<PAGE>

                                                                   Exhibit 10.74

                                                               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 DECEMBER 14, 2001

                                     BETWEEN

                               AIRCRAFT 28654 LLC

                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE

                  IN RESPECT OF AIRCRAFT: BOEING MODEL 737-700

                                SERIAL NO: 28654

             U.S. REGISTRATION NO.: N316ML (TO BE CHANGED TO N743AL)

                        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 December 14, 2001 and is

   BETWEEN:

   (1)  AIRCRAFT 28654 LLC, a limited liability company organized 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

   (2)  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").

   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

            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, and APU SUPPLEMENTAL RENT have the
            meaning specified in Schedule B.

            ASSUMED RATIO has the meaning specified in Schedule B.

                                      -1-

<PAGE>


            COMMON TERMS AGREEMENT means the "Aircraft Lease Common Terms
            Agreement" dated as of May 12, 2000 executed by GECC and Lessee (as
            in effect on the date hereof 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 Abbotsford, British Columbia, Canada 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 have the
            meanings specified in Schedule B.

            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,

                                      -2-

<PAGE>


            subsidiaries, affiliates, partners, contractors, directors,
            officers, representatives, agents and employees.

            LANDING GEAR SUPPLEMENTAL RENT has the meaning specified in Schedule
            B.

            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.

            PBH PERIOD has the meaning specified in Schedule B.

            PBH RATE has the meaning specified in Schedule B.

            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 January, 2002.

            SCHEDULED DELIVERY WEEK means the week during which the Scheduled
            Delivery Date occurs.

            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


                                       -3-


<PAGE>


            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.

            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 Tenn 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, subject to the
            following:

            2.2.1   LESSEE'S EARLY TERMINATION OPTION: Lessee may at its sole
                    option terminate the Lease at the first yearly anniversary
                    of the Delivery Date by providing written notice of its
                    election to terminate under this Section 2.2.1 to Lessor not
                    less than 180 days prior to the first yearly anniversary of
                    the Delivery Date. Upon such termination, Lessee shall
                    return the Aircraft to Lessor at the first yearly
                    anniversary of the Delivery Date in accordance with all of
                    the requirements of the Lease, including without limitation
                    those set forth in Part III of Schedule A hereto.

            2.2.2   LESSOR'S   EARLY   TERMINATION   OPTION: Lessor  may
                    terminate  the Lease at any time at or  prior  to the  first
                    yearly anniversary  of  the  Delivery  Date  by providing
                    written


                                       -4-



<PAGE>


            notice ("LESSOR'S NOTICE") of its election to terminate under this
            Section 2.2.2 to Lessee not less than 60 days prior to the
            termination date specified in such notice; provided, however, Lessee
            may elect to nullify the early termination of the Lease by Lessor
            under this Section 2.2.2 if, within fifteen (15) days following
            Lessee's receipt of Lessor's Notice, Lessee delivers to Lessor a
            written instrument in form and substance satisfactory to Lessor
            ("LESSEE'S COMMITMENT AND WAIVER") by which Lessee confirms its
            commitment to keep the Aircraft for the full Term and waives forever
            Lessee's right to terminate the Lease at the first yearly
            anniversary of the Delivery Date under Section 2.2.1 above. Upon
            receipt of Lessee's Commitment and Waiver, Lessor's election to
            terminate the Lease under this Section 2.2.2 shall be deemed null
            and void and the Lease shall continue in full force and effect
            (subject, however, to Lessee's waiver of its rights pursuant to
            Lessee's Commitment and Waiver) as though Lessor's Notice had never
            been delivered. If Lessor delivers a Lessor's Notice and Lessee does
            not deliver Lessee's Commitment and Waiver within fifteen (15) days
            following Lessee's receipt of Lessor's Notice, then Lessee shall
            return the Aircraft to Lessor at the termination date specified in
            Lessor's Notice in accordance with all of the requirements of the
            Lease, including without limitation those set forth in Part III of
            Schedule A hereto.

   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 pay Supplemental Rent to Lessor on
            each applicable date during the Term in the amounts provided in
            Schedule B hereto and as provided in Section 5.4 of the Common Terms
            Agreement.

                                       -5-


<PAGE>


   3.4     LESSOR'S MAINTENANCE CONTRIBUTION:

             3.4.1   Provided that no Default has occurred and is continuing,
                     Lessor will pay (as a separate and independent obligation
                     and not as a return of Supplemental Rent) the following
                     amounts to Lessee by way of contribution to the cost of
                     maintenance of the Aircraft, UPON RECEIPT BY LESSOR, WITHIN
                     SIX MONTHS AFTER COMMENCEMENT OF SUCH MAINTENANCE AND
                     BEFORE THE EXPIRY DATE, of an invoice and supporting
                     documentation reasonably satisfactory to Lessor evidencing
                     performance of the following work by the Maintenance
                     Performer:

                     (a)      AIRFRAME: With respect to the Airframe, the
                              completion, in accordance with the Lease, of the
                              Airframe Structural Check, the lesser of (aa) the
                              amount of that invoice and (bb) an amount equal to
                              the aggregate amount of the Airframe Supplemental
                              Rent paid under the Lease at the date such work
                              starts less the aggregate amount previously paid
                              by Lessor under this sub-clause;

                     (b)      ENGINE LIFE-LIMITED PARTS: With respect to
                              life-limited Parts within any Engine, the
                              performance, in accordance with the Lease, of any
                              replacement or repair of those Parts ("Engine LLP
                              Replacement"), the lesser of (x) the amount of
                              that invoice and (y) an amount equal to the
                              aggregate amount of the Engine LLP Supplemental
                              Rent paid in respect of that Engine under the
                              Lease at the date such work starts less the
                              aggregate amount previously paid in respect of
                              that Engine by Lessor under this sub-clause;

                     (c)      ENGINE REFURBISHMENT: With respect to any Engine,
                              the performance, in accordance with the Lease, of
                              Engine Refurbishment in respect of that Engine the
                              lesser of (x) the amount of that invoice and (y)
                              an amount equal to the aggregate amount of the
                              Engine Supplemental Rent paid under the Lease in
                              respect of that Engine at the date such work
                              starts less the aggregate amount previously paid
                              in respect of that Engine by Lessor under this
                              sub-clause;

                     (d)      APU: With respect to the APU, the performance, in
                              accordance with the Lease, of all shop visits
                              requiring APU removal and disassembly, the lesser
                              of (x) the amount of that invoice and (y) an
                              amount equal to the aggregate amount of the APU
                              Supplemental Rent paid under the Lease at the date
                              such work starts less the aggregate amount
                              previously paid by Lessor under this sub-clause;
                              and

                                       -6-

<PAGE>


                     (e)      LANDING GEAR: With respect to the Landing Gear,
                              the performance in accordance with the Lease, of
                              all work on the landing gear in the nature of
                              overhaul and requiring removal and disassembly,
                              the lesser of (x) the amount of that invoice and
                              (y) an amount equal to the aggregate amount of the
                              Landing Gear Supplemental Rent paid under the
                              Lease at the date such work starts less the
                              aggregate amount previously paid by Lessor under
                              this sub-clause.

            PROVIDED THAT Lessor will not pay any such contribution:

            3.4.2    in respect of paragraphs (a)-(e) above, for repairs arising
                     as a result of accidents or incidents (whether or not
                     eligible for recovery under Lessee's insurance),
                     operational or maintenance mishandling or airworthiness
                     directive work; nor

            3.4.3    in respect of paragraphs (b) and (c) above, for repairs
                     arising as a result of foreign object damage, the removal,
                     installation, maintenance and repair of QEC (Quick Engine
                     Change Kits) and/or any replacement of parts not required
                     under the Lessee's Maintenance Program to be replaced as
                     part of the maintenance described in clause (a) through (e)
                     above, as the case may be.

    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: Aircraft 28654 LLC., 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 II 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 III of Schedule
            A hereto and in the Common Terms Agreement, including Schedule 6 of
            the Common Terms Agreement.


                                      -7-

<PAGE>

    6.      ADDRESSES FOR NOTICES

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

            Lessor:          Aircraft 28654 LLC
            Address:         c/o GE Capital Aviation Services
                             201 High Ridge Road
                             Stamford, CT 06927
            Attention:       Contracts Leader
            Facsimile:       (203) 357-3201
            Telephone:       (203) 357-4482

            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

    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 LIMITING 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,
            INDEMNITIES, 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.


                                      -8-


<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:

      AIRCRAFT 28654 LLC               ALOHA AIRLINES, INC.

      BY: AFS Investments I, Inc.
          Its Member

      By: /s/ Charles H. Meyer         By: ____________________________________
           --------------------------
      Name:   Charles H. Meyer         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:

      AIRCRAFT 28654 LLC               ALOHA AIRLINES, INC.



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

                                       By: /s/ James M. King
                                           ------------------------------------
                                       Name: JAMES M. KING
                                             ----------------------------------
                                              SENIOR VICE PRESIDENT
                                       Title: PLANNING & BUSINESS DEVELOPMENT
                                              ---------------------------------



<PAGE>


                                   SCHEDULE A

                     PART I-AIRFRAME AND ENGINES DESCRIPTION

   AIRCRAFT

            Manufacturer:          Boeing

            Model:                 737-700 ETOPS

            Serial Number:         28654

            U.S. Registration No.  N316ML (To be changed to N743AL)

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

            Engine Type:           CFM56-7B26

            Serial Nos:            888639 and 889655


                                       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,               Configured in accordance with GECAS Detail
             Engines,                Specification D6-38808-34 (Revision D) as
             Components:             modified for the Boeing 737-700 aircraft
                                     bearing manufacturer's serial number
                                     30830 ("Aircraft 30830") pursuant to that
                                     certain Aircraft Lease Agreement dated as
                                     of May 12; 2000 between Lessee and an
                                     affiliate of Lessor, with the following
                                     differences from the configuration of
                                     30830: (i)SATCOM partial provisions are
                                     not installed; (ii) location of cockpit
                                     printer in sidewall; (iii) hand rails to
                                     overhead bin doors are not installed;
                                     (iv)installation of six (rather than
                                     five) attendants seats; (v) dual
                                     aspirated TAT probes not installed; (vi)
                                     airstairs not installed but Lessor will
                                     provide airstairs and data kit free of
                                     charge after Delivery.

                                      For the avoidance of doubt, Lessor and
                                      Lessee acknowledge and agree that,
                                      although the Aircraft 30830 was new from
                                      the Manufacturer at the time of delivery
                                      to Lessee, the Aircraft will undergo
                                      certain modification work, both at the
                                      Manufacturer and at a third party
                                      maintenance facility, in order to bring it
                                      into the configuration specified above,
                                      prior to Delivery to Lessee.


                                       A-2

<PAGE>


              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-3




<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 essor'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-4

<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 furnishes 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-5

<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-6


<PAGE>



             (h)      have the fuselage, empennage, wings painted in Lessee's
                      livery;

             (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;

             (l)      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-7

<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 Component"
                      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 expected 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-8


<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-9


<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-10

<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.


                                   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

                                      A-11


<PAGE>


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.]

     PART II        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.]

                                       A-2




<PAGE>



     PART IV        TAX DEFINITIONS; SPECIAL TAX INDEMNITY

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

                                       A-4


<PAGE>



     PART V         SUPPLEMENTAL RENT

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

                                       A-5


<PAGE>



     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.]


                                       A-6




<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.]


                                       A-8




<PAGE>


                                  SCHEDULE C
                   AIRCRAFT LEASE COMMON TERMS AGREEMENT
                                     AND
              AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT





SF1 #86850 v9



                                     A-2


<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>

 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 indemnity 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 53(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 indeminty 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.

                   (ii)    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 ate
                  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);

                   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
                           SubLease  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
                           8A(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 ss.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 n 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

                  (y)      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            Tide 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 Might 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
                          Might 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's 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 requite
                 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 A 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 them 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 re lease, 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)
          reposessing, 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 re-lease 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 WICH 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 1201(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 WILL 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.

 1.7.   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/  Norm Liu
    -----------------------------------
 Name:    Norm Liu
      ---------------------------------
 Title:       Vice President
       --------------------------------


 ALOHA AIRLINES, INC.


 By: __________________________________
 Name:_________________________________
 Title:________________________________


 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 he 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 I 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 Tenn;
                    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 Permiitted 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 8.11(b).

  REPLACEMENT ENGINE means an "Engine" that has duly replaced an "Engine" in
  accordance with the requirements of Section 8.11(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.

         (1)       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)      OPINIONS(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 my 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 confirm 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 1 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 confirm 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:___________     Restrictions:__________

Cycles:__________     Restrictions:__________

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 rating 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
                 assured 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 tile 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 insured
                 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 ________________ 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 oris 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 (in) to "the issuer"
                shall include a reference to any confirming bank for the
                Letter of Credit

     (n)  REDELIVERY: Lessee fails 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 Crediot (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 021 001 033, 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 MR0
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

GENERAL                                           WEIGHTS

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 IT:
Aircraft TC:                                      UTILIZATION
Data as of:                                        Hours:
                                                  Cycles:

INSPECTIONS

----------------------------------------------------------------------------
 TYPE OF CHECK        LAST ACCOMPLISHED                               TIME
                   DATE     TIME     CYCLE          INTERVAL       REMAINING
----------------------------------------------------------------------------
      C
----------------------------------------------------------------------------

_____Any major checks coming due in the next 3 months.


                                          --------------
ENGINES                                   MFG:
                                          --------------

                                          --------------
                                          TYPE:
                                          --------------


---------------------------------------------------
POSITION      S/N      TT      TC      TSO      TCO
---------------------------------------------------

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

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


                                    15-1

<PAGE>


                           AIRCRAFT SPECIFICATIONS
                                  WORKSHEET

REGISTRATION:___________________

AUXILIARY POWER UNIT

                             --------------
                         MFG:
                             --------------

                             --------------
                         TYPE:
                             --------------


---------------------------------------------------------------
     S/N                TT                TC                TSO
---------------------------------------------------------------

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

LANDING GEAR

        OVERHAUL INTERVAL

                      --------------
                 MAIN:
                      --------------

                      --------------
                 NOSE:
                      --------------


      ------------------------------------------------------------------------
       S/N        TT        TC        TSO        CSO        TIME        CYCLES
                                                          REMAINING   REMAINING
                                                            TO O/H     TO LIFE
      ------------------------------------------------------------------------
NLG
      ------------------------------------------------------------------------
LMG
      ------------------------------------------------------------------------
RMG
      ------------------------------------------------------------------------


INTERIOR EQUIPMENT

                       QTY                LOCATION & TYPE
                 -------------------------------------------
Galleys:
                 -------------------------------------------
Lavatories:
                 -------------------------------------------
Air Stairs:
                 -------------------------------------------
Psgr. Seats:
                 -------------------------------------------



                                     15-2