Document:

Conformed Copy

                                                               February 27, 2001

TO THE PERSONS LISTED ON SCHEDULE A ATTACHED HERETO

                         ASSUMPTION AND LEASE AGREEMENT

Ladies and Gentlemen:

         American Airlines, Inc., a Delaware corporation ("AMERICAN"), and Trans
World Airlines, Inc., a Delaware corporation (together with any predecessors or
affiliates, "TWA") have entered into an Asset Purchase Agreement (as amended
from time to time, the "ASSET PURCHASE AGREEMENT"), dated as of January 9, 2001
pursuant to which American has agreed with TWA, subject to certain terms and
conditions, to enter into a leasing transaction at the Commencement Time (as
defined below) with respect to the aircraft (the "AIRCRAFT") specified in
Schedule A attached hereto. All capitalized terms used but not defined herein
shall have the respective meanings given them in Appendix A hereto or, if not
defined herein, in the Schedule of Terms attached hereto as Appendix B. This
Assumption and Lease Agreement, together with all annexes, schedules and other
attachments hereto, is referred to collectively as this "AGREEMENT".

         American and the other parties hereto (such other parties, the "LESSOR
PARTIES") hereby agree as follows:

SECTION 1.  TRANSACTION.

         (a) Subject to the conditions precedent set forth in Section 5, the
person listed on Schedule A hereto as lessor (the "LESSOR") hereby agrees to
lease to American or to a Certificated Air Carrier that is a Citizen of the
United States and is a wholly-owned subsidiary of American to which American
shall assign its rights under this Agreement as provided and subject to the
terms herein, and American hereby agrees to lease, or to cause one of its
wholly-owned subsidiaries to lease, from the Lessor, the Aircraft (such leasing
transaction, the "TRANSACTION"), such Transaction to take effect at the
Commencement Time, PROVIDED that (A) American will have no responsibility or
liability for any act or omission of TWA at any time or for any act, claim,
event, circumstance or condition existing, accruing, arising or occurring at any
time at or prior to the Commencement Time (any of the foregoing, a "PRIOR
CLAIM"); (B) American does not assume or agree to pay, satisfy, discharge or
perform, and will not be deemed for any reason whatsoever to have assumed, or
agreed to pay, satisfy, discharge or perform, any liability, obligation or
indebtedness of TWA with respect to the Aircraft, Airframe or Engines, or
otherwise, whether primary or secondary, direct or indirect, including without
limitation any and all liabilities and obligations of TWA resulting from, caused
by or arising out of, directly or indirectly, any act or omission of TWA, the
conduct of its

                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

<PAGE>

business or ownership or lease of any of its properties or assets (including the
Aircraft) or any properties or assets used by TWA at any time, including without
limitation such of the foregoing as constitute, may constitute or are alleged to
constitute a tort, breach of contract or violation of requirements of any law;
(C) American will not be responsible for any rental or other payments arising or
accruing at any time at or prior to, or in respect of any period at or prior to,
the Commencement Time, even if the payment date therefor under the TWA Lease
Documents would have occurred after the Commencement Time; and (D) American
shall have no liability for any Prior Claim that results or arises from the
execution or performance of this Agreement, the Assignment, Assumption and
Amendment Agreement (as defined below) or any Substitute Transaction Document
(as defined below). American or any wholly-owned subsidiary of American to which
American shall assign its rights hereunder as provided herein is referred to
herein as the "LESSEE".

         (b) The Transaction shall have the terms specified by this Agreement
(the "TRANSACTION TERMS"), including without limitation the terms provided in
Appendix B.

         (c) In connection with the Transaction, the Lessor Parties hereby agree
to the amendment and restatement and, to the extent necessary, termination,
effective immediately prior to the Commencement Time (subject to the occurrence
of the Commencement Time), of each TWA Lease Document, such that the terms and
conditions of the TWA Lease Documents are replaced, deleted and superseded in
their entirety by this Agreement; PROVIDED, HOWEVER that the TWA Trust
Agreement, if any, and the TWA Purchase Agreement Assignment, if any, listed in
Schedule B shall not be so amended and restated or terminated, but shall only be
amended to the extent necessary to make their respective terms consistent with
the Transaction Terms.

         (d) Following the execution of this Agreement, the parties may conduct
good faith negotiations of more extensive leasing documents incorporating all of
the Transaction Terms (such leasing documents, the "SUBSTITUTE TRANSACTION
DOCUMENTS"). Any party wishing to negotiate Substitute Transaction Documents
shall notify the other parties of such fact within 15 days after such execution,
after which American shall prepare drafts of such documents for review by the
Lessor Parties. Negotiations of the Substitute Transaction Documents shall
proceed after such review is completed, it being agreed that the terms of such
documents, to the extent not set forth in this Agreement, shall be reasonably
satisfactory to the Lessor and be based on and similar to, American's standard
terms in other aircraft financing transactions or, to the extent not used in
such transactions, terms customary in leasing transactions with respect to
aircraft of the same make and model as the Aircraft and for an airline of
American's credit and standing, with, such terms in each case being determined
by American in good faith. This Agreement shall be in full force and effect
notwithstanding that Substitute Transaction Documents have not been entered into
or are being negotiated.

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                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

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         (e) American makes no representation or warranty and gives no assurance
as to the obligations of TWA or as to the rights of any person with respect to
the obligations of TWA. Each Lessor Party agrees, and will agree with TWA in the
Assignment, Assumption and Amendment Agreement, that, effective at (and subject
to the occurrence of) the Commencement Time, such Lessor Party waives any right
and relinquishes any claim it may have against TWA or against any collateral
securing any such claim with respect to any difference between its rights,
including the amounts to be received, hereunder and its rights, including the
amounts that would be received, under the TWA Lease Documents prior to their
amendment or that arises out of the amendment effected hereby. It is understood
that the Lessor Parties do not, under this Agreement, waive (i) the right they
may have to receive payment from TWA of amounts owed by TWA under the TWA Lease
Documents at any time prior to the Commencement Time or (ii) any rights or
remedies they may have against TWA with respect to events or circumstances
arising or occurring before the Commencement Time (including rights or remedies
arising under Section 1110 of the Bankruptcy Code (11 U.S.C. ss. 1110) or with
respect to Retained Liabilities (as defined in the Asset Purchase Agreement)).
Each Lessor Party acknowledges that it has no right or claim against American or
any of its affiliates with respect to any of the foregoing.

SECTION 2.  WARRANTIES.

         Subject to the conditions specified in Section 5, the Lessor agrees
that, following the Commencement Time, so long as no Event of Default shall have
occurred and be continuing, without recourse or warranty as against the Lessor
(if the Lessor is an Owner Trustee), American shall have the benefit of and
shall be entitled to enforce, either in its own name or in the name of the
Lessor for the use and benefit of the Lessee, any and all of the Lessor's rights
in, to and under dealer's, manufacturer's, installer's, contractor's or
subcontractor's warranties (whether express or implied) in respect of the
Aircraft, Airframe, any Engine or any Part thereof, and Lessor agrees to execute
and deliver such further documents and take such further action, as may be
reasonably requested by the Lessee and at the Lessee's expense, as may be
necessary to enable the Lessee to obtain such warranty service as may be
furnished for the Aircraft, Airframe, any Engine or any Part thereof by such
dealer, manufacturer, contractor, installer, contractor or subcontractor and as
to which the Lessor has any rights. The Lessor hereby appoints and constitutes
the Lessee, except at such times as an Event of Default shall have occurred and
be continuing, its agent and attorney-in-fact to assert and enforce, from time
to time, in the name and for the account of the Lessor and the Lessee, as their
interests may appear, but in all cases at the sole cost and expense of the
Lessee, whatever claims and rights the Lessor may have against any dealer,
manufacturer, installer, contractor or subcontractor of the Aircraft, Airframe,
any Engine or any Part thereof.

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                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

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SECTION 3.  WAIVER AND INSTRUCTION.

         (a) Except to the extent duly waived by the Lessor Parties (which
waiver is evidenced by this Agreement) the Lessor Parties confirm that this
Agreement, as of the Commencement Time, complies with all of the requirements in
the TWA Lease Documents necessary to consummate the Transaction and to have this
Agreement be effective.

         (b) If Schedule A lists an owner participant (the "OWNER PARTICIPANT"),
the Owner Participant hereby authorizes and directs the Lessor to execute and
deliver this Agreement.

SECTION 4.  CLOSING.

         The Transaction shall begin at the Commencement Time on the date of the
closing under the Asset Purchase Agreement (the "CLOSING DATE"), subject only to
the satisfaction or waiver of the conditions set forth in Section 5 hereof. On
or prior to the Closing Date, (A) American shall sign and each Lessor Party
shall countersign an assignment, assumption and amendment agreement between TWA
and American, substantially in the form of Appendix C hereto (the "ASSIGNMENT,
ASSUMPTION AND AMENDMENT AGREEMENT"), (B) if American shall elect to cause one
of its wholly-owned subsidiaries to lease the Aircraft from Lessor pursuant
hereto, (I) American and the Lessee shall execute and deliver an assignment and
assumption agreement, substantially in the form of Appendix D hereto (the
"LESSEE ASSIGNMENT AND ASSUMPTION AGREEMENT"), and (II) American shall execute
and deliver to Lessor and the Owner Participant, if any, a guaranty,
substantially in the form of Appendix E hereto (the "AMERICAN GUARANTY"), and
(C) the parties will execute and deliver such additional documents as may be
necessary or appropriate to be filed for recordation with the FAA to consummate
the Transaction.

SECTION 5.  CONDITIONS TO OBLIGATIONS OF PARTIES.

         (a) The obligations of each party hereto to consummate the Transaction,
and the occurrence of the Commencement Time, shall be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:

                  (i) the United States bankruptcy court having jurisdiction
         over the TWA bankruptcy proceedings (the "BANKRUPTCY COURT") shall have
         entered the Approval Order or such other order, in form and substance
         reasonably satisfactory to American, as shall approve the assumption of
         the TWA Lease Documents by TWA and the assignment to American of the
         TWA Lease Documents as amended and restated and/or terminated as
         provided herein;

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                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

<PAGE>

                  (ii) the closing of the purchase by the Lessee of TWA's right,
         title and interest in and to substantially all of the assets of TWA as
         contemplated by the Asset Purchase Agreement shall have occurred; and

                  (iii) delivery of the Aircraft by TWA to the Lessee pursuant
         to the Asset Purchase Agreement.

         (b) In addition to the conditions precedent in clause (a) above, unless
American is the Lessee (in the case of clauses (b)(i) and (b)(ii)), the
obligation of the Lessor under this Agreement to consummate the Transaction, and
the occurrence of the Commencement Time, shall be subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:

                  (i)  American and the Lessee shall have executed and delivered
         the Lessee Assignment and Assumption Agreement;

                  (ii) American shall have executed and delivered to the Lessor
         and the Owner Participant, if any, the American Guaranty; and

                  (iii) TWA shall have made payment of the amount, as determined
         by the Bankruptcy Court, required to satisfy the conditions to the
         assumption of the lease under Section 365(b) of the Bankruptcy Code (11
         U.S.C. ss. 365(b)); and

                  (iv) the receipt by the Lessor, on or prior to the Closing
         Date, of the Assignment, Assumption and Amendment Agreement, duly
         executed by TWA and American and of all the requisite consents of each
         Person (other than any Lessor Party) required to consummate the
         Transaction.

         (c) In addition to the conditions precedent in clause (a) above, the
obligation of the Lessee under this Agreement to consummate the Transaction, and
the occurrence of the Commencement Time, shall be subject to the receipt by
American, on or prior to the Closing Date, of the Assignment, Assumption and
Amendment Agreement, duly executed by TWA and the Lessor Parties, and of
evidence (reasonably satisfactory to American) of receipt of all the requisite
consents of each Person (other than any Lessor Party) required to consummate the
Transaction.

SECTION 6.  LETTERS OF CREDIT, DEPOSITS, ETC.

         Subject to the fulfillment of the condition specified in Section
5(b)(iii):

                  (a)  at the Commencement Time, any security or other deposit,
         maintenance or similar reserve, or letter of credit (including any
         reimbursement or collateral agreements) to which TWA is a party
         relating to the Aircraft or the TWA Lease Documents shall terminate;

                                        5

                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

<PAGE>

                  (b)  each Lessor Party shall surrender for cancellation any
         outstanding letter of credit held by it; and

                  (c)  each Lessor Party shall, at the Commencement Time, pay
         over to American (1) any deposit, reserve or cash or other collateral
         held or reserved by it and (2) any "basic rent" payable in advance and
         received by it allocable to any period after the Commencement Time (or,
         in either case, make the economic benefits thereof available to
         American in a manner reasonably satisfactory to American).

SECTION 7.  REPRESENTATIONS AND WARRANTIES.

         Each party makes, on the date of this Agreement, to each other party
hereto the representations and warranties of such party contained in Appendix F
hereto, and agrees that such party's participation in the Closing shall
constitute, without further act, a confirmation that the representations and
warranties made by it were true and complete when made and are true and complete
on and as of the Commencement Time as though made on and as of such Commencement
Time. The sole remedy in case of a breach of any representation or warranty by
any party shall be, subject to the limitations on indemnification set forth in
Appendix B hereto, monetary damages (exclusive of consequential, indirect,
speculative or punitive damages), and no party hereto shall be entitled to
refuse to consummate the Closing Transactions as result of any such breach.

SECTION 8.  NOTICES.

         Unless otherwise expressly specified or permitted by the terms hereof,
all notices required or permitted under the terms and provisions hereof shall be
in English and in writing, and any such notice may be given by U.S. mail,
courier service, or facsimile or any other customary means of communication, and
any such notice shall be effective when delivered to the recipient thereof in
accordance with the provisions of this Section, (i) if to American, to its
address (including facsimile number) set forth below its signature at the foot
of this Agreement, or (ii) if to any other party hereto, to its respective
address set forth on Schedule A to this Agreement.

SECTION 9.  CONFIDENTIAL INFORMATION.

         The term "CONFIDENTIAL INFORMATION" means: (a) the terms of this
Agreement and any Substitute Transaction Document (or the status of the
negotiations regarding any such Substitute Transaction Document); (b) the
existence and terms of any lease of the Airframe or Engines pursuant to this
Agreement or any Substitute Transaction Document; (c) all information obtained
in connection with any inspection conducted by the Lessor or Owner Participant,
if any, pursuant to this Agreement or any Substitute Transaction Document; and
(d) any report, certification or information furnished to the

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                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

<PAGE>

Lessor and Owner Participant, if any, pursuant to this Agreement or any
Substitute Transaction Document.

         All Confidential Information shall be held confidential by (w) American
and the Lessor, (x) if the Lessor is an owner trustee, by such Lessor in its
individual capacity (the "BANK"), (y) Owner Participant, if any, and (z) each
affiliate of any thereof and shall not be furnished or disclosed by any of them
to anyone other than (i) American, the Lessor, the Bank, if any, and the Owner
Participant, if any, and their respective affiliates, (ii) their respective bank
examiners, auditors, accountants, lawyers and agents, (iii) any person whose
consent is necessary in order for the Lessor to consummate the Transaction
(other than TWA, whose consent, to the extent required, shall be pursuant to
other documents) and (iv) after the Commencement Time, any person with whom the
Lessor or Owner Participant, if any, is in good faith conducting negotiations
relating to the possible transfer, sale, assignment or other disposition of
rights and interest in this Agreement or any Substitute Transaction Document,
if, in the case of any disclosure to any person other than American, such person
shall have entered into an agreement for the express benefit of American to hold
such Confidential Information confidential in accordance with the provisions of
this Section, and except as may be required by an order of any court or
administrative agency or by any statute, rule, regulation or order of any
governmental authority ("COURT ORDER"); PROVIDED that if any of them is required
by such a Court Order to disclose any Confidential Information, it will promptly
notify American prior to such disclosure to enable American to seek a protective
order or to take other action that American in its reasonable discretion deems
appropriate, and such party will cooperate with American in its efforts to
obtain a protective order or other reasonable assurance that confidential
treatment will be accorded the Confidential Information and PROVIDED, further,
that American (or a Lessor Party that has reporting obligations under the U.S.
securities laws) may make such public disclosures as it determines appropriate
to comply with the U.S. securities laws; and PROVIDED, FURTHER, that American
and each Lessor Party may make such disclosure as it determines appropriate in
connection with the TWA bankruptcy proceeding.

SECTION 10.  SEPARATE COUNTERPARTS.

         This Agreement may be executed in any number of counterparts (and each
of the parties hereto shall not be required to execute the same counterpart).
Any counterpart may be executed by facsimile signature and such facsimile
signature shall be deemed an original. Each counterpart of this Agreement
including a signature page executed by each of the parties hereto shall be an
original counterpart of this Agreement, but all of such counterparts together
shall constitute one instrument.

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                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

<PAGE>

SECTION 11.  ENTIRE AGREEMENT.

         This Agreement, including all the schedules, exhibits and annexes
hereto, the Assignment, Assumption and Amendment Agreement (when executed and
delivered) and the Substitute Transaction Documents (when executed and
delivered) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.

SECTION 12.  SURVIVAL

         The representations and warranties made by each party hereto pursuant
to Section 7 and the obligations of each party under Section 9 shall survive the
Closing, the delivery of the Aircraft, the termination of this Agreement or any
Substitute Transaction Document and any investigation made at any time by any
party hereto.

SECTION 13.  HEADINGS.

         The headings of the various sections herein are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.

SECTION 14.  BINDING EFFECT.

         This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns.

SECTION 15.  AMENDMENTS.

         (a) The provisions of this Agreement may be modified or amended only by
an instrument or instruments in writing signed by each party hereto.

         (b) Except as otherwise provided in this Agreement, each Lessor Party
further agrees it will not change, modify, amend or waive, or consent to any
such change, modification, amendment or waiver of any term or provision of the
TWA Trust Agreement, if any, the TWA Purchase Agreement Assignment, if any, or
any TWA Lease Document to which American is not a party in a way that affects
adversely the rights of American, without the prior written consent of American,
which consent shall not be unreasonably withheld.

SECTION 16.   GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL;
              MISCELLANEOUS.

         (a)  THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND
SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, BE GOVERNED BY,

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                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

<PAGE>

AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.

         (b) Each of the parties hereto, to the extent it may do so under
applicable law, for purposes hereof and of all Substitute Transaction Documents,
if any, hereby (I) irrevocably submits itself to the non-exclusive jurisdiction
of the courts of the State of New York sitting in the City of New York and to
the non-exclusive jurisdiction of the U.S. District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement, the subject matter hereof or any of the
transactions contemplated hereby brought by any party or parties thereto, or
their successors or permitted assigns and (II) waives, and agrees not to assert,
by way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, that the suit, action or proceeding is brought in an inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof or any of the transactions contemplated
hereby may not be enforced in or by such courts.

         (c) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, the right to trial by jury in
any legal or equitable action, suit or proceeding arising out of or relating to
this Agreement, the Assignment, Assumption and Amendment Agreement, the Lessee
Assignment and Assumption Agreement, if applicable, the American Guaranty, if
applicable, any Substitute Transaction Documents or any transaction contemplated
hereby or thereby or the subject matter of any of the foregoing.

         (d) Upon request from Lessor, Lessee shall provide Lessor on the
Closing Date with evidence of the authority of the person or persons executing
this Assumption and Lease Agreement, the Lessee Assignment and Assumption
Agreement and the American Guaranty on behalf of Lessee and American (if
American is not the Lessee).

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                    ASSUMPTION AND LEASE AGREEMENT (AIRLEASE)

<PAGE>

The  parties  hereto have signed  this  Agreement  as of the date first  written
above.

                            Sincerely yours,

                            AMERICAN AIRLINES, INC.

                            By:   /s/ LESLIE M. BENNERS
                               -------------------------------------
                               Name:   Leslie M. Benners
                               Title:  Managing Director
                                       Corporate Finance and Banking

                            Address:   4333 Amon Carter Boulevard
                                       MD 5662
                                       Forth Worth, Texas 76155
                                       Attn:  Treasurer
                                       Fax:  (817) 967-4318
                                       Tel.:  (817) 963-1234

<PAGE>

ACKNOWLEDGED AND AGREED

LESSOR/OWNER TRUSTEE

FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity except as otherwise stated herein,
BUT solely as Owner Trustee

By: /s/ NANCY DAHL
    ----------------------
    Name:   Nancy Dahl
    Title:  Vice President

AIRLEASE, LTD., a California limited partnership
By: AIRLEASE MANAGEMENT SERVICES, INC.,
    its general partner

By: /s/  DAVID B. GEBLER
    ----------------------
    Name: David B. Gebler
    Title:  President

<PAGE>

                                                                      SCHEDULE A

                              AIRCRAFT AND LESSOR PARTIES

AIRCRAFT

U.S. Registration Number:              N913TW

Manufacturer Serial Number:            49184

Engine Numbers: Nos.                   P709733D and P709734D

LESSOR PARTIES

Lessor/Owner Trustee:                  First Security Bank, National Association

Address:                               Corporate Trust Services
                                       MAC: U1254-031
                                       79 South Main Street, 3rd Floor
                                       Salt Lake City, Utah 84111
                                       Attn: Nancy Dahl

Facsimile:                             (801) 246-5053

Phone:                                 (801) 246-5208

Owner Participant:                     Airlease, Ltd.

Address:                               c/o Bank of America Leasing and Capital
                                       Group CA57050403
                                       555 California Street, 4th Floor
                                       San Francisco, CA 94104
                                       Attn: David Gebler

Facsimile:                             (415) 765-1817

Phone:                                 (415) 765-1824

<PAGE>

TWA LEASE DOCUMENTS PARTIES

Mortgagee/Indenture Trustee:           N/A

Address:

Facsimile:

Phone

Owner Participant Guarantor:           N/A

Address:

Facsimile:

Phone

Loan Participant/Lender:               The Provident Bank

Address:                               One East Fourth Street
                                       Cincinnati, Ohio 45202
                                       Attn: Forest C. Frank

Facsimile:                             (513) 579-2868

Phone:                                 (513) 579-2862

Lessee:                                Trans World Airlines, Inc.

Address:                               515 North 6th Street, 18th Floor
                                       St. Louis, MO 63101

Facsimile:                             (314) 589-3267

Phone                                  (314) 589-3227

<PAGE>

Other:                                 Bank of America Leasing and Capital Group

Address:                               CA57050403
                                       555 California St., 4th Floor
                                       San Francisco, CA 94104
                                       Attn: David Gebler

Facsimile:                             (415) 765-1817

Phone:                                 (415) 765-1824

<PAGE>

                                                                      SCHEDULE B

                               TWA LEASE DOCUMENTS

Lease dated March 15, 1984 between  Trans World  Airlines,  Inc. and  DC-9T-III,
Inc.

Lease  Supplement No. 1 dated March 22, 1984 between Trans World Airlines,  Inc.
and DC-9T-III, Inc.

Amendment  Agreement dated December 15, 1986 between Trans World Airlines,  Inc.
and DC-9T-III, Inc.

Participation  Agreement dated March 15, 1984 between Trans World Airlines, Inc.
and DC-9T-III, Inc.

Assignment and Assumption Agreement dated August 16, 1988 between DC-9T-III,
Inc. and Trust Company for USL, Inc.

Agreement of Assignment and Assumption  dated March 31, 1988 between  DC-9T-III,
Inc. and Merdian Trust Company

Assignment and Assumption Agreement dated July 19, 1988 between Meridian Trust
Company and DC-9T-III, Inc.

Resignation  of  Trustee;  Appointment  of  Successor  Trustee;  Assignment  and
Assumption  Agreement;  and  Amendment to Note  Purchase  Agreement and Security
Agreement  (N913TW)  dated May 15, 1997 between the Taurus Trust  Company,  Inc.
formerly  known as Trust Company for USL, Inc.,  First  Security Bank,  National
Association, Airlease Ltd and The Provident Bank

Note  Purchase  and  Security  Agreement  dated  January  29,  1997  between The
Provident Bank and First Security Bank, National Association,  formerly known as
Trust Company for USL, Inc. and the Taurus Trust Company.

Trust Agreement

Letter  Agreement dated April 1, 1991 between United States  Airlease,  Inc. and
Trans World Airlines, Inc.

Letter  Agreement  dated March 23, 1995 between Trans World  Airlines,  Inc. and
Trust Company for USL, Inc.

Letter Agreement dated March 23, 1995 between Trans World Airlines, Inc. and USL
Capital Corporation

<PAGE>

Estoppel  Certificate dated January 1997 by Trans Word Airlines Inc. for benefit
of Airlease Ltd.,  Taurus Trust Company  (formerly  Trust Company for USL, Inc.)
and The Provident Bank

Agreement to  Manufacture  and Lease dated  October 29, 1982 between Trans World
Airlines and McDonnell Douglas Corporation

Letter Agreement dated March 15, 1984

Guaranty dated March 15, 1984 by UT Credit Corporation in favor of Trans World
Airlines, Inc.

<PAGE>

                                                                     APPENDIX  A

                                   DEFINITIONS

         "APPROVAL ORDER" means order of the Bankruptcy Court pursuant to
sections 363 and 365 of the U.S. Bankruptcy Code, in substantially the form
attached as Exhibit D to the Asset Purchase Agreement or otherwise in form and
substance satisfactory to American.

         "CERTIFICATED AIR CARRIER" means a Citizen of the United States holding
an air carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49, United States Code, for aircraft capable of
carrying ten or more individuals or 6,000 pounds or more of cargo or that
otherwise is certified or registered to the extent required to fall within the
purview of Section 1110.

         "CITIZEN OF THE UNITED STATES" has the meaning specified for such term
in Section 40102(a)(15) of Title 49 of the United States Code or any similar
legislation of the U.S. enacted in substitution or replacement therefor.

         "COMMENCEMENT TIME" means the time on the Closing Date when (I) TWA,
American and the Lessor Parties shall have executed and delivered the
Assignment, Assumption and Amendment Agreement and (II) the closing under the
Asset Purchase Agreement shall have occurred.

         "DEPARTMENT OF TRANSPORTATION" means the Department of Transportation
of the U.S. and any successor governmental authority.

         "EVENT OF DEFAULT" means an event of default under this Agreement or
any Substitute Transaction Document.

         "FAA" means the Federal Aviation Administration of the U.S. and any
successor governmental authority.

         "LIEN" means any mortgage, pledge, lien, charge, encumbrance, lease,
exercise of rights, security interest or claim.

         "TWA TRUST AGREEMENT": the trust agreement listed in Schedule B hereto.

         "TWA LEASE DOCUMENTS" means all leases, mortgages, loan agreements,
notes, indentures, trust agreements, participation agreements, purchase
agreement assignments, security agreements, letter agreements and all other
agreements with respect to the Aircraft, in each case, to which TWA is a party
or by which TWA is bound or by which TWA's rights are affected, including,
without limitation, the documents listed in Schedule B hereto but excluding any
purchase agreement with a manufacturer of the Aircraft, the Engines or any
Parts.

<PAGE>

                                                                     APPENDIX  B

                               SCHEDULE OF TERMS

         References to (1) this "LEASE" shall mean the Assumption and Lease
Agreement, together with all annexes, schedules and other attachments thereto,
(2) the "SUMMARY OF ECONOMIC TERMS" shall mean the Summary of Economic Terms
attached as Appendix B-1, (3) the "RETURN CONDITIONS" shall mean the Return
Conditions provisions of the Summary of Economic Terms, and (4) the Operative
Documents shall mean this Lease, the TWA Trust Agreement, if any, and the TWA
Purchase Agreement Assignment, if any. All other capitalized terms used but not
defined in this Appendix B shall have the respective meanings ascribed in the
Lease.

I.       TRANSACTION PARTIES AND SUBJECT MATTER

AIRCRAFT:         The Aircraft, Airframe, and Engines are specified in the
                  Summary of Economic Terms. Each Engine has 750 or more rated
                  takeoff horsepower or the equivalent thereof.

LESSEE:           American or a wholly-owned subsidiary of American, as provided
                  in Section 1(a) of this Lease, and its respective successors
                  and permitted assigns.

GUARANTOR:        In the event that a wholly-owned subsidiary of American is
                  Lessee, American, as guarantor under the American Guaranty.

LESSOR;
OWNER
PARTICIPANT:      As specified in Schedule A to this Lease.  The owner trustee
                  of any owner trust and any successor owner trustee must be
                  reasonably acceptable to Lessee.

AGREEMENT
TO LEASE:         Following the Commencement Time, subject to the satisfaction
                  or waiver of the conditions set forth in Section 5 of the
                  Assumption and Lease Agreement, Lessor agrees to lease to
                  Lessee, and Lessee agrees to lease from Lessor, the Aircraft
                  for the Lease Term (as defined below).

II.      CERTAIN ECONOMIC TERMS

LEASE TERM:       Except as otherwise provided in this Lease, the Lease Term
                  will commence at the Commencement Time and end on the Lease
                  Expiry Date that is specified in the Summary of Economic
                  Terms.

BASIC RENT:       On the 1st day of each calendar month during the Lease Term
                  and on the Lease Expiry Date (each such date, a "LEASE PERIOD
                  DATE"), Lessee hereby agrees to pay to Lessor Basic Rent (at
                  the monthly rate specified in the Summary of Economic Terms)
                  in arrears for the Aircraft, provided that Basic Rent for any
                  lease period less than one month shall be the pro rata portion
                  of the Basic Rent rate specified in the Summary of Economic
                  Terms.

SUPPLEMENTAL
RENT:             Lessee also agrees to pay to Lessor, or to whomsoever shall be
                  entitled thereto, any and all amounts designated in this Lease
                  as "SUPPLEMENTAL RENT" promptly as the same shall become due

<PAGE>

                  and owing. "SUPPLEMENTAL RENT" means all amounts, liabilities
                  and obligations (other than Basic Rent) which Lessee assumes
                  or agrees to pay hereunder to Lessor or others, including,
                  without limitation, payments of Stipulated Loss Value, and the
                  amount of any loss of principal realized as the result of any
                  investments made pursuant to the section hereof entitled
                  "Investment of Security Funds". In addition, Lessee will pay
                  as Supplemental Rent on demand, an amount equal to 1% over the
                  Prime Rate on any part of any installment of Basic Rent not
                  paid when due for any period for which the same shall be
                  overdue and on any payment of Supplemental Rent not paid when
                  due or demanded, as the case may be, for the period until the
                  same shall be paid.

                  "PRIME RATE" means the rate of interest per annum announced by
                  Citibank, N.A. at its principal office in New York as its
                  "prime" or "base" rate from time to time; provided that if
                  Citibank, N.A. shall no longer announce such a "prime" or
                  "base" rate, the Prime Rate shall be the rate for 90-day
                  directly placed commercial paper (or the midpoint in the range
                  of such rate if more than one rate is published) as of the
                  opening of business on the date in question (or the arithmetic
                  average of such rates at the opening of business on each day
                  during any period in question), as quoted in THE WALL STREET
                  JOURNAL.

MANNER OF
PAYMENT:          All Basic Rent and Supplemental Rent (collectively, "RENT")
                  shall be payable to Lessor's account as specified to Lessee in
                  writing, in Dollars in immediately available funds in such
                  account not later than 1:00 p.m. (New York time), on the date
                  designated for payment under this Lease.

                  If any Rent is due on a day that is not a Business Day, such
                  Rent shall be paid on the next succeeding Business Day with
                  the same force and effect as if paid on the scheduled date of
                  payment, and no interest shall accrue on the amount of such
                  payment from and after such scheduled date to the time of
                  payment on such next succeeding Business Day.

STIPULATED
LOSS VALUES:      As specified in the Summary of Economic Terms.

                  "INDEPENDENT APPRAISA L" means an appraisal mutually agreed to
                  by two nationally recognized independent aircraft appraisers,
                  one of which appraisers shall be chosen by Lessor and one by
                  Lessee, or, if such appraisers cannot agree on such appraisal,
                  an appraisal arrived at by a third independent aircraft
                  appraiser chosen by the mutual consent of such two appraisers,
                  PROVIDED that, if either party shall fail to appoint an
                  appraiser within 15 days after a written request to do so by
                  the other party, or if such two appraisers cannot agree on
                  such appraisal and fail to appoint a third appraiser within 20
                  days after the date of the appointment of the second of such
                  appraisers, then either party may apply to the American
                  Arbitration Association to make such appointment. In the event
                  such third independent appraiser shall be chosen to provide
                  such appraisal, unless the parties agree otherwise, such
                  appraisal shall be required to be made within 20 days of such
                  appointment. An Independent Appraisal of the fair market
                  rental value or fair market sales value of the Aircraft shall
                  mean an appraisal which assumes that the sale or lease
                  transaction would be an arm's-length transaction between an
                  informed and willing lessee or buyer, as the case may be,
                  under no compulsion to lease or buy, as the case may be, and
                  an informed and willing lessor or seller, as the case may be,
                  under no compulsion to lease or sell, as the case may be, and
                  assumes that the Aircraft is unencumbered by this Lease or any
                  renewal or purchase option under this Lease and is in the
                  condition required by this Lease; PROVIDED that an Independent
                  Appraisal undertaken pursuant to Annex D shall value the
                  Aircraft on an "as-is, where-is" basis. The fees and expenses
                  of appraisers for an Independent Appraisal, whenever
                  undertaken pursuant to this Lease, shall be borne equally by
                  Lessor and Lessee and each shall separately bear any fees,
                  costs and expenses of its respective attorneys and experts
                  (other than the appraisers referred to above) incurred in

                                        2

<PAGE>

                  connection with such Independent Appraisal, except that the
                  costs of an Independent Appraisal undertaken pursuant to Annex
                  D shall be for the account of Lessee.

END OF
LEASE TERM
PURCHASE
OPTIONS:          As specified in the Summary of Economic Terms.

RENEWAL
OPTIONS:          As specified in the Summary of Economic Terms.

VOLUNTARY
TERMINATION:      As specified in the Summary of Economic Terms.

RETURN
CONDITIONS:       Upon the expiration of the Lease Term, Lessee shall return the
                  Aircraft in compliance with the Return Conditions.

III.     OTHER LEASE TERMS AND CONDITIONS

LEASE TERM:       Except as otherwise provided in this Lease, the Lease Term
                  will commence at the Commencement Time and end on the Lease
                  Expiry Date that is specified in the Summary of Economic
                  Terms.

REGISTRATION:     Lessor at all times must be a Citizen of the United States to
                  permit registration of the Aircraft with the Federal Aviation
                  Administration of the United States (such agency or any
                  successor governmental authority, the "FAA"). Owner
                  Participant, if any, at all times, must (I) be a Citizen of
                  the United States or (II) qualify through a voting trust
                  arrangement that is sufficient to permit registration of the
                  Aircraft with the FAA (without regard to any provision of
                  applicable law that permits FAA registration of an aircraft by
                  limiting its location and usage). Lessor, and if Lessor is an
                  owner trustee, Bank and Owner Participant, shall indemnify
                  American and Lessee (if Lessee is not American) for any costs
                  and expenses arising from its respective failure to be a
                  Citizen of the United States.

                  Lessee will cause the Aircraft to remain duly registered at
                  the FAA in Lessor's name, as owner, except (A) as otherwise
                  required by the provisions of 49 U.S. Code Subtitle VII (the
                  "TRANSPORTATION CODE"), or (B) to the extent that such
                  registration cannot be maintained because of the failure of
                  Lessor or Owner Participant, if any, to comply with the
                  citizenship or other eligibility requirements for registration
                  of aircraft under the Transportation Code; provided that
                  Lessor and Owner Participant, if any, will execute and deliver
                  all such documents as Lessee reasonably requests for the
                  purpose of continuing such registration. Lessee may
                  re-register the Aircraft in certain other countries to the
                  extent, if any, set forth in Annex A.

PERMITTED
LIENS:            Lessee's only lien-lifting obligations with respect to the
                  Aircraft are as follows:

                  Lessee will not permit any Lien on or with respect to the
                  Airframe or any Engine, title thereto or any interest therein
                  or in this Lease except: (i) the respective rights of Lessor,
                  Owner Participant, if any, and Lessee as provided in this
                  Lease; (ii) the rights of others under agreements or
                  arrangements to the extent expressly permitted by this Lease;
                  (iii) Lessor's Liens (as defined in the Section captioned
                  "QUIET ENJOYMENT; LIEN LIFTING"); (IV) Liens for Taxes either
                  not yet due or

                                        3

<PAGE>

                  being contested in good faith by appropriate proceedings so
                  long as such proceedings do not involve any material risk of
                  the sale, forfeiture or loss of the Airframe or any Engine or
                  interest therein; (v) materialmen's, mechanics', workmen's,
                  repairmen's, employees' or other like Liens arising in the
                  ordinary course of business securing obligations that either
                  are not yet overdue for a period of more than 60 days or are
                  being contested in good faith by appropriate proceedings so
                  long as such proceedings do not involve any material risk of
                  the sale, forfeiture or loss of the Airframe or any Engine or
                  interest therein; (vi) Liens (other than Tax liens) arising
                  out of judgments or awards (A) for 60 days after the entry of
                  such judgment or award (including any determination of an
                  appeal or other judicial review), PROVIDED that during such
                  60-day period there is no material risk of the sale,
                  forfeiture or loss of the Aircraft or any interest therein or
                  (B) during an appeal or other proceeding for review regarding
                  such judgment or award with respect to which there has been
                  secured a stay of execution pending such appeal or proceeding
                  for review; (vii) salvage or similar rights of insurers under
                  insurance policies maintained pursuant to this Lease; (viii)
                  for a period of 365 days after the Commencement Time, any Lien
                  arising out of, resulting from or relating to any act or
                  omission of TWA at any time, or any act, claim, event,
                  circumstance or condition existing, accruing, arising or
                  occurring at any time at or prior to the Commencement Time, or
                  any TWA Liability, PROVIDED that there is no material risk of
                  the sale, forfeiture or loss of the Airframe or any Engine or
                  interest therein; and (ix) the respective rights of the
                  financing parties under any financing arrangements entered
                  into by Lessor with respect to the Aircraft at any time.

                  "LIEN" means any mortgage, pledge, lien, charge, encumbrance,
                  lease, exercise of rights, security interest or claim.

                  "TWA LIABILITY" means any liability, obligation or
                  indebtedness of TWA with respect to the Aircraft, Airframe or
                  Engines, or otherwise, whether primary or secondary, direct or
                  indirect, including without limitation any and all liabilities
                  and obligations of TWA resulting from, caused by or arising
                  out of, directly or indirectly, any act or omission of TWA,
                  the conduct of its business or ownership or lease of any of
                  its properties or assets (including the Aircraft) or any
                  properties or assets used by TWA at any time, including
                  without limitation such of the foregoing as constitute, may
                  constitute or are alleged to constitute a tort, breach of
                  contract or violation of requirements of any law.

MAINTENANCE:      Lessee's maintenance obligations with respect to the Aircraft,
                  Airframe and Engines will be solely as follows:

                  At the Commencement Time, Lessee will take possession of the
                  Aircraft, "as-is, where-is and with all faults" and will have
                  no responsibility or liability for placing the Aircraft and
                  its records in the condition, status or repair required by
                  TWA's existing lease documents. However, following the
                  Commencement Time, Lessee will maintain, service, repair,
                  overhaul and test the Aircraft in accordance with a
                  maintenance program for aircraft of such make and model (the
                  "MAINTENANCE PROGRAM") approved by the FAA or, if the Aircraft
                  is then registered in another country, the central civil
                  aviation authority of such country, and in the same manner and
                  with the same care used by Lessee with respect to comparable
                  aircraft and engines owned or operated by Lessee and utilized
                  in similar circumstances, so as to keep the Aircraft in as
                  good operating condition as when delivered to Lessee at the
                  Commencement Time, ordinary wear and tear excepted, and in
                  such condition as may be necessary to enable the airworthiness
                  certificate to be maintained in good standing at all times
                  (other than during temporary periods of storage in accordance
                  with applicable regulations or during periods of grounding by
                  applicable governmental authorities, except where such periods
                  of grounding are the result of Lessee's failure to maintain

                                        4

<PAGE>

                  the Aircraft as otherwise required by this Lease) under the
                  Transportation Code or the applicable laws of any other
                  jurisdiction in which the Aircraft may then be registered.

                  Subject to the provisions of the Summary of Economic Terms,
                  Lessee will comply with all mandatory airworthiness directives
                  issued by the FAA which require compliance no later than the
                  last day of the Lease Term, but shall not be required to
                  comply with any manufacturer service bulletins.

                  Lessee will promptly furnish to Lessor such information as may
                  be required to enable Lessor to file any reports, returns or
                  statements required to be filed by Lessor with any
                  governmental authority because of Lessor's interest in the
                  Aircraft.

                  Following the Commencement Time, Lessee will maintain all
                  records, logs and other materials required by the appropriate
                  authorities in the jurisdiction where the Aircraft is
                  registered to be maintained by Lessee in respect of the
                  Aircraft.

                  Notwithstanding anything to the contrary contained in this
                  Lease, Lessee shall maintain any aircraft engine which is not
                  an Engine, but which is installed on the Airframe, in
                  accordance with this Section.

OPERATION:        Lessee's maintenance, operation and use of the Aircraft will
                  be subject only to the following operational restrictions:

                  The Aircraft will not be maintained, used or operated in
                  violation of any law or any regulation or order of any
                  government or governmental authority having jurisdiction in
                  any country in which the Aircraft is flown, or in violation of
                  any airworthiness certificate, license or registration
                  relating to the Aircraft issued by any such authority;
                  PROVIDED that Lessee may in good faith contest the validity or
                  application of any such law, regulation or order in any
                  reasonable manner which does not materially adversely affect
                  Lessor; and PROVIDED, FURTHER, that Lessee will not be in
                  default under this sentence if it is not possible for Lessee
                  to comply with the laws of a jurisdiction other than the U.S.
                  (or other than any jurisdiction in which the Aircraft is then
                  registered) because of a conflict with the applicable laws of
                  the U.S. (or such jurisdiction in which the Aircraft is then
                  registered), in which event Lessee will use its reasonable
                  best efforts to cause the Aircraft to be removed, as soon as
                  practicable, from the jurisdiction other than the U.S. (or
                  other than the jurisdiction in which the Aircraft is then
                  registered) creating the conflict or to take such other
                  reasonable action (including, if necessary, changing the
                  registration of the Aircraft unless the Aircraft is then
                  registered in the U.S.), as soon as practicable, as may be
                  necessary to avoid the conflict.

                  Lessee or any permitted sublessee may operate the Aircraft in
                  any geographical area, except (A) in any area excluded from
                  coverage by any insurance required by the terms of this Lease,
                  except in the case of a requisition for use by the U.S.
                  government where Lessee obtains indemnity in lieu of such
                  insurance from the U.S. government against the risks and in
                  the amounts required by this Lease covering such area, or (B)
                  in any war zone or recognized or, in Lessee's reasonable
                  judgment, threatened area of hostilities unless covered by war
                  risk insurance or unless the Aircraft is operated by or used
                  under contract with the U.S. government under which contract
                  the U.S. government assumes liability for any damage, loss or
                  destruction or failure to return possession of the Aircraft at
                  the end of the term of such contract and for injury to persons
                  or damage to property of others.

                                        5

<PAGE>

POSSESSION:       Lessee's rights to deliver, transfer or relinquish possession
                  of the Aircraft, Airframe or any Engine, or to install any
                  Engine on any airframe other than the Airframe, are specified
                  in Annex A.

INSIGNIA:         As soon as practicable after the Commencement Time, Lessee
                  shall affix and thereafter maintain in the cockpit of the
                  Airframe and (if not prevented by applicable law or
                  regulations or by any governmental authority) on each Engine a
                  metal nameplate bearing the following legible inscription:
                  "TITLE TO THIS AIRCRAFT/ENGINE IS HELD BY [NAME OF LESSOR],
                  LESSOR WHICH HAS LEASED THIS AIRCRAFT/ENGINE TO [AMERICAN
                  AIRLINES, INC.][NAME OF LESSEE]."

REPLACEMENT
OF PARTS:         Lessee, at its own cost and expense, will promptly replace or
                  cause to be replaced all Parts which may from time to time be
                  incorporated or installed in or attached to the Airframe or
                  any Engine and 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, except as otherwise provided in the Section
                  captioned "ALTERATIONS AND MODIFICATIONS". In addition, Lessee
                  may, at its own cost and expense, remove or cause to be
                  removed in the ordinary course of maintenance, service,
                  repair, overhaul or testing, any Parts, whether or not worn
                  out, lost, stolen, destroyed, seized, confiscated, damaged
                  beyond repair or permanently rendered unfit for use; PROVIDED
                  that Lessee, exc ept as otherwise provided in the Section
                  captioned "ALTERATIONS AND MODIFICATIONS", will, at its own
                  cost and expense, replace or cause to be replaced such Parts
                  as promptly as practicable. All replacement parts shall be
                  free and clear of all Liens (except for Permitted Liens), and
                  shall be in as good operating condition as, and shall have a
                  value and utility 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. Title to all
                  Parts at any time removed from the Airframe or any Engine
                  shall remain vested in Lessor, 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 the Airframe
                  or any Engine and which meet the requirements for replacement
                  parts specified above. Immediately upon any replacement part
                  becoming incorporated or installed in or attached to the
                  Airframe or any Engine as above provided, without further act,
                  (I) title to the replaced Part shall thereupon vest in Lessee,
                  free and clear of all right, title and interest of Lessor and
                  of Lessor's Liens, and shall no longer be deemed a Part under
                  this Lease, (II) title to such replacement part shall
                  thereupon vest in Lessor free and clear of all Liens (except
                  Permitted Liens) and (III) such replacement part shall become
                  subject to this Lease and be deemed part of the Airframe or
                  such Engine for all purposes to the same extent as the Parts
                  originally incorporated or installed in or attached to the
                  Airframe or such Engine.

                  "PARTS" means all appliances, parts, instruments,
                  appurtenances, accessories, furnishings and other equipment of
                  whatever nature (other than (I) complete Engines or engines,
                  (II) any items leased by Lessee from a third party (other than
                  items leased under this Lease by Lessee from Lessor), (III)
                  cargo containers and (IV) any Passenger Convenience Equipment
                  (as defined in the Section captioned "ALTERATIONS AND
                  MODIFICATIONS")) that at any time of determination are
                  incorporated or installed in or attached to the Airframe or
                  any Engine or the title to which remains vested in Lessor in
                  accordance with this Section.

PART POOLING:     Any Part removed from the Airframe or an Engine as provided in
                  the Section captioned "REPLACEMENT OF PARTS" may be subjected
                  by Lessee or a Person permitted to be in possession of the
                  Aircraft to a normal pooling arrangement customary in the
                  airline industry entered into in the ordinary course of
                  Lessee's or such other Person's business; provided that the
                  part replacing such removed Part shall be incorporated or
                  installed in or attached to the Airframe or such Engine in

                                        6

<PAGE>

                  accordance with the Section captioned "REPLACEMENT OF PARTS"
                  as promptly as practicable after the removal of such removed
                  Part. In addition, any replacement Part when incorporated or
                  installed in or attached to the Airframe or an Engine in
                  accordance with the Section captioned "REPLACEMENT OF PARTS"
                  may be owned by a third party subject to such a normal pooling
                  arrangement; provided that Lessee, at its expense, as promptly
                  thereafter as practicable, either (i) causes title to such
                  replacement Part to vest in Lessor in accordance with the
                  Section captioned "REPLACEMENT OF PARTS" by Lessee acquiring
                  title thereto for the benefit of, and transferring such title
                  to, Lessor free and clear of all Liens (other than Permitted
                  Liens), or (ii) replaces or causes to be replaced such
                  replacement Part by incorporating or installing in or
                  attaching to the Airframe or such Engine a further replacement
                  Part owned by Lessee free and clear of all Liens (other than
                  Permitted Liens) and by causing title to such further
                  replacement part to vest in Lessor in accordance with the
                  Section captioned "REPLACEMENT OF PARTS".

ALTERATIONS AND
MODIFICATIONS:    Lessee's rights and obligations with respect to alterations
                  and maintenance of the Aircraft, the Airframe, any Engine or
                  any Part will be solely as follows:

                  Lessee will make such alterations and modifications in and
                  additions to the Airframe and the Engines as may be required
                  from time to time to meet the applicable standards of any
                  applicable regulatory agency or body of the jurisdiction in
                  which the Aircraft is then registered; provided that Lessee
                  may in good faith contest the validity or application of any
                  such standard in any reasonable manner which does not
                  materially adversely affect Lessor.

                  In addition, Lessee may from time to time make such
                  alterations and modifications in and additions to the Airframe
                  or any Engine as Lessee may deem desirable in the proper
                  conduct of its business, including, without limitation,
                  removal of Parts which Lessee deems to be obsolete or no
                  longer suitable or appropriate for use on the Airframe or such
                  Engine (such Parts, "OBSOLETE PARTS"); PROVIDED that no such
                  alteration, modification, addition or removal materially
                  diminishes the value or utility of the Airframe or such
                  Engine, or impairs its condition or airworthiness, below the
                  value, utility, condition and airworthiness thereof
                  immediately prior to such alteration, modification, addition
                  or removal, assuming the Airframe or such Engine was then of
                  the value and utility and in the condition and airworthiness
                  required to be maintained by the terms of this Lease, except
                  that the value (but not the utility, condition or
                  airworthiness) of the Aircraft may be reduced by the value of
                  the Obsolete Parts which have been removed, if the aggregate
                  value of all such Obsolete Parts removed and not replaced does
                  not exceed the value specified in the Summary of Economic
                  Terms. Title to all parts incorporated or installed in or
                  attached or added to the Airframe or any Engine as the result
                  of such alteration, modification or addition will, without
                  further act, vest in Lessor. Lessor will not be required under
                  any circumstances to pay or compensate Lessee for any such
                  alteration, modification or addition. Notwithstanding the
                  foregoing, Lessee may at any time remove any Part; PROVIDED
                  that (i) such Part is in addition to, and not in replacement
                  of or substitution for, any Part originally incorporated or
                  installed in or attached to the Airframe or such Engine at the
                  time of delivery thereof under this Lease or any Part in
                  replacement of, or substitution for, any such Part, (ii) such
                  Part is not required to be incorporated or installed in or
                  attached or added to such Airframe or Engine pursuant to the
                  second paragraph of this Section and (iii) such Part can be
                  removed from the Airframe or such Engine without materially
                  diminishing or impairing its value, utility, condition or
                  airworthiness required to be maintained by the terms of this
                  Lease which the Airframe or such Engine would have had at such
                  time had such removal not occurred. Upon the removal of any
                  Part as provided in the immediately preceding sentence or the
                  removal of any Obsolete Part permitted by this Section, title
                  thereto will, without further act, vest in Lessee, free and
                  clear of all right, title and interest of

                                        7

<PAGE>

                  Lessor and of Lessor's Liens, and such Part will no longer be
                  deemed part of the Airframe or Engine from which it was
                  removed.

                  Lessee may install in the Airframe severable
                  telecommunications or other electronic equipment for
                  individual use by Aircraft passengers ("PASSENGER CONVENIENCE
                  EQUIPMENT") that are (1) owned by Lessee or American (if
                  Lessee is not American), (2) owned by another Person and
                  leased to Lessee, (3) sold to Lessee by another Person subject
                  to conditional sale contract or other retained security
                  interest, (4) leased to Lessee pursuant to a lease which is
                  subject to a security interest in favor of another Person or
                  (5) owned by another Person and installed on the Aircraft
                  subject to a license arrangement with Lessee, and in any such
                  case, Lessor will not acquire or claim any right, title or
                  interest in any such Passenger Convenience Equipment solely as
                  a result of its installation on the Airframe.

EVENT OF LOSS:    On a date (the "LOSS PAYMENT DATE") within 120 days after the
                  occurrence of an Event of Loss with respect to the Aircraft,
                  Lessee shall pay to Lessor Stipulated Loss Value and all other
                  Supplemental Rent then due and owing to Lessor and Owner
                  Participant, if any.

                  "STIPULATED LOSS VALUE" with respect to the Aircraft means the
                  amount set forth in the Summary of Economic Terms opposite the
                  Stipulated Loss Value Determination Date next preceding the
                  applicable Loss Payment Date (or, if such Loss Payment Date
                  occurs on a Stipulated Loss Value Determination Date, the
                  amount opposite such Stipulated Loss Value Determination Date)
                  plus interest at the Prime Rate for the period from and
                  including such Stipulated Loss Value Determination Date to but
                  excluding such Loss Payment Date.

                  Upon making the payment in the first paragraph of this
                  Section, (1) this Lease, Lessee's obligation to pay Basic Rent
                  on any Lease Period Date occurring subsequent to the
                  Stipulated Loss Value Determination Date (it being agreed that
                  Lessee shall pay any Basic Rent due and owing on the
                  Stipulated Loss Value Determination Date if the Stipulated
                  Loss Value Determination Date is a Loss Payment Date), and
                  Lessee's obligation to pay Supplemental Rent (other than
                  payments of Supplemental Rent for indemnities surviving
                  pursuant to Annex E or Annex F or to be made by Lessee in
                  respect of liabilities and obligations of Lessee which have
                  accrued but not been paid or which are in dispute as of the
                  date of such payment) shall terminate, and (2) Lessor shall
                  (x) transfer to Lessee, without recourse or warranty (except
                  as to the absence of Lessor's Liens), all of Lessor's right,
                  title and interest in and to the Airframe and Engines (if any)
                  with respect to which such Event of Loss occurred free and
                  clear of all right, title and interest of Lessor and any
                  Affiliate thereof and of Lessor's Liens, as well as all of
                  Lessor's right, title and interest in and to any Engines
                  constituting part of the Aircraft but not installed thereon
                  when such Event of Loss occurred, free and clear of all right,
                  title and interest of Lessor and any Affiliate thereof and of
                  Lessor's Liens, all in as-is where-is condition, and shall, at
                  Lessee's expense, execute and deliver such bills of sale and
                  other documents and instruments as Lessee shall reasonably
                  request to evidence (on the public record or otherwise) such
                  transfer and the vesting of all such right, title and interest
                  in and to the Aircraft in Lessee, free and clear of all right,
                  title and interest of Lessor and any Affiliate thereof and of
                  Lessor's Liens; and (y) assign to or as directed by Lessee all
                  claims against third Persons relating to such Airframe and
                  Engines arising from the Event of Loss.

REQUISITIONS:     Any payments (other than insurance proceeds the application of
                  which is provided for in Annex C) received at any time by
                  Lessor or by Lessee from any governmental authority or other
                  Person with respect to an Event of Loss to the Airframe or any
                  Engine will be applied as follows: (1) if such payments are
                  received with respect to the Airframe or the Airframe and the
                  Engines or engines installed on the Airframe, such payments
                  shall, after reimbursement of Lessor for costs and expenses,
                  be applied (A) in reduction of Lessee's obligation to pay the
                  Stipulated Loss Value

                                        8

<PAGE>

                  required to be paid by Lessee pursuant to the Section
                  captioned "EVENT OF LOSS" if not already paid by Lessee or, if
                  already paid by Lessee, shall be applied to reimburse Lessee
                  for its payment of Stipulated Loss Value, and (B) the balance,
                  if any, of such payment remaining thereafter will be
                  apportioned between Lessee and Lessor as their interests may
                  appear; and (2) if such payments are received with respect to
                  an Engine as to which an Event of Loss has occurred or is
                  deemed to have occurred, such payments shall be paid over to,
                  or retained by, Lessee; PROVIDED that Lessee shall have fully
                  performed the terms of the Section captioned "REPLACEMENT
                  ENGINES" with respect to the Event of Loss for which such
                  payments are made.

                  In the event of the requisition for use by the U.S. government
                  (including any agency or instrumentality thereof), including,
                  without limitation, pursuant to the CRAF Program, of the
                  Airframe and the Engines or engines installed thereon during
                  the Lease Term not constituting an Event of Loss, Lessee shall
                  promptly notify Lessor of such requisition and all of Lessee's
                  obligations under this Lease with respect to the Aircraft
                  shall (to the extent feasible with respect to obligations
                  other than payment obligations) continue to the same extent as
                  if such requisition had not occurred.

                  All payments received by Lessor or Lessee from the U.S.
                  government for the use of such Airframe and Engines or engines
                  during the Lease Term shall be paid over to, or retained by,
                  Lessee; and all payments received by Lessor or Lessee from the
                  U.S. government for the use of such Airframe and Engines or
                  engines after the Lease Term shall be paid over to, or
                  retained by, Lessor; PROVIDED that if such requisition
                  constitutes an Event of Loss, then all such payments shall be
                  applied as provided in the first paragraph of this Section.

                  In the event of the requisition for use by the U.S. government
                  (including for this purpose any agency or instrumentality
                  thereof) of any Engine (but not the Airframe) during the Lease
                  Term not constituting an Event of Loss, Lessee will replace
                  such Engine under this Lease by substituting another engine
                  for such Engine in accordance with the terms of the Section
                  captioned "REPLACEMENT ENGINES" to the same extent as if an
                  Event of Loss had occurred with respect to such Engine, and
                  any payments received by Lessor or Lessee from the U.S.
                  government with respect to such requisition shall be paid over
                  to, or retained by, Lessee.

                  Any amount referred to in this Section which is payable to
                  Lessee shall not be paid to Lessee, or, if it has been
                  previously paid directly to Lessee, shall not be retained by
                  Lessee, if at the time of such payment an Event of Default or
                  Specified Default shall have occurred and be continuing, but
                  shall be paid to and held by Lessor pursuant to the Section
                  captioned "INVESTMENT OF SECURITY FUNDS" as security for the
                  obligations of Lessee under the Lease, and at such time as
                  there shall not be continuing any such Event of Default or
                  Specified Default such amount shall be paid to Lessee;
                  PROVIDED, that if any such amount has been so held by Lessor
                  as security for more than 90 days, during which period (i)
                  Lessor shall not have been limited by operation of law or
                  otherwis e from exercising remedies and (ii) Lessor shall not
                  have commenced to exercise any remedy available to it under
                  Annex D, then such amount shall be paid to Lessee to the
                  extent not applied as provided above.

REPLACEMENT
ENGINES:          Upon the occurrence of an Event of Loss with respect to an
                  Engine, Lessee shall replace such Engine. In addition, Lessee
                  may at any time substitute an engine for any leased Engine.
                  The engine (the "REPLACEMENT ENGINE") replacing the replaced
                  or substituted Engine will be of the same make and model as
                  the replaced or substituted Engine or will be an engine of the
                  same or another manufacturer of a comparable or improved model
                  which is suitable for installation and use on the Airframe and
                  will have value and utility at least equal to (but in any
                  event without regard to

                                        9

<PAGE>

                  the number of hours or cycles) the Engine so replaced or
                  substituted (assuming that such Engine was of the condition
                  and repair required by the terms hereof immediately prior to
                  the occurrence of such Event of Loss). In addition, such
                  Engine replacement or substitution will be subject only to the
                  following conditions: Lessee will (A) furnish Lessor with a
                  warranty (as to title) bill of sale (which warranty will
                  except Permitted Liens) with respect to such Replacement
                  Engine, (B) cause a Lease Supplement, subjecting such
                  Replacement Engine to this Lease, to be delivered to Lessor
                  for execution to be filed for recordation pursuant to the
                  Transportation Code, or, if necessary, pursuant to the
                  applicable laws of such jurisdiction other than the U.S. in
                  which the Aircraft is registered and (C) furnish Lessor with
                  such evidence of compliance with the insurance provisions of
                  this Lease with respect to such Replacement Engine as Lessor
                  may reasonably request.

                  If Lessor is an owner trustee, Owner Participant hereby
                  authorizes and directs Owner Trustee to, and Owner Trustee
                  hereby agrees that it will, take such actions reasonably
                  requested by Lessee to subject a Replacement Engine to this
                  Lease; provided that such Engine replacement complies with the
                  paragraph above.

INSURANCE:        Lessee will maintain liability and hull insurance with respect
                  to the Aircraft as set forth in Annex C.

INSPECTION:       At all reasonable times during the Lease Term, but upon at
                  least 15 days' prior notice to Lessee, Lessor and Owner
                  Participant, if any, or their authorized representatives may
                  at their own expense and risk (including, without limitation,
                  any risk of personal injury) conduct a visual walk-around
                  inspection of the Aircraft and any Engine that may include
                  going on board the Aircraft and examining the contents of any
                  open panels, bays or other components of the Aircraft (but
                  shall not include the opening of any unopened panels, bays or
                  other components) and may inspect the books and records of
                  Lessee relating thereto; PROVIDED that (i) Lessor, Owner
                  Participant, if any, or their authorized representatives, as
                  the case may be, shall provide, prior to conducting any such
                  inspection, assurances reasonably satisfactory to Lessee that
                  it is fully insured with respect to any risks incurred in
                  connection with any such inspection; (ii) any such inspection
                  shall be subject to the safety, security and workplace rules
                  applicable at the location where such inspection is conducted
                  and to the requirements of any applicable law; and (iii) in
                  the case of an inspection during a maintenance visit, such
                  inspection shall not in any respect interfere with the normal
                  conduct of such maintenance visit or extend the time required
                  for such maintenance visit.

                  All information obtained in connection with any such
                  inspection shall be Confidential Information and shall be held
                  by Lessor and Owner Participant, if any, in accordance with
                  Section 9 of this Lease.

EVENTS OF
DEFAULT:          There will be no cross-collateralization, cross-acceleration
                  or cross-default provisions. The Events of Default and
                  remedies available to Lessor under this Lease are specified in
                  Annex D. There will be no Default or Event of Default for any
                  act or omission of TWA at any time or for any act, claim,
                  event, circumstance or condition existing, accruing, arising
                  or occurring at any time at or prior to the Commencement Time
                  or for any TWA Liability.

INVESTMENT OF
SECURITY
FUNDS:            Any moneys held by Lessor or required to be paid to or
                  retained by Lessor which are not required to be paid to Lessee
                  pursuant to the last paragraph of the Section captioned
                  "REQUISITIONS" or Annex C solely because an Event of Default
                  or Specified Default shall have occurred, or which are
                  required to be paid to Lessee pursuant to the Section
                  captioned "REQUISITIONS" or Annex C or

                                       10

<PAGE>

                  after completion of a replacement to be made pursuant to
                  "REPLACEMENT ENGINES" shall, until paid to Lessee, be invested
                  in Permitted Investments by Lessor from time to time as
                  directed in writing by Lessee. There shall, so long as no
                  Event of Default or Specified Default shall have occurred and
                  be continuing, be promptly remitted to Lessee any gain
                  (including interest received) realized as the result of any
                  such investment (net of any fees, commissions and other
                  expenses, if any, incurred in connection with such
                  investment), and Lessee will promptly pay to Lessor, on
                  demand, the amount of any loss realized as the result of any
                  such investment (together with any fees, commissions and other
                  expenses, if any, incurred in connection with such
                  investment).

                  "SPECIFIED DEFAULT" means an event that with the giving of
                  notice or the lapse of time or both would constitute an Event
                  of Default under clause (A), (G), (H) (I) or (J) of Annex D.

                  "PERMITTED INVESTMENT" means each of: (i) direct obligations
                  of the U.S., and agencies thereof; (ii) obligations fully
                  guaranteed by the U.S.; (iii) certificates of deposit issued
                  by, or bankers' acceptances of, or time deposits with, any
                  bank, trust company or national banking association
                  incorporated or doing business under the laws of the U.S. or
                  one of the states thereof having combined capital and surplus
                  and retained earnings of at least $100,000,000, and having a
                  rating of A, its equivalent or better by Moody's Investors
                  Service, Inc. ("MOODY'S") or Standard & Poor's Ratings
                  Services, a division of The McGraw-Hill Companies, Inc.
                  ("S&P") (or if neither such organization shall rate such
                  institution at any time, by any nationally recognized rating
                  organization in the United States); (iv) commercial paper of
                  any holding company of a bank, trust company or national
                  banking association described in CLAUSE (iii); (v) bearer note
                  deposits with, or certificates of deposit issued by, or
                  promissory notes of, any subsidiary incorporated under the
                  laws of Canada (or any province thereof) of any bank, trust
                  company or national banking association described in CLAUSES
                  (iii), (viii) or (ix); (vi) commercial paper of companies
                  having a rating assigned to such commercial paper by Moody's
                  or S&P (or, if neither such organization shall rate such
                  commercial paper at any time, by any nationally recognized
                  rating organization in the United States) equal to either of
                  the two highest ratings assigned by such organization; (vii)
                  U.S. dollar-denominated certificates of deposit issued by, or
                  time deposits with, the European subsidiaries of (A) any bank,
                  trust company or national banking association described in
                  CLAUSE (iii) or (B) any other bank described in CLAUSE (viii)
                  or (ix); (viii) U.S.-issued Yankee certificates of deposit
                  issued by, or bankers' acceptances of, or commercial paper
                  issued by, any bank having combined capital and surplus and
                  retained earnings of at least $100,000,000 and headquartered
                  in Canada, Japan, the United Kingdom, France, Germany,
                  Switzerland or The Netherlands; (ix) U.S. dollar-denominated
                  time deposits with any Canadian bank having a combined capital
                  and surplus and retained earnings of at least $100,000,000 and
                  having a rating of A, its equivalent or better by Moody's or
                  S&P (or, if neither such organization shall rate such
                  institution at any time, by any nationally recognized rating
                  organization in the United States); (x) Canadian Treasury
                  Bills fully hedged to U.S. dollars; and (xi) repurchase
                  agreements with any financial institution having combined
                  capital and surplus and retained earnings of at least
                  $100,000,000 collateralized by transfer of possession of any
                  of the obligations described in CLAUSES (i) through (x) above.

INDEMNITY:        Lessee will indemnify Lessor and Owner Participant, if any,for
                  Claims and Taxes arising out of Lessee's possession, use and
                  operation of the Aircraft following the Commencement Time,
                  solely as provided in Annex E and Annex F. There will be no
                  indemnity for loss of tax benefits.

QUIET ENJOYMENT;
LIEN LIFTING:     Except as expressly permitted by this Lease following an Event
                  of Default, none of Lessor, Owner Participant, if any, or any
                  Person claiming through or under Lessor or Owner Participant
                  will take

                                       11

<PAGE>

                  or cause to be taken any action inconsistent with Lessee's
                  right to quiet enjoyment of, or otherwise interrupt or
                  interfere in any way with Lessee's continuing possession, use
                  or operation of, the Aircraft, Airframe, or any Engine by
                  Lessee or any sublessee, assignee or transfer under any
                  sublease, assignment or transfer then in effect and permitted
                  by this Lease.

                  Each of Lessor and if Lessor is an owner trustee, Bank and
                  Owner Participant, if any, will promptly, at its own expense,
                  discharge any Lessor's Lien attributable to it with respect to
                  the Airframe or any Engine, or any interest therein or in this
                  Lease, and will indemnify Lessee from and against any cost or
                  expense resulting from the failure by Lessor, Bank or Owner
                  Participant, as the case may be, to discharge such Lessor's
                  Lien.

                  Lessee's obligation to pay Rent will be absolute and
                  unconditional and will not be affected by any circumstance;
                  PROVIDED Lessee shall not be required to pay Rent, and no Rent
                  shall accrue, during any period during which Lessee has been
                  deprived of possession of the Aircraft resulting from any
                  failure of Lessor or Owner Participant, if any, to comply with
                  its obligations in the preceding two paragraphs.

                  "LESSOR'S LIENS" means any Lien on or relating to or affecting
                  the Aircraft, the Engines or any part thereof arising as a
                  result of (1) Claims against or affecting Lessor or Owner
                  Participant, as applicable, not related to the ownership of
                  the Aircraft or the transactions contemplated by this Lease;
                  (2) acts or omissions of Lessor or Owner Participant, as
                  applicable, not related to the transactions contemplated by
                  this Lease or any other agreement entered into with the
                  written consent of Lessee in connection therewith or not
                  expressly provided for under the terms of this Lease or any
                  such agreement; (3) Taxes or Claims imposed against Lessor or
                  Owner Participant, as applicable, which are not indemnified
                  against by Lessee pursuant to this Lease; or (4) claims
                  against Lessor or Owner Participant, as applicable, arising
                  out of the voluntary transfer (other than pursuant to certain
                  voluntary transfers permitted by this Lease) by Lessor of its
                  interest in the Aircraft or this Lease including, without
                  limitation, by means of granting a security interest therein.

OWNER PARTICIPANT
TRANSFER; ASSIGNMENT;
RESTRUCTURING:    Lessor or Owner Participant, if any, may transfer its interest
                  to a transferee corporation, provided that (A) the transferee
                  satisfies the requirements for FAA registration eligibility
                  described in the Section captioned "REGISTRATION" and has (or
                  has its obligations guaranteed, pursuant to a guaranty
                  agreement satisfactory to Lessee, by a parent that has) a
                  tangible net worth of at least $50,000,000; provided that if
                  the tangible net worth of the proposed transferee or its
                  parent, as the case may be, is less than $50,000,000, such
                  transfer shall require Lessee's consent, such consent not to
                  be unreasonably withheld; (B) such transferee is not an
                  airline or other commercial operator of aircraft or any
                  affiliate of any thereof; (C) the transfer does not violate
                  the Securities Act of 1933 (the "SECURITIES ACT") or any other
                  law, as the case may be, or require registration under the
                  Securities Act; (D) the transferee assumes all obligations of
                  Lessor or Owner Participant, as the case may be, and the risk
                  of adverse consequences to any party to this Lease pursuant to
                  an agreement reasonably satisfactory to Lessee; and (E) Lessor
                  or Owner Participant, as the case may be, pays all reasonable
                  expenses of the other parties to this Lease in connection with
                  such transfer. If Lessor is an owner trustee, Lessor will not
                  transfer or assign its right, title and interest in the
                  Aircraft or this Lease without Lessee's consent, such consent
                  not to be unreasonably withheld.

                                       12

<PAGE>

                  Lessor will be permitted to grant a security interest in this
                  Lease or "back-leverage" the transaction to a third party,
                  PROVIDED that (1) no such transaction will require any
                  participation by Lessee or American (if Lessee is not
                  American), (2) such third party agrees to preserve Lessee's
                  quiet enjoyment of the Aircraft, (3) Lessor or Owner
                  Participant, as the case may be, pays all reasonable expenses
                  of the other parties to this Lease in connection with such
                  grant or "back-leveraging", (4) such grant or
                  "back-leveraging" does not violate the Securities Act or any
                  other law, as the case may be, or require registration under
                  the Securities Act or, without Lessee's consent (such consent
                  not to be unreasonably withheld), involve a Rule 144A/Reg S or
                  other capital markets transaction, (5) at Lessor's request and
                  with Lessee's consent (such consent not to be unreasonably
                  withheld), Lessor's lenders shall be added as additional
                  insureds under the aircraft liability policies and as
                  indemnities under the general (but not the general tax)
                  indemnity, and (6) none of the obligations, liabilities and
                  risks of Lessee in the use and operation of the Aircraft or
                  under or in respect of this Lease shall be increased, and none
                  of Lessee's rights and benefits in respect thereof shall be
                  diminished, as a result of any such grant or
                  "back-leveraging", and Lessor or Owner Participant, as the
                  case may be, agrees to indemnify Lessee and American (if
                  Lessee is not American) for any such adverse consequences
                  resulting from such grant or "back-leveraging".

                  Except as described in the preceding paragraph, Lessor will
                  have no other rights to restructure or refinance the
                  transaction, including without limitation to include a
                  "head-lease" structure, without Lessee's consent, such consent
                  not to be unreasonably withheld.

NO FINANCIAL
COVENANTS OR
GUARANTY; MERGER
COVENANT:         There will be no financial, negative-pledge or "event risk"
                  covenants of any kind and no guaranty of the obligations of
                  Lessee or American (if Lessee is not American) by any Person,
                  except in the event that Lessee is a wholly owned subsidiary
                  of American, Lessee's obligations under this Lease will be
                  guaranteed by American pursuant to the American Guaranty as
                  described in Section 4(b) of this Lease.

                  Except as described in the preceding sentence, each of Lessee
                  and American hereby agrees that it will not consolidate with
                  or merge into any other corporation, or convey, transfer or
                  lease all or substantially all of its assets as an entirety to
                  any Person, unless:

                  (1) the Person formed by such consolidation or into which
                      Lessee or American, as the case may be, is merged or the
                      Person that acquires by conveyance, transfer or lease all
                      or substantially all of the assets of Lessee or American,
                      as the case may be, as an entirety (the "SUCCESSOR"):

                           (a) in the case of a Successor of Lessee, shall, (A)
                               if and to the extent required under Section 1110
                               of the U.S. Bankruptcy Code in order that Lessor
                               continue to be entitled to any benefits of
                               Section 1110 with respect to the Aircraft, be a
                               Citizen of the United States and a Certificated
                               Air Carrier, and (B) shall execute and deliver to
                               Lessor an agreement in form reasonably
                               satisfactory to Lessor containing an assumption
                               by such Successor of the due and punctual
                               performance and observance of each covenant and
                               condition of this Lease to be performed or
                               observed by Lessee; or

                                       13

<PAGE>

                           (b) in the case of a Successor of American (unless
                               American is the Lessee), shall execute and
                               deliver to Lessor an agreement in form reasonably
                               satisfactory to Lessor containing an assumption
                               by such Successor of the due and punctual
                               performance and observance of each covenant and
                               condition of the American Guaranty to be
                               performed or observed by Lessee; and

                  (2) except in the case of a Lessee consolidation with or
                      merger into, or conveyance, transfer or lease of all or
                      substantially all of its assets as an entirety to
                      American, immediately after giving effect to such
                      transaction, no Event of Default shall have occurred and
                      be continuing; and

                  (3) Lessee or American, as the case may be, shall have
                      delivered to Lessor an officer's certificate and an
                      opinion of counsel (which may be American's general
                      counsel), each stating that such consolidation, merger,
                      conveyance, transfer or lease and the assumption agreement
                      described in clause (1) above comply with these
                      requirements and that all conditions precedent provided
                      for in this Lease relating to such transaction have been
                      complied with (except that such opinion need not cover the
                      matters referred to in clause (2) above and may rely, as
                      to factual matters, on an officer's certificate of Lessee
                      or American, as the case may be) and, in the case of such
                      opinion, that such assumption agreement has been duly
                      authorized, executed and delivered by the Successor,
                      constitutes its legal, valid and binding obligation and is
                      enforceable against such Successor in accordance with its
                      terms , except as the same may be limited by applicable
                      bankruptcy, insolvency, reorganization, moratorium or
                      similar laws affecting the rights of creditors generally
                      and by general principles of equity.

                  Upon any consolidation or merger, or any conveyance, transfer
                  or lease of all or substantially all of the assets of Lessee
                  or American, as the case may be, as an entirety in accordance
                  with the requirements above, the Successor will succeed to, be
                  substituted for, and may exercise every right and power of,
                  and will assume every obligation and liability of, Lessee
                  under this Lease or American under the American Guaranty, as
                  the case may be. No such conveyance, transfer or lease of all
                  or substantially all of the assets of Lessee or American will
                  have the effect of releasing Lessee, American or any Successor
                  which shall theretofore have become such in the manner
                  prescribed above from its liability under this Lease or the
                  American Guaranty, as the case may be.

FINANCIAL
INFORMATION:      American agrees to furnish Lessor and Owner Participant, if
                  any (A) within 60 days after the end of each of the first
                  three quarterly periods in each fiscal year of American,
                  either (x) a consolidated balance sheet of American and its
                  consolidated subsidiaries prepared by it as of the close of
                  such period, together with the related consolidated statements
                  of income for such period, or (y) a report of American on Form
                  10-Q in respect of such period in the form filed with the
                  Securities and Exchange Commission; (B) within 120 days after
                  the close of each fiscal year of American, either (x) a
                  consolidated balance sheet of American and its consolidated
                  subsidiaries as of the close of such fiscal year, together
                  with the related consolidated statements of income for such
                  fiscal year, as certified by independent public accountants,
                  or (y) a report of American on Form 10-K in respect of such
                  year in the form filed with the Securities and Exchange
                  Commission; (C) within 120 days after the close of each fiscal
                  year of American a certificate of American signed by a
                  responsible officer of American, to the effect that the signer
                  has reviewed the relevant terms of this Lease and has made, or
                  caused to be made under his or her supervision, a review of
                  the transactions and condition of Lessee during the accounting
                  period covered by the financial statements referred to in (B),
                  and that such review has not disclosed the existence during
                  such accounting period, nor does the signer have knowledge of
                  the existence as of the date of such

                                       14

<PAGE>

                  certificate, of any Event of Default or, if any such Event of
                  Default exists or existed, specifying the nature and period of
                  existence thereof and what action Lessee has taken or is
                  taking or proposes to take with respect thereto; and (D) such
                  other non-confidential information readily available to
                  American without undue expense as Lessor shall reasonably
                  request.

                  The items required to be furnished pursuant to (A) and (B)
                  above shall be deemed to have been furnished on the date on
                  which such item is posted on the SEC's website at www.sec.gov,
                  and such posting shall be deemed to satisfy the requirements
                  of (A) and (B); PROVIDED, that American shall deliver a paper
                  copy of any item referred to in (A) or (B) above if Lessor so
                  requests.

SECTION 1110:     There are no assurances that Lessor or Owner Participant, if
                  any, will be entitled to the benefits of Section 1110, and
                  Lessee shall have no obligations of any kind with respect to
                  the preservation of Section 1110 benefits for Lessor or Owner
                  Participant, if any, except as may be expressly provided in
                  this Lease. Lessee shall, for as long as and to the extent
                  required under Section 1110 in order that Lessor be entitled
                  to the benefits of Section 1110 with respect to the Aircraft
                  (if any), remain a Certificated Air Carrier.

LESSOR RIGHT
TO PERFORM
FOR LESSEE:       If Lessee fails to make any payment of Rent required to be
                  made by it under this Lease or fails to perform or comply with
                  any of its agreements contained in this Lease and such failure
                  can be cured with the payment of money, Lessor may, on behalf
                  of Lessee and upon prior notice to Lessee, itself make such
                  payment. The amount of any such payment and the amount of the
                  reasonable expenses of Lessor incurred in connection with such
                  payment shall be deemed Supplemental Rent immediately due and
                  payable as of and when such payment is made by Lessor.

LESSOR
DISCLAIMER:       NONE OF LESSOR, BANK OR OWNER PARTICIPANT (IN EACH CASE, IN
                  ITS CAPACITY AS SUCH) MAKES OR SHALL BE DEEMED TO HAVE MADE IN
                  THIS APPENDIX B ANY REPRESENTATION OR WARRANTY, EXPRESS OR
                  IMPLIED, AS TO THE AIRWORTHINESS, VALUE, CONDITION,
                  WORKMANSHIP, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR
                  USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS
                  TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
                  DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
                  PATENT, TRADEMARK OR COPYRIGHT, OR AS TO THE ABSENCE OF
                  OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER
                  REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
                  WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE OR ANY PART
                  THEREOF.

                  The disclaimer above shall not be construed as a waiver of any
                  warranty or other claim against any manufacturer, supplier,
                  dealer, contractor, subcontractor or other Person.

CONCERNING
LESSOR:           If Lessor is an owner trustee, the Owner Trustee is entering
                  into this Lease solely in its capacity as Owner Trustee under
                  the TWA Trust Agreement and not in its individual capacity
                  (except as expressly stated in this Lease) and in no case
                  shall Owner Trustee (or any entity acting as successor Owner
                  Trustee under the TWA Trust Agreement) be personally liable
                  for or on account of any of the statements, representations,
                  warranties, covenants or obligations stated to be those of
                  Lessor under this Lease; PROVIDED, HOWEVER, that Owner Trustee
                  (or any such successor Owner Trustee) shall be personally
                  liable under this Lease for its own gross negligence or
                  willful

                                       15

<PAGE>

                  misconduct or for its breach of its covenants, representations
                  and warranties contained in this Lease, to the extent
                  covenanted or made in its individual capacity.

REVOCATION  OF
TRUST;  SUCCESSOR
OWNER
TRUSTEE:          If Lessor is an owner trustee, Owner Participant agrees not to
                  amend, terminate or revoke the trust created by the TWA Trust
                  Agreement without the prior written consent of Lessee and,
                  which consent shall not be unreasonably withheld. Owner
                  Participant further agrees not to remove the institution
                  acting as Owner Trustee, and not to replace the institution
                  acting as Owner Trustee in the event that such institution
                  resigns as Owner Trustee, unless Owner Participant shall have
                  consulted in good faith with Lessee prior to such removal or
                  replacement as to the identity, location and fee schedules of
                  the proposed successor trustee.

EXPENSES:         Each party will be responsible for its own costs and expenses
                  incurred in connection with the negotiation and documentation
                  of the transaction contemplated by this Lease, including the
                  fees and disbursements of its counsel. Lessee agrees to pay
                  the fees and expenses of Crowe & Dunlevy, special FAA counsel.
                  If Lessor is an owner trustee, Lessee agrees to pay the
                  ongoing fees and expenses of Bank with respect to the Lease
                  Term in amounts that are reasonably satisfactory to Lessee.

EVIDENCE OF
AUTHORITY:        Upon request from Lessor, Lessee shall provide Lessor
                  on the Closing Date with evidence of the authority of the
                  person or persons executing this Assumption and Lease
                  Agreement and, if applicable, the Lessee Assignment and
                  Assumption Agreement and the American Guaranty, in each case
                  on behalf of Lessee and American (if American is not the
                  Lessee).

                                       16

<PAGE>

                                                                         ANNEX A

                                   POSSESSION

So long as no Event of Default has occurred and is continuing, Lessee will be
permitted, without any need for consent of Lessor or Owner Participant, if any,
to:

(i)     subject the Airframe to normal interchange agreements or any Engine to
        normal interchange or pooling agreements or arrangements in each case
        customary in the airline industry and entered into by Lessee in the
        ordinary course of its business with any Certificated Air Carrier or
        with any "FOREIGN AIR CARRIER" (as such term is defined in the
        Transportation Code) as to which there is in force a permit issued
        pursuant to 49 U.S.C. ss.ss.41301-41306 (any such Certificated Air
        Carrier and any such foreign air carrier, a "PERMITTED AIR CARRIER");
        PROVIDED that (A) no transfer of the registration of such Airframe will
        be effected in connection therewith, (B) no such agreement or
        arrangement contemplates or requires the transfer of title to the
        Airframe and (C) if Lessor's title to any such Engine would be divested
        under any such agreement or arrangement, such divestiture will be deemed
        to be an Event of Loss with respect to such Engine, and Lessee will
        comply with the Event of Loss provisions contained in this Lease;

(ii)    deliver possession of the Airframe or any Engine to any organization for
        testing, service, repair, maintenance, overhaul work or other similar
        purposes or for alterations, modifications or additions to the Airframe
        or such Engine to the extent required or permitted by the terms of this
        Lease;

(iii)   transfer possession of the Airframe or any Engine to the U.S. government
        pursuant to a sublease, contract or other instrument, a copy of which
        will be furnished to Lessor; PROVIDED that the term of such sublease
        (including, without limitation, any option of the sublessee to renew or
        extend) or the term of possession under such contract or other
        instrument will not continue beyond the end of the Lease Term or any
        Renewal Term then in effect or any Renewal Term that Lessee has
        irrevocably notified Lessor that it will exercise;

(iv)    subject the Airframe or any Engine to the Civil Reserve Air Fleet
        ("CRAF") Program or transfer possession of the Airframe or any Engine at
        any time to the U.S. or any instrumentality or agency thereof in
        accordance with applicable laws, rulings, regulations or orders
        (including, without limitation, the CRAF Program), PROVIDED that Lessee
        (x) will promptly notify Lessor upon transferring possession of the
        Airframe or any Engine pursuant to this clause (iv) and (y) in the case
        of a transfer of possession pursuant to the CRAF Program, within 60 days
        thereof, will notify Lessor of the name and address of the responsible
        Contracting Office Representative for the Military Airlift Command of
        the United States of America or other appropriate person to whom notice
        must be given;

(v)     install an Engine on an 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 third parties under normal interchange
        agreements or pooling or similar arrangements that would be permitted
        under clause (i) above;

(vi)    install an Engine on an airframe leased to Lessee or purchased or owned
        by Lessee subject to a lease, conditional sale or other security
        agreement; PROVIDED that (A) such airframe is free and clear of all
        Liens except (1) the rights of the parties to the lease or conditional
        sale or other security agreement covering such airframe and (2) Liens of
        the type permitted by clause (v) above and (B) either (1) Lessee will
        have obtained from the lessor or secured party of such airframe a
        written agreement (which may be the lease or conditional sale or other
        security agreement covering such airframe), in form and substance
        satisfactory to Lessor (it being understood that an agreement from such
        lessor or secured party substantially in the form of the last sentence
        of this clause (vi) will be deemed to be satisfactory to Lessor) whereby
        such lessor or secured party expressly agrees that it will not acquire
        or claim any right, title or interest in any Engine by

                                                           Annex A to Appendix B

<PAGE>

        reason of such Engine being installed on such airframe at any time while
        such Engine is subject to this Lease or title thereto is held by Lessor
        or (2) such lease, conditional sale or other security agreement
        effectively provides that such Engine will not become subject to the
        Lien of such lease, conditional sale or other security agreement at any
        time while such Engine is subject to this Lease or title thereto is held
        by Lessor, notwithstanding the installation thereof on such airframe;

(vii)   install an Engine on an airframe owned by Lessee, leased to Lessee or
        owned by Lessee subject to a conditional sale or other security
        agreement under circumstances where neither clause (v) nor clause (vi)
        above is applicable; PROVIDED that such installation will be deemed an
        Event of Loss with respect to such Engine, and Lessee will comply with
        the Event of Loss provisions in this Lease in respect thereof, if such
        installation will divest Lessor's title to such Engine; and

(viii)  sublease any Engine or the Airframe and Engines orengines then installed
        on the Airframe to any Permitted Sublessee (as defined below); PROVIDED
        that (x) the term of such sublease (including, without limitation, any
        option of the sublessee to renew or extend) will not continue beyond the
        end of the Lease Term or any Renewal Term then in effect, unless Lessee
        has agreed to purchase the Aircraft or renew this Lease in accordance
        with the terms of this Lease at the end of the Lease Term or such
        Renewal Term, as the case may be, to a date beyond the end of the term
        of such sublease (assuming that all options to renew or extend such
        sublease will be exercised); and (y) such sublease will provide that the
        sublessee will not sub-sublease the Aircraft except in connection with
        an integrated transaction involving a sub-sublease to a Permitted
        Sublessee commencing at the inception of such sublease. "PERMITTED
        SUBLESSEE" means, (A) in the case of a Lease with a Lease Expiry Date on
        or prior to December 31, 2007, any Certificated Air Carrier and (B) in
        the case of a Lease with a Lease Expiry Date after December 31, 2007,
        (1) any Certificated Air Carrier, (2) any foreign air carrier that is
        principally based in and a domiciliary of any of Argentina, Australia,
        Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland,
        Ireland, Italy, Japan, The Netherlands, New Zealand, Norway, Singapore,
        Spain (including Canary Islands), Sweden, Switzerland, and the United
        Kingdom (each, a "PERMITTED COUNTRY"), or (3) any foreign air carrier
        not described in clause (2) above, if, at the time Lessee enters into a
        sublease with such foreign air carrier, Lessor receives an opinion from
        Lessee's counsel (which counsel shall be reasonably satisfactory to
        Lessor) to the effect that (x) there exist no possessory rights in favor
        of such s ublessee under the laws of such sublessee's country which
        would, upon bankruptcy or insolvency of or other default by Lessee and
        assuming that at the time of such bankruptcy, insolvency or other
        default by Lessee, such sublessee is not insolvent or bankrupt, prevent
        the return of an Engine or the Airframe and each Engine or engine
        subject to such sublease to Lessor in accordance with and when permitted
        by the terms of this Lease upon Lessor's exercise of its remedies and
        (y) the terms of this Lease are legal, valid, binding and enforceable in
        the country in which such foreign air carrier is principally based
        (subject to customary exceptions); PROVIDED that in the case of any such
        foreign air carrier referred to in clause (2) or (3) above (other than a
        foreign air carrier principally based in Taiwan), the U.S. maintains
        full diplomatic relations with the country in which such foreign air
        carrier is principally based at the time such sublease is entered into;

PROVIDED that the rights of any transferee who receives possession by reason of
a transfer permitted by this Annex (other than the transfer of an Engine which
is deemed an Event of Loss) will be, during the period of such possession,
subject and subordinate to, and any sublease permitted by this Annex will be
made expressly subject and subordinate to, all the terms of this Lease,
including, without limitation, Lessor's rights to repossession and to avoid and
terminate such sublease upon such repossession, and Lessee will in all events
remain primarily liable under this Lease for the performance and observance of
all the terms and conditions of this Lease to the same extent as if such
sublease or transfer had not occurred, and that any such sublease will include
appropriate provisions for the maintenance and insurance of the Aircraft. No
interchange agreement, pooling agreement, sublease or other relinquishment of
possession of the Airframe or any Engine will in any way discharge or diminish
any of Lessee's obligations to Lessor under this Lease. Lessee will, prior to or
within 15 days after entering into a sublease of the Airframe or Engines, notify
Lessor and Owner Participant, if any, of the identity of the sublessee and the
term of

                                                           Annex A to Appendix B

                                       2

<PAGE>

such sublease, and, upon Lessor's written request, provide Lessor and Owner
Participant , if any, with a copy of the sublease, PROVIDED that the identity of
the sublessee and the existence and terms of such sublease shall be Confidential
Information and shall be held by Lessor and Owner Participant, if any, in
accordance with the provisions of Section 9 of this Lease. Lessor agrees, for
the benefit of the lessor or secured party of any airframe or any engine leased
to Lessee or purchased or owned by Lessee subject to a lease, conditional sale
or other security agreement, that Lessor will not acquire or claim, as against
such lessor or secured party, any right, title or interest in any 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 as the result of such engine or engines being installed on the
Airframe at any time while such engine or engines are subject to such lease or
conditional sale or other security agreement.

Any obligation imposed on Lessee in this Lease shall require only that Lessee
perform or cause to be performed such obligation, even if stated in this Lease
as a direct obligation, and the performance of any such obligation by a
permitted assignee, sublessee or transferee under an assignment, sublease or
transfer agreement then in effect shall constitute performance by Lessee and to
the extent of such performance discharge such obligation by Lessee. Except as
otherwise expressly provided in this Lease, any right granted to Lessee in this
Lease shall grant Lessee the right to exercise such right or permit such right
to be exercised by such assignee, sublessee or transferee.

Any "wet lease" or other similar arrangement under which Lessee maintains
operational control of the Aircraft will not constit ute a delivery, transfer or
relinquishment of possession for purposes of this Annex. No "wet lease" will
extend beyond the Lease Term or any Renewal Term then in effect.

In connection with a foreign sublease, Lessee at any time, upon notice to Lessor
and Owner Participant, if any, may cause the Aircraft to be registered under the
applicable statutes of any other country in which a Permitted Sublessee could be
based in the name of Lessor or, if required by applicable law, in the name of
any other Person, and Lessor and Owner Participant, if any, will cooperate with
Lessee's reasonable requests in effecting such foreign registration. Such
foreign registration is subject to the satisfaction of the conditions below or
waiver thereof by Lessor and Owner Participant, if any:

         (i)   no Event of Default shall have occurred and be continuing at the
               date of such request or at the effective date of the change in
               registration, PROVIDED that it shall not be necessary to comply
               with this condition (i) if the change in registration involves
               the registration of the Aircraft under the laws of the U.S.;

         (ii)  Lessor shall have received a legal opinion addressed to it from
               counsel to Lessee reasonably satisfactory to Lessor (A) to the
               effect that (I) after giving effect to such change in
               registration, all filing, recording or other action necessary to
               perfect and protect Lessor's rights and interests in and to the
               Aircraft and this Lease has been accomplished (or if such opinion
               cannot be given at the time by which Lessor has been requested to
               consent to a change in registration, (x) the opinion shall detail
               what filing, recording or other action is necessary and (y)
               Lessor shall have received a certificate from Lessee that all
               possible preparations to accomplish such filing, recording and
               other action shall have been done, and such filing, recording and
               other action shall be accomplished and a supplemental opinion to
               that effect shall be delivered to Lessor on or prior to the
               effective date of such change in registration), (II) the terms of
               this Lease are legal, valid and binding and enforceable in such
               jurisdiction (subject to customary exceptions), and (III) it is
               not necessary for Lessor or Owner Participant, if any, to qualify
               to do business in such jurisdiction or otherwise satisfy any
               other applicable law, rule or regulation existing at the date of
               such request (or if such opinion cannot be given, the opinion
               shall detail what other existing law, rule or regulation must be
               satisfied by Lessor or Owner Participant, as the case may be)
               solely as a result of the proposed re-registration, and (B) in
               addition, if such country is not, at the time of re-registration,
               the U.S. or a Permitted Country, to the effect that there exist
               no possessory rights in favor of Lessee under the laws of such
               country that would, assuming at such time Lessee is not insolvent
               or bankrupt, prevent the return of

                                                           Annex A to Appendix B

                                        3

<PAGE>

               the Aircraft in accordance with and when permitted by the terms
               of this Lease upon the exercise by Lessor of its remedies under
               this Lease;

         (iii) Lessor shall have received assurances reasonably satisfactory to
               Lessor that the insurance provisions of this Lease shall have
               been complied with after giving effect to such change in
               registration;

         (iv)  such re-registration will not result in the imposition by such
               country of any Taxes on Lessor or Owner Participant, if any, for
               which Lessee is not required to indemnify Lessor or Owner
               Participant, as the case may be, unless Lessee agrees to
               indemnify Lessor or Owner Participant, as the case may be, for
               any Taxes imposed by such country in connection with or relating
               to the transactions contemplated by this Lease that would not
               have been imposed but for such re-registration; PROVIDED that it
               shall not be necessary to comply with the conditions contained in
               this clause (iv) if such change in registration results in the
               re-registration of the Aircraft under the laws of the U.S.,
               except to the extent that the provisions of the tax
               indemnification provisions relating to Lessor or Owner
               Participant, as the case may be, were amended in effecting a
               previous foreign registration;

         (v)   such re-registration will not divest Lessor of title to the Air-
               craft; and

         (vi)  Lessee shall have paid or made provision for the payment of all
               reasonable out-of-pocket expenses (including reasonable
               attorneys' fees) of Lessor in connection with such change in
               registration; PROVIDED FURTHER that Lessee shall not cause the
               Aircraft to be registered under the laws of any foreign
               jurisdiction without the prior written consent of Lessor or Owner
               Participant, if any, if (1) the civil aviation laws of such
               foreign jurisdiction impose unusual requirements on lessors of
               civil aircraft, and (2) Lessor or Owner Participant, as the case
               may be, would be required to comply with such unusual
               requirements upon the registration of the Aircraft in such
               foreign jurisdiction, and compliance therewith by Lessor or Owner
               Participant, as the case may be, would result in a material
               burden on the business activities of Lessor or Owner Participant,
               as the case may be.

                                                           Annex A to Appendix B

                                       4

<PAGE>

                                                                         ANNEX B

                                 EVENTS OF LOSS

         "EVENT OF LOSS" with respect to any property means any of the following
events with respect to such property:

                  (1) loss of such property or the use thereof due to theft,
         disappearance, destruction, damage beyond repair or rendition of such
         property permanently unfit for normal use for any reason whatsoever;

                  (2) any damage to such property which results in an insurance
         settlement with respect to such property on the basis of a total loss
         or a compromised or constructive total loss;

                  (3) the condemnation, confiscation or seizure of, or
         requisition of title to or use of, such property (other than a
         requisition for use of the Aircraft by the U.S. government or any
         agency or instrumentality thereof which shall not have resulted in a
         loss of possession of such property for a period continuing beyond the
         end of the Lease Term or any Renewal Term then in effect);

                  (4) as a result of any rule, regulation, order or other action
         by the FAA, the Department of Transportation or other governmental body
         of the U.S. or other country of registry of the Aircraft having
         jurisdiction, the use of such property in the normal course of
         passenger air transportation will have been prohibited for a period of
         six consecutive months, unless such rule, regulation, order or other
         action will have prohibited such use with respect to all aircraft of
         such make and model registered in the applicable jurisdiction, unless
         Lessee (or any Permitted Sublessee), prior to the expiration of such
         six-month period, shall have undertaken and shall be diligently
         carrying forward all steps which in its judgment are necessary or
         desirable to permit the normal use of such property by Lessee (or any
         Permitted Sublessee) or, in any event, if such use has been prohibited
         for a period of twelve consecutive months; or

                  (5) the operation or location of the Aircraft, while under
         requisition for use by the U.S. government, in any area excluded from
         coverage by any insurance policy in effect with respect to the Aircraft
         required by the terms of this Lease, if Lessee shall be unable to
         obtain indemnity or insurance in lieu thereof from the U.S. government;

PROVIDED that if such property is returned to Lessee in usable condition after
the occurrence of an event described in clause (1), (3) or (5) above but prior
to the date upon which Stipulated Loss Value is required to be paid, then such
event will, at the option of Lessee, not constitute an Event of Loss.

                                                           Annex B to Appendix B

<PAGE>

                                                                         ANNEX C

                                    INSURANCE

         (a) AIRCRAFT LIABILITY INSURANCE. (i) Except as provided in clause (ii)
of this subsection (a) and subject to the rights of Lessee to establish and
maintain self-insurance in the manner and to the extent specified in subsection
(c), Lessee will carry, or cause to be carried, at no expense to Lessor or Owner
Participant, if any (collectively, the "SPECIFIED PERSONS"), aircraft liability
insurance (including, but not limited to, bodily injury, personal injury and
property damage liability, exclusive of manufacturer's product liability
insurance) and contractual liability insurance with respect to the Aircraft (A)
in amounts that are not less than the aircraft liability insurance applicable to
similar aircraft and engines in Lessee's fleet on which Lessee carries insurance
(PROVIDED that such liability insurance will not be less than the amount
certified in the insurance report delivered to Lessor at the Commencement Time)
[Report to specify $500,000,000], (B) of the type usually carried by
corporations engaged in the same or similar business, similarly situated with
Lessee and owning or operating similar aircraft and engines and covering risks
of the kind customarily insured against by Lessee and (C) that is maintained in
effect with insurers of recognized responsibility. Any policies of insurance
carried in accordance with this subsection (a) and any policies taken out in
substitution or replacement for any of such policies will (A) name the Specified
Persons as additional insured, (B) subject to the condition of clause (C) below,
provide that, in respect of the interests of the Specified Persons in such
policies, the insurance will not be invalidated by any action or inaction of
Lessee and will insure the interests of the Specified Persons as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Lessee, (C) provide that, if such insurance is
canceled for any reason whatever, or if any change is made in the policy that
reduces the amount of insurance or the coverage certified in the insurance
report delivered to the Specified Persons at the Commencement Time or if such
insurance is allowed to lapse for nonpayment of premium, such cancellation,
change or lapse will not be effective as to any Specified Person for 30 days
(seven (7) days, or such other period as is customarily available in the
industry, in the case of any war risk or allied perils coverage) after receipt
by such Specified Person of written notice from such insurers of such
cancellation, change or lapse, (D) provide that the Specified Persons will not
have any obligation or liability for premiums, commissions, assessments or calls
in connection with such insurance, (E) provide that the insurers will waive any
rights of (1) set-off, counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of the Specified Persons to
the extent of any moneys due to the Specified Persons and (2) subrogation
against the Specified Persons to the extent that Lessee has waived its rights by
its agreements to indemnify Specified Persons pursuant to this Lease, (F) be
primary without right of contribution from any other insurance that may be
carried by any Specified Person with respect to its interests as such in the
Aircraft and (G) expressly provide that all of the provisions thereof, except
the limits of liability, will operate in the same manner as if there were a
separate policy covering each insured. In the case of a lease or contract with
the U.S. government in respect of the Aircraft or any Engine, or in the case of
any requisition for use of the Aircraft or any Engine by the U.S. government, a
valid agreement by the U.S. government to indemnify Lessee, or an insurance
policy issued by the U.S. government, against the risks that Lessee is required
under this Lease to insure against will be considered adequate insurance for
purposes of this subsection (a) to the extent of the risks (and in the amounts)
that are the subject of such indemnification or insurance.

                  (ii) During any period that the Airframe or an Engine, as the
case may be, is on the ground and not in operation, Lessee may carry or cause to
be carried as to such non-operating Airframe or Engine, in lieu of the insurance
required by clause (i) above, and subject to self-insurance to the extent
permitted by subsection (c), insurance otherwis e conforming with the provisions
of said clause (i) except that: (A) the amounts of coverage will not be required
to exceed the amounts of airline liability insurance from time to time
applicable to airframes or engines owned or leased by Lessee of the same type as
such non-operating Airframe or Engine and that are on the ground and not in
operation and (B) the scope of the risks covered and the type of insurance will
be the same as from time to time applicable to airframes or engines owned or
leased by Lessee of the same type as such non-operating Airframe or Engine and
that are on the ground and not in operation.

         (b)   INSURANCE AGAINST LOSS OR DAMAGE TO AIRCRAFT.  (i) Except as
provided in clause (ii) of this subsection (b), and subject to the rights of
Lessee to establish and maintain self-insurance in the manner and to

                                                           Annex C to Appendix B

<PAGE>

the extent specified in subsection (c), Lessee will maintain, or cause to be
maintained, in effect with insurers of recognized responsibility, at no expense
to any Specified Person, all-risk aircraft hull insurance covering the Aircraft
and all-risk coverage with respect to any Engines or Parts while removed from
the Aircraft (including, without limitation, war risk insurance if and to the
extent the same is maintained by Lessee or any permitted sublessee with respect
to other aircraft owned or operated by Lessee or such permitted sublessee, as
the case may be, on the same routes) that is of the type and in substantially
the amount usually carried by corporations engaged in the same or similar
business and similarly situated with Lessee; PROVIDED that (A) such insurance
(including the permitted self-insurance) will at all times while the Aircraft is
subject to this Lease be for an amount not less than the Stipulated Loss Value
for the Aircraft from time to time and (B) such insurance need not cover an
Engine while attached to an airframe not owned, leased or operated by Lessee.
Any policies carried in accordance with this subsection (b) and any policies
taken out in substitution or replacement for any such policies will (A) provide
that any insurance proceeds up to an amount equal to the Stipulated Loss Value,
payable for any loss or damage constituting an Event of Loss with respect to the
Aircraft, and any insurance proceeds in excess of $[ ],1 up to the amount of the
Stipulated Loss Value, for any loss or damage to the Aircraft (or Engines) not
constituting an Event of Loss with respect to the Aircraft, will be paid to
Lessor, and that all other amounts will be payable to Lessee, unless the insurer
shall have received notice that an Event of Default exists, in which case all
insurance proceeds for any loss or damage to the Aircraft (or Engines) up to the
Stipulated Loss Value will be payable to Lessor, (B) subject to the conditions
of clause (C) below, provide that, in respect of the interests of the Specified
Persons in such policies, the insurance will not be invalidated by any action or
inaction of Lessee and will insure their interests as they appear, regardless of
any breach or violation of any warranty, declaration or condition contained in
such policies by Lessee, (C) provide that, if such insurance is canceled for any
reason whatsoever, or if any change is made in the policy that reduces the
amount of insurance or the coverage certified in the insurance report delivered
to the Specified Persons at the Commencement Time or if such insurance is
allowed to lapse for nonpayment of premium, such cancellation, change or lapse
will not be effective as to any Specified Person for 30 days (seven days, or
such other period as is customarily available in the industry, in the case of
any war risk or allied perils coverage) after receipt by such Specified Person
of written notice from such insurers of such cancellation, change or lapse, (D)
provide that the Specified Persons will not have any obligation or liability for
premiums, commissions, assessments or calls in connection with such insurance,
(E) provide that the insurers will waive any rights of (1) set-off, counterclaim
or any other deduction, whether by attachment or otherwise, in respect of any
liability of the Specified Persons to the extent of any moneys due to Specified
Persons and (2) subrogation against Specified Persons to the extent that Lessee
has waived its rights by its agreements to indemnify such party pursuant to this
Lease and (F) be primary without right of contribution from any other insurance
that may be carried by any Specified Person with respect to its interests as
such in the Aircraft. In the case of a lease or contract with the U.S.
government in respect of the Aircraft or any Engine, or in the case of any
requisition for use of the Aircraft or any Engine by the U.S. government, a
valid agreement by the U.S. government to indemnify Lessee, or an insurance
policy issued by the U.S. government, against any risks that Lessee is required
under this Lease to insure against will be considered adequate insurance for
purposes of this subsection (b) to the extent of the risks (and in the amounts)
that are the subject of such indemnification or insurance.

                  (ii) During any period that the Airframe or Engine is on the
ground and not in operation, Lessee may carry or cause to be carried as to such
non-operating Airframe or Engine, in lieu of the insurance required by clause
(i) above, and subject to self-insurance to the extent permitted by subsection
(c), insurance otherwise conforming with the provisions of said clause (i)
except that the scope of the risks covered and the type of

__________________

1  Amount varies according to aircraft type:
        MD80 - $4,000,000
        B757 - $7,000,000
        B767 - $10,000,000
        DC9 - TBD

                                                           Annex C to Appendix B

                                       2

<PAGE>

insurance will be the same as from time to time applicable to airframes or
engines owned or leased by Lessee of the same type as such non-operating
Airframe or Engine and that are on the ground and not in operation; provided
that, subject to self-insurance to the extent permitted by subsection (c),
Lessee will maintain insurance against risk of loss or damage to such
non-operating Airframe in an amount at least equal to the Stipulated Loss Value
during such period that such Airframe is on the ground and not in operation.

         (c) SELF-INSURANCE. Lessee may from time to time self-insure, by way of
deductible, self-insured retention, premium adjustment or franchise or otherwise
(including, with respect to insurance maintained pursuant to subsection (a) or
(b) above, insuring for a maximum amount that is less than the amounts set forth
in subsection (a) and (b)), the risks required to be insured against pursuant to
subsection (a) and (b), but in no case will the self-insurance with respect to
all of the aircraft and engines in the aggregate fleets of Lessee and American
(if American is not Lessee) (including, without limitation, the Aircraft) exceed
for any 12-month policy year 1% of the average aggregate insurable value (for
the preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Lessee and American (if American is not the Lessee) carries
insurance; PROVIDED that, if AMR Corporation's senior unsecured long-term debt
is rated BB or below by S&P and Ba2 or below by Moody's, then, upon not less
than 30 days' notice from Lessor to Lessee, Lessee will, until AMR Corporation's
senior unsecured long-term debt is rated BB+ or better by S&P or Ba1 or better
by Moody's, reduce the self-insurance permitted under this Lease to such
reasonable amount as Lessor may require; and PROVIDED, FURTHER, that a
deductible per occurrence that, in the case of the Aircraft, is not in excess of
the amount customarily allowed as a deductible in the industry or is required to
facilitate claims handling will be permitted in addition to the above-mentioned
self-insurance.

         (d) APPLICATION OF INSURANCE PAYMENTS. All losses will be adjusted by
Lessee with the insurers. As between Lessor and Lessee it is agreed that all
insurance payments received under policies required to be maintained by Lessee
under this Lease, exclusive of any payments received in excess of the Stipulated
Loss Value for the Aircraft from such policies, as the result of the occurrence
of an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:

                  (i) if such payments are received with respect to the Airframe
         (or the Airframe and any Engines installed on the Airframe), so much of
         such payments remaining after reimbursement of Lessor for its costs and
         expenses will be applied (A) in reduction of Lessee's obligation to pay
         the Stipulated Loss Value required to be paid by Lessee pursuant to the
         Section captioned "EVENT OF LOSS", if not already paid by Lessee, or,
         if already paid by Lessee, will be applied to reimburse Lessee for its
         payment of such Stipulated Loss Value, and (B) the balance, if any, of
         such payment remaining thereafter will be paid over to, or retained by,
         Lessee; and

                  (ii) if such payments are received with respect to an Event of
         Loss with respect to an Engine under the circumstances contemplated by
         the Section captioned "REPLACEMENT ENGINES", such payments will be paid
         over to, or retained by, Lessee; PROVIDED that Lessee shall have fully
         performed the terms of such Section with respect to the Event of Loss
         for which such payments are made.

                  As between Lessor and Lessee the insurance payment for any
loss or damage to the Aircraft in excess of the Stipulated Loss Value for the
Aircraft will be paid to Lessee.

                  As between Lessor and Lessee the insurance payments for any
loss or damage to the Airframe or an Engine not constituting an Event of Loss
with respect to the Airframe or such Engine will be applied in payment (or to
reimburse Lessee) for repairs or for replacement property, and any balance
remaining will be paid to Lessee. Any amount referred to in the preceding
sentence or in CLAUSE (i) or CLAUSE (ii) of the second preceding paragraph which
is payable to Lessee shall not be paid to Lessee (or, if it has been previously
paid directly to Lessee, shall not be retained by Lessee) if at the time of such
payment an Event of Default or Specified Default shall have occurred and be
continuing, but shall be paid to and held by Lessor pursuant to the Section
captioned "INVESTMENT OF SECURITY

                                                           Annex C to Appendix B

                                       3

<PAGE>

FUNDS", as security for the obligations of Lessee under this Lease, and at such
time as there shall not be continuing any such Event of Default or Specified
Default, such amount shall, to the extent not theretofore applied as provided
herein, be paid to Lessee, PROVIDED that if any such amount has been so held by
Lessor as security fo r more than 90 days after any such Event of Default or
Specified Default shall have occurred and during which period (i) Lessor shall
not have been limited by operation of law or otherwise from exercising remedies
hereunder and (ii) Lessor shall not have exercised any remedy available to it
under Annex D, then such amount shall be paid to Lessee.

                  (e) REPORTS, ETC. At or before the Commencement Time, and
annually upon renewal of Lessee's insurance coverage, Lessee will furnish to
Lessor a report signed by a firm of independent aircraft insurance brokers
appointed by Lessee (which broker may be in the regular employ of Lessee),
stating the opinion of such firm that the insurance then carried and maintained
on the Aircraft complies with the terms hereof; PROVIDED that all information
contained in such report will be Confidential Information and will be treated by
Lessor and its Affiliates and their respective officers, directors, agents and
employees in accordance with the confidentiality provisions of this Lease.
Lessee will cause such firm to advise Lessor in writing of any default in the
payment of any premium or of any other act or omission on the part of Lessee of
which such firm has knowledge and that might invalidate or render unenforceable,
in whole or in part, any insurance on the Aircraft. Lessee will also cause such
firm to advise Lessor writing as promptly as practicable after such firm
acquires knowledge that an interruption of any insurance carried and maintained
on the Aircraft pursuant to this Annex will occur.

                  (f) SALVAGE RIGHTS; OTHER. All salvage rights to the Airframe
and each Engine will remain with Lessee's insurers at all times. Nothing in this
Annex will limit or prohibit Lessor or Lessee from obtaining insurance for its
own account with respect to the Airframe or any Engine, and any proceeds payable
under such insurance will be payable as provided in the insurance policy
relating thereto; PROVIDED that no such insurance may be obtained which would
limit or otherwise adversely affect the coverage or amounts payable under, or
increase the premiums for, any insurance required to be maintained pursuant to
this Annex or any other insurance maintained by Lessee (or any permitted
sublessee) with respect to the Aircraft or any other aircraft in the fleet of
Lessee or American (if American is not Lessee).

                                                           Annex C to Appendix B

                                       4

<PAGE>

                                                                         ANNEX D

                         EVENTS OF DEFAULT AND REMEDIES

         The following events shall constitute "EVENTS OF DEFAULT" (whether any
such event will be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body), and each such Event of Default shall be deemed to exist and
continue so long as, but only so long as, it shall not have been remedied:

         (a)  Lessee shall fail to make any payment of Basic Rent or Stipulated
              Loss Value within five Business Days after the same shall have
              become due; or

         (b)  Lessee shall fail to make any other payment of Supplemental Rent
              (including, without limitation, indemnity payments) under this
              Lease (other than those described in subsection (a) above) at the
              times required to be paid thereunder, and any such failure shall
              continue unremedied for a period of 15 Business Days after notice
              of such failure by Lessor; or

         (c)  Lessee shall fail to carry and maintain insurance on or with
              respect to the Aircraft in accordance with the provisions of Annex
              C; PROVIDED, that in the case of insurance with respect to which
              cancellation, change or lapse for nonpayment of premium shall not
              be effective as to Lessor or Owner Participant, if any, for 30
              days (seven days, or such other period as may from time to time be
              customarily obtainable in the industry, in the case of any war
              risk coverage) after receipt of notice by Lessor or Owner
              Participant, as the case may be, of such cancellation, change or
              lapse, no such failure to carry and maintain insurance shall
              constitute an Event of Default until the earlier of (I) the date
              such failure shall have continued unremedied for a period of 20
              days (five days in the case of any war risk coverage) after
              receipt by Lessor or Owner Participant, as the case may be, of the
              notice of cancellation, change or lapse referred to subsection (a)
              or (b) of Annex C or (II) the date on which such insurance is not
              in effect as to Lessor; or

         (d)  Lessee shall operate the Aircraft when neither the aircraft
              liability insurance required by Annex C nor the indemnification
              described in the Section captioned "OPERATION" shall be in effect;
              or

         (e)  Lessee shall fail to perform or observe any other covenant,
              condition or agreement not specified elsewhere in this Annex to be
              performed by it under this Lease, and such failure in any such
              case shall continue unremedied for a period of 30 days after
              written notice thereof by Lessor, PROVIDED that, if such failure
              is capable of being remedied, no such failure shall constitute an
              Event of Default under this Lease for a period of 180 days after
              such notice so long as Lessee is diligently proceeding to remedy
              such failure; or

         (f)  any representation or warranty made by Lessee in this Lease or in
              any document or certificate furnished by Lessee to Lessor in
              connection therewith shall prove to have been incorrect in any
              material respect at the time made, and such incorrectness shall be
              material and shall continue to be unremedied for a period of 30
              days after written notice thereof by Lessor; or

         (g)  Lessee or Guarantor shall consent to the appointment of a receiver
              trustee or liquidator of itself or of a substantial part of its
              property or Lessee or Guarantor shall admit in writing its
              inability to pay its debts generally as they come due, or shall
              make a general assignment for the benefit of creditors; or

         (h)  Lessee or Guarantor shall file a voluntary petition in bankruptcy
              or a voluntary petition or an answer seeking reorganization in a
              proceeding under any bankruptcy laws (as now or hereafter in
              effect) or any answer admitting the material allegations of a
              petition filed against Lessee or

                                                           Annex D to Appendix B

<PAGE>

              Guarantor in any such proceeding, or Lessee or Guarantor shall by
              voluntary petition or answer, consent to or seek relief under the
              provisions of any other now existing or future bankruptcy or other
              similar law providing for the reorganization or winding-up of
              corporations, or providing for an agreement, composition,
              extension or adjustment with its creditors; or

         (i)  an order, judgment, or decree shall be entered by any court of
              competent jurisdiction appointing, without the consent of Lessee
              or Guarantor, a receiver, trustee or liquidator of Lessee or
              Guarantor or of any substantial part of its property, or
              sequestering any substantial part of the property of Lessee or
              Guarantor, and any such order, judgment or decree of appointment
              or sequestration shall remain in force undismissed, unstayed or
              unvacated for a period of 90 days after the date of entry thereof;

         (j)  a petition against Lessee or Guarantor in a proceeding under the
              Federal bankruptcy laws or other insolvency laws, as now or
              hereafter in effect, shall be filed and shall not be withdrawn or
              dismissed within 90 days thereafter, or under the provisions of
              any law providing for reorganization or winding-up of corporations
              which may apply to Lessee or Guarantor, any court of competent
              jurisdiction shall assume jurisdiction, custody or control of
              Lessee or Guarantor or of any substantial part of its property and
              such jurisdiction, custody or control shall remain in force
              unrelinquished, unstayed or unterminated for a period of 90 days;
              or

         (k)  Guarantor shall fail to make any payments under the American
              Guaranty;

PROVIDED that, notwithstanding anything to the contrary contained in this Lease,
any failure of Lessee to perform or observe any covenant, condition, or
agreement in this Lease shall not constitute an Event of Default if such
observance is prevented solely by reason of an event referred to in the
definition of "EVENTS OF LOSS" so long as Lessee is continuing to comply with
the applicable terms of the Section captioned "EVENT OF LOSS".

         Upon the occurrence of an 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 by a written notice to Lessee (PROVIDED that this Lease
shall be deemed to have been declared in default without the necessity of such
written notice upon the occurrence of any Event of Default described in clause
(h), (i) or (j) above); and at any time thereafter, so long as Lessee shall not
have remedied all outstanding Events of Default, Lessor may do one or more of
the following, as Lessor shall elect, to the extent permitted by, and subject to
compliance with any mandatory requirements of, applicable law; PROVIDED that
during any period the Aircraft is subject to the CRAF Program in accordance with
the provisions of Annex A and in the possession o f the U.S. government or an
instrumentality or agency thereof, Lessee shall not, on account of any Event of
Default, be required to do any of the following in such manner as to limit
Lessee's operational control under this Lease (or any sublessee's operational
control under any sublease permitted by the terms of this Lease) of the Airframe
or Engines, unless at least 60 days' (or such lesser period as may then be
applicable under the Military Airlift Command Program of the U.S. government)
prior notice of default under this Lease shall have been given by Lessor by
registered or certified mail to Lessee (or any sublessee) with a copy addressed
to the Contracting Office Representative for the Military Airlift Command of the
U.S. Air Force under any contract with Lessee (or any sublessee) relating to the
Aircraft:

(1)  cause Lessee, upon the written demand of Lessor and at Lessee's expense, to
     return promptly, and Lessee shall return promptly, all or such part of the
     Airframe and any Engines as Lessor may so demand, to Lessor in the manner
     and condition required by, and otherwise in accordance with all of the
     provisions of, the Return Conditions as if the Airframe or such Engines
     were being returned at the end of this Lease Term; or Lessor, at its
     option, after Lessee shall have failed to so return the Aircraft after such
     demand, may enter upon the premises where the Airframe is or any or all
     Engines are located or reasonably believed to be located and take immediate
     possession of and remove such Airframe or Engines (together with any engine
     which is not an Engine but which is installed on the Airframe, subject to
     all of the rights of the owner,

                                                           Annex D to Appendix B

                                       2

<PAGE>

     lessor, lienor or secured party of such engine; PROVIDED that the Airframe
     with an engine (which is not an Engine) installed thereon may be flown or
     returned only to a location within the continental U.S., and such engine
     shall be held for the account of any such owner, lessor, lienor or secured
     party or, if owned by Lessee, may, at the option of Lessor, be exchanged
     with Lessee for an Engine in accordance with the provisions of the Return
     Conditions), by summary proceedings or otherwise, all without liability to
     Lessor for or by reason of such entry or taking possession or removal,
     whether for the restoration of damage to property caused by such taking or
     otherwise and without any duty to account to Lessee with respect to such
     action or inaction or for any proceeds with respect thereto (except in
     connection with the calculation of liquidated damages set forth in CLAUSE
     (3) or CLAUSE (4) below and except to the extent such proceeds would
     constitute, under applicable law, a mitigation of Lessor's damages suffered
     or incurred as a result of the applicable Event of Default); or

(2)  sell all or any part of the Airframe and any Engine at public or private
     sale, whether or not Lessor shall at the time have possession thereof, as
     Lessor may determine, or otherwise dispose of, hold, use, operate, lease to
     others or keep idle all or any part of the Airframe or such Engine as
     Lessor, in its sole discretion, may determine, free and clear of any rights
     of Lessee (in which case Lessee shall deliver the Aircraft to the purchaser
     of the Aircraft); or

(3)  whether or not Lessor shall have exercised, or shall thereafter at any time
     exercise, any of its rights under CLAUSE (1) or CLAUSE (2) above with
     respect to all of any part of the Airframe or any Engine, Lessor, by
     written notice to Lessee specifying a payment date (which date shall be
     deemed to be a "Loss Payment Date" for purposes of computing Stipulated
     Loss Value) which shall be not earlier than 30 days from the date of such
     notice, may cause Lessee to pay to Lessor, and Lessee shall pay Lessor, on
     the payment date specified in such notice, as liquidated damages for loss
     of a bargain and not as a penalty (in lieu of the Basic Rent due for Lease
     Period Dates occurring after the Stipulated Loss Value Determination Date
     next preceding the payment date specified in such notice), any unpaid Basic
     Rent due on or prior to the Stipulated Loss Value Determination Date next
     preceding the payment date specified in such notice, plus whichever of the
     following amounts Lessor, in its sole discretion, shall specify in such
     notice: (I) an amount equal to the excess, if any, of the Stipulated Loss
     Value for the Airframe or such Engine or part thereof, computed as of the
     payment date specified in such notice, over the aggregate fair market
     rental value (computed as provided below) of the Airframe or such Engine or
     part thereof for the remainder of the remaining useful life of the Airframe
     or such Engine or part thereof, after discounting such aggregate fair
     market rental value to present worth as of the payment date specified in
     such notice at the Prime Rate in effect at the time of determination; or
     (II) an amount equal to the excess, if any, of Stipulated Loss Value for
     the Airframe or such Engine or part thereof, computed as of the payment
     date specified in such notice, over the fair market sales value of the
     Airframe or such Engine or part thereof (computed as provided below) as of
     the payment date specified in such notice;

(4)  in the event Lessor, pursuant to CLAUSE (2) above, shall have sold all or
     any part of the Airframe or any Engine, Lessor, in lieu of exercising its
     rights under CLAUSE (3) above with respect to the Airframe or such Engine
     or part thereof, may, if it shall so elect, cause Lessee, on the date of
     such sale (which date shall be deemed a "Loss Payment Date" for purposes of
     computing Stipulated Loss Value), as liquidated damages for loss of a
     bargain and not as a penalty (in lieu of the Basic Rent due on Lease Period
     Dates occurring after the date of such sale), any unpaid Basic Rent due on
     or prior to the Stipulated Loss Value Determination Date next preceding
     such date of sale, plus the amount of any deficiency between the net
     proceeds of such sale (or, if such sale is a private sale to Lessor or
     Owner Participant, if any, or any Affiliate of any thereof, the fair market
     sales value of the Airframe or such Engine or part thereof, determined as
     of the date of such sale) and the Stipulated Loss Value for the Airframe or
     such Engine or part thereof, computed as of the date of such sale; or

                                                           Annex D to Appendix B

                                       3

<PAGE>

(5)  rescind this Lease as to the Airframe and any or all Engines, or exercise
     any other right or remedy which may be available to it under applicable law
     or proceed by appropriate court action, either at law or in equity, to
     enforce the terms or to recover damages for the breach hereof.

In addition, Lessee shall be liable, except as otherwise provided above, for any
and all unpaid Rent due under this Lease before, after or during the exercise of
any of the foregoing remedies and for all 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 the Airframe or any Engine in
accordance with the terms of the Return Conditions or in placing such Airframe
or Engine in the condition and airworthiness required by the Return Conditions;
PROVIDED that if Lessee returns or surrenders possession of all or any part of
the Airframe or any Engine in accordance with this Section and Lessor does not
within 180 days after the date of such return or surrender exercise its rights
under CLAUSE (3) or CLAUSE (4) above with respect to such Airframe or Engine or
part thereof, there shall be deducted from each payment of Basic Rent becoming
due after the expiration of such 180-day period an amount equal to the quotient
obtained by dividing the aggregate fair market rental value (computed as
provided hereafter in this Annex) of such Airframe or Engine or part thereof,
for the remainder of the Lease Term after the expiration of such 180-day period
(computed as of the date of such expiration), by the number of Basic Rent
installments remaining with respect to the Aircraft after the expiration of such
180-day period to the end of the Lease Term. For the purpose of CLAUSE (3) and
CLAUSE (4) above and the preceding sentence, the "aggregate fair market rental
value" or the "fair market sales value" of the Airframe or any Engine or part
thereof shall be as specified in an Independent Appraisal but shall be
determined on an "as-is, where-is and with all faults" basis, taking into
account customary brokerage and other reasonable out-of-pocket fees and expenses
that typically would be incurred in connection with a sale or re-lease of
equipment such as the Airframe, Engine or part thereof. At any sale of the
Airframe or an Engine or part thereof pursuant to this Annex, Lessor or Owner
Participant, if any, may bid for and purchase such property. Except as otherwise
expressly provided above, no remedy referred to in this Section 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 of any one or more of such remedies
shall not preclude the simultaneous or later exercise by Lessor of any or all of
such other remedies.

                                                           Annex D to Appendix B

                                       4

<PAGE>

                                                                         ANNEX E

                                GENERAL INDEMNITY

         Subject to the exclusions stated below, Lessee agrees to indemnify,
protect, defend and hold harmless each Indemnified Person (as defined below) on
an After-Tax Basis (as defined below) against Claims (as defined below)
resulting from or arising out of (A) Lessee's use, possession and operation of
the Aircraft following the Commencement Time, including the lease, sublease,
possession, use, non-use, substitution, airworthiness, state of airworthiness,
control, maintenance, repair, replacement, operation, registration,
re-registration, condition, sale, storage, modification, alteration, return,
transfer or other disposition of the Aircraft, the Airframe, any Engine or any
Part (including, without limitation, any death or injury to passengers or
others, any damage to the environment, latent or other defects, whether or not
discoverable, and any Claim for patent, trademark or copyright infringement) and
(B) any breach of or failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement or other obligation to be performed
by Lessee under this Lease after the Commencement Time.

         "AFTER-TAX BASIS", in the context of determining the amount of a
payment to be made on such basis, means the payment of an amount which, after
subtraction of the net increase, if any, in U.S. Federal, state and local income
tax liability incurred by the Indemnified Person or Tax Indemnitee (as defined
in Annex F) to whom the payment is made as a result of the receipt or accrual of
such payment (taking into account any Tax benefits realized or deemed to be
realized by such Indemnified Person or Tax Indemnitee as a result of the event
or circumstances giving rise to such payment), shall equal the amount that would
have been payable if no net increase in such tax liability had been incurred.

         "CLAIMS" means any and all liabilities, obligations, losses, damages,
penalties, claims, costs, actions or suits of whatsoever kind and nature
(whether or not on the basis of negligence, strict or absolute liability or
liability in tort) which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person, and, except as otherwise expressly
provided, shall include all reasonable costs, disbursements and expenses
(including reasonable legal fees and expenses) of an Indemnified Person in
connection therewith or related thereto.

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

         "INDEMNIFIED PERSON" means Lessor and Owner Participant, if any, and
the respective officers, directors, servants, agents, successors and permitted
assigns of Lessor and Owner Participant, if any, but excluding any such Person
in its capacity as the manufacturer, supplier or subcontractor of the Aircraft,
Airframe, Engines or any Part thereof, and any officer, director, servant,
agent, successor, or permitted assign of such Person in such capacity.

         "RELATED INDEMNITEE GROUP" with respect to Lessor or Owner Participant
(if any), in each case, in its capacity as an Indemnified Person, means each of
such Indemnified Person's officers, directors, servants, agents, successors and
permitted assigns.

         "TRUST ESTATE" means all right, title, and interest of the Owner
         Trustee in and to the Aircraft and this Lease.

         All rights (including, without limitation, the right to receive any
indemnity payment under this Annex) of an Indemnified Person and any member of
such Indemnified Person's Related Indemnitee Group shall be exercised solely by
such Indemnified Person. If any Indemnified Person or any member of such
Indemnified Person's Related Indemnitee Group fails to comply with this Annex,
such Indemnified Person shall not be entitled to indemnity under this Annex with
respect to such Claim to the extent (but only to the extent) that Lessee shall
have been prejudiced by such failure and that such failure is not the result of
or otherwise attributable to the failure of Lessee to comply with any of its
duties or obligations under this Annex.

                                                           Annex E to Appendix B

<PAGE>

         The following are excluded from Lessee's agreement to indemnify under
this Annex:

(1)      Any Claim attributable to any act or omission of TWA at any time or to
         any act, claim, event, circumstance or condition existing, accruing,
         arising or occurring at any time at or prior to the Commencement Time,
         or any Claim attributable to any TWA Liability, PROVIDED that the
         foregoing exclusion shall not apply to any Claim relating to any death,
         personal injury or property damage occurring after the Commencement
         Time;

(2)      Any Claim attributable to acts or events occurring after the earlier of
         (X) the return of the Aircraft pursuant to the Return Conditions or, if
         the Aircraft is stored pursuant to the Return Conditions, the date of
         the placement of the Aircraft in storage, and (Y) the expiration or
         earlier termination of this Lease under circumstances not requiring the
         return of the Aircraft, unless and to the extent such Claim is
         attributable to the failure of Lessee to perform its obligations under
         this Lease in full compliance with this Lease or occurring in
         connection with the exercise of remedies pursuant to Annex D following
         the occurrence and continuance of an Event of Default;

(3)      Any Claim that is or is attributable to a Tax (including any Tax bene-
         fits), whether or not Lessee is required to indemnify therefor under
         Annex F, it being agreed that Annex F sets forth Lessee's entire
         liability with respect to Taxes;

(4)      Any Claim attributable to the gross negligence or willful misconduct of
         such Indemnified Person or any of the Related Indemnitee Group of such
         Indemnified Person (other than the gross negligence or willful
         misconduct imputed as a matter of law to such Indemnified Person solely
         by reason of its interest in the Aircraft);

(5)      Any Claim to the extent attributable to the non-compliance by such
         Indemnified Person or any of the Related Indemnitee Group of such
         Indemnified Person with any of the terms of, or any misrepresentation
         by, such Indemnified Person or any of the Related Indemnitee Group of
         such Indemnified Person contained in this Lease or any other Operative
         Document to which such Indemnified Person or any of the Related
         Indemnitee Group of such Indemnified Person is a party or any agreement
         relating hereto or thereto;

(6)      Any Claim that constitutes a Permitted Lien;

(7)      Any Claim to the extent attributable to the offer, sale, disposition or
         participation (voluntary or involuntary) by or on behalf of such
         Indemnified Person of any interest in the Aircraft, Rent, this Lease,
         the Trust Estate or the TWA Trust Agreement (in the case of an Owner
         Participant), or any similar interest or security, other than a
         transfer by such Indemnified Person of its interests in the Aircraft or
         this Lease pursuant to "VOLUNTARY TERMINATION", "EVENT OF LOSS" or "END
         OF LEASE TERM PURCHASE OPTIONS" or the exercise of remedies pursuant to
         Annex D;

(8)      If Lessor is an owner trustee, any Claim to the extent attributable to
         a failure on the part of Owner Trustee to distribute in accordance with
         this Lease or the TWA Trust Agreement any amounts received and
         distributable by it thereunder;

(9)      Any Claim that relates to a cost, fee or expense payable by a Person
         other than Lessee pursuant to the Agreement (other than any thereof to
         the extent Lessee is liable therefor in the event such Person fails to
         pay the same);

(10)     Any Claim that is an ordinary and usual operating or overhead expense
         other than such expenses caused directly by (X) the occurrence of an
         Event of Default or (Y) circumstances beyond the scope of routine
         portfolio administration (such routine portfolio administration to be
         deemed to include tax preparation and other normally occurring
         administrative tasks);

                                                           Annex E to Appendix B

                                       2

<PAGE>

(11)     Any Claims resulting from a violation of ERISA or Section 4975 of the
         Code;

(12)     Any Claim to the extent caused by the authorization or giving or
         withholding by such Indemnified Person of any future amendments,
         supplements, waivers or consents with respect to this Lease and the
         other Operative Documents, other than such as have been requested by
         Lessee, or such that occur as a result of an Event of Default that
         shall have occurred and is continuing, or such as are expressly
         required by this Lease;

(13)     If Lessor is an owner trustee, any Claim that would not have arisen but
         for the appointment of a successor or additional Owner Trustee without
         the consent of Lessee unless such successor or additional Owner Trustee
         has been appointed in connection with the exercise or remedies pursuant
         to Annex D following the occurrence and continuance of an Event of
         Default;

(14)     Any Claim attributable to, or that would not have arisen but for, any
         indebtedness, head lease or other financing arrangements of any
         Indemnified Person relating to the Aircraft or this Lease; and

(15)     Any Claim attributable to the failure of the Owner Participant or the
         Lessor to be a Citizen of the United States.

In the case of any Claim indemnified by Lessee which is covered by a policy of
insurance maintained by Lessee pursuant to Annex C, each Indemnified Person
agrees to cooperate, at Lessee's expense, with the insurers in the exercise of
their rights to investigate, defend or compromise such Claim as may be required
to retain the benefits of such insurance with respect to such Claim.

An Indemnified Person shall promptly notify Lessee of any Claim as to which
indemnification is sought; PROVIDED that the failure to give notice promptly
shall relieve Lessee of its indemnity obligations under this Annex only to the
extent such obligations are increased as a result of such failure. Any amount
payable by Lessee to any Indemnified Person pursuant to this Annex shall be paid
within 30 days after receipt of a written demand therefor from such Indemnified
Person accompanied by a written statement describing in reasonable detail the
Claims which are the subject of and basis for such indemnity and the computation
of the amount so payable.

Subject to the rights of insurers under policies of insurance maintained by
Lessee, Lessee shall have the right to investigate, and the right in its sole
discretion to defend or compromise, any Claim for which indemnification is
sought under this Annex (provided that in no event shall the right of any
Indemnified Person under this Annex be adversely affected thereby), and the
Indemnified Person shall cooperate with all reasonable requests of Lessee in
connection therewith; PROVIDED that Lessee shall reimburse such Indemnified
Person for all reasonable costs and expenses incurred by it in connection
therewith. Where Lessee or the insurers under a policy of insurance maintained
by Lessee undertake the defense of an Indemnified Person with respect to a
Claim, no additional legal fees or expenses of such Indemnified Person in
connection with the defense of such Claim shall be indemnified under this Lease
unless such fees or expenses were incurred at the request of Lessee or such
insurers; PROVIDED, HOWEVER, that if in the written opinion (a "CONFLICT
OPINION") of counsel to such Indemnified Person an actual or potential material
conflict of interest exists where it is advisable for such Indemnified Person to
be represented by separate counsel, the reasonable fees and expenses of such
separate counsel shall be borne by Lessee. Subject to the requirements of any
policy of insurance, an Indemnified Person may participate at its own expense in
any judicial proceeding controlled by Lessee pursuant to the preceding
provisions; PROVIDED that such party's participation does not, in the opinion of
the independent counsel appointed by Lessee or its insurers to conduct such
proceedings, interfere with such control; and such participation shall not
constitute a waiver of the indemnification provided in this Annex.
Notwithstanding anything to the contrary contained in this Lease, Lessee shall
not under any circumstances be liable for the fees and expenses of more than one
counsel for all Indemnified Persons except in the case of a delivery to Lessee
of a Conflict Opinion.

                                                           Annex E to Appendix B

                                       3

<PAGE>

To the extent that a Claim indemnified by Lessee under this Annex is in fact
paid in full by Lessee and/or an insurer under a policy of insurance maintained
by Lessee, Lessee and/or such insurer, as the case may be, shall be subrogated
to the rights and remedies of the Indemnified Person on whose behalf such Claim
was paid (other than rights of such Indemnified Person under insurance policies
maintained at its own expense) with respect to the transaction or event giving
rise to such Claim. So long as no Event of Default shall have occurred and be
continuing, should an Indemnified Person receive any payment from any party
other than Lessee or its insurers, in whole or in part, with respect to any
Claim paid in full by Lessee or its insurers under this Lease, such Indemnified
Person shall promptly pay the amount so received (but not an amount in excess of
the amount Lessee or any of its insurers has paid in respect of such Claim) over
to Lessee.

The indemnities and other obligations of Lessee (subject to CLAUSE (2) above),
and the obligations of each Indemnified Person, under this Annex E shall survive
the expiration or other termination of the Operative Documents.

                                                           Annex E to Appendix B

                                       4

<PAGE>

                                                                         ANNEX F

                              GENERAL TAX INDEMNITY

         (a)  "CODE" means the U.S. Internal Revenue Code of 1986, as currently
in effect or hereafter amended.

         "TAX" or "TAXES" means all governmental or quasi-governmental fees
(including, without limitation, license, filing and registration fees) and all
taxes (including, without limitation, franchise, excise, stamp, value added,
income, gross receipts, sales, use, property, personal and real, tangible and
intangible taxes), withholdings, assessments, levies, imposts, duties or
charges, of any nature whatsoever, together with any penalties, fines, additions
to tax or interest thereon or other additions thereto imposed, levied or
assessed by any country, taxing authority or governmental subdivision thereof or
therein or by any international authority, including any taxes imposed on any
Person as a result of such Person being required to collect and pay over
withholding taxes.

"TAX INDEMNITEE" means Lessor, Owner Participant, if any, The Provident Bank, as
lender, and the respective succes sors and permitted assigns of each of the
foregoing Persons, but excluding any such Person in its capacity as the
manufacturer, supplier or subcontractor of the Aircraft, Airframe, Engines or
any Part thereof, and any officer, director, servant, agent, successor, or
permitted assign of such Person in such capacity.

         (b) (i) Subject to CLAUSE (ii) below, Lessee agrees to indemnify, pro-
tect, defend and hold harmless on an After-Tax Basis each Tax Indemnitee against
any and all Taxes imposed with respect to any period after the Commencement Time
on any Tax Indemnitee, Lessee, the Aircraft, the Airframe, any Engine or any
Part, upon or with respect to (A) the Aircraft, the Airframe, any Engine or any
Part, (B) the lease, sublease, possession, use, non-use, substitution,
airworthiness, state of airworthiness, control, maintenance, repair,
replacement, operation, registration, re-registration, condition, sale, storage,
modification, alteration, return, transfer or other disposition of the Aircraft,
the Airframe, any Engine or any Part, (C) any Basic Rent or Supplemental Rent
payable by Lessee or (D) the exercise of remedies pursuant to Annex D in
connection with an Event of Default that shall have occurred and be continuing.

         (ii) Lessee shall have no obligation under this Lease with respect to
Taxes described in any one or more of the following clauses; PROVIDED that
CLAUSES (B) and (G) below shall not apply in determining the additional amount
necessary to make any payment under Annex E or this Annex F on an After-Tax
Basis:

         (A) Taxes imposed on or with respect to TWA, or attributable to any act
or omission of TWA at any time or to any act, claim, event, circumstance or
condition existing, accruing, arising or occurring at any time at or prior to
the Commencement Time, or attributable to, or constituting, a TWA Liability;

         (B) Taxes imposed by any government or taxing authority on, based on,
measured by or with respect to capital, net worth, doing business, retained
earnings, tax preferences, gross or net income or gross or net receipts or that
are franchise Taxes; PROVIDED that there shall not be excluded by this CLAUSE
(B) (X) any such Taxes imposed by any government or taxing authority located
outside the United States to the extent such Taxes would have been imposed had
the sole connection between the Tax Indemnitee and such government or taxing
authority been (I) the location, use, operation or presence of the Aircraft, the
Airframe, any Engine or any Part in such jurisdiction, (II) the presence,
activity or other connection of Lessee in or with such jurisdiction, or (III)
Lessee's making a payment from or through such jurisdiction or (Y) any sales,
use, license, value added, property or rental Taxes (or Taxes in the nature
thereof) imposed by any government or taxing authority;

         (C) Taxes imposed on any Tax Indemnitee to the extent such Taxes result
from, or would not have been imposed but for (W) a Lessor's Lien, (X) the
willful misconduct or gross negligence of such Tax Indemnitee, (Y) the breach or
inaccuracy of any representation, warranty or covenant of such Tax Indemnitee in
the Operative Documents, or (Z) the failure of such Tax Indemnitee to comply
with any certification, information, documentation, reporting or other similar
requirement, if such compliance is necessary or appropriate to claim any relief
from such Taxes for which such Tax Indemnitee was eligible, unless such failure
to comply is due to the failure of Lessee to comply with its obligations under
CLAUSE (VI) below;

                                                           Annex F to Appendix B

<PAGE>

         (D) Taxes imposed on any Tax Indemnitee in excess of the Taxes that
would have been imposed and indemnified against had there not been a transfer
(whether voluntary or involuntary) (X) by a Tax Indemnitee of any interest in
the Aircraft, the Airframe, any Engine, any Part, the Trust Estate, or any
interest arising under any Operative Document (other than such a transfer
pursuant to "VOLUNTARY TERMINATION", "REPLACEMENT ENGINES", "EVENT OF LOSS" or
"END OF LEASE PURCHASE OPTIONS" or the exercise of remedies pursuant to Annex D)
or (Y) of any interest (direct or indirect) in a Tax Indemnitee;

         (E) Taxes imposed on any Tax Indemnitee on or with respect to a
transfer (whether voluntary or involuntary) (X) by a Tax Indemnitee of any
interest in the Aircraft, the Airframe, any Engine, any Part, the Trust Estate,
or any interest arising under any Operative Document (other than such a transfer
pursuant to "VOLUNTARY TERMINATION", "REPLACEMENT ENGINES", "EVENT OF LOSS" or
"END OF LEASE PURCHASE OPTIONS" or the exercise of remedies pursuant to Annex D)
or (Y) of any interest (direct or indirect) in a Tax Indemnitee;

         (F) Taxes to the extent imposed with respect to any period commencing
after the earlier of (X) the return of the Aircraft to Lessor pursuant to the
Return Conditions or, if the Aircraft is stored pursuant to the Return
Conditions, the date of the placement of the Aircraft in storage and (Y) the
expiration or earlier termination of this Lease under circumstances not
requiring the return of the Aircraft; PROVIDED that there shall not be excluded
by this CLAUSE (F) any Taxes to the extent (I) attributable to events occurring
or matters arising prior to or simultaneously with the earlier of such times,
any failure of Lessee to perform its obligations under this Lease in full
compliance therewith, or the exercise of remedies pursuant to Annex D in
connection with an Event of Default that shall have occurred and be continuing
or (II) imposed with respect to any payment by Lessee under the Operative
Documents after such date;

         (G) Taxes imposed on any Tax Indemnitee by any government or taxing
authority to the extent such Taxes would not have been imposed but for a present
or former connection between such Tax Indemnitee and such government or taxing
authority unrelated to the transactions contemplated by the Operative Documents;

         (H) Taxes to the extent such Taxes would not have been imposed but for
an amendment to any Operative Document without the prior written consent of
Lessee, unless such amendment is requested by Lessee, is expressly required by
this Lease or is made as a result of an Event of Default that shall have
occurred and be continuing;

         (I) Taxes for so long as such Taxes are being contested in accordance
with the provisions of CLAUSE (V) below, except to the extent a payment by
Lessee is required pursuant to such clause;

         (J) Taxes imposed on any Tax Indemnitee in excess of the Taxes that
would have been imposed if such Tax Indemnitee at all times had been a United
States person for U.S. federal income tax purposes;

         (K) value added Taxes imposed in lieu of income Tax by the United
States or any state or local government or taxing authority thereof or therein;

         (L) Taxes resulting from a violation of ERISA or Section 4975 of the
Code;

         (M) if Lessor is an owner trustee, Taxes to the extent imposed by
reason of the trust of which Lessor is owner trustee not being treated as a
"grantor trust" or otherwise being disregarded for U.S. federal income tax
purposes, except to the extent such Taxes would have otherwise been imposed on
another Tax Indemnitee and been subject to indemnification by Lessee under this
SUBSECTION (B);

         (N) if Lessor is an owner trustee, Taxes on, based on, measured by or
with respect to any consideration payable for services rendered by Lessor as
owner trustee; and

                                                           Annex F to Appendix B

                                       2

<PAGE>

         (O) Taxes attributable to, or that would not have been imposed but for,
any indebtedness, head lease or other financing arrangements of any Tax
Indemnitee relating to the Aircraft or this Lease.

         (iii) If, by reason of any Claims or Taxes paid or indemnified against
by Lessee pursuant to Annex E or this SUBSECTION (B), any Indemnified Person or
Tax Indemnitee (or any related Person) at any time realizes a net reduction in
any Taxes not indemnified against by Lessee and not taken into account
previously in computing the amount of any indemnity payable by Lessee under
Annex E or this SUBSECTION (B), such Indemnified Person or Tax Indemnitee shall,
subject to CLAUSE (X) below, promptly pay to Lessee an amount that, after
subtraction of any further Tax savings such Tax Indemnitee or Indemnified Person
realizes as a result of the payment thereof, is equal to the amount of such net
Tax reduction; PROVIDED that any subsequent loss of a Tax benefit for which a
payment has been made to Lessee under this CLAUSE (III) (or which was taken into
account in computing an amount payable by Lessee under this SUBSECTION (B))
shall be treated as an indemnifiable Tax hereunder without regard to the
exclusions set forth in CLAUSE (II) above. Each Tax Indemnitee shall in good
faith use diligence in filing its tax returns and in dealing with taxing
authorities to seek and claim any Tax benefit that would result in such a
reduction in Taxes and to minimize the Taxes indemnifiable by Lessee hereunder.

         (iv) Lessee shall pay any Tax for which it is liable pursuant to this
SUBSECTION (B) directly to the appropriate taxing authority, if allowable, or if
not so allowable, directly to the relevant Tax Indemnitee. Any amount payable
directly to any Tax Indemnitee pursuant to this SUBSECTION (B) shall be paid to
such Tax Indemnitee on or prior to the later of (A) 30 days after receipt by
Lessee of a written demand therefor from such Tax Indemnitee accompanied by a
written statement describing in reasonable detail the Taxes that are the subject
of such indemnity and the computation of the amount so payable, (B) one Business
Day prior to the due date for the payment of such Taxes (including all
extensions) or (C) in the case of amounts which are being contested in
accordance with CLAUSE (V) below, the time such contest (including all appeals,
if any) is finally resolved; provided that Lessee shall pay any amounts due
pursuant to CLAUSE (V) below at the time or times required by such CLAUSE. If
requested by a Tax Indemnitee in writing, Lessee shall furnish to such Tax
Indemnitee the original or a certified copy of a receipt (if any is reasonably
available to Lessee) for Lessee's payment of any Tax directly to a taxing
authority pursuant to this SUBSECTION (B) or such other evidence of such payment
by Lessee as is reasonably acceptable to such Tax Indemnitee and reasonably
available to Lessee.

         (v) If a written claim is made against any Tax Indemnitee for any Tax
for which Lessee may be obligated pursuant to this SUBSECTION (B), or if any Tax
Indemnitee shall determine that any Tax for which Lessee may be obligated
pursuant to this SUBSECTION (B) may be payable, such Tax Indemnitee shall notify
Lessee promptly in writing. If requested by Lessee in writing, such Tax
Indemnitee shall in good faith diligently contest through appropriate
administrative and judicial proceedings (including pursuing all judicial
appeals, but not to the United States Supreme Court) in the name of such Tax
Indemnitee (or, if requested by Lessee and permitted by applicable law, and
subject to the conditions set forth in the next sentence, permit Lessee to
contest in the name of Lessee or such Tax Indemnitee), the validity,
applicability and amount of such Tax by (X) resisting payment thereof, (Y) not
paying the same except under protest, if protest be necessary or proper, or (Z)
if payment be made, seeking a refund thereof in appropriate administrative and
judicial proceedings; PROVIDED that (A) prior to taking such administrative or
judicial action Lessee shall have agreed to pay such Tax Indemnitee on demand
all reasonable out-of-pocket costs and expenses which such Tax Indemnitee may
incur in connection with contesting such claim, including, without limitation,
all reasonable legal, accountants' and investigatory fees and disbursements, (B)
if such contest shall be conducted in a manner requiring the payment of the Tax,
Lessee shall advance to such Tax Indemnitee (on an interest-free basis) the
amount of such payment and shall agree to indemnify such Tax Indemnitee against
any adverse tax consequences to such Tax Indemnitee resulting from such
interest-free loan, (C) the action to be taken will not result in any material
danger of forfeiture, sale or loss of the Aircraft, the Airframe or any Engine
(unless Lessee shall have provided to Lessor a bond or other sufficient
protection against such risk reasonably acceptable to Lessor and such Tax
Indemnitee), (D) if an Event of Default shall have occurred and be continuing,
Lessee shall have provided security for its related tax indemnity obligation
reasonably acceptable to such Tax Indemnitee, and (E) prior to commencing any
judicial action (but not administrative action), if reasonably requested by the
Tax

                                                           Annex F to Appendix B

                                       3

<PAGE>

Indemnitee, Lessee shall have provided to such Tax Indemnitee an opinion of tax
counsel (who may be an employee of Lessee) selected by Lessee and reasonably
acceptable to such Tax Indemnitee to the effect that there is a reasonable basis
(consistent with ABA Opinion 85-352) for contesting such claim. Lessee shall not
be permitted to conduct such a contest in its name or in the name of the
relevant Tax Indemnitee, and the relevant Tax Indemnitee shall conduct such
contest, if such contest involves issues for which Lessee is not obligated under
this SUBSECTION (B) that can not be severed by reasonable efforts of the Tax
Indemnitee from all issues for which Lessee might be so obligated. In any
contest under this CLAUSE (V) conducted by Lessee, Lessee shall determine the
forum and manner in which such contest shall be conducted and, upon the written
request of the relevant Tax Indemnitee, will advise such Tax Indemnitee of the
status of such contest. In any contest under this CLAUSE (V) conducted by a Tax
Indemnitee, such Tax Indemnitee shall determine the forum for such contest and
the manner in which it shall be conducted; PROVIDED that such Tax Indemnitee
shall consult in good faith with Lessee and its counsel, and provide to Lessee
and its counsel any communications to or from the relevant taxing authority or
administrative or judicial body, with respect to the issues for which Lessee may
be obligated under this SUBSECTION (B).

         If any Tax Indemnitee shall obtain a refund of all or part of any Tax
paid by Lessee or for which Lessee shall have reimbursed such Tax Indemnitee,
such Tax Indemnitee shall pay Lessee an amount equal to the amount of such
refund, including any interest received on such refund attributable to such Tax
that is properly attributable to the period subsequent to such payment or
reimbursement by Lessee, reduced by any Taxes payable by such Tax Indemnitee as
a result of the receipt or accrual of such refund and interest, and increased by
any Tax benefit realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee pursuant to this sentence.

         If a Tax Indemnitee elects not to contest any Tax that it is otherwise
required to contest in accordance with this CLAUSE (V), or elects to settle,
compromise or otherwise terminate any such contest without the consent of
Lessee, such election shall constitute a waiver by such Tax Indemnitee of any
right to any amount that might otherwise be payable by Lessee pursuant to this
SUBSECTION (B) with respect to such Tax (other than any expenses of the contest)
and, if Lessee has theretofore provided such Tax Indemnitee with an
interest-free loan to pay such amount, such Tax Indemnitee shall promptly repay
an amount which, after subtraction of any further net savings of Taxes actually
realized by such Tax Indemnitee as a result of such payment, shall be equal to
the amount of such interest-free loan, together with interest on the amount of
such loan from the date such loan was made to the date of repayment pursuant to
this sentence at the rate that would have been paid by the relevant taxing
authority had such contest resulted in a refund.

         (vi) If any report or return is required to be filed with respect to
any property Tax (or any Tax in the nature of a property Tax) subject to
indemnification by Lessee under this SUBSECTION (B), Lessee shall, if permitted
by applicable law to do so, timely file such report or return (except for any
such report or return as to which Lessor has notified Lessee that Lessor intends
to file such report or return) so as to show ownership of the Aircraft in Lessor
and, if requested by Lessor, send a copy of such re port or return to Lessor;
PROVIDED that Lessor shall have furnished Lessee, at Lessee's request, with such
information, not within the control of Lessee, as is in the control of Lessor or
Owner Participant, if any, and is reasonably available to such Person and
necessary to file such report or return (it being understood that neither Lessor
nor Owner Participant shall be required to furnish copies of its actual tax
returns). If Lessee is not permitted by applicable law to file any such report
or return with respect to such Tax, or has insufficient information to do so,
Lessee will promptly notify Lessor of such requirement and prepare and deliver
to Lessor a proposed form of such report or return, within a reasonable time
prior to the time such report or return is to be filed. If any report or return
is required to be filed with respect to any Tax (other than a property Tax or
Tax in the nature thereof) for which Lessee is obligated under this SUBSECTION
(B), Lessee will notify the relevant Tax Indemnitee thereof upon Lessee's
obtaining actual knowledge of such requirement. In addition, Lessee will furnish
upon written request such data in its possession or otherwise reasonably
available to it as any Tax Indemnitee may reasonably request to enable such Tax
Indemnitee to comply with the requirements of any taxing authority arising out
of such Tax Indemnitee's participation in the transactions contemplated by this
Lease.

                                                           Annex F to Appendix B

                                       4

<PAGE>

         Each Tax Indemnitee agrees to furnish from time to time to or as
directed by Lessee, upon Lessee's written request and at Lessee's expense, such
duly executed and properly completed forms, statements or certificates as may be
necessary or appropriate in order to claim any available reduction of any Tax
for which Lessee may be obligated under this SUBSECTION (B); PROVIDED that
Lessee shall have furnished such Tax Indemnitee with any information necessary
to complete such form, statement or certificate that is not otherwise reasonably
available to such Tax Indemnitee.

         (vii) At the request of Lessee, any statement prepared by a Tax
Indemnitee pursuant to this SUBSECTION (B), and any amount payable by or to
Lessee pursuant to this SUBSECTION (B), shall be verified and certified by a
nationally recognized firm of independent accountants selected by the relevant
Tax Indemnitee and reasonably acceptable to Lessee. The costs of any such
verification and certification shall be borne by Lessee unless such firm
determines that any amount payable (A) by Lessee to a Tax Indemnitee is less
than 95% of the amount determined to be so payable by such Tax Indemnitee or (B)
by any Tax Indemnitee to Lessee is greater than the amount determined to be so
payable by such Tax Indemnitee by at least 5%, in either of which cases the cost
of such verification and certification shall be paid by the Tax Indemnitee. In
the event such firm shall determine that such amount or statement is incorrect,
then such firm shall determine what it believes to be the correct amount, and
such determination shall be binding upon the parties. Any Tax return of a Tax
Indemnitee provided to such firm shall be confidential and shall be used by it
only for purposes of such verification and certification and shall not be
disclosed to Lessee.

         (viii) For purposes of this SUBSECTION (B), any reference to Lessor,
Owner Trustee, Owner Participant or a Tax Indemnitee shall, with respect to any
Tax imposed with respect to a combined, consolidated or affiliated group of
which such Person is a member, also include such group and any member thereof.

         (ix) If, at the time any amount would otherwise be payable to Lessee
under this subsection (b), an Event of Default or Specified Default shall have
occurred and be continuing, such amount shall be held by the relevant Tax
Indemnitee as security for the obligations of Lessee under the Operative
Documents and invested in accordance with the Section captioned "INVESTMENT OF
SECURITY FUNDS" and, if Lessor declares this Lease to be in default pursuant to
Annex D, applied against Lessee's obligations under the Operative Documents as
and when due. At such time as there shall not be continuing any such Event of
Default or Specified Default, such amount shall be paid to Lessee to the extent
not previously applied under the preceding sentence; PROVIDED that if any such
amount has been so held as security for more than 90 days after any such Event
of Default or Specified Default shall have occurred and during which period (A)
Lessor shall not have been limited by operation of law or otherwise from
exercising remedies hereunder and (B) Lessor shall not have exercised any remedy
available to it under Annex D, then such amount shall be paid to Lessee.

         (x) If a Tax Indemnitee is not a party to this Lease, Lessee may
require such Tax Indemnitee to agree in writing, in a form reasonably acceptable
to Lessee, to the terms of this SUBSECTION (B) prior to making any payments to
such Tax Indemnitee under this SUBSECTION (B).

         (xi) The indemnities and other obligations of Lessee (subject to clause
(ii)(F)), and the obligations of each Tax Indemnitee, under this Annex F shall
survive the expiration or other termination of the Operative Documents.

                                                           Annex F to Appendix B

                                       5

<PAGE>

                                                                    APPENDIX B-1

                            SUMMARY OF ECONOMIC TERMS

AIRFRAME
MANUFACTURER
AND MODEL                      McDonnell Douglas Corporation, MD-82

YEAR OF
MANUFACTURE:                   1984

AIRFRAME
REGISTRATION
NUMBER:                        N913TW

AIRFRAME
MANUFACTURER
SERIAL NUMBER:                 49184

ENGINE
MANUFACTURER
AND MODEL                      Pratt & Whitney Model JT8D-217A

ENGINE SERIAL
NUMBERS:                       P709733D and P709734D

LESSOR:                        First Security Bank, National Association

OWNER PARTICIPANT:             Airlease, Ltd.

LEASE EXPIRY
DATE:                          January 1, 2009

BASIC MONTHLY                  For all Lease Period Dates through January 1,
RENT IN                          2002: $90,000
ARREARS:                       For all Lease Period Dates thereafter: $100,000

STIPULATED
LOSS VALUES;
TERMINATION
VALUES:                        Attached as Schedule A hereto

MAXIMUM
VALUE OF
REMOVED
OBSOLETE PARTS:                $500,000

<PAGE>

DEPOSITS;
RESERVES:                  There will be no security deposits, maintenance
                           reserves or similar requirements, and under no
                           circumstances will Lessee or American (if Lessee is
                           not American) be required to provide additional
                           collateral, letters of credit or other credit support
                           for its obligations under this Lease.

PUT OPTION:                Lessor shall have the right to exercise a put option
                           (the "PUT OPTION") requiring Lessee to purchase the
                           Aircraft from Lessor for a purchase price specified
                           herein (the "PURCHASE PRICE") on any date specified
                           by Lessor occurring on or after October 1, 2001 but
                           not later than March 31, 2002, PROVIDED that Lessor
                           may only exercise the Put Option by providing Lessee
                           with at least 60 days' prior written notice of the
                           date on which such purchase is to occur. The Purchase
                           Price shall be $9,000,000 if the Aircraft is to be so
                           purchased on a date occurring in 2001, and $8,900,000
                           if the Aircraft is to be so purchased on a date
                           occurring thereafter. If the Aircraft is to be so
                           purchased on a date that is not a Lease Period Date,
                           Lessee shall, on such date, pay to Lessor Basic Rent,
                           calculated on a pro-rata basis to, and including, the
                           date on which Lessee purchases the Aircraft in
                           accordance with the provision of this Lease. In the
                           event that Lessor does not exercise the Put Option,
                           the monthly rent payable in arrears by Lessee to
                           Lessor for the Aircraft shall be as specified in this
                           Summary of Economic Terms, effective for the period
                           of time commencing January 1, 2002 and terminating on
                           the Lease Expiry Date, except as the parties may
                           otherwise agree.

                           Upon payment by Lessee of the purchase price referred
                           to above and all other Supplemental Rent then due and
                           owing to Lessor and Owner Participant: (A) Lessor
                           shall transfer to Lessee, without recourse or
                           warranty (except as to the absence of Lessor's
                           Liens), all of Lessor's right, title and interest in
                           and to the Aircraft and (B) Lessor shall deliver to
                           Lessee or its FAA counsel an FAA standard Form 8050-2
                           Bill of Sale for the Aircraft (the "FAA BILL OF SALE"
                           and, together with the bill of sale referenced in
                           subsection (A) of this paragraph, the "BILLS OF
                           SALE") and such other documents of transfer, title
                           and registration as may be prescribed by the U.S.
                           Federal Aviation Administration FAA or as may
                           reasonably be requested by the Lessee.

END OF
LEASE TERM
PURCHASE
OPTIONS:                   Lessee shall have the option at the end of the Lease
                           Term or any Renewal Term to purchase the Aircraft at
                           a price equal to the fair market sales value of the
                           Aircraft. Such option to purchase shall be exercised
                           upon written irrevocable notice from Lessee to Lessor
                           given not less than 180 days prior to the last day of
                           the Lease Term or any Renewal Term, as the case may
                           be. If Lessee shall have so elected to purchase the
                           Aircraft, Lessor shall transfer without recourse or
                           warranty (except as to Lessor's Liens) the Aircraft
                           to Lessee, against payment by Lessee of the
                           applicable purchase price in immediately available
                           funds. Fair market sales value of the Aircraft shall
                           be determined not less than 210 days prior to the end
                           of the Lease Term or any Renewal Term by mutual
                           agreement of Lessor and Lessee or, if they shall be
                           unable to agree, by an Independent Appraisal.

RENEWAL
OPTIONS:                   Lessee shall have the option to renew this Lease for
                           up to two successive renewal terms (each, a "RENEWAL
                           TERM") having a duration of one year each, in each
                           case at an amount of renewal rent equal to fair
                           market rental value, upon written irrevocable notice
                           from Lessee to Lessor given not less than 180 days
                           prior to the end of the Lease Term or any Renewal
                           Term then in effect, as the case may be. If the
                           Lessee exercises its option to renew the

<PAGE>

                           Lease, this Lease shall be extended for the
                           additional period of the Renewal Term on the same
                           conditions (other than the renewal rent) provided for
                           in this Lease, and upon such extension, the term
                           "Lease Term" whenever used in this Lease shall be
                           deemed to refer, unless the context otherwise
                           requires, to such Renewal Term. Fair market rental
                           value shall be determined not less than 210 days
                           prior to the end of the Lease Term or any Renewal
                           Term then in effect by mutual agreement between
                           Lessor and Lessee or, if they shall be unable to
                           agree, by an Independent Appraisal.

                           Lessor will have no rights to extend the Lease Term
                           or compel Lessee to renew the Lease Term.

VOLUNTARY
TERMINATION:               Lessee shall have the right, at its option and upon
                           90 days' prior written notice to Lessor specifying a
                           date of termination (the "TERMINATION DATE"), to
                           terminate this Lease with respect to any Aircraft at
                           any time after the 8th year anniversary of the
                           Commencement Time if, in Lessee's good faith
                           determination (as evidenced by a certificate of a
                           responsible officer of Lessee to such effect), such
                           Aircraft is surplus to Lessee's requirements or
                           economically obsolete to Lessee. Lessee will have the
                           option to act as non-exclusive agent of Lessor in
                           selling the Aircraft.

                           Lessor shall give Lessee irrevocable notice of its
                           election to sell or retain the Aircraft no later than
                           45 days prior to the Termination Date. If Lessor
                           elects to sell the Aircraft, Lessee, if it has
                           elected to serve as non-exclusive agent for Lessor,
                           shall use its best efforts to obtain bids for the
                           Aircraft. Lessee shall promptly certify to Lessor in
                           writing the amount and terms of each bid received by
                           Lessee and the name and address of the Person (who
                           shall not be Lessee or any affiliate of Lessee)
                           submitting each such bid. Lessor may also, at its
                           expense, independently obtain bids for such purchase
                           and, in the event Lessor receives any such bid,
                           Lessor shall promptly, and in any event at least five
                           Business Days prior to the Termination Date, certify
                           to Lessee in writing the amount and terms of such bid
                           and the name and address of the Person (who shall not
                           be Lessee or any affiliate of Lessee) submitting such
                           bid. On the Termination Date (or such earlier date of
                           sale as may be agreed to in writing by Lessor and
                           Lessee, which date shall thereafter be deemed the
                           Termination Date) (X) Lessee shall, subject to
                           receipt (I) by Lessor of funds in an amount equal to
                           the Termination Value for the Aircraft as of the
                           Termination Date, and (II) by the Persons entitled
                           thereto of all unpaid Supplemental Rent due on or
                           before the Termination Date, deliver the Aircraft to
                           the bidder, if any, which shall have prior to such
                           date submitted the highest cash bid that would result
                           in the highest net proceeds and of which notice shall
                           have been given, and shall duly transfer to Lessor
                           title to any engines installed on the Aircraft but
                           not owned by Lessor in accordance with the Return
                           Conditions, and (Y) Lessor shall, without recourse or
                           warranty (except as to Lessor's Liens),
                           simultaneously therewith sell the Aircraft for cash
                           to such bidder. The total selling price realized at
                           such sale shall be retained by Lessor and, in
                           addition, on the Termination Date, Lessee shall pay
                           to Lessor or, in the case of Supplemental Rent, to
                           the Persons entitled thereto, an amount equal to the
                           sum of (1) the excess, if any, of (A) the Termination
                           Value for the Aircraft as of the Termination Date,
                           over (B) the proceeds of the sale of the Aircraft
                           after deducting the reasonable expenses incurred by
                           Lessor, plus (2) all Supplemental Rent due and owing
                           on the Termination Date. If on or prior to the
                           scheduled Termination Date no sale of the Aircraft
                           shall have occurred and if Lessor shall not have
                           elected to retain the Aircraft, Lessee's notice of
                           termination shall be deemed to be withdrawn as of
                           such scheduled Termination Date and this Lease shall
                           continue in full force and effect. Upon any such sale
                           of the Aircraft, Lessor will transfer to Lessee,
                           without recourse or warranty (except as to Lessor's
                           Liens), all of Lessor's right, title and interest in
                           and to any Engines constituting part of the Aircraft
                           but which are not then

<PAGE>

                           installed on the Aircraft.

                           If Lessor shall have elected to retain the Aircraft,
                           on the Termination Date specified in Lessee's
                           termination notice (I) Lessee (X) shall deliver the
                           Aircraft to Lessor, and shall duly transfer to Lessor
                           title to any engines installed on the Aircraft but
                           not owned by Lessor in accordance with the Return
                           Conditions, and (Y) shall pay to Lessor or to the
                           Persons entitled thereto, all Supplemental Rent due
                           and owing on the Termination Date, and (II) Lessor
                           shall transfer to Lessee, without recourse or
                           warranty (except as to Lessor's Liens), all of
                           Lessor's right, title and interest in any to any
                           Engines constituting part of the Aircraft but which
                           are not then installed on the Aircraft.

                           Upon the sale or retention of the Aircraft, as the
                           case may be, in compliance with this Section, this
                           Lease, Lessee's obligation to pay Basic Rent on any
                           Lease Period Date occurring subsequent to the
                           Termination Value Determination Date with respect to
                           which Termination Value is determined (it being
                           agreed that if the Termination Value Determination
                           Date is a Lease Period Date, Lessee shall be required
                           to pay the Basic Rent installment falling due on such
                           Termination Value Determination Date), and Lessee's
                           obligation to pay Supplemental Rent (other than
                           payments of Supplemental Rent for indemnities
                           surviving pursuant to Annex E or Annex F or to be
                           made by Lessee in respect of liabilities and
                           obligations of Lessee which have accrued but not been
                           paid or which are in dispute as of the Termination
                           Date) shall terminate.

                           "TERMINATION VALUE" with respect to the Aircraft as
                           of the Termination Date means the amount set forth in
                           the Summary of Economic Terms opposite the
                           Termination Value Determination Date next preceding
                           the Termination Date (or, if the Termination Date
                           occurs on a Termination Value Determination Date, the
                           amount opposite such Termination Value Determination
                           Date) plus interest at the Prime Rate for the period
                           from and including such Termination Value
                           Determination Date to but excluding such date of
                           determination.

                           Except as set forth in this Summary of Economic
                           Terms, Lessor shall not otherwise have any right to
                           "put" the Aircraft to Lessee, to unwind or otherwise
                           in any way terminate this Lease or to compel Lessee
                           to terminate or unwind this Lease (except pursuant to
                           the exercise of Lessor's remedies in this Lease
                           following an Event of Default).

ASSIGNMENT:                Lessee shall be permitted to assign its rights and
                           obligations under this Lease with Lessor's prior
                           written consent, such consent not to be unreasonably
                           withheld; provided that (i) if Lessee is American, it
                           may assign its rights and obligations under this
                           Lease to any of its affiliates and (ii) if Lessee is
                           an affiliate of American, it may assign its rights
                           and obligations under this Lease to American or to
                           any other affiliate of American, in each of the
                           foregoing cases at any time without Lessor's prior
                           written consent and, with respect to any assignment
                           to an affiliate of American, subject to the execution
                           and delivery by American to Lessor and the Owner
                           Participant, if any, of a guaranty, substantially in
                           the form of the American Guaranty with respect to any
                           such affiliate assignee. Upon any such assignment to
                           an affiliate of American, and immediately prior to
                           the execution of an American Guaranty with respect to
                           such affiliate assignee, any other American Guaranty
                           in effect at such time shall automatically terminate
                           without any further action by American and American
                           shall have no further obligations thereunder.

<PAGE>

                     SCHEDULE A TO SUMMARY OF ECONOMIC TERMS

                             AIRLEASE LTD. - N913TW

STIPULATED LOSS VALUE                  STIPULATED LOSS VALUE
DETERMINATION DATE

1-Mar-01                                    $11,100,000
1-Apr-01                                    $11,035,106
1-May-01                                    $10,970,213
1-Jun-01                                    $10,905,319
1-Jul-01                                    $10,840,426
1-Aug-01                                    $10,775,532
1-Sep-01                                    $10,710,638
1-Oct-01                                    $10,645,745
1-Nov-01                                    $10,580,851
1-Dec-01                                    $10,515,957
1-Jan-02                                    $10,451,064
1-Feb-02                                    $10,386,170
1-Mar-02                                    $10,321,277
1-Apr-02                                    $10,256,383
1-May-02                                    $10,191,489
1-Jun-02                                    $10,126,596
1-Jul-02                                    $10,061,702
1-Aug-02                                     $9,996,809
1-Sep-02                                     $9,931,915
1-Oct-02                                     $9,867,021
1-Nov-02                                     $9,802,128
1-Dec-02                                     $9,737,234
1-Jan-03                                     $9,672,340
1-Feb-03                                     $9,607,447
1-Mar-03                                     $9,542,553
1-Apr-03                                     $9,477,660
1-May-03                                     $9,412,766
1-Jun-03                                     $9,347,872
1-Jul-03                                     $9,282,979
1-Aug-03                                     $8,218,085
1-Sep-03                                     $9,153,191
1-Oct-03                                     $9,088,298
1-Nov-03                                     $9,023,404
1-Dec-03                                     $8,958,511
1-Jan-04                                     $8,893,617
1-Feb-04                                     $8,828,723
1-Mar-04                                     $8,763,830
1-Apr-04                                     $8,698,936
1-May-04                                     $8,634,043
1-Jun-04                                     $8,569,149
1-Jul-04                                     $8,504,255
1-Aug-04                                     $8,439,362
1-Sep-04                                     $8,374,468
1-Oct-04                                     $8,309,574
1-Nov-04                                     $8,244,681
1-Dec-04                                     $8,179,787
1-Jan-05                                     $8,114,894
1-Feb-05                                     $8,050,000
1-Mar-05                                     $7,985,106
1-Apr-05                                     $7,920,213
1-May-05                                     $7,855,319

The amounts which are payable during any such Renewal Term in respect of
Stipulated Loss Value with respect to the Aircraft shall be determined on the
basis of the fair market sales value of the Aircraft as of the commencement of
such Renewal Term, amortized on a straight-line basis over such Renewal Term to
the fair market sales value of the Aircraft as of the expiration of such Renewal
Term, as such fair market sales value in each case be determined prior to the
commencement of such Renewal Term by mutual consent of Lessor and Lessee or, if
they shall be unable to agree, as determined by an independent Appraisal.

<PAGE>
                     SCHEDULE A TO SUMMARY OF ECONOMIC TERMS

                             AIRLEASE LTD. - N913TW

STIPULATED LOSS VALUE                  STIPULATED LOSS VALUE
DETERMINATION DATE

1-Jun-05                                     $7,790,426
1-Jul-05                                     $7,725,532
1-Aug-05                                     $7,660,638
1-Sep-05                                     $7,595,745
1-Oct-05                                     $7,530,851
1-Nov-05                                     $7,465,957
1-Dec-05                                     $7,401,064
1-Jan-06                                     $7,336,170
1-Feb-06                                     $7,271,277
1-Mar-06                                     $7,206,383
1-Apr-06                                     $7,141,489
1-May-06                                     $7,076,596
1-Jun-06                                     $7,011,702
1-Jul-06                                     $6,946,809
1-Aug-06                                     $6,881,915
1-Sep-06                                     $6,817,021
1-Oct-06                                     $6,752,128
1-Nov-06                                     $6,687,234
1-Dec-06                                     $6,622,340
1-Jan-07                                     $6,557,447
1-Feb-07                                     $6,492,553
1-Mar-07                                     $6,427,660
1-Apr-07                                     $6,362,766
1-May-07                                     $6,297,872
1-Jun-07                                     $6,232,979
1-Jul-07                                     $6,168,085
1-Aug-07                                     $6,103,191
1-Sep-07                                     $6,038,298
1-Oct-07                                     $5,973,404
1-Nov-07                                     $5,908,511
1-Dec-07                                     $5,843,617
1-Jan-08                                     $5,778,723
1-Feb-08                                     $5,713,830
1-Mar-08                                     $5,648,936
1-Apr-08                                     $5,584,043
1-May-08                                     $5,519,149
1-Jun-08                                     $5,454,255
1-Jul-08                                     $5,389,362
1-Aug-08                                     $5,324,468
1-Sep-08                                     $5,259,574
1-Oct-08                                     $5,194,861
1-Nov-08                                     $5,129,787
1-Dec-08                                     $5,064,894
1-Jan-07                                     $5,000,000

The amounts which are payable during any such Renewal Term in respect of
Stipulated Loss Value with respect to the Aircraft shall be determined on the
basis of the fair market sales value of the Aircraft as of the commencement of
such Renewal Term, amortized on a straight-line basis over such Renewal Term to
the fair market sales value of the Aircraft as of the expiration of such Renewal
Term, as such fair market sales value in each case be determined prior to the
commencement of such Renewal Term by mutual consent of Lessor and Lessee or, if
they shall be unable to agree, as determined by an independent Appraisal.

<PAGE>

                                                        Bank of America/Airlease
                                                  Aircraft Tail Numbers:  N913TW

                                                         RETURN CONDITIONS ANNEX

                                RETURN CONDITIONS

         The terms of this return conditions annex (this "Annex") shall apply
with respect to the return of the Aircraft to Lessor by or on behalf of Lessee
under the Lease, either at the expiration of the Lease Term or upon exercise of
Lessor's remedies following an Event of Default.

         Capitalized terms used but not defined in this Annex shall have the
respective meanings ascribed in the Lease.

A.       RETURN OF AIRCRAFT

         Except as otherwise provided in the Lease or in this Annex, upon the
termination of the Lease at the end of the Lease Term (including any Renewal
Term) or upon exercise of Lessor's remedies following an Event of Default,
unless Lessee shall have exercised its option (if any) to purchase the Aircraft
pursuant to the terms of the Lease, Lessee will return the Aircraft to Lessor by
delivering the same, at its own expense, to any one of Lessee's or American's
(if American is not Lessee) maintenance facilities in the 48 contiguous United
States which is on Lessee's or American's (if American is not Lessee) route
system, as selected by Lessee, or, if Lessor has requested storage pursuant to
Section H of this Annex, to the location determined in accordance with such
Section H. The Aircraft, at the time of return to Lessor, shall be in a
configuration suitable for commercial passenger service and shall be fully
equipped with two Engines (which may be Replacement Engines owned by Lessee)
duly installed thereon. At the time of the return of the Aircraft to Lessor,
Lessor and Lessee shall execute a Return Acceptance Supplement in the form of
Exhibit A attached hereto.

B.       RETURN OF MANUALS AND DATA

         At the time of the return of the Aircraft, Lessee shall deliver or
cause to be delivered to Lessor all logs, manuals, certificates and data, and
inspection, modification, overhaul and repair records required to be maintained
with respect thereto following the Commencement Time under applicable rules and
regulations of the FAA (the "Records"), which shall be in such condition as to
demonstrate compliance with the obligations of the Lessee under the maintenance
provisions of the Lease. At the time of delivery of the Records pursuant to this
Annex, Lessor and Lessee shall execute an Aircraft Documentation Return Receipt
in the form of Exhibit B attached hereto.

         Notwithstanding anything to the contrary contained in this Annex or the
Lease, Lessee's return obligation under this Annex shall be limited to returning
all such

<PAGE>

equipment, manuals and other property as were delivered to Lessee at the
Commencement Time or were developed by Lessee or were used by Lessee in respect
of the Aircraft during the Lease Term.

C.       MODIFICATION KITS

         Lessor may request and Lessee shall provide any modification kits or
other such items that are on order for the Aircraft, and Lessor shall reimburse
Lessee for the cost of such kits. Lessee shall be responsible for ordering all
no charge kits and, if not incorporated, shall return them to Lessor with the
Aircraft at no charge to Lessor.

D.       CONDITION OF AIRCRAFT AT RETURN

         At the time of return of the Aircraft to Lessor hereunder:

         (1) REGISTRATION; CERTIFICATION. The Aircraft will be registered under
the laws of the United States with the FAA in the name of Lessor or its
designee, PROVIDED that Lessee shall be relieved of its obligation to register
the Aircraft with the FAA if such registration is prohibited by reason of the
failure of Lessor, an owner participant or Lessor's designee to comply with the
citizenship or other eligibility requirements for registration of aircraft under
the Transportation Code.

         The Aircraft shall have a currently effective certificate of
airworthiness issued by the FAA and shall be in full compliance with the
provisions of Part 121 of the U.S. Federal Aviation Regulations and U.S.
regulations applicable to the Aircraft's operations for noise, emissions and
environment and be eligible for continued registration and operation in the
United States under the provisions of such Part 121 with no restrictions,
waivers or exemptions.

         (2) COMPLIANCE WITH MAINTENANCE PROGRAM.  The Aircraft shall be in
compliance with the Maintenance Program (including the associated corrosion
prevention and control program).

         (3) REPAIRS. All repairs that were performed since delivery of the
Aircraft to the Lessee at the Commencement Time and that then exist on the
Aircraft shall be permanent and shall have FAA approval if required. All such
repairs shall be provided with data and documentation necessary to verify and
substantiate their certification and methods of compliance. Lessee shall keep
and maintain a complete summary listing of all repairs performed after the
Commencement Time.

         (4) MODIFICATIONS.  All modifications to the Aircraft made after the
Commencement Time that have not been removed by Lessee at or prior to the return
of the Aircraft shall be in accordance with FAA-approved data. All such
modifications shall be provided with data and documentation necessary to
substantiate their certification,

                                        2

<PAGE>

approval and methods of compliance. Lessee shall keep and maintain a complete
summary listing of all modifications performed after the Commencement Time (it
being understood and agreed that nothing set forth in this Annex shall derogate
from Lessee's rights and obligations with respect to the alteration and
modification of the Aircraft as set forth in the Lease).

         (5) AIRWORTHINESS DIRECTIVES AND MANDATORY REGULATIONS. Subject to
provision in the Lease concerning the sharing of costs between Lessor and Lessee
with respect to compliance with airworthiness directives, if any, all FAA
airworthiness directives and U.S. Federal Aviation Regulations applicable to the
Aircraft (including its systems and components) requiring compliance or
terminating compliance on or prior to the expiration of the Lease Term shall be
accomplished in compliance with the issuing company or agency's specific
instructions without regard to any alternate means of compliance, waiver or
operator exemptions that delay compliance with such FAA airworthiness directives
or U.S. Federal Aviation Regulations. Lessee shall provide a current and
accurate status report and all hard copy records evidencing, when accomplished,
times and cycles and methods of accomplishment with the appropriate signatures
or stamps.

         (6) RETURN STATUS.

                  (i) OPERATING CONDITION. At the expiration of the Lease Term,
         the Aircraft shall be in good operating condition, ordinary wear and
         tear excepted, and all modifications and maintenance of the Aircraft
         after the Commencement Time shall have been performed in such a manner
         as to demonstrate compliance with the obligations of Lessee under the
         maintenance provisions of the Lease.

                  (ii) "C" CHECK TIME REMAINING. The Airframe shall have 100%
         remaining time (i.e., a full "C" check interval) until its next
         scheduled "C" check under the Maintenance Program, as measured by hour,
         cycle or calendar day, whichever is applicable and most limiting.
         Notwithstanding the immediately preceding sentence, the Aircraft may be
         returned with less time remaining to the next scheduled "C" check. If
         the Aircraft is returned with less time remaining than 100%, Lessee
         shall pay to Lessor, for each hour, cycle or calendar day below 100%, a
         U.S. dollar amount computed by dividing (I) Lessee's U.S. dollar cost
         of completing a "C" check in accordance with the Maintenance Program
         (at Lessee's internal rates with no mark-up) at the time of return of
         the Aircraft by (II) the total number of hours, cycles or calendar
         days, as applicable, in the applicable "C" check interval.

                  (iii) "HEAVY  C"  CHECK  TIME  REMAINING.  The  Airframe shall
         have at least 25% remaining time until its next scheduled most
         comprehensive  structural  overhaul  ("Heavy C" check) under the
         Maintenance Program, as measured by

                                        3

<PAGE>

         hour, cycle or calendar day, whichever is applicable and most limiting.
         Notwithstanding the immediately preceding sentence, the Aircraft may be
         returned with more or less time remaining to the next scheduled "Heavy
         C" check. If the Aircraft is returned with less time remaining than
         25%, Lessee shall pay to Lessor, and if the Aircraft is returned with
         more time remaining than 25%, Lessor shall pay to Lessee, for each
         hour, cycle or calendar day below or above 25%, as applicable, a U.S.
         dollar amount computed by dividing (I) Lessee's U.S. dollar cost of
         completing a "Heavy C" check in accordance with the Maintenance Program
         (at Lessee's internal rates with no mark-up) at the time of return of
         the Aircraft by (II) the total number of hours, cycles or calendar
         days, as applicable, in the applicable "Heavy C" check interval.

                  (iv) LANDING GEAR TIME REMAINING. The installed nose and main
         landing gears and components of the Aircraft and their associated
         actuators, side braces and parts (the "Landing Gear") shall have at
         least 25% remaining time until the next scheduled Landing Gear overhaul
         under the Maintenance Program as measured by hour, cycle or calendar
         day, whichever is applicable and most limiting. Notwithstanding the
         immediately preceding sentence, the Aircraft may be returned with more
         or less time remaining to the next scheduled Landing Gear overhaul. If
         the Aircraft is returned with less time remaining than 25%, Lessee
         shall pay to Lessor, and if the Aircraft is returned with more time
         remaining than 25%, Lessor shall pay to Lessee, for each hour, cycle or
         calendar day below or above 25%, as applicable, a U.S. dollar amount
         computed by dividing (I) Lessee's U.S. dollar cost of completing a
         Landing Gear overhaul in accordance with the Maintenance Program (at
         Lessee's internal rates with no mark-up) at the time of return of the
         Aircraft by (II) the total number of hours, cycles or calendar days, as
         applicable, in the applicable Landing Gear overhaul interval.

                  (v)  ENGINE LIFE-LIMITED PART CYCLE LIFE REMAINING.Each engine
         life-limited part shall have at least 25% remaining of its total cycle
         life until such part's next scheduled replacement or refurbishment
         under the Maintenance Program. Notwithstanding the immediately
         preceding sentence, the Aircraft may be returned with more or less
         cycle life remaining to the next scheduled replacement or refurbishment
         of any such part. If the Aircraft is returned with less cycle life
         remaining than 25% for any such part, Lessee shall pay to Lessor, and
         if the Aircraft is returned with more cycle life remaining than 25% for
         any such part, Lessor shall pay to Lessee, for each cycle below or
         above 25%, as applicable, a U.S. dollar amount computed by dividing (I)
         Lessee's U.S. dollar cost of replacing or refurbishing such part in
         accordance with the Maintenance Program (at Lessee's internal rates
         with no mark-up) at the time of return of the Aircraft by (II) the
         total number of cycles in such part's total cycle life.

                                            4

<PAGE>

                  (vi) ENGINES TIME REMAINING. Each Engine returned with the
         Aircraft shall have at least 25% remaining time until its next required
         performance restoring overhaul under the Maintenance Program (based on
         Lessee's mean time between such overhauls for engines of the same type
         operated by Lessee) as measured by hour, cycle or calendar day,
         whichever is applicable and most limiting. Notwithstanding the
         immediately preceding sentence, the Aircraft may be returned with more
         or less time remaining to the next required performance restoring
         overhaul of any such Engine. If the Aircraft is returned with less time
         remaining than 25% for any such Engine, Lessee shall pay to Lessor, and
         if the Aircraft is returned with more time remaining than 25% for any
         such Engine, Lessor shall pay to Lessee, for each hour, cycle or
         calendar day below or above 25%, as applicable, a U.S. dollar amount
         computed by dividing (I) Lessee's U.S. dollar cost of completing a
         performance restoring overhaul of such Engine in accordance with the
         Maintenance Program (at Lessee's internal rates with no mark-up) at the
         time of return of the Aircraft by (II) the total number of hours,
         cycles or calendar days, as applicable, in the applicable performance
         restoring overhaul interval for such Engine.

                  (vii) ENGINE BORESCOPE INSPECTION. A full cold and hot section
         video borescope inspection in accordance with the Maintenance Program
         and a full on-wing power assurance run in accordance with the
         Maintenance Program shall have been performed by Lessee for each Engine
         in the presence of a representative of Lessor prior to return of the
         Aircraft, and Lessee shall have corrected, at Lessee's expense,
         discrepancies found during such inspections that are determined to be
         outside the limits permitted by the Maintenance Program.

                  (viii) APU.  The auxiliary power unit of the Aircraft ("APU")
         shall be in serviceable condition.

         (7) DEFERRED MAINTENANCE. There shall be no deferred maintenance items,
scheduled or unscheduled, or watch items or items requiring repetitive
inspections against the Aircraft, including those identified in pre-delivery
inspections or test flights, that are outside of the limits established by the
Maintenance Program.

         (8) GENERAL  APPEARANCE.  The Aircraft  shall be clean and shall be in
suitable condition to be placed into U.S. scheduled revenue airline operations
under Part 121 of the U.S. Federal Aviation Regulations.

         (9) FUEL. Lessee shall have no obligation with respect to the amount of
fuel or oil contained in the Aircraft and all fuel or oil remaining on board the
Aircraft at the time of its return hereunder shall be the property of Lessor
without charge.

                                        5

<PAGE>

         (10) SPECIAL MARKINGS. All internal and external airline designation
markings appearing on the Aircraft shall have been removed or painted over in a
workmanlike manner (in accordance with Lessee's customary practice).

F.       PRE-RETURN INSPECTIONS

         Immediately prior to the redelivery of the Aircraft, Lessee shall make
the Aircraft available to Lessor for an inspection that shall include ground
functional checks to verify compliance with the return conditions set forth in
this Annex and, at Lessor's request, a one-hour demonstration flight of the
Aircraft, conducted by Lessee using Lessee's usual test flight procedures.
Lessor shall be permitted to have up to two representatives to be direct
observers of the demonstration flight. The cost of the demonstration flight
shall be paid by Lessee. In the event that the demonstration flight reveals any
operational discrepancies that are determined to be outside the limits permitted
by the Maintenance Program or other items or conditions that would prevent the
Aircraft from meeting the return conditions specified in this Annex, Lessee will
correct, at Lessee's expense, such discrepancies, items or conditions. Lessor
and such Lessor's representatives shall execute and deliver to Lessee prior to
such demonstration flight releases and waivers of liability in form and
substance reasonably satisfactory to Lessee. Any inspection or demonstration
flight shall be subject to the confidentiality provisions set forth in the Lease
with respect to inspections of the Aircraft.

G.       NO LIENS

         At the time of return of the Aircraft, it shall be free and clear of
all Liens other than Lessor's Liens and Permitted Liens referred to in clause
(i) or (viii) of the definition thereof.

H.       STORAGE UPON RETURN

         Upon written request of Lessor received at least 30 days prior to the
end of the Lease Term, Lessee will provide Lessor with storage facilities and
maintenance services for the Aircraft for a period not exceeding 90 days at such
location in the continental United States as selected by Lessee. Any storage
facilities provided by Lessee for the Aircraft pursuant to this Section H shall,
in all cases, be at the cost to Lessor of insurance and at Lessor's risk of
loss. In exchange for the maintenance and storage services described in this
Section H, Lessee will charge Lessor, and Lessor will pay to Lessee, Lessee's
rates customarily charged to third parties for similar maintenance and storage
services.

I.       REPLACEMENT ENGINES

         In the event that any engine not owned by Lessor shall be delivered
with the Airframe at the time of return, Lessee, concurrently with such
delivery, will furnish

                                        6

<PAGE>

Lessor with a warranty (as to title) bill of sale (which warranty shall except
Lessor's Liens and Permitted Liens of the type described in clause (viii) of the
definition thereof) with respect to such engine, and Lessor will transfer to
Lessee, without recourse or warranty (except as to Lessor's Liens), all Lessor's
right, title and interest in and to an Engine constituting part of the Aircraft
but not installed on the Airframe at the time of the return of the Airframe.

J.       PAYMENT MECHANICS

         Any payments required to be made pursuant to this Annex shall be made
in U.S. dollars in immediately available funds to such bank account as is
designated by the payee.

                                       7

<PAGE>

                                               Bank of America/Airlease Aircraft
                                                           Tail Numbers:  N913TW

                       EXHIBITS TO RETURN CONDITIONS ANNEX

Exhibit A:     Return Acceptance Supplement

Exhibit B:     Aircraft Documentation Return Receipt

<PAGE>

                                                  EXHIBIT A TO RETURN CONDITIONS
                                                               ANNEX

                          RETURN ACCEPTANCE SUPPLEMENT
                                      Dated ___________________
                                           to Lease No. ______
                                      Relating to Model ____ Aircraft
                                                  between
                          ___________________________________
                                       (LESSOR)
                                          and
                          ___________________________________
                                       (LESSEE)
         This Return Acceptance Supplement is executed by the parties hereto to
confirm that on the date of this Return Acceptance Supplement at _____________
[time] the following described Aircraft:

          Manufacturer    ..............................
          Model.........................................
          Manufacturer's Serial No. ....................
          Aircraft Hours and Cycles .................... (See Attachment 1)

         including the following described Engines installed thereon:

         MANUFACTURER        MAKE AND MODEL        MANUFACTURER'S SERIAL NO.

         was delivered by Lessee to Lessor.

         This Return Acceptance Supplement is intended to be delivered by Lessor
to Lessee in _____________________.

         IN WITNESS WHEREOF, the parties hereto have caused this Return
Acceptance Supplement to be executed by their duly authorized representatives as
of the day and year first above written.

         ___________________________              _____________________________
                 (LESSEE)                                   (LESSOR)

<PAGE>

By _______________________________       By ______________________________

Its ______________________________       Its _____________________________

         ATTACHMENT 1:  "Aircraft Hours and Cycles"

                                       2

<PAGE>

                                                           ATTACHMENT 1 TO
                                                    RETURN ACCEPTANCE SUPPLEMENT

                               AIRCRAFT HOURS AND CYCLES
                                     AS OF ________________
                                     MODEL _____ AIRCRAFT

REGISTRATION MARKINGS ______________                       SERIAL NUMBER _______

A. AIRFRAME:

Aircraft Total Time (Hours)............................... ______________

Aircraft Total Landings (Cycles).......................... ______________

Aircraft (and Engine) "C" Check--
   Hours/Cycles/Days since last check .................... ______________

Aircraft (and Engine) "Heavy C" Check--
   Hours/Cycles/Days since last check .................... ______________

B.      ENGINES--MODEL:

                                             HOURS/CYCLES/DAYS     CYCLES
                                                SINCE LAST         TO NEXT
                                TOTAL           PERFORMANCE     REPLACEMENT OF
                SERIAL          ENGINE  TOTAL    RESTORING       LOWEST LIFE
POSITION        NUMBER          CYCLES  TIME     OVERHAUL        LIMITED PART

1
2

                                        3

<PAGE>

                                                           ATTACHMENT 1 TO
                                                    RETURN ACCEPTANCE SUPPLEMENT

C. APU - MODEL: __________________________

SERIAL NUMBER                      TOTAL
                                HOURS/CYCLES

D. LANDING GEAR:

                                                           HOURS/CYCLES/DAYS
                       SERIAL NUMBER    HOURS/CYCLES       SINCE LAST OVERHAUL

Nose Landing Gear

Left Main Gear

Right Main Gear

                                       4

<PAGE>

                                                 EXHIBIT  B TO RETURN CONDITIONS
                                                                 ANNEX

                   AIRCRAFT DOCUMENTATION RETURN RECEIPT

         _________________ ("Lessee"), a [Delaware] ______________, and
____________________ ("Lessor"), a _______________________________, hereby
confirm the return delivery by Lessee and receipt by Lessor of the Aircraft
Documentation listed on Attachment 1 hereto and made a Part hereof, on
___________, in _________________, at _______________________local time. [Lessor
is executing this return receipt pursuant to the instructions of
___________________, a ______________ ("Owner Participant"), such instructions
attached hereto as Attachment 2.]

_____________________________                  ___________________________
         (LESSEE)                                       (LESSOR)

By _______________________             By ___________________________

Its  _______________________           Its  ___________________________

ATTACHMENTS (2)

<PAGE>

                                                  EXHIBIT B TO RETURN CONDITIONS
                                                              ANNEX

                                                                   ATTACHMENT 1

                                AIRCRAFT DOCUMENTATION

                                 IDENTIFICATION
               TITLE                 NUMBER                     QUANTITY

                                       2

<PAGE>

                                                                      APPENDIX C

                               [Letterhead of TWA]

                                                                          [Date]

TO THE PERSONS LISTED ON SCHEDULE A ATTACHED HERETO:

                 ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT

Ladies and Gentlemen:

         American Airlines, Inc., a Delaware corporation ("AMERICAN"), and Trans
World Airlines, Inc., a Delaware corporation (together with any predecessors or
affiliates, "TWA") have entered into an Asset Purchase Agreement (as amended
from time to time, the "ASSET PURCHASE AGREEMENT"), dated as of January 9, 2001,
pursuant to which American has agreed with TWA, subject to certain terms and
conditions, to enter into a leasing transaction at the Commencement Time (as
defined below) with respect to the aircraft (the "AIRCRAFT") specified in
Schedule A attached hereto. One such condition is that this Agreement shall have
been entered into. All capitalized terms used but not defined herein shall have
the respective meanings given them in Appendix A hereto. This Assignment,
Assumption and Amendment Agreement, together with all annexes, schedules and
other attachments hereto, is referred to collectively as this "AGREEMENT".

         The person listed on Schedule A hereto as lessor (the "LESSOR") has
agreed to lease the Aircraft to TWA Airlines LLC, a wholly-owned subsidiary of
American (the "LESSEE") (such leasing transaction, the "TRANSACTION"). The
Transaction has the terms (the "TRANSACTION TERMS") separately agreed by
American and each other person who is a party to, or who has consented to, an
Assumption and Lease Agreement (as may be amended, modified or assigned from
time to time, the "ASSUMPTION AND LEASE AGREEMENT") relating to the Aircraft
and, if entered into, more extensive leasing documents incorporating all of the
Transaction Terms (such leasing documents, the "SUBSTITUTE TRANSACTION
DOCUMENTS").

         TWA and the other parties hereto (such other parties other than
American and the Lessee, the "EXISTING TWA PARTIES") hereby agree as follows:

SECTION 1.  AMENDMENT, ASSIGNMENT AND ASSUMPTION.

         (a) Effective immediately prior to the Commencement Time, subject to
the occurrence of the Commencement Time, the Existing TWA Parties hereby amend
and restate and, to the extent necessary, terminate, effective at the
Commencement Time, each TWA Lease Document, such that the terms and conditions
of the TWA Lease Documents are replaced, deleted and superseded in their
entirety by the Assumption and Lease Agreement; PROVIDED, HOWEVER, that the TWA
Trust Agreement, if any, and the

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

TWA Purchase Agreement Assignment, if any, listed in Schedule B shall not be so
amended and restated or terminated, but shall only be amended to the extent
necessary to make their respective terms consistent with the Transaction Terms.

         (b) Effective at the Commencement Time, subject to the occurrence of
the Commencement Time, TWA hereby assigns to the Lessee all of the rights of the
"Lessee" under the TWA Lease Documents, as amended, restated and/or terminated
as provided herein (and only as so amended, restated and/or terminated) and the
Lessee hereby assumes all of the obligations of TWA under the TWA Lease
Documents, as so amended, restated and/or terminated (and only as so amended,
restated and/or terminated); PROVIDED that (A) neither American nor the Lessee
will have any responsibility or liability for any act or omission of TWA at any
time or for any act, claim, event, circumstance or condition existing, accruing,
arising or occurring at any time at or prior to the Commencement Time (any of
the foregoing, a "PRIOR CLAIM"); (B) neither American nor the Lessee assumes or
agrees to pay, satisfy, discharge or perform, and will not be deemed for any
reason whatsoever to have assumed, or agreed to pay, satisfy, discharge or
perform, any liability, obligation or indebtedness of TWA with respect to the
Aircraft, Airframe or Engines, or otherwise, whether primary or secondary,
direct or indirect, including without limitation any and all liabilities and
obligations of TWA resulting from, caused by or arising out of, directly or
indirectly, any act or omission of TWA, the conduct of its business or ownership
or lease of any of its properties or assets (including the Aircraft) or any
properties or assets used by TWA at any time, including without limitation such
of the foregoing as constitute, may constitute or are alleged to constitute a
tort, breach of contract or violation of requirements of any law; (C) neither
American nor the Lessee will be responsible for any rental or other payments
arising or accruing at any time at or prior to, or in respect of any period at
or prior to, the Commencement Time, even if the payment date therefor under the
TWA Lease Documents would have occurred after the Commencement Time; and (D)
neither American nor the Lessee shall have any liability for any Prior Claim
that results or arises from the execution or performance of this Agreement, the
Assumption and Lease Agreement or any Substitute Transaction Document.

         (c) Each of the Lessor and the Owner Participant, if any, hereby
consents to the assignment and assumption contained in paragraph (b) of this
Section 1.

         (d) Each Lessor Party agrees that, effective at (and subject to the
occurrence of) the Commencement Time, such Lessor Party waives any right and
relinquishes any claim it may have against TWA or against any collateral
securing any such claim with respect to any difference between its rights,
including the amounts to be received, hereunder and its rights, including the
amounts that would be received, under the TWA Lease Documents prior to their
amendment or that arises out of the amendment effected hereby. It is understood
that the Lessor Parties do not, under this Agreement, waive (I) the right they
may have to receive payment from TWA of amounts owed by TWA under the TWA

                                        2

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

Lease Documents at any time prior to the Commencement Time or (II) any rights or
remedies they may have against TWA with respect to events or circumstances
arising or occurring before the Commencement Time (including rights or remedies
arising under Section 1110 of the Bankruptcy Code (11 U.S.C. ss. 1110) or with
respect to Retained Liabilities (as defined in the Asset Purchase Agreement)).
Each Lessor Party acknowledges that it has no right or claim against American,
the Lessee or any of American's other affiliates with respect to any of the
foregoing.

         (e) At or prior to the Commencement Time, the parties will execute and
deliver such additional documents as may be necessary or appropriate to be filed
for recordation with the FAA to consummate the transaction contemplated hereby.

SECTION 2.  LIMITATION ON TWA LIABILITY OTHER THAN RETAINED LIABILITIES.

         Notwithstanding any provision to the contrary in the Transaction Terms,
the Assumption and Lease Agreement, or this Agreement, TWA shall not have any
liability after the Commencement Time other than Retained Liabilities (as
defined in the Asset Purchase Agreement).

SECTION 3.  INSTRUCTION.

         If Schedule A lists an owner participant (the "OWNER PARTICIPANT"), the
Owner Participant hereby authorizes and directs the Lessor to execute and
deliver this Agreement.

         Unless otherwise expressly specified or permitted by the terms hereof,
all notices required or permitted under the terms and provisions hereof shall be
in English and in writing, and any such notice may be given by U.S. mail,
courier service, telegram, cable or facsimile (confirmed by telephone or in
writing in the case of notice by telegram, cable or facsimile) or any other
customary means of communication, and any such notice shall be effective when
delivered to the recipient thereof in accordance with the provisions of this
Section, (I) if to TWA, American or the Lessee, to its respective address
(including facsimile number) set forth below its signature at the foot of this
Agreement, or (II) if to any other party hereto, to its respective address set
forth on Schedule A to this Agreement.

SECTION 4.  SEPARATE COUNTERPARTS.

         This Agreement may be executed in any number of counterparts (and each
of the parties hereto shall not be required to execute the same counterpart).
Any counterpart may be executed by facsimile signature and such facsimile
signature shall be deemed an original. Each counterpart of this Agreement
including a signature page executed by each of the parties hereto shall be an
original counterpart of this Agreement, but all of such counterparts together
shall constitute one instrument.

                                        3

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

SECTION 5.  ENTIRE AGREEMENT.

         This Agreement, including all the schedules, exhibits and annexes
hereto, the Assignment, Assumption and Amendment Agreement (when executed and
delivered) and the Substitute Transaction Documents (when executed and
delivered) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.

SECTION 6.  HEADINGS.

         The headings of the various sections herein are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.

SECTION 7.  BINDING EFFECT.

         This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns and
no other person.

SECTION 8.  AMENDMENTS.

         The provisions of this Agreement may be modified or amended only by an
instrument or instruments in writing signed by each party hereto and consented
to by American.

SECTION 9.  GOVERNING LAW.

         THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.

                                        4

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

The parties hereto have signed this Agreement as of the date first written
above.

                           Sincerely yours,

                           TRANS WORLD AIRLINES, INC.

                           By: ________________________
                               Name:
                               Title:
                               Address:

                                        5

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

ACKNOWLEDGED AND AGREED

AMERICAN AIRLINES, INC.

By: _________________________
    Name:
    Title:

    Address: 4333 Amon Carter Boulevard
             Mail Drop 5662
             Ft. Worth, Texas 76155
             Attn:  Treasurer
             Fax: (817) 967-4318
             Tel:  (817) 963-1234

TWA AIRLINES LLC

By: _________________________
    Name:
    Title:

    Address: One City Centre
             515 North Sixth Street
             St. Louis, Missouri 63101
             Attn:
             Fax:
             Tel:

                                        6

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

[NAME OF LESSOR/OWNER TRUSTEE]

By: ________________________________
    Name:
    Title:

[NAME OF OWNER PARTICIPANT]

By: ________________________________
    Name:
    Title:

                                        7

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

                                                                      SCHEDULE A

                          AIRCRAFT AND LESSOR PARTIES

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

                                                                      SCHEDULE B

                              TWA LEASE DOCUMENTS

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

                                                                      APPENDIX A

                                   DEFINITIONS

         "COMMENCEMENT TIME" means the time on the Closing Date when (i) TWA,
American and the Lessor Parties shall have executed and delivered the
Assignment, Assumption and Amendment Agreement and (ii) the closing under the
Asset Purchase Agreement shall have occurred.

         "FAA" means the Federal Aviation Administration of the U.S. and any
successor governmental authority.

         "TWA LEASE DOCUMENTS" means all leases, mortgages, loan agreements,
notes, indentures, trust agreements, participation agreements, purchase
agreement assignments, security agreements, letter agreements and all other
agreements with respect to the Aircraft, in each case, to which TWA is a party
or by which TWA is bound or by which TWA's rights are affected, including,
without limitation, the documents listed in Schedule B hereto but excluding any
purchase agreement with a manufacturer of the Aircraft, the Engines (as defined
in the Assumption and Lease Agreement) or any Parts (as defined in the
Assumption and Lease Agreement).

        FORM OF ASSIGNMENT, ASSUMPTION AND AMENDMENT AGREEMENT (GENERAL)

<PAGE>

                                                                      APPENDIX D

              [FORM OF LESSEE ASSIGNMENT AND ASSUMPTION AGREEMENT]

                     [Letterhead of American Airlines, Inc.]

To:      [AA Subsidiary]

Re:      Assumption and Lease Agreement, dated ___________, _____, regarding the
         Aircraft bearing U.S. registration number _____________

Ladies and Gentlemen:

         We refer to the Assumption and Lease Agreement specified above (as
amended hereby and from time to time, the "ASSUMPTION AND LEASE AGREEMENT"). All
capitalized terms used but not defined herein shall have the respective meanings
given them in the Assumption and Lease Agreement.

         American Airlines, Inc., a Delaware corporation, ("AMERICAN") hereby
assigns to you all of its rights under the Assumption and Lease Agreement, and
you hereby assume all of the obligations of American under the Assumption and
Lease Agreement. For the express benefit of the Lessor Parties, you and American
each agrees that the execution, delivery and performance of this Lessee
Assignment and Assumption Agreement does not release American from any of its
obligations under the Assumption and Lease Agreement; PROVIDED that performance
of any such obligation by you shall constitute performance by American (and, to
the extent of such performance, discharge such obligation by American).

         For the express benefit of the Lessor Parties, today and at the
Commencement Time:

         (1) you make the representations set forth in paragraphs 1(b) - (d) of
Appendix F of the Assumption and Lease Agreement as if (a) such representations
were applicable to you, (b) such representations were fully set forth herein,
and (c) such representation and warranties explicitly related to this Agreement
and the Assumption and Lease Agreement, and

         (2) you also represent that you are an entity duly formed or
incorporated and validly existing in good standing under the laws of the State
of Delaware, are a Certificated Air Carrier, are a Citizen of the United States,
have the corporate or company power and authority to own or hold under lease
your properties and to enter into and perform those obligations undertaken by
American under the Assumption and Lease Agreement and assumed by you hereby and
are duly qualified to do business as a foreign

<PAGE>

corporation in good standing in each state in which you have intrastate routes
or have a principal office or a major overhaul facility (other than failures to
so qualify that would not have a material adverse effect on the consolidated
financial condition of you and your subsidiaries, considered as a whole), and
your chief executive office (as such term is used the Uniform Commercial Code as
in effect in your state of formation or incorporation) is located in Texas.

         THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.

         The parties hereto have signed this Lessee Assignment and Assumption
Agreement as of the date written below.

                                                 Sincerely yours,

                                                 American Airlines, Inc.

                                                 By:____________________________
                                                    Name:
                                                    Title:

ACKNOWLEDGED AND
AGREED

[AA Subsidiary]

By:____________________________
   Name:
   Title:

Dated as of: _______________, ______

                                        2

<PAGE>

                                                                      APPENDIX E

                           [Form of American Guaranty]

                     [Letterhead of American Airlines, Inc.]

To:      The Lessor Parties named in the Assumption and Lease Agreement referred
         to below.

Re:      Lessee Assignment and Assumption Agreement between American Airlines,
         Inc. a Delaware Corporation ("American") and _______ (the "Assignee")

         relating to

         Assumption and Lease Agreement, dated ___________, _____, regarding the
         Aircraft bearing U.S. registration number _____________

Ladies and Gentleman:

         We refer to the Lessee Assignment and Assumption Agreement referred to
above (the "LESSEE ASSIGNMENT"), which relates to the Assumption and Lease
Agreement specified above, as amended by the Lessee Assignment (and as further
amended from time to time, the "ASSUMPTION AND LEASE AGREEMENT"). All
capitalized terms used but not defined herein shall have the respective meanings
given them in the Assumption and Lease Agreement.

         American agrees and confirms for the benefit of the Lessor Parties that
its execution, delivery and performance of the Lessee Assignment and Assumption
Agreement does not release American from any of its obligations under the
Assumption and Lease Agreement; PROVIDED that performance of any such obligation
by the Assignee shall constitute performance by American (and, to the extent of
such performance, discharge such obligation by American).

         In furtherance of the agreement and confirmation by American made in
the previous paragraph, American hereby unconditionally and irrevocably
guarantees to each Lessor Party the performance of and compliance with all
obligations, representations, covenants and undertakings of the Assignee in the
Assumption and Lease Agreement and the Substitute Transaction Documents, if any,
in accordance with each of their respective terms, and agrees that its
obligations hereunder are absolute, unconditional and irrevocable, are not
subject to any defense based on suretyship, and will not be discharged by any
change in the structure or ownership of the Assignee or any of its affiliates or
any insolvency, bankruptcy, reorganization, arrangement, composition,
liquidation, dissolution, or similar proceedings with respect to the Assignee or
any of its affiliates or any other occurrence whatsoever (including any
occurrence which might

<PAGE>

otherwise constitute a legal or equitable defense or discharge of the
liabilities of a guarantor or surety or which might otherwise limit recourse
against the undersigned), except to the extent of performance of all obligations
of the Assignee in accordance with the terms of the Assumption and Lease
Agreement and the Substitute Transaction Documents, if any. This guaranty is a
guaranty of payment and not of collectibility.

         For the express benefit of the Lessor Parties, today and at the
Commencement Time: American makes and confirms the representations set forth in
paragraphs 1(a) - (d) of Appendix F of the Assumption and Lease Agreement as if
(a) such representations were fully set forth herein and (b) such
representations and warranties explicitly related to this Agreement.

THIS GUARANTY IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL
RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.

         American has signed this American Guaranty as of the date written
below. This American Guaranty may be executed by facsimile or mechanical
signature, and such facsimile or mechanical signature shall be deemed an
original.

                            Sincerely yours,

                            American Airlines, Inc.

                            By:________________
                               Name:
                               Title:

Dated as of: _______________, ______.

                                        2

<PAGE>

                                                                      APPENDIX F

                         REPRESENTATIONS AND WARRANTIES

 1.      REPRESENTATIONS AND WARRANTIES OF AMERICAN

American represents and warrants that as of the date of this Agreement and as of
the Commencement Time:

         (a) American is a corporation duly incorporated and validly existing in
good standing under the laws of the State of Delaware, is a Certificated Air
Carrier, has the corporate power and authority to own or hold under lease its
properties and to enter into and perform its obligations under this Agreement
and is duly qualified to do business as a foreign corporation in good standing
in each state in which it has intrastate routes or has a principal office or a
major overhaul facility (other than failures to so qualify that would not have a
material adverse effect on the consolidated financial condition of American and
its subsidiaries, considered as a whole);

         (b) the execution, delivery and performance by American of this
Agreement have been duly authorized by all necessary corporate action on the
part of American, do not require any stockholder approval or approval or consent
of any trustee or holder of any indebtedness or obligations of American, except
such as have been duly obtained and are in full force and effect, and do not
contravene, conflict with any law, governmental rule, regulation, judgment or
order binding on American or the Certificate of Incorporation or By-Laws of
American or contravene or result in a breach of, or constitute a default under,
or result in the creation of any Lien upon the property of American under, any
indenture, mortgage, contract or other agreement to which American is a party or
by which it or any of its properties are bound or affected, PROVIDED that
American makes no representation or warranty with respect to compliance with or
absence of conflicts with, any of the TWA Lease Documents, any requirement of
the U.S. Bankruptcy Code with respect to TWA or any judgment or order entered in
connection with the bankruptcy proceedings involving TWA;

         (c) neither the execution and delivery by American of this Agreement,
nor the consummation by American of any of the transactions contemplated hereby,
requires the consent or approval of, the giving of notice to, the registration
with or the taking of any other action in respect of the Department of
Transportation, the FAA or any other Federal, state or foreign governmental
authority or agency, except for (I) such consents, approvals, notices,
representations and actions as have already been obtained, given, made or
completed, and (II) any other consent, approval, notice, registration or action
that may be required under the TWA Lease Documents, or in connection with the
bankruptcy proceedings involving TWA; and

<PAGE>

         (d) this Agreement has been duly executed and delivered by American and
constitutes the legal, valid and binding obligation of American enforceable
against American in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity.

 2.      REPRESENTATIONS AND WARRANTIES OF OWNER PARTICIPANT

         The Owner Participant represents and warrants that as of the date of
this Agreement and as of the Commencement Time:

         (a) The Owner Participant is a limited partnership duly organized and
validly existing in good standing under the laws of jurisdiction of its
organization, is a Citizen of the United States, has the power and authority to
own or hold under lease its properties and to enter into and perform its
obligations under this Agreement and is duly qualified to do business as a
foreign corporation in good standing in each state where the nature of the
business conducted by it or the properties owned or leased by it requires
qualification (other than failures to so qualify that would not have a material
adverse effect on the consolidated financial condition of the Owner Participant
and its subsidiaries, considered as a whole;

         (b) Airlease Management Services,  Inc. ("AMSI"), the general partner
of Owner Participant, is a corporation duly incorporated and validly existing
and in good standing under the laws of the jurisdiction of its organization.

         (c) the execution, delivery and performance by the Owner Participant of
this Agreement have been duly authorized by all necessary corporate action on
the part of AMSI and all necessary partnership action on the part of the Owner
Participant, do not require any stockholder approval or approval or consent of
any trustee or holder of any indebtedness or obligations of AMSI or the Owner
Participant, except such as have been or will be prior to the Commencement Time
duly obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation, judgment or order binding on AMSI or the Owner
Participant or the Certificate of Incorporation or By-Laws of AMSI or the
partnership agreement of the Owner Participant or contravene, conflict with or
result in a breach of, or constitute a default under, or result in the creation
of any Lien upon the property of AMSI or the Owner Participant under, any
indenture, mortgage, contract or other agreement to which AMSI or the Owner
Participant is a party or by which it or any of its respective properties may be
bound or affected;

         (d) neither the execution and delivery by the Owner Participant of this
Agreement, nor the consummation by the Owner Participant of any of the
transactions contemplated hereby, requires the consent or approval of, the
giving of notice to, the registration with or the taking of any other action in
respect of the Department of

                                        2

<PAGE>

Transportation, the FAA or any other Federal, state or foreign governmental
authority or agency or any other Person, except for such consents, approvals,
notices, representations and actions as have been or will be prior to the
Commencement Time obtained, given, made or completed;

         (e) this Agreement has been duly executed and delivered by the Owner
Participant and constitutes the legal, valid and binding obligation of the Owner
Participant enforceable against the Owner Participant in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity;

         (f) other than the TWA Lease Documents listed on Schedule B hereto and
the corresponding purchase agreements with the manufacturers of the Aircraft,
there are no leases, mortgages, loan agreements, notes, indentures, trust
agreements, participation agreements, purchase agreement assignments, security
agreements or other agreements with respect to the Aircraft; all parties to the
TWA Lease Documents have been listed on Schedule A to this Agreement; and

         (g) the Trust Estate is free of Lessor's Liens attributable to the
Owner Participant.

 3.      REPRESENTATIONS AND WARRANTIES OF THE BANK

         The Bank represents and warrants that as of the date of this Agreement
and as of the Commencement Time:

         (a) The Bank is a national banking association duly organized and
validly existing in good standing under the laws of the United States, is a
Citizen of the United States, has the corporate power and authority to own or
hold under lease its properties and to enter into and perform its obligations
under this Agreement;

         (b) the execution, delivery and performance by the Owner Trustee of
this Agreement have been duly authorized by all necessary corporate action on
the part of the Owner Trustee, do not require any stockholder approval or
approval or consent of any trustee or holder of any indebtedness or obligations
of the Owner Trustee, except such as have been duly obtained and are in full
force and effect, and do not contravene any federal banking law, governmental
rule, regulation, judgment or order binding on the Owner Trustee or the Articles
of Association or By-Laws of the Bank or contravene or result in a breach of, or
constitute a default under, or result in the creation of any Lien upon the
property of the Owner Trustee under, any indenture, mortgage, contract or other
agreement to which the Owner Trustee is a party or by which it or any of its
properties may be bound or affected;

                                        3

<PAGE>

         (c) neither the execution and delivery by the Owner Trustee of this
Agreement, nor the consummation by the Owner Trustee of any of the transactions
contemplated hereby, requires the consent or approval of, the giving of notice
to, the registration with or the taking of any other action in respect of any
federal banking, Utah state or local governmental authority or agency governing
it; and

         (d) the Trust Estate is free of any Lessor's Liens attributable to the
Bank.

                                        4Exhibit 4.5

[COMPANY LOGO GOES HERE]                         Nontransferable Employee Option

                           INTERSHOP COMMUNICATIONS AG
                             STOCK OPTION PLAN 2001

                                      SS. 1

                          STOCK OPTION, GRANT OF OPTION

(1)      INTERSHOP Communications AG ("INTERSHOP AG" or the "Company") grants to
         its current and former employees as well as to the current and former
         employees of its affiliated enterprises ("Optionees") free of charge
         the option to acquire shares of stock of INTERSHOP AG ("Option Shares")
         in accordance with this Stock Option Plan ("Option"). Members of the
         Management Board of INTERSHOP AG as well as members of the board of
         directors of an affiliated enterprise may only be granted Options if
         they currently are or formerly were employed by INTERSHOP AG or one of
         its affiliates.

(2)      Subject to adjustments following a change in the Company's share
         capital as set forth in ss. 3(2) each Option grants the right to
         purchase one INTERSHOP AG no-par value bearer share. The number of
         Options granted shall be equal to a full digit multiple of 50. The
         Optionee may exercise individual or all exercisable Options (ss. 4(1))
         at the same time. Non-exercisable Options may not be exercised. An
         exercise of Options prior to their exercisability ("Early Exercise") is
         not permitted.

(3)      If more options have been granted than conditional or authorized
         capital is available for the issuance of shares of stock for this
         purpose these Options shall be deemed to have been granted under the
         condition subsequent that, for such purpose, further corresponding
         conditional or authorized capital is validly created by a resolution
         adopted by the INTERSHOP AG stockholders or that the Company purchases
         own shares of stock.

(4)      In general, Options shall only be granted with effect as of the first
         day of a calendar month ("Day of Grant"). No Options shall be granted
         during the period beginning on the day on which INTERSHOP AG offers to
         its stockholders the opportunity to purchase new shares or convertible
         bonds or bonds with warrants either by a letter to its stockholders or
         by publication in the German Federal Gazette (BUNDESANZEIGER) and
         ending on the day on which the shares of stock of INTERSHOP AG
         conveying the right to subscribe for the aforementioned securities are
         traded at the Frankfurt Stock Exchange without such subscription right
         (EX BEZUGSRECHT) ("Restricted Period").

(5)      Without prejudice to the provisions ofss.9 the Options are neither
         transferable nor tradable.

                                      SS. 2

                                 NOTICE OF GRANT

The Options shall not be represented by registered warrants. The Optionee is not
entitled to receive registered warrants. INTERSHOP AG may inform the Optionee of
the grant of Options in written form ("Option Notice").

                                       1

<PAGE>

                                      SS. 3

           EXERCISE PRICE, ADJUSTMENTS FOLLOWING SHARE CAPITAL CHANGES

(1)      The exercise price per Option Share (the "Exercise Price") shall be
         payable in Euro or as provided in ss. 6. The Exercise Price is
         equivalent to the XETRA closing quotation at the Frankfurt Stock
         Exchange for voting shares of stock of INTERSHOP AG with full
         entitlement to distribution of profits and assets in case of
         liquidation of the Company (the "Quotation") on the Day of Grant or -
         if the Day of Grant is not a stock exchange trading day - equivalent to
         the Quotation on the last stock exchange trading day preceding the Day
         of Grant. If applicable, the Exercise Price will be restated in the
         Option Notice for information purposes.

(2)      In case of a stock split or measures economically equal to a stock
         split the Exercise Price shall remain unchanged; the number of shares,
         however, which may be purchased under an Option shall be adjusted -
         subject to the adoption of any necessary shareholders' resolutions (if
         any) - in accordance with the capital measure. In lieu of such
         adjustments, INTERSHOP AG may take such steps which - in general - are
         economically equal to the effect of such adjustments; in particular,
         INTERSHOP AG may adjust the Exercise Price per Option Share in
         accordance with the respective capital measure.

                                      SS. 4

                      VESTING AND EXERCISABILITY OF OPTIONS

(1)      Exercisable Options shall become vested in 50 equal monthly
         installments on the last day of each month coinciding with or following
         the Option's Day of Grant. In the event such formula results in a
         fractional number of Option Shares becoming vested, the number of
         vested Option Shares shall be rounded down to the nearest whole number
         and the rounded amount shall be carried forward into the subsequent
         months, provided that all Options shall become 100% vested on the last
         day of the 50th month following the Day of Grant.

(2)      Subject to the provisions of ss. 4(3) exercisable Options may be
         exercised at any time ("Exercise Day") after expiration of a period of
         six months beginning on the Day of Grant ("Cliff Period"), but in no
         event shall an Option be exercisable after its expiration date, as
         determined pursuant to ss. 10(1).

(3)      Options may not be exercised during Restricted Periods.

                                      SS. 5

                            EXERCISE OF STOCK OPTION

(1)      Administration of Options and acceptance of exercise demands will be
         handled by the Options Office. Options Office is the chief financial
         officer (FINANZVORSTAND) of INTERSHOP AG or such office as the chief
         financial officer may designate.

                                       2

<PAGE>

(2)      In order to exercise his or her Stock Options the Optionee has to
         submit a written exercise demand in duplicate. Sample exercise demands
         are available at the Options Office.

(3)      The Options  Office  accepts  exercise  demands on  continuous  basis.
         In general,  exercises of Options may not be cancelled.

(4)      Delivery of shares shall take place within an appropriate period of
         time after the last day of the month in which an Option was exercised
         by credit to a depository account previously indicated by the Optionee.
         The Optionee is not entitled to delivery of specific shares of stock.
         The stockholders' right to receive shares of stock represented by share
         certificates has been excluded by the INTERSHOP AG Articles of
         Association.

(5)      If Options are exercised after an invitation to a stockholders' meeting
         in which resolutions regarding the distribution of profits, the share
         capital or the issuance of convertible bonds or bonds with warrants has
         been delivered to the printers the shares will only be delivered after
         adoption of the aforementioned resolutions and - to the extent required
         by law - entry into the commercial register.

(6)      The Options Office shall notify the Optionees of possible restrictions
         and foreseeable delays regarding the delivery of the new shares.

                                      SS. 6

                            PAYMENT OF EXERCISE PRICE

(1)      Subject to the provisions of ss. 7 the Exercise Price for the Option
         Shares has to be paid - for INTERSHOP AG free of costs and fees - to a
         bank account indicated by INTERSHOP AG.

(2)      The Optionee is responsible that the Option Price is credited to one of
         the bank accounts indicated by INTERSHOP AG without reservations not
         later than the day prior to the Exercise Day.

(3)      In order to ensure a timely payment INTERSHOP AG recommends that - in
         case of payments by check - checks generally be submitted to the
         Options Office not later than ten bank business days prior to the
         designated Exercise Day; checks drawn on a bank domiciled neither in
         Germany nor in the U.S. ("Foreign Bank") should be submitted to the
         Options Office not later than twenty bank business days prior to the
         designated Exercise Day. In case of wire transfers the transfer
         instructions should be given not later than five, if given to a foreign
         bank not later than ten bank business days prior to the respective
         Exercise Day.

(4)      INTERSHOP AG does not assume any responsibility that the Exercise Price
         will be credited to INTERSHOP AG in time without restrictions if the
         Optionee adheres to the recommendations in ss. 6(3) above. In case that
         the Exercise Price is not credited to one of the accounts indicated in
         the exercise demand in time without restrictions INTERSHOP AG reserves
         the right to take into consideration the exercise demand on the next
         Exercise Day following crediting of the Exercise Price.

                                       3

<PAGE>

                                      SS. 7

                                CASHLESS EXERCISE

(1)      INTERSHOP AG grants to the Optionee the right - at any time revocable -
         to exercise Options without prior payment of the Exercise Price
         ("Cashless Exercise"), if the Optionee instructs the bank commissioned
         with the administration of the Stock Option Program ("Bank") to sell
         the Option Shares. The Optionee may subject his/her order to a sales
         limit (minimum sales price).

(2)      The Bank will sell the Option Shares on the stock exchange at the best
         price possible. The proceeds from the sale will be credited by
         INTERSHOP AG to the Optionee's account after deduction of the Exercise
         Price and any applicable costs and fees (ss. 7(3)).

(3)      The Bank will currently charge a sales commission of 0.35 % (at least
         EURO 20 per sales instruction) and a fee of 0.08 % of the stock market
         price of the sold Option Shares at the time of the sale. Unless the
         Optionee states a higher limit the instructions will therefore be
         deemed to have be given with a limit equal to 100.43 % of the Exercise
         Price, at least, however with a limit of 100.08 % of the Exercise Price
         plus EURO 20 per order. The commissions and fees pursuant to first
         sentence of this paragraph and the limit pursuant to the second
         sentence of this paragraph may change from time to time. The Options
         Office will inform the Optionee of any change.

(4)      The sales instructions will expire not later than the 15th day of the
         calendar month of the Exercise Day (or such later date as may be
         determined by INTERSHOP AG) if the Option Shares cannot be sold at the
         given limit; the instructions will also expire if INTERSHOP shares are
         being traded "ex Bezugsrecht" (without subscription rights). In this
         case the exercise demand shall be deemed to have been cancelled. The
         Optionee shall be notified accordingly.

                                      SS. 8

                    PARTICIPATION IN DISTRIBUTION OF PROFITS

To the extent that new shares are issued as a result of the exercise of an
Option these new shares will participate in the distribution of profits from
that fiscal year onwards for which no resolution regarding the distribution of
such profits has been adopted by the stockholders' meeting at the time at which
the respective shares are issued (ss. 4 Section 2 of the INTERSHOP Articles of
Association).

                                      SS. 9

                                DEATH OF OPTIONEE

Options are inheritable without restrictions. This includes the disposal by way
of distribution of the estate among co-heirs, by way of transfer of shares in
the estate to a third party or in a similar way, including that the transfer of
Options or a share in the estate to a third party for the purpose of fulfilling
a testamentary gift. Upon request by INTERSHOP AG the transferee has to prove
his/her entitlement as holder of Options.

                                       4

<PAGE>

                                     SS. 10

                                   EXPIRATION

(1)      Options  have  to be  exercised  within  five  years  from  their  Day
         of Grant, thereafter they expire without compensation.

(2)      In case that the employment agreement between INTERSHOP AG and its
         affiliated enterprises as employer and the Optionee is terminated all
         non-exercisable Options expire without compensation. Exercisable
         Options may within the scope of ss. 10(1) be exercised by the Optionee,
         or the holder of such Options in the event of the Optionee's death,
         within six months following the termination of an Optionee's
         employment, after which time all of the Optionee's unexercised Options
         will expire without compensation.

(3)      To the extent that

                  a)  INTERSHOP AG or one of its affiliated enterprises has
                      given notice of termination of employment for cause or
                      could have given such notice and the employment relation
                      is terminated or

                  b)  the employment relation is terminated during the
                      probationary period

         all exercisable Options expire without compensation unless INTERSHOP AG
         adopts a different decision on a case to case basis.

(4)      With regard to periods during which neither INTERSHOP AG nor its
         affiliated enterprises are obligated to compensate the employee for
         his/her services, e.g. due to military or civilian alternative service,
         maternity leave, long term illness without termination of the
         employment relation or similar reasons, the vesting of the Options
         shall be deferred accordingly; Sections 1 to 3 shall apply.

(5)      The expiration of an Option pursuant to the terms of this ss. 10 shall
         occur automatically as set forth in ss. 158 Section 2 of the German
         Civil Code; no declaration is required by INTERSHOP AG or the Optionee
         with respect to such expiration.

                                     SS. 11

                                      TAXES

(1)      INTERSHOP AG points out that the grant as well as the exercise of
         Options may be treated as taxable events and may result in an
         additional tax burden to the Optionee. In addition, the sale of Option
         Shares (especially if sold under the Cashless Exercise regime) may be
         treated as taxable event.

                                       5

<PAGE>

(2)      All taxes which become due in the course of grant and exercise of
         Options or in the context of a transfer of such Options due to a
         disposition in contemplation of death including church tax and
         solidarity surcharge have to be borne by the Optionee or his/her
         successor him-/herself.

                                     SS. 12

                                 INSIDER TRADING

INTERSHOP AG points out that Optionees and holders of INTERSHOP AG shares of
stock have to comply with ss.ss. 12 ff. of the German Securities Trading Act,
especially with regard to the sale and transfer of shares of stock resulting
from the option exercise - and that the Optionee or holder of such shares of
stock may render him-/herself liable to prosecution. In addition, when dealing
in securities the INTERSHOP Insider Trading Policy has to be observed. Further
information is obtainable from the Options Office.

                                     SS. 13

                            RESERVATION OF DISCRETION

Options are granted pursuant to the sole discretion of the Company. If Options
have been granted several times no entitlement to the grant of further Options
may by inferred from such grant for the future.

                                     SS. 14

             SPECIAL PROVISIONS FOR UNITED STATES RESIDENT OPTIONEES

(1)      Notwithstanding  any  provisions  of this Plan to the  contrary,  the
         provisions of thisss.14 shall apply to Options granted to persons who
         are residents of the United States of America ("U.S. Optionees").

(2)      Subject to adjustments upon changes in stock the number of shares of
         stock that may be issued under this Plan is 8,753,094. If any Option
         shall for any reason expire or otherwise terminate, in whole or in
         part, without having been exercised in full, the shares not acquired
         under such Option shall revert to and again become available for
         issuance under the Plan.

(3)      Any employee, officer or director of INTERSHOP AG or any of its
         affiliates is eligible to receive a grant of an Option under this Plan
         unless he or she is a member of the supervisory board of INTERSHOP AG
         or any of its affiliates; provided, however, that Options intended to
         qualify as "incentive stock options" ("Incentive Stock Options") within
         the meaning of Section 422 of the U.S. Internal Revenue Code of 1986,
         as amended, and the regulations promulgated thereunder (the "Code") may
         be granted only to employees of INTERSHOP AG or any parent or
         subsidiary corporation as defined by Sections 424 (e) and (f) of the
         Code.

                                       6

<PAGE>

(4)      A person who owns (or is deemed to own pursuant to Section 424(d) of
         the Code) stock possessing more than 10% of the total combined voting
         power of all classes of stock of the Company or of any of its
         affiliates shall not be granted an Incentive Stock Option unless the
         exercise price of such Option is at least 110% of the Quotation on the
         Day of Grant or, if the date of Day of Grant is not a stock exchange
         trading day, the Quotation on the last stock exchange trading day prior
         to the Day of Grant.

(5)      Options shall not be transferable, except an Option is transferable as
         to vested shares in one or more of the following circumstances: (i) by
         will, (ii) by the laws of descent and distribution, or (iii) in the
         case of an Option not intended to be an Incentive Stock Option,and if
         specifically provided for in the option agreement for such Option, then
         by instrument to an inter vivos trust in which the Option is to be
         passed to beneficiaries upon the death of the trustor (settlor) or by
         gift given to a member of the giver's "immediate family" (meaning any
         child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
         sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
         brother-in-law, or sister-in-law of the giver (including adoptive
         relationships)).

(6)      No Incentive Stock Options shall be exercised unless and until the Plan
         has been approved by the shareholders of the Company, which approval
         shall be within 12 months before or after the date of the Plan's
         adoption by the Management Board of the Company.

(7)      Subject to the provisions of ss. 10(1), but notwithstanding the
         provisions of ss. 4(3) and ss. 10(3)(b), the Optionee shall be
         permitted to exercise the vested portion of the Option during one of
         the periods described below:

                  a)  In the event that the Optionee's service terminates after
                      the six-month period provided for in ss. 4(2) for any
                      reason other than cause, death, or disability, the Option
                      may be exercised at any time for thirty (30) consecutive
                      days beginning on the date of termination of service,
                      after which time all of the Optionee's unexercised Options
                      will expire without compensation.

                  b)  In the event that the Optionee's service terminates due to
                      disability after the six-month period provided for in ss.
                      4(2), the Option may be exercised at any time for a period
                      of six (6) consecutive months beginning on the date of
                      termination of service, after which time all of the
                      Optionee's unexercised Options will expire without
                      compensation.

(8)      The courts located in Hamburg, Germany, shall have exclusive venue and
         jurisdiction over all disputes arising out of or relating to this Stock
         Option Plan.

                                     SS. 15

                                  MISCELLANEOUS

(1)      Place of performance is Hamburg, Germany.

                                       7

<PAGE>

(2)      This Stock Option Plan as well as the rights and obligations of the
         Optionee resulting from the Options which have been granted to him/her
         are - subject to the mandatory provisions of tax and labour law -
         exclusively subject to the laws of the Federal Republic of Germany.

(3)      Any  alterations  of this Stock Option Plan and the Option Notice
         require  written form;  this does also apply to an alteration of this
         clause.

(4)      Should individual provisions of this Stock Option Plan partly or in
         total be or become invalid, the validity of the remainder of this Stock
         Option Plan shall not be affected. In this case, the parties shall
         undertake to agree upon a valid provision in lieu of the invalid
         provision which, to the extent legally possible, reflects as close as
         possible the economical purpose of this Stock Option Plan taking
         account of the parties' interests as expressed by this Stock Option
         Plan. The same shall apply if and to the extent that this Stock Option
         Plan contains a loophole which was not foreseen by the parties.

(5)      Unless sooner terminated by INTERSHOP AG, this Plan shall terminate on
         the last business day prior to the tenth anniversary of the date the
         Plan is adopted by the Company or approved by the shareholders of the
         Company, whichever is earlier. No Options may be granted under the Plan
         after it is terminated.

Hamburg, this March 2001

Management Board of INTERSHOP Communications Aktiengesellschaft

                                       8

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