<PAGE>

          THE [*] INDICATES THAT PORTIONS OF TEXT HAVE BEEN DELETED AND ARE
          BEING FILED UNDER SEPARATE COVER WITH THE SECURITIES AND EXCHANGE
          COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.

                               DATED 4th February 1998


                                 BRITISH AIRWAYS PLC

                                       - and -

                           HAWKER PACIFIC AEROSPACE LIMITED

                                       - and -

                              HAWKER PACIFIC, AEROSPACE


                                      UNDERLEASE

                                     relating to
                             Part of Technical Block "A"
                               Heathrow Airport, London


                                 LINKLATERS & PAINES
                                   One Silk Street
                                   London EC2Y  8HQ

                               TEL: (+44) 171 456 2000

                                      Ref:  RJTW

<PAGE>

                                      UNDERLEASE
DATE:                                                      4th February 1998

PARTIES:       BA means:           BRITISH AIRWAYS PLC of Speedbird 
                                   House Heathrow Airport London PO Box 10 
                                   Middlesex TW6 2JA.

               HP means:           HAWKER PACIFIC AEROSPACE 
                                   LIMITED of Number One London Road 
                                   Southampton SO15 2AE

               GUARANTOR means:    HAWKER PACIFIC, AEROSPACE whose 
                                   registered office is at 11240 Sherman Way Sun
                                   Valley CA91352 USA

  1       DEFINITIONS AND INTERPRETATION

          In this Lease:

1.1       Unless the context otherwise requires, references to:-

          "AIRPORT" means the land from time to time during the Term comprising
          Heathrow Airport London;

          "AIRPORT OPERATOR" means Heathrow Airport Limited or the body or
          person which from time to time manages the Airport as defined in
          Section 82(1) of the Airports Act 1986;

          "AREA A" means the part of the Property coloured pink and hatched
          black on Plan 1;

          "AREA B" means the part of the Property coloured pink and hatched
          green on Plan 1;

          "AREA C" means the part of the Property coloured pink on Plan 1 and
          Plan 2;

          "BUILDING" means the building of which the Property comprises part and
          each and every part thereof;

          "COMMON PARTS" means the accessways roads entranceways halls landings
          stairways lifts escapeways toilet facilities and any other areas
          within the Building or the Site made available from time to time for
          common use by the tenants and occupiers of the Building and those
          authorised by them;

          "CORE AREAS" means Area A, Area B and Area C and a reference to a Core
          Area shall be construed accordingly;

          "GIA ORIGINAL AREA" means the Gross Internal Area of the Property as
          at the commencement of the Term;

          "GIA RESIDUE PROPERTY" means the Gross Internal Area of the Residue
          Property;

          "GROSS INTERNAL AREA" means the Gross Internal Area agreed between BA
          and HP or failing agreement determined on the application of either
          party by an independent expert appointed by the President for the time
          being of the Royal Institution of Chartered Surveyors who shall act as
          expert and not as arbitrator.

          "PLATING SHOP" means the area shown coloured pink and cross hatched
          black on Plan 1 and Plan 2.

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                                          1

<PAGE>

          "PROPERTY" means the part of the Building shown coloured pink, pink
          hatched black, pink hatched green and pink cross hatched black on Plan
          1 and Plan 2 and each and every part thereof (and all additions and
          alterations thereto) as described in Schedule 1 except tenant's
          fixtures and fittings (including so far as applicable all windows and
          doors, the plaster and other internal finishes only on the walls, the
          floor boards, and other finishes on the floors and any false ceiling
          or other finishes to the ceilings but excluding Service Media any
          items of plant or equipment owned by BA and all structural and
          exterior parts of the Building);

          "SERVICE MEDIA" means the sewers drains gutters pipes ducts wires
          cables and other conducting media in the Building;

          "SITE" means the land and buildings shown edged red on Plan 3;

          "BA" and "HP" includes their respective successors in title;

          "INSURED RISK" means any risk against which BA (under the Head Lease)
          is responsible for insuring the Property;

          "HEAD LEASE" means the lease dated 31 December 1986 between Heathrow
          Airport Limited (1) and BA(2) under which BA holds the Property and
          the superior lease dated 1 April 1995 between Heathrow Airport Limited
          (1) and BA and British Airways Associated Companies Limited (2);

          "SUPERIOR LANDLORD" means BA's immediate reversioner from time to time
          and the landlord under the lease dated 1 April 1995 referred to above;

          "RELEVANT CORE VACATION DATE" means 15 March 1998 in respect of Area
          A, 31 January 1999 in respect of Area B and 28 February 1999 in
          respect of Area C;

          "LEASE" means this underlease and all documents supplemental thereto;

          "RENT" means:-

          (a)  [*] per  month from and including the Rent Commencement Date
               until  31 December 1998; and 

          (b)  [*] per month  from and including  1 January 1999 until 30
               June 1999; and

          (c)  [*] per day from and including  1 July 1999 until the expiry
               of the Term; 

          in each case payable monthly in advance the first such payment being
          made on the Rent Commencement Date and thereafter on each monthly
          anniversary of such date subject to Clause 7.3 and Clause 7.4;

          "RENT COMMENCEMENT DATE" means  1 June 1998;

          "REVISED RENT" means the following daily rent:

          [*] Residue Property

          GIA Original Area

          "SALE OF BUSINESS AGREEMENT" means the agreement dated 20 December
          1997 made between BA (1) HP (2) and the Guarantor (3)

          "SERVICES AGREEMENT" means the landing gear services agreement 
          dated 4th February 1998 made between BA (1) HP (2) relating to 
          the provision of services to BA;

1.2       Obligations undertaken by more than a single person are joint and
          several obligations;

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                                          2

<PAGE>

1.3       Any covenant by HP not to do an act or thing shall be construed as if
          it were a covenant not to do or permit or suffer such act or thing;

1.4       Clause headings and titles shall not affect the construction of this
          Lease.

1.5       Any provision in this Lease requiring the consent or approval of BA
          shall be construed as also requiring the consent (where necessary
          under the Head Lease) of the Superior Landlord.

  2       LETTING

          BA LETS to HP the Property together with the rights set out in
          Schedule 2 but except and reserving as mentioned in Schedule 3 for a
          TERM ("the Term") from and including the date hereof to 31 December
          1999 HP paying the Rent;

  3       HP'S COVENANTS

          HP COVENANTS with BA:-

3.1       RENT

          To pay the Rent on the dates and in the manner referred to in Clause 1
          hereof without any deduction or set-off;

3.2       INTEREST

          Without prejudice to BA's other remedies to pay to BA on demand as
          additional rent interest on any sum payable under this Lease which is
          not paid within 7 days following the due date at the rate of 4% above
          the base rate of Barclays Bank plc from the due date until payment is
          received (both before and after any judgment);

3.3       VAT

          Where HP is to pay to BA any sum or provide any consideration it shall
          on the same due date (subject to prior receipt of a valid Value Added
          Tax invoice) also pay Value Added Tax in respect of such sum or
          consideration and where HP is to indemnify or reimburse or pay costs
          incurred by BA it shall also pay Value Added Tax on such costs to the
          extent that BA does not recover it;

3.4       REPAIR

          (Without prejudice to the other obligations of HP herein contained or
          obligations contained in the Services Agreement) To make good any
          damage to the Property, save for any damage which arises as a result
          of fair wear and tear or from the carrying on of the Permitted Use in
          a similar manner to that which has been carried on prior to the date
          hereof, caused by HP its servants or agents licensees or invitees
          excluding damage by any Insured Risk except to the extent that the
          insurance money is made irrecoverable through any knowing act or
          default of HP or its servants agents licensees or invitees;

3.5       DECORATION

          To decorate in a good and workmanlike manner any part of the Property
          damaged by HP or its servants agents invitees or licensees;

3.6       CLEANING

          In so far as appropriate having regard to the nature of the Property
          and the Permitted Use to keep the Property clean and tidy and clear of
          rubbish and whenever BA reasonably considers necessary in so far as
          appropriate having regard to the nature of the property and the
          Permitted Use to clean all internal surfaces and finishes of the
          Property;

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                                          3

<PAGE>

3.7       NOTICES TO REPAIR

          To repair and make good all defects and disrepair for which HP is
          liable under this Lease within two months (or sooner if necessary) of
          written notice from BA and if HP defaults in so doing BA may enter the
          Property to carry out such work and all cost so incurred by BA shall
          be a debt repayable by HP to BA on demand;

3.8       TO PERMIT ENTRY

          To permit the Landlord and all persons authorised by it at all times
          to enter the Property to use or operate any items of plant or
          equipment owned by BA in the Property, to inspect its condition to
          take a schedule of BA's fixtures or of any dilapidations to exercise
          any of the rights excepted and reserved out of this Lease or to carry
          out any works or to remedy any breach of HP's obligations under this
          Lease or to do anything necessary to prevent a forfeiture of the Head
          Lease and the Landlord shall when exercising such right of entry cause
          as little inconvenience as reasonably possible and shall make good
          without delay to the reasonable satisfaction of HP all damage
          occasioned to the Property by the exercise of such right of entry;

3.9       NOT TO PREJUDICE INSURANCE

          Not to bring into or keep in the Property any thing which is or may
          become dangerous nor to carry on any hazardous trade nor knowingly do
          anything which might cause the insurance of the Property to be
          vitiated or the premiums to be increased save that the use and storage
          upon the Property of anything which has to date been used or stored
          therein (or which has to date been used for the carrying on of any
          trade therein) or the use of the Property by HP for the Permitted Use
          shall not in any event be deemed to be a breach of this sub-clause; 

3.10      OVERLOADING

          Not to overload any part of the Property or its services;

3.11      UNDESIRABLE USES

          Not to use the Property for any noisy offensive dangerous illegal or
          immoral purpose nor to do on the Property any thing which in the
          reasonable opinion of the Landlord may be a nuisance or cause damage
          disturbance or inconvenience to or any owners or occupiers of any
          neighbouring premises save that the use of the Property by HP for the
          Permitted Use shall not in any event be deemed to be a breach of this
          sub-clause;

3.12      PERMITTED USE

          Not to use the Property otherwise than for the use current at the date
          hereof and in connection with the performance and provision of
          Services to BA (as that expression is defined in the Services
          Agreement (the "Permitted Use");

3.13      STATUTORY REQUIREMENTS

          Subject always to clause 6.5 hereof to comply with all statutes and
          subordinate legislation from time to time in force and the
          requirements of any competent authority relating to the Property and
          its use and to execute at its own expense any work required to be
          carried out (whether by owner or occupier) on the Property under such
          statutes or by such authority;

3.14      IRRECOVERABLE INSURANCE MONIES

          To pay to BA on demand the amount of any insurance monies in respect
          of the Property which cannot be recovered by reason of any act or
          default of HP or any person deriving title under HP or its or their
          servants agents licensees or invitees and which act or default arises
          otherwise than in the carrying on of the use of the Property for the
          Permitted Use;

3.15      PLANNING

          Not to apply for planning permission in respect of the Property;

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                                          4
<PAGE>

3.16      ALTERATIONS

          Not to make any other alterations or additions to the Property without
          the Landlord's prior written consent which shall not be unreasonably
          withheld or delayed;

3.17      SIGNS

          Not to exhibit on the Property any sign notice mast aerial or
          satellite dish visible from the outside of the Property without the
          prior consent of the Landlord (not to be unreasonably withheld) but no
          consent shall be required for unobjectionable and inoffensive trade
          signs within the Property;

3.18      ALIENATION

          Not to mortgage charge or grant any security interest over the
          Property nor to assign nor underlet the whole or any part of the
          Property nor to share or part with the possession or occupation of the
          whole or any part of the Property;

3.19      COSTS

          To pay to BA on demand as additional rent and as a debt all costs it
          incurs in connection with or in contemplation of:-

          3.19.1    the preparation and service of a notice or any proceedings
                    under Section 146 or 147 of the Law of Property Act 1925 or
                    under the Leasehold Property (Repairs) Act 1938 (even if
                    forfeiture is avoided);

          3.19.2    the preparation and service of a schedule of dilapidations
                    at any time during or within 2 months after the termination
                    of the Term;

          3.19.3    any applications for consent or approval whether or not
                    consent is properly refused or offered subject to a
                    proper condition or the application is withdrawn;

          3.19.4    the remedying of any breach of HP's obligations under
                    this Lease; 

3.20      APPLICATIONS FOR CONSENT

          On applying for any consent or approval HP shall disclose to the
          Landlord such information as the Landlord may reasonably require;

3.21      TO INFORM LANDLORD OF DAMAGE DEFECTS AND NOTICES

          Forthwith upon becoming aware of the same to give full details to BA
          of any damage to or any defect in the Property which may give rise to
          a duty on the Landlord and of any notice or thing which may adversely
          affect BA's interest in the Property;

3.22      TO INDEMNIFY LANDLORD

          Subject always to the provisions of clause 6.5, to indemnify BA
          against all actions proceedings costs claims and demands in respect of
          any breach by HP of its obligations under this Lease;

3.23      YIELDING UP

          Immediately before the end of the Term to remove all HP's fixtures and
          fittings (including the Fixed Assets as defined in the Sale of
          Business Agreement) and (unless the Landlord otherwise requires) all
          alterations or additions made to the Property during the Term and in
          each case to carry out any work of making good arising from the
          removal of the said fixtures fittings alterations or additions at the
          Property to BA's reasonable satisfaction and at the end of the Term
          (howsoever determined) to yield up to BA the Property in accordance
          with HP's obligations under this Lease;

3.24      TO OBSERVE COVENANTS

          3.24.1    Not to do anything which would cause BA to be in breach of
                    its obligations under the Head Lease (save that the use and
                    storage upon the Property of anything which has to 

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                                          5

<PAGE>

                    date been used or stored therein (or which has to date been
                    used for the carrying on of any trade therein) or the use of
                    the Property by HP for the Permitted Use shall not in any
                    event be deemed to be a breach of this sub clause);

          3.24.2    To comply with all reasonable regulations made by BA
                    regarding the Property and/or the Site and notified to HP
                    including without limitation security and safety regulations
                    and the recommendations and requirements of the insurers
                    relating to the use or occupation of the Property;

3.25      VACATION OF THE PROPERTY

          To the extent that HP has not vacated  the relevant Core Area by the
          Relevant Core Vacation Date in accordance with HP's covenants and
          obligations contained in this Lease it shall forthwith on each
          Relevant Core Vacation Date vacate and yield up such relevant Core
          Area in accordance with the said covenants and obligations.

  4       LANDLORD'S COVENANTS

          BA covenants with HP:-

4.1       QUIET ENJOYMENT

          To permit HP peaceably to hold and enjoy the Property without any
          lawful interruption by BA or any person lawfully claiming through
          under or in trust for it;

4.2       INSURANCE

          Unless such insurance shall be vitiated by any act or omission of HP
          or any person deriving title under HP or any of its or their servants
          agents licensees or invitees to procure compliance with the insurance
          and reinstatement provisions in the Head Lease;

4.3       HEAD LEASE

          4.3.1     To pay the rents reserved by and to perform and observe all
                    other covenants and conditions contained in the Head Lease
                    and to enforce compliance by the Superior Landlord with its
                    obligations under the Head Lease.

          4.3.2     To maintain the Property in no worse a state or condition
                    than exists at the date hereof save where such maintenance
                    or other works may be required as a result of the Tenant's
                    or its servants' or agents' default.

          4.3.3     Where the superior lease dated 1 April 1995 referred to
                    above imposes an obligation on BA to repair and maintain
                    Service Media and structural and exterior parts of the
                    Building BA shall repair and maintain the Service Media and
                    structural and exterior parts of the Building in accordance
                    with its repairing obligation in such superior lease
                    excluding damage by any Insured Risk and damage or disrepair
                    due to the default of HP or any person deriving title under
                    HP or its or their respective servants agents licensees or
                    invitees.

4.4       MAINTENANCE OF LIGHTING SYSTEM

          To keep the Property lighted (including the repair and maintenance of
          the lighting system) in the same manner as has been provided up to the
          date hereof.

4.5       PAYMENT OF RATES AND OTHER OUTGOINGS

          To pay general rates and sewerage rates and all other rates and
          outgoings of any kind payable in respect of the Property (whether
          alone or in conjunction with other property) during the Term
          including, without prejudice to the generality of the foregoing, the
          cost of supply of electricity, water, gas, telephone and all other
          utilities to the Property, including meter rents.

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                                          6

<PAGE>

  5       FORFEITURE

          IF:-

5.1       the rents or any other sum due under this Lease shall be in arrear for
          twenty-one days (whether formally demanded or not); or

5.2       HP commits a material breach of its obligations under this Lease which
          is not remedied within 30 days of written notice from BA; or

5.3       distress or other execution shall be levied on the Property or its
          contents; or

5.4       a Bankruptcy Order or an Administration Order is made in respect of
          HP; or

5.5       a resolution is passed or an Order is made to wind up HP (except for
          the purposes of a solvent amalgamation or reconstruction); or

5.6       a receiver or administrative receiver is appointed over the whole or
          any part of the property assets or undertaking of HP; or

5.7       HP is struck off the Register of Companies or is dissolved or
          otherwise ceases to exist under the laws of the country or state of
          its incorporation;

          then the Landlord may determine this Lease by re-entering the Property
          but without prejudice to its other remedies for any antecedent breach
          of any of obligation.

  6       OTHER MATTERS

6.1       NO IMPLIED EASEMENTS

          Nothing in this Lease shall confer upon HP any easement right or
          privilege whatsoever over or against any land adjoining or
          neighbouring the Property which may now or subsequently belong to BA
          nor impose any restriction on the use of any land not comprised in
          this Lease save as expressly hereby granted or imposed.

6.2       NO COMPENSATION

          The right of HP to compensation on quitting the Property is excluded
          to the extent permitted by law.

6.3       CESSER OF RENT

          If the Property shall be damaged or destroyed by any of the Insured
          Risks so as to be unfit for occupation and use then (save to the
          extent that the insurance money shall be irrecoverable by reason
          solely or in part of any act or default of HP or any of its servants
          agents licensees or invitees) all the rents hereby reserved or a fair
          proportion according to the nature and extent of the damage shall be
          suspended until the Property shall again be fit for occupation and
          use.

6.4       EXCLUSION OF STATUTORY SECURITY

          Pursuant to an Order of the Mayor's & City of London Court made on 
          28th January 1998 it is agreed that Sections 24 to 28 of the 
          Landlord and Tenant Act 1954 (as amended) shall not apply to 
          this tenancy.

6.5       CONFLICT WITH SERVICES AGREEMENT

          If there is any conflict between the provisions of this Lease and
          Clause 6 of the Services Agreement the provisions in the Services
          Agreement shall prevail.

6.6       SECURITY OF PROPERTY

          Subject to obtaining BA's prior written approval in accordance with
          Clause 3.16 hereof, if so required by HP, HP may take such steps as it
          reasonably considers necessary (including the 

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                                          7

<PAGE>

          installation of doors and the like) in order to properly secure the
          Property provided that if any such alterations shall (in the absolute
          opinion of BA) adversely affect BA's or any other occupiers' continued
          use and enjoyment of the Building or the rights reserved in Schedule 3
          of this Lease the withholding of consent to such alterations shall be
          deemed not to be unreasonable.

  7       BREAK CLAUSE

7.1       If either BA or HP serve notice on the other pursuant to Clause 21.1,
          21.2 or 21.3 of the Services Agreement terminating the Services
          Agreement to such an extent that the Property or part of the Property
          is no longer required for the Permitted Use this Lease shall cease and
          determine but without prejudice to any claim by either party against
          the other in respect of any antecedent breach of any covenant or
          condition herein contained provided that if BA serves notice requiring
          HP to comply with the obligations contained in Clause 22.4.1 of the
          Services Agreement this Lease shall not cease and determine pursuant
          to this clause until BA serves notice pursuant to Clause 22.4.1(i) or
          22.4.1(ii) of the Services Agreement or until the expiration of the
          eighteen month period referred to in Clause 22.4.1 (iii) of the
          Services Agreement.

          7.2.1     Subject to 7.2.2 if HP shall desire to determine the Term at
                    any time on or after  1 June 1998 and shall give to BA not
                    less than  8 weeks previous notice in writing of such its
                    desire and provided HP has given vacant possession of all
                    the Property then at the expiry of such notice this Lease
                    and everything herein contained shall cease and determine
                    but without prejudice to any claim by either party against
                    the other in respect of any antecedent breach of any
                    covenant or condition herein contained; 

          7.2.2     If HP desires to determine the Term prior to 1 July 1999 and
                    serves notice pursuant to 7.2.1 to this effect such notice
                    shall only be valid if on or before the expiry of such
                    notice HP has paid to BA as additional rent an amount equal
                    to the aggregate Rent for the period from the Rent
                    Commencement Date to and including 30 June 1999 less any
                    actual rent paid pursuant to the terms of this Lease;

          7.3.1     Subject to BA's prior written consent  (which shall not be
                    unreasonably withheld provided that failure to give consent
                    to any Surrender Notice which is due to expire prior to 1
                    July 1999 and which relates to the entirety of the Property
                    then remaining the subject of this demise shall not in any
                    event be deemed not to be reasonable and provided further
                    that such consent shall not be required if the Surrender
                    Notice expires on or after 1 July 1999 and relates to the
                    entirety of the Property then remaining the subject of this
                    demise) HP may at any time during the Term give to BA not
                    less than  8 weeks written notice (each a "Surrender
                    Notice") (or such shorter period as BA may agree in writing)
                    of its desire to vacate all or any part of the Property
                    ("Surplus Property") and provided HP gives vacant possession
                    of all the Surplus Property the subject of the Surrender
                    Notice then at the expiry of the Surrender Notice this Lease
                    shall be deemed to have been surrendered in part in so far
                    as it relates to the Surplus Property and BA and HP's
                    obligations under this Lease shall cease and determine in so
                    far as they relate to the part surrendered but without
                    prejudice to any claim by either party against the other in
                    respect of any antecedent breach of any covenant or
                    condition herein contained. 

          7.3.2          

                         (I)       Notwithstanding the service of one or more
                                   Surrender Notices this Lease shall continue
                                   in full force and effect in relation to the
                                   Property excluding any surrendered Surplus
                                   Property ("Residue Property");

                         (II)      If a partial surrender pursuant to Clause
                                   7.3.1 takes place  then from the later of (a)
                                   the date of such partial surrender or (b) 1
                                   July 1999 the Rent 


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                                          8

<PAGE>

                                   shall forthwith be varied to the Revised Rent
                                   which shall be payable from  such later date.
                                   BA and HP shall use reasonable endeavours
                                   to agree the Revised Rent;

                         (III)     For the avoidance of doubt, HP may serve one
                                   or more Surrender Notices at the same or at
                                   different times during the Term.

7.4       Unless notified in writing by BA that BA does not wish this clause 7.4
          and clause 3.25 hereof to apply (but without prejudice to HP's right
          to serve one or more surrender notices in respect of all or any part
          or parts of each of the Core Areas at any time  whether before or
          after the Relevant Core Vacation Date pursuant to Clause 7.3 hereof):

          7.4.1     HP shall surrender and yield up to BA the relevant part of
                    the Core Areas on or before the Relevant Core Vacation Date
                    and on such date this Lease shall be deemed to have been
                    surrendered in part in so far as it relates to the relevant
                    part of the Core Areas; 

          7.4.2     provided HP gives vacant possession of the relevant part of
                    the Core Areas on or before the Relevant Core Vacation Date
                    a Revised Rent shall apply to the Property that has not been
                    surrendered on or before the Relevant Core Vacation Date
                    (such Property being the "Residue Property" for the purposes
                    of the calculation of the Revised Rent applicable pursuant
                    to this Clause). BA and HP shall use reasonable endeavours
                    to agree the Revised Rent which shall be payable from  1
                    July 1999; and 

          7.4.3     BA and HP's obligations under this Lease shall cease and
                    determine in so far as they relate to the part surrendered
                    but without prejudice to any claim by either party against
                    the other in respect of any antecedent breach of any
                    covenant or condition herein contained. 

8         GOVERNING LAW AND SUBMISSION TO JURISDICTION

          This Lease shall be governed by and construed in accordance with
          English law and the parties irrevocably agree that the courts of
          England are to have non-exclusive jurisdiction to settle any disputes
          which may arise out of or in connection with this Lease and such
          documents.

  9       NOTICES

9.1       Any notices or other communication requiring to be given or served
          under or in connection with this Lease shall be in writing and shall
          be sufficiently given or served if delivered or sent:

                    In the case of the Landlord to:

                    Speedbird House
                    PO Box 10
                    Heathrow Airport (London)
                    Hounslow
                    Middlesex TW6 2JA


                    Fax: 0181 562 3323


                    Attention: The Company Secretary and the General
                    Manager, Aircraft Maintenance Purchasing

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                                          9

<PAGE>

                    In the case of HP:

                    Number One
                    London Road
                    Southampton SO15 2AE

                    Fax: 01703 631835

                    Attention: The Company Secretary

                    In the case of the Guarantor to:

                    Hawker Pacific Aerospace
                    11240 Sherman Way
                    Sun Valley
                    CA 91352 USA

                    Fax: 001 818 765 2416

                    Attention: The Company Secretary

9.2       Any such notice or other communication shall be delivered by hand or
          sent by courier, fax or prepaid first class post. If sent by post such
          notice or communication shall conclusively be deemed to have been
          received two Business Days from the time of posting (whereby "Business
          Day" shall mean any day on which banks are open for business in
          England excluding Saturdays and Sundays and public holidays). If sent
          by courier or fax and the notice is received after 4.00 pm. on any day
          then the date of service shall be deemed to be the following working
          day thereafter.

9.3       The Guarantor hereby appoints Paris Smith & Randall of Number One
          London Road Southampton SO15 2AE or such other firm of solicitors in
          England as may be notified in writing to BA as its agents to accept
          service of all proceedings on its behalf and BA may serve any
          proceedings on the Guarantor either by sending them by first class
          post to the above named agents.

 10       PARENT COMPANY GUARANTEE

10.1      In part consideration of BA entering into this Lease at the request of
          the Guarantor and in consideration of the sum of L1 (receipt of which
          is hereby acknowledged) the Guarantor hereby unconditionally and
          irrevocably guarantees the full, prompt and complete performance and
          observance by HP of all its obligations, commitments, undertakings,
          warranties and indemnities under or pursuant to this Lease and any
          document entered into pursuant to the terms of this Lease (the
          "GUARANTEED OBLIGATIONS") which are stated to be binding on HP
          including, without limitation, the due and punctual payment of all
          sums now or subsequently payable by HP hereunder when the same shall
          become due and the Guarantor undertakes with BA to indemnify BA
          against all losses which BA may suffer through or arising from any
          breach by HP. If and whenever HP defaults for any reason whatsoever in
          the performance of any of the Guaranteed Obligations the Guarantor
          shall forthwith upon demand unconditionally perform (or procure
          performance of) and satisfy (or procure the satisfaction of) the
          Guaranteed Obligations in regard to which such default has been made
          in the manner prescribed by this Agreement and so that the same
          benefits shall be conferred on BA as it would have received if the
          Guaranteed Obligations had been duly performed and satisfied by HP.

10.2      The guarantee contained in Clause 10.1 is a continuing guarantee and
          shall remain in force until all the Guaranteed Obligations have been
          fully performed and all sums payable by HP have been fully paid. This
          guarantee is in addition to and without prejudice to and not in
          substitution for any 

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<PAGE>

          rights or security which BA may now or hereafter have or hold for the
          performance and observance of the Guaranteed Obligations.

10.3      The obligations of the Guarantor shall not be affected by any act,
          omission, matter or thing which, but for this provision, might operate
          to release or otherwise exonerate the Guarantor from his obligations
          or affect such obligations, including without limitation and whether
          or not known to the Guarantor:

          10.3.1    any time, indulgence, neglect, delay, waiver or consent at
                    any time given to HP or any other person;

          10.3.2    any compromise or release of or absentation from perfecting
                    or enforcing any right or remedies against HP or any other
                    person;

          10.3.3    any legal limitation, liability, disability, incapacity or
                    other circumstances relating to HP or any other person or
                    any amendment to or variation of the terms of the Guaranteed
                    Obligations;

          10.3.4    any irregularity, unenforceability or invalidity of any
                    obligations of HP under this Agreement, or the dissolution,
                    amalgamation, reconstruction or insolvency of HP;

          10.3.5    the surrender of part of the Property

          and shall nevertheless be enforceable against and recoverable from the
          Guarantor as though the same had been incurred by the Guarantor and
          the Guarantor were the sole or principal obligor in respect thereof.

11        It is hereby acknowledged that the Rent payable from time to time
          pursuant to Clause 3.1 includes [*] per day as payment to BA towards
          expenses it shall incur in complying with its obligations as to
          maintenance contained in Clause 4.

          IN WITNESS whereof this document has been executed as a Deed the day
          and year first before written.

                                     SCHEDULE 1 
                             DESCRIPTION OF THE PROPERTY

          Offices storage and workshops within Technical Block "A" Heathrow
          Airport London shown coloured pink, pink hatched black, pink hatched
          green and pink cross-hatched black on Plan 1 and Plan 2.

                                     SCHEDULE 2 
                  EASEMENTS AND OTHER RIGHTS INCLUDED IN THIS LEASE

  1       The rights in common with the Landlord and all others authorised by
          the Landlord:

          (a)  of way on foot and, as appropriate, with or without vehicles and
               equipment over and along and otherwise to use the Common Parts
               for all purposes reasonably connected with the use and occupation
               of the Property subject always to the right of the Landlord to
               vary such areas made available provided suitable alternative
               areas are made available;

          (b)  of free passage and running of water soil gas and electricity and
               other services through the Service Media serving the Property.

  2       Insofar as BA is able to grant such a right, the right in common with
          BA, others authorised by BA, the Superior Landlord, the Airport
          Operator and all others from time to time having similar rights:

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2.1       of passage (for the purpose of access and egress only and not so as to
          confer any right to carry on any trade of business within any part of
          the Airport other than the Property or to supply any goods or services
          to aircraft at the Airport other than those parked within the premises
          demised to BA by the superior lease dated 1 April 1995) with or
          without vehicles and equipment, as appropriate, over through and along
          the roads access ways or tunnels (if any) giving direct access to the
          Property from the public highway provided that:

          2.1.1     HP shall comply and shall use its best endeavours to ensure
                    that anyone within its control shall comply with such
                    reasonable directions as may from time to time properly be
                    given by BA, the Superior Landlord or the Airport Operator
                    for the regulation and direction of traffic using the
                    Airport with a view to securing and facilitating their use
                    by all persons entitled to rights over them.

          2.1.2     BA, the Superior Landlord or the Airport Operator may on
                    reasonable prior written notice to HP (except in the case of
                    emergency) close the said roads or access ways as often as
                    may be necessary and whether temporarily or permanently for
                    the purpose of carrying out any works to the Airport or for
                    the purpose of obtaining access to any services in the
                    Airport, or for any other proper purpose in connection with
                    the operation management refurbishment or redevelopment of
                    the Airport subject to there always being available to HP
                    reasonable alternative roads or access ways or other means
                    of access.

  3       The right of support for the Property from the remainder of the
          Building.

  4       The right in common with BA and all others authorised by BA to use
          parking spaces in such car parks as shall be designated by BA
          ("designated car parks") on a first come first served basis provided
          that:

4.1       the number of car parking spaces used under this right does not exceed
          the number used by BA employees whose place of work was at the
          Property immediately before the grant of the Lease;

4.2       BA may alter modify or change the designated car parks at any time;
          and

4.3       all persons who exercise this right shall comply at all times with any
          proper regulations which may govern the use of the designated car
          parks from time to time.

  5       The right to park vehicles in the two parking spaces immediately
          outside the Property in the approximate positions marked X on Plan  1
          provided that in the exercise of such right HP shall not at any time
          cause any obstruction or material inconvenience to BA or any other
          occupiers of the Building.

  6       The right to share occupation of the areas cross hatched white and
          pink on Plan  1 (the "Common Area") with BA and others authorised by
          BA subject at all times to HP complying with its covenants and
          obligations contained herein as if the Common Area comprised part of
          the Property.

                                      SCHEDULE 3
                    EXCEPTIONS AND RESERVATIONS OUT OF THIS LEASE

          To the Landlord and all others authorised by the Landlord or similarly
          entitled:

  1       the right to carry out or consent to the carrying out by any person of
          any erection of a new building or the rebuilding demolition or
          alteration of the Building other than the Property;

  2       the right at all times to enter and remain upon the Property with or
          without workmen with all necessary appliances and materials (making
          good all damage occasioned thereby to the Property 

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          to the reasonable satisfaction of HP and causing as little
          inconvenience as reasonably possible) for all purposes in connection
          with the carrying out of any works providing any services or
          fulfilling the Landlord's obligations under this Lease and to share
          occupation to enable the Landlord to use or operate any items of plant
          or equipment owned by the Landlord situated from time to time in the
          Property and causing as little inconvenience as reasonably possible;

  3       the right of free passage and running of water soil gas and
          electricity through the Service Media within the Property.


          THE COMMON SEAL OF                  }                          [SEAL]
          BRITISH AIRWAYS PLC was             }
          hereunto affixed in the presence of:}

          /s/  [ILLEGIBLE]
          ----------------
          ASSISTANT
          SECRETARY


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