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                                                                   Exhibit 10.40

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                                TRUST AGREEMENT

                          DATED AS OF August 15, 1988


                                     AMONG




                AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP,
                             as Owner Participant,

                          UNITED STATES AIRLEASE, INC.
                        as Owner Participant and Agent,


                                      AND


                          TRUST COMPANY FOR USL, INC.,
                                   as Trustee



                                   Concerning
                   One (1) McDonnell Douglas DC-9-82 Aircraft
                        with FAA Registration No. N913TW
                      Leased to Trans World Airlines, Inc.


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                               TABLE OF CONTENTS



<TABLE>
<CAPTION>
ARTICLE                                                                   PAGE
-------                                                                   ----
<S>                                                                        <C>
I       Definitions              . . . . . . . . . . . . . . . . . . . .    4

II      Authority to Execute and Perform Various
        Documents; Declaration of Trust by Trustee . . . . . . . . . . .    6

III     Beneficial Interest of Owner Participants in
        Trust Estate and Certificates  . . . . . . . . . . . . . . . . .    6

IV      Acceptance of Lease Property . . . . . . . . . . . . . . . . . .   10

V       Management and Administrative Services . . . . . . . . . . . . .   11

VI      Distributions            . . . . . . . . . . . . . . . . . . . .   12

VII     Duties of the Trustee  . . . . . . . . . . . . . . . . . . . . .   13

VIII    The Trustee              . . . . . . . . . . . . . . . . . . . .   15

IX      Indemnification of Trustee by
        Owner Participants       . . . . . . . . . . . . . . . . . . . .   17

X       Termination of Trust Agreement . . . . . . . . . . . . . . . . .   18

XI      Successor Trustees, Co-Trustees and Separate
        Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19

XII     Concerning the Agent . . . . . . . . . . . . . . . . . . . . . .   21

XIII    Supplements and Amendments . . . . . . . . . . . . . . . . . . .   23

XIV     Sale, Transfer or Mortgage of Lease Property . . . . . . . . . .   23

XV      Miscellaneous  . . . . . . . . . . . . . . . . . . . . . . . . .   28

Schedule I - Description of Aircraft and Engines . . . . . . . . . . . .   32
</TABLE>



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                                TRUST AGREEMENT

                 THIS TRUST AGREEMENT dated as of August 15, 1988, by and among
Trust Company for USL, Inc., a trust company organized under the laws of the
State of Illinois, in its individual capacity as expressly stated herein and
otherwise not in its individual capacity but solely as trustee hereunder
(herein in such capacity with its permitted successors and assigns called the
"Trustee"); Airlease Ltd., A California Limited Partnership (herein referred to
as the "Partnership" or "Owner Participant"); and United States Airlease, Inc.,
a California corporation, (herein sometimes referred to as "Airlease" or "Owner
Participant" in its separate capacity as Owner Participant and at other times,
herein sometimes referred to as "Agent" in its separate capacity as Agent).
(The Partnership and Airlease are herein sometimes referred to collectively as
the "Owner Participants.")

                              W I T N E S S E T H

                 WHEREAS, DC-9T-III, a Delaware corporation ("Seller"), is the
owner of the full legal and beneficial title to one (1) McDonnell Douglas
DC-9-82-Aircraft, which is subject to the Lease (as hereinafter defined);

                 WHEREAS, the Owner Participants are entering into this Trust
Agreement with the Trustee for the purpose of acquiring the Aircraft and the
Trustee shall purchase the Aircraft upon the instructions of the Owner
Participants, with funds advanced by each of the Owner Participants;

                 WHEREAS, Each of the Partnership and Airlease shall hold an
undivided fifty percent (50%) beneficial interest in the Lease Property (as
hereafter defined);

                 WHEREAS, upon the instructions of the Owner Participants, the
Trustee is entering into an agreement with Intercontinental Pacific Group,
Inc., a California corporation ("IPG"), Seller, and the Owner Participants to
acquire the Seller's interest in the Aircraft;

                 WHEREAS, the parties hereto desire to set forth certain of
their rights and obligations in respect of their interests under the
Certificates and in the Trust Estate (as such terms are hereafter defined);

                 NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:





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                                   ARTICLE I


                                  Definitions

                 Section 1.01. For all purposes of this Agreement, the
following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):

                 "Affiliate" means any individual, partnership, joint venture,
estate, association, corporation, trust company, trust or other entity
(collectively, "Person") that directly or indirectly controls, is controlled
by, or is under common control with the Person in question.

                 "Agreement" means this Trust Agreement, as it may hereafter
from time to time be supplemented, amended, waived, or modified pursuant to the
applicable provisions hereof.

                 "Aircraft" means the McDonnell Douglas DC-9-82 aircraft, FAA
Registration No. N913TW, Serial No. 49184, identified in Schedule 1 to this
Agreement, as more particularly defined in the applicable Lease, including the
Engines pertaining thereto.

                 "Application for Aircraft Registration" means the Application
for Aircraft Registration (AC Form 8050-1) with respect to the Aircraft.

                 "Assumption Agreement" means the Assumption Agreement dated as
of the Closing Date among Seller, Buyer, Security Pacific Equipment Leasing,
Inc., IPG, and Pegasus Capital Corporation.

                 "Certificate" means a certificate substantially in the form
included in Article III hereof issued by the Trustee to the Owner Participants.

                 "Closing Date" means the date the Aircraft is purchased by the
Trustee pursuant to the Purchase Agreement.

                 "Engine" in respect of the Aircraft means the two (2)  Pratt &
Whitney JT8D-217A engines identified by serial number in Schedule 1 hereto.

                 "FAA" means the Federal Aviation Administration and any agency
succeeding to the powers thereof.

                 "FAA Bill of Sale" means the bill of sale for the Aircraft on
AC Form 8050-2 or such other form as may be approved by the FAA on the Closing
Date for the Aircraft.

                 "IPG" means Intercontinental Pacific Group, Inc., a California
corporation.





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                 "Lease" means the Aircraft Lease Agreement, dated as of March
15, 1984 relating to the Aircraft between Seller as Lessor and Lessee, as
supplemented by Lease Supplement No. 1 thereto dated March 22, 1984, recorded
as one instrument by the FAA on April 26, 1984, and assigned Conveyance Number
S47200, and as amended by the Amendment Agreement dated as of December 15,
1986, recorded by the FAA on January 26, 1987 and assigned Conveyance Number
E91224, and all Exhibits attached thereto.

                 "Lease Assignment" means an Assignment and Assumption
Agreement between the Trustee, the Owner Participants and Seller, with respect
to the Aircraft, the Lease and the Participation Agreement in the form attached
to the Purchase Agreement as such Assignment and Assumption Agreement may
hereafter from time to time be supplemented, amended, waived or modified.

                 "Lease Property" means the Lease, the Aircraft, the Purchase
Agreement, and the Participation Agreement and all income, deductions, credits
and other benefits to which an owner of property would be entitled to as lessor
under the Lease, and owner of the Aircraft, including without limitation, all
rental payments under the Lease, the right to possession of the Aircraft, and
all proceeds upon the sale or re-lease of the Aircraft.

                 "Lender" means any Person whose principal business is
providing financing and which provides financing to the Trustee or Owner
Participants and is granted a Lien on the Aircraft, or the Airframe, or an
Engine or Part.

                 "Lessee" means Trans World Airlines, Inc., a Delaware
corporation.

                 "Majority in Interest of Owner Participants", as of a
particular date of determination, means the Owner Participant(s) having in
excess of 75% of the then outstanding amount of all Certificates.

                 "Operative Documents" means this Agreement, the Lease, the
Lease Assignment, the Assumption Agreement, the Certificates, the Purchase
Agreement, the Application for Aircraft Registration, the FAA Bill of Sale and
the Warranty Bill of Sale, the Participation Agreement and all other
agreements, instruments and certificates contemplated by such documents.

                 "Participation Agreement" means the Participation Agreement
between Seller and Lessee dated as of March 15, 1984, relating to the Lease and
the Aircraft.

                 "Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership, dated as of October 10, 1986, among Airlease
Management Services, Inc. ("General Partner"), United States Airlease Holding,
Inc., and other limited partners specified therein (the "Partnership
Agreement") to acquire, own, lease, and otherwise hold interests in aircraft
lease transactions.





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                 "Purchase Agreement" means the Aircraft Purchase Agreement,
dated as of August 15, 1988, by and among the Trustee, IPG, Seller and the
Owner Participants, as such Purchase Agreement may hereafter from time to time
be supplemented, amended, waived or modified.

                 "Seller" means DC-9T-III, Inc., a Delaware corporation.

                 "Trust Estate" means all estate, right, title and interest of
the Trust in and to the Operative Documents, any funds given to the Trustee by
the Owner Participants, and the Lease Property, including, without limitation,
all amounts of Basic Rent, insurance proceeds, stipulated loss value payments,
and requisition, indemnity or other payments of any kind (1) for or with
respect to the Lease Property or (2) payable to the Trustee under the Purchase
Agreement, Lease Assignment or Lease, or with respect to the Lease Property,
excluding any indemnity payments paid directly to an Owner Participant.

                 "Warranty Bill of Sale" means the bill of sale covering the
Aircraft in the form attached to the Purchase Agreement.

                 Section 1.02. For all purposes of this Agreement, any term
used but not defined herein shall have the meanings assigned to it in the
Lease, including, without limitation, "Airframe," "Parts," "Default," "Event of
Default," "Basic Rent" or "rental," and "Lien."

                                   ARTICLE II

              Authority to Execute and Perform Various Documents;
                        Declaration of Trust by Trustee

                 Section 2.01 Authority to Execute and Perform Various
Documents.  Each Owner Participant hereby authorizes and directs the Trustee
(i) to execute and deliver the Purchase Agreement, the Lease Assignment, the
Certificates, the Assumption Agreement, the Application, for Aircraft
Registration and the Affidavit pursuant to Section 47.7(c)(2)(ii) of the
Federal Aviation Regulations with respect to the Aircraft, and all other
agreements, instruments and certificates contemplated by the Operative
Documents, and to accept the FAA Bill of Sale and the Warranty Bill of Sale and
(ii) subject to the terms of this Agreement, to take other action in connection
with the foregoing as the Owner Participants may from time to time direct in
writing.

                 Section 2.02 Declaration of Trust by Trustee.  The Trustee
hereby declares that it will and does hold the Trust Estate upon the trusts set
forth herein for the sole use and benefit of the Owner Participants.

                                  ARTICLE III

                   Beneficial Interest of Owner Participants
                        in Trust Estate and Certificates

                 Section 3.01. Beneficial Interest of Each Owner Participant.





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                 (a)      Each Owner Participant shall have and retain an
undivided fifty percent (50%) beneficial interest in the Trust Estate, such
interest to be evidenced by Certificate(s) to be issued hereunder.  The Owner
Participants have jointly agreed to participate in the purchase of the Lease
Property on the Closing Date on the terms set forth in the Purchase Agreement,
and each Owner Participant shall, on the Closing Date, wire transfer to the
Seller on behalf of the Trustee its pro-rata portion of the purchase price for
the Aircraft.

                 Section 3.02. The Certificates.  The Owner Participants hereby
authorize and direct the Trustee, and the Trustee agrees that it will issue to
each Owner Participant a Certificate substantially in the form set forth below
as provided in Section 3.03 hereof.

                      Trust Company for USL, Inc., Trustee
                       Under Trust Agreement Dated as of
                                August 15, 1988

                                  CERTIFICATE

                 Issued in connection with the Aircraft hereinafter described:
McDonnell Douglas DC-9-82 Aircraft, Serial No. 49184, FAA Registration No.
N913TW.  August _____, 1988.

                 Trust Company for USL, Inc., not in its individual capacity
but solely as Trustee (herein in such capacity called the "Trustee") under the
Trust Agreement hereinafter referred to hereby certifies as follows: (i) this
Certificate is one of the Certificates referred to in the certain Trust
Agreement dated as of August 15, 1988, by and among the Trustee, Airlease Ltd.,
A California Limited Partnership, and United States Airlease, Inc., (herein
called "Trust Agreement"); the defined terms therein not otherwise defined
herein being herein used with the same meaning), which Certificates have been
or are to be issued by the Trustee pursuant to the Trust Agreement;
(ii)_________ is an Owner Participant and owns an undivided 50% interest in the
Trust Estate; and (iii) the holder of this Certificate has, ratably with the
holders of the other Certificates, an undivided beneficial interest in the
Trust Estate and is entitled to receive, ratably with the holders of the other
Certificates issued with respect to the Trust Estate as provided in the Trust
Agreement, a share of a portion of (1) the rental received or to be received by
the Trustee with respect to the Trust Estate, or (2) upon the sale or lease of
all or any part of the Trust Estate, any proceeds received or receivable
therefrom, as well as a share of certain other payments, which may be received
by the Trustee pursuant to the terms of the Trust Agreement as more
particularly set forth therein.

                 All amounts payable hereunder and under the Trust Agreement
shall be paid only from the income and the proceeds from the Trust Estate and
only to the extent that the Trustee shall have sufficient income or proceeds
from the Trust Estate to make such payments in accordance with the terms of the
Trust Agreement, except as specifically provided in Section 8.01 thereof; and
each holder hereof, by its acceptance of this Certificate, agrees that it will
look solely to the income and proceeds from the Trust Estate to the extent
available for distribution to such holder as above provided and that neither
the Owner Participants nor the Trustee (except to the





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extent provided in Section 8.01 of the Trust Agreement) are personally liable
to the holder hereof for any amounts payable under this Certificate or the
Trust Agreement.

                 Reference is hereby made to the Trust Agreement for a
statement of the rights of the holder of this Certificate and of the rights of
the holders of the other Certificates, as well as for a statement of the terms
and conditions of the trusts created by, and the rights, limitations of rights,
obligations and duties of the Trustee set forth in, the Trust Agreement, to all
of which terms and conditions each holder hereof agrees by its acceptance of
this Certificate.

                 Each holder hereof, by its acceptance of this Certificate,
agrees not to transfer this Certificate except in accordance with the terms of
Article XIV and Section 3.06 of the Trust Agreement.

                 These Certificates have not been registered under the
Securities Law of 1933, as amended, and may be transferred only in compliance
with such law.

                 IN WITNESS WHEREOF, the Trustee has duly executed this
Certificate as of the date first above written.


                                            ---------------------------
                                            Name: Stanley E. Gutman
                                            Title: Vice President
                                            TRUST COMPANY FOR USL, INC.


                 Section 3.03. Issuance of Certificates.  Each Certificate
issued to an Owner Participant shall contain a statement by the Trustee that
the holder of such Certificate has, ratably with the holders of the other
Certificates, an undivided beneficial interest in the Trust Estate, and is
entitled to receive, ratably with the holders of the other like Certificates as
provided herein, a share of a portion of (i) the rental received or to be
received by the Trustee for such Trust Estate, or (ii) upon the sale or lease
of all or any part of the Trust Estate, any proceeds received or receivable
therefrom, as well as a share of certain other payments which may be received
by the Trustee pursuant to the terms hereof as more particularly set forth
herein.

                 Section 3.04. Payments from Trust Estate Only.  All payments
to be made under the Certificates and under this Trust Agreement shall be made
only from the income and the proceeds from the Trust Estate and only to the
extent that the Trustee shall have sufficient income or proceeds from the Trust
Estate to make such payments in accordance with the terms of Article VI hereof,
except as specifically provided in Section 8.01 hereof.  Each holder of a
Certificate, by its acceptance of such Certificate, agrees that it will look
solely to the income and proceeds from the Trust Estate, to the extent
available for distribution to such holder as above provided and that the Owner
Participants are not personally liable to the holder of any Certificates.
Except as specifically provided herein, the Trustee is not liable to the Owner
Participants for any amounts payable under this Agreement and is not subject to
any liability in its individual capacity under this Agreement.





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                 Section 3.05. Payment to Holder of Certificate.  Subject to
Article VI, any amounts received by the Trustee and payable to each holder of a
Certificate pursuant to this Trust Agreement will be payable to each such
holder by wire transfer of immediately available funds to the bank for the
account of each Owner Participant as such Owner Participant shall direct in
writing, without any presentment or surrender of any Certificate.  The Trustee
may deem and treat the person in whose name any Certificate shall have been
issued by the Trustee as the absolute owner and holder of such Certificate for
the purpose of receiving payment of all amounts payable by the Trustee with
respect to such Certificate and for all other purposes, and the Trustee shall
not be affected by any notice to the contrary.

                 Section 3.06. Transfer of Certificate.  Subject to Article
XIV, a holder of a Certificate intending to transfer any Certificate held by
such holder to a new holder shall surrender such Certificate to the Trustee,
together with a written request from such holder for the issuance of a new
Certificate, specifying the name and address of the transferee and evidence
that the conditions set forth herein for such transfer have been satisfied.
Promptly upon receipt of such documents the Trustee will issue a new
Certificate of the same type, dated the same date or dates, in the amounts
indicated, and designated as issued in connection with the Aircraft as the
Certificate surrendered, and naming such transferee as shall be specified in
the written request from such holder, the Trustee shall not be required to
exchange any surrendered Certificate as above provided during the 10-day period
preceding the due date of any payment on such Certificate.

                 Section 3.07. Mutilated, Destroyed, Lost, or Stolen
Certificates.  If any Certificate shall become mutilated, destroyed, lost or
stolen, the Trustee shall, upon the written request of the holder of such
Certificate, execute and deliver in replacement thereof a new Certificate, in
the same original amount, dated the same date, as the Certificate so mutilated,
destroyed, lost or stolen.  If the Certificate being replaced has become
mutilated, such Certificate shall be surrendered to the Trustee.  If the
Certificate being replaced has been destroyed, lost or stolen the holder of
such Certificate shall furnish to the Trustee such security or indemnity as may
be required by either of them to save it harmless and evidence satisfactory to
the Trustee of the destruction, loss or theft of such Certificate and of the
ownership thereof.  If such holder is an original Owner Participant, the
written undertaking of such Owner Participant shall be sufficient indemnity.

                 Section 3.08. Payment of Expenses Upon Transfer.  Upon the
issuance of a new Certificate or Certificates pursuant to Section 3.06 or 3.07
hereof, the Trustee may require the payment from the party or parties to whom
such new Certificate or Certificates are issued of a sum to reimburse itself
for, or to provide funds for, the payment of any tax or other governmental
charge or any charges and expenses connected therewith paid or payable by the
Trustee.

                 Section 3.09. Payments by Each Owner Participant.  Payments
and contributions (including, without limitation, Trustee's fees and expenses
and indemnifications of the Trustee) provided for herein to be made by each
Owner Participant shall be made by each Owner Participant in proportion to its
beneficial interest in the Trust Estate at the time such payments or
contributions are due and payable.  In the event that any Owner Participant
makes a payment for any costs or expenses (including legal fees and expenses)
pursuant to the written instructions of the Trustee or a Majority in Interest
of Owner Participants, such Owner Participant shall be entitled to immediate





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reimbursement therefor from the other Owner Participants in proportion to its
beneficial interest in the Trust Estate.

                                   ARTICLE IV

                          Acceptance of Lease Property

                 Section 4.01 Acceptance of Lease Property.  The Owner
Participants hereby authorize and direct the Trustee to, and the Trustee agrees
for the benefit of the Owner Participants, that on the Closing Date, it will,
subject to due compliance with the terms of Section 4.02 hereof, take such
actions as are required of the Trustee hereunder or under the Operative
Documents, including without limitation, the following:

                 (a)      authorize a representative or representatives of the
Trustee to accept the FAA Bill of Sale, Warranty Bill of Sale, a complete copy
of the Lease and an executed counterpart of the Participation Agreement, on
such Closing Date;

                 (b)      execute and deliver a Lease Assignment relating to
the Lease Property; and

                 (c)      execute and deliver the Assumption Agreement; and

                 (d)      upon the payment by each Owner Participant of its
proportionate share of the purchase price for the Aircraft, the Trustee shall
cause the Agent, without further act, authorization, or direction by the Owner
Participants to the Trustee, to file on behalf of the Trustee the FAA Bill of
Sale, UCC-1 Financing Statements, the Aircraft Registration Application, and
other related documents in the name of the Trustee; and

                 (e)      execute and deliver, and accept, each of the
Operative Documents and all other related documents to which it is a party; and

                 (f)      issue a Certificate for such interest in the Trust
Estate to each of the Owner Participants.

                 Section 4.02 Conditions Precedent.  The right and obligation
of the Trustee to take the action required by Section 4.01 hereof shall be
subject to the conditions precedent enumerated in Article III of the Purchase
Agreement.

                 Section 4.03 Authority Without Express Instructions.  The
Trustee, without the necessity of further instructions from the Owner
Participants, is hereby authorized and directed by the Owner Participants to
take all action specified in the Operative Documents as action to be taken by
the Trustee; provided, however, that the Trustee shall not give any consent,
waive any right or benefit or enter into any modification or amendment of the
Operative Documents or take any other action to perform any obligation of
Lessee under the Lease except at the direction of all of the Owner Participants
or a Majority in Interest Owner Participants, as applicable.





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                 Section 4.04 Replacements.  The Owner Participants hereby
authorize and direct the Trustee, and the Trustee agrees for the benefit of the
Owner Participants that, in the event of a replacement airframe or engine, if
any, being substituted pursuant to the applicable provisions of the Lease, it
will, subject to Section 7.02 hereof and in compliance with the terms of the
Lease:

                 (a)      to the extent not previously accomplished by a prior
authorization, authorized a representative of the Trustee (who may be an
employee of the Lessee) to accept delivery of the replacement airframe or
engine;

                 (b)      accept from the Lessee or other vendor of a
replacement airframe or engine a bill of sale or bills of sale and the invoice,
if any, with respect to such replacement airframe or engine;

                 (c)       execute and deliver a Lease Supplement covering such
replacement airframe or engine and, to the extent requested by counsel to any
Owner Participant, execute and deliver any required amendments to this
Agreement or any other Operative Document to which the Trustee is a party and
request any required consent form the manufacturer of such replacement airframe
or engine; and

                 (d)      transfer title to the airframe or engine being
replaced to the Lessee.

                                   ARTICLE V

                     Management and Administrative Services

                 Section 5.1. Partnership Agreement.  Pursuant to the
Partnership Agreement (i) the General Partner or Airlease or other Affiliates
(as defined in the Partnership Agreement) will perform certain management,
administrative, and remarketing services for the Partnership, including,
without limitation, the payment of operating expenses, lease management,
collection of lease income, negotiation and review of leases, servicing
indebtedness secured by aircraft, disposing and remarketing of aircraft, the
payment of distributions and allocations to the limited partners of the
Partnership, and preparing the books and records and tax returns of the
Partnership; and (ii) the Partnership will pay certain fees (as specified in
the Partnership Agreement) as compensation for the performance of such
services.  All of the terms, conditions, and agreements under the Partnership
Agreement are incorporated by reference herein as though set forth at length,
and in the event of any inconsistency between the provisions of this Agreement
and the Partnership Agreement, the provisions of the Partnership Agreement
shall control.

                 Section 5.2. Compensation and Reimbursement of Owner
Participants.

                 (a) No Compensation.  Except as may be expressly provided for
herein, no payment will be made by or to any Owner Participant for the services
of such Owner Participant or any officer, shareholder, director, or employee of
such Owner Participant.





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                 (b) Reimbursable Expenditures.  Airlease or its Affiliates
shall receive fees and compensation and be reimbursed by the Partnership in
accordance with the Partnership Agreement, for expenditures incurred in
connection with negotiating and consummating the transaction contemplated by
the Purchase Agreement and this Agreement, performing management and
administrative services in connection with the Trust Estate and disposing of or
remarketing the Aircraft for lease.

                 Section 5.3. Scope of Owner Participant's Authority.  Except
as otherwise specified in this Agreement: (a) no Owner Participant shall have
any authority to bind or act for, or assume any obligations or responsibility
on behalf of, the other Owner Participant, and (b) no Owner Participant shall
be responsible or liable for any indebtedness or obligation of the other Owner
Participant relating to the Trust Estate, or otherwise.

                 Section 5.4. Joint Directions Under Trust Agreement.  In the
event it shall be necessary or appropriate at any time, or from time to time,
for the Owner Participants to give any directions, authorizations or
instructions to the Trustee under the Trust Agreement, or otherwise, the
Partnership and Airlease hereby agree that all such directions, authorizations
or instructions shall be given by them jointly, and that each will act in good
faith to reach agreement as to such directions, authorizations or instructions,
and each will join with the other to execute any and all joint written
directions, authorizations or instructions to the Trustee as may be necessary
or appropriate in the premises.

                                   ARTICLE VI

                                 Distributions

                 Section 6.01 Distribution of Rental.  Each payment of rental,
as well as payment of interest on overdue rental installments, received by the
Trustee at any time shall be distributed in accordance with Section 3.05 by the
Trustee on the date such payment is due from the Lessee (or as soon thereafter
as such payment shall be received by the Trustee) to each Owner Participant
without priority of one over the other ratably in proportion to its undivided
beneficial interest in the Trust Estate.  The Trustee agrees to  take all
reasonable steps necessary to collect any rent or other amounts due under the
operative Documents.

                 Section 6.02. Distribution of Payments.  All payments and
amounts, except for rental, if any, received by the Trustee shall be
distributed forthwith upon receipt, provided, however, all such amounts in
excess of $10,000 shall be distributed no later than twenty four (24) hours
after the Trustee has knowledge of its receipt, in the following order of
priority: first, so much of such payment or amount as shall be required to
reimburse the Trustee for any reasonable fees or expenses not otherwise paid or
reimbursed by the Owner Participants as to which the Trustee is entitled to be
paid or reimbursed hereunder shall be retained by the Trustee; second, to
reimburse an Owner Participant for payments made by it and not by all Owner
Participants, pursuant to Section 7.03 or 9.01 hereof, or an instruction from
the Trustee pursuant to a written instruction from all of the Owner
Participants or a Majority in Interest of Owner Participants, as required,
ratably in proportion to the aggregate amount of such payments made by each
Owner





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Participant; and third, the balance, if any, of such payment or amount
remaining thereafter shall be distributed to the Owner Participants ratably,
without priority of one over the other, in proportion to the beneficial
interest of each Owner Participant in the Trust Estate.

                 Section 6.03 Distribution of Trust Estate. Whenever the terms
of this Agreement shall require the Trustee to distribute or transfer the
entire Trust Estate to any person(s), the Trustee shall be entitled to retain
such monies and securities, if any, as shall then be held by the Trustee as a
part of the Trust Estate and as shall be required to reimburse or pay the
Trustee for any reasonable fees, expenses, or liabilities not reimbursed or
paid by the Owner Participants as to which the Trustee is entitled to be paid
or reimbursed hereunder or under any Operative Document and shall distribute
the Trust Estate in accordance with Section 6.02.

                                  ARTICLE VII

                             Duties of the Trustee

                 Section 7.01 Notice of Event of Default.  In the event the
Trustee shall have knowledge of a Default or Event of Default, the Trustee
shall give prompt written notice thereof to each Owner Participant.  Subject to
the terms of Section 7.03 hereof, the Trustee shall take or refrain from taking
such action with respect to a Default or Event of Default as the Trustee shall
be instructed in a written instrument executed by a Majority in Interest of
Owner Participants.  If the Trustee shall not have received instructions within
twenty (20) days after giving notice of a Default or Event of Default as above
provided, the Trustee may, but shall be under no duty to, and it shall have no
liability for its failure or refusal, to take or refrain from taking any action
with respect to such Default or Event of Default as it shall deem advisable and
in the best interests of the Owner Participants; provided, however, that the
Trustee shall give the owner Participants ten days' notice thereof prior to
taking any such action.  For all purposes of this Agreement, in the absence of
actual knowledge of an officer of the Trustee, the Trustee shall not be deemed
to have knowledge of a Default or an Event of Default unless it receives
written notification thereof given by or on behalf of the Lessee, any Owner
Participant or any other party.

                 Section 7.02 Action upon Instructions.  Subject to the terms
of Sections 7.01 and 7.03 hereof, upon the written instructions of a Majority
in Interest of Owner Participants, the Trustee will take or refrain from taking
such action or actions, as may be specified in such instructions, including,
without limitation, (i) enforcing provisions of the Lease;(ii) executing and
filing UCC-1 Financing Statements; (iii) executing and delivering loan
agreements with any Lender(s) (but only upon the written instruction of all of
the Owner Participants); (iv) executing and delivering amendments to the Lease;
(v) giving such notice of direction or exercising such right, remedy or power
hereunder or under any of the Lease, the Assumption Agreement or the Purchase
Agreement or in respect of all or any part of the Trust Estate, or taking such
other action as shall be specified in such instructions; (vi) taking such
action to preserve or protect the Trust Estate (including the discharge of
liens and encumbrances) as may be specified in such instructions; (vii)
approving as satisfactory to it or consenting to all matters required by the
terms of the Operative Documents to be satisfactory to the Trustee, it being
understood that without the written instructions of a Majority in Interest of
Owner Participants, the Trustee shall not approve any such





                                      -13-
<PAGE>   14
matter as satisfactory to it or consent to any such action; and (viii) taking
such other action as a Majority in Interest of Owner Participants shall direct
in writing.

                 Section 7.03 Indemnification.  The Trustee shall not be
required to take or refrain from taking any action under this Agreement or any
Operative Document (other than the actions specified in the first sentence of
Section 7.01 hereof) unless the Trustee shall have been indemnified by the
Owner Participants, in accordance with Article IX hereof, against any
liability, fee, cost or expense (including attorneys' fees) which may be
incurred or charged in connection therewith; and, if the Owner Participants or
a Majority in Interest of Owner Participants, as required, shall have directed
the Trustee to take or refrain from taking any action under this Agreement or
any Operative Document, the Owner Participants agree to furnish the Trustee
with the indemnification more particularly set forth in Article IX hereof, and,
in addition, to pay the reasonable compensation of the Trustee for the services
performed or to be performed by it pursuant to such direction.  The Trustee
shall not be required to take any action under this Agreement or any Operative
Document if the Trustee shall reasonably determine, .or shall have been advised
by counsel, that such action is contrary to the terms hereof or of any document
contemplated hereby to which the Trustee is a party or is otherwise contrary to
law.

                 Section 7.04 No Duties Except as Specified in Trust Agreement
or Instructions.  The Trustee shall not have any duty or obligation to manage,
control, make any payment in respect of, register, record, insure, inspect,
instruct, use, sell, dispose of or otherwise deal with the Lease Property, or
any other part of the Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with, any document contemplated hereby to
which the Trustee is a party, except as expressly provided by the terms of this
Agreement, or in written instructions from a Majority in Interest of Owner
Participants received pursuant to Section 7.01 or 7.02 hereof; and no implied
duties or obligations shall be read into this Agreement against the Trustee.
The Trustee, in its individual capacity, nevertheless agrees that it will, at
its own cost and expense, promptly take all action as may be necessary to
discharge any Liens (including Seller's Liens) on any part of the Trust Estate
which result from actions or commissions or omissions by or claims against the
Trustee, in its individual capacity, or the trusts created hereby not related
to the Trustee's ownership of the Lease Property or any other part of the Trust
Estate or the administration of the Trust Estate or the transactions
contemplated by the Operative Documents or this Agreement.

                 Section 7.05 No Action Except Under Specified Documents or
Instructions.  The Trustee agrees that it will not manage, control, use, sell,
dispose of or otherwise deal with the Lease Property or any other part of the
Trust Estate except (i) as required by this Agreement and the Operative
Documents, or (ii) in accordance with the powers granted to, or the authority
conferred upon, or the directions given to, the Trustee pursuant to or under
this Agreement.

                 Section 7.06 Absence of Duties.  Except in accordance with
written instructions furnished pursuant to Section 7.02 hereof, and without
limitation of the generality of Section 7.04 and the last sentence of Section
11.01(b) hereof, the Trustee shall have no duty (i) to file, record or deposit
any Operative Documents, any financing statements or this Agreement, or to
maintain any such filing, recording or deposit or to refile, rerecord or
redeposit any such document, except as specified in Section 7.02 hereof, (ii)
to obtain insurance on the Aircraft, or to effect or maintain any





                                      -14-
<PAGE>   15
such insurance, (iii) to maintain or mark the Aircraft, (iv) to pay or
discharge any tax, assessment or other governmental charge or any lien or
encumbrance of any kind owing with respect to or assessed or levied against any
part of the Trust Estate, except as provided in the last sentence of Section
7.04 hereof, (v) to confirm, verify, investigate or inquire into the failure to
receive any reports or financial statement of Lessee or any sublessee, or (vi)
to inspect the Aircraft at any time or to ascertain or inquire as to the
performance or observance of any covenants of Lessee or any sublessee under any
Operative Document with respect to the Aircraft.

                                  ARTICLE VIII

                                  The Trustee

                 Section 8.01 Acceptance of Trusts and Duties.  The Trustee
accepts the trusts hereby created and agrees to perform the same but only upon
the terms of this Agreement.  The Trustee also agrees to disburse all monies,
if any, actually received by it constituting part of the Trust Estate upon the
terms of this Agreement.  The Trustee shall not be answerable or accountable
under any circumstances, in its individual capacity, except (i) for its own
willful misconduct or gross negligence, (ii) in the case of the inaccuracy of
any representation or warranty of the Trustee contained in Section 8.03 hereof
or any representation or warranty of the Trustee in its individual capacity
contained in the Operative Documents, (iii) as arising from the failure by the
Trustee to perform its obligations under the last sentence of Section 7.04
hereof, (iv) for taxes, fees or other charges on, based on or measured by any
fees, commissions or compensation received by Trustee for acting as Trustee in
connection with any of the transactions contemplated by the Operative
Documents.

                 Section 8.02 Furnishing of Documents.  The Trustee will
furnish to each Owner Participant, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Trustee hereunder or
under the Operative Documents.

                 In case any tax report or tax return is required to be made
with respect to the Trust Estate and the Lessee is not required to prepare and
file the same pursuant to the Lease, the Trustee will prepare such tax report
or return and deliver a copy thereof to each Owner Participant.  Upon the
request of the Trustee, each Owner Participant will provide such instruments,
documents, certificates or other information as is reasonably necessary to
enable the Trustee to prepare any such tax report or return.  The Trustee
agrees to forward to each Owner Participant a copy of any communications with
respect to taxes pertaining to the Trust Estate which are received by the
Trustee.

                 Section 8.03 No Representations or Warranties as to Lease
Property or Documents.  THE TRUSTEE, IN ITS INDIVIDUAL CAPACITY, MAKES (i) NO
REPRESENTATION OR WARRANTY AS TO THE TITLE, VALUE, CONDITION, DESIGN,
OPERATION, AIRWORTHINESS, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR
ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE
AIRCRAFT, AIRFRAME, OR ANY ENGINE OR PART WHATSOEVER,





                                      -15-
<PAGE>   16
and (ii) no representation or warranty as to the validity or enforceability of
this Agreement or the Operative Documents, or as to the correctness of any
statement contained in any thereof, except to the extent that any such
statement is made therein by the Trustee, in its individual capacity, and
except that the Trustee, in its individual capacity, hereby represents and
warrants to each Owner Participant that this Agreement has been and each of
such other documents which contemplates execution thereof by the Trustee has
been or will be, executed and delivered by its officers who are or will be duly
authorized to execute and deliver such document on its behalf, and except that
the Trustee, in its individual capacity, hereby represents and warrants to each
Owner Participant that the Lease Property is free and clear of any liens
attributable to it and that it will comply with the last sentence of Section
7.04 hereof.

                 Section 8.04 No Segregation of Monies; No Interest.  Except as
otherwise provided herein, monies, if any, received by the Trustee hereunder
need not be segregated in any manner except to the extent required by law and
may be deposited under such general conditions as may be prescribed by law, and
the Trustee shall not be liable for any interest thereon.

                 Section 8.05 Reliance; Advice of Counsel.  The Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties.  The Trustee may accept a certified copy
of a resolution of the Board of Directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect.  As to any
fact or matter the manner of ascertainment of which is not specifically
prescribed herein, the Trustee may for all purposes hereof rely on a
certificate, signed by a duly authorized officer of the relevant party, as to
such fact or matter, and such certificate shall constitute full protection to
the Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.  In the administration of the trusts hereunder, the Trustee
may execute any of the trusts or powers hereof and perform its powers and
duties hereunder directly or through agents or attorneys and may consult, with
counsel, accountants and other skilled persons to be selected and employed by
it, and the Trustee shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons and not contrary to this
Agreement, so long as such advice or opinion pertains to such matters as the
Trustee may reasonably presume to be within the scope of such person's
expertise.

                 Section 8.06 Not Acting in Individual Capacity.  Except as
provided in this Article VIII, in accepting the trusts hereby created the
Trustee acts solely as trustee hereunder and not in its individual capacity;
and all persons having any claim against the Trustee by reason of the
transactions contemplated hereby or by the other Operative Documents shall look
only to the Trust Estate for payment or satisfaction thereof, except as
specifically provided in this Article VIII.





                                      -16-
<PAGE>   17
                                   ARTICLE IX

                Indemnification of Trustee by Owner Participants

                 Section 9.01 Owner Participants to Indemnity Trustee.  Each
Owner Participant agrees to pay, severally, in proportion to its respective
beneficial interest in the Trust Estate, to the extent not paid by the Lessee
pursuant to the Lease (or reimburse the Trustee for), all reasonable expenses
of the Trustee hereunder, including, without limitation, the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Trustee may employ in connection with the exercise
and performance of its rights and duties hereunder or under the other Operative
Documents, whether or not the transactions contemplated hereby are consummated;
provided, however, that if the Trustee deems it advisable to employ any such
agent, representative, expert or counsel, and the Trustee reasonably believes
that the fees of such agent, representative, expert or counsel will exceed
$5,000, the Trustee shall notify the Owner Participants thereof and shall
employ such agent, representative, expert or counsel only if a Majority in
Interest of Owner Participants has approved such employment.  The Owner
Participants agree to assume liability for, and to indemnify the Trustee in its
individual capacity and its successors, assigns, agents and servants against
and from any and all liabilities (including without limitation, any liability
of the Owner Participants, and liability without fault and any strict
liability), obligations, losses, damages, taxes (such term "taxes" or the term
"tax" as used in this Article IX shall include, without limitation, all taxes
specifically related to this Agreement and the Trust Estate created hereby
excluding, however, any income taxes or fees or other compensation received by
the trustee in its capacity as Trustee), claims, actions, suits, costs,
expenses and disbursements (including legal fees and expenses) of any kind and
nature whatsoever (collectively, "Expenses") which may be imposed on, incurred
by or asserted at any time against the Trustee (whether or not indemnified
against by the Lessee or any other parties) in any way relating to or arising
out of the existence or administration of this Agreement, the Trust Estate or
the action or inaction of the Trustee hereunder or under the other Operative
Documents, or the enforcement of any of the terms of any thereof, or in any way
relating to or arising out of the manufacture, purchase, acceptance,
non-acceptance, rejection, ownership, delivery, lease, financing, possession,
use, operation, condition, sale, return or other disposition of the Aircraft,
the Airframe, or an Engine (including, without limitation, latent and other
defects, whether or not discoverable, and any claim for patent, trademark or
copyright infringement) or in any way relating to or arising out of the
Operative Agreements, except that the foregoing indemnities shall not cover the
Trustee (i) for its own willful misconduct or gross negligence, (ii) in the
case of the inaccuracy of any representation or warranty of the Trustee
contained in Section 8.03 hereof or any representation or warranty of the
Trustee in its individual capacity contained in the Operative Documents, and
(iii) as arising from the failure by the Trustee to perform its obligations
under the last sentence of section 7.04 hereof, or obligations in its
individual capacity contained in the operative Documents.  In addition, if
necessary, the Trustee shall be entitled to indemnification from the Trust
Estate, for any liability, obligation, loss, damage, penalty, tax, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to
this Section 9.01 to the extent not reimbursed by Lessee, the Owner
Participants or others, but without releasing any of them from their respective
agreements of reimbursement; and, to secure the same, the Trustee shall have a
lien on the Trust Estate, subject to the Lien, if any, of any Lender, which
shall be prior to any interest therein of the Owner Participants, but only in
the





                                      -17-
<PAGE>   18
event and to the extent that the Trustee does not receive payment from the
Lessee or pursuant to any other provision of any Operative Document, except
only that the Owner Participants shall not be required to indemnify the Trustee
for expenses arising or resulting from any of the matters described in the last
sentence of Section 8.01 hereof.  The indemnities contained in this Section
9.01 shall survive the termination of this Agreement.

                 Section 9.02 Compensation and Expense.  The Trustee shall
receive the following as compensation for its services hereunder, and as
payment for all its costs, fees and expenses incurred in connection with the
administration of the Trust Estate (including legal fees and expenses):

                 (a)       An acceptance fee of $2,500 and an administration
fee of $2,000 ("Annual Administration Fee") for the one year period commencing
on the Closing Date, and each year thereafter in which it is the Trustee
hereunder and under the Operative Documents; provided, however, that after two
(2) years from the date of this Agreement, the Trustee may request an increase
in the Annual Administration Fee, and the Owner Participants shall consider
such request and make its determination with respect thereto in good faith.
Such Annual Administration Fee shall cover all of the Trustee's costs, fees and
expenses of any kind incurred in connection with the administration of the
Trust Estate, including, without limitation, any fees paid to the Agent and
executing and delivering loan agreement(s) and other agreements with any Lender
and taking such other action under or in connection with the Operative
Documents as the Owner Participants shall direct in writing.

                 (b)      The Trustee shall be entitled to compensation for any
of its reasonable out-of-pocket expenses and the reasonable fees and expenses
of any agent, representative, expert or counsel employed by the Trustee,
incurred in connection with its administration of the Trust Estate hereunder;
provided, however, that if the Trustee reasonably believes that such expenses,
fees and expenses will exceed $5,000, the Trustee will obtain the prior
approval thereof of a Majority in Interest of Owner Participants.

                                   ARTICLE X

                         Termination of Trust Agreement

                 Section 10.01 Termination of Trust Agreement.  Subject to
Section 10.02 of this Agreement, this Agreement and the trusts created hereby
shall terminate and the Trust Estate shall, subject to Article VI hereof, be
distributed to the Owner Participants, and this Agreement shall be of no
further force or effect, upon the earlier of (i) the sale or other final
disposition by the Trustee of all property constituting part of the Trust
Estate and the final distribution by the Trustee or any other party of all
monies or other property or proceeds constituting part of the Trust Estate in
accordance with the terms of Article VI hereof, provided that at such time the
Lessee and any parties to the Operative Documents other than Trustee and Owner
Participants shall have fully complied with all the terms of the Operative
Documents to which it is a party or (ii) twenty-one (21) years less one day
after the death of the last survivor of all of the descendants living on the
date of this Agreement of the present members of the Boards of Directors of the
Trustee and the Owner Participants; but if this Agreement and the trusts
created hereby shall be or become valid





                                      -18-
<PAGE>   19
under applicable law for a period subsequent to the 21st anniversary of the
death of such last survivor, or if legislation shall become effective providing
for the validity thereof for a period in gross exceeding the period hereinabove
stated, than this Agreement and the trusts created hereby shall not terminate
as aforesaid but shall extend to and continue in effect, buy only if such
non-termination and extension shall then be valid under applicable law, until
such time as the same shall, under applicable law, cease to be valid.

                 Section 10.02 Termination at Option of Owner Participants  The
provisions of_Section 10.01 hereof notwithstanding, this Agreement and the
trusts created hereby shall terminate and the Trust Estate shall be distributed
to the Owner Participants in accordance with the terms of Article VI hereof,
and this Agreement shall be of no further force and effect, upon the election,
in their sole discretion, of all of the Owner Participants by notice to the
Trustee, if such notice shall be accompanied by the written agreement of all of
the Owner Participants assuming all the obligations of the Trustee under the
Operative Documents and all other obligations of the Trustee incurred by it as
Trustee hereunder.  Such written agreement shall fully and completely release
the Trustee from all further obligations and liabilities of the Trustee
hereunder and under the agreements and other instruments mentioned in the
preceding sentence; provided, however, that the obligations and liabilities of
any party hereinunder arising prior to the date of such written agreement shall
survive such termination of the Trustee.

                                   ARTICLE XI

             Successor Trustees, Co-Trustees and Separate Trustees

                 Section 11.01  Resignation of Trustee; Appointment of
Successor.

                 (a)      The Trustee may resign at any time without cause by
giving at least thirty (30) days' prior written notice to each Owner
Participant, such resignation to be effective upon the acceptance of such
appointment by a successor Trustee under Section 11.01(b) hereof.  In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Article XI, the Trustee shall resign immediately by giving
written notice to each Owner Participant, such resignation to be effective upon
the acceptance of appointment by a successor Trustee under Section 11.01(b)
hereof.  In addition, the Trustee may be removed at any time without cause by
an instrument in writing executed by each Owner Participant and delivered to
the Trustee, such removal to be effective upon the acceptance of appointment by
a successor Trustee under Section 11.01(b) hereof.  In case of the resignation
or removal of the Trustee, a Majority in Interest of Owner Participants may
appoint a successor Trustee by an instrument signed by such a Majority in
Interest of Owner Participants.  If a successor Trustee shall not have been
appointed within thirty (30) days after the giving of written notice of such
resignation or the delivery of the written instrument with respect to such
removal, the Trustee or a Majority in Interest of Owner Participants may apply
to any court of competent jurisdiction to appoint a successor Trustee to act
until such time, if any, as a successor Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Trustee appointed as above provided within one year from the date of the
appointment by such court.





                                      -19-
<PAGE>   20
                 (b)      Any successor Trustee, however appointed, shall
execute and deliver to the predecessor Trustee and each Owner Participant an
instrument accepting such appointment, and thereupon such successor Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers, duties and trusts of the predecessor Trustee in the trusts
hereunder with like effect as if originally named the Trustee herein; but
nevertheless, upon the written request of such successor Trustee, such
predecessor Trustee shall execute and deliver an instrument transferring to
such successor Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, duties and trusts of such predecessor Trustee, and
such predecessor Trustee shall duly assign, transfer, deliver and pay over to
such successor Trustee all monies or other property then held by such
predecessor Trustee upon the trusts herein expressed.  The predecessor Trustee
will cooperate in causing registration of the Aircraft to be transferred to the
successor Trustee in accordance with applicable law.

                 (c)       The Trustee and any successor Trustee, however
appointed, must resign if at any time it is unable to obtain or maintain at all
times satisfactory registration of each Aircraft pursuant to the Federal
Aviation Act, as amended (the "Act").  Any successor Trustee shall be a bank or
trust company incorporated and doing business within the United States of
America and having a combined capital and surplus of at least $25,000,000, or
the subsidiary of an institution having a combined capital and surplus of at
least $25,000,000, which guarantees the obligations of such subsidiary.

                 (d)      The Trustee shall be and any successor Trustee will
be "a citizen of the United States" as defined in Section 101(16) of the Act.

                 (e)      Any corporation into which the Trustee may be merged
or with which it may be consolidated, or any corporation resulting from any
merger, or consolidation to which the Trustee shall be a party, or any
corporation to which substantially all the corporate trust business of the
Trustee may be transferred, shall, subject to the terms of Section 11.01(c)
hereof, be the Trustee under this Agreement without further act.

                 Section 11.02 Co-Trustees and Separate Trustees.  Whenever the
Trustee or a Majority in Interest of Owner Participants shall deem it necessary
or prudent in order either to conform to any law of any jurisdiction in which
all or any part of the Trust Estate shall be situated or to make any claim or
bring any suit with respect to the Trust Estate or the Operative Documents, or
either the Trustee or a Majority in Interest of Owner Participants shall be
advised by counsel satisfactory to it that it is so necessary or prudent, the
Trustee and a Majority in Interest of Owner Participants shall execute and
deliver an agreement supplemental hereto and all other instruments and
agreements, and shall take all other action, necessary or proper to constitute
one or more persons (and the Trustee may appoint one or more of its
officers)(any and all of which shall be a "citizen of the United States" as
defined in Section 101(16) of the Act) either as co-trustee or co-trustees
jointly with the Trustee of all or any part of the Trust Estate, or as separate
trustee or separate trustees of all or any part of the Trust Estate, and to
vest in such persons, in such capacity, such title to the Trust Estate or any
part thereof, and such rights or duties as may be necessary or desirable, all
for such period and under such terms and conditions as are satisfactory to the
Trustee and a Majority in Interest of Owner Participants.  In case any
co-trustee or separate trustee shall





                                      -20-
<PAGE>   21
die, become incapable of acting, resign or be removed, the title to the Trust
Estate and all rights and duties of such co-trustee or separate trustee shall,
so far as permitted by law, vest in and be exercised by the Trustee, without
the appointment of a successor to such co-trustee or separate trustee.

                                  ARTICLE XII

                              Concerning the Agent

                 Section 12.01. Appointment of Agent.  The Owner Participants
authorize and direct the Trustee to appoint, and the Trustee hereby does
appoint, Airlease, in its separate capacity as Agent and not as Owner
Participant, as its agent to do all such acts and things and execute all such
documents, instruments and other agreements as the Trustee hereafter may from
time to time direct, in its place and stead, in accordance with the terms of
this Agreement and the Operative Documents.

                 Section 12.02. Agent's Acceptance of Appointment.  The Agent
agrees to act as Agent for the Trustee hereunder and to accept possession of
and hold such items of the Trust Estate as it may from time to time receive on
behalf of the Trustee subject to the trusts hereby created and the terms and
conditions of this Agreement.

                 Section 12.03. Agreements of the Agent.  The Agent hereby
agrees:

                 (a)      to exercise the rights and perform the duties of the
Trustee as directed by the Trustee in accordance with the terms hereof;

                 (b)      to assume liability for and indemnify the Owner
Participants, Trustee, and Trust Estate from and against Liens attributable to
it; and

                 (c)      pursuant to the instructions of the Trustee in
accordance with the terms hereof, to conduct negotiations with respect to the
documents contemplated by this Agreement and the Operative Documents and to use
its best efforts by administrative means to cause the Operative Documents to be
executed and to consummate the purchase of the Aircraft, Airframe, and Engines
and delivery of the Aircraft, Airframe, and Engines under the Purchase
Agreement in the manner contemplated by the operative Documents.

                 Section 12.04. Standard of Care and Diligence

                 (a)      Agent's Liability. Except as provided in Section
12.03 hereof, the Agent assumes no liability for anything other than its own
willful misconduct or gross negligence.  It shall give each Owner Participant
prompt notice of any Events of Default or claimed Events of Default under the
Lease of which it shall have actual knowledge.  For all purposes of this
Agreement, in the absence of actual knowledge of an officer of the Agent, the
Agent shall not be deemed to have actual knowledge of a Default or an Event of
Default unless it receives written notification thereof given by or on behalf
of the Lessee, the Trustee, any Owner Participant, or any other party.





                                      -21-
<PAGE>   22
                 (b)      Use of Agents.  Subject to the same limitations as
the Trustee herein, the Agent may exercise its powers and perform its duties by
or through such attorneys, agents and servants as it shall appoint; and it
shall be entitled to the advice of counsel (who may, in cases deemed by the
Agent in its reasonable discretion to be appropriate, be counsel for the Agent)
and shall be protected by the advice of such counsel in anything done or
omitted to be done in accordance with such advice.

                 Section 12.05. Resignation or Removal of Agent.  The Agent or
any successor thereto may resign at any time without cause by giving at least
thirty (30) days prior written notice to the Trustee and each Owner
Participant, such resignation to be effective on the date specified in such
notice.  In addition, a Majority in Interest of Owner Participants may at any
time remove the Agent without cause by an instrument in writing executed by a
Majority in Interest of Owner Participants delivered to the Agent and the
Trustee.  In the case of the resignation or removal of the Agent, a Majority in
Interest of Owner Participants may, at their sole cost and expense, appoint a
successor Agent by an instrument signed by a Majority in Interest of Owner
Participants.  If a Majority in Interest of Owner Participants shall not have
appointed a successor Agent within thirty (30) days after such resignation or
removal, the Trustee may apply to any court of competent jurisdiction to
appoint a successor Agent to act until such time, if any, as a successor shall
have been appointed by a Majority in Interest of Owner Participants as above
provided.  The successor Agent so appointed by such court shall immediately and
without further act be superseded by any successor Agent appointed by a
Majority in Interest of Owner Participants within one year from the date of the
appointment by such court.

                 Section 12.06. Estates and Rights of Successor Agent.  Any
Agent, whether appointed by a Majority in Interest of Owner Participants or a
court, shall execute and deliver to the Trustee and to the predecessor Agent an
instrument accepting such appointment, and thereupon such successor Agent,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Agent hereunder with like effect
as if originally named the Agent herein; but nevertheless upon the written
request of the Trustee or such successor Agent, such predecessor Agent shall
execute and deliver an instrument transferring to such successor Agent all the
estates, properties, rights and powers of such predecessor Agent, and such
predecessor Agent shall duly assign, transfer, deliver and pay over to such
successor Agent all monies or other property then held by such predecessor
Agent hereunder.

                 Section 12.07. Merger or Consolidation of Agent.  Any
corporation into which the Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Agent shall be a party, or any corporation to
which substantially all the business of the Agent may be transferred, shall be
the Agent under this Agreement without further act.

                 Section 12.08. Agent's Duty to Indemnity.  The obligation of
the Agent under Section 12.03(b) to indemnify the Owner Participants, Trust
Estate, and Trustee shall survive the resignation or removal of the Agent and
the termination of the Trust.





                                      -22-
<PAGE>   23
                                  ARTICLE XIII

                           Supplements and Amendments

                 This Agreement shall be amended only by a written instrument
signed by the Trustee and a Majority in Interest of Owner Participants and to
the extent any such amendment affects the Agent, signed by the Agent; but if in
the reasonable opinion of the Trustee or Agent, as the case may be, any
instrument required to be so executed adversely affects any right, duty,
liability of, or immunity or indemnity in favor of it under this Agreement or
any of the documents contemplated hereby to which it is a party, or would cause
or result in any conflict with or breach of any terms, conditions or provisions
of, or default under the charter documents or by-laws of the Trustee or Agent
or any document contemplated hereby to which the Trustee or Agent is a party,
the Trustee or Agent, as the case may be, may in its sole discretion decline to
execute such instrument and upon the request of a Majority in Interest of Owner
Participants immediately shall resign as the Trustee or Agent, as the case may
be, under this Agreement, any Operative Document, or other related document.
No supplement, amendment or modification of the Agreement shall impair any
requirement in this Agreement that the consent of a Majority in Interest of or
all of the Owner Participants be obtained for any purpose and no such
supplement, amendment or modification shall require any Owner Participant to
invest or advance funds or shall entail any additional personal liability or
the surrender of any indemnification, claim or individual right on the part of
any Owner Participant with respect to any agreement or obligation or create or
suffer to exist any additional obligation of or liability on the Trust Estate,
except with the written consent of each of the Owner Participants.

                                  ARTICLE XIV

                  Sale, Transfer or Mortgage of Lease Property

                 Section 14.01. General.  Except as hereinafter expressly
permitted, no Owner Participant may sell, assign, transfer, mortgage, charge or
otherwise encumber, or suffer any third party to sell, assign, transfer,
mortgage, charge or otherwise encumber, or contract to do or permit any of the
foregoing, whether voluntarily or by operation of law (herein sometimes
collectively called a "transfer"), any part or all of its interest hereunder or
in the Trust Estate without the written consent of the other Owner Participants
and any attempt to do so shall be void.  The giving of such consent in any one
or more instances shall not limit or waive the need for such consent in any
other or subsequent instances.

                 Section 14.02. Permitted Transfers by the Owner Participants.
Notwithstanding the provisions of Subsection 14.01, without the consent of the
other Owner Participants, either party may at any time or from time to time
transfer all or any portion of its interest hereunder to an Affiliate.

                 Section 14.03. Right of First Refusal as to an Owner
Participant's Trust Estate Interest.





                                      -23-
<PAGE>   24
                 (a)      Offering Notice.  Except for permitted transfers
under Section 14.02 above, if any Owner Participant receives a bona fide offer
for the purchase of either (i) all of its interest hereunder or (ii) less than
all of its interest hereunder, (the recipient of any such offer being
hereinafter called the "Offeror"), which offer complies with the provisions of
Section 14.03(b) and which offer it desires and intends to accept, before
accepting such offer it shall give notice (the "Offering Notice") to the other
Owner Participants (the "Offerees") which shall include a true copy of such
offer, whereupon the provisions set forth in this Section 14.03 shall apply.
Except for permitted transfers under Section 14.02 above, no Owner Participant
shall accept an offer unless such offer complies with the provisions of Section
14.03(b).

                 (b)      Requirements of Offer.  Such an offer shall comply
with the following requirements:

                          (1)     the proposed purchase price (which shall be
                 net of any Trust Estate debts or liabilities which the
                 proposed purchaser has agreed to assume in its offer to
                 purchase the Offeror's interest) is payable solely in lawful
                 money of the United States and, if not payable in its entirety
                 in cash, under no circumstances may payment of the non-cash
                 portion of the proposed purchase price be secured by any
                 charge, encumbrance or hypothecation of the Trust Estate;

                          (2)     the offer contains provisions whereby the
                 proposed purchaser is obligated to comply with the provisions
                 of Section 14.06 hereof, requiring it to assume certain
                 obligations prior to or at closing;

                          (3)     the offer is accompanied by a certified check
                 of the prospective purchaser for a sum equal to at least ten
                 percent (10%) of the proposed purchase price; provided,
                 however, that if the sale to the third party purchaser is not
                 consummated for any reason other than due to the failure of
                 the Owner Participants to perform their obligations pursuant
                 to the offer, each Owner Participant shall be entitled to a
                 pro rata portion of such sum;

                          (4)     the Offeror shall not have caused or permitted
                 an Owner Participant Event of Default (as hereinafter defined)
                 ; and

                          (5)     the prospective purchaser shall be capable of
                 carrying out all obligations of an Owner Participant under
                 this Agreement and all related agreements; and as shown by the
                 audited financial statements of such prospective purchaser for
                 the two (2) most recent fiscal years of such prospective
                 purchaser, shall have tangible net worth satisfactory to the
                 Offerees, determined in accordance with generally accepted
                 accounting principles.

                 (c)      Procedure.  In the Offering Notice, the Offeror shall
offer (the "Sale offer") to each Offeree the right to purchase a portion of the
interest (the "Portion of the Interest") of the Offeror referred to in said
offer, at a portion of the same price and subject to the same terms and
conditions as set forth in said offer and the Offeror shall submit with the
Offering Notice a true





                                      -24-
<PAGE>   25
copy of said offer.  The portion shall be equal to the full amount of the
interest offered multiplied by a fraction, the numerator of which is such
Offeree's then interest in the Trust Estate and the denominator is the then
interest in the Trust Estate of all Offerees.  Each Offeree shall notify the
Offeror and the other Offeree(s) of its election within fifteen (15) days of
the date of its receipt of the Offering Notice; provided, however, that such
election shall be as to all of the Portion of the Interest.

                 (d)       Acceptance of Sale Offer.

                          (1)     If the Sale Offer is accepted by each
                 Offeree, and notice in writing is given within the period
                 specified in Section 14.03(c), the Offeror shall thereupon be
                 bound to sell to such Offeree and the Offeree shall thereupon
                 be bound to purchase the Portion of the Interest referred to
                 in the Sale Offer in accordance with the terms of the Sale
                 Offer and the closing of the purchase shall take place in
                 accordance with Section 14.04.

                          (2)     If one Offeree has not accepted the Sale
                 Offer or has not accepted the Sale Offer within such fifteen
                 (15) day period and one or more of the other Offerees has
                 accepted the Sale Offer ("Accepting Offeree"), the Accepting
                 Offeree(s) shall have the right to purchase the entire
                 interest referred to in the Sale Offer (but not less than such
                 entire interest) in accordance with the terms of the Sale
                 Offer and the purchase shall take place in accordance with
                 Section 14.04 and the procedures included in Section 14.03(c).
                 Except that the Accepting Offerees shall notify the Offeror
                 and other Offerees of such election within ten (10) days of
                 the end of the initial fifteen (15) day period referred to in
                 Section 14.03(c). The Offeror shall thereupon be bound to sell
                 to such Accepting Offeree(s) and the Accepting Offeree(s)
                 shall thereupon be bound to purchase the entire interest
                 referred to in the Sale Offer in accordance with the terms of
                 the Sale Offer and the closing of the purchase shall take
                 place in accordance with Section 14.04.

                 (e)      Right to Sell to Third Party.  If the Offerees have
not accepted the Sale Offer as provided in Section 14.03(c) within the time
limits referred to therein, or if the Accepting Offeree(s) have not accepted
the Sale Offer as provided in Section 14.03(d)(2) within the time limits
referred to therein, the Sale Offer shall be deemed to have been declined by
such Offerees and the Offeror shall be free to sell its interest to the maker
of said offer at a price and upon terms and conditions not less favorable to
the Offeror than those set forth in the Offering Notice within the time period
set forth below.  If in any instance such Offerees elect not to exercise their
rights hereunder or to waive such rights, such election shall not constitute a
waiver of the Offerees' right to an Offering Notice in the case of any
subsequent offer.  If such interest is not so sold and the transfer not
consummated within thirty (30) days, unless extended by mutual agreement, from
the expiration of the time limits referred to in Section 14.03(c) or Section
14.03(d)(2), as applicable, the relevant interest shall then again become
subject to all the provisions of this Section 14.03.

                 (f)       Limitations on Exercise.  Notwithstanding anything
to the contrary contained in this Section 14.03, no Offeree which has failed to
perform or observe any of its





                                      -25-
<PAGE>   26
obligations, covenants, conditions, or agreements under this Agreement or any
related document (an "Owner Participant Event of Default"), which Owner
Participant Event of Default is still continuing, shall be entitled to exercise
its right to purchase (or sell, unless the Owner Participant Event of Default
is cured by such sale) any portion of the Offeror's interest.

                 Section 14.04. Closings.

                 (a)       Location and Time Periods.  The closing of any sale
of an interest in the Trust Estate pursuant to this Article XIV shall be held
at a mutually acceptable place and on a mutually acceptable date not more than
thirty (30) days, unless extended by mutual agreement, after the receipt by the
Offeror of the written notices of election by the Offerees, Accepting Offeree,
or Third Party Accepting Offeree, as applicable, or after the expiration of the
time within which the Offeree must so elect, as provided in Sections 14.03(c)
or 14.03(d).

                 (b)      Closing Conditions.  Any Owner Participant
transferring its interest shall transfer such interest free and clear of all
liens, encumbrances or any interests of any third party (excepting any liens
permitted under the Lease) and shall execute or cause to be executed any and
all documents required to fully transfer such interest to the acquiring third
party or acquiring Owner Participant(s), including, but not limited to, any
documents necessary to evidence such transfer and to evidence the agreement by
the acquiring third party or acquiring Owner Participant(s) to be bound by all
applicable provisions of the Operative Documents, and all documents required to
release any interest in such selling Owner Participant's interest.  Any sums
owed by the selling Owner Participants to the Trust Estate or the other Owner
Participants shall be paid concurrently from the proceeds from such sale at the
closing.  Following the date of closing, unless otherwise agreed, the selling
Owner Participant(s) shall have no further rights to any rent or proceeds from
the Trust Estate assets attributable to any period or event following the date
of closing and all such rights shall vest in the transferee of the interest
purchased from the selling Owner Participant(s).

                 (c)      Event of Loss.  If an Event of Loss (as defined in
the Lease) shall occur with respect to the Aircraft between (i) the date an
election is made by an Owner Participant, the Owner Participants, or a third
party transferee to purchase pursuant to Section 14.03, and (ii) the closing of
such purchase, the offer to purchase shall automatically terminate, without any
further action or notice required.

                 (d)      Partial Loss.  If a partial loss shall occur with
respect to the Aircraft under the Lease, subject to the performance by Lessee
of its obligations under the Lease and so long as there is no Event of Default
thereunder, the purchase of the interest hereunder shall be consummated as
contemplated by the parties.

                 14.05. Termination of Obligations.  As of the closing date of
any transfer not prohibited hereunder by an Owner Participant of its entire
interest in the Trust Estate to the other Owner Participant(s) or to a third
party purchaser, such transferring Owner Participant's rights and obligations
hereunder shall terminate except as to any of its unperformed obligations
accrued as of such date and except as to any unperformed indemnity obligations
of such Owner Participant attributable to acts or events occurring prior to
such closing date.  Thereupon, except as limited by





                                      -26-
<PAGE>   27
the preceding sentence, this Agreement shall terminate as to the transferring
Owner Participant(s) but all terms and conditions thereof shall remain in
effect as to the other Owner Participant(s) and the third party purchaser shall
become an Owner Participant hereunder.  In the event of a transfer of its
entire Trust Estate interest by an Owner Participant to the other Owner
Participant(s) or to a third party purchaser, the Owner Participant(s) or third
party purchaser to which such interest is transferred, shall indemnify, defend
and hold harmless the Owner Participant so transferring its interest from and
against any and all claims, demands, losses, liabilities, expenses, actions,
lawsuits, and other proceedings, judgments, awards, and costs and expenses
(including but not limited to reasonable attorneys' fees) incurred in or rising
directly or indirectly, in whole or in part, out of the Trust Estate, excluding
only those liabilities, if any, accruing prior to the closing date of such
transfer.

                 Section 14.06. Agreements with Transferees.  In the event that
pursuant to the provisions of this Article XIV, any Owner Participant shall
transfer its interest hereunder to any person or entity other than the other
Owner Participant(s), no such transfer shall be made or shall be effective to
make such transferee an Owner Participant or entitle such transferee to any
benefits or rights hereunder or under the Operative Documents until the
proposed Transferee agrees in writing to assume and be bound by all the
obligations of the selling Owner Participant and be subject to all the
restrictions to which the selling Participant is subject under the terms of
this Agreement, the Operative Documents, and any further agreement which may be
required with respect to the Trust Estate.  In the event an Owner Participant's
interest hereunder is transferred by operation of law, such Owner Participant's
transferee shall sign such a writing within fifteen (15) days of the closing
date as an express condition to the effectiveness of any such transfer.

                 Section 14.07. Restraining Order.  In the event that any Owner
Participant shall at any time transfer or attempt to transfer its interest
hereunder in violation of the provisions of this Agreement and any rights
hereby granted, then the other Owner Participant(s) shall, in addition to all
rights and remedies at law and in equity, be entitled to a decree or order
restraining and enjoining such transfer and the defaulting Owner Participant
shall not plead in defense thereto that there would be an adequate remedy at
law; it being hereby expressly acknowledged and agreed by the parties hereto
that damages at law will be an inadequate remedy for a breach or threatened
breach of the violation of the provisions concerning transfer of a Trust Estate
interest as set forth in this Agreement.

                 Section 14.08. Sale by an Owner Participant of an Owner
Participant's Trust Estate.  The parties agree that in the event that one of
the Owner Participants should decide to purchase the Trust Estate interest of
the other Owner Participants, the parties shall negotiate the terms and
conditions of such purchase in good faith, including, without limitation, the
purchase price, any financing arrangements, and like matters.  Such purchase
shall take place in accordance with Section 14.04.

                 Section 14.09 Amendment to Agreement on Transfer.  Upon either
(i) the transfer by the Partnership of all its Certificates or (ii) the
transfer by Airlease of all its Certificates to a person which is not an
Affiliate of the Partnership, then Section 5.1 and 5.2(b) shall no longer be a
part of this Agreement.





                                      -27-
<PAGE>   28
                                   ARTICLE XV

                                 Miscellaneous

                 Section 15.01 No Legal Title to Trust Estate in Owner
Participants.  The Owner Participants shall not have legal title to any part of
the Trust Estate.  No transfer, by operation of law or otherwise, of any right,
title and interest of the Owner Participants in and to the Trust Estate or
hereunder shall operate to terminate this Agreement or the trusts hereunder or
entitle any successor or transferee to an accounting or to the transfer to it
of legal title to any part of the Trust Estate.

                 Section 15.02 Sale of Aircraft, etc., by Trustee is Binding.
Any sale or other conveyance of the Aircraft, the Airframe, an Engine or Part
by the Trustee made pursuant to the terms of this Agreement (so long as such
sale is not contrary to the provisions of the Operative Documents) shall bind
the Owner Participants and shall be effective to transfer or convey all right,
title and interest of the Trustee and the Owner Participants in and to the
Aircraft, the Airframe, or an Engine or Part.  No purchaser or other grantee
shall be required to inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of any sale or
other proceeds with respect thereto by the Trustee.

                 Section 15.03 Limitations on Rights of Others.  Nothing in
this Agreement shall be construed to give to any person other than the Trustee,
Owner Participants, and the Agent (to the extent provided in Article XII
hereof) any legal or equitable right, remedy or claim under or in respect of
this Agreement, any covenants, conditions or provisions contained herein or the
Trust Estate.

                 Section 15.04 No Partnership for Tax Purposes.  The Owner
Participants agree that this Trust Estate is not to be construed as a
partnership for tax purposes; provided, however, that if it is determined to be
a partnership for tax purposes, each Owner Participant agrees to be bound by an
election under Section 754 of the Internal Revenue Code of 1986, as amended,
made by the Partnership.

                 Section 15.05 Notices.  Unless otherwise expressly specified
or permitted by the terms hereof, all notices required under the terms and
provisions hereof shall be in writing by first class mail, personal delivery,
cable, telex or telecopy (with such cable, telex or telecopy confirmed in
writing, mailed by first-class mail, postage prepaid) addressed to such person
at the address set forth herein with copies to Trustee, Owner Participants, or
Agent, as the case may be.  Whenever any notice is required to be given, such
notice shall be deemed given and such requirement satisfied if such notice is
(i) mailed, on the day of deposit into the mail, or (ii) personally delivered,
when delivered, or (iii) cabled, when such notice is delivered to the telegraph
company, or (iv) telecopied, when the telecopy has been received, or (v)
telexed, when the answer back of the addressee is received.  Any person
entitled to notice hereunder may change the address to which notices to such
person will be sent by giving notice of such change to Trustee, Owner
Participant, or Agent.





                                      -28-
<PAGE>   29
              If to Trustee:      Trust Company for USL, Inc.
                                              615 Battery Street
                                              San Francisco, CA 94111
                                              Attn: President
                                              Telex: 278031
                                              Telecopy:    415/398-7029

              If to Airlease:     United States Airlease, Inc.
                                         615 Battery Street
                                         San Francisco, California 94111
                                         Attn: President
                                         Telex: 278031
                                         Telecopy:    415/398-7029

                 If to the
                 Partnership:     Airlease Ltd.
                                         A California Limited Partnership
                                         c/o Airlease Management Services, Inc.
                                         2988 Campus Drive
                                         San Mateo, California 94403
                                         Attn: President

                 Section 15.06 Severability.  Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

                 Section 15.07 Limitation on Liability of Owner Participants
and Agent.  The Owner Participants or Agent shall not have any liability for
the performance of this Agreement except as expressly set forth herein or, with
respect to the Agent, in any written instructions of the Trustee pursuant to
this Agreement.

                 Section 15.08 Separate Counterparts.  This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.

                 Section 15.09 Successors and Assigns.  All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Trustee and its successors and assigns, the Owner Participants and their
successors and, to the extent permitted by Article XIV hereof, its assigns, all
as herein provided, and the Agent and its successors and assigns, to the extent
permitted by Article XII hereof.  Any request, notice, direction, consent,
waiver or other instrument or action by the Owner Participants, shall bind the
successors and assigns of such Owner Participant.





                                      -29-
<PAGE>   30
                 Section 15.10 Headings.  The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.

                 Section 15.11 Arbitration.  If the Owner Participants are
unable to agree with respect to any matter hereunder, or under any of the
Operative Documents, the same shall be settled and finally determined by
arbitration in accordance with the Rules of Commercial Arbitration of the
American Arbitration Association ("AAA"), or if agreed by the parties, by any
arbitration association authorized by or in the State of California ("CAA") or
its successors, and the provisions of Article 9, Arbitration, of the California
Code of Civil Procedure, or any successor or amended statute or law containing
similar provisions, shall be applicable in any such arbitration; or in any case
where the AAA or CAA, as applicable, or its successor, is not in existence or
fails or refuses to act within a reasonably prompt period of time (but in no
event exceeding thirty (30) days from the date a request for arbitration is
filed), the arbitration shall proceed in accordance with the laws relating to
arbitration then in effect in the State of California, including but not
limited to Article 9, Arbitration, of the California Code of Civil Procedure,
as the same may be amended or modified from time to time.  Any arbitration
pursuant to this Agreement shall be conducted by three arbitrators.  All Owner
Participants shall collectively select two disinterested arbitrators approved
by the AAA or CAA, as applicable.  The two (2) arbitrators selected by the
Owner Participants shall select a third disinterested arbitrator approved by
the AAA or CAA, as applicable.  The judgment upon the award rendered in any
such arbitration by the three (3) arbitrators shall be final and binding upon
the parties and may be entered in any court having jurisdiction thereof.  All
fees and expenses of the arbitrators and all other expenses of the arbitration,
except for attorneys' fees, shall be shared equally by the Owner Participants.
Each Owner Participant shall bear its own attorneys' fees.

                 Section 15.11 Governing Law.  This Agreement shall in all
respects be governed by, and construed in accordance with, the laws of the
State of California, including all matters of construction, validity and
performance.





                                      -30-
<PAGE>   31
                 IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereto duly
authorized, as of the day and year first above written.

AIRLEASE LTD., A CALIFORNIA                 UNITED STATES AIRLEASE, INC.,
LIMITED PARTNERSHIP, as Owner               as Owner Participant
Participant


By  Airlease Management                     /s/ Douglas C. Kay
    Services, Inc.,                         -------------------------------
    General Partner                         By:  Douglas C. Kay
                                            Title:  President

/s/Douglas C. Kay
-----------------------------
By:  Douglas C. Kay
Title:  President


UNITED STATES AIRLEASE, INC.,               TRUST COMPANY FOR USL, INC., as
as Agent                                    Trustee


/s/ Douglas C. Kay                          /s/ Stanley E. Gutman
-----------------------------               -------------------------------
By:  Douglas C. Kay                         By:  Stanley E. Gutman
Title:  President                           Title:  Vice President





                                      -31-
<PAGE>   32
                                   SCHEDULE 1

                     IDENTIFICATION OF AIRCRAFT AND ENGINES

           Aircraft Make and Model:           McDonnell Douglas DC-9-82

           Manufacturer's Serial Number:      49184

           U.S. FAA Registration Number:      N913TW

           Engine 1 Serial Number:            P709733D

           Engine 2 Serial Number:            P709734D

     Including without limitation, all equipment, components, fittings, parts
or accessories made a part of, or installed on or attached to the Aircraft
which are the property of Lessor pursuant to the Lease Documents or otherwise
subject to the Lease Documents.





                                      -32-