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                            AIRCRAFT LEASE AGREEMENT


                            Dated as of June 26, 1997


                                     BETWEEN


                        GATX THIRD AIRCRAFT CORPORATION,
                                   as Lessor,


                                       AND


                         WESTERN PACIFIC AIRLINES, INC.,
                                   as Lessee,




                                   Concerning:
                           One Boeing 737-300 Aircraft
                                       and
                         Two CFM56-3C1 Turbofan Engines.

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                                TABLE OF CONTENTS



SECTION                                                    PAGE
SECTION 1. DEFINITIONS.......................................1
SECTION 2. DELIVERY AND ACCEPTANCE...........................7
  2.1. Time and Place........................................7
  2.2. A LETTING ONLY........................................7
  2.3. LESSOR'S CONDITIONS TO DELIVERY.......................8
  2.4. LESSEE'S CONDITIONS TO DELIVERY......................10
SECTION 3. TERM.............................................10
SECTION 4. RENT.............................................11
  4.1. BASIC RENT...........................................11
  4.2. SUPPLEMENTAL RENT....................................11
  4.4. SECURITY DEPOSIT.....................................12
  4.5. MANNER AND PLACE OF PAYMENT..........................12
SECTION 5. REPRESENTATIONS AND WARRANTIES;
           COVENANTS OF THE PARTIES ........................14
  5.L. LESSOR'S REPRESENTATIONS AND WARRANTIES
       AND DISCLAIMER.......................................14
  5.2. LESSEE'S REPRESENTATIONS AND WARRANTIES..............17
  5.3. COVENANTS OF LESSEE..................................20
  5.4. COVENANTS OF LESSOR..................................22
  6.6. MAINTENANCE..........................................27
  6.7. INSIGNIA AND NOTICES.................................28
  6.8. Use of Aircraft......................................28
SECTION 7. INSPECTION.......................................32
SECTION 9.  REPLACEMENT AND POOLING OF PARTS;
            Alterations, Modifications
            AND ADDITIONS...................................34
  9.1. REPLACEMENT OF PARTS.................................34
  9.2. TITLE TO REPLACED AND REPLACEMENT PARTS..............34
  9.3. POOLING..............................................34
  9.4. ALTERATIONS, MODIFICATIONS AND ADDITIONS.............35
  9.5. TITLE TO PARTS.......................................35
SECTION 13.  GENERAL INDEMNIFICATION........................46
SECTION 14. LIENS...........................................47
SECTION 15. RETURN OF AIRCRAFT AND RECORDS..................48
SECTION 16. EVENTS OF DEFAULT...............................48
  17.2. FURTHER RIGHTS......................................53
  17.3. REMEDIES CUMULATIVE.................................53
SECTION 18. MISCELLANEOUS...................................54
  18.1. CONSTRUCTION AND APPLICABLE LAW.....................54
  18.2. NOTICES.............................................54
  18.3. LESSOR'S RIGHT TO PERFORM...........................54
  18.4. ASSIGNMENT BY LESSOR................................55
  18.5. SERVICE OF PROCESS; WAIVER OF IMMUNITIES............55
  18.7. ARBITRATION.........................................57
  18.8. SURVIVAL............................................57
  18.9. ENTIRE AGREEMENT; COUNTERPARTS......................57
  18.10. SUCCESSORS AND ASSIGNS.............................58
  18.11. FURTHER ASSURANCES.................................58



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                            AIRCRAFT LEASE AGREEMENT


           THIS AIRCRAFT LEASE  AGREEMENT,  dated as of June 26, 1997 ("Lease"),
between GATX THIRD AIRCRAFT CORPORATION, a Delaware corporation,  ("Lessor") and
WESTERN PACIFIC AIRLINES, INC., a Delaware corporation, ("Lessee").

                             W I T N E S S E T H :

           WHEREAS, Lessee desires to lease from Lessor and Lessor is willing to
lease to Lessee the Aircraft (this and all other capitalized terms being defined
below) upon the terms and conditions set forth in this Lease;

           NOW,  THEREFORE,  in consideration of the mutual covenants herein set
forth, Lessor and Lessee hereby agree as follows:


SECTION 1. DEFINITIONS

           The  following  terms  shall  have  the  following  meanings  for all
purposes of this Lease and such meanings shall be equally applicable to both the
singular and the plural forms of the terms defined:

           "ADDITIONAL  INSUREDS" shall mean the Lessor,  any Assignee and their
respective  officers,   directors,   servants,  agents  and  employees  and  the
successors and assigns of each of the foregoing.

           "AIRCRAFT"  shall mean the Airframe  described in the  Certificate of
Acceptance together with, as the context requires,  either the engines installed
thereon or the Engines, whether or not installed thereon.

           "AIRCRAFT RECORDS" means the records, manuals and logbooks relating
to the Aircraft specified in Appendix II to Certificate of Acceptance No. 1
(presently Exhibit A hereto).

           "AIRFRAME"  shall mean the Boeing 737-300  airframe  described in the
Certificate of Acceptance (except for any engines or Engines installed thereon),
and  (except as  otherwise  provided  in Section  9.3  hereof) any and all Parts
incorporated  or  installed  therein or  attached  thereto  or, so long as title
thereto shall remain  vested in Owner in accordance  with the terms of Section 9
hereof, removed therefrom.

           "APU" shall mean the Auxiliary  Power Unit  installed on the Aircraft
as more specifically described in the Certificate of Acceptance.

           "ASSIGNEE"  shall  mean  any  transferee  of all or  any  portion  of
Lessor's  interest in the  Aircraft  or this Lease as set forth in Section  18.5
below.

           "AUTHORIZED MAINTENANCE PERFORMER" is defined in Section 6.6 below.

           "BASIC  RENT"  shall mean the rent  payable  pursuant  to Section 4.1
hereof.

           "BASIC RENT PAYMENT DATE" shall mean each date on which Basic Rent is
payable hereunder in accordance with Section 4.1 hereof.

           "BOEING" shall mean The Boeing Company of Seattle, Washington.

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           "BUSINESS  DAY" shall mean any day other than a  Saturday,  Sunday or
day on which commercial banking  institutions in New York, Denver or Chicago are
authorized by law to be closed.

           "CFMI" shall mean CFM International, Inc.

           "CERTIFICATE OF ACCEPTANCE" shall mean the Certificate of Acceptance,
substantially in the form of Exhibit A hereto,  to be entered into by Lessor and
Lessee on the  Delivery  Date for the purpose of leasing the Items of  Equipment
pursuant to the terms of this Lease.  The  Certificate  of  Acceptance  shall be
deemed to  incorporate  by reference all of the  provisions of this Lease to the
same extent as if such provisions were fully set forth therein.

           "CYCLE"  shall mean each  combination  of the take-off and landing of
the Airframe,  or in the case of an Engine, the airframe on which such Engine is
then installed.

           "DEBT" shall mean any obligation for the payment of borrowed money or
deferred purchase price.

           "DEFAULT" shall mean any event or condition which,  with the lapse of
time or the giving of notice or both, would constitute an Event of Default.

           "DELIVERY  DATE" with  respect to an Aircraft or an Item of Equipment
shall mean the date on which such  Aircraft or Item is delivered to and accepted
by Lessee pursuant to the provisions of Section 2 hereof.

           "DOLLARS" and "$" shall mean the lawful currency of the United
States of America.

           "ELIGIBLE   SUBLESSEE"   shall  mean  any   financially   responsible
commercial air carrier  holding an airline  operating  certificate in the United
States, Canada, Western Europe, Japan or Australia.

           "ENGINE"  shall mean: (a) any of the two CFM56-3C1  turbofan  engines
described  in the  Certificate  of  Acceptance  whether or not from time to time
thereafter installed on the Airframe; (b) any engine which may from time to time
be  substituted or be a replacement  for any such engine  pursuant to Section 11
hereof;  and (c) except as otherwise provided in Section 9.3 hereof, any and all
Parts incorporated or installed in or attached thereto or removed therefrom,  so
long as title thereto  shall remain vested in the Lessor in accordance  with the
terms of Section 9 hereof;  provided,  however, that the term "Engine" shall not
include any engine with respect to which this Lease shall have been terminated.

           "EQUIPMENT" shall mean, as the context may require, any or all of the
Airframe,  the Engines and the Parts, and an "Item of Equipment" or "Item" shall
mean, as the context may require, any one of the foregoing.

           "EVENT OF DEFAULT" shall have the meaning specified in Section 16
hereof.

           "EVENT OF LOSS" shall mean,  with  respect to any Item of  Equipment,
any of the  following:  (a) loss of such Item or the use  thereof  due to theft,
disappearance  for a period in excess of 90 days (or such shorter  period ending
on the date on which an insurance  settlement has been reached on the basis of a
total loss),  destruction,  damage beyond  economic  repair or rendition of such
Item permanently unfit for normal use for any reason whatsoever;  (b) any damage
to such Item which results in an insurance  settlement with respect to such Item


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on the basis of a total loss; (c) the condemnation,  confiscation or seizure of,
or  requisition  of title  to,  such  Item by any  government  or any  political
subdivision  thereof;  (d)  the  use of the  Aircraft  in the  normal  cause  of
passenger  operations  shall have been  prohibited  by  applicable  law, rule or
regulation  for a period in excess of 180 days (or the  balance of the Term,  if
less).  An Event of Loss with  respect to the  Aircraft  shall be deemed to have
occurred if an Event of Loss occurs with respect to the Airframe.

           "FAA" shall mean,  as context  requires,  the United  States  Federal
Aviation  Administration  and/or the  Administrator of the United States Federal
Aviation  Administration,   or  any  person,  governmental  department,  bureau,
commission or agency succeeding to the functions of either of the foregoing.

           "FAIR  MARKET  RENTAL"  shall mean the rental which would apply in an
arm's length  transaction  between a willing lessor and a willing lessee for the
Aircraft assuming it is in the condition  required  hereunder and for the period
of time in question.

           "FAR" or "FEDERAL AVIATION  REGULATION" shall mean one or more of the
Federal Aviation Regulations issued by the FAA.

           "FEDERAL  AVIATION ACT" shall mean the United States Federal Aviation
Act of  1958,  as  amended,  as in  effect  on the  date of this  Lease,  or any
successor or substituted legislation at the time in effect and applicable.

           "FLIGHT  HOUR"  shall mean each hour or portion  thereof  during each
period  commencing with liftoff from the runway and concluding when the Aircraft
or,  in the case of an  Engine,  the  airframe  on  which  such  Engine  is then
installed touches down upon landing.

           "GATX" shall mean GATX Capital Corporation, Four Embarcadero
Center, San Francisco, California  94111.

           "HEREBY", "HEREIN", "HEREOF", "HEREUNDER", and other like words shall
refer  to  this  Lease  as  originally  executed  or  as  amended,  modified  or
supplemented  pursuant to the applicable provisions hereof,  including,  without
limitation, as supplemented by the Certificate of Acceptance.

           "INCENTIVE  RATE"  shall mean a rate of  interest  equal to the Prime
Rate on the due date of any payment with respect to which  interest shall accrue
hereunder,  plus 4.0% per annum,  but in no event  greater than the maximum rate
permitted by applicable law.

           "INSURED  VALUE" with  respect to an  Aircraft  shall mean the amount
specified on Exhibit E hereto.

           "ITEM OF EQUIPMENT" or "ITEM" is defined under Equipment.

           "LEASE"  shall  mean  this  Agreement  and,  where  applicable,   the
Certificate of Acceptance.

           "LEASE DOCUMENTS" shall mean this Agreement and the Certificate of
Acceptance.

           "LEASE TERMINATION DATE" shall mean the date on which the Term
expires.

           "LESSOR  LIENS"  shall  mean any Lien with  respect to any Item which
results from (a)  nonpayment  by Lessor of any Taxes imposed on it (except Taxes
as to which Lessee is obliged hereunder to indemnify Lessor), (b) claims against
Lessor not related to the  transactions  described in this Lease or the Purchase


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Agreement or the Lessorship of the Items of Equipment, or (c) an affirmative act
of  Lessor  not  related  to the  transactions  described  in this  Lease or the
Purchase Agreement.

           "LESSOR'S COST" is defined in the Certificate of Acceptance.

           "LIEN"  shall  mean  any  assignment  by way of  security,  mortgage,
pledge,  lien,  charge,  encumbrance,  lease,  exercise  of rights  or  security
interest.

           "MAINTENANCE   PROGRAM"  shall  mean  Lessee's  FAA-approved  737-300
overhaul and maintenance  program,  included in the Lessee's  maintenance manual
and including all subsequent revisions thereto.

           "MORTGAGE" shall mean any security interest in the Aircraft granted
by Lessor.

           "MORTGAGEE"  shall  mean any entity or  entities  to which the Lessor
grants a security interest in the Aircraft.

           "PART" shall mean any and "Parts" shall mean all  appliances,  parts,
instruments,  accessories,  furnishings  and other  equipment of whatever nature
(other  than  the  Engines  or  engines),  which  (a)  are  from  time  to  time
incorporated or installed in or attached to the Airframe or the Engines,  or (b)
having been so installed or attached,  are later removed  therefrom,  so long as
title  thereto  remains  vested in Lessor in  accordance  with Section 9 hereof;
provided, however, the term "Parts" shall not include any of the Lessee Parts.

           "PERMITTED LIENS" shall mean (a) the respective rights of the parties
hereunder; (b) Liens for taxes, assessments or other governmental charges either
not yet due or being  contested  in good  faith  (and for the  payment  of which
adequate reserves have been provided) by appropriate proceedings so long as such
proceedings do not involve any danger of the sale,  forfeiture,  loss or loss of
use of the  Aircraft,  the Airframe or any Engine or any interest  therein;  (c)
materialmen's, mechanics', workers', repairers', employees', or other like Liens
arising in the  ordinary  course of business for amounts the payment of which is
either not yet due or is being  contested  in good faith (and for the payment of
which adequate  reserves have been provided) by appropriate  proceedings so long
as such proceedings do not involve danger of the sale, forfeiture or loss of use
of the  Aircraft,  the Airframe or any Engine or any interest  therein;  (d) any
other Liens with respect to which Lessee  shall have  provided  security in form
and amount  acceptable to Lessor;  (e) the lien of the Mortgage;  and (f) Lessor
Liens.

           "PRIME  RATE" shall mean the publicly  announced  "prime rate" by The
Chase Manhattan Bank as its best lending rate for commercial borrowers.

           "PURCHASE AGREEMENT" shall mean that certain Purchase Agreement No.
     , dated                           between Boeing, as seller, and Lessee,
as buyer, including all Exhibits, Letter Agreements and amendments thereto.

           "PURCHASE  AGREEMENT  ASSIGNMENT"  shall mean that  certain  Purchase
Agreement  Assignment  dated on or before the  Delivery  Date,  transferring  to
Lessor the right to purchase the Aircraft from Boeing and also  transferring  to
Lessor the product support and warranty rights with respect to the Aircraft.

           "RENT" shall mean Basic Rent and Supplemental Rent, collectively.

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<PAGE>

           "SECURITY  DEPOSIT"  shall mean the amount paid by Lessee and held as
security by Lessor pursuant to Section 4.4.

           "STATE OF REGISTRATION" shall mean the United States of America.

           "SUPPLEMENTAL   RENT"  shall  mean  all  amounts,   liabilities   and
obligations (other than Basic Rent) which Lessee assumes, agrees or is obligated
to pay hereunder.

           "SUPPLIER"  shall mean the  manufacturer,  vendor or  supplier of any
Item of Equipment other than Boeing or CFMI.

           "TAXES" shall have the meaning set forth in Section 10.

           "TERM"  shall mean the period  for which the Items of  Equipment  are
leased hereunder  pursuant to Section 3 hereof. If such period is extended,  the
word  "Term"  shall be deemed to refer to such  period as so  extended,  and all
provisions of this Lease shall apply until the  expiration  date of such period,
except as may be otherwise specifically provided herein.


SECTION 2. DELIVERY AND ACCEPTANCE.

      2.1. TIME AND PLACE.  Subject to the  satisfaction  of the  conditions set
forth in Section 2.3 hereof,  Lessor shall deliver the  Aircraft,  together with
the Aircraft Records relating  thereto,  to Lessee at the Boeing delivery center
at Renton,  Washington or at such other time and/or  location as may be mutually
agreed.  Subject to  satisfaction  of the  conditions  set forth in Section  2.4
below, Lessee shall accept the Items of Equipment,  by executing the Certificate
of   Acceptance   and   delivering   the  same  to  Lessor  and  upon   Lessor's
countersignature  on the  Certificate of Acceptance the Aircraft and other Items
shall be subject to this Lease.  The date of the  Certificate of Acceptance with
respect to the Aircraft shall be its Delivery Date.

      It is anticipated  that the Delivery Date of the Aircraft will be June 27,
1997.  If the  Delivery  Date has not  occurred  prior to December 31, 1997 then
Lessee or Lessor may give written notice of cancellation to the other party, the
balance of the Security  Deposit  held by Lessor shall be promptly  returned and
this  Agreement  shall be without  further force or effect.  In the event Boeing
terminates the Purchase  Agreement as to the Aircraft  because of an anticipated
or actual delay in delivery exceeding 12 months,  then Lessor may give notice of
such event to Lessee,  return the  balance  of the  Security  Deposit,  and this
Agreement shall be deemed cancelled and without further force or effect.

      2.2. A LETTING ONLY. At all times during the Term, full legal title to and
ownership of the  Aircraft  shall  remain  vested in Lessor to the  exclusion of
Lessee,  notwithstanding the delivery of the Aircraft to, and the possession and
use thereof by, Lessee.

      2.3. LESSOR'S  CONDITIONS TO DELIVERY.  Lessor's obligation to deliver and
lease  the  Items  of  Equipment  to  Lessee   hereunder  shall  be  subject  to
satisfaction of the following conditions on or before the Delivery Date:

                (a) Lessor shall have received the Security  Deposit in the form
           of an irrevocable stand-by letter of credit in a form and from a bank
           acceptable  to Lessor in the  amount of $[ ]* which  shall be held in
           the manner specified in Section 4.4(a) hereof;

                (b) Lessor shall have received  satisfactory written evidence of
           appropriate  corporate  action,  certified  by the Head of the  Legal


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<PAGE>

           Department of Lessee,  duly authorizing or ratifying the lease of the
           items  of  Equipment  hereunder  and  the  execution,   delivery  and
           performance of this Lease, together with an incumbency certificate as
           to the person or entity or persons  authorized to execute and deliver
           said  certification  and said  documents  and to take delivery of the
           Aircraft on behalf of Lessee;

                (c) certified  copies of Lessee's  certificate of  incorporation
           and  bylaws,  together  with a good  standing  certificate  from  the
           Secretary  of  State  of  Delaware,   and  copies  of  all  consents,
           authorizations   or  approvals   required  in  connection   with  the
           execution, delivery and performance of the Lease by Lessee.

           (d)  insurance   certificates   and  a  letter  of  undertaking  from
           independent aircraft insurance brokers evidencing Lessee's compliance
           with the insurance provisions of Section 12 hereof;

           (e) the  favorable  written  opinion of  Lessee's  independent  legal
           counsel in the form attached hereto as Exhibit C.

           (f) the Certificate of Acceptance duly executed by Lessee,  dated the
           Delivery Date;

           (g) a  certificate  signed by a duly  authorized  officer  of Lessee,
           dated the Delivery Date, to the effect that:

                (1) the representations and warranties  contained in Section 5.2
                hereof are true and  correct on and as of the  Delivery  Date as
                though made on and as of such date, and all  authorizations  and
                approvals of,  givings of notice to, and filings and  recordings
                with,  all  regulatory  bodies  and  authorities  which  may  be
                conditions  to the validity or  enforceability  of this Lease or
                Lessee's   performance  of  the  terms  hereof  have  been  duly
                accomplished;

                (2)  no  Default  or  Event  of  Default  has  occurred  and  is
                continuing,  or  would  result  from the  lease of the  items of
                Equipment hereunder;

           (h) evidence  satisfactory to Lessor confirming that the Aircraft has
           been registered with the Aeronautics Authority in the name of Lessor,
           as owner,  and that this Lease and the Certificate of Acceptance have
           been duly filed with the Aeronautics Authority;

           (i) Uniform Commercial Code financing statements evidencing filing in
           the State of Colorado  in favor of Lessor  with  respect to the Lease
           and the Aircraft;

           (j) a letter  from the Agent  (specified  in  Section  5.2(g)  below)
           accepting the appointment specified in Section 18.5 hereof;

           (k)  a copy of the Maintenance Program;

           (l) the  favorable  opinion  of William  C.  Boston  and  Associates,
           special FAA counsel,  concerning the due and proper  registration  of
           the Aircraft in the name of Lessor and the filing of the Lease;

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<PAGE>

           (m) an executed  original of the  warranty  bill of sale from Boeing,
           conveying title to the Aircraft to Lessor;

           (n) satisfactory  documentation evidencing that the Aircraft complies
           with the delivery requirements of the Purchase Agreement;

           (o)  a copy of the Certificate of Airworthiness for the Aircraft;

           (p)  certified  copies  of  Lessee's  737  airframe  maintenance  and
           overhaul  contract  with BF Goodrich  (Tramco)  and  Lessee's  engine
           overhaul contract with General Electric Aircraft Engines  (Strother);
           and

           (q) such other documents as Lessor may reasonably request.

      2.4. LESSEE'S  CONDITIONS TO DELIVERY.  Lessee's  obligation to accept and
lease the Aircraft from Lessor hereunder shall be subject to the satisfaction of
the following conditions:

           (a) Lessor shall have  accepted  delivery of the Aircraft from Boeing
           under the Purchase Agreement.

           (b)  The  Aircraft  shall  be  in  the  condition  and  configuration
           specified in the Purchase Agreement.

                (c) On or before the Delivery Date, Lessee shall have received:

                     (i) a certificate  signed by a duly  authorized  officer of
                Lessor,  dated  the  Delivery  Date,  to  the  effect  that  the
                representations  and warranties  contained in Section 5.1 hereof
                are true and  correct  on and as of such date as though  made on
                and as of such date; and

                     (ii) a copy of the Purchase  Agreement  Assignment  showing
                consent by Boeing thereto.


SECTION 3. TERM.

           The Term with respect to the Aircraft  shall commence on the Delivery
Date and shall expire on the tenth (10th) anniversary  thereof,  unless extended
pursuant to  paragraph 6 of Exhibit D hereto or earlier  terminated  pursuant to
Section 17.


SECTION 4. RENT.

      4.1.  BASIC RENT.  Commencing  on the Delivery Date and on the same day of
each month thereafter,  Lessee shall pay Lessor rent for the Aircraft, each such
payment in the amount  specified in Exhibit B hereto ("Basic  Rent").  The Basic
Rent  amounts  are  subject  to  adjustment  as set forth in  Exhibit  B. If the
Delivery Date has no  corresponding  numerical day in any month,  the Basic Rent
Payment  Date shall be the last  Business  Day in such  month.  As a courtesy to
Lessee, Lessor agrees to provide Lessee with an invoice in advance of each Basic
Rent  Payment  Date.  The failure to provide  such an invoice  shall not relieve
Lessee of its obligation to pay Basic Rent hereunder.

      4.2.  SUPPLEMENTAL  RENT.  Lessee shall also pay to Lessor or, at Lessor's
direction,  to  whomsoever  shall be  entitled  thereto,  subject to the proviso
contained  in  Section  18.5,  any and  all  Supplemental  Rent on the due  date


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<PAGE>

specified  in the  invoice  from  Lessor to Lessee for such  Supplemental  Rent.
Lessee shall pay to Lessor, as Supplemental Rent, interest at the Incentive Rate
on any part of any  installment  of Rent not paid on the due date  thereof.  All
computations  of interest  under this Lease to be made on the basis of a 365-day
year and actual days elapsed.

      4.3. PROHIBITION AGAINST SETOFF, COUNTERCLAIM, ETC. Lessee's obligation to
pay Rent and make  other  payments  in  accordance  with  this  Lease,  shall be
absolute and unconditional  irrespective of any contingency whatsoever including
(but not limited to) (i) any right of setoff, counterclaim,  recoupment, defence
or other right which either  party  hereto may have against the other,  (ii) any
unavailability of the Aircraft for any reason,  including, but not limited to, a
requisition thereof or any prohibition or interpretation or interference with or
other restriction  against Lessor's or Lessee's use,  operation or possession of
the Aircraft (other than in violation of a covenant of quiet enjoyment),  or the
airworthiness,  merchantability,  fitness for any purpose,  condition, design or
operation of any kind or nature of the  Aircraft,  or the  ineligibility  of the
Aircraft for any particular use or trade, or for  registration or  documentation
under the laws of any relevant  jurisdiction,  or any Event of Loss  (subject to
the  provision for cessation of Basic Rent as stated in Section 11.1) in respect
of or any damage to the  Aircraft  or any part  thereof,  (iii) any  insolvency,
bankruptcy,  reorganization,  arrangement,  readjustment  of debt,  dissolution,
liquidation  or similar  proceedings  by or against  Lessor or Lessee,  (iv) any
invalidity or  unenforceability or lack of due authorization of, or other defect
in, this Lease,  and (v) any other cause which but for this  provision  would or
might have the effect of  termination  or in any way affecting any obligation of
Lessee hereunder.

      4.4.  SECURITY  DEPOSIT.  On or before the Delivery Date Lessor shall have
received  an  irrevocable  standby  letter of  credit  from a bank and in a form
acceptable  to Lessor  in the face  amount of $[ ]* (the  "Letter  of  Credit").
Promptly upon receipt of the Letter of Credit,  Lessor shall refund to Lessee $[
]*  previously  paid to  Lessor.  The  Letter  of Credit  shall  remain in place
throughout the Term, except as specified in this Section 4.4.

           The Security  Deposit shall be held by the Lessor as security for the
timely and faithful  performance  by Lessee of Lessee's  obligations  under this
Lease, and Lessee hereby grants Lessor a security interest in all sums deposited
with or  otherwise  held by Lessor  under this  Section  4.4.  Lessee  agrees to
execute  and  file  with  the  appropriate  governmental  entities  any  and all
documents  necessary or  reasonably  requested by Lessor to evidence and perfect
such security  assignment in favor of Lessor.  If an Event of Default shall have
occurred and is  continuing,  in addition to all other rights  Lessor shall have
under the New York Uniform  Commercial Code as a secured party,  Lessor may, but
shall not be  obligated  to,  draw on the Letter of Credit  and/or  use,  apply,
set-off or retain all or any  portion of the  Security  Deposit,  in payment for
sums due by Lessee, to compensate Lessor for any sums advanced as a result of an
Event of  Default  by Lessee or to apply  toward any  expenses  Lessor  actually
incurs as a result of such Event of  Default.  If Lessor  uses or applies all or
any portion of such Security Deposit as provided above,  such application  shall
not be deemed a cure of any Events of Default,  and Lessee shall within five (5)
days  deposit with Lessor in cash an amount  sufficient  to restore the Security
Deposit to the aggregate  amount of such Security  Deposit prior to Lessor's use
or application and Lessee's doing so shall be deemed a cure of any such Event of
Default  but the  failure of Lessee to do so shall be a material  breach of this
Lease by Lessee.  Provided  that an Event of Default shall not have occurred and
then be  continuing  (and in such case, at such time as no such Event of Default
shall then be  continuing)  and provided that Lessee shall have paid all amounts


                                       8
<PAGE>

owing  hereunder,  the Security  Deposit  together with accrued interest thereon
shall be  returned to Lessee at the end of the Term and  Lessee's  return of the
Aircraft in compliance with Article 13 hereof.

           Provided no Event of Default has occurred or is continuing,  promptly
following the third anniversary of the Delivery Date Lessor agrees to review the
Lessee's  financial  condition  and will confer with Lessee to determine if said
financial condition merits a reduction in the amount of the Security Deposit.

      4.5.  MANNER  AND  PLACE OF  PAYMENT.  All  amounts  to be paid by  Lessee
hereunder shall be paid by wire transfer of same day funds, consisting of lawful
currency of the United States of America,  to the account of Lessor at The First
National Bank of Chicago,  ABA No. 071000013,  Chicago,  IL 60670 account no. 52
47209, account name: GATX Capital Corporation, or to such other party or account
as Lessor shall designate in writing.  If any such amount is due to be paid on a
day  other  than a  Business  Day,  such  amount  shall be  payable  on the next
succeeding  Business  Day.  Any payment of Rent not  received  in Lessor's  bank
account by 11:00 a.m. on the due date shall be treated as having  been  received
on the next succeeding Business Day.


SECTION 5. REPRESENTATIONS AND WARRANTIES; COVENANTS OF THE PARTIES.

      5.l. LESSOR'S REPRESENTATIONS AND WARRANTIES AND DISCLAIMER.

                a. Lessor  represents  and warrants  that on the  Delivery  Date
           Lessor  shall hold such title as shall  have been  conveyed  to it by
           Boeing  and  shall  have the right to lease  the  Aircraft  to Lessee
           hereunder.   EXCEPT  FOR  THE  FOREGOING   REPRESENTATION,   AND  THE
           REPRESENTATIONS AND WARRANTIES  CONTAINED IN THIS SECTION 5.1, LESSOR
           DOES NOT MAKE AND  SHALL  NOT BE  DEEMED  TO HAVE MADE OR TO MAKE ANY
           WARRANTIES,  REPRESENTATIONS OR GUARANTEES OF ANY KIND, INCLUDING (I)
           AS TO THE AIRWORTHINESS, VALUE, CONDITION, DESIGN OR OPERATION OF, OR
           QUALITY  OF THE  MATERIAL  OR  WORKMANSHIP  IN, OR ANY DEFECT IN, THE
           AIRCRAFT,  THE AIRFRAME,  ANY ENGINE, ANY PART, ANY DATA OR ANY OTHER
           THING DELIVERED,  LEASED, OR TRANSFERRED HEREUNDER,  (II) ANY IMPLIED
           WARRANTIES OF  MERCHANTABILITY OR FITNESS FOR USE OR FOR A PARTICULAR
           PURPOSE,  AGAINST INFRINGEMENT OR THE LIKE, OR ARISING FROM COURSE OF
           PERFORMANCE,  COURSE OF  DEALING  OR USAGE OF TRADE,  (III) AS TO ANY
           OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT WITH RESPECT TO
           THE AIRCRAFT,  THE AIRFRAME,  ANY ENGINE,  ANY PART,  ANY DATA OR ANY
           OTHER THING DELIVERED,  LEASED, OR TRANSFERRED HEREUNDER,  WHETHER OR
           NOT IN STRICT OR  ABSOLUTE  LIABILITY  OR ARISING  FROM THE ACTUAL OR
           IMPUTED  NEGLIGENCE  OF  LESSOR  OR  MORTGAGEE,  OR  (IV)  AS TO  ANY
           OBLIGATION,  LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF, OR DAMAGE
           TO, THE AIRCRAFT, THE AIRFRAME, ANY ENGINE, ANY PART, ANY DATA OR ANY
           OTHER  THING,  FOR ANY LOSS OF USE,  REVENUE OR PROFIT,  OR ANY OTHER
           DIRECT,  INCIDENTAL OR CONSEQUENTIAL  DAMAGES.  Lessor hereby assigns
           (but only for such time as no Event of Default  shall  have  occurred
           and be  continuing)  to Lessee such rights as Lessor may from time to
           time  have  under  any  warranty  made by  Boeing,  CFMI or any other
           Manufacturer   with  respect  to  the  Aircraft  or  other  Items  of
           Equipment,  and any other claims  against  Boeing,  CFMI or any other
           Manufacturer   with  respect  to  the  Aircraft  or  other  items  of
           Equipment.

                b.   CORPORATE   EXISTENCE  AND   QUALIFICATION.   Lessor  is  a
           corporation  duly  incorporated and validly existing under the law of
           the State of Delaware  and has the power and  authority to enter into


                                       9
<PAGE>

           and  perform  its  obligations   hereunder  and  under  the  Purchase
           Agreement Assignment and the Certificate of Acceptance.

                c. ASSIGNMENTS.  The Purchase Agreement Assignment has been duly
           executed  and  delivered  by the  officers of the Lessor who are duly
           authorized to execute and deliver such agreements and is legal, valid
           and binding on the Lessor, enforceable in accordance with its terms.
 .
                d.  AUTHORITY.  Lessor has full corporate power and authority to
           enter into and perform this Lease, the Purchase Agreement  Assignment
           and the Certificate of Acceptance,  and the other agreements executed
           pursuant  hereto  and  thereto;  and  the  execution,   delivery  and
           performance of this Lease and the other documents  executed by Lessor
           pursuant hereto have been duly authorized by all necessary  corporate
           action on the part of Lessor, do not require any stockholder approval
           or approval or consent of any trustee or holders of any Debt or other
           obligations  of Lessor  except such as have been duly obtained and do
           not  contravene  any  provision  of  any  law,   governmental   rule,
           regulation   or  order   binding   on  Lessor,   or  any   applicable
           interpretation or administration of any such law,  governmental rule,
           regulation or order, or contravene the certificate of  incorporation,
           Bylaws  or  other  organic  documents  of  Lessor  or any  indenture,
           mortgage,  contract or other  agreement or instrument to which Lessor
           is a party  or by  which  it or any of its  assets  may be  bound  or
           affected.

                e. GOVERNMENTAL APPROVALS. Neither the making nor performance by
           Lessor of this Lease or any other  document  to be executed by Lessor
           pursuant  hereto,  nor the consummation of any of the transactions by
           Lessor   contemplated   hereby  or  thereby,   nor  the  acquisition,
           Lessorship or leasing by Lessor of the Aircraft under such documents,
           requires  the  consent or  approval  of, the giving of notice to, the
           registration  or filing for  recordation  with,  or the taking of any
           other action in respect of, any  authority of or in the United States
           of  America,   including  any   governmental  or  political   agency,
           subdivision or instrumentality thereof.
                f. NO  VIOLATION.  The  execution  and delivery by the Lessor of
           this Lease are not, and the execution and delivery of the Certificate
           of Acceptance and the Purchase Agreement  Assignment will not be, and
           the  performance by the Lessor of its  obligations  under each of the
           foregoing  documents will not be,  inconsistent with the terms of its
           charter  or  by-laws,  do  not  and  will  not  contravene  any  law,
           governmental rule or regulation,  judgment or order applicable to it,
           and do not and will not  contravene any provision of, or constitute a
           default under, any indenture,  mortgage, contract or other instrument
           to which the Lessor is a party or by which it is bound or require the
           consent or  approval  of,  the giving of notice to, the  registration
           with or the taking of any  action in  respect of or by, and  Federal,
           state or local  governmental  authority  or agency  or other  person,
           except such as have been obtained, given or accomplished.

           g. Lessor is a "citizen of the United  States"  within the meaning of
           Section 40102 of Title 49 of the United States Code.

      5.2. LESSEE'S REPRESENTATIONS AND WARRANTIES.  Lessee covenants,
represents and warrants that:

                                       10
<PAGE>

                a.   CORPORATE   EXISTENCE  AND   QUALIFICATION.   Lessee  is  a
           corporation duly  incorporated and validly existing under the laws of
           the State of Delaware and is an air carrier of persons and  property,
           registered,  licensed or otherwise  certificated  or duly  authorized
           under Part 121 of the Federal Aviation  Regulations to engage in such
           air transportation  and is duly qualified or otherwise  authorized to
           do business as an air  carrier in all  jurisdictions  in which it has
           air routes,  except for jurisdictions  where failure to so qualify or
           obtain  authorization would not have a material adverse effect on the
           business  of Lessee  and would not  involve  any  danger of the sale,
           forfeiture  or loss of any item of  Equipment  or  impairment  of the
           value thereof.

                b.  AUTHORITY.  Lessee has full corporate power and authority to
           enter into and perform this Lease and the other Lease Documents;  and
           the execution,  delivery and  performance of this Lease and the other
           documents   executed  by  Lessee   pursuant  hereto  have  been  duly
           authorized by all necessary  corporate  action on the part of Lessee,
           do not require any stockholder approval or approval or consent of any
           trustee or holders of any Debt or other  obligations of Lessee except
           such as have been duly obtained and do not  contravene  any provision
           of any law, governmental rule, regulation or order binding on Lessee,
           or any applicable  interpretation  or administration of any such law,
           governmental rule, regulation or order, or contravene the certificate
           of incorporation,  bylaws or other organic documents of Lessee or any
           indenture,  mortgage,  contract or other  agreement or  instrument to
           which  Lessee is a party or by which it or any of its  assets  may be
           bound or affected.

                c. GOVERNMENTAL APPROVALS. Neither the making nor performance by
           Lessee of this Lease or any other  document  to be executed by Lessee
           pursuant  hereto,  nor the consummation of any of the transactions by
           Lessee   contemplated   hereby  or  thereby,   nor  the  acquisition,
           Lessorship or leasing by Lessor of the Aircraft under such documents,
           requires  the  consent or  approval  of, the giving of notice to, the
           registration  or filing for  recordation  with,  or the taking of any
           other action in respect of, any authority of or in the United States,
           including  any  governmental  or  political  agency,  subdivision  or
           instrumentality  thereof,  except for a certificate of  airworthiness
           and a certificate of registration with respect to the Aircraft issued
           by the FAA naming Lessor as the owner of the Aircraft.

                d. BINDING OBLIGATIONS. This Lease and each other Lease Document
           executed by Lessee  constitutes  or, when executed and delivered will
           constitute,  the  valid and  legally  binding  obligations  of Lessee
           enforceable against Lessee in accordance with the terms thereof.

                e.  LITIGATION.  Except  as  otherwise  disclosed  to  Lessor in
           writing prior to the execution and delivery of this Lease,  there are
           no suits or proceedings pending in any court of before any regulatory
           commission,  board or other  administrative or governmental agency in
           the United  States  against or  affecting  Lessee which relate to the
           transactions  contemplated hereby or which, if adversely  determined,
           would  have a  material  adverse  effect on the  ability of Lessee to
           fulfill its obligations hereunder.

                                       11
<PAGE>

                f. FINANCIAL  CONDITION.  The audited balance sheet of Lessee as
           at December  31,  1996 (the "1996  Balance  Sheet"),  and the audited
           statements of profit and loss of Lessee for 1996,  each  certified by
           the independent  auditor of Lessee,  heretofore  furnished to Lessor,
           are complete and correct and have been  prepared in  accordance  with
           generally accepted  accounting  principles.  Lessee has no contingent
           obligations  (to its  knowledge),  liabilities  for taxes or  unusual
           forward or long-term  commitments which could have a material adverse
           effect on its  financial  condition,  except as disclosed in the 1996
           Balance Sheet or the notes thereto.

                g. REGISTRATION, FILING, ETC. The agent in the State of New York
           upon whom  service of process may be made on behalf of Lessee,  is CT
           Corporation  System.  Lessee will give written  notice in  accordance
           with  Section  18.2  hereof  prior to any change of address  for such
           agent.  Lessee  agrees to  maintain an agent in the State of New York
           throughout the term who is authorized to accept service of process on
           behalf of Lessee. In the event Lessee fails to maintain such an agent
           in the State of New York,  Lessee  agrees that service by mail to the
           location specified in Section 18.2 hereof shall be sufficient for all
           purposes.

                h. USE OF AIRCRAFT.  The Aircraft will be used  exclusively  for
           the carriage of persons,  property, cargo and mail as permitted under
           the laws of the United States.

                i. PARI PASSU  RANKING.  The  obligations  of Lessee to pay Rent
           hereunder  will be direct and  unconditional  general  obligations of
           Lessee,  and will rank in right of  payment  at least PARI PASSU with
           all  Debt,  whether  now or  hereafter  outstanding.  The PARI  passu
           ranking  referred to in the preceding  sentence  refers to ranking in
           right of payment only,  and does not address the issues of collateral
           security  for any Debt or recourse in respect of any Debt against any
           direct or indirect guarantor thereof.

                j. NO  CONFLICTING  AGREEMENTS.  Lessee  is not a  party  to any
           agreement or instrument or subject to any charter or other  corporate
           restriction  which  individually  or in  the  aggregate  is,  in  the
           reasonable judgment of Lessee, likely to adversely affect its ability
           to perform its obligations under this Lease.

                k. NO DEFAULT. No Default has occurred and is continuing.

                l. REPETITION.  The representations and warranties  contained in
           this  Section 5.2 (other than Section  5.2(f))  shall be deemed to be
           repeated in full upon each Basic Rent Payment  Date having  regard to
           the facts and circumstances then existing.

      5.3.  COVENANTS  OF  LESSEE.  Until  payment  in  full  of  all  Rent  and
performance  by Lessee of all its other  obligations  hereunder,  Lessee  agrees
that:

           a.   FINANCIAL STATEMENTS, REPORTS, ETC.  Lessee will furnish to
Lessor:

                                       12
<PAGE>

                     i. as soon as  available  and in any  event  within 60 days
                after the end of each quarter and within 90 days after the close
                of each fiscal  year of Lessee,  the  audited  balance  sheet of
                Lessee  as at the end of such  quarter  or  fiscal  year and the
                related statements of earnings for such fiscal year, prepared in
                accordance with generally accepted accounting  principles and on
                a basis  consistent  with  that used in the  preparation  of the
                financial  statements  referred to in Section 5.2(f),  except as
                noted  in  such  balance  sheet  and  statements,  certified  by
                Lessee's  independent  public  accountants  and including  their
                certificate and accompanying comment;

                     ii. promptly after Lessee shall have obtained  knowledge of
                the occurrence of any Default,  a written notice  specifying the
                nature and period of  existence  thereof and what action  Lessee
                has taken or is taking or proposes to take with respect thereto;

                     iii. not later than 30 days after entering into or becoming
                bound or  affected by any pooling or  interchange  agreement  or
                arrangement  permitted by Section 6.1 by which any Engine may be
                affected and promptly  after each amendment or  modification  of
                any such  agreement  or  arrangement,  Lessee at its option will
                either  deliver to Lessor a certified  copy of the  agreement in
                English,  or will deliver to Lessor a certificate  duly executed
                by an  authorized  officer  of  Lessee  to the  effect  that the
                pooling or  interchange  agreement is (or remains) in compliance
                with the terms of this Lease;

                     iv. prompt  written notice of any damage to any Item if the
                estimated  cost of repair  exceeds $[ ]* (or the  equivalent  in
                local currency); and

                     v. from time to time such other  information  regarding the
                Aircraft as Lessor may  reasonably  request,  including  reports
                from  time to time as to  maintenance  of the  Aircraft  and the
                Engines  (including  total  Flight  Hours  and  Cycles  and time
                between overhauls).

                b.  RECORDING.  Subject to the  requirements  of Section  5.4(a)
           below,  Lessee  will be  responsible  for and  bear  the  expense  of
           registering  the Aircraft in the United States in the name of Lessor,
           as owner and lessor,  and of recording and  rerecording,  registering
           and  reregistering and filing and refiling this Lease, each and every
           supplement to this Lease, the Mortgage(s), and such other instruments
           as are  necessary  or  reasonably  requested by Lessor to protect the
           right,  title and interest of Lessor and Mortgagee and to perfect and
           maintain the interests of Lessor and Mortgagee  created hereunder and
           under  the  Mortgage,   provided,   however,   Lessee  shall  not  be
           responsible  for  filings  with  respect to any  mortgage or security
           interest  granted by Lessor on the Aircraft or the Lease,  but Lessee
           shall  cooperate  with  Lessor's  reasonable  requests  in making and
           maintaining any such filings.

                                       13
<PAGE>

           c.   CORPORATE EXISTENCE, MERGERS, ETC.

                          i.  Lessee  will do or  cause  to be done  all  things
                necessary  to  preserve  and keep in full  force and  effect its
                status as a duly  certificated  air carrier  pursuant to (or, in
                the  event   such  law  or   regulation   is   superseded,   its
                authorization  under) FAR Part 121 to be an air carrier  engaged
                in the  carriage of persons and  property  for  compensation  or
                hire.

                          ii.  Lessee  will,  except  as  permitted  by the next
                sentence, at all times maintain its corporate existence.  Lessee
                will not  consolidate  with or merge into any other  Person,  or
                sell, lease, exchange, transfer or otherwise dispose (whether in
                one transaction or in a series of related  transactions)  of all
                or substantially all its property,  assets or revenues,  whether
                now owned or  hereafter  acquired,  unless (i) Lessee shall have
                obtained the prior written consent of Lessor, which shall not be
                unreasonably withheld or delayed, (ii) the entity formed by such
                consolidation  or  merger  or the  person  or  entity  which  so
                acquires such assets by purchase,  lease,  exchange or transfer,
                shall be a corporation duly organized and validly existing under
                the  laws  of one of  the  United  States  of  America  and is a
                certificated  air carrier and shall have  executed and delivered
                to Lessor an agreement in form satisfactory to Lessor containing
                an assumption  by such  successor of the  obligations  of Lessee
                under  this  Lease,  (iii)  no Event of  Default  exists  and is
                continuing   and   immediately   after  giving  effect  to  such
                consolidation,  merger or  acquisition,  no  Default  shall have
                occurred and be continuing  and (iv) the financial  condition of
                the surviving  entity shall not be any worse than that of Lessee
                immediately prior to such consolidation, merger or acquisition.

      5.4. COVENANTS OF LESSOR.

                a.  REGISTRATION.  Lessor  will  take  such  action  as  may  be
           requested  by Lessee,  at the expense of Lessee,  in order to file or
           record  the  Lease,  the  Certificate  of  Acceptance  and such other
           documents as may be necessary  and to register the Aircraft  with the
           FAA and  Lessee  hereby  consents  to such  filing,  recordation  and
           registration by Lessee.

                b. QUIET  ENJOYMENT.  So long as no Event of Default  shall have
           occurred  and  be   continuing,   Lessor   agrees  that,   except  as
           specifically  permitted  by the  terms of this  Lease,  it will  not,
           through  its own  actions  or  through  the  actions  of others  duly
           claiming  through or under Lessor,  interfere with Lessee's  peaceful
           and quiet use, operation and possession of the Aircraft.


SECTION 6. POSSESSION AND USE.

      6.1. POSSESSION.

           a. SUBLEASE:  ASSIGNMENT AND TRANSFER. Lessee will not assign, pledge
           or otherwise  encumber  this Lease or,  except as provided in Section


                                       14
<PAGE>

           6.1(b) below, sublet or transfer possession of the Aircraft, Airframe
           or any  Engine or  install  any  Engine or  permit  any  Engine to be
           installed on any airframe  other than the  Airframe,  provided that a
           "wet" lease of the Aircraft,  pursuant to which Lessee's flight crews
           remain in sole command of the Aircraft and its  operations,  will not
           be deemed to be a sublease of the  Aircraft,  and  provided  further,
           that so long as no Default or Event of  Default  shall have  occurred
           and be  continuing  and as long as the  action to be taken  shall not
           affect the  registration of the Aircraft and so long as all necessary
           approvals of each  Governmental  Entity having  jurisdiction over the
           Aircraft have been obtained,  then Lessee,  without the prior written
           consent of Lessor,  but in all cases  with  prior  written  notice to
           Lessor, may:

                (i)  subject  any  Engine  to  normal   interchange  or  pooling
                agreements or similar arrangements in each case customary in the
                commercial  airline  industry  and entered  into in the ordinary
                course of its business with an air carrier approved by Lessor or
                an  FAA-licensed  engine overhaul  agency;  provided that (A) no
                such  agreement  or  arrangement  results  in  or  requires  the
                transfer of title to such Engine;  and (B) if Lessor's  title to
                such  Engine  shall be  divested  under  any such  agreement  or
                arrangement,  such divestiture shall be deemed to be an Event of
                Loss with  respect to such Engine and Lessee  shall  comply with
                Section 11.2 hereof in respect thereof;

                (ii) deliver  possession  of the  Aircraft,  the Airframe or any
                Engine to the Manufacturer  thereof for testing or other similar
                purposes or to any  FAA-licensed  repair  station  for  service,
                repair,  maintenance,  testing or overhaul work on the Aircraft,
                Airframe  or Engine or any Part  thereof or for  alterations  or
                modifications  in or  additions  to the  Aircraft,  Airframe  or
                Engine  to the  extent  required  or  permitted  by the terms of
                Section 9 hereof;

                (iii) install an Engine on an airframe (other than the Airframe)
                owned  by  Lessee  free  and  clear  of all  Liens  except:  (A)
                Permitted Liens and those which apply only to the engines (other
                than Engines),  appliances,  parts, instruments,  appurtenances,
                accessories,  furnishings and other equipment (other than Parts)
                installed  on  such  airframe  (but  not to the  airframe  as an
                entirety);  and (B) the rights of the participants  under normal
                interchange  agreements  which  are  customary  in  the  airline
                industry and do not  contemplate,  permit,  result in or require
                the  transfer  of  title  to  the  airframe,  engines  or  parts
                installed thereon; and

                (iv) install an Engine on an airframe  leased to Lessee or owned
                by  Lessee  subject  to a  conditional  sale or  other  security
                agreement; provided, that (x) such airframe is free and clear of
                all  Liens  except  the  rights of the  parties  to the lease or
                conditional  sale or  other  security  agreement  covering  such
                airframe  and  except  Permitted  Liens,  and  the  lien  of any
                mortgage  which either by its terms does not apply to the Engine
                or which effectively  provides that each Engine leased to Lessee
                hereby  shall not become  subject to the lien  thereof or to any
                rights of any party  thereunder  other than Lessee (with respect
                to Lessee's rights expressly granted hereunder), notwithstanding
                the  installation of such Engine on any airframe  subject to the


                                       15
<PAGE>

                lien of such mortgage,  unless and until Lessee shall become the
                owner of such Engine and Lessor  shall have no further  interest
                therein,  all pursuant to the express  terms of this Lease;  and
                (y) there shall be in effect a written  agreement  of the lessor
                or  secured  party of such  airframe  (which may be the lease or
                conditional  sale or  other  security  agreement  covering  such
                airframe)  substantially  similar in effect to the  agreement of
                Lessor in Section  6(b)  below  whereby  such  lessor or secured
                party  effectively and expressly  agrees that neither it nor its
                successors or assigns will acquire or claim any right,  title or
                interest in any Engine by reason of such Engine being  installed
                on such  airframe  at any time  while  such  Engine  is owned by
                Lessor  and  is  subject  to  this  Lease,  and a copy  of  such
                agreement shall be provided to Lessor upon written request.

           b. PERMITTED SUBLEASE.  So long as no Default or Event of Default has
           occurred and is  continuing,  and provided that Lessee is and remains
           an air  carrier  and not an  aircraft  leasing  company,  Lessee  may
           sublease  the  Aircraft  to an  Eligible  Sublessee,  for  use on the
           Eligible  Sublessee's  regularly  scheduled  route or in its  charter
           services,  subject to the  provisions  of Section  6(c) below and the
           following additional terms and conditions:

                (1) no such  sublease  shall be scheduled to extend  beyond that
                date which is one month short of the end of the Term;

                (2) no such sublease shall be to foreign air carrier until after
                the seventh anniversary of the Delivery Date; and

                (3) no sublease shall have a term of longer than three years.

           c. CERTAIN LIMITATIONS ON TRANSFERS AND SUBLEASE. With respect to any
           transfer of possession pursuant to this Section 6.1:

                (i) the rights of any  transferee  that  receives  possession by
                reason of a  transfer  permitted  by this  Section  6.1 shall be
                subject and  subordinate to all the terms of this Lease and such
                transferee shall recognize in writing such subordination;

                (ii) Lessee  shall remain  primarily  liable  hereunder  for the
                performance of all of the terms of this Lease to the same extent
                as if such transfer had not occurred; and

                (iii)  no  interchange  agreement  or  other  relinquishment  of
                possession  pursuant  to the terms of this  Section 6.1 shall in
                any way  discharge  or diminish any of Lessee's  obligations  to
                Lessor hereunder.

      6.2.  RECIPROCAL  RECOGNITION  OF RIGHTS.  In the event  Lessee shall have
received  from the lessor or secured  party of any airframe  leased to Lessee or
owned by Lessee  subject to a  conditional  sale or other  security  agreement a
written agreement  complying with clause (y) of Section  6.1(a)(iv)  hereof, and
such lease,  conditional sale or other security agreement covering such airframe
also covers an engine or engines owned by the lessor under such lease or subject
to a security interest in favor of the secured party under such conditional sale
or other security agreement, Lessor hereby agrees for the benefit of such lessor
or secured  party that Lessor will not acquire or claim,  as against such lessor
or secured party, any right,  title or interest in any such engine as the result
of such engine being  installed on the Airframe at any time while such engine is
subject to such lease or conditional sale or other security  agreement and owned


                                       16
<PAGE>

by such lessor or subject to a security interest in favor of such secured party.
Lessor also hereby  agrees for the benefit of the  mortgagee  under any mortgage
complying with clause (x) of Section 6.1(a)(iv) hereof, relating to installation
of an  Engine  on an  airframe  owned  by  Lessee,  subject  to the lien of such
mortgage, that Lessor will not acquire or claim, as against such mortgagee,  any
right,  title or interest in any engine  subject to the lien of such mortgage as
the result of such engine being installed on the Airframe at any time while such
engine is subject to the lien of such mortgage.

      6.3. NET LEASE.  Lessee shall pay for and provide all electric power, oil,
fuel and  lubricant  consumed by and required for the operation of the Aircraft.
Lessee shall  promptly  pay all  navigation  charges  (including  landing  fees,
departure fees and airport taxes) the nonpayment of which could result in a Lien
upon the Aircraft.

      6.4.  OPERATIONAL  EXPENSES;  LAWFUL INSURED  OPERATIONS.  Lessee will not
cause or permit any item of  Equipment  to be  maintained,  used or  operated in
violation  of any  law,  treaty,  statute,  rule,  regulation  or  order  of any
government or  governmental  authority  having  jurisdiction  or contrary to any
manufacturer's  operating  manuals  and  instructions,  or,  in the  case of the
Aircraft and the  Engines,  in violation  of any  airworthiness  certificate  or
registration  relating  thereto.  Lessee  agrees  not to  operate  any  item  of
Equipment, or suffer such item of Equipment to be operated, (a) unless such item
of Equipment is covered by insurance as required by the provisions of Section 12
hereof, or (b) contrary to the terms of the insurance required by the provisions
of Section 12 hereof. If the Aircraft is brought into any location or country in
which the  insurance  required by Section  12.2 is not in full force and effect,
Lessee,  in addition to its liability  under Sections 17 and 18, shall be liable
to Lessor for loss or damage to the Aircraft up to the Insured Value.

      6.5. NOTICE OF  MAINTENANCE.  Regardless of the identity of the Authorized
Maintenance  Performer,  Lessee shall notify Lessor, not less than 30 days prior
to the scheduled  commencement  thereof, of each upcoming structural  inspection
(complete or partial),  or other major check to be performed on the Airframe and
of any Engine  overhaul.  Lessee  agrees that the  Aircraft  shall be treated on
maintenance matters in the same manner as other 737-300 aircraft in the fleet of
Lessee and shall not be discriminated against in any way.

      6.6. MAINTENANCE.  Lessee, at its own cost and expense, shall:

           a. service, repair, maintain, overhaul and test, or cause the same to
           be done to, each Item leased hereunder (i) so as to keep such Item in
           the same  condition as when delivered to Lessee  hereunder,  ordinary
           wear and tear excepted,  and in good operating condition,  (ii) so as
           to keep each  Aircraft  in the  condition  necessary  to  enable  the
           airworthiness  certification of such Aircraft for operation under FAR
           Part 121 to be  maintained  in good  standing  at all times under all
           applicable  laws and  regulations  of the FAA,  and  (iii) in  strict
           compliance  with  the  Maintenance  Program.  All  revisions  to  the
           Maintenance  Program shall be delivered by Lessee to Lessor  promptly
           after the issuance of such revisions.

           b. maintain all records, logs and other materials required by the FAA
           in respect of the Aircraft;

                                       17
<PAGE>

           c. timely  furnish to Lessor such  information as may be requested by
           Lessor to enable  Lessor to file any reports  required to be filed by
           Lessor with any governmental authority concerning the Aircraft;

           d.  incorporate  into the Aircraft all  mandatory  Service  Bulletins
           issued by Boeing, CFMI or other vendors during the Lease Term and all
           recommended Service Bulletins issued by Boeing, CFMI or other vendors
           that  Lessee  adopts  during  the Lease  Term for at least 50% of the
           owned or leased Boeing 737-300  aircraft in Lessee's  fleet, it being
           the  intent  of  the  parties  that  this   Aircraft   shall  not  be
           discriminated  against  in  Service  Bulletin  compliance  and  other
           maintenance matters;

           e. carry out, on the Aircraft,  each  applicable AD which the FAA may
           from time to time  issue and which may  become  due  during the Lease
           Term;

           f. maintain during the Term all records and documents required by the
           FAA or the Maintenance Program;

           g.   maintain, service, repair and overhaul the Airframe and all
           Engines to comply with all warranty requirements pursuant to the
           Purchase Agreement;

           h. equip each  Airframe at all times with two Engines  (except as may
           be required for maintenance); and

           i. cause all  maintenance  and repairs to the  Aircraft to be done by
           Lessee or an FAA-certificated overhaul and repair station approved in
           writing by Lessor (the "Authorized Maintenance Provider").

      6.7.  INSIGNIA AND NOTICES.  Lessee will affix and maintain in the cockpit
of the  Aircraft  adjacent  to  and  in an  equally  prominent  position  as the
airworthiness certificate therein and on each Engine a nameplate satisfactory to
Lessor bearing the inscription "This [Aircraft]  [Engine] is owned by GATX Third
Aircraft Corporation and leased to Western Pacific Airlines, Inc. and is subject
to a Mortgage in favor of [Mortgagee]" or such other  inscription as Lessor from
time to time  may  reasonably  request  in order  to show  its  interest  in the
Aircraft  or to show the  interests  of third  parties  holding  a  mortgage  or
security interest in the Aircraft. Except as otherwise provided, Lessee will not
allow the name of any  Person to be placed on the  Airframe  or any  Engine as a
designation  that might be  interpreted  as a claim of  Lessorship  except  that
Lessee may place its  customary  colors and  insignia  on the  Airframe  and any
Engine.

      6.8. USE OF AIRCRAFT.  Lessee shall use the Aircraft  solely in commercial
operations for which Lessee is duly authorized.  Lessee shall not use, or permit
the use of, any  Aircraft for any purpose for which it is not  suitable.  Lessee
shall  comply  with all  regulations  of the FAA.  Lessee  shall not  permit any
Aircraft  or any Engine to be under the control of any citizen or company of any
of the following  countries:  Cuba, Haiti, Iran, Iraq, Libya, North Korea or any
of the  countries  formerly  comprising  Yugoslavia,  or any country  subject to
technology transfer  restrictions imposed by the government of the United States
of  America.  The  foregoing  sentence  shall not  prohibit  overflight  of such
countries,  nor shall the foregoing  sentence impose any greater  restriction on
the operation of the Aircraft  than is mandated by the  government of the United
States of America.

                                       18
<PAGE>

      6.9  MAINTENANCE RESERVES

           a. PAYMENT. As soon as possible, but in no event later than the tenth
           day of each month,  Lessee  shall  provide  Lessor with the number of
           Flight Hours and Cycles accumulated on the Airframe, each Engine, the
           Landing  Gear and the APU and the number of  take-offs at each of B-1
           and B-2 thrust  levels in the prior month.  On or before the 15th day
           of each month  throughout the Term, and with one final payment on the
           last day of the Term,  Lessee shall pay Lessor as  Supplemental  Rent
           the  following  amounts (the "Reserve  Rates"):  (i) $[ ]* per Flight
           Hour  accumulated on the Airframe in the preceding  month for the C-7
           Check (the "C-7 Reserve"); (ii) $[ ]* per Flight Hour on the Airframe
           in the preceding month for Landing Gear replacement and overhaul (the
           "Landing  Gear   Reserve");   (iii)  $[  ]*  for  each  running  hour
           accumulated  on  the  APU  during  the  preceding   month  (the  "APU
           Reserve");  (iv) $[ ]* per Flight  Hour  accumulated  on each  Engine
           during the preceding  month for shop visits on the Engine  modules as
           specified below (each an "Engine  Reserve");  and, (v) $[ ]* for each
           Cycle  accumulated  on each  Engine  during the  preceding  month for
           replacement  of Life Limited Parts  ("LLPs") in each Engine (the "LLP
           Reserve").

           The LLP Reserve  shall be allocated  among the LLPs in  proportion to
           their catalog prices. Each Engine Reserve will be allocated among the
           Engine modules as follows:

                               $ AMOUNTS            PERCENTAGE COST
           MODULE              PER FLIGHT HOUR         DISTRIBUTION

           Fan and Booster      $[   ]*                  [   ]*
           HPT                   [   ]*                  [   ]*
           HPC                   [   ]*                  [   ]*
           LPT                   [   ]*                  [   ]*
           Gearbox               [   ]*                  [   ]*
           Combuster             [   ]*                  [   ]*
                          -------------------------------------
                                $[   ]*                  [   ]*

           The amount of the Reserve Rates shall be adjusted annually commencing
           on the first  anniversary  of the Delivery  Date by the increase from
           January 1, 1997,  which results from applying the escalation  formula
           contained in Lessee's airframe maintenance and overhaul contract with
           BF Goodrich (Tramco) (or if such contract,  or the escalation formula
           therein,  no  longer  exists,  then the  Boeing  airframe  escalation
           formula) to all of the Maintenance Reserves except the APU and Engine
           Reserve  Rates,  which shall be adjusted  based on the CFM escalation
           formula.  Additional  increases or decreases in the Reserve Rates may
           be made on the first  anniversary  of the Delivery  Date and annually
           thereafter  based upon Lessee's  usage  pattern,  actual  maintenance
           costs and the number of Flight Hours and Cycles actually  accumulated
           on the Airframe and Engines in the prior year and anticipated for the
           coming  year,  as well as changes  in the  Maintenance  Program.  The
           payments  have  been  calculated  on the  assumptions  that  Lessee's
           utilization  will  average [ ]* Flight  Hours per Cycle and that each
           Engine will  operate at B-1 power for [ ]*% of all  take-offs  and at
           B-2 power for [ ]*% of all take-offs.

                                       19
<PAGE>

                1.  AVAILABILITY  OF RESERVES.  Each  Maintenance  Reserve shall
           remain under the sole control and direction of Lessor, subject to the
           provisions  of this  Section  6.9, and shall be available to be drawn
           upon,  following receipt of an invoice from Lessee (giving details of
           the payee and  accompanied by such  supporting  information as Lessor
           shall require), to pay for:

                     a)    the C-7 Check on the Airframe up to the amount
                available in the C-7 Reserve on the date such Check is
                completed;

                     a)    overhauls and shop visits of the APU, up to the
                amount then available in the APU Reserve on the date the work
                on the APU is completed;
                     b) Engine shop visits,  up to the amount then  available in
                the Engine Reserve  applicable to such Engine module on the date
                the work on such Engine is completed;

                     a)  replacement  of LLPs up to the amount  available in the
                LLP  Reserve  applicable  to the LLP being  replaced on the date
                such LLP is removed from the Engine; and

                     a)  overhauls  of  the  landing  gear,  up  to  the  amount
                available  in the Landing  Gear  Reserve on the date the work on
                the landing gear is completed.

           c.  PAYMENTS.  All payments from the  Maintenance  Reserves  shall be
           reduced by the  actual  amounts  received  by Lessee or due to Lessee
           under  any  applicable  manufacturer's  warranties,   guarantees  and
           concessionary  adjustments.  If, on any occasion,  the balance of any
           funds held in the particular  Reserve account is insufficient to meet
           a claim for  reimbursement in respect of such Reserve,  the shortfall
           will be  Lessee's  responsibility  and may not be carried  forward or
           made the subject of any further claim for reimbursement.

           Each invoice shall be  accompanied  by  substantiating  data from the
           Authorized Maintenance Performer. No reimbursement shall be made from
           any Reserve for any repair,  overhaul  or  inspection  occasioned  by
           Foreign  Object  Damage  (FOD),  ADs,  SBs,  faulty   maintenance  or
           installation, improper operation, misuse, neglect, ingestion or other
           accidental  cause, or repair  reimbursable  from insurance (for which
           purpose  the  deductible,  if any,  shall  be  treated  as  insurance
           proceeds) or Manufacturer's warranty, guarantee or adjustment.

           Lessor shall have no duty to determine  whether any item of Equipment
           requires  overhaul  or  maintenance,  or to observe  or  inspect  the
           overhaul or  maintenance  of any Item, and Lessor shall not incur any
           liability or  obligation  by reason of the failure of the Aircraft to
           be  properly  overhauled  or  maintained  or by  reason  of  Lessor's
           election  to observe  or  inspect  or not to  observe or inspect  any
           overhaul or maintenance.

           d. REMAINING BALANCE. At the end of the Term, the balance, if any, in
           the Maintenance Reserves shall be retained by Lessor. If the Aircraft


                                       20
<PAGE>

           suffers an Event of Loss, upon  compliance  with the  requirements of
           Section 11.1, the balance, if any, of the Maintenance  Reserves shall
           be promptly paid over to Lessee. e. COST OF ENGINE REPAIRS.  Prior to
           start of a repair  of an  Engine  (after  disassembly)  Lessee  shall
           provide  Lessor  with a  written  estimate  of  total  repair  costs,
           including test cell run and consumable liquids.


SECTION 7. INSPECTION.

           During the Term,  Lessee  shall  furnish to Lessor  such  information
concerning the location,  condition, use and operation of the Items of Equipment
as Lessor may reasonably  request.  Lessee shall permit any person designated in
writing by Lessor to, at Lessor's expense,  visit and inspect (at any reasonable
time,   provided  that  such  inspection   shall  not  interfere  with  Lessee's
operational  commitments)  the  Items of  Equipment,  their  condition,  use and
operation and the records  maintained in connection  therewith  and, at Lessee's
expense,  to make  copies of such  records as Lessor may  reasonably  designate;
provided, however, Lessor shall not have access to information from the aircraft
data recorders (QAR, DFDR and CVR) until such  information has been disclosed by
the FAA.  Lessor  shall have no duty to make any such  inspection  and shall not
incur any liability or obligation by reason of not making any such inspection.


SECTION 8. ADDITIONAL COVENANTS OF LESSEE.  Lessee covenants and agrees to the
following:

           a.  Lessee  is,  and shall  remain so long as it shall be the  Lessee
           under this Lease,  a "citizen of the United  States" as defined by 49
           USC ss.  40102(a)(15),  and Lessee is and shall  maintain and operate
           the Aircraft at all times as a Certificated Air Carrier;

           b. Lessee will not,  without prior written  notice to Lessor,  change
           its principal place of business or chief executive office if there is
           more than one place of business  and will  maintain  all records with
           respect to the  Aircraft  and the Engines at its  principal  place of
           business;

           c.  Lessee  shall not (i)  voluntarily  suspend its  operations  as a
           Certificated Air Carrier; or (ii) voluntarily or involuntarily permit
           to be revoked,  canceled or otherwise terminated all or substantially
           all of the  franchises,  concessions,  permits,  rights or privileges
           required for the conduct of business and  operations of Lessee or the
           free and continued use and exercise thereof;

           d. Lessee specifically  covenants that during the Term hereof it will
           not operate the  Aircraft to any  location  where such  operation  is
           prohibited by applicable law, rule or regulation.

           e.  Lessee  shall  pay or cause to be paid  promptly  when due all en
           route navigation  charges,  navigation  service charges (including to
           the extent  applicable  Eurocontrol  charges)  and all other  charges
           payable  in  respect  of  the  use of the  Aircraft  or for  services
           provided at any airport in respect of the Aircraft.  Lessee agrees to
           indemnify and hold the Lessor harmless in respect of all such charges
           in respect of the Aircraft.  This  indemnity  shall  continue in full
           force and effect notwithstanding the termination or expiration of the
           Term for any reason whatsoever or the return of the Aircraft but only
           with  respect  to  acts  or  events  occurring  on or  prior  to such


                                       21
<PAGE>

           termination,  expiration  or return.  Upon request of Lessor,  Lessee
           shall provide  Lessor with a letter  addressed to  Eurocontrol or any
           other relevant air traffic control authority pursuant to which Lessee
           authorizes the addressee to issue to Lessor a statement of account of
           all sums due by Lessee to the  authority in respect of the  operation
           of the Aircraft (and other aircraft owned or operated by Lessee).

           f.  Lessee  shall not  become a "tax  exempt  entity"  as  defined in
           Section 168(h) of the Internal Revenue Code.

           g. Lessee shall not permit the  predominant use of the Aircraft to be
           outside the United States within the meaning of Section 168(g) of the
           Internal  Revenue  Code  prior  to  the  seventh  anniversary  of the
           Delivery Date.

           h.  Lessee  will  make  no  claim  or  file  any  document  which  is
           inconsistent with the ownership of the Aircraft by the Lessor.

           i.  Lessee  will not alter or amend the  Tramco  Agreement  or the GE
           Agreement without the prior written consent of Lessor.

           j. Lessee will not operate or permit the  operation of the Engines at
           B3 or C1 thrust, except on an emergency basis.






SECTION 9.      REPLACEMENT AND POOLING OF PARTS;
           ALTERATIONS, MODIFICATIONS AND ADDITIONS.

      9.1.  REPLACEMENT  OF PARTS.  Lessee,  at its own cost and expense,  shall
promptly  replace all Parts  which may from time to time become worn out,  lost,
stolen,  destroyed,  seized,  confiscated,  damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever.  In addition,  in the ordinary
course of maintenance,  service,  repair, overhaul or testing, Lessee may remove
any Part, whether or not worn out, lost, stolen, destroyed, seized, confiscated,
damaged  beyond  repair or  permanently  rendered  unfit for use;  provided that
Lessee  shall  promptly  replace  such  Part as  promptly  as  practicable.  All
replacement  Parts shall be free and clear of all Liens,  except those permitted
under  Section 9.3 hereof and shall be in as good  operating  condition  as, and
shall have a value and  utility and  modification  status at least equal to, the
Parts  replaced,  assuming such replaced  Parts were in the condition and repair
required to be maintained by the terms hereof.

      9.2. TITLE TO REPLACED AND  REPLACEMENT  PARTS.  All Parts removed from an
Airframe or an Engine  shall  remain the  property of Lessor and subject to this
Lease, no matter where located,  until such time as such Parts shall be replaced
by Parts  which have been  incorporated  or  installed  in or  attached  to such
Airframe  or Engine  and  which  meet the  requirements  for  replacement  Parts
specified above.  Immediately  upon any replacement Part becoming  incorporated,
installed or attached as above  provided,  without further act, (a) title to the
replaced Part shall  thereupon  vest in Lessee,  free and clear of all rights of
Lessor  and  Lessor  and free of all  Liens,  other  than  Permitted  Liens (not
including Lessor Liens); (b) such replaced Part shall no longer be deemed a Part
hereunder; (c) title to the replacement Part shall thereupon vest in Lessor; and


                                       22
<PAGE>

(d) such replacement Part shall become subject to this Lease and be deemed to be
a Part  hereunder  to the same extent as the Parts  originally  incorporated  or
installed in or attached to an Airframe or Engine.

      9.3.  POOLING.  Any replacement Part when  incorporated or installed in or
attached to an Airframe or Engine in  accordance  with Section 9.1 hereof may be
owned by another air carrier, subject to a normal pooling arrangement;  provided
that  Lessee,  at its expense,  as promptly  thereafter  as possible  either (a)
causes  title to such  replacement  Part to vest in  Lessor in  accordance  with
Section 9.2 by Lessee  acquiring  title thereto for the benefit of Lessor,  free
and clear of all Liens,  or (b) replaces  such  replacement  Part with a further
replacement Part owned by Lessee free and clear of all Liens.

           Any Part  removed  from an  Airframe or Engine as provided in Section
9.1 may be subjected by Lessee to a normal pooling arrangement  customary in the
airline  industry  entered into the ordinary  course of Lessee's  business  with
another air carrier;  PROVIDED that a Part  replacing such removed Part shall be
incorporated  or  installed  in or  attached  to  such  Airframe  or  Engine  in
accordance  with  Section 9.1 as promptly as possible  after the removal of such
removed Part.
      9.4.  ALTERATIONS,  MODIFICATIONS  AND  ADDITIONS.  Except as  provided in
Section  6.6  hereof,  Lessee  shall not make any  alteration,  modification  or
addition to any Airframe or any of the Engines,  without  Lessor's prior written
consent;  provided,  however,  Lessor's  consent  shall not be  required  if the
modification, alteration or addition has a cost (including cost of installation,
if  applicable) of less than $[ ]* and does not decrease the value or utility of
the Aircraft or Engine.  Lessor shall bear no liability  whatsoever for the cost
of  alterations,  modifications  or  additions  to the  Aircraft  whether due to
grounding  of any  Aircraft or any Engine or the  suspension  or  revocation  of
certification of any Aircraft or for any other cause.

      9.5. TITLE TO PARTS.  Subject to the provisions hereof, title to all Parts
incorporated or installed in or attached or added to each Aircraft as the result
of any  alteration,  modification  or addition,  or  otherwise  installed on the
Aircraft by Lessee and necessary for the  transportation  of persons or property
under the rules of the FAA,  shall,  without  further  act,  vest in Lessor  and
become subject to this Lease;  PROVIDED,  HOWEVER, that so long as no Default or
Event of Default shall have occurred and be  continuing,  at any time during the
Term,  Lessee may remove any Part from an Item of  Equipment,  provided that (a)
such Part is in addition to, and not in replacement of or in  substitution  for,
any Part originally incorporated or installed in or attached to such Item at the
time  of  delivery  thereof   hereunder  or  any  Part  in  replacement  of,  or
substitution  for, any such original  Part;  (b) such Part is not required to be
incorporated  or installed in or attached or added to such Item  pursuant to the
terms  hereof;  and  (c)  such  Part  can be  removed  from  such  Item  without
diminishing  or impairing the value,  utility or  airworthiness  which such item
would have had at such time had such  alteration,  modification  or addition not
occurred.  Upon the removal by Lessee of any such Part as above provided,  title
thereto shall, without further act, vest in Lessee and such Part shall no longer
be deemed a Part  hereunder.  Any Part not  removed by Lessee as above  provided
prior to the return to the respective Item to Lessor  hereunder shall remain the
property of Lessor and subject to this Lease.


SECTION 10.  TAXES.

      10.1.GENERAL.  Lessee  shall  pay,  assume  liability  for and  indemnify,
protect,  defend, save and hold Lessor,  Mortgagee and any permitted  successor,
assignee or transferee of any of the foregoing,  and any affiliate of any of the
foregoing with which such entity files a consolidated  or combined  return (each
an "Indemnitee"),  harmless from and against,  all taxes (including  value-added


                                       23
<PAGE>

taxes), fees (including license and registration fees), levies, imposts, duties,
charges or withholdings of any nature  whatsoever,  together with any penalties,
fines or interest thereon,  (all the foregoing being collectively called "Taxes"
and  each a  "Tax")  which  are  imposed  by any  government  (or any  political
subdivision  or fiscal or taxing  authority  thereof) and are imposed on or with
respect to, or are  measured  by, (a) this Lease,  (b) the  Aircraft or any Part
thereof,  (c) the Lessorship,  delivery,  possession,  use,  presence,  storage,
registration,  deregistration,  modification,  maintenance,  operation,  return,
import,  export,   subleasing,   repair,  overhaul,   transportation,   landing,
redelivery,  leasing or other disposition of the Aircraft or any Part or portion
thereof,  or (d) the  receipts,  earnings,  insurance  proceeds or other amounts
arising from the Aircraft or any Part,  or this Lease;  PROVIDED,  HOWEVER,  the
foregoing  indemnity shall not apply to: (i) Taxes imposed on or measured by the
net  income,  net  worth,  gross  receipts,  capital  or excess  profits  of any
Indemnitee by the  jurisdiction of  incorporation or principal place of business
of such Indemnitee, or where such Indemnitee is otherwise subject to taxation as
a result of transactions unrelated to the Aircraft or the Lease, unless such Tax
resulted   solely  from  the  operation  by  Lessee  of  the  Aircraft  in  such
jurisdiction;  (ii)  Taxes  imposed  with  respect  to any  period  prior to the
Delivery Date or the period after return of the Aircraft  pursuant to Section 15
hereof; (iii) Taxes imposed on or with respect to a transfer by an Indemnitee of
all or any part of its rights,  title and  interest in, to or under the Aircraft
(or any Part thereof,  except a transfer of a Part pursuant to Section 9 of this
Lease) or this Lease to any person or entity,  unless any such  transfer  occurs
because an Event of Default has occurred and is continuing, (iv) Taxes which any
Indemnitee  is subject to as a result of business or  transactions  unrelated to
the transactions contemplated by this Lease; (v) any Tax imposed on a transferee
of any  Indemnitee  to the extent such Tax exceeds  the amount  Lessee  would be
required to indemnify the  transferring  Indemnitee  hereunder;  (vi) any Tax or
penalty due to a failure by the Lessor,  after receipt of timely  written notice
thereof  from  the  Lessee  to  comply  with  any  certification,   information,
documentation,  notification or other reporting requirement which is required by
law or a  precondition  to exemption or other  relief from (or  reduction)  such
taxes;  (vii) any tax or penalty due to the Indemnitee's  willful  misconduct or
inaccuracy  of any  representation  of the  Indemnitee,  or  the  breach  of any
agreement of the Indemnitee,  in the Lease or any other Lease Documents;  (viii)
any increase in Taxes caused by a change of  jurisdiction  of  incorporation  or
place of business of an  Indemnitee  or a change in the place of any payment due
hereunder.

      10.2.WITHHOLDING TAXES. Notwithstanding anything to the contrary contained
in this  Section  10 (other  than  subsection  10.1(viii)  above),  if Lessee is
required by law to make any withholding from Rent or any other amount payable by
Lessee to an Indemnitee  under this Lease,  Lessee shall pay to such  Indemnitee
such additional  amount as may be necessary to enable such Indemnitee to receive
(after  such  withholding)  and retain an amount  equal to the full  amount then
payable to such Indemnitee absent such withholding. As soon as practicable after
Lessee makes any withholding from any amount payable to an Indemnitee under this
Lease,  Lessee shall  deliver to such  Indemnitee  a receipt or other  document,
reasonably  satisfactory to such Indemnitee and reasonably obtainable by Lessee,
evidencing  such  withholding  and the  payment  of the amount  withheld  to the
relevant governmental authority,  for the purpose of enabling such Indemnitee to
substantiate  a claim for credit or  deduction  for income tax  purposes  of the
amounts so withheld.  If Lessee pays to Lessor pursuant to this Section 10.2 any
additional  amount  with  respect  to any  withholding  for which  Lessee is not
required by Section  10.1 hereof to  indemnify  Lessor,  Lessor shall repay such
additional  amount  to Lessee  within 30 days  after  Lessor  receives  Lessee's
written request therefor  accompanied by the receipt or other document  referred
to in the  preceding  sentence,  together with interest on such amount repaid at
LIBOR as in effect  from time to time,  and in such  case,  Lessee  shall not be


                                       24
<PAGE>

further  obliged  to pay  such  additional  amount  in  the  future  once  it is
determined that Lessee is not required to indemnify for such  withholding.  This
Section 10.2 shall not apply to any withholding tax imposed by the United States
of America.

      10.3.AMOUNT OF INDEMNITY.  Each indemnity  provided for in this Section 10
or Section 13 below,  shall be in an amount which, after taking into account all
taxes,  fees or other  charges  payable or imposed with respect  thereto or as a
result of the receipt thereof by any Indemnitee in any jurisdiction  (whether or
not excepted  above),  shall be equal to the amount of such indemnity  otherwise
payable  under this  Lease.  Any  payment  required  to be made by Lessee  under
Sections 10.1 or 10.3 shall be due and payable within 30 days following Lessee's
receipt of Lessor's written demand therefor  (accompanied by a written statement
of Lessor  describing in reasonable detail the Taxes for which the Indemnitee is
demanding an indemnity and the  computation of the amount of the indemnity being
demanded), subject to the provisions of Section 10.4.

      10.4.CONTEST.  If a claim is made against any  Indemnitee for any Tax that
is subject to  indemnification  under this  Section 10,  Lessor will give Lessee
written  notice of such claim.  If Lessee so requests in writing  within 30 days
after receipt of such notice,  the Indemnitee shall permit Lessee to contest the
claim in the name of such  Indemnitee  or in the name of  Lessee,  to the extent
permitted by law. However,  if such claim together with other claims which could
be made with respect to other  transactions  to which such  Indemnitee is then a
party could (if sustained) have an adverse effect on such Indemnitee's  business
or  financial  affairs  (a  "Special  Claim"),  or (b) if  Lessee  shall  not be
permitted  by law to contest a claim  (other than a Special  Claim) on behalf of
such  Indemnitee,  then such Indemnitee  shall contest such claim in good faith.
Notwithstanding the foregoing, no claim shall be contested unless and until: (a)
the Indemnitee shall have received (i) an indemnity  reasonably  satisfactory to
it for all  expenses  reasonably  expected  to be paid in  contesting  the claim
(including  attorneys' and accountants' fees and disbursements) and (ii) written
acknowledgment by Lessee of its liability  hereunder (if such contest is decided
adversely) in respect of such Taxes; (b) the action to be taken will not involve
any  material  risk of the sale,  forfeiture  or loss of, or the creation of any
Lien  (except a Lien  which  Lessee  shall  have  bonded in an amount and manner
reasonably  satisfactory  to Lessor) on, the Aircraft or any part thereof or any
interest  therein;  (c) if such contest shall be conducted in a manner requiring
the payment of the claim,  Lessee shall have advanced the amount  required on an
after-tax  basis;  (d) no Default or Event of Default shall have occurred and be
continuing  and Lessor shall be receiving all amounts of Rent when due,  without
reduction by reason of any Taxes;  and (e) if such claim is a Special Claim, and
if Lessor  shall have  received a legal  opinion (at the expense of Lessee) from
counsel  satisfactory  to Lessor  indicating  that a  reasonable  basis for such
contest exists. Lessor and Lessee shall in good faith consider the other party's
views  regarding the conduct of the contest.  Lessor and Lessee shall provide to
each other, upon request, such reasonably obtainable  information and such other
reasonable  assistance  as may be  necessary  or  advisable  for  the  effective
evaluation or conduct of such contest.  Notwithstanding the foregoing provisions
of this Section 10.4, if at any time Lessor waives its right of  indemnification
under  this  Section  10 in respect of a claim,  or if,  after  having  received
payment of  indemnification  from  Lessee  hereunder  in respect to such  claim,
Lessor  tenders  such  payment to Lessee,  then Lessee  shall not be entitled to
contest, or to continue to contest, any such claim.

      10.5.TAX  RETURNS.   Lessee  will  provide  such  information  as  may  be
reasonably  requested by Lessor and  reasonably  obtainable  by Lessee to enable
Lessor to fulfil its tax filing  requirements  with respect to the  transactions
contemplated  hereby.  In the  event  that any  return,  statement  or report is
required to be made or filed with respect to any Tax required to be  indemnified
against by Lessee  under this Section 10,  Lessee  shall  notify  Lessor of such


                                       25
<PAGE>

requirement  and (a) to the extent  permitted by law and  requested by Lessor or
required by law, make and file in its own name such return,  statement or report
in such manner as will show the Lessorship of the Aircraft in Lessor and furnish
Lessor with a copy of such return, statement or report or (b) where such return,
statement or report is required to be in the name of or filed by Lessor, prepare
and furnish such return, statement or report for filing by Lessor in such manner
as shall be  satisfactory  to Lessor  and send the same to Lessor  for filing no
later than 30 days prior to the due date.  Where  Lessor is  required to make or
file a return,  statement or report  reflecting items of Equipment other than or
in addition to Taxes indemnified against by Lessee under this Section 10, Lessee
shall,  upon  Lessor's  request,  provide  Lessor  with  information,  within  a
reasonable  time,  sufficient  to permit such return,  statement or report to be
properly made and timely filed.

      10.6.MUTUAL ASSISTANCE.  Lessor and Lessee agree to consider in good faith
(but without any obligation to agree thereto) any  reasonable  modifications  of
the transaction described in this Lease that would reduce or eliminate any Taxes
imposed on either party as a result of such transaction.

      10.7 REFUND OF  INDEMNITY.  If any amount paid under this Section 10 to an
Indemnitee is later  recovered in whole or in part,  whether by way of refund of
tax or utilization of a tax credit  generated by the Tax indemnified  hereunder,
the  Indemnitee  shall repay such amount,  together with such interest as may be
paid by the taxing  authority,  to Lessee.  No refund to Lessee shall exceed the
sum of the indemnity payments to such Indemnitee hereunder.

      10.8  MACRS  INDEMNITY.  Lessee  will  indemnify  the Lessor for the loss,
reduction  or  recapture of  deductions  with respect to the Aircraft  otherwise
available to the Lessor under Section 168 of the Internal  Revenue Code of 1986,
as amended,  caused by (i) the Lessee's or any  sublessee's  being a "tax-exempt
entity"  within  the  meaning  of Code  Section  168(g)  or (ii)  the use of the
Aircraft by Lessee or any sublessee  "predominantly  outside the United  States"
within the meaning of Code Section 168(h).

[Customary  exceptions  and contest  rights and provision for the payment to the
Lessee by the Lessor of any tax  benefits  available  to the Lessor  (whether by
deduction, credit or otherwise) as the result of the indemnified matter.]


SECTION 11.  EVENT OF LOSS.

      11.1.WITH RESPECT TO THE AIRCRAFT. Upon the occurrence of an Event of Loss
with respect to the Aircraft, Lessee shall forthwith (and in any event within 10
days after such  occurrence)  give Lessor  written notice of such Event of Loss,
and Lessor and Lessee shall proceed  diligently  and  cooperate  fully with each
other in the recovery of any and all proceeds of insurance  applicable  thereto.
On the earlier of the date of receipt of proceeds of  insurance  or the 90th day
following the Event of Loss Lessee shall pay or cause to be paid to Lessor:  (a)
the Insured Value of the  Aircraft;  (b) all other amounts of Rent which are due
and unpaid hereunder.

           At such time as Lessor or  Mortgagee  shall have  received the entire
Insured  Value for the  Aircraft  and all  accrued and unpaid Rent and any other
amounts due Lessor  hereunder,  Lessor  shall  transfer  to Lessee all  Lessor's
right,  title, and interest,  "as-is,  where-is,"  without recourse or warranty,
express or  implied,  in and to (a) the  Aircraft,  (b) all claims for damage to
such Items, if any, against third persons arising from the Event of Loss (unless
any  insurance  carrier  requires  that such claims be assigned to it),  (c) all
rights  to any  insurance  claims  and  proceeds  under  all  insurance,  except


                                       26
<PAGE>

liability insurance, maintained by Lessee hereunder, all without representation,
recourse or warranty of any kind whatsoever, and (d) the Term of the Lease shall
end.

      11.2.WITH  RESPECT TO AN ENGINE.  Upon the  occurrence of an Event of Loss
with respect to an Engine under circumstances in which there has not occurred an
Event of Loss with respect to the Aircraft,  Lessee shall  forthwith (and in any
event within 10 days after such  occurrence)  give Lessor written notice thereof
and Lessee  shall  replace  such Engine as soon as  reasonably  possible by duly
conveying to Lessor, free and clear of all Liens, title to another engine of the
same or an improved model and suitable for  installation and use on the Airframe
with the other  Engine,  which  engine  shall have a value and  utility at least
equal to, and be in as good  operating  condition as, the Engine with respect to
which such Event of Loss shall have  occurred,  assuming  such Engine was of the
value and  utility  and in the  condition  and repair as  required  by the terms
hereof  immediately  prior  to the  occurrence  of  such  Event  of  Loss.  Such
replacement  engine  shall be deemed  an  "Engine"  as  defined  herein  for all
purposes  hereunder.  Lessee  agrees  to  promptly  notify  Lessor  of any  such
substitution,  provide Lessor with an officer's  certificate  demonstrating full
compliance  with this  Section  11.2 and Lessee  agrees to take such  action and
execute  such  documents,  including  a  warranty  bill of sale,  as Lessor  may
reasonably  request in order that any such replacement  Engine shall be duly and
properly  titled in the name of the  Lessor  and  leased  hereunder  to the same
extent as any Engine replaced  thereby.  Lessor shall take such action and shall
execute such documents as are reasonably necessary to convey the Engine replaced
pursuant to the preceding sentence to Lessee or its insurer.

      11.3.APPLICATION  OF  PAYMENTS  FROM  GOVERNMENTAL  AUTHORITIES.  Payments
received  by Lessor or Lessee  from any  governmental  authority  or entity with
respect to an Event of Loss resulting  from the  condemnation,  confiscation  or
seizure of, or  requisition  of title to an Aircraft,  an Airframe or any of the
Engines,  shall be retained by Lessor,  if received by Lessor,  or promptly paid
over to Lessor, if received by Lessee, up to the Insured Value (plus any amounts
of Rent then due and owing). At such time as Lessor has received such amounts in
full,  Lessor shall promptly  remit the excess,  if any, of such payments to the
Lessee. Payments received by Lessor or Lessee from any governmental authority or
entity with respect to a requisition  of use during the Term of an Aircraft,  an
Airframe  or any of the  Engines  shall be paid to or  retained  by Lessee,  and
Lessee's  obligation to make all payments of Rent shall  continue  undiminished.
Payments  received by Lessor or Lessee with respect to periods  after the end of
the Term shall be paid to (or retained by) Lessor.


SECTION 12.  INSURANCE.

      12.1.PUBLIC  LIABILITY,   BODILY  INJURY  AND  PROPERTY  DAMAGE  LIABILITY
INSURANCE.  Lessee, at its own expense, shall maintain or cause to be maintained
in effect third party aircraft liability insurance (which includes coverage with
respect  to  liabilities  arising  while  the  Items  of  Equipment  are  not in
operation),  passenger legal liability  insurance and property damage  liability
insurance,  including  contractual  liability insurance and war risk,  hijacking
(air  piracy),  confiscation,  nationalization,   expropriation  (excluding  the
Government of the United States of America) and related perils coverages, during
the Term in an amount not less than the  greater  of (a) $[ ]*, per  occurrence,
combined single limit or (b) the amount normally  carried by Lessee on its other
owned or leased aircraft,  for any one accident,  or series of accidents arising
out of any one event, with respect to the items of Equipment.  All such policies
shall be maintained in effect directly with  independent  insurers of recognized


                                       27
<PAGE>

reputation and financial responsibility,  reasonably satisfactory to Lessor. Any
policies of  insurance  carried in  accordance  with this  Section  12.1 and any
policies  taken out in  substitution  or  replacement  for any of such  policies
shall:  (i)  name  Lessor  and all  other  Additional  Insureds,  as  additional
insureds;  (ii)  provide  that in respect  of the  interests  of the  Additional
Insureds  such  policies  of  insurance  shall  insure the  Additional  Insureds
regardless  of  any  breach  or  violation  of  any  warranty,  declarations  or
conditions  contained  in such  policies by any other  insured  party other than
Additional  Insureds;  (iii) provide that if the insurers  cancel such insurance
for any  reason  whatever,  or the same is allowed  to lapse for  nonpayment  of
premium, or if there is any material change in policy terms and conditions, such
cancellation,  lapse or change  shall not be  effective  until 30 days (and with
respect to war risk insurance,  such shorter period as shall be customary in the
International  Aviation  market  for such  insurance  in such area of the world)
after prior written notice to the Additional Insureds,  in care of the Lessor at
the address  shown in Section 18.2 below,  from such insurers or brokers of such
cancellation,  lapse or change;  (iv) be primary  without right of  contribution
from any other insurance which may be available to any Additional  Insured;  (v)
expressly  provide  that all of the  provisions  thereof,  except  the limits of
liability,  shall operate in the same manner as if there were a separate  policy
covering each insured, but this provision shall not operate to include any claim
arising in respect of loss or damage to the  Aircraft or Engines  insured  under
the hull insurance provided in Section 12.2 below, and provided further that the
foregoing  shall not  increase the total  liability  of the insurers  beyond the
limits of liability  stated in the Policy;  (vi) provide that the insurers agree
to waive any right of subrogation  or setoff,  counterclaim  or other  deduction
against any  Additional  Insured;  and (vii)  provide for world wide coverage in
full  force and  effect  throughout  any  geographical  areas  traversed  by the
Aircraft or Engines.  Without increasing the scope of coverage under the airline
liability  policies,  the insurers thereunder shall acknowledge the existence of
this  Lease  and the  Mortgage  and  provide  coverage  for the  indemnification
provisions of this Lease.  Insurers  shall also  acknowledge  that Lessor has no
operational control over the Aircraft.

      12.2.INSURANCE AGAINST LOSS OR DAMAGE TO THE AIRCRAFT.  Lessee, at its own
expense,  shall  maintain  directly  in  effect  with  independent  insurers  of
recognized reputation and financial  responsibility,  reasonably satisfactory to
Lessor:  (a) all-risk  ground and flight  aircraft hull insurance  covering each
Aircraft; (b) fire and extended perils coverage with respect to Engines or Parts
while  removed from the  Aircraft;  and (c) war risk,  hijacking  (air  piracy),
confiscation,  nationalization,  expropriation  (excluding the Government of the
United States of America) and related perils coverages. All such insurance shall
be in full force and effect  throughout any geographical  areas traversed at any
time by each Aircraft or Engines, shall be payable in Dollars and shall be in an
amount  of not less  than the  Insured  Value.  Any hull  insurance  carried  in
accordance  with this Section 12.2 shall not contain a provision for  deductible
or self-insurance amount in excess of $[ ]*. Each Engine, after removal pursuant
to  Section  6.1,  shall be  insured  for not less than $[ ]* under  the  policy
referenced  in 12.2(b)  above.  Any  policies  carried in  accordance  with this
Section  12.2 shall (i) name the Lessor,  the Lessee and the  Mortgagee  as loss
payee(s); (ii) provide that if such insurance is cancelled or materially changed
for any  reason  whatever,  or the same is allowed  to lapse for  nonpayment  of
premium,  such cancellation,  change or lapse shall not be effective for 30 days
(and  with  respect  to war risk  insurance,  such  shorter  period  as shall be
customary in the  International  Aviation market for such insurance in such area
of the world) after prior written  notice to the  Additional  Insureds from such
insurers of such  cancellation  or lapse or material  change in policy terms and
conditions;  (iii)  provide that in respect of the  interests of the  Additional
Insureds  such  policies  of  insurance  shall  insure each  Additional  Insured
regardless  of  any  breach  or  violation  of  any  warranty,  declarations  or
conditions  contained  in such  policies  by any other  insured  other  than the
Additional Insureds; (iv) shall include waivers by the insurers of any rights of


                                       28
<PAGE>

subrogation or setoff,  counterclaim or other deduction whether by attachment or
otherwise,  in respect of any  liability of Lessor except in respect of premiums
in respect of the Aircraft  which are the subject of this Lease;  (v) be primary
without right of contribution from any other insurance which may be available to
any Additional Insured;  and (vi) provide that in the event of a dispute between
the insurance and reinsurance  underwriters subscribing to the Hull Risks Policy
and the insurance and reinsurance  underwriters  subscribing to the Hull War and
Allied Risks Policy each policy shall subscribe to 50% of the agreed valid claim
in  accordance  with "50/50"  clause AVS 103.  Without  increasing  the scope of
coverage under the airline  liability  policies,  the insurers  thereunder shall
acknowledge  the  existence of this Lease and the Mortgage and provide  coverage
for  the  indemnification   provisions  of  this  Lease.   Insurers  shall  also
acknowledge that Lessor has no operational control over the Aircraft.

      12.3.NOTICE OF ADDITIONAL PARTIES. Lessor agrees to provide written notice
to Lessee of the name,  address and telephone and fax numbers of all  Additional
Insureds at the inception of this Lease and at the time of any change therein.

      12.4.APPLICATION  OF  PROCEEDS  IN AN EVENT OF LOSS.  All  payments  under
insurance policies required to be maintained hereunder and received by Lessee or
by Lessor as the result of the  occurrence  of an Event of Loss shall be applied
as follows:

           a. If such  payments are received  with respect to an Airframe (or an
           Airframe and the Engines or engines  installed  thereon),  Lessor and
           Lessee shall proceed  diligently and cooperate  fully with each other
           in the  recovery  of any and all  proceeds  of  insurance  applicable
           thereto,  and so much of such insurance proceeds as shall not exceed,
           in the aggregate, the sums due under Section 11.1 above shall be paid
           first to Mortgagee,  if any, as first  priority  loss payee,  then to
           Lessor as second  priority  loss  payee,  in  accordance  with  their
           respective interests.

           b. If such  payments are received with respect to an Engine under the
           circumstances  contemplated by Section 11.2 hereof,  provided that no
           Event of Default  exists and is  continuing,  such payments  shall be
           paid over to, the Lessee,  provided  that the Lessee shall have fully
           performed  the terms of  Section  11.2  hereof  with  respect  to the
           provision of a satisfactory replacement Engine.

      12.5.APPLICATION  OF  PROCEEDS  IN THE  ABSENCE  OF AN EVENT  OF LOSS.  As
between Lessor and Lessee, the insurance payments of any property damage loss to
an Aircraft or any Engine not constituting an Event of Loss with respect thereto
will be applied as follows:
           a. in respect of a claim for damage not  exceeding  $[ ]* any payment
           from the insurers shall be released  directly to Lessee, or where the
           work has been contracted out, to the repairers; and

           b. in respect of a claim where damage  exceeds $[ ]* any payment from
           the  insurers  shall  be  payable  to  Mortgagee  and  Lessor  or its
           assignee(s) up to and including the amount of the Insured Value,  but
           will be paid over to Lessee in  reimbursement  for completed  repairs
           or, where the approved  work has been  contracted  out,  will be paid
           over to the repairer.

           Any  amount  referred  to in this  Section  12.5  which is payable to
Lessee  shall not be paid to Lessee if at the time of such  payment  an Event of
Default declared to Lessee's Insurers shall have occurred and be continuing, but


                                       29
<PAGE>

shall be held by Lessor as security  for the  obligations  of Lessee  under this
Lease  and such  amount  shall be paid to Lessee at such time as there no longer
exists any Default or Event of Default.

      12.6.REPORTS,  ETC. Lessee and Lessee's independent insurance broker shall
advise  Lessor in writing  promptly of any default in the payment of any premium
and of any other act or omission on the part of Lessee which might invalidate or
render unenforceable, in whole or in part, any insurance on the Aircraft. At the
Delivery  Date and at least 10 days prior to the renewal  date of any  insurance
policy  maintained  with  respect to the  Aircraft  pursuant to this Section 12,
Lessee shall provide Lessor with:

           a.   the insurance  certificates executed by an independent aircraft
           insurance broker together with their letter of undertaking; and

           b.  the  written  opinion  of  Lessee's  insurance  broker  that  the
           insurance maintained by Lessee and its insurers is in compliance with
           the provisions of this Lease.

      12.7.LESSEE'S  ADDITIONAL  INSURANCE.  Lessee shall not place insurance on
the Aircraft in excess of the amounts  specified in Section 12.2 beyond the next
policy renewal date without the prior written approval of Lessor,  which consent
shall not be  unreasonably  withheld.  Any proceeds of insurance  maintained  by
Lessee in excess of the amount  specified in Section 12.2,  assuming  Lessor has
consented  thereto,  shall be paid to Lessee as soon as practical after the date
such  insurance  proceeds are received by Lessor,  Lessor or  Mortgagee.  In any
event Lessor shall be entitled to receive all  insurance  proceeds  derived from
insurance  coverage  paid for by Lessor.  No  additional  insurance  procured by
Lessee shall have the effect of suspending,  impairing, defeating,  invalidating
or rendering  unenforceable or reducing, in whole or in part, the coverage of or
the proceeds payable under any insurance  required to be provided and maintained
by Lessee pursuant to this Section 12.

      12.8.LESSOR  NOT LIABLE FOR  PREMIUMS.  All policies of insurance  carried
hereunder  shall clearly  state that neither  Lessor nor any assignee of Lessor,
shall  have  any  liability   for  or  obligation   with  respect  to  premiums,
commissions, assessments or calls, but shall have the right to pay the same with
respect to the Aircraft and/or Engines. Lessor shall have the right, but not the
obligation,  to place  additional  insurance  on the Aircraft in such amounts as
Lessor in its sole discretion deems proper; provided, however, no such insurance
shall impair,  defeat or invalidate  the coverage  effected  pursuant to Section
12.2 above and such additional insurance shall be at Lessor's sole expense.

      12.9.CONTINUING  INSURANCE.  Lessor  may  require  Lessee to effect and to
maintain  insurance  after  the  expiration  of the  Term  with  respect  to its
liability  under the  indemnities  in Section  13 for such  period as Lessor may
require (but in any event not after the second anniversary of the termination of
the leasing of the Aircraft under this Lease, which provides for each Indemnitee
to be named as additional insured.  Lessee's obligation under this Section shall
not be affected by Lessee ceasing to be lessee of the Aircraft and/or any of the
Indemnities ceasing to have any interest in the Aircraft.


                                       30
<PAGE>

SECTION 13.  GENERAL INDEMNIFICATION.

      13.1  SCOPE.  Lessee  shall  hold  Lessor,  Mortgagee  and GATX and  their
respective directors,  officers,  agents,  shareholders contractors,  employees,
successors,  assigns and servants (each an  "Indemnitee")  harmless from any and
all claims, demands, suits, causes of action and all legal proceedings,  whether
civil or criminal,  damages, losses, liabilities (including, but not limited to,
strict liability in tort), obligations,  penalties, judgments or fines and other
sanctions,  and any  costs  and  expenses  in  connection  therewith,  including
reasonable  legal fees and expenses of whatever kind and nature  ("Loss")  which
may result from or arise out of (a) the condition,  use or operation  during the
Term of any Item of  Equipment  either in the air or on the  ground,  or (b) any
maintenance,   service,  repair,  overhaul,  possession,  delivery,  performance
management,  registration,  control,  return or testing  of any Item  during the
Term,  whether  or not such  Item is at the time in the  possession  of  Lessee;
provided,  however,  that the Lessee  shall not be  required  to  indemnify  any
Indemnitee  for any Loss, (i) to the extent that such Loss is caused by the acts
or events which occur after full and final  compliance  by Lessee with all terms
of the Lease,  unless attributable to acts,  omissions,  circumstances or events
occurring  during the Term,  (ii) to the extent that such Loss is caused by acts
or events which occur  following  expiration or termination of the Lease, or the
taking of  possession of the Aircraft by any  Indemnitee  pursuant to Section 17
hereof,  (iii) which is a Tax or a loss of tax benefit (it being understood that
Section 10 provides for Lessee's  liability with respect to Taxes),  (iv) to the
extent that such Loss results from the willful misconduct of any Indemnitee,  or
(v) to the  extent  that  such  Loss  results  from any  breach by Lessor of any
representation or warranty in Section 5.1 contained herein. Upon payment in full
to any party indemnified  hereunder of any indemnities contained in this Section
13 by Lessee,  Lessee shall be subrogated to all rights and remedies  which such
indemnified party has or may have against  manufacturers of the relevant Item or
any other person. Lessor shall notify Lessee promptly of any such Loss and in no
event later than 30 days after the Lessor has notice thereof.

      13.2.LESSEE'S RELEASE.  Lessee hereby waives and releases any claim now or
hereafter  existing  against  any  Indemnitee  on account of any and all claims,
demands,  suits,  causes of action and all legal  proceedings,  whether civil or
criminal,  damages, losses,  liabilities (including,  but not limited to, strict
liability  in  tort),  obligations,  penalties,  judgments  or fines  and  other
sanctions,  and any  costs  and  expenses  in  connection  therewith,  including
reasonable legal fees and expenses of whatever kind and nature, which may result
from or arise out of injury to or death of  personnel of Lessee or its agents or
contractors  or loss or damage to  property  of Lessee or the loss of use of any
property  which  may  result  from or  arise  out of (a) the  condition,  use or
operation during the Term of any Item of Equipment,  either in the air or on the
ground, or (b) any maintenance, service, repair, overhaul, possession, delivery,
performance  management,  registration,  control,  return or testing of any Item
during the Term,  whether or not such Item is at the time in the  possession  of
Lessee.  The foregoing  waiver and/or release shall not apply to injury,  death,
loss or  damage  solely  resulting  from  (i) the  gross  negligence  or  wilful
misconduct of such Indemnitee or (ii) the breach by Lessor of any representation
or warranty contained in Section 5.1 above.

      13.3.CONTEST. If Lessee is not permitted to contest in its own name and if
an Indemnitee is unable to assign to Lessee  whatever right such  Indemnitee may
have to bring or defend such an action,  then if requested by Lessee in writing,
Lessor  shall  upon  receipt  of an opinion of  Lessee's  counsel  stating  that
reasonable grounds exist to take the action requested, in good faith contest the
validity,  applicability  or amount of any  liability  or loss which  Lessor may
incur as a result of its  contesting  an  indemnified  amount  (an  "Indemnified


                                       31
<PAGE>

Amount") by (a) resisting payment thereof,  (b) not paying the same except under
protest if protest is  necessary  and proper,  or (c) if payment is made,  using
reasonable efforts to obtain a refund in appropriate  administrative or judicial
proceedings;  provided,  however, that Lessor need not contest the applicability
of any such  Indemnified  Amount,  if the matter in question is of a  continuing
nature and has  previously  been  resolved  pursuant to the  provisions  of this
Section 13.3.

      13.4.REPAYMENT.   If  an  Indemnitee  shall  obtain  a  repayment  of  any
Indemnified  Amount  paid by Lessee,  such  Indemnitee  shall,  so long as there
exists no Event of Default, promptly pay to Lessee the amount of such repayment,
together with the amount of any interest  received by such Indemnitee on account
of such repayment.

      13.5.PAYMENT.  Subject to the  provisions  of Section 13.3 hereof,  Lessee
shall pay  directly to each party  indemnified  hereunder  all amounts due under
this  Section 13 within 30 days of the  receipt of notice  that such  payment is
due.

SECTION 14.     LIENS.

      Lessee shall not, directly or indirectly create,  incur,  assume or suffer
to exist any Lien on or with  respect to any Item of  Equipment  or any interest
therein, except Permitted Liens. Lessee shall promptly, at its own expense, take
such action as may be  necessary  to duly  discharge  any such Lien not excepted
above if the same shall arise at any time with respect to any Item of Equipment.
As Lessor may reasonably  request from time to time due to changes in applicable
law or changes in other  circumstances  Lessee  shall  provide  Lessor  with the
written  opinion of independent  counsel  reasonably  satisfactory  to Lessor or
other written evidence  satisfactory to Lessor to the effect that, based upon an
examination  of the  documents  of the Lessee and the records of the FAA and any
other documents deemed  necessary,  and subject to the accuracy of such records,
no Liens exist  against the Aircraft or any Engine except  Permitted  Liens (and
specifying which, if any, such Permitted Liens exist).

SECTION 15.     RETURN OF AIRCRAFT AND RECORDS.

      On the expiration or earlier  termination of this Lease,  the Aircraft and
the  Aircraft  Records  shall be  returned  to  Lessor  in  accordance  with the
provisions  of Exhibit F hereto,  all of which shall be deemed  incorporated  by
reference  as though set forth in full  herein.  This Section 15 shall not limit
any rights or remedies under Section 17 hereof.  Any references in this Lease to
Section 15 shall be deemed to refer to this Section 15 and Exhibit D.

SECTION 16.     EVENTS OF DEFAULT.

      The following events shall constitute Events of Default:

           a. Lessee shall fail to make any payment of Basic Rent on the day the
           same is due  hereunder  or fails to make any payment of  Supplemental
           Rent within three Business Days of the date when due hereunder; or

           b. Lessee shall fail to procure and maintain any  insurance  required
           by Section 12 hereof or Lessee shall operate the Aircraft at any time
           when insurance required by Section 12 shall not be in effect or in an
           area excluded from such insurance cover; or

           c. Lessee  shall fail to perform or observe in any  material  respect
           any other of the covenants, conditions, or agreements to be performed


                                       32
<PAGE>

           or observed by it  hereunder  and such failure  shall  continue for a
           period in excess of 30 days from the date written  notice is received
           from the Lessor requiring the same to be remedied, or if such failure
           can not be remedied  within this time  period,  failure to have taken
           all  reasonable  measures,  so that it could be remedied  immediately
           thereafter; or

           d. Any  representation  or warranty  made by Lessee  herein or in any
           document or certificate  furnished  Lessor in connection  herewith or
           pursuant  hereto  shall prove to have been  incorrect in any material
           respect when made or deemed to be repeated; or

           e.  Lessee  shall  default in the payment of any  obligation  for the
           payment  of  borrowed  money,  for the  deferred  purchase  price  of
           property  or for the  payment  of rent  under any  lease  which has a
           principal  amount of [ ]* Dollars ($[ ]*) or more  determined  in the
           case of borrowed money by the amount  outstanding under the agreement
           pursuant to which such borrowed money was borrowed,  in the case of a
           deferred purchase price by the remaining balance and in the case of a
           lease by the present  discounted  value of the remaining rent or hire
           payable  thereunder  (ignoring any fair market renewal) when the same
           becomes due if such  nonpayment  results in an  acceleration  of such
           indebtednessor  any early termination or declaration of default under
           such lease,  or Lessee shall default in the  performance of any other
           term,   agreement,   or  condition  contained  in  any  agreement  or
           instrument  under  or  by  which  any  such  obligation  is  created,
           evidenced or secured,  if the effect of such default is to cause such
           obligation  to become  due prior to its stated  maturity  or to cause
           such lease to be early terminated or declared in default or;

           f. any consent, authorization, license or approval of or registration
           with or declaration to  governmental  or public bodies or authorities
           or courts  required by the Lessee in order to perform its obligations
           under any of the  Lessee  Documents  is not  granted or is revoked or
           terminated or expires and is not replaced or reinstated in full force
           and effect within thirty (30) days thereafter; or

           g. a creditor  attaches or takes possession of a material part of the
           assets  or  revenues  of  the  Lessee  and  such  attachment  is  not
           discharged within sixty (60) days; or

           h.  the  Lessee  suspends  payment  of its  debts  or  becomes  or is
           judicially  determined  to be insolvent or unable to pay its debts as
           they fall due or commences  negotiations with its creditors generally
           with a view to the  re-adjustment  or re-scheduling of all or part of
           its  indebtedness or proposes or enters into any composition or other
           arrangement  for the benefit of its creditors  generally or any class
           of creditors commence proceedings in relation to the Lessee under any
           law,   regulation  or  procedure   relating  to   reconstruction   or
           readjustment of debts and the same are not contested by Lessee; or

           i. the Lessee  shall file a  voluntary  petition in  bankruptcy  or a
           voluntary    petition   seeking    protection   from   creditors   or
           reorganization  in a proceeding  under any bankruptcy laws (as now or
           hereafter in effect) or an answer admitting the material  allegations
           of a petition  filed against the Lessee in any such  proceedings,  or


                                       33
<PAGE>

           Lessee shall by voluntary  petition,  answer,  or consent seek relief
           under the provisions of any bankruptcy or other similar law providing
           for the reorganization or winding-up of corporations,  or consents to
           the  appointment  of a receiver,  trustee,  liquidator of itself or a
           substantial part of its assets; or

           j. an order,  judgment  or decree is entered  by any  court,  with or
           without the consent of the Lessee, appointing a receiver,  trustee or
           liquidator for Lessee of all or any substantial part of its property,
           or all or any  substantial  part of the  property  of the  Lessee  is
           sequestered, and any such order, judgment or decree of appointment or
           sequestration remains in effect,  undismissed,  unstayed or unvacated
           for a period of sixty (60) days after the date of entry thereof; or

           k.  a  petition   against  the  Lessee  in  a  proceeding  under  any
           bankruptcy,  insolvency or other similar laws (as now or hereafter in
           effect)  shall be  filed,  or if,  under  the  provisions  of any law
           providing for  reorganization or winding-up of corporations which may
           apply to Lessee  any court of  competent  jurisdiction  shall  assume
           jurisdiction,  custody or control of the Lessee, and such petition is
           not voluntarily or otherwise  dismissed  within sixty (60) days after
           the filing thereof; or

           l. the Lessee  suspends or ceases or  threatens in writing to suspend
           or cease to carry on its business  such that the ability of Lessee to
           perform its obligations  under the Lessee Documents may reasonably be
           expected to be materially adversely affected; or

           m. all or  substantially  all of the assets or revenues of the Lessee
           are seized, nationalized, expropriated or compulsorily acquired by or
           under the authority of any government; or

           n. the Lessee threatens to dispose of all or substantially all of its
           assets,  whether by one or a series of transactions,  related or not,
           other than for the purpose of a  reconstruction  or amalgamation  the
           terms of which have  received the previous  consent in writing of the
           Lessor and such  disposition  would have a material adverse effect on
           the ability of the Lessee to perform its obligations under the Lessee
           Documents;

           o. the Lessee  ceases to be a  Certificated  Air Carrier or ceases to
           hold a United States Air Carrier  License or  Certificate  under Part
           121 of the FAR (or any  successor  provision)  or  Certificate  under
           Section 41101 of Title 49 of the United States Code (or any successor
           provision); or

           p.  Lessee  voluntarily  suspends  all of its airline  operations  or
           substantially  all the  franchises,  concessions,  permits and rights
           required for the conduct of the business and operations of Lessee are
           revoked,  cancelled or otherwise  terminated or Lessee ceases to be a
           certificated  commercial  air carrier  under  Section  1110(a) of the
           Bankruptcy Code; or

           q.  Judgment  for the payment of money in excess of $[ ]* is rendered
           against Lessee by a court of competent  jurisdiction  and enforceable
           against Lessee's assets and the same shall remain  undischarged for a
           period of 30 days during which  execution of such judgment  shall not
           be effectively stayed; or

                                       34
<PAGE>

           r. Lessee fails to accept  delivery of either  Aircraft  when validly
           tendered to it pursuant to this Lease; or

           s. The existence, validity,  enforceability or priority of the rights
           of Lessor as owner and  lessor of the  Aircraft  or the rights of any
           Mortgagees as mortgagees are challenged by Lessee or any other person
           claiming by or through Lessee.


SECTION 17.     RIGHTS AND REMEDIES.

      17.1.REMEDIES. Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be  continuing,  Lessor may, at its option,
declare  this  Lease to be in  default  and at any time  thereafter,  so long as
Lessee shall not have  remedied all  outstanding  Events of Default,  Lessor may
exercise one or more of the following remedies with respect to any or all of the
Items of Equipment as Lessor, in its sole discretion, shall elect, to the extent
available  and  permitted  by, and  subject  to  compliance  with any  mandatory
requirements of, applicable law then in effect:

           a. Subject to Section  4.4,  apply all or any portion of the Security
           Deposit to Lessor's damages  attributable to such Event of Default or
           to the costs of curing such Event of Default;  provided,  however the
           Event of  Default  shall  continue  until  the  Security  Deposit  is
           restored to its original amount.

           b. Terminate this Lease and demand that Lessee, and Lessee shall upon
           written demand of Lessor and at Lessee's  expense,  forthwith  return
           all items of Equipment to Lessor in the manner and condition required
           by,  and  otherwise  in  accordance  with all of the  provisions  of,
           Section 15 hereof as if the items of Equipment were being returned at
           the end of the Term; or Lessor may enter upon the premises  where the
           items of Equipment are located and take  immediate  possession of and
           remove the same by summary  proceedings  or  otherwise,  all  without
           liability  for or by  reason of such  entry or  taking of  possession
           whether  for the  restoration  of damage to  property  caused by such
           taking or otherwise.

           c. Proceed by appropriate  court action or actions,  either at law or
           in  equity,  to  enforce  performance  by  Lessee  of the  applicable
           covenants  of this  Lease  and to  recover  damages  for  the  breach
           thereof.

           d. In  addition to all other  legal and  equitable  rights of Lessor,
           upon  notice to Lessee,  Lessor  may,  following  an Event of Default
           lease  the  Aircraft  to  any  third  party  upon  such  commercially
           reasonable terms and conditions as Lessor may determine and apply the
           rental therefrom to any amounts due to Lessor as provided herein.

           The total  proceeds of such lease less expenses of Lessor  (including
           attorneys'  fees),  to the extent  actually  received and retained by
           Lessor,  shall be  applied  to the  total  amount  due to  Lessor  as
           provided  herein  and  Lessee  shall  immediately  pay to Lessor  any
           deficiency.

           e.  On the  date  on  which  the  Lessor  shall  become  entitled  to
           repossession  of the  Aircraft,  Lessor,  in  addition  to all  other
           remedies herein provided, may by notice to Lessee, demand that Lessee


                                       35
<PAGE>

           pay,  and Lessee  shall pay,  on the first  Basic Rent  payment  date
           following  said  notice,  (1) any  due  and  unpaid  Basic  Rent  and
           Supplemental Rent,  together with interest at the Incentive Rate from
           the due date to the date the  same are  paid,  and (2) as  liquidated
           damages for loss of a bargain and not as a penalty,  an amount  equal
           to the  difference  between (i) the sum of all remaining  payments of
           Basic  Rent  falling  due  hereunder  after the date of said  notice,
           discounted to the date of said notice at seven percent per annum on a
           monthly basis (and assuming that the remaining payments of Basic Rent
           shall be in identical amounts as that payment falling due immediately
           prior to the Event of  Default),  and (ii) the Fair Rental  Value (as
           determined  by  an  independent   aviation  appraiser  of  recognized
           standing  selected by Lessor) of the Aircraft for the remaining Term,
           discounted  at the same rate and  frequency  specified  in (i) above;
           provided,  however,  if Lessor has  already  leased the  Aircraft  as
           permitted  by Section  17.1(d)  above,  the rental  specified in said
           lease shall be conclusive as to the "fair market rentals".

      17.2.FURTHER  RIGHTS.  Lessee  shall be liable for any and all unpaid Rent
and for all  reasonable  legal fees and other  costs and  expenses  incurred  by
reason of the  occurrence  of any Event of Default or the  exercise  of Lessor's
remedies  with respect  thereto,  including  all costs and expenses  incurred in
connection  with the return of any Item in accordance  with the terms of Section
15  hereof  or in  placing  such Item in the  condition  and with  airworthiness
certificates as required by said Section.

      17.3.REMEDIES  CUMULATIVE.  Except  as  otherwise  expressly  provided  in
Section 17.1 hereof,  no remedy referred to in this Section 17 is intended to be
exclusive,  but each shall be  cumulative  and in addition  to any other  remedy
referred to above or otherwise  available to Lessor at law or in equity; and the
exercise or beginning of exercise by Lessor or any one or more of such  remedies
shall not preclude the simultaneous or later exercise by Lessor of any or all of
such other  remedies.  No  express  or implied  waiver by Lessor of any Event of
Default  shall in any way be, or be  construed  to be, a waiver of any future or
further Event of Default.


SECTION 18.     MISCELLANEOUS.

      18.1.CONSTRUCTION AND APPLICABLE LAW. Any provision of this Lease which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.  No term or provision of
this Lease may be changed, waived,  discharged or terminated orally, but only by
a written  instrument  signed by the party against which the  enforcement of the
change,  waiver,  discharge or termination is sought. The captions in this Lease
are for  convenience  of reference only and shall not define or limit any of the
terms or provisions hereof.

           This Lease shall in all  respects be governed  by, and  construed  in
accordance  with,  the laws of the State of New York,  including  all matters of
construction,  validity and  performance,  but not  including  the choice of law
provisions thereof.

      18.2.NOTICES.  All  notices  provided  for herein  shall be in writing and
shall be deemed to have been given when delivered  personally or when telexed or
telefaxed  and receipt  confirmed and shall be deemed to have been received five


                                       36
<PAGE>

days after  deposit in the United  States  mail,  first class  postage  prepaid,
addressed as follows:
      If to Lessee:       Western Pacific Airlines, Inc.
                       2864 South Circle Drive, Suite 1100
                           Colorado Springs, CO 80906
                          Attn: Chief Financial Officer
                             Telefax: (719) 527-7480

      If to Lessor:       GATX Third Aircraft Corporation
                       Four Embarcadero Center, Suite 2200
                     San Francisco, California 94111
                       Attn: Air Portfolio Administration
                    Telefax: (415) 955-3424 or (415) 955-3444

or to such other address as any party may designate for itself by written notice
to the other party.

      18.3.LESSOR'S  RIGHT TO  PERFORM.  If Lessee  fails to perform  any of its
obligations hereunder,  Lessor may discharge such obligation,  and the amount of
the  expenses of Lessor  incurred in  connection  with such  discharge  shall be
deemed Supplemental Rent, payable by Lessee upon demand.

      18.4.ASSIGNMENT  BY  LESSOR.  Lessor  shall  have  the  absolute  right to
transfer or assign to any person,  firm,  corporation or other entity any or all
of  Lessor's  rights,  obligations,  benefits  and  interests  under this Lease,
including,  without  limitation,  the right to receive Rent or any other payment
due under  this  Lease,  the right to  transfer  or assign  title to any Item of
Equipment  or to transfer or assign the right to purchase  any item of Equipment
and the right to make all waivers and agreements,  to give all notices, consents
and releases,  to take all action upon the occurrence of an Event of Default, or
to do any and all other  things  which  Lessor is or may become  entitled  to do
under this  Lease;  PROVIDED,  HOWEVER,  that  Lessor  shall not have the right,
without Lessee's prior written consent,  to transfer or assign any or all of its
rights,  title or  interest in the  Aircraft  or this Lease to United  Airlines,
Delta Air Lines, Southwest Airlines, or American Airlines; and, PROVIDED FURTHER
that any  transferee of Lessor's  entire  interest shall be an entity with a net
worth of at least $[ ]*, and, PROVIDED FURTHER that no such assignment by Lessor
shall have any impact on Lessee's  maintenance  or  operation  of the  Aircraft.
Lessee acknowledges that, if Lessor should sell or transfer to a third party all
of  Lessor's  interest  under this Lease and in the items of  Equipment,  Lessor
shall  thereupon be relieved of all of its  obligations  hereunder  and Lessor's
transferee  shall succeed to all of Lessor's  rights,  interests and obligations
under this  Lease as though  Lessor's  transferee  had been the  initial  lessor
hereunder;  provided, however, that, in the event of a transfer or assignment of
a  security  interest  in any  item of  Equipment  Lessor  shall  remain  liable
hereunder.  Any  assignment,   pledge  or  other  conveyance,  for  security  or
otherwise,  of this Lease by Lessor  shall be subject to Lessee's  rights  under
this Lease and shall not be  effective  unless and until  Lessee shall have been
given notice of such assignment  identifying the assignee or transferee  hereof.
No assignment or transfer  permitted  hereby shall increase  Lessee's  financial
obligations to Lessor hereunder, nor shall it serve to otherwise increase in any
material respect Lessee's obligations when compared with those obligations which
would have arisen had such  assignment  or transfer  not  occurred,  or serve to
decrease Lessee's rights, hereunder.

      18.5.SERVICE  OF PROCESS;  WAIVER OF  IMMUNITIES.  Lessee (a)  irrevocably
submits  itself to the  nonexclusive  jurisdiction  of the Supreme  Court of the
State of New York, New York County,  of the United States District Court for the
Southern  District  of New York for the  purpose  of any  suit,  action or other


                                       37
<PAGE>

proceeding arising out of this Lease or any other Lease Document, or the subject
matter  hereof or  thereof  or any of the  transactions  contemplated  hereby or
thereby,  brought by Lessor or its  successor,  subrogees  or  assigns;  and (b)
irrevocably  agrees that all claims in respect of such action or proceeding  may
be heard and  determined in such New York State or United States  Federal court.
Lessee  consents to service of process in any suit,  action or other  proceeding
arising  out  of  this  Lease  or  the  subject  matter  hereof  or  any  of the
transactions contemplated hereby in such New York State or United States Federal
courts and irrevocably  designates and appoints the person  specified in Section
5.2(g)  hereof  (herein  referred to as  "Agent"),  as its  attorney-in-fact  to
receive service of process in such action,  suit or proceeding,  it being agreed
that service upon such  attorney-in-fact  shall  constitute  valid  service upon
Lessee  and its  successors  and  assigns.  Lessee  agrees  that  (x)  the  sole
responsibilities  of Agent shall be to receive such  process,  to send a copy of
any such  process so  received  to Lessee at the  address of Lessee set forth in
Section  18.2  above,  or at the last  address  filed in writing by Lessee  with
Agent,  and to give prompt telefax  notice of receipt  thereof to Lessee at such
address and (y) Agent shall have no responsibility for the receipt or nonreceipt
by Lessee of such process,  nor for any performance or  nonperformance by Lessee
or Lessor or their  respective  successors  or assigns.  Lessee agrees to pay to
Agent such  compensation  as shall be agreed upon from time to time for services
hereunder. Lessee agrees that its submission to jurisdiction and its designation
of Agent set  forth  above is made for the  express  benefit  of Lessor  and its
successors,  subrogees and assigns.  Lessee agrees that a final judgment against
Lessee in any such action or proceeding shall be conclusive, and may be enforced
in other  jurisdictions  by suit on the judgment or in any other manner provided
by law, a certified  or true copy of which final  judgment  shall be  conclusive
evidence  of the fact and of the  amount of any  indebtedness  or  liability  of
Lessee therein described. Nothing in this Section 18.6 shall affect the right of
Lessor,  or its  successors,  subrogees or assigns to serve legal process in any
other manner permitted by law or affect the right of Lessor,  or its successors,
subrogees or assigns,  to bring any action or proceeding  against  Lessee or its
property in the courts of other  jurisdictions.  In the event of the transfer of
all or  substantially  all  the  assets  and  business  of  Agent  to any  other
corporation,  by consolidation,  merger, sale of assets or otherwise, such other
corporation shall be substituted  hereunder for Agent with the same effect as if
named herein in place of Agent.  Lessee  agrees that so long as this Lease shall
be in effect,  Lessee shall maintain a duly  appointed  agent for the service of
summonses  and other  legal  processes  in New York City and shall  give  Lessor
written notice prior to any change of address for such agent.

      18.6.EXPENSES.  Each party shall bear its own expenses in connection  with
the negotiation and  documentation  of this Lease and the other Lease Documents,
except  that  Lessee  shall be  solely  responsible  for the fees,  if any,  due
Newcourt  Capital  and for the  fees and  expenses  of  William  C.  Boston  and
Associates,  special FAA counsel to Lessor. In any action or proceeding  between
Lessor and Lessee to enforce the terms of this Lease, the prevailing party shall
be entitled to recover its costs and expenses, including attorneys' and experts'
fees and expenses,  incurred in connection  with such action or  proceeding.  If
there is less than a full recovery the court or arbitrator  shall  determine the
"prevailing party" for purposes of this Section.

      18.7.ARBITRATION.  Except for a failure  of Lessee to pay Rent  hereunder,
any dispute  hereunder shall be submitted to binding  arbitration in the City of
New York before an arbitrator mutually acceptable to Lessor and Lessee under the
rules of the American Arbitration  Association.  If Lessor and Lessee are unable
to agree upon a single  arbitrator,  they shall each appoint one  arbitrator and
the two so selected  shall  select a third.  All  arbitrators  shall be selected
within 30 days after  written  demand by either party.  Prior to commencing  any
arbitration proceeding the parties agree to meet in person, on not less than two
Business Days notice,  in New York and make a good faith effort to resolve their


                                       38
<PAGE>

differences.  In any such  dispute  the  prevailing  party  shall be entitled to
recover its costs and expenses,  including legal fees and expenses,  in addition
to any other recovery or award. If there is less than a full recovery, the court
or  arbitrator,  as the case may be, shall  determine the  prevailing  party for
purposes of this Section 18.8.

      18.8.SURVIVAL. The representations,  warranties, covenants, agreements and
indemnities  of Lessee and  Lessor set forth in this  Lease,  and  Lessee's  and
Lessor's   obligations   hereunder,   shall  survive  the  expiration  or  other
termination  of this  Lease to the  extent  required  for full  performance  and
satisfaction  thereof,  but in any case for two years  after  the  return of the
Aircraft.

      18.9.ENTIRE  AGREEMENT;  COUNTERPARTS.  This Lease and the  Certificate of
Acceptance  executed  pursuant hereto  constitute the entire  agreement  between
Lessor  and  Lessee  regarding  the  Aircraft  and there  are no other  prior or
contemporaneous written or oral understandings with regard to the subject matter
hereof.  At least  three  counterparts  of this Lease have been  executed by the
parties  hereto,  each of which  shall be deemed to be an  original,  but all of
which taken together shall constitute a single agreement.

      18.10.  SUCCESSORS  AND ASSIGNS.  This Lease shall be binding on and shall
inure to the  benefit of  Lessee,  Lessor and their  respective  successors  and
permitted assigns.

      18.11.  FURTHER  ASSURANCES.  Each party hereto shall,  at its  respective
expense,  promptly  and duly execute and deliver to the other party such further
documents and promptly take such further action not inconsistent  with the terms
hereof as the other party may from time to time  reasonably  request in order to
more  effectively  carry out the intent and  purpose of this Lease or to perfect
and protect the rights and, with respect to Lessor, remedies created or intended
to be created hereunder.

      18.12BANKRUPTCY,  SECTION 1110.It is the intention of the parties that the
provisions of 11 U.S.C.  Section 1110 and any  analogous  section of the Federal
bankruptcy  laws,  as  amended  from  time to time  shall be  applicable  to the
interests  of the Lessor in the  Aircraft and to any right of the Lessor to take
possession of the Aircraft in compliance with this Agreement.  The parties agree
that this  Agreement  is  intended  to by a true  lease for  Federal  income tax
purposes.



           IN WITNESS WHEREOF,  Lessor and Lessee have each caused this Lease to
be duly  executed  by  their  authorized  officers  as of the date  first  above
written.


                        GATX THIRD AIRCRAFT CORPORATION,
                     as Lessor


                       By: _______________________________
                      Title:_______________________________


                     WESTERN PACIFIC AIRLINES, INC.,
                     as Lessee


                     By:____________________________
                        Its:_____________________________




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