrence of an Event of Default,
                              and (B) the Expiry Date;

                    (iii)     such right of removal is subject to and
                              conditioned upon such owner restoring, or causing
                              Lessee to restore, all alterations made to the
                              Aircraft in connection with the installation of
                              the Inflight Equipment to the condition prior to
                              the installation thereof (ordinary wear and tear
                              excepted).

          (b)       Lessor acknowledges that at all times:

                    (i)       the owner of the Inflight Equipment has and will
                              retain sole and exclusive right and title to and
                              in the Inflight Equipment;

                    (ii)      the Inflight Equipment shall not constitute a Part
                              or a part of the Aircraft;


                                      -37-
<PAGE>

                    (iii)     title to the Inflight Equipment shall not transfer
                              to or from Lessor pursuant to Clauses 8.12 and
                              8.13; and

                    (iv)      the Inflight Equipment shall not become subject to
                              the Security Interest of any Person to whom Lessor
                              grants a Security Interest in the Aircraft
                              pursuant to Clause 14.1.

 9.       INSURANCE

 9.1      Insurance

          Lessee will maintain the Insurance in full force during the Term, and
          thereafter as expressly required in the Lease, which Insurance shall
          be of the type usual and customary in the industry for comparable
          operators operating similar equipment in similar circumstances, and
          shall be through reputable brokers and insurers of recognized standing
          in the commercial aviation insurance industry. The Insurance shall in
          any event meet the requirements set forth in Schedule 7.

 9.2      [NOT APPLICABLE]

 9.3      Insurance Undertakings and Information: Lessee will:

          (a)       comply with the terms and conditions of each policy of any
                    Insurance and not do, consent or agree to any act or
                    omission which:

                    (i)       invalidates or may invalidate any Insurance; or

                    (ii)      renders or may render void or voidable the whole
                              or any part of any Insurance; or

                    (iii)     brings any particular liability within the scope
                              of an exclusion or exception to any Insurance;

          (b)       not take out any insurance or reinsurance in respect of the
                    Aircraft other than that which is required under the Lease
                    which adversely affects the Insurance required to be
                    maintained hereunder; provided, however, Lessee may purchase
                    a separate "hull total loss" policy with respect to the
                    Aircraft in such amount as Lessee may desire;

          (c)       commence renewal procedures at least 30 days prior to expiry
                    of any of the Insurance and provide to Lessor:

                    (i)       if requested by Lessor in writing, a written
                              status report of renewal negotiation as of the
                              time of the request;

                    (ii)      [NOT APPLICABLE];


                                      -38-
<PAGE>

                    (iii)     receipt of certificates of insurance (and where
                              appropriate certificates of reinsurance), and
                              broker's (and any reinsurance broker's) letter of
                              undertaking in a form acceptable to Lessor,
                              detailing the coverage and confirming compliance
                              with the specified insurance requirements of the
                              Lease and, in the case of the broker's letter of
                              undertaking, opining that the Insurance complies
                              with the requirements of the Lease on or before
                              each renewal date;

          (d)       on reasonable request, provide to Lessor copies of documents
                    or other information evidencing the Insurances; and

          (e)       provide any other insurance and reinsurance related
                    information, or assistance, in respect of the Insurance as
                    Lessor may reasonably require.

 9.4      Failure to Insure

          If Lessee fails to maintain any of the Insurance in compliance with
          the Lease:

          (a)       each of the Indemnitees will be entitled but not bound
                    (without prejudice to any other rights of Lessor under the
                    Lease) to pay the premiums due or to effect and maintain
                    insurance satisfactory to such Indemnitee or otherwise
                    remedy Lessee's failure in such manner (including, without
                    limitation to effect and maintain an "owner's interest"
                    policy) as such Indemnitee considers appropriate. Any sums
                    so expended by any such Indemnitee will become immediately
                    due and payable by Lessee on demand by Lessor together with
                    interest thereon at the Interest Rate, from the date of
                    expenditure by such Indemnitee up to the date of
                    reimbursement by Lessee; and

          (b)       Lessor at any time while such failure is continuing may
                    require the Aircraft to remain at any airport or to proceed
                    to and remain at any airport designated by Lessor until the
                    failure is remedied to Lessor's reasonable satisfaction.

 9.5      Continuing Indemnity

          Lessee shall effect and maintain product legal liability insurance
          after the Expiry Date with respect to its liability under Section 10
          (INDEMNITY) for two years, and such insurance shall name each
          Indemnitee as an additional insured.

 10.      INDEMNITY

          (a)       Except as provided in Section 10(b) below, Lessee agrees to
                    assume liability for and to indemnify each of the
                    Indemnitees against and agrees to pay on demand any and all
                    Losses which an Indemnitee may at any time suffer or incur
                    at any time, whether directly or indirectly, arising out of,
                    related to or in any way connected with:


                                      -39-
<PAGE>

                    (i)       the ownership, maintenance, overhaul, service,
                              repair, delivery, possession, transfer of
                              ownership or possession, import, export,
                              registration, control, storage, modification,
                              leasing, insurance, inspection, testing, design,
                              date processing, sub leasing, use, condition,
                              redelivery or other matters relating to the
                              Aircraft, any Engine or any Part (regardless of
                              whether in the air or on the ground, and
                              regardless of whether such Losses are based on
                              strict liability in tort, any act or omission,
                              including the negligence, of any Indemnitee, or
                              otherwise); or

                    (ii)      any breach by the Lessee of any of its obligations
                              under the Lease; or

                    (iii)     the design, testing or use of or any article or
                              material in, the Aircraft, any Engine or any Part
                              or its use or operation, including any defect in
                              design and regardless of whether it is
                              discoverable, and any infringement of patent,
                              copyright, trademark, design or other proprietary
                              right claimed by any Person or a breach of any
                              obligation of confidentiality claimed to be owed
                              to any Person.

                              For the avoidance of doubt, the reference to
                              "ownership" in clause (i) shall not require
                              Lessee to indemnify Lessor in respect of (y)
                              any defect in Lessor's or Owner's title to the
                              Aircraft or (z) any decline in residual value
                              of the Aircraft if Lessee shall have fully
                              complied with its obligations under the Lease.

          (b)       Lessee is not required to indemnify any particular
                    Indemnitee (provided that (i) Lessor and its Subsidiaries
                    and Affiliates and its and their officers, directors,
                    representatives, agents, partners, contractors and employees
                    shall be treated as a single Indemnitee, and (ii) each
                    Financing Party and its shareholders, subsidiaries,
                    affiliates, partners, contractors, directors, officers,
                    representatives, agents and employees shall be treated as a
                    single Indemnitee) under this Section, to the extent a
                    particular Loss is:

                    (i)       caused solely by the willful misconduct of that
                              Indemnitee or gross negligence of that Indemnitee,
                              other than gross negligence imputed to that
                              Indemnitee by reason of its interest in the
                              Aircraft or the Lease;

                    (ii)      caused solely by Lessor's breach of the Lease
                              which does not result from a Default;

                    (iii)     related to any Taxes (but without prejudice to any
                              Indemnitee's rights under any other provision of
                              this Lease relating to Taxes);

                    (iv)      caused solely by an event which occurs before the
                              commencement of the Term (except where the Loss is
                              suffered during the Term as a result of a pre-
                              Delivery defect in or such Loss otherwise arises
                              out of or relates to or is any way


                                      -40-
<PAGE>

                              connected with the manufacture, design,
                              maintenance, repair, rebuilding, overhaul or
                              modification of the Aircraft);

                    (v)       caused solely by an event which occurs after the
                              redelivery of the Aircraft to Lessor in compliance
                              with the Lease and is not attributable to any act,
                              omission, event or circumstance occurring prior to
                              such redelivery;

                    (vi)      caused solely as a result of any sale, assignment,
                              transfer or other disposition (whether voluntary
                              or involuntary) by such Indemnitee of the Aircraft
                              or Engine or any interest therein that is not a
                              replacement thereof under the Lease or is
                              otherwise not contemplated under the Lease, and
                              unless such sale, transfer or other disposition
                              has resulted from or occurred following a Default;
                              or

                    (vii)     consists of normal administrative costs and
                              expenses of such Indemnitee (but excluding any
                              such costs or expenses resulting from the
                              occurrence of any Default); or

                    (viii)    consists of costs or expenses for which Lessor has
                              expressly agreed to be responsible under any other
                              provision of the Lease.

 11.      EVENTS OF LOSS

 11.1     Events of Loss

          (a)       If an Event of Loss occurs prior to Delivery of the
                    Aircraft, the Lease will immediately terminate and except as
                    expressly stated in the Lease neither party will have any
                    further obligation other than pursuant to Section 5.21 and
                    Section 3 of Schedule 4, except that Lessor will return the
                    Deposit (if any) to Lessee and return to Lessee or cancel
                    any Letter of Credit.

          (b)       If an Event of Loss occurs after Delivery, Lessee will pay
                    the Agreed Value to Lessor on or prior to the earlier of (i)
                    sixty (60) days after the Event of Loss and (ii) the date of
                    receipt of insurance proceeds in respect of that Event of
                    Loss.

          (c)       Subject to the rights of any insurers and reinsurers or
                    other third party, upon irrevocable payment in full to
                    Lessor of the Agreed Value and all other amounts which may
                    be or become payable to Lessor under the Lease, and if
                    Lessee requests such transfer, Lessor will, or will procure
                    that Owner will, without recourse or warranty (except as to
                    the absence of Lessor's Liens) transfer to Lessee or will
                    procure that Owner transfers to Lessee or to Lessee's
                    designee legal and beneficial title, subject to no Lessor's
                    Liens (but otherwise without warranty), to the Aircraft, on
                    an AS IS, WHERE IS basis, and will at Lessee's expense,
                    execute and deliver or will procure that Owner executes and
                    delivers


                                      -41-
<PAGE>

                    such bills of sale and other documents and instruments as
                    Lessee may reasonably request to evidence (on the public
                    record or otherwise) such transfer, free and clear of all
                    rights of Lessor and Owner and Lessor Liens. Lessee shall
                    indemnify, on an After-Tax Basis, Lessor, Owner and each
                    other Tax Indemnitee for all fees, expenses and Taxes
                    incurred by Lessor, Owner or any other Tax Indemnitee in
                    connection with any such transfer.

 11.2     Requisition

          During any requisition for use or hire of the Aircraft, any Engine or
          Part which does not constitute an Event of Loss:

          (a)       the Rent and other charges payable under the Lease will not
                    be suspended or abated either in whole or in part, and
                    Lessee will not be released from any of its other
                    obligations (other than operational obligations with which
                    Lessee is unable to comply solely by virtue of the
                    requisition); and

          (b)       so long as no Default has occurred and is continuing, Lessee
                    will be entitled to any compensation paid by the
                    requisitioning authority in respect of such authority's use
                    of the Aircraft, such Engine or such Part during the Term.
                    Lessee will, as soon as practicable after the end of any
                    such requisition, cause the Aircraft to be put into the
                    condition required by the Lease. Lessor will be entitled to
                    all compensation payable by the requisitioning authority in
                    respect of any change in the structure, state or condition
                    of the Aircraft arising during the period of requisition,
                    and Lessor will apply such compensation in reimbursing
                    Lessee for the cost of complying with its obligations under
                    the Lease in respect of any such change, but, if any Default
                    has occurred and is continuing, Lessor may apply the
                    compensation in or towards settlement of any amounts owing
                    by Lessee under the Lease and/or under any Other Agreement.

 12.      RETURN OF AIRCRAFT

 12.1     Return

          On the Expiry Date or redelivery of the Aircraft pursuant to Section
          13.2 or termination of the leasing of the Aircraft under the Lease,
          Lessee will, unless an Event of Loss has occurred, redeliver the
          Aircraft and the Aircraft Documents and Records at Lessee's expense to
          Lessor at the Redelivery Location, in accordance with the procedures
          and in compliance with the conditions set forth in the Aircraft Lease
          Agreement, free and clear of all Security Interests (other than Lessor
          Liens) and in a condition qualifying for and having a valid and fully
          effective certification of airworthiness under FAR Part 121. Lessor
          shall commence the Final Inspection in accordance with the Aircraft
          Lease Agreement promptly upon Lessee making the Aircraft and the
          Aircraft Documents and Records available for the Final Inspection
          provided that Lessee gives


                                      -42-
<PAGE>

          Lessor no less than thirty (30) days prior written notice of the
          availability of the Aircraft and the Aircraft Documents and Records
          for such inspection.

 12.2     Non-Compliance

          If at the time of Final Inspection Lessee has not fully complied with
          any of its obligations under the Lease (including, without limitation,
          Part III of Schedule A to the Aircraft Lease Agreement), or Lessee
          fails to make the Aircraft available to Lessor on a timely basis for
          inspection and redelivery pursuant to Section 12.1 and Part III of
          Schedule A to the Aircraft Lease Agreement (whether such failure is
          due to any act or omission of Lessee or any other circumstance
          whatsoever), the Term shall be extended until the time when the
          Aircraft has been redelivered to Lessor in full compliance with the
          Lease, for the sole purpose of enabling such non-compliance or failure
          to be promptly rectified, and during such extension period:

          (a)       Lessee shall not use the Aircraft in flight operations
                    except those related directly to the redelivery of the
                    Aircraft to Lessor;

          (b)       all Lessee's obligations and covenants under the Lease will
                    remain in full force until Lessee so redelivers the
                    Aircraft; and

          (c)       Lessee shall pay Rent to Lessor at a rate per month equal to
                    the amount of Rent payable in respect of the last scheduled
                    Rental Period plus 50 per cent thereof, calculated on a per
                    diem basis; provided, however, with respect to the portion
                    of such extension, if any, attributable solely to a good
                    faith dispute between Lessor and Lessee as to the meaning of
                    some particular language in the Lease applicable to the
                    return of the Aircraft, whether set forth in Part III of
                    Schedule A to the Aircraft Lease Agreement or elsewhere (but
                    not, for the avoidance of doubt, in respect of any dispute
                    as to the result or outcome of any inspection or check
                    required in connection with the Final Inspection under the
                    Lease), Lessee shall pay to Lessor Rent, calculated on a per
                    diem basis, at 50% of the rate otherwise applicable, which
                    rate shall be equal to (i) 50% of the rate applicable to the
                    last scheduled Rental Period, without giving effect to the
                    50% premium required in the introductory clause of this
                    paragraph (c), if as of the Scheduled Expiry Date the
                    Aircraft is in full compliance with the requirements of the
                    Lease for return to Lessor (other than the item in dispute),
                    and (ii) 50% of the rate specified in the introductory
                    clause of this paragraph (c), or 75% of the rate applicable
                    to the last scheduled Rental Period, if the rate specified
                    in the introductory clause of this paragraph (c) becomes
                    applicable as of the Scheduled Expiry Date due to Lessee's
                    failure to comply with its obligations in respect of the
                    Final Inspection in a timely manner or the Aircraft
                    otherwise fails to comply as of the Scheduled Delivery Date
                    with the requirements of the Lease for return to Lessor in
                    any respect other than in reference to the disputed
                    language. For so long as the Aircraft remains non-compliant
                    with any requirements of the Lease other than those that are
                    the


                                      -43-
<PAGE>

                    subject of the disputed language, Lessee shall pay to Lessor
                    Rent in the amount specified in the introductory clause of
                    this paragraph (c), and the Rent rate specified in this
                    clause (ii) shall become applicable, if at all, only from
                    and after such time as the Aircraft is brought into
                    compliance with all requirements of the Lease for return to
                    Lessor (including, but not limited to, Part III of Schedule
                    A to the Aircraft Lease Agreement) other than the with
                    respect to the items that are the subject of the disputed
                    language, such that the disputed language remains as the
                    sole cause in the delay in the return of the Aircraft to
                    Lessor.

         Any such extension shall not prejudice Lessor's right to treat such
         non-compliance or failure as an Event of Default at any time, and to
         enforce such rights and remedies as may be available to Lessor in
         respect thereof under the terms of the Lease or applicable Law. Without
         limiting the generality of the foregoing, Lessee's Rent obligation
         under paragraph (c) above shall be without prejudice to Lessor's rights
         to terminate the letting of the Aircraft and to indemnification
         pursuant to Section 13.3.

         Lessor may elect (either on first tender of the Aircraft by Lessee or
         at any time during the said extension period) to accept redelivery of
         the Aircraft notwithstanding non-compliance with Section 12.1 or Part
         III of Schedule A to the Aircraft lease Agreement, in which case Lessee
         will indemnify Lessor on an After-Tax Basis, and provide cash to Lessor
         (in an amount satisfactory to Lessor) as security for that indemnity,
         in respect of the cost to Lessor of putting the Aircraft into the
         condition required by the Lease.

 12.3    Redelivery

         Upon redelivery Lessee will provide to Lessor, upon Lessor's request,
         all documents necessary to export the Aircraft from the United States
         (including a valid and subsisting export certificate of airworthiness
         for the Aircraft) or required in relation to the deregistration of the
         Aircraft with the Air Authority.

 12.4    Acknowledgement

         Provided Lessee has complied with its obligations under Section 12
         hereof and Part III of Schedule A to the Aircraft Lease Agreement,
         following redelivery of the Aircraft by Lessee to Lessor at the
         Redelivery Location, Lessor will deliver to Lessee an acknowledgement
         confirming that Lessee has redelivered the Aircraft to Lessor in
         accordance with the Lease which acknowledgement shall be without
         prejudice to Lessor's accrued and continuing rights under the Lease or
         any Other Agreement.


                                      -44-
<PAGE>

 13.      DEFAULT

 13.1     Events

          The occurrence of any of the Events of Default will constitute a
          repudiation (but not a termination) of the Lease by Lessee (whether
          the occurrence of any such Event of Default is voluntary or
          involuntary or occurs by operation of Law or pursuant to or in
          compliance with any judgement, decree or order of any court or any
          order, rule or regulation of any Government Entity).

 13.2     Rights and Remedies

          If an Event of Default occurs, Lessor may at its option (and without
          prejudice to any of its other rights under the Lease), at any time
          thereafter (without notice to Lessee except as required under
          applicable Law):

          (a)       accept such repudiation and by notice to Lessee and with
                    immediate effect cancel the leasing of the Aircraft (but
                    without prejudice to the continuing obligations of Lessee
                    under the Lease), whereupon all rights of Lessee under the
                    Lease shall cease; and/or

          (b)       proceed by appropriate court action or actions to enforce
                    performance of the Lease including the payment of all Rent
                    and all other amounts payable to Lessor or any Indemnitee
                    pursuant to the terms of the Lease; and/or

          (c)       proceed by appropriate court action or actions to recover
                    damages for the breach of the Lease which shall include:

                    (i)       all Rent and other amounts which are or become due
                              and payable hereunder prior to the earlier to
                              occur of the date Lessor sells or re-leases the
                              Aircraft or receives payment of the amount
                              calculated pursuant to clause (ii) below;

                    (ii)      an amount equal to the aggregate Rent for the
                              remainder of the Term (determined without
                              reference to any right of Lessor to cancel the
                              leasing of the Aircraft, whether or not such right
                              is exercised), discounted periodically (equal to
                              installment frequency) to present worth at the
                              Discount Rate to the date of payment by Lessee to
                              Lessor, less the applicable amount set forth
                              below:

                              A.        in the event that Lessor has re-let the
                                        Aircraft on terms (other than rental
                                        payment terms) which, taken as a whole,
                                        Lessor reasonably regards as being
                                        substantially similar to the material
                                        economic terms of the Lease (taking into
                                        account factors affecting the degree of
                                        risk associated with such re-lease
                                        and/or the residual value of the
                                        Aircraft thereunder, but


                                      -45-
<PAGE>

                                        excluding the rental payment terms), an
                                        amount equal to the aggregate basic
                                        rental payments to become due under such
                                        re-lease for the period coinciding with
                                        the remainder of the Term (determined
                                        without reference to any right of Lessor
                                        to cancel the leasing of the Aircraft,
                                        whether or not such right is exercised),
                                        discounted periodically (equal to
                                        installment frequency) to present worth
                                        at the Discount Rate to the date of
                                        payment by Lessee; or

                              B.        in the event that Lessor has not re-let
                                        the Aircraft or has sold the Aircraft or
                                        has re-let the Aircraft on terms which,
                                        taken as a whole, Lessor does not
                                        reasonably regard as being substantially
                                        similar to the material economic terms
                                        of the Lease (taking into account
                                        factors affecting the degree of risk
                                        associated with such re-lease and/or the
                                        residual value of the Aircraft
                                        thereunder, but excluding the rental
                                        payment terms), an amount equal to the
                                        fair market rental value (determined
                                        pursuant to the Appraisal Procedure) of
                                        the Aircraft for the period commencing
                                        with the date that Lessor reasonably
                                        anticipates that the Aircraft could be
                                        re-let at such rental rate and ending
                                        with the date that the Term was
                                        scheduled to expire (determined without
                                        reference to any right of Lessor to
                                        cancel the leasing of the Aircraft,
                                        whether or not such right is exercised),
                                        discounted periodically (equal to
                                        installment frequency) to present worth
                                        at the Discount Rate to the date of
                                        payment by Lessee.

                    (iii)     all costs and other incidental damages associated
                              with Lessor's exercise of its remedies hereunder
                              or otherwise incurred by Lessor as a result of an
                              Event of Default, including repossession costs,
                              legal fees, Aircraft storage, maintenance and
                              insurance costs, Aircraft re-lease or sale costs
                              (including, in the case of a release, any costs
                              incurred to transition the Aircraft to the next
                              operator's maintenance program) and Lessor's
                              internal costs and expenses (including the cost of
                              personnel time calculated based upon the
                              compensation paid to the individuals involved on
                              an annual basis and a general Lessor overhead
                              allocation), all such costs and incidental damages
                              being referred to herein collectively as
                              "Enforcement and Remarketing Costs";

                    (iv)      any loss, premium, penalty or expense which may be
                              incurred in repaying funds raised to finance the
                              Aircraft or in unwinding any financial instrument
                              relating in whole or in part to Lessor's financing
                              of the Aircraft, all such amounts being referred
                              to herein collectively as "Unwind Expenses";

                    (v)       any loss, cost, expense or liability, or damage to
                              Lessor's residual interest in the Aircraft,
                              sustained by Lessor due to Lessee's failure to
                              maintain the Aircraft in


                                      -46-
<PAGE>

                              accordance with the terms of this Agreement or
                              Lessee's failure to redeliver the Aircraft in the
                              condition required by this Agreement, including
                              any consequential loss of revenues or profits, all
                              such amounts being referred to herein collectively
                              as "Aircraft Condition Damages"; and

                    (vi)      such additional amount, if any, as may be
                              necessary to place Lessor in the same economic
                              position, on an After-Tax Basis, as Lessor would
                              have been in if Lessee had timely performed each
                              of its obligations under this Agreement; and/or

          (d)       either:

                    (i)       enter upon the premises where all or any part of
                              the Aircraft is located and take immediate
                              possession of and, at Lessor's sole option, remove
                              the same (and/or any engine which is not an Engine
                              but which is installed on the Airframe, subject to
                              the rights of the lessor or secured party
                              thereof), 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, conversion or otherwise, caused by
                              such entry or taking, except damages caused by
                              gross negligence or willful misconduct; or

                    (ii)      by delivering notice to Lessee, require Lessee to
                              redeliver the Aircraft to Lessor at Phoenix Sky
                              Harbor International Airport in Phoenix, Arizona
                              (or such other location as Lessor may require) on
                              the date specified in such notice and in all
                              respects in the condition required by the Lease
                              upon the Return Occasion (it being understood that
                              Lessee shall not delay any such return for the
                              purpose of placing the Aircraft in such condition,
                              but shall nevertheless be liable to Lessor for the
                              failure of the Aircraft to be in such condition);
                              and/or

          (e)       sell at private or public sale, as Lessor may determine, or
                    hold, use, operate or lease to others the Aircraft as Lessor
                    in its sole discretion may determine, all free and clear of
                    any rights of Lessee; and/or

          (f)       by written notice to Lessee specifying a payment date (which
                    shall be a date not earlier than five (5) Business Days
                    following the date of such notice), Lessor may demand that
                    Lessee pay to Lessor, and Lessee shall pay to Lessor on the
                    payment date specified in such notice (in lieu of the Rent
                    due for the period commencing after the date specified for
                    payment in such notice) the sum of the following amounts:

                    (i)       all Rent and other amounts which are or are
                              expected to become due and payable hereunder prior
                              to the payment date specified by Lessor;


                                      -47-
<PAGE>

                    (ii)      an amount equaling the aggregate Rent for the
                              remainder of the Term (determined without
                              reference to any right of Lessor to cancel the
                              leasing of the Aircraft, whether or not such right
                              is exercised), discounted periodically (equal to
                              installment frequency) to present worth at the
                              Discount Rate to the payment date specified by
                              Lessee to Lessor, less the applicable amount set
                              forth below:

                              A.        in the event that Lessor has re-let the
                                        Aircraft on terms (other than rental
                                        payment terms) which, taken as a whole,
                                        Lessor reasonably regards as being
                                        substantially similar to the material
                                        economic terms of the Lease (taking into
                                        account factors affecting the degree of
                                        risk associated with such re-lease
                                        and/or the residual value of the
                                        Aircraft thereunder, but excluding the
                                        rental payment terms), an amount equal
                                        to the aggregate basic rental payments
                                        to become due under such re-lease for
                                        the period coinciding with the remainder
                                        of the Term (determined without
                                        reference to any right of Lessor to
                                        cancel the leasing of the Aircraft,
                                        whether or not such right is exercised),
                                        discounted periodically (equal to
                                        installment frequency) to present worth
                                        at the Discount Rate to the date of
                                        payment by Lessee; or

                              B.        in the event that Lessor has not re-let
                                        the Aircraft or has sold the Aircraft or
                                        has re-let the Aircraft on terms which,
                                        taken as a whole, Lessor does not
                                        reasonably regard as being substantially
                                        similar to the material economic terms
                                        of the Lease (taking into account
                                        factors affecting the degree of risk
                                        associated with such release and/or the
                                        residual value of the Aircraft
                                        thereunder, but excluding the rental
                                        payment terms), an amount equal to the
                                        fair market rental value (determined
                                        pursuant to the Appraisal Procedure) of
                                        the Aircraft for the period commencing
                                        with the date that Lessor reasonably
                                        anticipates that the Aircraft could be
                                        re-let at such rental rate and ending
                                        with the date that the Term was
                                        scheduled to expire (determined without
                                        reference to any right of Lessor to
                                        cancel the leasing of the Aircraft,
                                        whether or not such right is exercised),
                                        discounted periodically (equal to
                                        installment frequency) to present worth
                                        at the Discount Rate to the date of
                                        payment by Lessee;

                    (iii)     an amount equal to Lessor's reasonably anticipated
                              Enforcement and Remarketing Costs, Unwind Expenses
                              and Aircraft Condition Damages; and

                    (iv)      such additional amount, if any, as may be
                              necessary to place Lessor in the same economic
                              position, on an After-Tax Basis, as Lessor would
                              have been in if Lessee had timely performed each
                              of its obligations under this Agreement;


                                      -48-
<PAGE>

                    (v)       it being understood that, to the extent that any
                              of the foregoing amounts represents an estimate by
                              Lessor of losses, damages, costs or expenses which
                              Lessor expects to incur, (y) Lessor shall adjust
                              the amount thereof as needed to reflect the actual
                              amount of such losses, damages, costs or expenses
                              incurred by Lessor when substantially all of such
                              amounts become known to Lessor, but Lessee shall
                              nevertheless be obligated to pay the amount
                              demanded by Lessor (subject to such subsequent
                              adjustment in which (i) amounts, if any, actually
                              paid by Lessee to Lessor upon such demand as may
                              exceed the actual amount of losses, damages, costs
                              or expenses incurred by Lessor as finally
                              determined by Lessor are refunded to Lessee or
                              otherwise credited to the account of Lessee and
                              (ii) additional amounts, if any, as may be
                              required to cure any shortfall between the
                              estimated amounts paid by Lessee and the actual
                              amount of losses, damages, costs or expenses
                              incurred by Lessor as finally determined by Lessor
                              are paid by Lessee to Lessor), and (z)
                              notwithstanding the amount specified in such
                              demand, Lessor shall be entitled to claim such
                              other (and greater) amount in any action against
                              Lessee hereunder; and/or

          (g)       draw upon the Deposit or the Letter of Credit and apply such
                    amounts to any amounts owing to Lessor hereunder and/or make
                    demand against any Guarantor for any or all of the
                    foregoing.

          In addition to the foregoing, Lessor shall be entitled to exercise
          such other rights and remedies as may be available under applicable
          Law and Lessee shall be liable on an After-Tax Basis for, and shall
          pay Lessor on demand: (i) interest on all unpaid amounts at the
          Interest Rate, from the due date until the date of payment in full;
          (ii) all reasonable legal fees and other reasonable costs and expenses
          incurred by Lessor by reason of the occurrence of any Event of Default
          or the exercise of Lessor's remedies with respect thereto; and (iii)
          all reasonable expenses, disbursements, costs and fees incurred in (A)
          repossessing, storing, preserving, shipping, maintaining, repairing
          and refurbishing the Aircraft, the Airframe, any Engine or Part to the
          condition required by Section 12 hereof and (B) preparing the
          Aircraft, the Airframe, an Engine or Part for sale or lease,
          advertising the sale or lease of the Aircraft, the Airframe, an Engine
          or Part and selling or releasing the Aircraft, the Airframe, an Engine
          or Part.

          Lessor is hereby authorized and instructed, but shall have no
          obligation, to make any expenditures which Lessor, in its sole
          discretion, considers advisable to repair and restore the Aircraft,
          the Airframe, an Engine or Part to the condition required by Section
          12 hereof (it being understood that Lessee shall be liable for all
          such expenditures).

          Lessee hereby agrees that, in the event of the return to or
          repossession by Lessor of the Aircraft, the Airframe, an Engine or
          Part, any rights in any warranty (express or implied) previously


                                      -49-
<PAGE>

          assigned to Lessee or otherwise held by Lessee shall without further
          act, notice or writing be assigned or reassigned to Lessor, if
          assignable.

          No remedy referred to in this Section 13 is intended to be exclusive,
          but, to the extent permissible under the Lease or under applicable
          Law, each shall be cumulative and in addition to any other remedy
          referred to above or otherwise available to Lessor at Law or in
          equity; and the exercise or beginning of exercise by Lessor of any one
          or more of such remedies shall not preclude the simultaneous or later
          exercise by Lessor of any or all of such other remedies; provided,
          however, that nothing in this Section 13 shall be construed to permit
          Lessor to obtain a duplicate recovery of any element of damages to
          which Lessor is entitled. No express or implied waiver by Lessor of
          any Default or Event of Default shall in any way be, or be construed
          to be, a waiver of any future or subsequent Default or Event of
          Default.


                                      -50-
<PAGE>


 13.3     Power of Attorney: Lessee hereby appoints Lessor as the
          attorney-in-fact of Lessee, with full authority in the place and stead
          of Lessee and in the name of Lessee or otherwise, for the purpose of
          carrying out the provisions of the Lease and taking any action and
          executing any instrument that Lessor may deem necessary or advisable
          to accomplish the purposes hereof; provided, however, that Lessor may
          only take action or execute instruments under this Section 13 after an
          Event of Default has occurred and is continuing. Lessee hereby
          declares that the foregoing powers are granted for valuable
          consideration, constitute powers granted as security for the
          performance of the obligations of Lessee hereunder and are coupled
          with an interest and shall be irrevocable. Without limiting the
          generality of the foregoing or any other rights of Lessor under the
          Lease, upon the occurrence and during the continuation of an Event of
          Default, Lessor shall have the sole and exclusive right and power to
          (i) settle, compromise, adjust or defend any actions, suits or
          proceedings relating to or pertaining to the Aircraft, Airframe or any
          Engine, or the Lease and (ii) make proof of loss, appear in and
          prosecute any action arising from any policy or policies of insurance
          maintained pursuant to the Lease, and settle, adjust or compromise any
          claims for loss, damage or destruction under, or take any other action
          in respect of, any such policy or policies.

 13.4     Sale or Re-Lease

          If an Event of Default occurs, Lessor may sell or re-lease or
          otherwise deal with the Aircraft at such time and in such manner and
          on such terms as Lessor considers appropriate in its absolute
          discretion, free and clear of any interest of Lessee, as if the Lease
          had never been entered into. Lessor shall have no duty or obligation
          to sell the Aircraft, and Lessor shall be obligated to attempt to
          re-lease the Aircraft only to the extent, if any, that it is required
          to do so under Article 2A of the UCC, and Lessee hereby disclaims any
          right to compel Lessor to sell or otherwise release the Aircraft.

 13.5     Removal of Lease from FAA Registry

          If an Event of Default occurs, Lessee will at the request of Lessor
          immediately take all steps necessary to enable the Aircraft to be
          redelivered to Lessor in accordance with and free and clear of the
          Lease and Lessee hereby irrevocably and by way of security for its
          obligations under the Lease appoints (which appointment is coupled
          with an interest) Lessor as its attorney-in-fact to execute and
          deliver any documentation and to do any act or thing not prohibited by
          Law required in connection with the foregoing during the continuance
          of an Event of Default. Without limiting the foregoing, Lessor may
          file with the FAA the Lease Termination Certificate provided to Lessor
          under the Lease.


                                      -51-
<PAGE>

 14.      TRANSFER

 14.1     Lessee

          LESSEE WILL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
          INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS OR
          OBLIGATIONS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR
          THIS CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST OVER ANY
          OF ITS RIGHTS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT
          OR THIS CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID. The
          foregoing shall not be construed to prohibit a Permitted Sub-Lease.

 14.2     Lessor

          Lessee acknowledges and agrees that Lessor will, if applicable under
          the Financing Documents, assign as security Lessor's interest in the
          Lease as described in the Acknowledgement and Agreement referred to in
          Schedule 3.

          In addition insofar as Lessee is concerned, Lessor may, without the
          consent of Lessee, further transfer all or any of its rights or
          obligations under the Lease or all or any of its right, title or
          interest in and to the Aircraft, including pursuant to:

          (a)       a sale and leaseback; or

          (b)       a novation or assignment of the Lease and/or a sale of the
                    Aircraft (including to a special purpose or securitization
                    or monetization trust, fund, limited liability company,
                    corporation, partnership or other vehicle or in connection
                    with any other direct or indirect raising of capital); or

          (c)       a secured loan financing.

          Lessor will promptly notify Lessee of any transfer and Lessee agrees
          promptly to execute and deliver in connection with any transfer such
          documents and assurances (including an acknowledgement of the transfer
          and a certificate as to the absence of any Default under the Lease)
          and to take such further action as Lessor may reasonably request to
          establish or protect the rights and remedies created or intended to be
          created in favor of the transferee in connection with any transfer.
          After any transfer, the transferee shall be entitled to be an
          Indemnitee and to such other rights under the Lease as Lessor shall
          specify. Upon an assignment or novation described in clause (b),
          Lessor shall be released from all obligations and liabilities under
          the Lease to the extent such obligations and liabilities are assumed
          by such transferee, and the Lease, including this CTA as in effect at
          that time and as incorporated in the Aircraft Lease Agreement, shall
          be


                                      -52-
<PAGE>

          deemed applicable as between Lessee and the transferee of the Lease
          and may be amended, supplemented or otherwise modified without the
          consent of the transferor (if this CTA is applicable to the Other
          Agreements not so transferred, it shall remain in full force and
          effect and may be amended, supplemented or otherwise modified without
          the consent of the transferee). Notwithstanding any such assignment or
          novation, Lessor, Owner, Financing Parties' Representative and each
          other Indemnitee shall continue to be entitled to indemnification
          under Section 10, and shall continue to be named as an additional
          insured under all Insurances referred to in Section 9 for a period of
          not less than two years after such transfer. The agreements,
          covenants, obligations and liabilities contained in the Lease,
          including all obligations to pay Rent and indemnify each Indemnitee,
          are made for the benefit of Lessor (and, in the case of Section 10,
          each other Indemnitee) and its or their respective successors and
          assigns, notwithstanding the possibility that any such Person was not
          originally a party to the Lease or may, at the time such enforcement
          is sought, not be a party to the Lease.

 14.3     Conditions

          In connection with any such transfer by Lessor:

          (a)       QUIET ENJOYMENT: as a condition precedent to such transfer
                    becoming effective, Lessor will procure that the transferee
                    or any new owner of the Aircraft or any new holder of a
                    Security Interest in the Aircraft or any holder of an
                    interest in the Aircraft or the Lease (by way of security or
                    otherwise), as the case may be, shall in the case of a
                    transferee that is the "Lessor" acknowledge Lessor's
                    obligation under Section 7.1 or, if not the Lessor, execute
                    and deliver to Lessee a letter of quiet enjoyment in respect
                    of Lessee's use and possession of the Aircraft in a form
                    substantially similar to Section 7.1 hereof;

          (b)       COSTS: Lessor shall reimburse to Lessee its reasonable
                    out-of-pocket expenses (including reasonable legal fees and
                    expenses) actually incurred in connection with co-operating
                    with Lessor in relation to any such transfer referred to in
                    this Section 14, provided that such expenses are
                    substantiated to Lessor's reasonable satisfaction;

          (c)       RIGHTS OF LESSEE: as a condition precedent to any transfer
                    becoming effective, such transfer shall not, at the time of
                    the transfer, materially expand Lessee's obligations under
                    the Lease or materially reduce Lessee's rights under the
                    Lease, in each case as compared to what such obligations and
                    rights would have been in the absence of such transfer;
                    provided, however, that no transfer to any Person that meets
                    the requirements of a "citizen of the United States" under
                    49 U.S.C. Section 40102(a)(15) shall be deemed to materially
                    expand Lessee's obligations or materially restrict Lessee's
                    rights under the Lease.


                                      -53-
<PAGE>

 15.      MISCELLANEOUS

 15.1     Survival

          Lessee's obligations under Section 3 of Schedule 4, under Sections
          5.6, 5.7, 5.10, 5.21, 9.5, 10, 12, and 13.2 and under any other
          provision of the Lease providing for an obligation on the part of the
          Lessee to indemnify Lessor or any other Indemnitee shall survive the
          expiration or any termination of the Lease and continue in full force
          and effect.

 15.2     Waivers, Remedies Cumulative

          The rights of Lessor under the Lease may be exercised as often as
          necessary, are cumulative and not exclusive of its rights under any
          Law; and may be waived only in writing and specifically. Delay by
          Lessor in exercising, or non-exercise of, any such right will not
          constitute a waiver of that right.

 15.3     Delegation

          Lessor may delegate to any Person all or any of the rights, powers or
          discretion vested in it by the Lease, and any such delegation may be
          made upon such terms and conditions and subject to such regulations
          (including power to sub-delegate) as Lessor in its absolute discretion
          thinks fit.

 15.4     Severability

          If a provision of the Lease is or becomes illegal, invalid or
          unenforceable in any jurisdiction, that will not affect:

          (a)       the legality, validity or enforceability in that
                    jurisdiction of any other provision of the Lease; or

          (b)      the legality, validity or enforceability in any other
                   jurisdiction of that or any other provision of the Lease.

 15.5     Remedy

          If Lessee fails to comply with any provision of the Lease, Lessor may,
          without being in any way obliged to do so or responsible for so doing
          and without prejudice to the ability of Lessor to treat such
          non-compliance as a Default, effect compliance on behalf of Lessee,
          whereupon Lessee shall become liable to pay immediately any sums
          expended by Lessor together with all costs and expenses (including
          legal fees and expenses) in connection with the non-compliance.


                                      -54-
<PAGE>

 15.6     Time of Essence

          The time stipulated in the Lease for all payments payable by Lessee
          and the prompt, punctual performance of Lessee's other obligations
          under the Lease are of the essence of the Lease.

 15.7     Notices

          All notices under, or in connection with, the Lease will, unless
          otherwise stated, be given in writing by means of a overnight courier
          service or facsimile. Any such notice is deemed effectively to be
          given when received by the recipient (or if receipt is refused by the
          intended recipient, when so refused).

          The addresses and facsimile and telephone numbers of Lessee and Lessor
          are as set forth in the Aircraft Lease Agreement.

 15.8     Governing Law; Jurisdiction; WAIVER OF JURY TRIAL

          (a)       PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW
                    YORK GENERAL OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT
                    THE LEASE IN ALL RESPECTS SHALL BE GOVERNED BY, AND
                    CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
                    YORK, UNITED STATES, AS APPLIED TO CONTRACTS TO BE PERFORMED
                    WHOLLY WITHIN THE STATE OF NEW YORK (EXCLUSIVE OF SECTION
                    7-101 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH IS
                    INAPPLICABLE TO THE LEASE). THE PARTIES AGREE THAT THE LEASE
                    WAS EXECUTED AND DELIVERED IN THE STATE OF NEW YORK.

          (b)       Pursuant to and in accordance with Section 5-1402 of the New
                    York General Obligations Law, Lessee and Lessor each agree
                    that the United States District Court for the Southern
                    District of New York and any New York state court sitting in
                    the County of New York, New York, and all related appellate
                    courts, are to have non-exclusive jurisdiction to settle any
                    disputes arising out of or relating to the Lease and submits
                    itself and its property to the non-exclusive jurisdiction of
                    the foregoing courts with respect to such disputes.

          (c)       Without prejudice to any other mode of service, Lessee:

                    (i)       appoints CT Corporation System, 1633 Broadway,
                              New York, New York 10019, as its agent for
                              service of process relating to any proceedings
                              before the New York courts in connection with the
                              Lease and agrees to maintain the process agent in
                              New York notified to Lessor;


                                      -55-
<PAGE>

                    (ii)      agrees that failure by a process agent to notify
                              Lessee of the process shall not invalidate the
                              proceedings concerned;

                    (iii)     consents to the service of process relating to any
                              such proceedings by prepaid mailing of a copy of
                              the process to Lessee's agent at the address
                              identified in paragraph (i) or by prepaid mailing
                              by air mail, certified or registered mail of a
                              copy of the process to Lessee at the address set
                              forth in Section 15.7.

           (d)      [NOT APPLICABLE.]

           (e)      Each of Lessor and Lessee:

                    (i)       waives to the fullest extent permitted by Law any
                              objection which it may now or hereafter have to
                              the courts referred to in Section 15.8(b) above on
                              grounds of inconvenient forum or otherwise as
                              regards proceedings in connection with the Lease;

                    (ii)      waives to the fullest extent permitted by Law any
                              objection which it may now or hereafter have to
                              the laying of venue of any suit, action or
                              proceeding arising out of or relating to the Lease
                              brought in the courts referred to in Section
                              15.8(b); and

                    (iii)     agrees that a judgement or order of any court
                              referred to in Section 15.8(b) in connection with
                              the Lease is conclusive and binding on it and may
                              be enforced against it in the courts of any other
                              jurisdiction.

          (f)       Nothing in this Section 15.8 limits the right of either
                    party to bring proceedings against the other in connection
                    with the Lease:

                    (i)     in any other court of competent jurisdiction; or

                    (ii)    concurrently in more than one jurisdiction.

          (g)       Each of Lessee and Lessor irrevocably and unconditionally:

                    (i)       agrees that if the other brings legal proceedings
                              against it or its assets in relation to the Lease
                              no sovereign or other immunity from such legal
                              proceedings (which will be deemed to include suit,
                              court jurisdiction, attachment prior to judgement,
                              attachment in aid of execution of a judgement,
                              other attachment, the obtaining of judgement,
                              execution of a judgement or other enforcement or
                              legal process or remedy) will be claimed by or on
                              behalf of itself or with respect to its assets;
                              and


                                      -56-
<PAGE>

                    (ii)      waives any such right of immunity which it or its
                              assets now has or may in the future acquire and
                              agrees that the foregoing waiver shall have the
                              fullest extent permitted under the Foreign
                              Sovereign Immunities Act of 1976 of the United
                              States and is intended to be irrevocable for the
                              purposes of such Act.

          (h)       EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND
                    UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL IN
                    RESPECT OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
                    ARISING OUT OF THE LEASE OR ANY DEALINGS BETWEEN THEM
                    RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS
                    CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP BEING
                    ESTABLISHED, including, without limitation, contract claims,
                    tort claims, breach of duty claims and other common law and
                    statutory claims. Each of Lessor and Lessee represents and
                    warrants that each has reviewed and voluntarily waives its
                    jury trial rights following consultation with its legal
                    counsel. THIS WAIVER IS IRREVOCABLE, AND THIS WAIVER SHALL
                    APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
                    MODIFICATIONS TO THE LEASE. In the event of litigation, this
                    Section may be filed as a written consent to a trial by the
                    court.

 15.9     Sole and Entire Agreement; True Lease; Section 1110

          (a)       ENTIRE AGREEMENT: The Lease is the sole and entire
                    agreement between Lessor and Lessee in relation to the
                    leasing of the Aircraft, and supersedes all previous
                    agreements in relation to that leasing. Any amendments to
                    the Lease must be made in writing and signed on behalf of
                    Lessor and Lessee.

          (b)       TRUE LEASE: The parties intend and agree that the Lease:

                    (i)       constitutes a "true lease", and not a "security
                              interest" as defined in Section 1-201(37) of the
                              UCC;

                    (ii)      constitutes a "true lease" for United States
                              Federal income tax purposes; and

                    (iii)     confers only a leasehold interest on Lessee in and
                              to the Aircraft on and subject to the terms of the
                              Lease, and no ownership or other interest with
                              respect to the Aircraft is provided to Lessee
                              under the Lease.

                    Lessee shall not file a tax return that is inconsistent with
                    the provisions of this Section 15.9(b).

          (c)       SECTION 1110: Lessee acknowledges that Lessor would not have
                    entered into the Lease unless it had available to it the
                    benefits of a lessor under Section 1110 of Title 11 of the


                                      -57-
<PAGE>

                    U.S.C. Lessee covenants and agrees with Lessor that to
                    better ensure the availability of such benefits, Lessee
                    shall not oppose any motion, petition or application filed
                    by Lessor with any bankruptcy court having jurisdiction over
                    Lessee whereby Lessor seeks recovery of possession of the
                    Aircraft under said Section 1110, except in a situation in
                    which Lessee shall have complied with the requirements of
                    said Section 1110 to be fulfilled in order to entitle Lessee
                    to continued use and possession of the Aircraft hereunder.
                    In the event said Section 1110 is amended, or if it is
                    repealed and another statute is enacted in lieu thereof,
                    Lessor and Lessee agree to amend the Lease and take such
                    other action not inconsistent with the Lease as Lessor
                    reasonably requests so as to afford to Lessor the rights and
                    benefits as such amended or substituted statute confers upon
                    owners and lessors of aircraft similarly situated to Lessor.

 15.10    Indemnitees

          All rights expressed to be granted to each Indemnitee (other than
          Lessor) under the Lease are given to Lessor on behalf of that
          Indemnitee, and each Indemnitee is an express third party beneficiary
          thereof.

 15.11    Counterparts

          The Lease (including the Aircraft Lease Agreement and this CTA) may be
          executed in two or more counterparts, each of which shall be deemed an
          original, but all of which together shall constitute one and the same
          instrument. To the extent, if any, that the Lease constitutes chattel
          paper (as such term is defined in the Uniform Commercial Code as in
          effect in any applicable jurisdiction), no security interest in the
          Lease may be created through the transfer or possession of any
          counterpart other than the original counterpart, which shall be
          identified as the counterpart designated as the "original" on the
          signature page of the Aircraft Lease Agreement by Financing Parties'
          Representative, Owner or Lessor, as the case may be.

 15.12    Language

          All notices to be given under the Lease will be in English. All
          documents delivered to Lessor pursuant to the Lease (including any
          documents to be delivered pursuant to the Conditions Precedent) will
          be in English.

 16.      DISCLAIMERS AND WAIVERS

          LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND
          CONFIRMATIONS SET FORTH IN CLAUSES 16.1 TO 16.4 BELOW SHALL APPLY AT
          ALL TIMES DURING THE TERM. LESSEE'S ACCEPTANCE OF THE AIRCRAFT IN
          ACCORDANCE WITH SECTION 4.3 SHALL BE CONCLUSIVE EVIDENCE THAT


                                      -58-
<PAGE>

         LESSEE HAS FULLY INSPECTED THE AIRCRAFT AND EVERY PART THEREOF AND THAT
         THE AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS AND
         RECORDS ARE TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY
         CONDITION REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR DELIVERY TO
         AND ACCEPTANCE BY LESSEE.

 16.1    Exclusion

         THE AIRCRAFT IS LEASED AND DELIVERED UNDER THE LEASE "AS IS, WHERE IS,"
         AND LESSEE AGREES AND ACKNOWLEDGES THAT:

          (a)       LESSOR WELL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS
                    NOT AND WILL NOT BE DEEMED TO HAVE ACCEPTED, MADE OR GIVEN
                    (WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT,
                    OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR
                    IN RELATION TO THE LEASE OR OTHERWISE), ANY GUARANTEES,
                    COVENANTS, WARRANTIES OR REPRESENTATIONS, EXPRESS OR
                    IMPLIED, WITH RESPECT TO, THE AIRCRAFT OR ANY ENGINE OR PART
                    OR ANY SERVICES PROVIDED BY LESSOR UNDER THE LEASE,
                    INCLUDING (BUT NOT LIMITED TO) THE TITLE (EXCEPT AS AND TO
                    THE EXTENT EXPRESSLY PROVIDED IN SECTION 7.1), DESCRIPTION,
                    AIRWORTHINESS, COMPLIANCE WITH SPECIFICATIONS, OPERATION,
                    MERCHANTABILITY, QUALITY, FREEDOM FROM INFRINGEMENT OF
                    PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY RIGHTS,
                    FITNESS FOR ANY PARTICULAR USE OR PURPOSE, VALUE,
                    DURABILITY, DATE PROCESSING, CONDITION, OR DESIGN, OR AS TO
                    THE QUALITY OF THE MATERIAL OR WORKMANSHIP, THE ABSENCE OF
                    LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS
                    TO ANY OTHER MATTER WHATSOEVER, EXPRESS OR IMPLIED
                    (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF
                    PERFORMANCE OR DEALING OR USAGE OF TRADE) WITH RESPECT TO
                    THE AIRCRAFT, ANY ENGINE OR ANY PART OR ANY SERVICES
                    PROVIDED BY LESSOR UNDER THE LEASE; AND

          (b)       LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER
                    TO LESSEE (WHETHER ARISING IN CONTRACT OR IN TORT, AND
                    WHETHER ARISING BY REFERENCE TO NEGLIGENCE,
                    MISREPRESENTATION OR STRICT LIABILITY OF LESSOR OR
                    OTHERWISE) FOR:

                    (i)       ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO
                              BE CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT
                              OR ANY ENGINE OR BY ANY INADEQUACY THEREOF OR
                              DEFICIENCY OR


                                      -59-
<PAGE>

                              DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN
                              CONNECTION THEREWITH (EXCEPT FOR DIRECT DAMAGES
                              DUE TO LESSOR'S BREACH AS AND TO THE EXTENT
                              EXPRESSLY PROVIDED IN SECTION 4.4 OR 7.1 HEREOF);

                    (ii)      THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT
                              OR ANY RISKS RELATING THERETO;

                    (iii)     ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR
                              ANTICIPATED PROFITS OR ANY OTHER DIRECT (EXCEPT
                              FOR DIRECT DAMAGES DUE TO LESSOR'S BREACH AS
                              PROVIDED IN SECTION 4.4 or 7.1), INDIRECT OR
                              CONSEQUENTIAL LOSS OR DAMAGE; OR

                    (iv)      THE DELIVERY, OPERATION, SERVICING, MAINTENANCE,
                              REPAIR, IMPROVEMENT OR REPLACEMENT OF THE
                              AIRCRAFT, ANY ENGINE OR ANY PART.

 16.2    Waiver

         LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS IN
         RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR
         IMPLIED, ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER
         AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF ANY OF THE
         MATTERS REFERRED TO IN SECTION 16.1.

 16.3    Disclaimer Of Consequential Damages

         LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY
         DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER,
         FOR INTERRUPTION OF SERVICE, LOSS OF BUSINESS, LOST PROFITS OR REVENUES
         OR CONSEQUENTIAL DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR
         OTHERWISE) AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY
         OF THE AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR CONTAINED IN
         THE LEASE (INCLUDING A BREACH BY LESSOR UNDER SECTION 4.4 OR 7.1).

 16.4    Confirmation

         LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS
         SECTION 16 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER
         THE LEASE HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.


                                      -60-
<PAGE>

 16.5     Limitation

          LESSOR HEREBY EXPRESSLY AGREES AND ACKNOWLEDGES THAT NOTHING IN THIS
          SECTION 16 SHALL DEROGATE FROM LESSOR'S OBLIGATIONS UNDER, OR
          OTHERWISE LIMIT LESSOR'S LIABILITY IN RESPECT OF, SECTIONS 2.2,
          4.4(c), 7.1, 7.2,14.2 or 14.3 HEREOF OR SECTION 2(c) OF SCHEDULE 4
          HERETO.

 17.      BROKERS AND OTHER THIRD PARTIES

 17.1     No Brokers

          Each of the parties hereby represents and warrants to the other that
          it has not paid, agreed to pay or caused to be paid directly or
          indirectly in any form, any commission, percentage, contingent fee,
          brokerage or other similar payments of any kind, in connection with
          the establishment or operation of the Lease, to any Person (other than
          fees payable to legal advisers or portfolio services).

 17.2     Indemnity

          Each party agrees to indemnify and hold the other harmless from and
          against any and all claims, suits, damages, costs and expenses
          (including, reasonable legal fees and expenses) asserted by any agent,
          broker or other third party for any commission or compensation of any
          nature whatsoever based upon the Lease or the Aircraft, if such claim,
          suit, damage, cost or expense arises out of any breach by the
          indemnifying party, its employees or agents of Section 17.1.





                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
                           THE SIGNATURE PAGE FOLLOWS.




                                      -61-




<PAGE>

IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.

 GENERAL ELECTRIC CAPITAL CORPORATION

 By:     /s/  [illegible]
       --------------------------------
 Name:        [illegible]
       --------------------------------
 Title:          Vice President
       --------------------------------


 ALOHA AIRLINES, INC

 By:
       --------------------------------
 Name:
       --------------------------------

 Title:
       --------------------------------


<PAGE>


 IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
 on the date shown at the beginning of the document.

 GENERAL ELECTRIC CAPITAL CORPORATION


 By:
       --------------------------------
 Name:
       --------------------------------

 Title:
       --------------------------------


 ALOHA AIRLINES, INC.


 By:   /s/    Brenda F. Cutwright
       --------------------------------
 Name:       Brenda F. Cutwright
       --------------------------------

 Title:   Exec. Vice President & CFO
       --------------------------------





 By:    /s/   James M. King
       --------------------------------
 Name:         James M. King
       --------------------------------

 Title:   VP Planning & Development
       --------------------------------


<PAGE>


                             SCHEDULE 1
                             DEFINITIONS

 The following words and expressions have the respective meanings set forth
 below:

 ACT means the Federal Aviation Act of 1958, as amended, and as recodified in
 Title 49 U.S.C. pursuant to Public Law 103-272, or any similar legislation of
 the United States enacted in substitution or replacement thereof.

 AFFILIATE means as to any Person, any other Person that, directly or
 indirectly, is in control of, is controlled by, or is under common control
 with, such Person. For purposes of this definition, "control" of a Person means
 the power, directly or indirectly, either to (a) vote 50% or more of the
 securities having ordinary voting power for the election of directors (or
 persons performing similar functions) of such Person or (b) direct or cause the
 direction of the management and policies of such Person, whether by contract or
 otherwise.

 AFTER-TAX BASIS means in the case of any amount payable on an "After-Tax Basis"
 to or for the benefit of any Person (including any amount payable pursuant to
 this definition) that the total amount paid shall be such that the Person
 actually realizes the amount payable, after deduction from the total amount
 paid of the net amount of all Taxes required to be paid by such Person with
 respect to the receipt or accrual by it of such amount.

 AGREED VALUE has the meaning given in the Aircraft Lease Agreement.

 AIR AUTHORITY means the FAA.

 AIRCRAFT has the meaning given in the Aircraft Lease Agreement.

 AIRCRAFT DOCUMENTS AND RECORDS means the documents, data and records identified
 in the list attached to the Certificate of Technical Acceptance, and any other
 documents and records Lessee is required to maintain under Section 8.8, and all
 additions, renewals, revisions and replacements from time to time made to any
 of the foregoing in accordance with the Lease.

 AIRCRAFT LEASE AGREEMENT means the specific aircraft lease agreement for the
 Aircraft entered or to be entered into between the parties hereto or Affiliates
 thereof.

 AIRFRAME means the Aircraft, excluding the Engines and Aircraft Documents and
 Records.

 AIRFRAME STRUCTURAL CHECK has the meaning given in the Aircraft Lease
 Agreement.

 AIRFRAME SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
 Agreement.


                                      1-1
<PAGE>

 AIRWORTHINESS DIRECTIVE means an airworthiness directive issued by the State of
 Design or the State of Registry.

 ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning given in the Aircraft Lease
 Agreement.

 APPRAISAL PROCEDURE means the following procedure for determining the "fair
 market rental value" of the Aircraft pursuant to Sections 13.2 and 13.4 of the
 CTA: (a) Lessor shall select an independent aircraft appraiser in its sole and
 absolute discretion who shall make a determination of "fair market rental
 value" of the Aircraft; and (b) the fees and expenses of the appraiser shall be
 paid by Lessee. "Fair market rental value" shall mean the value determined by
 an appraisal completed on an "as-is" and "where-is" basis.

 APU means the auxiliary power unit installed on the Aircraft on the Delivery
 Date and any replacement auxiliary power unit installed on the Aircraft and
 title to which is transferred to Owner in accordance with the Lease.

 APU SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.

 ASSUMED UTILIZATION has the meaning given in the Aircraft Lease Agreement.

 ASSUMED RATIO has the meaning given in the Aircraft Lease Agreement.

 BUSINESS DAY means any day other than a Saturday, Sunday or other day on which
 banking institutions in New York, New York or Honolulu, Hawaii are authorized
 or required by Law to be closed.

 "C" CHECK means a block "C" check in accordance with Lessee's Maintenance
 Program or, if the Lessee's Maintenance Program is not based on the
 Manufacturer's Maintenance Planning Document on a block basis, in accordance
 with the Manufacturer's Maintenance Planning Document.

 CERTIFICATE OF TECHNICAL ACCEPTANCE means a certificate of technical acceptance
 in the form of Part 1 or Part 2, as applicable, of Schedule 5.

 CERTIFICATED AIR CARRIER means any Person (except the United States Government)
 that is a "citizen of the United States of America" (as defined in Section
 40102 of Title 49 of the U.S.C.) and holding a Certificate of Public
 Convenience and Necessity issued under Section 41102 of Title 49 of U.S.C. by
 the Department of Transportation or any predecessor or successor agency
 thereto, and an air carrier operating certificate issued pursuant to Chapter
 447 of Title 49 of U.S.C. or, in the event such certificates shall no longer be
 applicable, any Person (except the United States Government) that is a citizen
 of the United States (as defined in Section 40102 of Title 49 of the U.S.C.)
 and legally engaged in the business of transporting for hire passengers or
 cargo by air predominantly to, from or between points within the United States
 of America, and, in either event, operating commercial jet aircraft capable of
 carrying ten or more individuals or 6,000 pounds or more of cargo, which also
 is certificated so as to entitle Lessor, as a lessor, to the benefits of
 Section 1110 of Title 11 of U.S.C. with respect to the Aircraft.


                                      1-2
<PAGE>

 CONDITIONS PRECEDENT means Lessee Conditions Precedent and Lessor's Conditions
 Precedent, collectively, or any of them, as the context may require.

 CYCLE means one take-off and landing of the Aircraft.

 DAMAGE NOTIFICATION THRESHOLD has the meaning given in the Aircraft Lease
 Agreement.

 DEDUCTIBLE AMOUNT has the meaning given in the Aircraft Lease Agreement.

 DEFAULT means any Event of Default or any event or circumstance which, with the
 giving of notice and/or lapse of time and/or determination of materiality
 and/or fulfillment of any other condition, would constitute an Event of
 Default.

 DEFECT means any defect or non-conformity with the Delivery Condition
 Requirements notified by Lessee to Lessor during the Pre-Delivery Procedure.

 DELIVERY means delivery of the Aircraft by Lessor to Lessee under the Lease.

 DELIVERY CONDITION REQUIREMENTS has the meaning given in the Aircraft Lease
 Agreement.

 DELIVERY DATE means the date on which Delivery occurs.

 DELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.

 DEPOSIT has the meaning given in the Aircraft Lease Agreement.

 DISCOUNT RATE has the meaning given in the Aircraft Lease Agreement.

 DOLLARS AND $ means the lawful currency of the United States.

 ENGINE means, whether or not installed on the Aircraft:

     (a)  each engine of the manufacture and model specified in the Aircraft
          Lease Agreement for the Aircraft which Lessor offers to Lessee for
          delivery with the Airframe on the Delivery Date, such engines being
          described as to serial numbers on the Certificate of Technical
          Acceptance; and

     (b)  any Replacement Engine, with effect from the time when title thereto
          has passed to Owner in accordance with the Lease;

 and in each case includes all modules and Parts from time to time belonging to
 or installed in that engine but excludes any properly replaced engine title to
 which has passed to Lessee pursuant to the Lease.

 ENGINE CYCLE means operation of an engine on an aircraft from and including a
 take-off to and including the landing of that aircraft.


                                      1-3
<PAGE>


 ENGINE EVENT OF LOSS means the occurrence, with respect to the Engine only,
 whether or not installed on the Airframe, of any of those events described in
 the definition of Event of Loss.

 ENGINE FLIGHT HOUR means each hour or part thereof an Engine is operated,
 elapsing from the moment the wheels of an aircraft on which such Engine is
 installed leave the ground until the wheels of such aircraft next touch the
 ground.

 ENGINE LLP REPLACEMENT has the meaning given in Section 7.2(ii);

 ENGINE LLP SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
 Agreement.

 ENGINE REFURBISHMENT means all scheduled and unscheduled off the wing Engine
 maintenance and repair accomplished for each module in accordance with the
 performance restoration or full overhaul sections of the Manufacturer's
 workscope planning guide.

 ENGINE SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.

 EQUIPMENT CHANGE has the meaning given in Section 8.12.

 ERISA means the Employee Retirement Income Security Act of 1974, as amended.

 EVENT OF DEFAULT means any event or condition specified in Schedule 9.

 EVENT OF LOSS means with respect to the Aircraft (including for the purposes of
 this definition the Airframe):

     (a)  the actual or constructive, compromised, arranged or agreed total loss
          of the Aircraft; or

     (b)  the Aircraft being destroyed, damaged beyond reasonable economic
          repair as determined by Lessor or permanently rendered unfit for
          normal use for any reason whatsoever; or

     (c)  the Aircraft being condemned, confiscated or requisitioned for title,
          or title to the Aircraft being otherwise compulsorily acquired by the
          government of the State of Registry or any other Government Entity; or

     (d)  the Aircraft being hijacked, stolen, confiscated, detained, seized,
          condemned or requisitioned for use or hire for the lesser of (i) a
          period of more than 30 days (or 60 days in the case of requisition for
          use or hire by the government of the State of Registry) or (ii) a
          period equal to or exceeding the remaining balance of the Term; or

     (e)  as a result of any rule, regulation, order or other action by the FAA
          the use of the Aircraft by Lessee or any Permitted Sub Lessee shall
          have been prohibited for a period of twelve (12) consecutive months.


                                      1-4
<PAGE>

 EXPIRY DATE means the Scheduled Expiry Date or, if earlier (i) the date when
 Lessor acting in accordance with the provisions of the Lease, terminates the
 leasing of the Aircraft to Lessee under the Lease, or (ii) subject to the
 provisions of Section 11.1 and 11.2, the date when Lessor receives the Agreed
 Value together with any other amounts then due and unpaid under the Lease and
 the Other Agreements following an Event of Loss; provided, that if the Term is
 extended pursuant to Section 12.2, the Expiry Date shall be extended to the
 date to which the Term is extended pursuant to Section 12.2.

 FAA means the Federal Aviation Administration of the United States and any
 successor thereof.

 FAR means the Federal Aviation Regulations set forth in Title 14 of the United
 States Code of Federal Regulations, as amended and modified from time to time.

 FINAL DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.

 FINAL INSPECTION has the meaning given in Section 1.1 of Part III of Schedule A
 to the Aircraft Lease Agreement.

 FINANCIAL INDEBTEDNESS means any indebtedness in respect of:

     (a)  moneys borrowed or raised;

     (b)  any liability under any debenture, bond, note, loan stock, acceptance,
          documentary credit or other security;

     (c)  the acquisition cost of any asset to the extent payable before or
          after the time of acquisition or possession (exclusive of trade
          payables); or

     (d)  any guarantee, indemnity or similar assurance against financial loss
          of any person in respect of the above.

 FINANCIAL INFORMATION means:

     (a)  as soon as available but not in any event later than 60 days after the
          last day of each fiscal quarter of Lessee, the consolidated financial
          statements of Aloha Airgroup, Inc. (consisting of a balance sheet and
          statements of operations and of retained earnings and cash flows)
          prepared for the most recent previous fiscal quarter certified by a
          qualified financial officer of Aloha Airgroup, Inc. as being true and
          correct and fairly presenting its financial condition and results of
          operation in accordance with GAAP (subject to year end adjustments);
          and

     (b)  as soon as available but not in any event later than 120 days after
          the last day of each fiscal year of Lessee, the audited combined
          financial statements of Aloha Airgroup, Inc. (consisting of a balance
          sheet and statements of operations and of retained earnings and cash
          flows), prepared for the fiscal year then most recently ended
          certified by the independent auditors of Aloha Airgroup, Inc. without
          qualification.


                                      1-5
<PAGE>

 FINANCING DOCUMENTS (if applicable) has the meaning given in the Aircraft Lease
 Agreement.

 FINANCING DOCUMENTS CONTEST RIGHTS (if applicable) has the meaning given in the
 Aircraft Lease Agreement.

 FINANCING DOCUMENTS INDEMNITY AMOUNTS (if applicable) has the meaning given in
 the Aircraft Lease Agreement.

 FINANCING DOCUMENTS TAX AMOUNTS (if applicable) has the meaning given in the
 Aircraft Lease Agreement.

 FINANCING PARTIES (if applicable) has the meaning given in the Aircraft Lease
 Agreement.

 FINANCING PARTIES' REPRESENTATIVE (if applicable) has the meaning given in the
 Aircraft Lease Agreement.

 FINANCING STATEMENTS means Uniform Commercial Code Financing Statements in
 respect of the Lease and the Aircraft and Engines leased thereunder prepared in
 a form acceptable for filing with the applicable Government Entities in the
 state in which Lessee's chief executive office is located (as the term "chief
 executive office" is defined in Article 9 of the Uniform Commercial Code as in
 effect in such state) and such other jurisdictions as Lessor shall reasonably
 require.

 FLIGHT HOUR means each hour or part thereof elapsing from the moment the wheels
 of the Aircraft leave the ground on take off until the wheels of the Aircraft
 next touch the ground.

 GAAP means generally accepted accounting principles in the United States.

 GE CAPITAL means General Electric Capital Corporation.

 GECAS means either or both of GE Capital Aviation Services, Limited and GE
 Capital Aviation Services, Inc.

 GOVERNMENT ENTITY means:

     (a)  national government, political subdivision thereof, or local
          jurisdiction therein;

     (b)  any instrumentality, board, commission, court, or agency of any of the
          above, however constituted; and

     (c)  any association, organization, or institution of which any of the
          above is a member or to whose jurisdiction any thereof is subject or
          in whose activities any of the above is a participant.


                                      1-6
<PAGE>

 GUARANTEE means, if applicable, a guarantee by the Guarantor in form and
 substance reasonably acceptable to Lessor and references to the Guarantee
 include reference to any replacement or re-issued guarantee.

 GUARANTOR (if applicable) has the meaning given in the Aircraft Lease
 Agreement.

 HABITUAL BASE means the jurisdiction in which the Aircraft's primary aircraft
 operations center is located.

 INDEMNITEE has the meaning given in the Aircraft Lease Agreement.

 INTEREST RATE has the meaning given in the Aircraft Lease Agreement.

 INSURANCE means the insurance in respect of the Aircraft in form and substance
 satisfactory to Lessor, and includes any insurance and reinsurance required by
 Section 9 and Schedule 7.

 LANDING GEAR means the landing gear assembly of the Aircraft excluding any
 rotable components.

 LANDING GEAR SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
 Agreement.

 LAW means and includes (a) any statute, decree, constitution, regulation,
 order, judgement or other directive of any Government Entity; (b) any treaty,
 pact, compact or other agreement to which any Government Entity is a signatory
 or party; (c) any judicial or administrative interpretation or application of
 any Law described in (a) or (b) above; and (d) any amendment or revision of any
 Law described in (a), (b) or (c) above.

 LC AMOUNT has the meaning given in the Aircraft Lease Agreement.

 LEASE means the Aircraft Lease Agreement for the Aircraft (of which this CTA
 forms a part), any schedules or documents executed pursuant to the Schedules
 hereto or pursuant to the Aircraft Lease Agreement, any Lease Supplement to the
 Lease (including Lease Supplement No. 1), and any side letters related to the
 Lease.

 LEASE SUPPLEMENT means any Lease Supplement executed and delivered with respect
 to, the Lease.

 LEASE SUPPLEMENT NO. 1 means a Lease Supplement No. 1 substantially in the form
 of Schedule 12.

 LEASE TERMINATION CERTIFICATE means a Lease Termination Certificate
 substantially in the form of Schedule 11 in respect of the Lease.

 LESSEE means the Person named as Lessee in the Aircraft Lease Agreement.

 LESSEE AFFILIATE means any Subsidiary or other Affiliate for the time being of
 Lessee.

 LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of
 Schedule 3.


                                      1-7
<PAGE>

 LESSEE'S MAINTENANCE PROGRAM means the Maintenance Program specifically
 approved by the Air Authority for maintenance of the Aircraft by Lessee, or at
 any time that a Permitted Sub-Lease approved by Lessor and meeting the
 requirements of Section 8.4(b) is in effect, by the Permitted Sub-Lessee under
 such Permitted Sub-Lease.

 LESSOR means the Person named as Lessor in the Aircraft Lease Agreement.

 LESSOR CONDITIONS PRECEDENT means the conditions specified in Part A of
 Schedule 3.

 LESSOR LIEN means (i) any Security Interest whatsoever from time to time
 created by Lessor or Owner in connection with the financing of the Aircraft,
 including the Financing Documents, and (ii) any other Security Interest in the
 Aircraft which (a) results from acts of or claims against Lessor or Owner or
 any affiliate of Lessor or Owner that do not relate to the transactions
 contemplated by the Lease or by any other contract or agreement between Lessee
 or any affiliate of Lessee and Lessor or Owner or any affiliate of Lessor or
 Owner and (b) is not attributable to Lessee or Lessee's use or possession of
 the Aircraft.

 LESSOR/OWNER TAX JURISDICTION has the meaning given in the Aircraft Lease
 Agreement.

 LESSOR TAXES means Taxes for which Lessee is not obligated to indemnify Lessor
 and/or Owner and/or a Financing Party as provided in Section 5.7(c).

 LETTER OF CREDIT means any letter of credit issued in relation to the Lease
 pursuant to Section 5.14 and any replacement or renewal of that letter of
 credit.

 LOSSES means any and all cost, expense (including any and all reasonable legal
 fees and expenses and the fees and expenses of other professional advisers),
 claims, proceedings, losses, liabilities, obligations, damages (whether direct,
 indirect, special, incidental or consequential), suits, judgements, fees,
 penalties or fines (whether criminal or civil) of any kind or nature
 whatsoever, including any of the foregoing arising or imposed with or without
 any Indemnitee's fault or negligence, whether passive or active or under the
 doctrine of strict liability.

 MAINTENANCE CONTRIBUTIONS means, as and if applicable, all amounts payable by
 Lessor pursuant to Section 7.2.

 MAINTENANCE PERFORMER means (i) any of the Persons identified on Schedule 14
 hereto (until such time as Lessor delivers written notice to Lessee of the
 removal of any such Person from the list of Maintenance Performers), or (ii)
 such other mutually acceptable Persons as may be added to Schedule 14 hereto
 from time to time (Lessee shall advise Lessor in writing of any request to add
 a Person to Schedule 14 and Lessor shall respond in writing).

 MAINTENANCE PROGRAM means an Air Authority approved maintenance program for the
 Aircraft and encompassing scheduled maintenance, condition-monitored
 maintenance, and/or on-condition



                                      1-8
<PAGE>

 maintenance of Airframe, Engines and Parts, including servicing, testing,
 preventive maintenance, repairs, structural inspections, system checks,
 overhauls, approved modifications, engineering orders, airworthiness
 directives, corrosion control, inspections and treatments.

 MAJOR CHECKS means any C-check, multiple C-check or heavier check (including
 structural inspections and CPCP) suggested for commercial aircraft of the same
 model as the Aircraft by its manufacturer (however denominated) as set out in
 the Lessee's Maintenance Program.

 MANUFACTURER has the meaning given in the Aircraft Lease Agreement.

 MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the recommended maintenance
 program for the Aircraft issued by the Manufacturer as in effect at the time of
 any applicable determination.

 MINIMUM AIRFRAME LIFE LIMITED COMPONENT CYCLES has the meaning given in the
 Aircraft Lease Agreement.

 MINIMUM AIRFRAME LIFE LIMITED COMPONENT FLIGHT HOURS has the meaning given in
 the Aircraft Lease Agreement.

 MINIMUM APU LIMIT has the meaning given in the Aircraft Lease Agreement.

 MINIMUM APU LLP LIMIT has the meaning given in the Aircraft Lease Agreement.

 MINIMUM COMPONENT CALENDAR LIFE has the meaning given in the Aircraft Lease
 Agreement.

 MINIMUM COMPONENT CYCLES has the meaning given in the Aircraft Lease Agreement.

 MINIMUM COMPONENT FLIGHT HOURS has the meaning given in the Aircraft Lease
 Agreement.

 MINIMUM ENGINE CYCLES has the meaning given in the Aircraft Lease Agreement.

 MINIMUM ENGINE FLIGHT HOURS has the meaning given in the Aircraft Lease
 Agreement.

 MINIMUM LANDING GEAR CALENDAR TIME has the meaning given in the Aircraft Lease
 Agreement.

 MINIMUM LANDING GEAR CYCLES has the meaning given in the Aircraft Lease
 Agreement.

 MINIMUM LANDING GEAR FLIGHT HOURS has the meaning given in the Aircraft Lease
 Agreement.

 MINIMUM LIABILITY COVERAGE has the meaning given in the Aircraft Lease
 Agreement.

 MINIMUM MEASURABLE FUEL REQUIREMENT has the meaning given in the Aircraft Lease
 Agreement.

 NAMEPLATE INSCRIPTION means the inscription to be included on the Nameplates as
 reasonably requested by Lessor from time to time.



                                      1-9
<PAGE>

 NAMEPLATES means the fireproof plates to be installed on the Aircraft in
 accordance with Section 8.6(a).

 OTHER AGREEMENTS means any aircraft, engine or spare parts related lease or
 financing agreement (including an aircraft, engine or spare parts related loan,
 hire purchase, conditional sale, credit sale or security agreement) from time
 to time entered into between Lessor (or any Subsidiary or Affiliate of Lessor),
 on the one hand, and Lessee (or any Subsidiary or Affiliate of Lessee), on the
 other hand.

 OWNER has the meaning given in the Aircraft Lease Agreement.

 PART means, whether or not installed on the Aircraft:

     (a)  any component, furnishing or equipment (other than a complete Engine
          or engine) incorporated or installed in or attached to or furnished
          with the Aircraft on the Delivery Date or thereafter if paid for or
          otherwise provided by or on behalf of Lessor; and

     (b)  any other component, furnishing or equipment (other than a complete
          Engine or engine), with effect from the time when title thereto has
          passed to Owner pursuant to the Lease;

     (c)  but excludes any such items title to which has passed to Lessee
          pursuant to the Lease.

 PART 36 OR FAR PART 36 means Part 36 of the FAR, as amended or modified from
 time to time.

 PART 121 OR FAR PART 121 means Part 121 of the FAR, as amended or modified from
 time to time.

 PERMITTED LIEN means:

     (a)  any lien for Taxes not assessed or, if assessed, not yet due and
          payable, or being diligently contested in good faith by appropriate
          proceedings;

     (b)  any lien of a repairer, mechanic, hangar-keeper or other similar lien
          arising in the ordinary course of business by operation of Law in
          respect of obligations which are not overdue or are being diligently
          contested in good faith by appropriate proceedings;

     (c)  any Lessor Lien; and

     (d)  rights of others under any sub-lease or other arrangements to the
          extent expressly permitted under Section 8.4;

 but only if (in the case of both (a) and (b)) (i) adequate reserves have been
 provided by Lessee for the payment of such Taxes or obligations; and (ii) such
 proceedings, or the continued existence of the lien, do not give rise to any
 risk of the sale, forfeiture or other loss of the Aircraft or any interest
 therein or of criminal liability on the part of Lessor or Owner.


                                      1-10
<PAGE>

 PERMITTED SUB-LEASE means any sub-lease of the Aircraft to a Permitted
 Sub-Lessee to which Lessor has consented as provided for in Section 8.4(a).

 PERMITTED SUB-LESSEE means any sub-lessee of the Aircraft to which Lessor has
 consented as provided in Section 8.4(a).

 PERSON means any individual person, any form of corporate or business
 association, trust, Government Entity, or organization or association of which
 any of the above is a member or a participant.

 PRE-APPROVED BANK has the meaning given in the Aircraft Lease Agreement.

 PRE-DELIVERY PROCEDURE means the procedure leading to Delivery as specified in
 Schedule 4.

 REDELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.

 REGULATIONS means any Law or regulation, official directive or recommendation,
 mandatory requirement, or contractual undertaking, or airworthiness
 requirements or limitations, which applies to Lessee or the Aircraft and any
 Law or regulation, official directive or recommendation or mandatory
 requirement which applies to Lessor, Owner, Financing Parties' Representative
 or GECAS.

 RENT means the basic monthly "Rent", as defined in Schedule B of the Aircraft
 Lease Agreement, and payable pursuant to Section 5.3.

 RENT COMMENCEMENT DATE has the meaning given, in the Aircraft Lease Agreement.

 RENTAL PERIOD means each period ascertained in accordance with Section 5.2.

 RENT DATE means the first day of each Rental Period.

 REPLACEMENT APU means an "APU" that has duly replaced the APU in accordance
 with the requirements of Section 8.1 1(b).

 REPLACEMENT ENGINE means an "Engine" that has duly replaced an "Engine" in
 accordance with the requirements of Section 8.1 1(b).

 REQUIRED LC EXPIRY DATE means the date being 91 days after the Expiry Date.

 RETURN OCCASION means the date on which the Aircraft is redelivered to Lessor
 in accordance with Section 12.

 SCHEDULED DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.

 SCHEDULED DELIVERY MONTH has the meaning given in the Aircraft Lease Agreement.

 SCHEDULED DELIVERY WEEK has the meaning given in the Aircraft Lease Agreement.


                                      1-11
<PAGE>

 SCHEDULED EXPIRY DATE has the meaning given in the Aircraft Lease Agreement.

 SECURITY INTEREST means any mortgage, chattel mortgage, security interest,
 charge, pledge, lien, conditional sale agreement, title retention agreement,
 equipment trust agreement, encumbrance, assignment, hypothecation, right of
 detention, right of set-off or any other agreement or arrangement having the
 effect of conferring security.

 STATE OF DESIGN has the meaning specified in the Aircraft Lease Agreement.

 STATE OF INCORPORATION means the United States and the state of organization of
 the applicable Person as identified in the heading of the Aircraft Lease
 Agreement.

 STATE OF REGISTRY means the United States.

 SUBSIDIARY means:

     (a)  in relation to any reference to financial statements, any Person whose
          financial statements are consolidated with the accounts of Lessee in
          accordance with GAAP; and

     (b)  for any other purpose, an entity from time to time of which another
          has direct or indirect control or owns directly or indirectly more
          than 50 percent of the voting share capital or similar equity
          interests.

 SUPPLEMENTAL RENT means, as and if applicable, all amounts payable under the
 Lease in respect of each of Airframe Supplemental Rent, Engine Supplemental
 Rent, Engine LLP Supplemental Rent, APU Supplemental Rent and Landing Gear
 Supplemental Rent.

 TAXES means any and all present and future taxes, duties, withholdings, levies,
 assessments, imposts, fees and other governmental charges of all kinds
 (including any value added or similar tax and any stamp, documentary, license,
 registration or similar fees or tax) imposed by a Government Entity, together
 with any penalties, fines, surcharges and interest thereon and any additions
 thereto.

 TAX INDEMNITEE has the meaning given in the Aircraft Lease Agreement.

 TECHNICAL REPORT means a monthly report of the Flight Hours, Cycles, Engine
 Flight Hours and Engine Cycles operated by the Airframe and Engines in respect
 of each calendar month substantially in the form attached as Schedule 15.

 TERM means the period commencing on the Delivery Date and ending on the Expiry
 Date.

 UCC means the Uniform Commercial Code as in effect in the State of New York.

 UNFORESEEN EVENT means:


                                      1-12
<PAGE>


     (a)  civil disturbance or act of any Government Entity;

     (b)  natural disaster or any other act of God;

     (c)  Law of, or any allocation or other action by, a Government Entity or
          any unexpected shortage of labor, materials or facilities affecting
          the Aircraft;

     (d)  any damage or Defect;

     (e)  labor disputes;

     (f)  breach of contract by any Person (other than Lessor), or other failure
          to deliver or redeliver the Aircraft by any Person (whether or not a
          breach) with possession or control of the Aircraft (other than by
          Lessor, if it has possession and control of the Aircraft), including
          any failure to deliver or delay in delivery by any prior lessee, any
          seller of the Aircraft or any Person performing modifications or
          maintenance to the Aircraft and any breach by any prior lessee, seller
          or modification or maintenance performer or failure to cooperate by
          any prior lessee, seller or modification or maintenance performer, or
          any "excusable" or "inexcusable" delay under any previous lease,
          purchase or modification or maintenance agreement for the Aircraft, or
          any purchase or modification or maintenance agreement for the Aircraft
          terminating prior to Delivery (including due to Lessor or an Affiliate
          of Lessor voluntarily terminating such agreement);

     (g)  delays in obtaining the Aircraft or any equipment or services for the
          Aircraft;

     (h)  any delay due to Air Authority certifications; or

     (i)  any other cause beyond the control of Lessor or not occasioned by
          Lessor's gross negligence or willful misconduct.

 UNITED STATES means the United States of America.

 U.S.C. means the United States Code.


                                      1-13



<PAGE>

                                   SCHEDULE 2
                         REPRESENTATIONS AND WARRANTIES

 1.1      LESSEE'S REPRESENTATIONS AND WARRANTIES

 Lessee's representations and warranties to Lessor as of the date of execution
 of the Lease and the Delivery Date are as follows:

     (a)  STATUS: It is duly organized, validly existing and in good standing in
          its State of Incorporation.

     (b)  NON-CONFLICT: Execution, delivery and performance of the Lease do not
          contravene or breach any Regulation applicable to Lessee.

     (c)  POWER AND AUTHORITY: It has all corporate and other power and
          authority to execute, deliver and perform the Lease, and the Lease has
          been duly authorized, executed and delivered by Lessee.

     (d)  LEGAL VALIDITY: The Lease is its legal, valid and binding obligation,
          enforceable against Lessee in accordance with its terms.

     (e)  NO EVENT OF DEFAULT: No Event of Default has occurred and is
          continuing or would occur because of Delivery.

     (f)  LITIGATION: It is not involved in any litigation or other dispute
          which could materially and adversely affect its financial condition or
          its ability to perform its obligations under the Lease.

     (g)  FINANCIAL INFORMATION: Its audited financial statements most recently
          delivered to Lessor:

          (i)  have been prepared in accordance with GAAP; and

          (ii) are true and correct and present fairly the financial condition
               and results of operations of Lessee as at the date thereof and
               for the period then ending.

     (h)  FULL DISCLOSURE: Neither the audited financial statements referred to
          in paragraph (g) nor any other financial, operational or credit
          related information provided to Lessor by Lessee for the purposes of
          the Lease contains as of the date thereof any untrue statement of a
          material fact or omits to state any material fact necessary in order
          to make the statements therein not misleading in the light of the
          circumstances under which they were made.


                                       2-1

<PAGE>


     (i)  LOCATION: Lessee's chief executive office (as that term is defined in
          Article 9 of the UCC) is located at the address set forth in the
          heading of the Aircraft Lease Agreement; and the records of the Lessee
          concerning the Aircraft are maintained at such chief executive office
          or at the Habitual Base of the Aircraft.

     (j)  CERTIFICATED AIR CARRIER: Lessee is a Certificated Air Carrier and
          Lessor, as lessor of the Aircraft to Lessee, is entitled to the
          benefits of Section 1110 of Title 11 of the U.S.C. with respect to the
          Aircraft.

     (k)  CITIZEN OF THE UNITED STATES: Lessee is a "citizen of the United
          States" as defined in Section 40102 of Title 49 of the U.S.C.

     (l)  ERISA: Lessee is not engaged in any transaction in connection with
          which it could be subjected to either a civil penalty assessed
          pursuant to Section 502 of ERISA or any tax imposed by Section 4975 of
          the Internal Revenue Code; no material liability to the Pension
          Benefit Guaranty Corporation has been or is expected by Lessee to be
          incurred with respect to any employee pension benefit plan (as defined
          in Section 3 of ERISA) maintained by Lessee or by any trade or
          business (whether or not incorporated) which together with Lessee
          would be treated as a single employer under Section 4001 of ERISA and
          Section 414 of the Internal Revenue Code; there has been no reportable
          event (as defined in Section 4043(b) of ERISA) with respect to any
          such employee pension benefit plan; no notice of intent to terminate
          any such employee pension benefit plan has been filed or is expected
          to be filed, nor has any such employee pension benefit been
          terminated; no circumstance exists or is anticipated that constitutes
          or would constitute grounds under Section 4042 of ERISA for the
          Pension Benefit Guaranty Corporation to institute proceedings to
          terminate, or to appoint a trustee to manage the administration of,
          such an employee pension benefit plan; and no accumulated funding
          deficiency (as defined in Section 302 of ERISA or Section 412 of the
          Internal Revenue Code), whether or not waived, exists with respect to
          any such employee pension benefit plan.

     (m)  MATERIAL ADVERSE CHANGE: there has been no material adverse change in
          the financial condition or operations of Lessee and Lessee Affiliates
          or in the ability of Lessee to comply with its obligations under the
          Lease since the date of the financial statements most recently
          provided to Lessor on or prior to the date of the Aircraft Lease
          Agreement.

 1.2     LESSOR'S REPRESENTATIONS AND WARRANTIES

 Lessor's representations and warranties to Lessee as of the date of execution
 of the Lease and the Delivery Date are as follows:

     (a)  STATUS: It is duly organized, validly existing and in good standing in
          its State of Incorporation.


                                       2-2

<PAGE>


     (b)  NON-CONFLICT: Execution, delivery and performance of the Lease do not
          contravene or breach any Regulation applicable to Lessor.

     (c)  POWER AND AUTHORITY: It has all corporate and other power and
          authority to execute, deliver and perform the Lease, and the Lease has
          been duly authorized, executed and delivered by Lessor.

     (d)  LEGAL VALIDITY: The Lease is its legal, valid and binding obligation,
          enforceable against Lessor in accordance with its terms.

     (e)  CITIZEN OF THE UNITED STATES: Lessor is a "citizen of the United
          States" as defined in Section 40102 of Title 49 of the U.S.C. and the
          FAR.


                                      2-3

<PAGE>

                                   SCHEDULE 3
                              CONDITIONS PRECEDENT

 PART A - LESSOR CONDITIONS PRECEDENT

 The conditions precedent to Lessor's obligation to deliver and to commence the
 leasing of the Aircraft are as follows. All documents delivered to Lessor
 pursuant to this Schedule 3 will be in English:

 1.1      PRELIMINARY CONDITIONS

 Lessor will receive from Lessee, not later than two Business Days prior to the
 Scheduled Delivery Date, each of the following, satisfactory in form and
 substance to Lessor:

          (a)       OPINION(S): forms of the opinion(s) substantially in the
                    form of Schedule 8 that will be issued on the Delivery Date
                    by legal counsel(s) reasonably acceptable to Lessor with
                    respect to the laws of the State of New York, the state of
                    the location of Lessee's chief executive offices and the
                    general corporate laws of the State of Incorporation;

          (b)       APPROVALS: evidence of the issue of each approval, license
                    and consent, if any, which is required in relation to, or in
                    connection with the performance by Lessee of any of its
                    obligations under the Lease;

          (c)       IMPORT: evidence that any required license, and all customs
                    formalities, relating to the import of the Aircraft into the
                    Habitual Base have been obtained or complied with, and that
                    the import of the Aircraft into the Habitual Base is exempt
                    from Taxes;

          (d)       PROCESS AGENT: a letter from the process agent appointed by
                    Lessee in the Lease accepting that appointment;

          (e)       LICENSES: copies of Lessee's air transport license, air
                    carrier operating certificate, air operator's certificates,
                    including authority to operate the Aircraft under FAR Part
                    121, and a Certificate of Public Convenience and Necessity
                    issued under Section 40102 of Title 49 of U.S.C.;

          (f)       UCC: Financing Statements with respect to the Lease and the
                    Aircraft in a form reasonably acceptable to Lessor shall
                    have been executed and delivered by Lessee to Lessor and
                    duly filed in each jurisdiction reasonably requested by
                    Lessor;

          (g)       LETTER OF CREDIT (if applicable): the form of the Letter of
                    Credit;

          (h)       GENERAL: such other documents as Lessor may reasonably
                    request.


                                       3-1


<PAGE>


 1.2      FINAL CONDITIONS

          (a)       Final Documents: Lessor shall receive on or before the
                    Delivery Date each of the following:

                    (i)       CERTIFICATE OF TECHNICAL ACCEPTANCE AND LEASE
                              SUPPLEMENT NO. 1: each of the Certificate of
                              Technical Acceptance and Lease Supplement No. 1,
                              dated and fully completed, and executed by Lessee,
                              and, in the case of Lease Supplement No. 1, filed
                              for recording at the FAA (together with the CTA);

                    (ii)      OPINIONS: a signed original (or facsimile
                              transmission thereof) of each of the opinions
                              referred to in Section 1.1(a) of this Schedule,
                              dated the Delivery Date;

                    (iii)     PAYMENTS: all sums due to Lessor under the Lease
                              on or before the Delivery Date, including the
                              first payment of Rent and, if applicable, the
                              balance of the Deposit;

                    (iv)      INSURANCE: certificates of insurance, an opinion
                              and undertaking from Lessee's insurance broker and
                              other evidence reasonably satisfactory to Lessor
                              that Lessee is taking the required steps to ensure
                              due compliance with the provisions of the
                              Agreement as to Insurance with effect on and after
                              the Delivery Date;

                    (v)       FINANCIAL INFORMATION: the latest Financial
                              Information of Lessee requested by Lessor;


                    (vi)      LETTER OF CREDIT (if applicable): the Letter of
                              Credit;

                    (vii)     GUARANTEE (if applicable): the Guarantee, duly
                              executed and delivered by the Guarantor, and an
                              opinion of legal counsel acceptable to Lessor in
                              respect of the Guarantee in form and substance
                              acceptable to Lessor and its legal counsel;

                    (viii)    LESSEE'S MAINTENANCE PROGRAM: such information and
                              documents relating to the Lessee's Maintenance
                              Program as Lessor may reasonably require;

                    (ix)      FILINGS: evidence that on the Delivery Date all
                              filings, registrations, recordings and other
                              actions have been or will be taken which are
                              necessary or advisable to ensure the validity,
                              effectiveness and enforceability of the Lease and
                              to protect the interests of Owner and, if
                              applicable, the Financing Parties in the Aircraft,
                              any Engine or any Part and in the Lease;

                    (x)       FAA OPINION: evidence that there will be issued an
                              opinion of ___________________ or other counsel
                              reasonably acceptable to Lessor who are recognized
                              specialists with regard to FAA registration
                              matters in a form reasonably acceptable to Lessor
                              as


                                       3-2


<PAGE>


                              to the due filing for recordation of the Lease
                              and, if applicable, the Financing Documents, (the
                              costs for which shall be paid by Lessee);

                    (xi)      CERTIFICATE OF LEASE TERMINATION: a certificate of
                              lease termination executed by a duly authorized
                              officer of Lessee substantially in the form of
                              Schedule 11 acknowledging that the Lease is no
                              longer in effect with respect to the Aircraft and
                              Engines, which certificate Lessor will hold in
                              escrow to be filed at the FAA upon the expiration
                              or other termination of the Lease;

                    (xii)     ACKNOWLEDGEMENT AND AGREEMENT RE ASSIGNMENT (if
                              applicable): an acknowledgement of and certain
                              agreements with respect to the assignment by
                              Lessor of this Lease to Owner and Financing
                              Parties' Representative in the form previously
                              provided to Lessee or as Owner or Financing
                              Parties' Representative may otherwise reasonably
                              request; and

                    (xiii)    GENERAL: such other documents as Lessor may
                              reasonably request;

          (c)       REPRESENTATIONS/WARRANTIES: the representations and
                    warranties of Lessee in Schedule 2 shall be true and correct
                    in all material respects, and would be true and correct in
                    all material respects if repeated on Delivery; and

          (d)       NO DEFAULT: no Default shall have occurred and be continuing
                    on Delivery or could reasonably be expected to result from
                    the leasing of the Aircraft to Lessee under the Lease.

 PART B - LESSEE CONDITIONS PRECEDENT

 The conditions precedent to Lessee's obligation to accept and to commence the
 leasing of the Aircraft are as follows. All documents delivered to Lessee
 pursuant to this Schedule 3 will be in English.

          (a)       FINAL DOCUMENTS: Lessee shall receive on or before the
                    Delivery Date for the Aircraft each of the following:

                    (i)       LEASE SUPPLEMENT NO. 1: Lease Supplement No. 1,
                              dated and executed by Lessor and filed for
                              recording at the FAA (together with the CTA); and

                    (ii)      ACKNOWLEDGEMENT RE QUIET ENJOYMENT: if Lessee is
                              required to deliver an acknowledgement of or
                              agreement with respect to the assignment by Lessor
                              of the Lease to Owner or Financing Parties'
                              Representative, an agreement by each such Person
                              (Owner, Financing Parties' Representative or both,
                              as the case may be) as to itself to the effect set
                              forth in Section 7.1;


                                       3-3


<PAGE>

                    (iii)     REPRESENTATIONS/WARRANTIES: the representations
                              and warranties of Lessor in Schedule 2 shall be
                              true and correct in all material respects, and
                              would be true and correct in all material respects
                              if repeated on Delivery; and

                    (iv)      DELIVERY CONDITION REQUIREMENTS: tender by Lessor
                              of delivery of the Aircraft in compliance with the
                              Delivery Condition Requirements.


                                       3-4


<PAGE>


                                   SCHEDULE 4
                 PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION

                      REQUIREMENTS - PART 1 (NEW AIRCRAFT)

 1.      Licenses

         (a)      It is the responsibility of Lessee to obtain all licenses,
                  permits or approvals necessary to export or transport the
                  Aircraft from the Delivery Location.

         (b)      Lessor will provide Lessee with any required data and
                  information for the purposes of obtaining any such licenses,
                  permits or approvals.

 2.      INSPECTION

         Except as otherwise provided in the Aircraft Lease Agreement:

         (a)      Subject to any applicable purchase agreement, Lessee may
                  inspect the Aircraft (including such rights as Lessor has to
                  be present and inspect, on an ongoing basis, the manufacture
                  of the Aircraft and including a demonstration flight at no
                  expense to Lessee with up to two (2) representatives of Lessee
                  on the Aircraft as observers) to ensure that the Aircraft
                  fulfils the Delivery Condition Requirements.

         (b)      If Lessee's inspection of the Aircraft shows that the Aircraft
                  does not fulfil the Delivery Condition Requirements, Lessor
                  will correct any defects and make the Aircraft available for
                  re-inspection by Lessee provided that, in Lessor's reasonable
                  opinion, it is not impracticable or prohibitively expensive to
                  correct the defect.

         (c)      If Lessor notifies Lessee that it does not intend to correct
                  the defect, either party may terminate the Lease, and upon
                  such termination neither party shall have any further
                  liability to any party under this Lease, except that Lessor
                  shall promptly return to Lessee the Deposit and/or the Letter
                  of Credit, if any, to Lessor.

 3.      INDEMNITY

         Lessee is responsible for and will indemnify each Indemnitee against
         all Losses arising from death or injury to any observer or any employee
         of Lessee in connection with the inspection of the Aircraft.


                                       4-1


<PAGE>

                                   SCHEDULE 4
                 PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION

                      REQUIREMENTS - PART 2 (USED AIRCRAFT)

 1.       LICENSES

          (a)     It is the responsibility of Lessee to obtain all licenses,
                  permits or approvals necessary to export or transport the
                  Aircraft from the Delivery Location.

          (b)     Lessor will provide Lessee with any required data and
                  information for the purposes of obtaining any such licenses,
                  permits or approvals.

 2.       INSPECTION

          Except as otherwise provided in the Aircraft Lease Agreement:

          (a)     Subject to any applicable purchase agreement or prior lease,
                  Lessee may inspect the Aircraft (including a demonstration
                  flight at no expense to Lessee with up to two (2)
                  representatives of Lessee on the Aircraft as observers) to
                  ensure that the Aircraft fulfils the Delivery Condition
                  Requirements.

         (b)      If Lessee's inspection of the Aircraft shows that the Aircraft
                  does not fulfil the Delivery Condition Requirements, Lessor
                  will correct any defects and make the Aircraft available for
                  re-inspection by Lessee provided that, in Lessor's reasonable
                  opinion, it is not impracticable or prohibitively expensive to
                  correct the defect.

          (c)     If Lessor notifies Lessee that it does not intend to correct
                  the defect, either party may terminate the Lease, and upon
                  such termination neither party shall have any further
                  liability to any party under this Lease, except that Lessor
                  shall promptly return to Lessee the Deposit and/or the Letter
                  of Credit, if any, to Lessor.

 3.      INDEMNITY

         Lessee is responsible for and will indemnify each Indemnitee against
         all Losses arising from death or injury to any observer or any employee
         of Lessee in connection with the inspection of the Aircraft.


                                       4-2


<PAGE>


                                   SCHEDULE 5

           CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 1 (NEW AIRCRAFT)

 This Certificate of Technical Acceptance is delivered, on the date set out
 below by ("Lessee") to ____________ ("Lessor") pursuant to the Aircraft Lease
 Agreement  dated _____________ between Lessor and Lessee (the "Lease"). The
 capitalized terms used in  this Certificate shall have the meaning given to
 such terms in the Lease.

 DETAILS OF ACCEPTANCE

 Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this
 ________ day of ____________, at __________, technically accepted the
 following, in accordance with the provisions of the Lease:

 ___________ Aircraft, Manufacturer's Serial Number ____________ ;

 ____________ Engines:

 Engine Number     Manufacturer's Serial Number

 [To be completed at Delivery]

 (each of which has 750 or more rated take off horsepower or the equivalent of
 such horsepower)

 Fuel Status:     Kilos/lbs ______________; and

 Loose Equipment Check List: in accordance with the list signed by Lessor and
 Lessee and attached hereto.

 Aircraft Documents and Records: in accordance with the list signed by Lessor
 and Lessee and attached hereto.

 LOPA drawing attached.

 HOURS AND CYCLES DATA (AS OF DELIVERY DATE)

 Airframe:

 Time Since New:______________              Cycles Since New:_____________

 Landing Gear (Main and Nose)

 Time Since New: [, Center]                 Cycles Since New: _____________

 Engines

 Position:                                  Time Since New: _______________

                                            Cycles Since New: _____________


 _______________________________


 Auxiliary Power Unit:

 Number of Flight Hours/APU Hours

 (as applicable) since New: _________________


                                       5-1


<PAGE>


 ACCEPTANCE:

 Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
 and Records are technically acceptable to it, satisfy all of the Delivery
 Condition Requirements and are in the condition for delivery and acceptance as
 required under the Lease.

 IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
 representative, executed this Certificate of Technical Acceptance on the date
 in paragraph I above.

 LESSEE: _________________________

 By: _____________________________

 Title: __________________________

 LESSOR: _________________________

 By: _____________________________

 Title: __________________________



                                       5-2


<PAGE>


                                   SCHEDULE 5

          CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 2 (USED AIRCRAFT)

 This Certificate of Technical Acceptance is delivered, on the date set out
 below by ___________ ("Lessee") to ____________ ("Lessor") pursuant to the
 Aircraft Lease Agreement dated _____________ between Lessor and Lessee
 (the "Lease"). The capitalized terms used in this Certificate shall have the
 meaning given to such terms in the Lease.

 DETAILS OF ACCEPTANCE

 Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this
 __________ day of ____________, at _____, technically accepted the following,
 in accordance with the provisions of the Lease:

 __________ Aircraft, Manufacturer's Serial Number _________;

 __________ Engines:

 Engine Number    Manufacturer's Serial Number

 [to be completed at Delivery]

 (each of which has 750 or more rated take off horsepower or the equivalent of
 such horsepower)

 Fuel Status: Kilos/lbs _________; and

 Loose Equipment Check List: in accordance with the list signed by Lessor and
 Lessee and attached hereto.

 Aircraft Documents and Records: in accordance with the list signed by Lessor
 and Lessee and attached hereto.

 HOURS AND CYCLES DATA (as of Delivery Date)

 Airframe:

 Number of Hours since last Airframe Structural Check: ________ hours

 "C" Check (or Equivalent)

 Interval: __________________________

 Time Since: ________________________

 Landing Gear Overhaul:

 Number of Cycles Since Last Overhaul:


                                       5-3


<PAGE>


 [____] Gear ___________________________ cycles

 Interval: _____________________________

 Engines:

 Number of Hours Since Last Engine Refurbishment:

 S/N ___________:______________ hours

 Hot Section Inspection:

 Interval: ________________________________

 Time Since (S/N ________________):_________________

 Time Remaining to First Restriction:

 Engine SIN:

 Hours:__________________    Restriction:_______________

 Cycles:_________________    Restriction:_______________

 Average Cycles in Life Limited Parts (see attached Schedule):________________

 Auxiliary Power Unit:

 Number of APU Hours since Last Heavy Shop Visit:

 ______________ hours      Date accomplished ____________________

 Hot Section Inspection:

 Interval:__________________________

 Time Since: ___________________________

 Interior Equipment:

 LOPA - attached ___________________________

 Emergency drawing - attached __________________________

 Galley Equipment __________________________


                                       5-4


<PAGE>


 ACCEPTANCE:

 Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
 and Records are technically acceptable to it, satisfy all of the Delivery
 Condition Requirements and are in the condition for delivery and acceptance as
 required under the Lease.

 IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
 representative, executed this Certificate of Technical Acceptance on the date
 in paragraph 1 above.

 LESSEE:

 By: _______________________________

 Title: ____________________________

 LESSOR:

 By:________________________________

 Title:_____________________________

 By:________________________________

 Title:_____________________________


                                       5-5


<PAGE>


                                   SCHEDULE 6
                                [NOT APPLICABLE]





                                       6-1




<PAGE>


                                   SCHEDULE 7
                             INSURANCE REQUIREMENTS

1.1      TYPES OF INSURANCE

The Insurances required to be maintained are as follows:

          (a)       HULL ALL Risks of loss or damage while flying, taxiing and
                    on the ground with respect to the Aircraft on an agreed
                    value basis for not less than the Agreed Value and not more
                    than 110% of the Agreed Value and with a deductible not
                    exceeding the Deductible Amount;

          (b)       HULL WAR AND ALLIED PERILS, being such risks excluded from
                    the Hull All Risks Policy, to the fullest extent available
                    from the leading international insurance markets for the
                    Agreed Value; provided that, when the Aircraft is being
                    operated in or over the United States or Canada, coverage
                    may be limited to such coverage as is usual and customary
                    for comparable airlines, operating similar equipment in
                    similar circumstances, namely subject to the North American
                    buy-back;

          (c)       ALL RISKS (including War and Allied Risk except when on the
                    ground or in transit other than by air) property insurance
                    on all Engines and Parts when not installed on the Aircraft
                    for like kind and quality value and including engine test
                    and running risks; and

          (d)       COMPREHENSIVE AIRCRAFT THIRD PARTY PROPERTY DAMAGE,
                    PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                    PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                    single limit (bodily injury/property damage) of an amount
                    not less than the Minimum Liability Coverage for the time
                    being for any one occurrence (but in respect of products and
                    personal injury liability, this limit may be an aggregate
                    limit for any and all losses occurring during the currency
                    of the policy). War and Allied Risks are also to be covered
                    under the policy in line with prudent market practice for
                    comparable airlines, operating similar equipment in similar
                    circumstances.

1.2      TERMS OF HULL AND SPARES INSURANCE

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

          (a)       LOSS PAYEE: name Lessor, as loss payee (without imposing on
                    Lessor any obligation imposed on the insured, including the
                    liability to pay any calls, commissions or premiums);

          (b)       PAYMENT OF LOSSES: Losses will be payable in Dollars to
                    Lessor for all amounts up to the Agreed Value and to Lessee
                    for any excess above the Agreed Value (which excess shall
                    not exceed 10% of the Agreed Value), except where the
                    insurance payment does not

                                       7-1


<PAGE>


                    exceed the Damage Notification Threshold, and no Default
                    is in existence, in which case the loss will be settled
                    with and paid to Lessee;

          (c)       50/50 PROVISION: if separate Hull "all risks" and "war
                    risks" insurances are arranged, include a 50/50 provision in
                    accordance with market practice (AVS. 103 is the current
                    London market language); and

          (d)       NO OPTION TO REPLACE: confirm that the insurers are not
                    entitled to replace the Aircraft in the event of an insured
                    Event of Loss and are not entitled to replace any Engine in
                    the event of an Engine Event of Loss with respect to such
                    Engine.

1.3      TERMS OF LIABILITY INSURANCE

All required liability insurances will:

          (a)       ADDITIONAL INSUREDS: include each Indemnitee, as additional
                    insureds for its respective rights and interests, warranted,
                    each as to itself only, no operational interest (without
                    imposing on any such Person any obligation imposed on the
                    insured, including the liability to pay any calls,
                    commissions or premiums);

          (b)       SEVERABILITY: include a severability of interests clause
                    which provides that the insurance, except for the limit of
                    liability, will operate to give each insured the same
                    protection as if there were a separate policy issued to each
                    insured; and

          (c)       PRIMARY POLICY: contain a provision confirming that the
                    policy is primary without right of contribution and the
                    liability of the insurers will not be affected by any other
                    insurance of which Lessor, any Indemnitee or Lessee has the
                    benefit so as to reduce the amount payable to the additional
                    insureds under such policies.

1.4     TERMS OF ALL INSURANCES

All Insurances will:

          (a)       INDUSTRY PRACTICE: be in accordance with standard industry
                    practice for airlines operating similar aircraft in similar
                    circumstances;

          (b)       DOLLARS: provide cover denominated in Dollars;

          (c)       WORLDWIDE: operate on a worldwide basis subject to such
                    limitations and exclusions as are in line with industry
                    practice obtained by prudent United States-based
                    international air carriers;

          (d)       BREACH OF WARRANTY: provide that, in relation to the
                    interests of each of the additional assureds, the Insurances
                    will not be invalidated by any act or omission by Lessee, or
                    any other Person other than the respective additional
                    assureds seeking protection and shall

                                       7-2


<PAGE>

                    insure the interests of each of the additional assureds
                    regardless of any breach or violation by Lessee, or any
                    other Person other than the respective additional assured
                    seeking protection of any warranty, declaration or
                    condition, contained in such Insurances;

          (e)       SUBROGATION: provide that the insurers will hold harmless
                    and waive any rights of recourse or subrogation against the
                    additional insureds to the extent Lessee has waived its
                    rights against the additional insureds in the Lease;

          (f)       PREMIUMS: provide that the additional insureds will have no
                    obligation or responsibility for the payment of any premiums
                    due (but reserve the right to pay the same should any of
                    them elect so to do) and that the insurers will not exercise
                    any right of set-off, counter claim or other deduction, by
                    attachment or otherwise, in respect of any premium due
                    against the respective interests of the additional insureds
                    other than outstanding premiums relating to the Aircraft,
                    any Engine or Part the subject of the relevant claim;

          (g)       Cancellation/Change: provide that the Insurances will
                    continue unaltered for the benefit of the additional
                    insureds for at least 30 days after written notice by
                    registered mail or telex of any cancellation, change, event
                    of non-payment of premium or installment thereof has been
                    sent by insurer(s) to Lessor, or where an insurance broker
                    is appointed to the insurance broker who shall promptly send
                    on such notice to Lessor, except in the case of war risks
                    for which 7 days (or such lesser period as is or may be
                    customarily available in respect of war risks or allied
                    perils) will be given, or in the case of war between the 5
                    great powers or nuclear peril for which termination is
                    automatic; and

          (h)       [NOT APPLICABLE]

          (i)       [INTENTIONALLY OMITTED.]

          (j)       INDEMNITIES: accept and insure the indemnity provisions of
                    the Lease to the extent of the risks covered by the
                    policies.

1.5     DEDUCTIBLES

Lessee shall be responsible for any and all deductibles under the Insurances.

1.6      APPLICATION OF INSURANCE PROCEEDS

The Insurances will be endorsed to provide for payment of proceeds as follows:

          (a)       EVENT OF LOSS: all insurance payments up to the Agreed Value
                    received as the result of an Event of Loss occurring during
                    the Term will be paid to Lessor as loss payee and any amount
                    in excess of the Agreed Value (which excess shall not exceed
                    10% of the Agreed Value) shall be paid to Lessee;

                                       7-3

<PAGE>


          (b)       EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                    proceeds of any damage or loss to the Aircraft, any Engine
                    or any Part occurring during the Term not constituting an
                    Event of Loss and in excess of the Damage Notification
                    Threshold will be paid to the appropriate repair facility,
                    and applied in payment (or paid to Lessee and/or Lessor as
                    reimbursement) for repairs or replacement property upon
                    Lessor being satisfied that the repairs or replacement have
                    been effected in accordance with the Lease.

          (c)       BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                    amounts below the Damage Notification Threshold shall be
                    paid by the insurer directly to Lessee;

          (d)       LIABILITY PROCEEDS: all insurance proceeds in respect of
                    third party liability will be paid by the insurers to the
                    relevant third party in satisfaction of the relevant
                    liability or to Owner, Lessor, Financing Partners'
                    Representative or Lessee, as the case may be, in
                    reimbursement of any payment so made;

          (e)       DEFAULT: notwithstanding any of the foregoing paragraphs, if
                    at the time of the payment of any such insurance proceeds a
                    Default has occurred and is continuing, all such proceeds
                    will be paid to Lessor, Owner or Financing Parties'
                    Representative, as the case may be, or retained to be
                    applied toward payment of any amounts which may be or become
                    payable by Lessee in such order as Lessor or Owner, as the
                    case may be, may elect until such time as no Default is
                    continuing and then applied as described above; and to the
                    extent that insurance proceeds are paid to Lessee, Lessee
                    agrees to hold such proceeds in trust and comply with the
                    foregoing provisions and apply or pay over such proceeds as
                    so required.

1.7      UNITED STATES GOVERNMENTAL INDEMNITY

Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any
Governmental Entity whose obligations have the full faith and credit of the
federal Government of the United States, Lessor agrees to accept in lieu of
insurance required hereunder indemnification or insurance from the United
States or such a Governmental Entity in a form reasonably acceptable to
Lessor and Owner and against such risks and in such amounts and on such terms
such that when added to the Insurance maintained by Lessee, Lessee is in full
compliance with the requirements of Section 9 and this Schedule.

                                       7-4


<PAGE>

                                   SCHEDULE 8

                 FORM OF LESSEE'S AND GUARANTOR'S LEGAL OPINION

[Lessor]

[Owner]

[Financing Parties' Representative]

Ladies and Gentlemen:

1.        You have asked us to render an opinion in connection with the
          transaction governed by or subject to, inter alia, the following
          documents.

          (a)      the Lease as defined below;

          (b)       the [Articles/Certificate of Incorporation and By-laws]* of
                    Lessee; and

                    [*Counsel should amend this reference as necessary to
                    describe the actual constitutional documents of Lessee].

          (c)       all other documents, approvals and consents of whatever
                    nature and wherever kept which it was, in our judgement and
                    to our knowledge, necessary or appropriate to examine to
                    enable us to give the opinion expressed below.

          Words and expressions used and not otherwise defined herein will
          bear the same meanings as defined in an Aircraft Lease Agreement
          dated _______, ____ between _______ ("Lessor") and ______
          ("Lessee") in respect of one _______ aircraft with manufacturer's
          serial number _______ together with the _______ installed _______
          engines (the "Aircraft"). As used herein the term "Lease" means and
          includes the Aircraft Lease Agreement which incorporates the Common
          Terms Agreement (as defined therein) and Lease Supplement No. ____.
          Also, for the purposes of this opinion, the term "Lease" includes
          the Acknowledgment and Agreement dated as of the date hereof
          executed by Lessee in favor of Owner and Financing Parties'
          Representative.

2.        Having considered the documents listed in paragraph 1 above, and
          having regard to the relevant laws of we are pleased to advise that in
          our opinion: -

          (a)       Lessee is a company duly incorporated and in good
                    standing under the laws of _______, and is qualified to
                    do business as a foreign corporation in each jurisdiction
                    where failure to so qualify would have a materially
                    adverse effect on Lessee's business or its ability to
                    perform its obligations under the Lease;

          (b)       Lessee has the corporate power to enter into and perform,
                    and has taken all necessary corporate action to authorize
                    the entry into, and the execution, delivery and performance
                    by it of, the Lease and the transactions contemplated by the
                    Lease;

                                       8-1


<PAGE>

          (c)       the entry into and performance by Lessee of, and the
                    transactions contemplated by, the Lease do not and will not
                    (x) conflict with any laws binding on Lessee, (y) conflict
                    with the [Articles/Certificate of Incorporation or By-laws]
                    of Lessee; or (z) conflict with or result in default under
                    any agreement or instrument which is binding upon Lessee or
                    any of its assets or result in the creation of any Security
                    Interest on any of its assets;

          (d)       no authorizations, consents, licenses, approvals and
                    registrations (other than those which have been obtained and
                    of which copies are attached hereto) are necessary or
                    desirable to be obtained from any governmental or other
                    regulatory authorities in the United States or any other
                    jurisdiction having jurisdiction over Lessee, its operations
                    or its properties to enable Lessee (x) to enter into and
                    perform the transactions contemplated by the Lease, (y) to
                    operate the Aircraft in the United States and on
                    international flights for the transport of fare-paying
                    passengers, or (z) to make the payments provided for in the
                    Lease;

          (e)       except for the filing and recordation of
                    [a bill of sale in favor of the Owner,] the Financing
                    Documents and the Lease with the FAA (which filing has
                    been duly made on or before this date) and the filing of
                    Financing Statements in _______, it is not necessary or
                    desirable, to ensure the priority, validity and
                    enforceability of all the obligations of Lessee under the
                    Lease, as against Lessee and all third parties, or to
                    perfect the interests of Lessor, Owner or Financing
                    Parties' Representative in and to the Aircraft or the
                    Lease, that the Lease be filed, registered, recorded or
                    notarized in any public office or elsewhere or that any
                    other instrument be signed, delivered, filed, registered
                    or recorded, that any tax or duty be paid or that any
                    other action whatsoever be taken;

          (f)       the Lease has been duly executed and delivered on behalf of
                    Lessee and constitutes the legal, valid and binding
                    obligation of Lessee, enforceable against Lessee in
                    accordance with its terms;

          (g)       [NOT APPLICABLE];

          (h)       there is no applicable usury or interest limitation law in
                    _______ applicable to payments in accordance with the Lease;

          (i)       there are no registration, stamp or other taxes or duties
                    of any kind payable in _______ in connection with the
                    execution, performance or enforcement by legal
                    proceedings of the Lease or the Guaranty;

          (j)       the choice of New York law to govern the Lease will be
                    upheld as a valid choice of law in any action in the
                    courts of _______;

          (k)       the consent to the jurisdiction by Lessee contained in the
                    Lease is valid and binding on Lessee;

                                       8-2


<PAGE>


          (l)       Lessee is a Certificated Air Carrier;

          (m)       Lessee is a "citizen of the United States" as defined in 49
                    U.S.C. Section 40102(a)(15);

          (n)       Lessee's "chief executive office" (as referenced in the
                    Uniform Commercial Code adopted in the State of _______)
                    is _______;

          (o)       Lessor will not violate any law or regulation of the
                    States of _______ or New York or any federal laws or
                    regulations of the United States of America and Lessor
                    will not become liable to income tax in the State of
                    _______ solely by reason of Lessor entering into the
                    Lease with Lessee or performing its obligations
                    thereunder or enforcement of its rights thereunder;

          (p)       It is not necessary for Lessor to establish a place of
                    business or be licensed or qualified to do business in the
                    State of _______ or New York in order for Lessor to
                    enforce any provisions of the Lease; and

          (q)       Lessor is entitled to the benefits of Section 1110 of Title
                    11 of the U.S.C. with respect to the Aircraft and the Lease.



                                                  Very truly yours,






[If there is a Guarantor/Guarantee the opinion must also include paragraphs
(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (o) and (p) revised to be
applicable to the Guarantor/Guarantee]







                                       8-3


<PAGE>


                                   SCHEDULE 9
                                EVENTS OF DEFAULT

Each of the following events or conditions constitutes an Event of Default:

          (a)       NON-PAYMENT: Lessee fails to make any payment of Rent,
                    Supplemental Rent or any other amount payable under the
                    Lease on the due date and such failure continues for three
                    (3) Business Days or more; or

          (b)       INSURANCE: Lessee fails to comply with any provision of
                    Section 9 (other than the requirement to provide Lessor with
                    evidence of renewal of any policy on or before the renewal
                    date where the policy has actually been renewed on or prior
                    to such date) or Schedule 7, or any insurance required to be
                    maintained under the Lease is cancelled or terminated, or a
                    notice of cancellation is given in respect of any such
                    insurance; or

          (c)       BREACH: (i) Lessee fails to provide Lessor with evidence of
                    renewal of any insurance policy on or before the renewal
                    date for that policy where the policy has actually been
                    renewed on or prior to such date and such failure continues
                    for 24 hours after notice from Lessor to Lessee of such
                    failure to comply; or (ii) Lessee fails to comply with any
                    other provision of the Lease not referenced in this Schedule
                    9 and, if such failure is in the opinion of Lessor capable
                    of remedy, such failure continues for 30 days after notice
                    from Lessor to Lessee; or

          (d)       REPRESENTATION: any representation or warranty made (or
                    deemed to be repeated) by Lessee in or pursuant to the Lease
                    or in any document executed by Lessee in connection with or
                    pursuant to the Lease or in any document or in any
                    certificate is or proves to have been incorrect in any
                    material respect when made or deemed to be repeated; or

          (e)      CROSS-DEFAULT:

                    (i)       any amount in respect of Financial Indebtedness of
                              Lessee or any Lessee Affiliate having a principal
                              amount in excess of Five Hundred Thousand Dollars
                              ($500,000) is not paid when due;

                    (ii)      any such Financial Indebtedness becomes due or
                              capable of being declared due prior to the date
                              when it would otherwise have become due; or
                              becomes due as a result of an event of default or
                              termination event, howsoever described, on the
                              part of Lessee or any other Person prior to the
                              date when it would otherwise have become due; or

                    (iii)     the security for any such Financial Indebtedness
                              becomes enforceable; or

                                       9-1


<PAGE>


                   (iv)     any event of default or termination event, howsoever
                            described, occurs under any Other Agreement, or any
                            other lease, hire purchase, conditional sale or
                            credit sale agreement of Lessee or any Lessee
                            Affiliate; or

          (f)       APPROVALS: any consent, authorization, license, certificate
                    or approval of or registration with or declaration to any
                    Government Entity required to be obtained or maintained by
                    Lessee in connection with the Lease and/or the operation of
                    the Aircraft (including any airline license or air transport
                    license including authority to operate the Aircraft under
                    Part 121 of the FARs, a Certificate of Convenience and
                    Necessity issued under the Act and any air carrier operating
                    certificate issued under the Act) is modified in a
                    materially prejudicial manner or is withheld, or is revoked,
                    suspended, cancelled, withdrawn, terminated or not renewed,
                    or otherwise ceases to be in full force; or

          (g)       BANKRUPTCY, ETC:

                    (i)       Lessee or any Lessee Affiliate consents to the
                              appointment of a custodian, receiver, trustee or
                              liquidator of itself or all or a material part of
                              its property or its consolidated property, or
                              Lessee or any Lessee Affiliate admits in writing
                              its inability to, or is unable to, or does not,
                              pay its debts generally as they come due, or makes
                              a general assignment for the benefit of creditors,
                              or Lessee or any Lessee Affiliate files a
                              voluntary petition in bankruptcy or voluntary
                              petition seeking reorganization in a proceeding
                              under any bankruptcy or insolvency laws (as now or
                              hereafter in effect), or an answer admitting the
                              material allegations of a petition filed against
                              Lessee in any such proceeding, or Lessee or any
                              Lessee Affiliate by voluntary petition, answer or
                              consent seeks relief under the provisions of any
                              other bankruptcy, insolvency or other similar law
                              providing for the reorganization or winding-up of
                              debtors, or provides for an agreement,
                              composition, extension or adjustment with its
                              creditors, or any board of directors or
                              shareholder action is taken by Lessee or any
                              Lessee Affiliate in furtherance of any of the
                              foregoing, whether or not the same is fully
                              effected or accomplished; or

                    (ii)      An order, judgement or decree is entered by any
                              court appointing, without the consent of Lessee or
                              any Lessee Affiliate, a custodian, receiver,
                              trustee or liquidator of or sequestering any of
                              Lessee's or any Lessee Affiliate's property, and
                              any such order, judgement or decree of appointment
                              or sequestration remains in effect, undismissed,
                              unstayed or unvacated for a period of 30 days
                              after the date of entry thereof or at any time an
                              order for relief is granted; or

                    (iii)     An involuntary petition against Lessee or any
                              Lessee Affiliate or other proceeding under the
                              United States Federal Bankruptcy laws or other
                              insolvency laws (as now or hereafter in effect) is
                              filed and is not withdrawn or dismissed

                                       9-2


<PAGE>


                              within 30 days thereafter or at any time an order
                              for relief is granted in such proceeding, or if,
                              under the provisions of any law providing for
                              reorganization or winding-up of debtors which may
                              apply to Lessee or any Lessee Affiliate, any court
                              of competent jurisdiction assumes jurisdiction
                              over, or custody or control of, Lessee or any
                              Lessee Affiliate or of all or any material part of
                              Lessee's or Lessee Affiliates' property, and such
                              jurisdiction, custody or control remains in
                              effect, unrelinquished, unstayed or unterminated
                              for a period of 30 days or at any time an order
                              for relief is granted in such proceeding; or

          (h)       SUSPENSION OF BUSINESS: Lessee suspends or ceases or takes
                    substantive steps to suspend or cease to carry on all or a
                    material part of its business as a Certificated Air Carrier
                    (other than as a result of a labor dispute with Lessee's
                    employees); or

          (i)       RIGHTS AND REMEDIES: Lessee or any other Person claiming by
                    or through Lessee challenges the existence, validity,
                    enforceability or priority of the Lease or the rights of
                    Lessor as lessor or of Owner as owner in respect of the
                    Aircraft or Financing Parties' Representative as holder of a
                    first priority Security Interest in the Aircraft and the
                    Lease; or

          (j)       CHANGE OF CONTROL: any single person or group of persons
                    acquire control of Lessee or Guarantor without the previous
                    consent in writing of Lessor; or

          (k)       DELIVERY: Lessee fails to comply with its obligation under
                    Section 4 to accept delivery of the Aircraft or Lessee fails
                    to comply with its obligations under Section 2 of Part III
                    of Schedule A to the Aircraft Lease Agreement; or

          (l)       ADVERSE CHANGE: any event or series of events occurs which,
                    in the reasonable opinion of Lessor, could be expected to
                    have a material adverse effect on the financial condition or
                    operations of Lessee or Guarantor or on the ability of
                    Lessee to comply with its obligations under the Lease or on
                    the ability of Guarantor to comply with its obligations
                    under the Guarantee; or

          (m)       Letter of Credit:

                    (i)       the issuer of the Letter of Credit (if any) fails
                              to make any payment under that Letter of Credit
                              when due; or

                    (ii)      any such Letter of Credit is not in full force or,
                              for any reason ceases to constitute the legal,
                              valid and binding obligation of the issuer; or

                    (iii)     any of the events listed in paragraph (g) above
                              applies to such issuer (references in those
                              sub-paragraphs to Lessee being deemed to be to the
                              issuer); or

                                       9-3


<PAGE>


                    (iv)      where applicable, any Letter of Credit is not
                              renewed, extended or reissued within the time, or
                              replaced when, required by Section 5.14; or

                    (v)       any consent, authorization, license, certificate
                              or approval of or registration with or declaration
                              to any Governmental Entity required to be obtained
                              or maintained by the issuer of the Letter of
                              Credit in connection with the Letter of Credit is
                              modified in a materially prejudicial manner or is
                              withheld, revoked, suspended, cancelled,
                              withdrawn, terminated or not renewed, or otherwise
                              ceases to be in full force; or

                    (vi)      and each reference in this paragraph (m) to "the
                              issuer" shall include a reference to any
                              confirming bank for the Letter of Credit

          (n)       REDELIVERY: Lessee falls to return the Aircraft to Lessor on
                    the Expiry Date in accordance with Section 12; or

          (o)       LITIGATION: a judgement for the payment of money not covered
                    by insurance in excess of Six Hundred Fifty Thousand Dollars
                    ($650,000) (or the equivalent thereof in other currencies)
                    shall be rendered against Lessee or any Lessee Affiliate and
                    the same shall remain undischarged for a period of 30 days,
                    unless during such period, execution of such judgement shall
                    have been effectively stayed by agreement of the parties
                    involved or by court order or such judgement shall have been
                    adequately bonded; or

          (p)       GUARANTEE:

                    (i)       any representation or warranty made by Guarantor
                              is or proves to have been incorrect in any
                              material respect when made or deemed to be
                              repeated or Guarantor fails to make any payment or
                              comply with any other obligation under the
                              Guarantee when due; or

                    (ii)      the Guarantor repudiates, revokes or claims that
                              it has no further obligations under the Guarantee
                              or the Guarantee ceases to be in full force or,
                              for any reason, ceases to be the legal, valid and
                              binding obligation of Guarantor; or

                   (iii)      any of the events listed in paragraph (f)(i) or
                              (g) above occurs in respect of Guarantor (and
                              for purposes of this paragraph(s), references
                              in those paragraphs to Lessee shall be deemed
                              to be references to Guarantor); or

          (q)       UNLAWFUL: it becomes unlawful for Lessee to perform any of
                    its obligations under the Lease or the Lease becomes wholly
                    or partly invalid or unenforceable; or

          (r)       TRANSFER/LESSEE REQUIREMENTS: Lessee makes or permits any
                    assignment or transfer of the Lease, or any interest herein,
                    or of the right to possession of the Aircraft, the

                                       9-4

<PAGE>

                    Airframe, or any Engine, or any obligations under the Lease,
                    or Lessee subleases the Aircraft, in any case except as
                    expressly permitted in the Lease; or Lessee breaches any
                    provision of Section 8.7; or

          (s)       ENGINE LOSS: Lessee fails to timely comply with its
                    obligations under Sections 8.11(a) and 8.11(b) with
                    respect to an Engine Event of Loss.

          (t)       OTHER: Such other events, if any, as may be specified in the
                    Aircraft Lease Agreement.

                                       9-5


<PAGE>

                                   SCHEDULE 10

                                [NOT APPLICABLE]


















                                      10-1


<PAGE>

                                   SCHEDULE 11

                      FORM OF LEASE TERMINATION CERTIFICATE

The undersigned hereby certify that the Aircraft Lease Agreement dated as of
__________, _______ between the undersigned Lessor and undersigned Lessee,
and as further described in the Appendix attached hereto, has terminated
(except as described in Section 15.1 of the Common Terms Agreement
incorporated therein) and the aircraft and aircraft engines covered thereby
are no longer subject to the terms thereof. This certificate may be executed
in one or more counterparts each of which when taken together shall
constitute one and the same instrument.

          DATED this _______ day of __________, _______

LESSOR                                 LESSEE

[      INSERT LESSOR'S NAME        ]   [        INSERT LESSEE'S NAME        ]
 ----------------------------------     ------------------------------------



By:                                    By:
      -------------------------------        ---------------------------------
Title:                                 Title:
      -------------------------------        ---------------------------------









                                      11-1


<PAGE>

                                   SCHEDULE 12

                         FORM OF LEASE SUPPLEMENT NO. 1

          LEASE SUPPLEMENT NO. 1, dated _______, _______, between
____________, [a corporation organized under the laws of _______]
[, not in its individual capacity, but solely as owner trustee]("Lessor"),
and ______________, a corporation organized under the laws of the __________
("Lessee").

          Lessor and Lessee have previously entered into that certain
Aircraft Lease Agreement dated as of _________________. including the Common
Terms Agreement as defined therein (collectively, herein referred to as the
"Agreement" and the defined terms therein being hereinafter used with the
same meaning). The Agreement provides for the execution and delivery from
time to time of a Lease Supplement substantially in the form hereof for the
purpose of leasing the aircraft described below under the Agreement as and
when delivered by Lessor to Lessee in accordance with the terms thereof.

          The Agreement and this Lease Supplement relate to the Aircraft,
Engines and Parts as more precisely described below and in the Certificate of
Technical Acceptance. A counterpart of the Agreement is attached hereto and this
Lease Supplement and the Agreement shall form one document.

          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 and pursuant to the
Agreement and Lessee hereby accepts, acknowledges receipt of possession and
leases from Lessor under and pursuant to the Agreement, that certain ________
aircraft, and the _______ (___) _______ Engines (each of which Engines has
750 or more rated takeoff horsepower or the equivalent of such horsepower)
described in Schedule 1 hereto, together with the Aircraft Documents and
Records described in the Agreement (the "Delivered Aircraft").

2. The Delivery Date of the Delivered Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.

3. The Term for the Delivered Aircraft shall commence on the Delivery Date and
shall end on the Expiry Date, with respect to which the Scheduled Expiry Date
shall be [insert date].

4. The amount of Rent for the Delivered Aircraft is set forth in Schedule B to
the Agreement.

                                      12-1


<PAGE>


5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft and each
delivered Engine have been duly marked in accordance with the terms of Section
8.6(a) of the Agreement, (ii) the Aircraft is insured as required by the
Agreement, (iii) the representations and warranties of Lessee referred to in
Section 2.1 of the Agreement are hereby repeated with effect as of the date
first above written, (iv) having inspected the Delivered Aircraft, Lessee
acknowledges that the Delivered Aircraft satisfies all conditions required for
Lessee's acceptance of delivery as set forth in the Agreement, and (v) the
execution and delivery of this Lease Supplement signifies absolute and
irrevocable acceptance by Lessee of the Delivered Aircraft for all purposes
hereof and of the Agreement.

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

7. This Lease Supplement may be executed in any number of counterparts; each of
such counterparts, shall for all purposes be deemed to be an original; and all
such counterparts shall together constitute but one and the same Lease
Supplement.

          IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
Supplement No. 1 to be duly executed as of the day and year first above written.


LESSOR,                                LESSEE,

[INSERT LESSOR'S NAME]                 [INSERT LESSEE'S NAME]

By:                                    By:
      -------------------------------        --------------------------------
Name:                                  Name:
      -------------------------------        --------------------------------
Title:                                 Title:
      -------------------------------        --------------------------------







                                      12-2



<PAGE>


                                   SCHEDULE 13

                            FORM OF LETTER OF CREDIT


                      IRREVOCABLE STANDBY LETTER OF CREDIT

BENEFICIARY:
Aviation Financial Services, Inc.
Attention: ______________
201 High Ridge Road
Stamford, CT 06927

Gentlemen:

          We hereby establish our irrevocable Standby Letter of Credit No.
S/B _________ dated February ____________, 2000 (this "Letter of Credit") in
your favor in connection with the leasing of one Boeing 737-700 aircraft by
Aviation Financial Services Inc. ("Beneficiary") to Aloha Airlines, Inc.
("Customer"). All bank charges relating to this Letter of Credit are for the
account of Customer.

          At the request of Customer for account of same, we hereby establish
this Irrevocable Standby Letter of Credit No. S/B ___________ (this "Letter
of Credit") to authorise you to draw on First Hawaiian Bank, Honolulu, Hawaii
an amount or amounts not exceeding in aggregate US$________ (_________ United
States Dollars upon receipt by us of the following demand certificate from
Beneficiary, accompanied by a copy of this Letter of Credit (which
certificate and copy may be presented to us by telecopy at telecopy
no.______________):

                    "The undersigned are two authorised signatories of Aviation
                    Financial Services Inc. ("Beneficiary"). Beneficiary hereby
                    draws upon the Irrevocable Standby Letter of Credit No.
                    S/B ____________ of first Hawaiian Bank, Honolulu, Hawaii
                    dated ______________. Beneficiary hereby instructs you to
                    transfer US$___________ (__________United States Dollars)
                    to Bankers Trust Company, New York, ABA 021 001033, For the
                    account of: Aviation Financial Services Inc., Account
                    Number: 50-259-862, immediately, with telex confirmation to
                    us of such payment."

          We hereby agree with you that drawings drawn under and in
compliance with the terms of this Letter of Credit received on or prior to
the first anniversary of the date of this Letter of Credit (as the same may
be extended pursuant to the terms hereof, the "Expiration Date") will be duly
honoured upon receipt by us of such a demand certificate. Partial drawings
are permitted. This Letter of Credit shall be automatically renewed for
successive one year periods until at least _______________, unless at least
thirty (30) business days prior to the then current Expiration Date, we
notify you in writing by certified mail, return receipt requested, at the
address set forth above or such other address as Beneficiary may have
notified to us in writing, of our election not to renew this Letter of Credit
beyond the then current Expiration Date. In the event of such non

                                      13-1


<PAGE>


renewal, the full amount of this Letter of Credit may be drawn down upon
presentation of a demand certificate as provided above.

          If a drawing by you hereunder does not, in any instance, conform to
the provisions of this Letter of Credit, we shall give you prompt notice that
the purported drawing was not effected in accordance with such provisions,
stating the reasons therefor, and that we are holding any documents presented in
connection therewith at your disposal or are returning the same to you, as we
may elect.

          This Letter of Credit is transferable and constitutes an obligation to
make payment against documents. Except to the extent the express provisions
hereof conflict, this Letter of Credit is issued subject to the Uniform Customs
and Practice for Documentary Credits (1993 Revision) International Chamber of
Commerce Publication No. 500 ("Uniform Customs").


                                         Sincerely,

                                         FIRST HAWAIIAN BANK


----------------------------------       ------------------------------
Authorised Signature                     Authorised Signature















                                      13-2


<PAGE>


                                   SCHEDULE 14

                             MAINTENANCE PERFORMERS

Air New Zealand Limited
Repair Station #ANZZ188C
Christchurch

Aviation Management Systems
Repair Station #ZM7R567Y
Sky Harbor Int'l Airport

Aviation Management Systems
Repair Station #D8LR566Y
Goodyear, AZ

BFGoodrich Aerospace MRO
Repair Station #HN6R593N
Everett, WA

Conair Aviation Ltd.
Repair Station #AMO 10-75
Abbotsford, B.C.

Spar Aerospace Limited
Repair Station #AMO 03-57
Canada











                                      14-1


<PAGE>


                                   SCHEDULE 15

                            FORM OF TECHNICAL REPORT

                             AIRCRAFT SPECIFICATIONS
                                    WORKSHEET




<TABLE>
<CAPTION>
GENERAL                                    WEIGHTS
<S>                     <C>                <C>                       <C>
Registration:           __________         Max. Taxi Weight:         __________
Manufacturer:           __________         Max. Take Off Weight:     __________
Aircraft Type:          __________         Max. Landing Weight:      __________
Serial Number:          __________         Max. Zero Fuel Weight:    __________
Line Number:            __________         Operating Empty Weight:   __________
Date of Manufacture:    __________         Fuel Capacity:            __________
Aircraft TT:            __________                                   __________
Aircraft TC:            __________         UTILIZATION               __________
Data as of:             __________         Hours:                    __________
                                           Cycles:                   __________

</TABLE>

INSPECTIONS

<TABLE>
-------------------------------------------------------------------------------
  <S>               <C>       <C>      <C>           <C>              <C>
  TYPE OF CHECK         LAST ACCOMPLISHED                               TIME
                    DATE      TIME     CYCLE         INTERVAL         REMAINING
-------------------------------------------------------------------------------
       C
-------------------------------------------------------------------------------
</TABLE>
__ Any major checks coming due in the next 3 months.

ENGINES                                      MFG:       ___________

                                             TYPE:      ___________

<TABLE>
-------------------------------------------------------------------------------
 <S>                <C>           <C>         <C>         <C>           <C>
 POSITION           S/N           TT          TC          TSO           ICO
-------------------------------------------------------------------------------

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

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

</TABLE>



                                      15-1


<PAGE>


                             AIRCRAFT SPECIFICATIONS
                                    WORKSHEET

REGISTRATION:   _________________

AUXILIARY POWER UNIT

                    MFG:       ___________

                    TYPE:      ___________


       S/N                TT                 TC                   TSO
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

      LANDING GEAR

              OVERHAUL INTERVAL

                    MAIN:       ___________

                    NOSE:       ___________
<TABLE>
        -----------------------------------------------------------------------
 <S>       <C>     <C>    <C>   <C>     <C>      <C>               <C>
           S/N     TT     TC    TSO     CSO         TIME            CYCLES
                                                 REMAINING         REMAINING
                                                  TO O/H            TO LIFE
        -----------------------------------------------------------------------
 NLG
        -----------------------------------------------------------------------
 LMG
        -----------------------------------------------------------------------
 RMG
        -----------------------------------------------------------------------
</TABLE>

INTERIOR EQUIPMENT

<TABLE>
<S>                                    <C>                <C>
                                       QTY                LOCATION & TYPE
                               -----------------------------------------------
Galleys:
                               -----------------------------------------------
Lavatories:
                               -----------------------------------------------
Air Stairs:
                               -----------------------------------------------
Psgr. Seats:
                               -----------------------------------------------

</TABLE>

                                      15-2


<PAGE>



                             AIRCRAFT LEASE NOVATION
                             AND AMENDMENT AGREEMENT

                          DATED AS OF FEBRUARY 28, 2001

                        AVIATION FINANCIAL SERVICES INC.
                               AS EXISTING LESSOR

                              ALOHA AIRLINES, INC.
                                    AS LESSEE

                           CASTLE HARBOUR LEASING INC.
                                  AS NEW LESSOR

                                  IN RESPECT OF
                AIRCRAFT LEASE AGREEMENT DATED AS OF MAY 12, 2000
              RELATING TO BOEING 737-700 AIRCRAFT BEARING MSN 28641


<PAGE>


                                                               EXECUTION VERSION

THIS AGREEMENT is made as of February 28, 2001

BETWEEN:

AVIATION FINANCIAL SERVICES INC., a corporation incorporated under the laws of
the State of Delaware having its principal place of business and chief
executive office at 201 High Ridge Road, Stamford, Connecticut 06927.
("EXISTING LESSOR");

ALOHA AIRLINES, INC., a corporation incorporated under the laws of the State
of Delaware with its principal place of business at 371 Aokea Street,
Honolulu, Hawaii 96819 and its chief executive office at 500 Ala Moana Blvd.,
Two Waterfront Tower, Suite 500, Honolulu, Hawaii 96813 ("LESSEE"); and

CASTLE HARBOUR LEASING INC., a corporation incorporated under the laws of the
State of Delaware and having its principal office at c/o GE Capital Aviation
Services, Inc., 201 High Ridge Road, Stamford, CT 06927, U.S.A. ("NEW
LESSOR").

WHEREAS:

(A)      By Aircraft Lease  Agreement,  dated as of May 12, 2000,  between
         Lessee and Existing Lessor which incorporates by reference that
         certain Aircraft Lease Common Terms Agreement dated as of May 12,
         2000 executed by General Electric Capital Corporation and Lessee, as
         the same has been amended by that certain letter agreement dated May
         12, 2000 entered into between Existing Lessor and Lessee
         (collectively, and as amended, the "LEASE"), Existing Lessor has
         agreed to lease to Lessee and Lessee has agreed to take on lease one
         Boeing Model 737-700 aircraft identified in such Lease as having
         manufacturer's serial number 28641 (the "AIRCRAFT") on the terms and
         subject to the conditions contained in the Lease.

(B)      The parties have agreed that New Lessor should assume the rights,
         liabilities and obligations of Existing Lessor under the Lease, and
         that Existing Lessor should be released from its liabilities and
         obligations under the Lease on the terms and conditions set out
         herein.

NOW THEREFORE in consideration of the provisions and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS: In this Agreement, the following expressions shall have
         the following meanings:

         "EFFECTIVE TIME" bears the meaning ascribed to it in Clause 5; and

         "NOVATED LEASE" means an agreement between New Lessor and Lessee on
         the same terms as the Lease, subject to the amendments specified in
         this Agreement.


<PAGE>


 1.2      DEFINED TERMS IN LEASE: Capitalised terms used, but not defined, in
          this Agreement shall have the respective meanings assigned to them in
          the Lease.

 1.3      INTERPRETATION: In this Agreement, unless the context otherwise
          requires:

           (a)   a reference to a Clause or a Schedule is a reference to a
                 clause of or schedule to this Agreement;

           (b)   a reference to a person includes its successors and permitted
                 assigns;
           (c)   words importing the plural shall include the singular, and
                 vice versa; and
           (d)   headings are to be ignored in construing this Agreement.

 2.       NOVATION

 2.1      RELEASES, ASSIGNMENTS AND ASSUMPTIONS: As of and with effect from
          the Effective Time, and subject to the provisions of Clauses 2.2
          and 2.3:

           (a)   Existing Lessor releases Lessee from Lessee's obligations,
                 duties and liabilities under the Lease, and Lessee agrees that
                 it has no further rights against Existing Lessor under the
                 Lease;

           (b)   Lessee releases Existing Lessor from Existing Lessor's
                 obligations, duties and liabilities under the Lease, and
                 Existing Lessor agrees that it has no further rights against
                 Lessee under the Lease;

           (c)   Existing Lessor assigns to New Lessor, and New Lessor assumes,
                 the rights and obligations, duties and liabilities of Existing
                 Lessor under the Lease, and New Lessor agrees to perform the
                 obligations of the Lessor under the Novated Lease;

           (d)   Lessee consents to and accepts the assumption by New Lessor of
                 Existing Lessor's rights and obligations, duties and
                 liabilities under the Lease and New Lessor's agreement to
                 perform the obligations of the Lessor under the Novated Lease;

           (e)   Lessee agrees that it will not assert against New Lessor any
                 claim or defence which it may have or have had against
                 Existing Lessor under the Lease prior to the Effective Time;
                 and

           (f)   Lessee acknowledges that its obligations, duties and
                 liabilities under the Novated Lease are to New Lessor, and
                 agrees with New Lessor to perform the obligations of Lessee
                 under the Novated Lease.

          Each of the foregoing events and agreements is conditional upon the
          happening of the others and shall occur simultaneously.

  2.2     EFFECT: Existing Lessor, New Lessor and Lessee accordingly agree
          that, as and with effect from the Effective Time, the Lease is
          novated and constitutes an agreement between New Lessor as lessor and
          Lessee as lessee on the terms and conditions of the Novated Lease.


<PAGE>


2.3      PRE-EFFECTIVE TIME RIGHTS AND REMEDIES: Without prejudice to the
         rights of New Lessor under the Novated Lease and in consideration of
         the payment by Existing Lessor to Lessee of US$5 (receipt and
         sufficiency of which are hereby acknowledged), New Lessor, Lessee and
         Existing Lessor agree that Existing Lessor and Lessee shall have the
         same rights and remedies against each other pursuant to this Clause
         2.3 as each would have had under the Lease in respect of any losses,
         liabilities or claims suffered or incurred or brought against or
         payments due to each other in respect of or attributable to the
         period of the Term prior to the Effective Time as if Existing Lessor
         had remained the Lessor under the Lease, and New Lessor shall not be
         responsible to Lessee in respect of any such losses, liabilities or
         claims, nor shall Lessee exercise any set-off or counterclaim in
         respect of any such losses, liabilities or claims against New Lessor.

3.       LEASE AMENDMENTS

3.1      AMENDMENTS: As of, and with effect from, the Effective Time the Lease
         shall be (and it is hereby) amended as follows:

(a)      the expressions THIS LEASE and THE LEASE shall be construed, wherever
         they appear in the Lease and wherever the context so permits, as if
         they referred to the Novated Lease;

(b)      the expression LESSOR shall be construed, wherever it appears in the
         Lease, as if it referred to New Lessor in place of Existing Lessor
         (other than Recital B to the Aircraft Lease Agreement, in which case
         the expression LESSOR shall be construed to mean General Electric
         Capital Corporation, a New York corporation);

(c)      Clause 3.4 of the Aircraft Lease Agreement shall be amended and
         restated in its entirety as follows:

         LESSOR'S BANK ACCOUNT: For the purposes of Clause 5.5 of the Common
         Terms Agreement, Lessor's bank account and wire transfer particulars,
         to which all payments to Lessor shall be made, are at the date hereof:

                  Bankers Trust Company
                  New York
                  ABA 021 001 033

                  For the account of:
                  Castle Harbour Leasing Inc
                  Account Number: 50-263-968

3.2      REFERENCES IN OTHER DOCUMENTS: With effect from the Effective Time,
         all references to the Lease contained in any documents delivered
         under or pursuant to the Lease shall be construed as references to
         the Novated Lease (as it may be further amended from time to time).

4.       DEPOSIT

         As of the Effective Time the portion of the Deposit actually paid by
         Lessee as of the date hereof ($286,400) shall be transferred by
         Existing Lessor to New Lessor, and:


<PAGE>


        (a)  New Lessor acknowledges and agrees with Lessee, with effect from
             the Effective Time, that such moneys have been paid by Lessee in
             accordance with the Novated Lease and further acknowledges and
             agrees that Lessee shall have no further obligation to make any
             payment in respect of the Deposit which have become due and
             payable before the Effective Time and in respect of which Lessee
             has made payment in favour of Existing Lessor;

        (b)  each of New Lessor, Lessee and Existing Lessor agrees that any
             amounts in respect of the Deposit which become due and payable at
             or after the Effective Time shall be payable by Lessee to New
             Lessor in accordance with the Novated Lease;

        (c)  Existing Lessor acknowledges that it has released and has no
             continuing security or other interest in the moneys and amounts
             transferred to New Lessor under this clause.

5.       EFFECTIVE TIME

         This Agreement shall become effective at the time (the "EFFECTIVE
         TIME") at which this Agreement shall have been executed by all of the
         parties hereto, and such signatures shall have been delivered to New
         Lessor. New Lessor shall notify each of Existing Lessor and Lessee in
         writing of the Effective Time promptly upon its determination of the
         same. Filing of this Agreement with the FAA shall evidence that the
         Effective Time has occurred.

6.       MISCELLANEOUS

6.1      CONTINUING EFFECT: Save as provided for herein, the Novated Lease and
         all provisions thereof shall continue in full force and effect as the
         legal, valid and binding rights and obligations of each of New Lessor
         and Lessee enforceable in accordance with their respective terms. All
         representations, warranties and agreements contained in this
         Agreement shall continue in full force and effect after the Effective
         Time.

6.2      VARIATION: The provisions of this Agreement shall not be varied
         otherwise than by an instrument in writing executed by or on behalf
         of all the parties; provided that New Lessor and Lessee shall be
         entitled to amend, modify or vary the terms of the Novated Lease
         after the Effective Time without reference to Existing Lessor.

6.3      NOTICES: Every notice, request, demand or other communication under
         this Agreement shall be made in accordance with Clause 15.7 of the
         Novated Lease and shall be sent to Existing Lessor and Lessee to the
         addresses for notices set forth in Clause 6 of the Aircraft Lease
         Agreement and every notice, request, demand or other communication to
         New Lessor under this Agreement and the Novated Lease shall be sent
         to:
                           c/o GE Capital Aviation Services, Inc.
                           201 High Ridge Road
                           Stamford, CT 06927
         Attention:        Contracts Leader
         Facsimile:        203-357-3201
         Telephone:        203-357-3776


<PAGE>


6.4  COUNTERPARTS: This Agreement may be executed in any number of counterparts
     and by any party hereto in separate counterparts, each of which when so
     executed shall be deemed to be an original and all of which, when taken
     together, shall constitute one and the same agreement.

6.5  LEASE PROVISIONS: The provisions of Clauses 14 (Assignment), 15.2 (Waivers,
     Remedies Cumulative), 15.4 (Severability), and 15.8 (Governing Law;
     Jurisdiction; WAIVER OF JURY TRIAL) of the Lease shall apply to this
     Agreement as if set out in fall herein.

6.6  NAMEPLATES: New Lessor hereby advises Lessee that the Nameplate Inscription
     on the Nameplates installed on the Aircraft in accordance with the
     requirements of Clause 8.6(a) shall read as follows:

     "This Aircraft/Engine is owned by Castle Harbour Leasing Inc., and is
     leased to Aloha Airlines, Inc. and may not be operated by any other
     person without the prior written consent of Castle Harbour Leasing Inc."

6.7  EXPENSES: New Lessor hereby agrees that it will, upon written request from
     Lessee accompanied by written evidence as to the amount of such fees and
     expenses reasonably satisfactory to New Lessor, reimburse Lessee, or cause
     Lessee to be reimbursed, for the reasonable fees and disbursements of
     Lessee's outside legal counsel relating to the review, negotiation and
     execution of this Agreement.

6.8  ENTIRE AGREEMENT: The Novated Lease and this Agreement together constitute
     the sole and entire agreement between Lessee and New Lessor in relation to
     the leasing of the Aircraft, and supersede all previous agreements in
     relation to that leasing.


<PAGE>


IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first herein written.

SIGNED for and on behalf of AVIATION FINANCIAL SERVICES INC.

By:   /s/ Charles H. Meyer
    -----------------------------------

Name:
      ---------------------------------

Title:
       --------------------------------

SIGNED for and on behalf of ALOHA AIRLINES, INC.

By:
    -----------------------------------

Name:
      ---------------------------------

Title:
       --------------------------------


By:
    -----------------------------------

Name:
      ---------------------------------

Title:
       --------------------------------

SIGNED for and on behalf of CASTLE HARBOUR LEASING INC.,

By:   /s/ Charles H. Meyer
    -----------------------------------

Name:
      ---------------------------------

Title:
       --------------------------------


<PAGE>


IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first herein written.

SIGNED for and on behalf of AVIATION FINANCIAL SERVICES INC.

By:
    -----------------------------------

Name:
      ---------------------------------

Title:
       --------------------------------

SIGNED for and on behalf of ALOHA AIRLINES, INC.

By:   /s/ G.R. Zander
    -----------------------------------

Name:    Glenn R. Zander
      ---------------------------------

Title:   President & CEO
       --------------------------------


By:   /s/ James M. King
    -----------------------------------

Name:    James M. King
      ---------------------------------

Title:   SR VP Planning & Business Dev.
       --------------------------------

SIGNED for and on behalf of CASTLE HARBOUR LEASING INC.,

By:
    -----------------------------------

Name:
      ---------------------------------

Title:
       --------------------------------


<PAGE>

                                                            EXECUTION VERSION

                                March 20, 2001

Aloha Airlines, Inc.
371 Aokea Street
Honolulu, Hawaii 96819
Attn: Executive Vice President and Chief Financial Officer

         Re: Aircraft Lease Agreement dated as of May 12, 2000 between
             Aviation Financial Services Inc. ("AFSI"), as lessor, and Aloha
             Airlines, Inc., as Lessee ("LESSEE"), in respect of One Boeing
             737-700 Aircraft Bearing MSN 28641 and U.S. Reg. No. N741AL,
             which incorporates the terms of that certain Common Terms
             Agreement dated as of May 12, 2000 between General Electric
             Capital Corporation and Aloha Airlines, Inc. (i) as modified
             by that certain Letter Agreement dated May 12, 2000 between
             AFSI and Lessee, and (ii) as assigned and novated by that
             certain Aircraft Lease Novation and Amendment Agreement among
             AFSI, as existing lessor, Castle Harbour Leasing Inc., as new
             lessor ("Lessor"), and Lessee (collectively, and as amended or
             supplemented from time to time, the "LEASE")

Ladies and Gentlemen:

         We refer to the Lease, as defined above, and capitalized terms used
without definition herein have the meanings assigned to them in the Lease.
Lessor and Lessee desire to enter into this Letter Agreement in order to
document their mutual understanding in respect of certain additional changes in
the specifications for the Aircraft to be completed prior to Delivery.

         1. SCOPE OF CHANGES TO DELIVERY CONDITIONS. Lessor and Lessee hereby
acknowledge and agree that, notwithstanding anything to the contrary set
forth in the Lease, at Delivery under the Lease, (i) the engine thrust
capacity of the Aircraft shall have been modified from the level currently
specified in the GECAS Detail Specification D6-38808-34 (Revision D) as
incorporated in the Purchase Agreement No. 1905 dated as of April 1996 (the
"PURCHASE AGREEMENT") between General Electric Capital Corporation, as buyer,
and The Boeing Company, as seller, to include 26,000 lbs. Engine thrust bump
option (the "ENGINE THRUST BUMP UPGRADE"), and (ii) the Aircraft shall be
modified to include partial provisions for the installation of the Honeywell
SATCOM system (the "SATCOM PROVISIONS"). Completion of the Engine Thrust Bump
Upgrade and the installation of the

<PAGE>


SATCOM Provisions shall each be deemed one of the "Delivery Condition
Requirements" for all purposes of the Lease.

        2. COST OF CHANGES AND EFFECT ON RENT.

        [This provision has been omitted as confidential information, and
is separately filed with the Commission.]

         3. LIMITATION ON AMENDMENT. Except as expressly modified by this
Letter Agreement, all of the terms and provisions of the Lease remain in full
force and effect and are hereby ratified and confirmed by the parties.


<PAGE>


        Please indicate your acceptance of and agreement with the terms set
forth in this Letter Agreement by signing in the space provided below and
return one fully-executed counterpart of this Letter Agreement to Lessor.

                                   Very truly yours,

                                   CASTLE HARBOUR LEASING INC.


                                   By: /s/ Charles H. Meyer
                                       --------------------------------
                                   Name:   Charles Meyer
                                       --------------------------------
                                   Title:  Vice President
                                       --------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.


By:
    --------------------------------
Name:
    --------------------------------
Title:
    --------------------------------


By:
    --------------------------------
Name:
    --------------------------------
Title:
    --------------------------------

<PAGE>


         Please indicate your acceptance of and agreement with the terms set
forth in this Letter Agreement by signing in the space provided below and
return one fully-executed counterpart of this Letter Agreement to Lessor.

                                   Very truly yours,

                                   CASTLE HARBOUR LEASING INC.


                                   By:
                                       --------------------------------
                                   Name:
                                       --------------------------------
                                   Title:
                                       --------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.


By: /s/ G. R. Zander
    --------------------------------
Name:   Glenn R. Zander
    --------------------------------
Title:  President & CEO
    --------------------------------


By: /s/ James M. King
    --------------------------------
Name:   James M. King
    --------------------------------
Title:  SR VP Planning & Business Dev
    --------------------------------


<PAGE>


                             LEASE SUPPLEMENT NO. 1

          LEASE SUPPLEMENT NO. 1, dated March 29, 2001 between Castle Harbour
 Leasing Inc., a corporation organized under the laws of the State of Delaware
 ("Lessor"), and Aloha Airlines, Inc., a corporation organized under the laws of
 the State of Delaware ("Lessee").

          Lessor and Lessee have previously entered into that certain Aircraft
 Lease Agreement dated as of May 12, 2000, including the Common Terms Agreement
 as defined therein (collectively, herein referred to as the "Agreement" and the
 defined terms therein being hereinafter used with the same meaning). The
 Agreement provides for the execution and delivery from time to time of a Lease
 Supplement substantially in the form hereof for the purpose of leasing the
 aircraft described below under the Agreement as and when delivered by Lessor to
 Lessee in accordance with the terms thereof.

          The Agreement and this Lease Supplement relate to the Aircraft,
 Engines and Parts as more precisely described below and in the Certificate of
 Technical Acceptance. A counterpart of the Agreement is attached hereto and
 this Lease Supplement and the Agreement shall form one document.

          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 and pursuant to
 the Agreement and Lessee hereby accepts, acknowledges receipt of possession and
 leases from Lessor under and pursuant to the Agreement, that certain Boeing
 737-76N aircraft, and the two (2) CFM56-7B26 Engines (each of which Engines has
 750 or more rated takeoff horsepower or the equivalent of such horsepower)
 described in Schedule 1 hereto, together with the Aircraft Documents and
 Records described in the Agreement (the "Delivered Aircraft").

          2. The Delivery Date of the Delivered Aircraft is the date of this
 Lease Supplement set forth in the opening paragraph hereof.

          3. The Term for the Delivered Aircraft shall commence on the Delivery
 Date and shall end on the Expiry Date, with respect to which the Scheduled
 Expiry Date shall be March 29, 2016.

          4. The amount of Rent for the Delivered Aircraft is set forth in
Schedule B to the Agreement.

          5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft
 and each delivered Engine have been duly marked in accordance with the terms of
 Section 8.6(a) of the Agreement, (ii) the Aircraft is insured as required by
 the Agreement, (iii) the representations and warranties of Lessee referred to
 in Section 2.1 of the Agreement are hereby repeated with effect as of the date
 first above written, (iv) having inspected the Delivered Aircraft, Lessee
 acknowledges that the Delivered Aircraft satisfies all conditions required for
 Lessee's acceptance of delivery as set forth


<PAGE>


 in the Agreement, and (v) the execution and delivery of this Lease Supplement
 signifies absolute and irrevocable acceptance by Lessee of the Delivered
 Aircraft for all purposes hereof and of the Agreement.

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

         7. This Lease Supplement may be executed in any number of counterparts;
 each of such counterparts, shall for all purposes be deemed to be an original;
 and all such counterparts shall together constitute but one and the same Lease
 Supplement.


<PAGE>



             IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
     Supplement No. 1 to be duly executed as of the day and year first above
     written.


     LESSOR,                              LESSEE,

     CASTLE HARBOUR LEASING INC.          ALOHA AIRLINES, INC.


     By:  /s/ Charles H. Meyer            By:___________________________
        ------------------------
     Name: Charles H. Meyer               Name:_________________________
          ----------------------
     Title:   Vice President              Title: _______________________
           ---------------------


                                          By: __________________________

                                          Name:_________________________

                                          Title:________________________


<PAGE>


          IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
 Supplement No. 1 to be duly executed as of the day and year first above
 written.

 LESSOR,                                 LESSEE,

 CASTLE HARBOUR LEASING INC.             ALOHA AIRLINES, INC.




 By:___________________________          By:   /s/ Brenda F. Cutwright
                                            ---------------------------------
 Name:_________________________          Name: BRENDA F. CUTWRIGHT
                                              -------------------------------
 Title:________________________          Title:   EXEC. V.P. & C.F.O.
                                               ------------------------------


                                         By:   /s/ James M. King
                                            ---------------------------------
                                         Name:      JAMES M. KING
                                              -------------------------------
                                         Title: SENIOR V.P. PLANNING & BUS DEV.
                                               --------------------------------


<PAGE>


                                   SCHEDULE 1

              Airframe Manufacturer:                      Boeing
              Aircraft Model and Series:                  737-76N
              Registration Mark:                          N741AL
              Manufacturer's Serial Number:               28641
              Engine Manufacturer and Model:              CFMI Model CFM56-7B26
              Engine Serial Numbers:                      889274 and 888281



<PAGE>


                                 March 29, 2001

 Aloha Airlines, Inc.
 371 Aokea Street
 Honolulu, Hawaii 96819
 Attn: Executive Vice
 President and Chief Financial Officer

          Re:     Aircraft Lease Agreement dated as of May 12, 2000 between
                  Aviation Financial Services Inc. ("AFSI"), as lessor, and
                  Aloha Airlines, Inc., as Lessee ("LESSEE"), in respect of One
                  Boeing 737-700 Aircraft Bearing MSN 28641 and U.S. Reg. No.
                  N741AL, which incorporates the terms of that certain Common
                  Terms Agreement dated as of May 12, 2000 between General
                  Electric Capital Corporation and Aloha Airlines, Inc. (i) as
                  modified by that certain Letter Agreement dated May 12, 2000
                  between AFSI and Lessee, (ii) as assigned and novated by that
                  certain Aircraft Lease Novation and Amendment Agreement among
                  AFSI, as existing lessor, Castle Harbour Leasing Inc., as new
                  lessor ("Lessor"), and Lessee, (iii) as modified by that
                  certain Letter Agreement dated March 20, 2001 (collectively,
                  and as amended or supplemented from time to time, the "LEASE")

 Ladies and Gentlemen:

         We refer to the Lease, as defined above, and capitalized terms used
 without definition herein have the meanings assigned to them in the Lease.
 Lessor and Lessee desire to enter into this Letter Agreement in order to
 document their mutual understanding in respect of the determination of the
 actual amount of Rent pursuant to Part III of Schedule B to the Lease as well
 as in respect of an undertaking by Lessee with respect to a legal opinion.

          1. RENT. [This provision has been omitted as confidential information,
 and is separately filed with the Commission.]


         2. UNDERTAKING BY LESSEE. Lessee hereby covenants and undertakes to
 obtain, and to deliver to Lessor on or before April 23, 2001 an updated legal
 opinion from Squires, Sanders & Dempsey, Lessee's regulatory counsel, which
 shall be in form and substance reasonably satisfactory to Lessor, as to (i)
 Lessee's possession of an air carrier operating certificate issued by the
 Secretary of Transportation


<PAGE>

 pursuant to Chapter 447 of Title 49 of the United States Code for aircraft
 capable of carrying 10 or more individuals or 6,000 pounds or more of cargo and
 (ii) Lessee's possession of a Certificate of Public Convenience and Necessity
 issued by the U.S. Department of Transportation authorizing Lessee to engage in
 both interstate and foreign carriage of passengers and cargo. Lessee and Lessor
 mutually agree and acknowledge that, if Lessee fails to deliver the foregoing
 updated legal opinion to Lessor within the period specified in the preceding
 sentence, such failure shall constitute an "Event of Default" for all purposes
 of the Lease and Lessor shall be entitled to any and all rights and remedies
 available to Lessor under the Lease and applicable Law.

          3. LIMITATION ON AMENDMENT. Except as expressly modified by this
 Letter Agreement, all of the terms and provisions of the Lease remain in full
 force and effect and are hereby ratified and confirmed by the parties.


<PAGE>


          Please indicate your acceptance of and agreement with the terms set
 forth in this Letter Agreement by signing in the space provided below and
 return one fully-executed counterpart of this Letter Agreement to Lessor.

                                               Very truly yours,

                                               CASTLE HARBOUR LEASING INC.

                                               By:     /s/ Charles H. Meyer
                                                     -------------------------
                                               Name:       Charles Meyer
                                                     -------------------------
                                               Title:      Vice President
                                                     -------------------------

 ACKNOWLEDGED AND AGREED.

 ALOHA AIRLINES, INC.

 By:
      ---------------------------
 Name:
      ---------------------------
 Title:
      ---------------------------


 By:
      ---------------------------
 Name:
      ---------------------------
 Title:
      ---------------------------



<PAGE>


           Please indicate your acceptance of and agreement with the terms set
  forth in this Letter Agreement by signing in the space provided below and
  return one fully-executed counterpart of this Letter Agreement to Lessor.

                                              Very truly yours,

                                              CASTLE HARBOUR LEASING INC.

                                              By:
                                                    ---------------------------
                                              Name:
                                                    ---------------------------
                                              Title:
                                                    ---------------------------


  ACKNOWLEDGED AND AGREED.

  ALOHA AIRLINES, INC.

  By:     /s/ Brenda F. Cutwright
        ----------------------------
  Name:    Brenda F. Cutwright
        ----------------------------
  Title: EXECUTIVE Vice President & CFO
        ----------------------------

  By:    /s/ James M. King
        ----------------------------
  Name:      James M. King
        ----------------------------
  Title:   Senior Vice President
        ----------------------------
        Planning & Business Development



<PAGE>


                                                               EXECUTION VERSION
                                                               -----------------

                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT

                             Dated December 14, 2001

                                     between

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                    as Lessor

                                       and

                              ALOHA AIRLINES, INC.

                                    as Lessee


<PAGE>

THIS AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT is made on
December 14, 2001 (this "AGREEMENT")

BETWEEN:

GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated under the laws of
Delaware whose principal office is at 201 Long Ridge Road, Stamford, CT 06927,
U.S.A. ("GE CAPITAL"); and

ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at 371 Aokea Street, Honolulu, HI 96819, U.S.A.
and its chief executive office at 500 Ala Moana Blvd., Two Waterfront Tower,
Suite 500, Honolulu, HI 96813, U.S.A. ("ALOHA").

WHEREAS:

(A)     GE Capital and Aloha have previously entered into that certain Aircraft
        Lease Common Terms Agreement dated as of May 12, 2000 (the "CTA");

(B)     GE Capital and Aloha desire to amend the CTA on the terms set forth in
        this Agreement.

IT IS AGREED as follows:

1.      INTERPRETATION

1.1     DEFINITIONS: From and after the effective date of this Agreement
        (as notified to Lessee pursuant to the Notice), all references herein
        to the "Lease" mean the integrated agreement consisting of the various
        documents comprising the Lease as defined in Schedule 1 to the CTA as
        the same is amended by this Agreement and all references in the Lease
        to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
        shall mean the Lease as amended by this Agreement. Capitalized terms
        used herein but not defined shall have the respective meanings ascribed
        to such terms in the Lease.

1.2     CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
        shall apply to this Agreement as if the same were set out in full
        herein.

2.      AMENDMENT TO CTA

2.1     Schedule 7 to the CTA is hereby amended to read in its entirety as set
        forth on Schedule 7 attached to this Agreement.

3.      MISCELLANEOUS

3.1     FURTHER ASSURANCES: Aloha agrees from time to time to do and perform
        such other and further acts and execute and deliver any and all such
        other instruments as may be required by law or reasonably requested by
        GE Capital to establish, maintain and protect the rights and remedies
        of GE Capital and to carry out and effect the intent and purpose of
        this Agreement and of any Lease in which the CTA as amended by this
        Agreement may be incorporated.


                                       1


<PAGE>

3.2     COUNTERPARTS: This Agreement may be executed in any number of separate
        counterparts, and each counterpart shall when executed and delivered be
        an original document, but all counterparts shall together constitute
        one and the same instrument.

3.3     GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
        Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
        Agreement as if the same were set out in full herein.

3.4     VARIATION: The provisions of this Agreement shall not be varied
        otherwise than by an instrument in writing executed by or on behalf of
        GE Capital and Aloha.

3.5     INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
        invalid, illegal or unenforceable in any respect under any law, the
        validity, legality and enforceability of the remaining provisions shall
        not in any way be affected or impaired.

3.6     COSTS AND EXPENSES: Aloha shall pay to GE Capital on demand all fees,
        costs and expenses incurred or payable by GE Capital in connection with
        the preparation, negotiation and completion of this Agreement and
        performance of the transactions contemplated hereby.

4.      CONTINUATION OF COMMON TERMS AGREEMENT

        Save as expressly amended by this Agreement, the CTA shall continue in
        full and unvaried force and effect as the legal, valid and binding
        rights and obligations of each of GE Capital and Aloha enforceable in
        accordance with their respective terms.


                                        2
<PAGE>

        IN WITNESS WHEREOF the parties hereto have executed this Agreement the
        day and year first above written.

        Signed for and on behalf of
        GENERAL ELECTRIC CAPITAL CORPORATION


        By: /s/ Norman Liu
                ----------------------------
        Name:   Norman Liu
                ----------------------------
        Title:  Vice President
                ----------------------------


        Signed for and on behalf of
        ALOHA AIRLINES, INC.


        By:
                ----------------------------
        Name:
                ----------------------------
        Title:
                ----------------------------


        By:
                ----------------------------
        Name:
                ----------------------------
        Title:
                ----------------------------


<PAGE>

        IN WITNESS WHEREOF the parties hereto have executed this Agreement the
        day and year first above written.

        Signed for and on behalf of
        GENERAL ELECTRIC CAPITAL CORPORATION

        By:
                ----------------------------
        Name:
                ----------------------------
        Title:
                ----------------------------


        Signed for and on behalf of
        ALOHA AIRLINES, INC.

        By: /s/ Brenda F. Cutwright
                ----------------------------
        Name:   Brenda F. Cutwright
                ----------------------------
        Title:  Exec. Vice President & CFO
                ----------------------------


        By: /s/ James M. King
                ----------------------------
        Name:   JAMES M. KING
                ----------------------------
        Title:  SENIOR VICE PRESIDENT
                PLANNING & BUSINESS DEVELOPMENT
                ----------------------------


<PAGE>

                                  SCHEDULE 7
                            INSURANCE REQUIREMENTS

1.1     TYPES OF INSURANCE

The Insurances required to be maintained are as follows:

        (a)      HULL ALL RISKS of loss or damage while flying, taxiing and on
                 the ground with respect to the Aircraft on an agreed value
                 basis for not less than the Agreed Value and not more than
                 110% of the Agreed Value and with a deductible not exceeding
                 the Deductible Amount;

        (b)      HULL WAR Risks AND ALLIED PERILS in accordance with LSW555B or
                 its equivalent form reasonably acceptable to Lessor (or an
                 agreement of the United States Government to insure against or
                 indemnify for substantially the same risks) in an amount not
                 less than the Agreed Value;

        (c)      ALL RISKS (including War and Allied Risk except when on the
                 ground or in transit other than by air) property insurance on
                 all Engines and Parts when not installed on the Aircraft for
                 like kind and quality value and including engine test and
                 running risks; and

        (d)      COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
                 PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                 PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                 single limit (bodily injury/property damage) of an amount not
                 less than the Minimum Liability Coverage for the time being
                 for any one occurrence (but in respect of products and
                 personal injury liability, this limit may be an aggregate
                 limit for any and all losses occurring during the currency of
                 the policy). War and Allied Risks are also to be covered under
                 the policy in line with prudent market practice for comparable
                 airlines, operating similar equipment in similar
                 circumstances. In addition, without limitation of the
                 requirements of the preceding sentence (and notwithstanding
                 anything to the contrary contained in the preceding sentence),
                 the Lessee shall in all events maintain war risk and allied
                 perils liability insurance in accordance with London form
                 AVN52C (as in effect on September 1, 2001) or its equivalent
                 form reasonably acceptable to Lessor (or an agreement of the
                 United States Government to insure against or indemnify for
                 substantially the same risks), from time to time, with respect
                 to the Aircraft in an amount not less than the Minimum
                 Liability Coverage.

1.2     TERMS OF HULL AND SPARES INSURANCE

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

        (a)      LOSS PAYEE: name Lessor, as loss payee (without imposing on
                 Lessor any obligation imposed on the insured, including the
                 liability to pay any calls, commissions or premiums);

        (b)      PAYMENT OF LOSSES: Losses will be payable in Dollars to Lessor
                 for all amounts up to the Agreed Value and to Lessee for any
                 excess above the Agreed Value


                                       4
<PAGE>

                 (which excess shall not exceed 10% of the Agreed Value),
                 except where the insurance payment does not exceed the Damage
                 Notification Threshold, and no Default is in existence, in
                 which case the loss will be settled with and paid to Lessee;

        (c)      50/50 PROVISION: if separate Hull "all risks" and "war risks"
                 insurances are arranged, include a 50/50 provision in
                 accordance with market practice (AVS. 103 is the current
                 London market language); and

        (d)      NO OPTION TO REPLACE: confirm that the insurers are not
                 entitled to replace the Aircraft in the event of an insured
                 Event of Loss and are not entitled to replace any Engine in
                 the event of an Engine Event of Loss with respect to such
                 Engine.

1.3     TERMS OF LIABILITY INSURANCE

All required liability insurances will:

        (a)      ADDITIONAL INSUREDS: include each Indemnitee, as additional
                 insureds for its respective rights and interests, warranted,
                 each as to itself only, no operational interest (without
                 imposing on any such Person any obligation imposed on the
                 insured, including the liability to pay any calls, commissions
                 or premiums);

        (b)      SEVERABILITY: include a severability of interests clause which
                 provides that the insurance, except for the limit of
                 liability, will operate to give each insured the same
                 protection as if there were a separate policy issued to each
                 insured; and

        (c)      PRIMARY POLICY: contain a provision confirming that the policy
                 is primary without right of contribution and the liability of
                 the insurers will not be affected by any other insurance of
                 which Lessor, any Indemnitee or Lessee has the benefit so as
                 to reduce the amount payable to the additional insureds under
                 such policies.

1.4     TERMS OF ALL INSURANCES


All Insurances will:

        (a)      INDUSTRY PRACTICE: be in accordance with standard industry
                 practice for airlines operating similar aircraft in similar
                 circumstances;

        (b)      DOLLARS: provide cover denominated in Dollars;

        (c)      WORLDWIDE: operate on a worldwide basis subject to such
                 limitations and exclusions as are in line with industry
                 practice obtained by prudent United States-based international
                 air carriers;

        (d)      BREACH OF WARRANTY: provide that, in relation to the interests
                 of each of the additional assureds, the Insurances will not be
                 invalidated by any act or omission by Lessee, or any other
                 Person other than the respective additional assureds seeking
                 protection and shall insure the interests of each of the
                 additional assureds regardless of any breach or violation by
                 Lessee, or any other Person other than the respective
                 additional assured seeking protection of any warranty,
                 declaration or condition, contained in such Insurances;


                                       5
<PAGE>

        (e)      SUBROGATION: provide that the insurers will hold harmless and
                 waive any rights of recourse or subrogation against the
                 additional insureds to the extent Lessee has waived its rights
                 against the additional insureds in the Lease;

        (f)      PREMIUMS: provide that the additional insureds will have no
                 obligation or responsibility for the payment of any premiums
                 due (but reserve the right to pay the same should any of them
                 elect so to do) and that the insurers will not exercise any
                 right of set-off, counter-claim or other deduction, by
                 attachment or otherwise, in respect of any premium due against
                 the respective interests of the additional insureds other than
                 outstanding premiums relating to the Aircraft, any Engine or
                 Part the subject of the relevant claim;

        (g)      CANCELLATION/CHANGE: provide that the Insurances will continue
                 unaltered for the benefit of the additional insureds for at
                 least 30 days after written notice by registered mail or telex
                 of any cancellation, change, event of non-payment of premium
                 or installment thereof has been sent by insurer(s) to Lessor,
                 or where an insurance broker is appointed to the insurance
                 broker who shall promptly send on such notice to Lessor,
                 except in the case of war risks for which 7 days (or such
                 lesser period as is or may be customarily available in
                 respect of war risks or allied perils) will be given, or in
                 the case of war between the 5 great powers or nuclear peril
                 for which termination is automatic; and

        (h)      [NOT APPLICABLE]

        (i)      [INTENTIONALLY OMITTED.]

        (j)      INDEMNITIES:  accept and insure the indemnity  provisions of
                 the Lease to the extent of the risks covered by the policies.

1.5     DEDUCTIBLES

Lessee shall be responsible for any and all deductibles under the Insurances.

1.6     APPLICATION OF INSURANCE PROCEEDS

The Insurances will be endorsed to provide for payment of proceeds as follows:

        (a)      EVENT OF LOSS: all insurance payments up to the Agreed Value
                 received as the result of an Event of Loss occurring during
                 the Term will be paid to Lessor as loss payee and any amount
                 in excess of the Agreed Value (which excess shall not exceed
                 10% of the Agreed Value) shall be paid to Lessee;

        (b)      EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                 proceeds of any damage or loss to the Aircraft, any Engine or
                 any Part occurring during the Term not constituting an Event
                 of Loss and in excess of the Damage Notification Threshold
                 will be paid to the appropriate repair facility, and applied
                 in payment (or paid to Lessee and/or Lessor as reimbursement)
                 for repairs or replacement property upon Lessor being
                 satisfied that the repairs or replacement have been effected
                 in accordance with the Lease.

        (c)      BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                 amounts below


                                       6
<PAGE>

                 the Damage Notification Threshold shall be paid by the insurer
                 directly to Lessee;

        (d)      LIABILITY PROCEEDS: all insurance proceeds in respect of
                 third party liability will be paid by the insurers to the
                 relevant third party in satisfaction of the relevant liability
                 or to Owner, Lessor, Financing Partners' Representative or
                 Lessee, as the case may be, in reimbursement of any payment so
                 made;

        (e)      DEFAULT: notwithstanding any of the foregoing paragraphs, if
                 at the time of the payment of any such insurance proceeds a
                 Default has occurred and is continuing, all such proceeds will
                 be paid to Lessor, Owner or Financing Parties' Representative,
                 as the case may be, or retained to be applied toward payment
                 of any amounts which may be or become payable by Lessee in
                 such order as Lessor or Owner, as the case may be, may elect
                 until such time as no Default is continuing and then applied
                 as described above; and to the extent that insurance proceeds
                 are paid to Lessee, Lessee agrees to hold such proceeds in
                 trust and comply with the foregoing provisions and apply or
                 pay over such proceeds as so required.

1.7     UNITED STATES GOVERNMENTAL INDEMNITY

Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any Governmental
Entity whose obligations have the full faith and credit of the federal
Government of the United States, Lessor agrees to accept in lieu of insurance
required hereunder indemnification or insurance from the United States or such
a Governmental Entity in a form reasonably acceptable to Lessor and Owner and
against such risks and in such amounts and on such terms such that when added
to the Insurance maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.


                                       7


<PAGE>

                                                            EXECUTION VERSION


              AGREEMENT AND AMENDMENT TO AIRCRAFT LEASE AGREEMENT



                             DATED DECEMBER 14, 2001

                                     BETWEEN

                           CASTLE HARBOUR LEASING INC.

                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE


               AGREEMENT AND AMENDMENT TO AIRCRAFT LEASE AGREEMENT


                                  IN RESPECT OF
              AIRCRAFT LEASE AGREEMENT DATED AS OF MAY 12, 2000
RELATING TO BOEING MODEL 737-700 AIRCRAFT MANUFACTURER'S SERIAL NUMBER 28641


<PAGE>


THIS AGREEMENT is made on December 14,2001 ("AGREEMENT")

BETWEEN:

CASTLE HARBOUR LEASING INC., a company incorporated under the laws of
Delaware whose principal office is at c/o GE Capital Aviation Services, Inc.,
201 High Ridge Road, Stamford, CT 06927, U.S.A. ("LESSOR"); and

ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at 371 Aokea Street, Honolulu, HI 96819,
U.S.A. and its chief executive office at 500 Ala Moana Blvd., Two Waterfront
Tower, Suite 500, Honolulu, HI 96813, U.S.A. ("LESSEE").

WHEREAS:

(A)      By an Aircraft Lease Agreement dated as of May 12, 2000 ("ORIGINAL
         LEASE") between Lessee, as lessee, and Aviation Financial Services
         Inc. ("AFSI"), as lessor, which incorporates by reference that
         certain Aircraft Lease Common Terms Agreement dated as of May 12,
         2000 executed by General Electric Capital Corporation and Lessee (the
         "CTA"), as the same has been amended by (i) that certain letter
         agreement dated May 12, 2000 entered into between AFSI and Lessee,
         (ii) that certain Aircraft Lease Novation and Amendment Agreement
         dated as of February 28, 2001 (the "NOVATION AGREEMENT") among AFSI,
         as existing lessor, Lessor, as new lessor and Lessee, (iii) that
         certain letter agreement dated March 20, 2001 entered into between
         Lessor and Lessee, (iv) that certain letter agreement dated March 29,
         2001 entered into between Lessor and Lessee, and (v) Lease Supplement
         No. 1 dated March 29, 2001 entered into between Lessor and Lessee
         (collectively, and as amended or supplemented from time to time, the
         "LEASE") Lessor leased to Lessee and Lessee took on lease one Boeing
         model 737-700 aircraft with manufacturer's serial number 28641 (the
         "AIRCRAFT") on the terms and subject to the conditions contained
         therein.

(B)      The Original Lease, together with the Novation Agreement and Lease
         Supplement No. 1 thereto, have been recorded by the FAA and assigned
         conveyance numbers by the FAA as set forth on Schedule I hereto.

(C)      Lessee has requested Lessor to permit Lessee to defer the payment of
         a portion of the Rent and to amend the Lease to change certain
         provisions therein subject to the terms and conditions of this
         Agreement.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS: Capitalised terms used herein but not defined shall have
         the respective meanings ascribed to such terms in the Lease.

1.2      CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
         shall apply to this Agreement as if the same were set out in full
         herein. From and after the effective date of this Agreement (as
         notified to Lessee pursuant to the Notice), all references in the
         Lease to "the Lease," the "Aircraft Lease Agreement," "hereunder" or
         the like shall mean the Lease as amended by this Agreement.


                                     1
<PAGE>


2.       REPRESENTATIONS AND WARRANTIES

         Lessee hereby repeats the representations and warranties in Clause 2.1
         of the CTA as if made with reference to the facts and circumstances
         existing as at the date hereof and as if the references in such
         representations and warranties to the "Lease" referred to the Lease as
         amended by this Agreement.

3.       DEFERRAL OF RENT

3.1.     DEFINITION OF DEFERRED AMOUNT: The term "Deferred Amount" is defined
         in Clause 2 of Schedule 2 hereto.

3.2      TERMS OF RENT DEFERRAL: Each Deferred Amount shall be deferred as set
         forth in Clause 3 of Schedule 2 hereto.

4.       LETTER OF CREDIT

4.1      DEFINITION OF LETTER OF CREDIT PROCEEDS: The term "Letter of Credit
         Proceeds" is defined in Clause 2 of Schedule 2 hereto.

4.2      APPLICATION OF LETTER OF CREDIT PROCEEDS: The Letter of Credit
         Proceeds shall be applied as set forth in Clause 4.1 of Schedule 2
         hereto.

4.3      RESTORATION OF LETTER OF CREDIT: The Letter of Credit shall be
         restored by Lessee as set forth in Clause 4.2 of Schedule 2 hereto.

4.4      REMAINING AMOUNTS AVAILABLE UNDER LETTER OF CREDIT: Lessor shall
         continue to hold the Letter of Credit and shall be entitled to draw
         the remaining amounts available for drawing in accordance with the
         Lease, and Lessee shall ensure that the Letter of Credit complies with
         all requirements of Section 5.14 of the CTA and Section 3.1 of the
         Lease, except as set forth in Clause 4.2 of Schedule 2 hereto.

5.       AMENDMENTS TO LEASE

5.1      AMENDMENT TO CLAUSE 1.1: The following new definition is hereby added,
         to Clause 1.1 of the Lease:

         DEFERRED AMOUNT has the meaning assigned to it in the Agreement and
         Amendment to Aircraft Lease Agreement dated December 14, 2001
         between Lessor and Lessee.

5.2      EVENTS OF DEFAULT:

         (a)  In lieu of paragraph (a) (NON-PAYMENT) of Schedule 9 to the CTA,
              the following shall constitute an Event of Default:

              NON-PAYMENT: Lessee fails to make any payment of Rent,
              Supplemental Rent or any other amount payable under the Lease
              (including, without limitation, any repayment of a Deferred
              Amount due under the Agreement and Amendment to Aircraft Lease
              Agreement dated December 14, 2001 between Lessor and Lessee) on
              the due date and such failure continues for three (3) Business
              Days or more.


                                      2
<PAGE>

          (b)  In addition to the Events of Default set forth in paragraph (m)
               of Schedule 9 to the CTA, the following shall constitute an Event
               of Default:

                    the Letter of Credit is not restored as set forth in Clause
                    4.3 of the Agreement and Amendment to Aircraft Lease
                    Agreement dated December 14, 2001 between Lessor and Lessee.

5.3       RIGHTS AND REMEDIES ON DEFAULT: In addition to the rights and remedies
          set forth in Clause 13.2 of the CTA, the following shall be an
          additional right of Lessor:

                    Upon the occurrence of an Event of. Default, the entire
                    outstanding Deferred Amounts, together with interest thereon
                    at the Interest Rate, shall become immediately due and
                    payable by Lessee.

5.4       AMENDMENT TO THE CTA. Lessor and Lessee hereby acknowledge and agree
          that (i) the Amendment of Aircraft Lease Common Terms Agreement
          attached hereto as Schedule 3 is hereby incorporated by this reference
          and made an integral part of the Lease, and (ii) all references in the
          Lease to the "CTA" or "Common Terms Agreement" shall mean the CTA as
          amended by such amendment.

6.        CONDITIONS PRECEDENT

6.1       CONDITIONS: This Agreement shall take effect upon issuance by Lessor
          of a notice to Lessee (the "NOTICE") confirming the satisfaction of
          each of the following conditions and receipt of the following
          documents by Lessor on or prior to December 31, 2001:

          (a)  RESOLUTIONS: a copy of a resolution of the board of directors of
               Lessee approving the terms of, and transactions contemplated by,
               this Agreement, resolving that it enter into this Agreement, and
               authorising a specified person or persons to execute this
               Agreement;

          (b)  LEGAL OPINION: a legal opinion from Lessee's counsel in a form
               reasonably satisfactory to Lessor, and

          (C)  OTHER: such other documents as Lessor may reasonably request.

6.2       FURTHER CONDITIONS PRECEDENT: Lessor's obligations under this
          Agreement are subject to the further conditions precedent that as of
          the date of issuance of the Notice:

          (a)  the representations and warranties of Lessee under Clause 2 of
               this Agreement and under Clause 2.1 of the CTA shall be true and
               correct; and

          (b)  no Default shall have occurred and be continuing or might result
               from the leasing of the' Aircraft to Lessee under the Lease as
               amended hereby.

6.3       WAIVER: The conditions specified in Clauses 6.1 and 6.2 are for the
          sole benefit of Lessor and may be waived or deferred (in whole or in.
          part and with or without conditions) by Lessor.

7.        MISCELLANEOUS

7.1       FURTHER ASSURANCES: Lessee agrees from time to time to do and perform
          such other and further acts and execute and deliver any and all such
          other instruments as may be required by law or


                                       3
<PAGE>

          reasonably requested by Lessor to establish, maintain and protect the
          rights and remedies of Lessor and to carry out and effect the intent
          and purpose of this Agreement.

7.2       COUNTERPARTS: This Agreement may be executed in any number of separate
          counterparts, and each counterpart shall when executed and delivered
          be an original document, but all counterparts shall together
          constitute one and the same instrument.

7.3       GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
          Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
          Agreement as if the same were set out in full herein.

7.4       VARIATION: The provisions of this Agreement shall not be varied
          otherwise than by an instrument in writing executed by or on behalf of
          Lessor and Lessee.

7.5       INVALIDITY OF ANY PROVISION: If any provision of this Agreement
          becomes invalid, illegal or unenforceable in any respect under any
          law, the validity, legality and enforceability of the remaining
          provisions shall not in any way be affected or impaired.

7.6       COSTS AND EXPENSES: Whether or not the conditions specified in Clause
          6 are fulfilled, Lessee shall pay to Lessor on demand all fees, costs
          and expenses incurred or payable by Lessor in connection with the
          preparation, negotiation and completion of this Agreement and
          performance of the transactions contemplated hereby.

8.        CONTINUATION OF LEASE

          Save as expressly amended by this Agreement, the Lease shall continue
          in full and unvaried force and effect as the legal, valid and binding
          rights and obligations of each of Lessor and Lessee enforceable in
          accordance with their respective terms.


                                       4
<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
CASTLE HARBOUR LEASING INC.


By: /s/ Charles H. Meyer
    --------------------------------
Name:   Charles H. Meyer
    --------------------------------
Title:  Vice President
    --------------------------------


Signed for and on behalf of
ALOHA AIRLINES, INC.


By:
    --------------------------------
Name:
    --------------------------------
Title:
    --------------------------------


By:
    --------------------------------
Name:
    --------------------------------
Title:
    --------------------------------

<PAGE>

IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
CASTLE HARBOUR LEASING INC.


By:
    --------------------------------
Name:
    --------------------------------
Title:
    --------------------------------


Signed for and on behalf of
ALOHA AIRLINES, INC.


By: /s/ Brenda F. Cutwright
    --------------------------------
Name:   Brenda F. Cutwright
    --------------------------------
Title:  Exec. Vice President & CFO
    --------------------------------


By: /s/ James M. King
    --------------------------------
Name:   JAMES M. KING
    --------------------------------
        SENIOR VICE PRESIDENT
Title:  PLANNING & BUSINESS DEVELOPMENT
    --------------------------------


<PAGE>

                                   SCHEDULE 1

         Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
Financial Services Inc., as lessor, and Aloha Airlines, Inc., as lessee,
which  was recorded by the Federal Aviation Administration on May 1, 2001 and
assigned  Conveyance No. H101899, as assigned and supplemented by the
following described  instruments:

<Table>
<Caption>
DOCUMENT                             FAA RECORDING DATE    FAA CONVEYANCE NO.
--------                             ------------------    ------------------
<S>                                  <C>                   <C>
Aircraft Lease Novation and               05/01/01               H101899
Amendment Agreement among
Aviation Financial Services Inc.,
as existing lessor, Aloha Airlines,
Inc., as lessee, and Castle Harbour
Leasing Inc., as new lessor

Lease Supplement No. 1                    05/01/01               H101899
</Table>







                                  Schedule 1-1


<PAGE>

                                   SCHEDULE 2

                             CERTAIN FINANCIAL TERMS

1.        CONFIDENTIALITY

Lessor and Lessee understand that the commercial and financial information
contained in this Schedule 2 to this Agreement are considered by Lessor and
Lessee as proprietary and confidential. Lessor and Lessee each hereby agree,
and any of their assignees, upon becoming such shall agree that it will treat
this Schedule 2 as proprietary and confidential and will not without the
prior written consent of the other, disclose or cause to be disclosed, the
terms hereof to any person or entity, except to its employees, counsel,
underwriters and auditors as necessary or appropriate for the leasing
transaction which is the subject hereof, or except (a) as may be required by
applicable law or pursuant to an order, or a valid and binding request,
issued by any court or other Government Entity having jurisdiction over
Lessor, Lessee or the assignee of either of them, as the case may be, or (b)
as necessary to enable Lessor or its assignee to make transfers, assignments
or other dispositions to potential transferees, assignees or participants of
its interest in and to the Lease and this Agreement. In connection with any
such disclosure or any filing of the information contained herein pursuant to
any such applicable law, Lessor, Lessee or the assignee of either of them, as
the case may be, shall request and use its best reasonable efforts to obtain
confidential treatment of this Schedule 2 and the other party will cooperate
in making and supporting any such request for confidential treatment.

2.        DEFINITIONS OF CERTAIN TERMS

          [This provision has been omitted as confidential information, and
          is separately filed with the Commission.]

3.        TERMS OF RENT DEFERRAL

          [This provision has been omitted as confidential information, and
          is separately filed with the Commission.]


                                  Schedule 2-1
<PAGE>


4.        LETTER OF CREDIT

4.1       [This provision has been omitted as confidential information, and
          is separately filed with the Commission.]

4.2       [This provision has been omitted as confidential information, and
          is separately filed with the Commission.]


                                  Schedule 2-2


<PAGE>


                                   SCHEDULE 3

                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT













                                  Schedule 2-4


<PAGE>


                                                               EXECUTION VERSION
                                                               -----------------


                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT



                             Dated December 14, 2001


                                     between


                      GENERAL ELECTRIC CAPITAL CORPORATION

                                    as Lessor


                                       and


                              ALOHA AIRLINES, INC.

                                    as Lessee


<PAGE>


 THIS AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT is made on December 14,
 2001 (this "Agreement")

 BETWEEN:

 GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated under the laws of
 Delaware whose principal office is at 201 Long Ridge Road, Stamford, CT 06927,
 U.S.A. ("GE CAPITAL"); and

 ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
 principal place of business is at 371 Aokea Street, Honolulu, HI 96819, U.S.A.
 and its chief executive office at 500 Ala Moana Blvd., Two Waterfront Tower,
 Suite 500, Honolulu, HI 96813, U.S.A. ("ALOHA").

 WHEREAS:

 (A)     GE Capital and Aloha have previously entered into that certain Aircraft
         Lease Common Terms Agreement dated as of May 12, 2000 (the "CTA");

 (B)     GE Capital and Aloha desire to amend the CTA on the terms set forth in
         this Agreement.

 IT IS AGREED as follows:

 1.      INTERPRETATION

 1.1     DEFINITIONS: From and after the effective date of this Agreement
         (as notified to Lessee pursuant to the Notice), all references herein
         to the "Lease" mean the integrated agreement consisting of the various
         documents comprising the Lease as defined in Schedule 1 to the CTA as
         the same is amended by this Agreement and all references in the Lease
         to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
         shall mean the Lease as amended by this Agreement. Capitalized terms-
         used herein but not defined shall have the respective meanings ascribed
         to such terms in the Lease.

 1.2     CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
         shall apply to this Agreement as if the same were set out in full
         herein.

 2.      AMENDMENT TO CTA

 2.1     Schedule 7 to the CTA is hereby amended to read in its entirety as set
         forth on Schedule 7 attached to this Agreement.

 3.      MISCELLANEOUS

 3.1     FURTHER ASSURANCES: Aloha agrees from time to time to do and perform
         such other and further acts and execute and deliver any and all such
         other instruments as may be required by law or reasonably requested by
         GE Capital to establish, maintain and protect the rights and remedies
         of GE Capital and to carry out and effect the intent and purpose of
         this Agreement and of any Lease in which the CTA as amended by this
         Agreement may be incorporated.


                                        1


<PAGE>


3.2      COUNTERPARTS: This Agreement may be executed in any number of separate
         counterparts, and each counterpart shall when executed and delivered be
         an original document, but all counterparts shall together constitute
         one and the same instrument.

3.3      GOVERNING LAW: The provisions of Clause 15.8  (Governing  Law;
         Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
         Agreement as if the same were set out in full herein.

 3.4     VARIATION: The provisions of this Agreement shall not be varied
         otherwise than by an instrument in writing executed by or on behalf of
         GE Capital and Aloha.

3.5      INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
         invalid, illegal or unenforceable in any respect under any law, the
         validity, legality and enforceability of the remaining provisions shall
         not in any way be affected or impaired.

3.6      COSTS AND EXPENSES: Aloha shall pay to GE Capital on demand all fees,
         costs and expenses incurred or payable by GE Capital in connection with
         the preparation, negotiation and completion of this Agreement and
         performance of the transactions contemplated hereby.

 4.      CONTINUATION OF COMMON TERMS AGREEMENT

         Save as expressly amended by this Agreement, the CTA shall continue in
         full and unvaried force and effect as the legal, valid and binding
         rights and obligations of each of GE Capital and Aloha enforceable in
         accordance with their respective terms.


                                        2


<PAGE>


       IN WITNESS WHEREOF the parties hereto have executed this Agreement the
       day and year first above written.

       Signed for and on behalf of
       GENERAL ELECTRIC CAPITAL CORPORATION

       By:      /s/ Norman Liu
          -------------------------------

       Name:     Norman Liu
            -----------------------------

       Title:    Vice President
             ----------------------------


       Signed for and on behalf of
       ALOHA AIRLINES, INC.


       By: ______________________________

       Name: ____________________________

       Title: ___________________________


       By: ______________________________

       Name: ____________________________

       Title: ___________________________



<PAGE>


      IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.



       Signed for and on behalf of
       GENERAL ELECTRIC CAPITAL CORPORATION


       By: ______________________________

       Name: ____________________________

       Title: ___________________________



      Signed for and on behalf of
      ALOHA AIRLINES, INC.

      By:    /s/ Brenda F. Cutwright
         --------------------------------

      Name:   Brenda F. Cutwright
           ------------------------------

      Title:  Exec. Vice President & CFO
            -----------------------------


      By:    /s/ James M. King
          -------------------------------

      Name:   James M. King
            -----------------------------

                SENIOR VICE PRESIDENT
      Title:    PLANNING & BUSINESS DEVELOPMENT
            -----------------------------------


<PAGE>


                                   SCHEDULE 7
                             INSURANCE REQUIREMENTS

 1.1     TYPES OF INSURANCE

 The Insurances required to be maintained are as follows:

         (a)      HULL ALL RISKS of loss or damage while flying, taxiing and on
                  the ground with respect to the Aircraft on an agreed value
                  basis for not less than the Agreed Value and not more than
                  110% of the Agreed Value and with a deductible not exceeding
                  the Deductible Amount;

         (b)      HULL WAR RISKS AND ALLIED PERLIS in accordance with LSW555B or
                  its equivalent form reasonably acceptable to Lessor (or an
                  agreement of the United States Government to insure against or
                  indemnify for substantially the same risks) in an amount not
                  less than the Agreed Value;

         (c)      ALL RISKS (including War and Allied Risk except when on the
                  ground or in transit other than by air) property insurance on
                  all Engines and Parts when not installed on the Aircraft for
                  like kind and quality value and including engine test and
                  running risks; and

         (d)      COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
                  PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                  PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                  single limit (bodily injury/property damage) of an amount not
                  less than the Minimum Liability Coverage for the time being
                  for any one occurrence (but in respect of products and
                  personal injury liability, this limit may be an aggregate
                  limit for any and all losses occurring during the currency of
                  the policy). War and Allied Risks are also to be covered under
                  the policy in line with prudent market practice for comparable
                  airlines, operating similar equipment in similar
                  circumstances. In addition, without limitation of the
                  requirements of the preceding sentence (and notwithstanding
                  anything to the contrary contained in the preceding sentence),
                  the Lessee shall in all events maintain war risk and allied
                  perils liability insurance in accordance with London form
                  AVN52C (as in effect on September 1, 2001) or its equivalent
                  form reaonsably acceptable to Lessor (or an agreement of the
                  United States Government to insure against or indemnify for
                  substantially the same risks), from time to time, with respect
                  to the Aircraft in an amount not less than the Minimum
                  Liability Coverage.

 1.2     TERMS OF HULL AND SPARES INSURANCE

 All required hull and spares insurance, so far as it relates to the Aircraft,
 will:

         (a)      LOSS PAYEE: name Lessor, as loss payee (without imposing on
                  Lessor any obligation imposed on the insured, including the
                  liability to pay any calls, commissions or premiums);

         (b)      PAYMENT OF LOSSES: Losses will be payable in Dollars to Lessor
                  for all amounts up to the Agreed Value and to Lessee for any
                  excess above the Agreed Value


                                        4


<PAGE>

                  (which excess shall not exceed 10% of the Agreed Value),
                  except where the insurance payment does not exceed the Damage
                  Notification Threshold, and no Default is in existence, in
                  which case the loss will be settled with and paid to Lessee;

         (c)      50/50 PROVISION: if separate Hull "all risks" and "war risks"
                  insurances are arranged, include a 50/50 provision in
                  accordance with market practice (AVS. 103 is the current
                  London market language); and

         (d)      NO OPTION TO REPLACE: confirm that the insurers are not
                  entitled to replace the Aircraft in the event of an insured
                  Event of Loss and are not entitled to replace any Engine in
                  the event of an Engine Event of Loss with respect to such
                  Engine.

 1.3     TERMS OF LIABILITY INSURANCE

 All required liability insurances will:

         (a)      ADDITIONAL INSUREDS: include each Indemnitee, as additional
                  insureds for its respective rights and interests, warranted,
                  each as to itself only, no operational interest (without
                  imposing on any such Person any obligation imposed on the
                  insured, including the liability to pay any calls, commissions
                  or premiums);

         (b)      SEVERABILITY: include a severability of interests clause which
                  provides that the insurance, except, for the limit of
                  liability, will operate to give each insured the same
                  protection as if there were a separate policy issued to each
                  insured; and

         (c)      PRIMARY POLICY: contain a provision confirming that the policy
                  is primary without right of contribution and the liability of
                  the insurers will not be affected by any other insurance of
                  which Lessor, any Indemnitee or Lessee has the benefit so as
                  to reduce the amount payable to the additional insureds under
                  such policies.

 1.4     TERMS OF ALL INSURANCES

 All Insurances will:

         (a)      INDUSTRY PRACTICE: be in accordance with standard industry
                  practice for airlines operating similar aircraft in similar
                  circumstances;

         (b)      DOLLARS: provide cover denominated in Dollars;

         (c)      WORLDWIDE: operate on a worldwide basis subject to such
                  limitations and exclusions as are in line with industry
                  practice obtained by prudent United States based international
                  air carriers;

         (d)      BREACH OF WARRANTY: provide that, in relation to the interests
                  of each of the additional assureds, the Insurances will not be
                  invalidated by any act or omission by Lessee, or any other
                  Person other than the respective additional assureds seeking
                  protection and shall insure the interests of each of the
                  additional assureds regardless of any breach or violation by
                  Lessee, or any other Person other than the respective
                  additional assured seeking protection of any warranty,
                  declaration or condition, contained in such Insurances;


                                        5


<PAGE>


         (e)      SUBROGATION: provide that the insurers will hold harmless and
                  waive any rights of recourse or subrogation against the
                  additional insureds to the extent Lessee has waived its rights
                  against the additional insureds in the Lease;

         (f)      PREMIUMS: provide that the additional insureds will have no
                  obligation or responsibility for the payment of any premiums
                  due (but reserve the right to pay the same should any of them
                  elect so to do) and that the insurers will not exercise any
                  right of set-off, counter-claim or other deduction, by
                  attachment or otherwise, in respect of any premium due against
                  the respective interests of the additional insureds other than
                  outstanding premiums relating to the Aircraft, any Engine or
                  Part the subject of the relevant claim;

                  (g) Cancellation/Change: provide that the Insurances will
                  continue unaltered for the benefit of the additional insureds
                  for at least 30 days after written notice by registered mail
                  or telex of any cancellation, change, event of non-payment of
                  premium or installment thereof has been sent by insurer(s) to
                  Lessor, or where an insurance broker is appointed to the
                  insurance broker who shall promptly send on such notice to
                  Lessor, except in the case of war risks for which 7 days (or
                  such lesser period as is or may be customarily available in
                  respect of war risks or allied perils) will be given, or in
                  the case of war between the 5 great powers or nuclear peril
                  for which termination is automatic; and

         (h)      [NOT APPLICABLE]

         (i)      [INTENTIONALLY OMITTED.]

         (j)      INDEMNITIES: accept and insure the indemnity provisions of the
                  Lease to the extent of the risks covered by the policies.

 1.5      DEDUCTIBLES

 Lessee shall be responsible for any and all deductibles under the Insurances.

 1.6     APPLICATION OF INSURANCE PROCEEDS

 The Insurances will be endorsed to provide for payment of proceeds as follows:

         (a)      EVENT OF LOSS: all insurance payments up to the Agreed Value
                  received as the result of an Event of Loss occurring during
                  the Term will be paid to Lessor as loss payee and any amount
                  in excess of the Agreed Value (which excess shall not exceed
                  10% of the Agreed Value) shall be paid to Lessee;

         (b)      EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                  proceeds of any damage or loss to the Aircraft, any Engine or
                  any Part occurring during the Term not constituting an Event
                  of Loss and in excess of the Damage Notification Threshold
                  will be paid to the appropriate repair facility, and applied
                  in payment (or paid to Lessee and/or Lessor as reimbursement)
                  for repairs or replacement property upon Lessor being
                  satisfied that the repairs or replacement have been effected
                  in accordance with the Lease.

         (c)      BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                  amounts below


                                        6


<PAGE>

                  the Damage Notification Threshold shall be paid by the insurer
                  directly to Lessee;

          (d)     LIABILITY PROCEEDS: all insurance proceeds in respect of
                  third party liability will be paid by the insurers to the
                  relevant third party in satisfaction of the relevant liability
                  or to Owner, Lessor, Financing Partners' Representative or
                  Lessee, as the case may be, in reimbursement of any payment so
                  made;

          (E)     DEFAULT: notwithstanding any of the foregoing paragraphs, if
                  at the time of the payment of any such insurance proceeds a
                  Default has occurred and is continuing, all such proceeds will
                  be paid to Lessor, Owner or Financing Parties' Representative,
                  as the case may be, or retained to be applied toward payment
                  of any amounts which may be or become payable by Lessee in
                  such order as Lessor or Owner, as the case may be, may elect
                  until such time as no Default is continuing and then applied
                  as described above; and to the extent that insurance proceeds
                  are paid to Lessee, Lessee agrees to hold such proceeds in
                  trust and comply with the foregoing provisions and apply or
                  pay over such proceeds as so required.

 1.7      UNITED STATES GOVERNMENTAL INDEMNITY

 Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
 Sub-Lease to, or a requisition of use by, the United States or any Governmental
 Entity whose obligations have the full faith and credit of the federal
 Government of the United States, Lessor agrees to accept in lieu of insurance
 required hereunder indemnification or insurance from the United States or such
 a Governmental Entity in a form reasonably acceptable to Lessor and Owner and
 against such risks and in such amounts and on such terms such that when added
 to the Insurance maintained by Lessee, Lessee is in full compliance with the
 requirements of Section 9 and this Schedule.


                                        7


<PAGE>

                                                May 12, 2000

Aloha Airlines, Inc.
371 Aokea Street
Honolulu, Hawaii 96819
Attn: Executive Vice President and Chief Financial Officer

          Re:     Aircraft Lease Agreement dated as of May 12, 2000 between
                  Aviation Financial Services, Inc., as Lessor, and Aloha
                  Airlines, Inc., as Lessee, in respect of One Boeing 737-700
                  Aircraft Bearing MSN 28641, incorporating the terms of that
                  certain Common Terms Agreement dated as of May 12, 2000 (the
                  "CTA") between General Electric Capital Corporation and Aloha
                  Airlines, Inc. (collectively, the "Lease")

Ladies and Gentlemen:

We refer to the Lease, as defined above, and capitalized terms used without
definition herein have the meanings assigned to them in the Lease. This letter
will serve as the acknowledgment of Aviation Financial Services, Inc., as
lessor ("Lessor") under the Lease, that neither of the following situations
shall constitute an "Event of Default" under the Lease pursuant to Section (h)
of Schedule 9 to the CTA:

          1.   Cessation or temporary suspension of Lessee's trans-Pacific route
               between Hawaii and California (or any other location within the
               continental United States); or

          2.   Cessation or temporary suspension of any segment of Lessee's
               business which accounted for ten percent (10%) or less of the
               gross revenues of Lessee over the last three fiscal years
               immediately preceding the date of suspension or cessation (which
               calculation shall be made on a cumulative basis taking into
               account any and all segments of Lessee's business suspended or
               ceased within such three-year period).

For the avoidance of doubt, Lessor and Lessee expressly acknowledge and agree
that nothing in this letter agreement shall be deemed to derogate from or
modify any other provisions of the Lease. Without limiting the foregoing,
Lessee expressly acknowledges and agrees that, in the event that Lessee's
utilization of the Aircraft results in an operational ratio of less than one
Flight Hour per Cycle for a period of twelve (12) consecutive months, an "Event
of Default" shall arise pursuant to Part VIII of Schedule B to the Lease,
regardless of whether or not such operation arises out of or as a result of any
suspension of Lessee's trans-Pacific route.

<PAGE>

Please indicate your acceptance of and agreement with the terms set forth in
this letter by signing in the space provided below and return one
fully-executed counterpart of this letter to Lessor.

                                           Very truly yours,

                                           AVIATION FINANCIAL SERVICES, INC.

                                           By:      /s/ Norm Liu
                                               ---------------------------------
                                           Name:        Norm Liu
                                                 -------------------------------
                                           Title:       Vice President
                                                  ------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


<PAGE>

Please indicate your acceptance of and agreement with the terms set forth in
this letter by signing in the space provided below and return one
fully-executed counterpart of this letter to Lessor.

                                           Very truly yours,

                                           AVIATION FINANCIAL SERVICES, INC.

                                           By:
                                               ---------------------------------
                                           Name:
                                                 -------------------------------
                                           Title:
                                                  ------------------------------

ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By: /s/ Brenda F. Cutwright
    ---------------------------------
Name:  Brenda F. Cutwright
      -------------------------------
Title: Executive Vice President & CFO
       ------------------------------

By: /s/ James M. King
    ---------------------------------
Name:  James M. King
      -------------------------------
Title: VP Planning & Development
       ------------------------------