Document:

<PAGE>

                                                                   EXHIBIT 10.41

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

                             AMENDED AND RESTATED
                          EQUIPMENT LEASING AGREEMENT

                         Dated as of September 1, 2001

                                    between

                               Citiflight, Inc.

                                   as Lessor

                                      and

                 Cell Therapeutics Corporate Development, Inc.

                                   as Lessee

--------------------------------------------------------------------------------
<PAGE>

                               TABLE OF CONTENTS
                             (Amended and Restated
                         Equipment Leasing Agreement)

<TABLE>
<CAPTION>
Section                                                                                       Page
-------                                                                                       ----
<S>                                                                                           <C>
1.   Definitions..........................................................................     1
     -----------

2.   Agreement for Lease of Equipment;  Quiet Enjoyment; Unconditional Obligation.........     5
     ----------------------------------------------------------------------------

3.   Delivery.............................................................................     6
     --------

4.   Lease Term...........................................................................     7
     ----------

5.   Rent.................................................................................     7
     ----

6.   Use of Equipment.....................................................................     8
     ----------------

7.   Improvements and Repair of Equipment.................................................     9
     ------------------------------------

8.   Insurance............................................................................    11
     ---------

9.   Indemnity............................................................................    11
     ---------

10.  Tax Indemnity........................................................................    13
     -------------

11.  Loss or Destruction of the Equipment.................................................    17
     ------------------------------------

12.  Surrender of Equipment...............................................................    18
     ----------------------

13.  Events of Default....................................................................    18
     -----------------

14.  Rights of Lessor upon Default of Lessee..............................................    19
     ---------------------------------------

15.  Equipment To Be and Remain Personal Property...........,.............................    21
     --------------------------------------------

16.  Early Buyout Option..................................................................    21
     -------------------

17.  Purchase of Equipment at Expiry of the Basic Term; Renewal of Lease Term.............    22
     ---------------------

18.  Finance Lease Status.................................................................    22
     --------------------
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                <C>
19.    Disclaimer of Warranties................................................    23
       ------------------------

20.    Assignment by Lessor....................................................    23
       -------------------

21.    Voluntary Termination...................................................    24
       ---------------------

22.    Net Lease...............................................................    25
       ---------

23.    Reports and Certificates................................................    25
       ------------------------

24.    Leasing of Components...................................................    26
       ---------------------

25.    Truth in Leasing........................................................    27
       ----------------

26.    Closing Fees............................................................    27
       ------------

27.    Miscellaneous...........................................................    28
       -------------
</TABLE>

       -    Signature Lines
       -    Schedule A - Stipulated Loss Values

       -    Exhibit A - Individual Leasing Record

       -    Exhibit B - Form of Lessee's Annual Aircraft Status Certificate

                                      ii
<PAGE>

                AMENDED AND RESTATED EQUIPMENT LEASING AGREEMENT

     AMENDED AND RESTATED EQUIPMENT LEASING AGREEMENT, dated as of September 1,
2001 (this "Agreement"), by and between Citiflight, Inc., a Delaware
corporation, as lessor (herein, together with its successor and assigns, called
"Lessor") and Cell Therapeutics Corporate Development, Inc., an Oregon
corporation, as lessee (herein called "Lessee").

     WHEREAS, Lessor and Lessee entered into an Equipment Leasing Agreement
dated as of September 1, 2001; and

     WHEREAS, Lessor and Lessee wish to amend and restate the Equipment Leasing
Agreement to provide for floating rent during the basic lease term and to extend
the interim lease period from January 1, 2002 to March 1, 2002.

          NOW, THEREFORE,

     In consideration of the premises and the mutual covenants hereinafter
contained, Lessor and Lessee agree as follows:

     1.   Definitions.  As herein used:
          -----------

     (a)  "Acceptance Date" for any Unit means the date specified in the
           ---------------
applicable ILR when Lessee shall have accepted such Unit for lease hereunder.
The Acceptance Date for the Aircraft itself shall be evidenced by the execution
and delivery by Lessee of the Aircraft Delivery Receipt substantially in the
form of Exhibit C.

     (b)  "Aircraft" shall mean a used 1988 Gulfstream IV aircraft and related
           --------
equipment, Registration No. N399CC, Serial No. 1051; engines: Rolls Royce,
Serial Nos. 16209 and 16210; Garrett auxiliary power unit: Serial No. P425.

     (c)  "Basic Lease Term Commencement Date" shall mean September 1, 2001 or
           ----------------------------------
the first day of any subsequent month as may be agreed to in writing by Lessor
and which shall correspond to the Acceptance Date of a Unit; provided, however,
if Lessee shall deliver an Interim ILR for a Unit, the Basic Lease Term
Commencement Date for such Unit shall be the first day of the next succeeding
Rental Period after delivery of the Final ILR for such Unit.  The Basic Lease
Term Commencement Date shall not extend beyond March 1, 2002.

     (d)  "Basic Rent" for the Equipment for any full month during the Basic
           ----------
Term of the lease of such Equipment shall mean an amount equal to $160,598.77,
which amount shall be adjusted by the amount of the Incremental Rent as defined
herein. In the event that the Lessor's Cost is determined to be an amount less
than $22,300,000, the Basic Rent shall be recalculated by Lessor using the same
methodology it used when calculating the Basic Rent based on a Lessor's Cost of
$22,300,000.
<PAGE>

     (e) "Basic Rent Date" shall mean the 25/th/ day of each month commencing
          ---------------
September 25, 2001 and terminating on August 25, 2011 unless otherwise agreed
to in writing by Lessor.

     (f) "Basic Term" shall mean as to any Unit of Equipment the period for such
          ----------
Unit selected by Lessee and approved by Lessor as stated in the applicable
Individual Leasing Record. The Basic Term shall be a period equal to 120 months.
The Basic Term shall commence on the Basic Lease Term Commencement Date for such
Unit and shall terminate on the last day of the month in which the Last Basic
Rent Date for such Unit occurs, unless the lease for such Unit shall have
terminated at an earlier date.

     (g) "Code" means the United States Internal Revenue Code of 1986, as
          ----
amended.

     (h) "Equipment" means the Aircraft (described in Subsection 1(b) hereto)
          ---------
owned or to be owned by Lessor and leased by Lessor to Lessee or ordered by
Lessor for lease to Lessee as provided herein.

     (i) "Event of Default" has the meaning specified in Section 13.
          ----------------

     (j) "Event of Loss" has the meaning specified in Section 11.
          -------------

     (k) "Expiration Date" as to any Unit means the last day of the month in
          ---------------
which the Last Basic Rent Date for such Unit occurs, unless the lease for such
Unit shall have terminated at an earlier date or extended pursuant to the
provisions of this Equipment Leasing Agreement.

     (l) "Extended Term" shall have the meaning specified in Subsection 17(a)
          -------------
hereof.

     (m) "Final Delivery Date" shall mean December 31, 2001 or such other date
          -------------------
as may be agreed to in writing by Lessor.

     (n) "First Delivery Date" shall mean September 1, 2001.
          -------------------

     (o) "Guarantee" shall mean the Guarantee dated as of September 1, 2001,
          ---------
between Citiflight, Inc. and Cell Therapeutics, Inc., as Guarantor.

     (p) "Incremental Rent" for the Equipment for any month shall be an amount
          ----------------
computed by multiplying the following:

          (i)   the Incremental Rent Value for the Equipment on the first day of
     the month, by

          (ii)  a fraction having a numerator equal to the number of days in the
     current month and a denominator of 360, by
<PAGE>

          (iii) a percentage equal to the difference between 2.52% and the
     monthly LIBOR Rate as set for the first day of the current month.

     If Incremental Rent is calculated to be a negative amount, such amount will
constitute a reduction in Basic Rent.

     (q)  "Incremental Rent Value" for the Equipment shall be the applicable
           ----------------------
amount shown in Schedule A, subject to the same type of adjustment described in
Section 1(d) dealing with the recalculation of Basic Rent if Lessor's Cost is
less than $22,300,000.

     (r)  "Individual Leasing Record" or "ILR" is a record with respect to
           -------------------------      ---
Equipment dated the date of the delivery of the Equipment to Lessee,
substantially in the form of Exhibit A hereto, setting forth a full description
of the Equipment covered thereby (including, if available, model numbers,
manufacturer's numbers and serial numbers), its Lessor's Cost, the location of
such Units, the MACRS classification, and such other details as the parties may
agree.  Each Individual Leasing Record shall contain a short form of lease to be
executed by each of the parties as set forth in Exhibit A.  As between Lessor
and Lessee the signature of Lessee on an Individual Leasing Record shall
constitute acknowledgement by Lessee that the Equipment has been delivered in
good condition and accepted for lease by Lessee as of the date of the Individual
Leasing Record.

     (s)  "Interim Rent" for any Unit for any period from and including the
           ------------
Acceptance Date with respect to such Unit to but excluding the Basic Lease Term
Commencement Date shall mean an amount equal to:

          (1) Lessor's Cost of the Unit, multiplied by

          (2) a fraction having a numerator equal to the number of days in such
     period and a denominator of 360, multiplied by

          (3) a percentage (the "Percentage Rental Factor") equal to the sum of
                                 ------------------------
     1.75% per annum plus the LIBOR Rate as set for the first day of the current
     month.

     (t)  "Last Basic Rent Date" shall mean August 25, 2011 or the twenty-fifth
           --------------------
day of any subsequent month as may be agreed to in writing by Lessor; provided,
however, such Last Basic Rent Date shall not extend beyond December 25, 2011.

     (u)  "Lease Term" as to any Unit means the term for which such Unit is
           ----------
leased as determined pursuant to Section 4.

     (v)  "Lessor's Cost" for the Aircraft shall be an amount equal to the sum
           -------------
of (A) a mutually agreed upon value of the Aircraft, as-is, of $20,300,000 plus
(B) the acquisition cost of any components and upgrades Lessee desires to lease
hereunder to be included on the Aircraft pursuant to Section 24 hereof plus (C)
Capitalized Interim Rent, if any, as provided in Section 24(e) hereof;
<PAGE>

provided, however, Lessor's Cost shall not exceed $22,300,000. Lessor and Lessee
shall jointly determine the amount of Lessor's Cost on the Basic Lease Term
Commencement Date.

     (w)  "LIBOR Rate" shall be the rate per annum obtained by dividing (i) the
           ----------
rate per annum at which deposits in U.S. dollars are offered by Citibank, N.A.
to prime banks in the London Interbank Market for a period equal to one month,
as quoted at 11:00 a.m. (London time) two Business Days (as such term is defined
in Section 5 hereof) prior to the applicable date, by (ii) a percentage equal to
100% minus the Reserve Percentage for such one-month period.

     (x)  "Permitted Liens" shall mean (i) the leasehold interest of Lessee
           ---------------
hereunder, (ii) liens for taxes, assessments, levies, fees or other governmental
charges either not yet due or being contested in good faith and by appropriate
proceedings, so long as such proceedings do not involve any material likelihood
of the sale, forfeiture or loss of the Equipment or interference with the
payment by Lessee and receipt and retention by Lessor of Rent payable pursuant
to this Equipment Leasing Agreement, (iii) inchoate materialmen's, mechanic's,
workmen's, repairmen's, employee's or other liens arising in the ordinary course
of business and not delinquent, and (iv) liens and encumbrances arising from the
acts or omissions of Lessor which are not otherwise the responsibility of Lessee
hereunder.

     (y)  "Redelivery Rent for any Unit shall mean an amount equal to:
           ---------------

          (1) the Stipulated Loss Value of the Unit on the Expiration Date for
     such Unit, multiplied by;

          (2) a fraction having a numerator equal to the number of days in the
     current month for each month the Lease Term of such Unit is extended
     pursuant to the provisions of Section 12 hereof, and a denominator of 360,
     multiplied by;

          (3) the applicable percentage provided in Subsection 1(s)(3).

     (z)  "Redelivery Rent Date" for a Unit of Equipment shall mean the 25/th/
           --------------------
day of each month Redelivery Rent is due and owing pursuant to the provisions of
Section 12 hereof.

     (aa) "Rent" means Interim Rent, Basic Rent, Incremental Rent, Redelivery
           ----
Rent and Supplemental Rent, collectively.

     (bb) "Rental Period" shall mean the period from the first day of each
           -------------
calendar month to and including the last day in such calendar month.

     (cc) "Reserve Percentage" shall mean the reserve percentage applicable
           ------------------
during such month under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City that Citibank, N.A. is required to
maintain with
<PAGE>

respect to liabilities or assets consisting of or including Eurocurrency
liabilities, having a term equal to one (1) month.

     (dd) "Stipulated Loss Value" as to any Unit means an amount determined by
           ---------------------
multiplying Lessor's Cost therefor by the applicable percentage set forth in
Schedule B hereto.

     (ee) "Supplemental Rent" means all amounts, liabilities and obligations
           -----------------
(including, without limitation, amounts due under Sections 9 and 10 and the
Stipulated Loss Value) other than Basic Rent, Interim Rent and Redelivery Rent
that Lessee assumes or agrees to pay hereunder to whomever shall be entitled
thereto.

     (ii) "UCC" shall mean the Uniform Commercial Code including the provisions
           ---
of the Uniform Personal Property Leasing Act as adopted in the applicable state.

     (jj) "Unit" or "Units" means each item of Equipment described in a fully
           ----      -----
executed ILR.

     2.   Agreement for Lease of Equipment;  Quiet Enjoyment; Unconditional
          -----------------------------------------------------------------
Obligation.  (a)  Subject to the terms and conditions and representations and
----------
warranties stated in this Equipment Leasing Agreement and upon execution and
delivery by the Lessor and the Lessee of an ILR evidencing the mutual agreement
of the parties hereto with respect to the lease of specific Units of Equipment,
Lessor shall lease to Lessee and Lessee shall lease from Lessor such Units of
Equipment as set forth in such ILR. No ILR shall be effective and Lessor shall
have no obligation to lease any particular unit of equipment hereunder unless
and until such ILR is executed by Lessor and in no event shall the Lessee
execute and deliver to Lessor an ILR which, if executed and funded by Lessor,
would result in Lessor's Cost exceeding $22,300,000.  Lessor and Lessee hereby
further agree that all Equipment shall be leased and acquired and all ILRs shall
be delivered to Lessor prior to the applicable Final Delivery Date.  All such
leases as evidenced by an ILR shall be entered into in the manner and upon the
terms and conditions set forth in this Equipment Leasing Agreement.  Unless
expressly waived in writing by Lessor, Lessee shall deliver each ILR to Lessor
no more than sixty (60) days after the Equipment to which such ILR relates is
"placed in service" for purposes of Sections 167 and 168 of the Code.  Lessor
and Lessee hereby declare that this Equipment Leasing Agreement is, and is
intended to be, an agreement to lease, and that every ILR executed by the
parties pursuant to this Equipment Leasing Agreement is a lease.  Lessor has or
will have title to and will be the owner of the Equipment to be leased, and
Lessee does not hereby acquire any right, equity, title or interest in any Unit
except the right, as lessee, to use the same under the terms hereof.  If this
Equipment Leasing Agreement is deemed at any time to be one intended as
security, Lessee agrees that the Equipment shall secure all amounts owed by
Lessee to Lessor as set forth herein.  The parties further agree to treat this
Equipment Leasing Agreement and any ILR executed pursuant to this Equipment
Leasing Agreement as a lease for all purposes, including, but not limited to,
tax, accounting, and commercial law purposes.

     (b)  Lessor hereby covenants that, as long as Lessee is not in default
hereunder, Lessee shall be entitled to the uninterrupted use and quiet enjoyment
of the Equipment on the terms and conditions herein provided.
<PAGE>

     (c) LESSEE HEREBY CONFIRMS THAT THIS EQUIPMENT LEASING AGREEMENT CANNOT BE
CANCELED OR TERMINATED, EXCEPT AS EXPRESSLY PROVIDED HEREIN AND THAT LESSEE'S
OBLIGATION TO PAY RENT, INTERIM RENT AND ANY OTHER AMOUNTS DUE HEREUNDER IN
ACCORDANCE WITH THE TERMS HEREOF ARE ABSOLUTE AND UNCONDITIONAL UNDER ANY AND
ALL CIRCUMSTANCES AND SHALL BE PAID WITHOUT NOTICE OR DEMAND AND WITHOUT ANY
ABATEMENT, REDUCTION, DIMINUTION, SET OFF, DEFENSE, COUNTERCLAIM OR RECOUPMENT
DUE OR ALLEGED TO BE DUE TO, OR BY REASON OF, ANY PAST, PRESENT OR FUTURE CLAIMS
WHICH LESSEE MAY HAVE AGAINST LESSOR, ANY VENDOR OR MANUFACTURER OF THE
EQUIPMENT OR ANY PART THEREOF, OR ANY OTHER PERSON OR ANY REASON WHATSOEVER.

     3.  Delivery.  (a)  Lessee may execute and deliver to Lessor one or more
         --------
ILRs each covering a separate Unit of Equipment.  Such ILR shall contain a
detailed description of the Unit (including any manufacturer's serial number),
to which shall be attached purchase orders, purchase agreements or similar
documents respecting the ordering of the Units on such ILR and an invoice
(approved by Lessee), each indicating Lessor as purchaser of the Unit.

     (b) Lessor hereby appoints Lessee as its agent to accept delivery of each
Unit from the vendor thereof, such agency to begin on the First Delivery Date
and to terminate on the Final Delivery Date.  Lessee agrees that, as agent for
Lessor, it will not execute any ILR for Equipment delivered and accepted by
Lessee prior to the First Delivery Date or after the Final Delivery Date. Upon
delivery of each Unit, Lessee will inspect the same and (i) if it is in good
order and conforms to the purchase order therefor, accept such Unit from the
vendor and, on its own behalf and as Lessor's agent, execute and deliver an ILR
for it, or (ii) if Lessee, acting in good faith, finds that such Unit is not in
good order, return the same to the vendor thereof.  Each Unit of Equipment so
accepted will be subject to this Equipment Leasing Agreement from the Acceptance
Date specified in the ILR for such Unit.

     (c) Execution of an ILR for any Unit of Equipment by Lessee shall
constitute irrevocable acceptance of such Unit for lease hereunder by Lessee.
Execution of an ILR for any Unit of Equipment by Lessee shall constitute
Lessee's representation and warranty that no default or Event of Default under
this Equipment Leasing Agreement has occurred and is continuing on the
Acceptance Date for such Unit of Equipment and that Lessee has obtained and
there are in full force and effect on such date such insurance policies with
respect to such Unit as are required to be obtained pursuant to Section 8
hereof.  If a Unit of Equipment delivered to Lessee is not in good condition,
does not conform to the purchase order therefor, is not properly installed, does
not operate as represented or warranted by the vendor, or is unsatisfactory for
any other reason, Lessee shall make any claim on account thereof solely against
the vendor or installer of the Unit, and not against Lessor and shall indemnify
Lessor from and against any liability therefor.  Notwithstanding the foregoing,
Lessee's execution and delivery of the ILR shall conclusively establish that the
Equipment is acceptable to and accepted by Lessee under this Equipment Leasing
Agreement, notwithstanding any defect with respect to design, manufacture,
condition or in any other respect, and that the
<PAGE>

Equipment is in good order and condition and appears to conform to the
specifications applicable thereto and to all governmental standards and
requirements reasonably interpreted as being applicable thereto.

     (d) Upon (i) receipt by Lessor of an ILR for a Unit of Equipment, and the
invoice(s) therefor from the vendor and any installer thereof and (ii)
satisfaction by Lessee of the terms and conditions stated in this Equipment
Leasing Agreement, Lessor will pay such invoice(s), provided that, on the
Acceptance Date, Lessor shall have good and marketable title in and to such Unit
of Equipment free of all liens, encumbrances and exceptions of any kind
whatsoever other than Permitted Liens.

     4.  Lease Term.  The Lease Term of each Unit shall begin on the Acceptance
         ----------
Date for such Unit, as specified in the applicable ILR and shall end on the
Expiration Date.  If the Lease Term for any Unit is renewed or extended, the
phrase "Lease Term" shall include the Basic Term and any renewals or extensions
thereof, and all provisions of this Equipment Leasing Agreement shall apply
during such renewal or extension periods, except as may otherwise be
specifically provided in this Equipment Leasing Agreement or in any subsequent
written agreement between Lessor and Lessee.

     (b) After the expiration or earlier termination of this Equipment Leasing
Agreement or the Lease Term for any Unit of Equipment, and payment by Lessee of
all amounts then due and owing hereunder, the obligations of Lessee under this
Equipment Leasing Agreement with respect to such Unit of Equipment shall
terminate except for such obligations or events which occur or conditions which
exist at or prior to, such expiration or early termination, as well as such
obligations which by the express terms of this Equipment Leasing Agreement
survive the termination hereof or the Lease Term of such Unit, including without
limitation the obligations of Lessee under Sections 9 and 10.

     5.   Rent.   (a)  On the Basic Rent Date immediately preceding the Basic
          ----
Lease Term Commencement Date for such Unit, Lessee shall pay Interim Rent to
Lessor with respect to each Unit.  On the first Basic Rent Date and each Basic
Rent Date thereafter to and including the Last Basic Rent Date, Lessee shall pay
Basic Rent to Lessor with respect to each Unit.  On each Redelivery Rent Date,
Lessee shall pay Redelivery Rent to the Lessor with respect to each applicable
Unit.  If Lessor shall not receive payment of Basic Rent, Interim Rent or
Redelivery Rent when due hereunder, Lessee shall pay a late payment charge to
Lessor on such late payment in an amount equal to the product of the applicable
Incremental Value multiplied by 2% (but in no event shall such rate be greater
than that rate permitted by applicable law) for the period during which such
late payment remains due and unpaid.  Invoices from Lessor shall be rendered
within a reasonable period of time after the Rent, Interim Rent and Redelivery
Rent can be determined.  Such invoices shall cover  the computation of Basic
Rent, Interim Rent and Redelivery Rent and other payments due hereunder for the
month, adjustments to the preceding month's Rent resulting from commencement or
termination of the lease of any Equipment during such month and other
appropriate items, if any.  All payments of Basic Rent, Interim Rent and
Redelivery Rent and all other payments made by Lessee to Lessor pursuant to this
Equipment Leasing Agreement shall be paid to Lessor in lawful money of the
United States in immediately available funds by wire transfer to Lessor's
Account No. 3024-2344 at
<PAGE>

Citibank, N.A., 399 Park Avenue, New York, New York 10043. If the date for the
payment or determination of Rent shall not occur on a day when banks in New
York, New York or London, England, are generally open for business (a "Business
                                                                       --------
Day"), such payment shall be due and such determination shall be made on the
---
immediately succeeding Business Day.

     (b)  Lessee shall pay (i) all Supplemental Rent as demanded by the person
entitled thereto, which Lessee has agreed to pay hereunder to Lessor or others,
and (ii) on the date provided herein, any amount payable as the Stipulated Loss
Value.

     6.   Use of Equipment.  (a)   Lessor and Lessee hereby acknowledge and
          ----------------
agree that the Equipment leased hereunder shall at all times be the sole and
exclusive property of Lessor, and Lessee shall have no right, title or property
therein but only the right to use the same as Lessee as herein provided.  So
long as Lessee is not in default in any obligation to Lessor, Lessee may use the
Equipment in the regular course of its business or the business of any
subsidiary or affiliate of Lessee and may permit others to use same for any
lawful purpose. Such use shall not be predominantly outside the United States.
Lessee shall promptly and duly execute, deliver, file and record all such
documents, statements, filings and registrations, and take such further action
as Lessor shall from time to time reasonably request in order to establish,
perfect and maintain Lessor's title to and interest in the Equipment as against
Lessee or any third party.  Lessee shall provide Lessor with prior notice in
writing of any change in the principal hangar location of any unit of Equipment,
of any change in the primary business address of Lessee in any particular
jurisdiction, or jurisdiction of organization, or of any change in the legal
name or business structure of the Lessee.  Notwithstanding the foregoing, no
such changes of location shall be undertaken unless and until all legal
requirements shall have been met or obtained.  Upon the Lessor's request, Lessee
shall advise Lessor in writing where all Equipment leased hereunder as of such
date is principally hangared.  Lessee shall not use any Equipment or allow the
same to be used for any unlawful purpose.  Lessee shall use every reasonable
precaution to prevent loss or damage to Equipment and to prevent injury to third
persons or property of third persons.  Lessee shall cooperate fully with Lessor
and all insurance companies providing insurance under Section 8 hereof in the
investigation and defense of any claims and suits.  Lessee shall comply and
shall cause all persons operating Equipment to comply with all insurance policy
conditions and with all statutes, decrees, ordinances and regulations regarding
acquiring, titling, registering, leasing, insuring, using, operating, and
disposing of Equipment, including all local, state and federal environmental
laws and regulations of whatever kind which relate in any way to the use of the
Equipment, and the licensing of operators thereof.  Lessor or any authorized
representative of Lessor may during reasonable business hours from time to time
inspect Equipment wherever the same be located.  Lessee upon written request
from Lessor, or if necessary or advisable under applicable law, shall attach to
each Unit of Equipment in a place designated by Lessor (or if no such place has
been designated, in a prominent place), a sign, stencil, plaque, or legend
disclosing the ownership of Lessor and the interest of any mortgagee or assignee
in the Equipment.

     (b) Lessor shall have the right to make any security filings necessary or
desirable to protect its interest in the Equipment, including, but not limited
to, UCC personal property filings, and shall have the right to make UCC personal
property filings without the Lessee's signature where
<PAGE>

authorized by law. Lessee shall cooperate with Lessor and shall pay all costs
and expenses incurred by Lessor in completing and making all such filings.

     (c) LESSEE SHALL NOT WITHOUT PRIOR WRITTEN CONSENT OF LESSOR SUBLEASE ANY
EQUIPMENT NOR PERMIT, OR SUFFER TO EXIST, ANY LIEN OR ENCUMBRANCE OTHER THAN
THOSE PLACED THEREON BY LESSOR OR BY PERSONS CLAIMING ONLY AGAINST LESSOR AND
NOT AGAINST LESSEE, NOR SHALL LESSEE ASSIGN ANY RIGHT OR INTEREST HEREIN OR IN
ANY EQUIPMENT, PROVIDED, HOWEVER, THAT LESSEE MAY SUBLET EQUIPMENT TO ANY
SUBSIDIARY, AFFILIATE, OFFICER OR EMPLOYEE OF LESSEE, OR TO ANY CONTRACTOR FOR
USE IN PERFORMING WORK FOR LESSEE, PROVIDED THAT SUCH SUBLETTING SHALL IN NO WAY
AFFECT THE OBLIGATIONS OF LESSEE HEREUNDER, OR THE RIGHTS OF LESSOR HEREUNDER.
THE RIGHTS OF THE LESSEE TO ASSIGN ITS INTEREST AS LESSEE HEREUNDER, AS
DESCRIBED IN SECTION 303 OF THE LEASING ARTICLE OF THE UCC, ARE HEREBY WAIVED BY
LESSEE.

     (d) With respect to the lease of Aircraft hereunder, the home airport of
such Aircraft shall be in the continental United States.  Aircraft may be used
anywhere in the world other than (i) in a country or area in which operation of
such Aircraft would in any way affect or impair the insurance coverage provided
in Subsection 8(a), (ii) in a country or area which is designated as restricted
for travel by the State Department of the United States of America, and (iii) in
any recognized or threatened zone of hostilities unless fully covered by war
risk insurance satisfactory to Lessor. Lessee shall permit such Aircraft to be
operated only by a currently certified pilot having at least the minimum total
pilot hours required by said insurance.  Lessee shall notify Lessor in writing
of any change in the home airport of Aircraft, and no change of the home airport
shall be undertaken unless and until all applicable legal requirements shall
have been met or obtained. Lessee hereby agrees to provide Lessor with copies of
all flight logs, fuel receipts and hangar receipts for the first ninety (90)
days of the lease of such Aircraft.

     7.   Improvements and Repair of Equipment.   (a)  Lessee shall pay all
          ------------------------------------
costs, expenses, fees and charges incurred in connection with the use and
operation of Equipment during the lease thereof.  Lessee shall at all times, at
its own expense, keep Equipment in good condition and repair, and in good and
efficient working order, reasonable wear and tear only excepted, consistent with
prudent industry practice (but in any event to the same extent that the Lessee
would, in the prudent management of its properties, maintain similar equipment
if owned or leased by the Lessee), and in compliance with all applicable laws,
ordinances and regulations, the conditions of all insurance policies required to
be maintained by the Lessee pursuant to this Equipment Leasing Agreement, and
all written recommendations as to repair and maintenance practices and
procedures (both normal and preventative) issued by the vendor or manufacturer
of such Unit of Equipment. These provisions shall apply regardless of the cause
of damage and all risks with respect thereto are assumed by Lessee.  At its own
expense, Lessee shall make all additions, modifications and improvements to each
Unit of Equipment required by applicable law, ordinance or regulation.  The
Lessee shall replace all parts of the Equipment that become worn out, lost,
stolen, destroyed, damaged beyond repair or otherwise rendered permanently unfit
for use with replacement parts each
<PAGE>

of which shall be in at least as good condition as the part being replaced, and
which shall meet the original performance specifications and maintain the
functionality of the part being replaced and shall supply the necessary power
and other items required in the operation of the Equipment. No other alterations
or modifications to the Equipment may be undertaken by Lessee without the prior
written consent of Lessor, such consent not to be unreasonably withheld. All
improvements and additions to any of the Equipment shall become and remain the
property of Lessor, except that any improvements or additions for which Lessor
has not made a payment under Section 3 of this Equipment Leasing Agreement,
which constitute severable improvements and which when attached to or removed
from the Equipment will not diminish the value or usefulness of such Equipment,
shall become and remain the property of Lessee.

     (b) Lessee agrees that the Aircraft will be enrolled in a maintenance
program equivalent to existing standards of the industry.  At all times during
the lease hereunder, the Aircraft shall be current on all Airworthiness
Directives and Maintenance Service Bulletins issued by the Federal Aviation
Administration ("FAA") and the manufacturers. Lessee further agrees that the
Aircraft's engines will be maintained on an MSP or similar maintenance program.
All costs with respect to such maintenance programs will be paid by Lessee.  At
least once each year, upon request from Lessor, Lessee shall provide Lessor with
evidence satisfactory to Lessor that the Aircraft and engines are enrolled in
such maintenance programs.  Lessee agrees that the Aircraft will be maintained
at all times, at its own cost and expense, in good, fully operational condition,
in a condition suitable to properly fulfill its designated purpose and in an
airworthy condition pursuant to existing industry practices, all applicable FAA
rules and regulations and in accordance with the manufacturer's suggested
maintenance procedures.  Lessee further agrees that the Aircraft shall not be
operated in excess of 800 hours during any twelve (12) month period during the
lease term or in excess of  8,000 hours during the Basic Term.  Upon termination
of the lease of the Aircraft hereunder, the Aircraft shall have at least 50%
life remaining on all time or cycle life limited components, including but not
limited to engines.  Lessee shall maintain and possess all log books relating to
the Aircraft.  Lessor shall have the right to inspect the Aircraft and log books
at any time. Lessee shall notify Lessor promptly upon Lessee's discovery of any
condition which could have significant negative impact, such as damage history,
on the long term value of the Aircraft.

     (c) If the Aircraft is to be returned to Lessor at the end of its Basic
Term and is not thereupon purchased by Lessee, Lessee shall, at its own expense,
surrender such Aircraft by delivering such Aircraft to Lessor at a location in
the United States acceptable to Lessor and in the condition required hereunder.
All plans, specifications, warranties, operating manuals, logs, and maintenance
records furnished by the manufacturer or vendor of the Aircraft and such other
documents in Lessee's possession relating to the maintenance and methods of
operation of such Aircraft shall be provided to Lessor (in English) in the event
of any termination of this Equipment Leasing Agreement.  Aircraft returned to
Lessor shall be in the condition and repair required pursuant to the provisions
of this Section 7, free of any insignia placed on it by Lessee, shall meet all
applicable legal and regulatory conditions necessary for Lessor to sell or lease
such Aircraft to a third party, and shall be free of all liens or encumbrances
of any nature whatsoever, except for Permitted Liens, and shall be registered in
the United States in the name of the Lessor. The Aircraft
<PAGE>

shall have a new exterior paint job, and the interior of the Aircraft shall be
clean, free of tears or breaks and in good condition, with normal wear and tear
only excepted.

     8.   Insurance.   (a)  With respect to the lease of the Aircraft hereunder,
          ---------
Lessee shall, at its own cost and expense, procure and maintain in full force
and effect (i) hull insurance in an amount not less than the Stipulated Loss
Value of the Aircraft (this policy shall be payable to the Lessor and Lessee as
their interests may appear, it being understood that Lessee shall be entitled to
any insurance proceeds payable by reason of any loss or damage which is replaced
or repaired by Lessee), and (ii) public liability and property damage insurance
in an amount not less than $100,000,000, naming Lessor and Lessee as insureds as
their interests may appear, and covering liability for personal injuries, death
and property damage arising out of or any way connected with the ownership,
maintenance, operation or use of the Aircraft. All policies required hereunder
shall be subject to the same self-insured retention or deductible amounts as are
applicable to Lessee's owned equipment of the same types as the Equipment leased
hereunder; provided, however, that if any such self-insured retention amount is
greater than $250,000, Lessee may self-insure only such portions of the
foregoing coverage as Lessor may approve in writing.  All policies of insurance
shall provide for a 30-day written minimum cancellation notice to the Lessor,
and in the event of such cancellation and failure on the part of the Lessee to
provide substitute policies satisfactory to the Lessor, the Lessor may at its
option provide such insurance and add the amount of the premium to the next
rental installment.  Lessee shall furnish Lessor certificates of compliance by
Lessee with the provisions hereof, but the Lessor shall be under no duty to
examine such certificates or to advise Lessee in case its insurance is not in
compliance herewith.  Lessee's obligation to maintain insurance with respect to
the Aircraft shall commence on the actual date of delivery of the Aircraft and
shall continue until the Aircraft is sold or the lease term of the Aircraft
terminates, whichever is later.  Lessee covenants that it will not use or permit
the use or operation of the Aircraft at any time when the insurance required by
this Subsection 8(a) is not in force with respect to the Aircraft.

     (b) Notwithstanding the foregoing, any policies of insurance required
pursuant to Subsection (a) above shall (i) name the Lessor as loss payee,
provided that, in the case of any payment not in excess of $1,000,000 and not
resulting from an event of loss with respect to the Aircraft or any engine, such
payment may be made directly to the Lessee, unless the Lessor shall have
previously notified the insurers that a default or an Event of Default has
occurred and is continuing; and (ii) provide that, in respect of the interests
of the Lessor in such policies, the insurance shall not be invalidated by any
action or inaction of the Lessee or of any other person (other than is solely
attributable to the gross negligence or willful misconduct of the Lessor) and
shall insure the interest of the Lessor regardless of any breach or violation by
the Lessee or of any other person (other than is solely attributable to the
gross negligence or willful misconduct of the Lessor) of any warranty,
declaration or condition contained in such policies (including, without
limitation, in the case of any insurance for war risk and allied perils, the
Lessee, or any person other than the Lessor, flying or operating the Aircraft or
any engine to a geographical area then excluded from coverage under such
policy).

     9.   Indemnity.
          ---------
<PAGE>

     (a)  Lessee agrees to indemnify and hold harmless Lessor, any employee of
Lessor and any parent, subsidiary or affiliate of Lessor against any and all
claims, demands and liabilities of whatsoever nature (including all negligence,
tort and strict liability claims), judgments, suits and all legal proceedings,
and all costs and expenses (including litigation expenses) relating to or in any
way arising out of:

          (i)    the selection, manufacture, purchase, acceptance, ownership,
     ordering, delivery, non-delivery, acquisition, making of payments (by
     electronic transfer, check or other means), rejection, installation,
     possession, leasing, use, non-use, misuse, operation, condition, servicing,
     maintenance, transportation, repair, improvement, alteration, replacement,
     storage, control or disposition of Equipment leased or requested by Lessee
     to be leased hereunder, except to the extent that such costs are included
     in Lessor's Cost of such Equipment and except for any general
     administrative or overhead expenses of Lessor;

          (ii)   all recording and filing fees, stamp taxes and like expenses
     with respect to security filings on the Equipment incurred by Lessor or its
     agent;

          (iii)  all costs, charges, damages or expenses for royalties and
     claims and expenses arising out of or necessitated by the assertion of any
     claim or demand based upon any infringement or alleged infringement of any
     patent or other right, by or in respect of any Equipment;

          (iv)   all federal, state, county, municipal, foreign or other fees
     and taxes of whatsoever nature, including but not limited to license,
     qualification, franchise, sales, use, gross receipts, ad valorem, business,
     property (real or personal), excise and occupation fees and taxes, and
     penalties and interest thereon, whether assessed, levied against or payable
     by Lessor or otherwise, with respect to Equipment or the acquisition,
     purchase, sale, rental, use, operation, control, ownership or disposition
     of Equipment or measured in any way by the value thereof or by the business
     of, investment in, or ownership by Lessor with respect thereto, excepting
     net franchise, qualification and income taxes on the net income of Lessor
     determined substantially in the same manner as net income is presently
     determined under the Federal Internal Revenue Code, except that income
     taxes (other than foreign income taxes) and certain related claims shall be
     governed by the specific terms of Section 10 below rather than by this
     Section 9, and excepting any excise, sales or use taxes included in
     Lessor's Cost of the Equipment;

          (v)    any violation, or alleged violation, by Lessee of this
     Equipment Leasing Agreement or of any contracts or agreements to which
     Lessee is a party or by which it is bound, or any laws, rules, regulations,
     orders, writs, injunctions, decrees, consents, approvals, exemptions,
     authorizations, licenses and withholdings of objection, of any governmental
     or public body or authority and all other requirements having the force of
     law applicable at any time to Equipment or any action or transaction by
     Lessee with respect thereto or pursuant to this Equipment Leasing
     Agreement, including, but not limited to, the
                                      12
<PAGE>

      violation of any local, state or federal environmental laws or regulations
      of whatever kind which relate in any way to the use of the Equipment; or

          (vi)  tort  claims of any kind (whether based on strict liability or
      otherwise) including claims for injury to or death of persons (including
      Lessee's employees) and for damage to property related directly or
      indirectly in any way to the ownership, maintenance, use and operation of
      any Equipment.

Provided, however, should any instance(s) occur under any one or more of
subparagraphs (i) through (vi) above that Lessor will to the extent permissible
make available to Lessee Lessor's rights under any indemnification or warranty
arising by contract or operation of law from the manufacturer of Equipment,
prior lessee of the Aircraft, or applicable third-party.

      (b) Lessee shall forthwith upon demand reimburse Lessor for any sum or
sums expended with respect to any of the foregoing, or shall pay such amounts
directly upon request from Lessor. Lessee shall be subrogated to Lessor's right
in the affected transaction and shall upon such payment have a right to
determine the settlement of claims therein, but in the best interests of Lessor.
The indemnities contained in this Equipment Leasing Agreement (including those
in this Section 9 and all of Section 10) shall survive the expiration or earlier
termination of this Equipment Leasing Agreement or any lease of Equipment
hereunder.

      (c) If any claim is made or action commenced against Lessor for death,
personal injury or property damage resulting from actions occurring only after
Lessee's acceptance of the Aircraft and resulting from the ownership,
maintenance, use or operation of any Equipment, Lessor shall promptly notify
Lessee thereof and forward to Lessee a copy of every demand, notice, summons or
other process received in connection therewith.  Lessee hereby agrees that it
shall fully defend and indemnify Lessor and handle all aspects of any such claim
or action.  Lessee further agrees to keep Lessor reasonably informed as to the
progress of any such claim or action.  Lessor shall have the right to arrange
for its own defense against any such claim or action if, in Lessor's reasonable
discretion, Lessor believes a separate defense would be in its best interests.

      10. Tax Indemnity.  For purposes of this Section 10, the term, "Lessor,"
          -------------
shall also include any assignee of Lessor, to the extent only that such assignee
is a U.S. taxpayer.

      SECTION 10.1.  Certain Tax Assumptions.  (a)  Lessor is entering into this
                     -----------------------
Equipment Leasing Agreement on the assumption that it will be treated as the
owner of each Unit of Equipment for income tax purposes and will be entitled to
such deductions, credits and other benefits as are provided to an owner of
property by the Code and by applicable state and local laws imposing taxes on or
measured by the income of corporations, including, without limitation, (i) cost
recovery deductions for 100% of Lessor's Cost of each Unit of Equipment under
Sections 167 and 168 of the Code for five (5) year property within the meaning
of Subsections 168(c) and 168(e) of the Code

                                      13
<PAGE>

starting for each Unit with the tax year that includes the Acceptance Date, and
using the applicable method in Subsection 168(b) of the Code (the "Recovery
                                                                   --------
Deductions"); and (ii) amortization deductions in an amount at least equal to
----------
the transaction costs computed on a straight line basis over a period of not
longer than the Basic Term (the "Amortization Deductions").
                                 ------------------------

      (b) Lessor in entering into this Equipment Leasing Agreement has also
assumed that it will be entitled for tax purposes (i) to treat each item of
income, gain, loss, deduction and credit with respect to the transactions
contemplated by this Equipment Leasing Agreement as derived from, or allocable
to, sources within the United States; and (ii) not to include in gross income
with respect to the transactions contemplated by this Equipment Leasing
Agreement at any time any amount other than (A) any payment of Interim Rent,
Basic Rent or Redelivery Rent in the amount specified in this Equipment Leasing
Agreement on the date such payment is required to be made, (B) any payment of
renewal rent or purchase price in the amount specified in Section 17 of this
Equipment Leasing Agreement on the date such payment is required to be made and
(C) any payment of Stipulated Loss Value on the date such payment is required to
be made.

      SECTION 10.2.    Inconsistent Actions; Records. Lessee agrees that neither
                       -----------------------------
it nor any corporation or entity controlled by it, in control of it, or under
 common control with it, directly or indirectly, will at any time take any
 action or file any tax returns or other documents in connection therewith
 inconsistent with the assumptions set forth in Section 10.1 so long as Lessor
 does not do so. Lessee covenants that it will file such returns, take such
 actions and execute such documents as may be reasonable and necessary to
 facilitate accomplishment of the intent hereof. Lessee covenants to keep and
 make available for inspection and copying by Lessor such logs and records as
 shall be reasonably necessary to establish the factual basis for the matters
 referred to in Section 10.1.

      SECTION 10.3.    Representations, Warranties and Covenants of Lessee.  By
                       ---------------------------------------------------
its execution and delivery of this Equipment Leasing Agreement and upon the
execution of each ILR hereunder Lessee shall be deemed to have made the
following representations and warranties to Lessor with respect to this
Equipment Leasing Agreement, each ILR and the Units covered thereby as of the
Acceptance Date thereof:

      (a) Recovery Deductions.  Each Unit which is a component as described in
          -------------------
Section 24, will be as of the Acceptance Date with respect to such Unit and will
remain throughout the Lease Term, property which is "five (5) year property" in
the hands of Lessor within the meaning of Subsection 168(c) and Subsection
168(e) of the Code and those depreciation deductions will be available to be
taken by the Lessor for 100% of Lessor's Cost of each Unit under Sections 167
and 168 of the Code starting for each Unit with the tax year that includes the
Acceptance Date, and using the applicable method in Subsection 168(b) of the
Code.

      (b) Useful Life, etc.  As of the Acceptance Date with respect to each Unit
          -----------------
(i) the remaining useful life of the Equipment at the end of the Basic Term will
be the greater of 20% of its original life or one (1) year, (ii) the estimated
fair market value of such Unit at the expiration of the Basic Term with respect
to such Unit is equal to at least 20% of Lessor's Cost therefor, without
including in such value any increase or decrease for inflation or deflation and
after subtracting from

                                      14
<PAGE>

such value any cost to Lessor for removal and delivery of possession of such
Unit at the end of such period, (iii) it is reasonable to expect that each Unit
will be useful to and useable by a party other than Lessee or any person related
to Lessee at the end of the Basic Term with respect thereto and capable of
continued leasing or transfer to another party at that time, and that it will be
commercially feasible to do so; (iv) each Unit is not "limited use property"
within the meaning of Revenue Procedure 76-30 as modified to such Acceptance
Date; and (v) Lessor's Cost for each Unit is equal to the fair market value of
such Unit.

      (c) No Inclusions in Income.  Lessor shall not at any time be required to
          -----------------------
include any amount in its gross income as a result of all or any part of any
addition, modification, improvement, alteration, replacement or any other
expenditure of, or to, or in respect of, any Unit or any part thereof (whether
or not pursuant to the terms of this Equipment Leasing Agreement) made by any
person other than Lessor.

      (d) Use.  Lessee shall not use the Aircraft in commercial or contract
          ---
carrying of passengers or freight within the meaning of Revenue Procedure 87-56.
For this purpose, air charter operations under FAA part 135, part 90 or similar
provisions for air charter operations shall not be considered commercial or
contract carrying of passengers or freight within the meaning of Revenue
Procedure 87-56.  Notwithstanding the foregoing, Lessee shall not use the
Aircraft in air charter operations more than 50% of the time (in terms of hours
and cycles).  The Aircraft and each part thereof will not be used predominantly
outside the United States within the meaning of Section 168(g)(1)(A) of the
Code, or it will be operated to and from the United States within the meaning of
Section 168(g)(4)(A) of the Code, in any taxable year (or portion thereof)
during the Lease Term.  Aside from air charter operations, the Aircraft shall be
for corporate or personal use only.

      (e) No "Tax-Exempt Use Property," etc.  Lessee is a corporation organized
          ----------------------------------
under the laws of the United States and is not exempt from Federal income tax.
No Unit of Equipment will be treated as "tax-exempt use property," as defined in
Subsection 168(h) of the Code, or as "tax-exempt bond financed property," as
defined in Subsection 168(g) of the Code during the Lease Term or the Basic Term
of the lease for such Unit of Equipment.

      (f) No Improvements.  At the commencement of the Lease Term and on the
          ---------------
Acceptance Date with respect to each Unit, no improvements, modifications or
additions to such Unit will be required in order to render such Unit complete
for its intended use by Lessee or any sublessee.

      (g) Information.  All information supplied by Lessee or any affiliate
          -----------
thereof to Lessor or any independent appraiser or engineer as of the Acceptance
Date with respect to any Unit or any part thereof was accurate and complete at
the time given and Lessee has notified each such party of any material change,
if any, in any such information so supplied.

      SECTION 10.4.    Indemnified Losses.  If as a result of any act or failure
                       ------------------
to act by Lessee, any officer, employee, agent, or controlled entity thereof, or
any user or person in possession of any Unit or any part thereof, or if as a
result of any breach, inaccuracy or incorrectness of any representation,
warranty, covenant or agreement of Lessee under this Equipment Leasing
Agreement,

                                      15
<PAGE>

any bankruptcy of Lessee or other proceedings for the relief of debtors
involving Lessee or any disposition of any Unit or any part thereof pursuant to
Section 13 of this Equipment Leasing Agreement or any damage to, destruction of,
theft, requisition or taking of, or repair or replacement of any Unit or part
thereof, any change in the tax status of the Lessee as a taxpaying corporation
under Section 11 of the Code, or state or local statute Lessor shall lose, shall
not have, shall lose the right to claim, shall suffer a disallowance of, shall
be delayed in claiming, shall have deferred or shall be required to recapture
all or any portion of the Recovery Deductions, or the Amortization Deductions;
(hereinafter referred to collectively as a "Loss"), then Lessee will pay to
Lessor, at Lessor's option and after deduction of all additional Federal, state,
local and foreign taxes required to be paid by Lessor with respect to the
receipt of such following amount or amounts, a cash lump sum payment or
additional monthly payments of Rent for the remainder of the Basic Term equal to
the greater of (1) the amount necessary to preserve the pre-tax return that
Lessor would have realized if such Loss had not occurred, plus any interest,
penalties or additions to tax imposed by any taxing authority as a result of
such Loss and (2) the amount necessary to preserve the after-tax cash flow that
Lessor would have realized if such Loss had not occurred, plus any interest,
penalties or additions to tax imposed by any taxing authority as a result of
such Loss. Notwithstanding the foregoing, Lessee shall not have any liability to
Lessor for indemnification under this Section 10.4 if such Loss is a result of
any one or more of the following events: (i) an Event of Loss if Lessee shall
have paid to Lessor the amounts provided for in such cases in Section 11 of this
Equipment Leasing Agreement; (ii) the failure of Lessor to file timely or proper
tax returns or to claim in a timely and proper manner the Recovery Deductions,
the Interest Deductions, if any, or the Amortization Deductions in its Federal,
state or local income tax returns for the appropriate year (unless, in the
opinion of independent tax counsel selected by Lessor and reasonably acceptable
to Lessee, there is no reasonable basis to make such claim); (iii) the failure
of Lessor to have sufficient taxable income or tax liability to utilize the tax
benefits described in Section 10; (iv) any revision in the Code or any
regulation or judicial or administrative decision issued, enacted or adopted
after the date of this Equipment Leasing Agreement and made applicable or
retroactive to any period during which this Equipment Leasing Agreement shall be
in effect; (v) a determination that the Equipment Leasing Agreement is not a
"true lease" in respect of any Unit or that Lessor is not the owner or lessor of
any Unit, in each case for income tax purposes, except to the extent resulting
from a breach of Section 10.2 of this Agreement; or (vi) a determination that
Lessor did not enter into the transaction for profit. The amount payable to
Lessor pursuant to this Section 10.4 shall be paid within thirty (30) days after
receipt by Lessee of a written demand therefor from Lessor accompanied by a
written statement describing in reasonable detail such Loss and the computation
of the amount so payable. Upon payment of such amount, Lessee may, upon one
hundred eighty (180) days prior written notice, purchase or sell the Equipment
and pay to Lessor an amount equal to its then Stipulated Loss value.

      SECTION 10.5.    Determination of Payments.  Whenever it may be necessary
                       -------------------------
for purposes of this Section 10 to determine whether Lessor has suffered a Loss,
such determination shall be made on the assumptions that (i) the federal income
taxes of Lessor are payable at a marginal effective rate of 35% (the "Assumed
                                                                      -------
Federal Rate") and the effective rate of state and local taxes are payable at a
------------
rate of 3.5% (the "Assumed State Rate"), the sum of the Assumed Federal Rate and
                   ------------------
the Assumed State Rate is hereinafter referred to as the "Effective Rate," and
                                                          --------------
(ii) in computing

                                      16
<PAGE>

its Federal income tax liability, Lessor can currently fully utilize the tax
benefits that are the subject of such Loss against taxes payable at the
Effective Rate. For purposes of determining the amount of taxes payable by
Lessor upon receipt of any payment required to be made by Lessee to Lessor under
this Equipment Leasing Agreement, it shall be assumed that Federal, state, local
and foreign taxes are payable by Lessor at the highest marginal statutory rates
in effect for the relevant period.

      SECTION 10.6.  Contest.  Lessor will notify Lessee in writing of any
                     -------
claim, whether or not proposed, that would give rise to payment by Lessee under
this Section 10. If reasonably requested by Lessee in writing within thirty (30)
days of Lessor's notice, and such request is accompanied by an opinion of
competent tax counsel of repute selected by the Lessee and acceptable to the
Lessor confirming that there is a reasonable basis for concluding that the
contesting of the validity and applicability of the claim would be successful,
the Lessor shall contest in the name of the Lessor but at the sole cost and
expense of the Lessee, the validity and applicability of such claim by, at the
discretion of the Lessor:

          (i)    resisting payment thereof if practicable; or

          (ii)   paying the same only under protest, if protest is necessary and
      proper; and

          (iii)  if payment shall be made, seeking a refund thereof in
      appropriate administrative or judicial proceedings.

      However, Lessor shall have no such obligation to contest unless (a) prior
to taking any such action the Lessee shall have indemnified Lessor to Lessor's
satisfaction for all reasonable costs, expenses, losses, claims or liabilities
which the Lessor may suffer or incur in connection with contesting such claim,
including, without limitation, all reasonable legal and accountants' fees and
disbursements, and the amount of any interest or penalties which may be payable
as a result of contesting such claim, (b) if the Lessor designates that such
contest is to be initiated by the payment of, and the claiming of a refund for
such claim, the Lessee shall have advanced to the Lessor sufficient funds (on an
interest fee basis and, if such advance results in taxable income to the Lessor
on an after tax basis) to make such payment and (c) the Lessor shall not be
obliged to take any action which is contrary to any applicable law or regulation
or is contrary to prudent business practice.

      11.  Loss or Destruction of the Equipment.  Lessee hereby assumes all
           ------------------------------------
risks of loss or damage to the Equipment howsoever the same may be caused.
Lessee shall notify Lessor immediately of any loss or of any damage to any
Equipment in an amount in excess of $50,000 and shall keep Lessor informed of
all developments and correspondence regarding insurance rights and other rights
and liabilities arising out of the loss or damage. In the event of total
destruction of any of the Equipment or damage beyond repair or the
commandeering, conversion or other such loss of any of the Equipment, or if the
use thereof by Lessee in its regular course of business is prevented by the act
of any third person or persons, or any governmental instrumentality, for a
period exceeding ninety (90) days or if any of the Equipment is attached (other
than on a claim against Lessor but not Lessee) or is seriously damaged and the
attachment is not removed or the Equipment not repaired, as the case may be, in
a period of ninety (90) days, then in any such event (an "Event of Loss"):
                                                          -------------
                                      17
<PAGE>

     (a)  Lessee shall promptly notify Lessor in writing of such fact;

     (b)  By the next Basic Rent Date, Lessee shall pay to Lessor, or Lessor's
assignee, an amount equal to the Stipulated Loss Value of such Equipment at the
time of payment plus an amount equal to the Basic Rent due with respect to such
Unit on such date;

     (c)  By the next Basic Rent Date, Lessee shall pay to Lessor, or Lessor's
assignee, all other Rent, late charges and other sums past due in respect of
such Unit of Equipment;

     (d)  The lease of such Equipment shall continue until all such payments
have been received by Lessor, or Lessor's assignee, and shall thereupon
terminate; and

     (e)  Upon such payment all of Lessor's title to and rights in such
Equipment and any insurance thereon shall automatically pass to Lessee or its
designee.

     12.  Surrender of Equipment.  Upon the date of expiration or final
          ----------------------
termination of the lease as to any Unit, and provided Lessee shall have not
exercised its right to purchase the Equipment or extend the Lease Term for the
Equipment under Section 17 hereof with respect to such Unit, Lessee shall, at
its own cost and expense, deliver possession of such Unit of Equipment to Lessor
in accordance with the provisions of Subsection 7(c) hereof and this Section 12.
Within ninety (90) days prior to such expiration or final termination, the
Lessee will permit the Lessor or any person designated by it, including the
authorized representative or representatives of any prospective purchaser of any
such Unit of Equipment, to inspect the same.  All movement, inspection and
storage of each such Unit of Equipment is to be at the risk and expense of the
Lessee.  Upon redelivery, the Equipment shall be in good repair, condition and
working order and in the condition as required by the terms and provisions of
this Equipment Leasing Agreement including, but not limited to, Section 7
hereof, and will be free of all liens or encumbrances of any nature whatsoever
excluding Permitted Liens.  Lessee shall have the obligation to restore any such
Unit which is not in compliance with the provisions of this Equipment Leasing
Agreement to the condition required by such provisions before Lessor shall be
required to accept redelivery thereof.  In the event that any Unit is not
accepted for redelivery by Lessor, or any person designated by it, on the date
required herein, Lessee shall pay Lessor Redelivery Rent for such Unit on a
monthly basis until accepted for redelivery by Lessor, but in no event shall
such redelivery period exceed six (6) months.  Upon the expiration of such six
(6) month period, if such Equipment has not been delivered to Lessor in the
condition and repair required herein, Lessee shall be in default hereunder.

     13.  Events of Default.  The following events of default ("Events of
          -----------------                                     ---------
Default") by Lessee shall give rise to rights on the part of Lessor described in
-------
Section 14:

     (a)  Default in the payment of Interim Rent, Basic Rent, Redelivery Rent or
any other payment due from Lessee hereunder when due, or default in the payment
of Supplemental Rent beyond the tenth (10th) day after the person entitled to
receive the same has made demand therefor; or

                                      18
<PAGE>

     (b)  Default in the covenant of Lessee in Section 8 hereof as to non-use of
any Equipment as to which the required liability insurance is not in force; or

     (c)  Default in the payment or performance of any other liability,
obligation, or covenant, condition, representation or agreement to be performed
or observed by Lessee hereunder or breaches of any representation or provision
contained herein or in any other document furnished to Lessor in connection
herewith, and such failure or breach shall continue unremedied for thirty (30)
days after written notice to Lessee sent by registered or certified mail by
Lessor; or

     (d)  The termination of existence or business failure of, or the making of
an assignment for the benefit of creditors by, Lessee; or

     (e)  The institution of bankruptcy, reorganization, liquidation or
receivership proceedings by or against Lessee and, if instituted against Lessee,
its consent thereto or the pendency of such proceedings for at least sixty (60)
days; or

     (f)  Lessee shall admit in writing its inability to pay its debts generally
when due; or

     (g)  Lessee shall create, incur, assume, or suffer to exist any mortgage,
lien, pledge or other encumbrance or attachment of any kind whatsoever (except
for permitted liens) upon, affecting or with respect to the Equipment or this
Equipment Leasing Agreement or any of Lessor's interests hereunder; or

     (h)  The dissolution, merger, reorganization or sale of all or
substantially all of the assets of Lessee (all such events collectively herein
referred to as a "Merger") without the prior written consent of Lessor;
                  ------
provided, however, that Lessee may engage in a Merger without the prior written
consent of Lessor if, following such Merger, the Lessee, or the successor in
interest to Lessee resulting from such Merger, will be rated at least
"investment grade" by Moody's Investors Services and Standard & Poor's
Corporation or if Lessee's stockholders own 51% or more of the stock of the
surviving corporation of the Merger; or

     (i)  There shall occur an event of default by Lessee under or in connection
with any indebtedness owed by Lessee which such default continues beyond any
grace or cure periods applicable thereto under the terms of the instruments
evidencing such indebtedness.

     Lessee shall be obligated to provide Lessor with written notice of any
Event of Default and of any event which, with notice, or the lapse of time, or
both, would constitute an Event of Default promptly upon Lessee becoming aware
of any such event.

     14.  Rights of Lessor upon Default of Lessee.  Upon the occurrence of any
          ---------------------------------------
of the Events of Default and at any time thereafter, Lessor may, in its
discretion, do one or more of the following:

                                      19
<PAGE>

     (a) Give written notice to Lessee, upon which notice the present value
(determined as provided herein) of the entire amount of Basic Rent and all other
amounts remaining to be paid over the balance of the Lease Term hereof for all
Equipment then leased hereunder, computed from the date of Lessee's default,
shall become immediately due and payable and be accelerated;

     (b) Proceed by appropriate court action or actions at law or in equity or
in bankruptcy to enforce performance by Lessee of the covenants and terms of
this Equipment Leasing Agreement and/or to recover damages for the breach
thereof;

     (c)  Terminate the lease of any or all Equipment, upon five (5) days'
written notice to Lessee sent by certified mail;

     (d)  Whether or not any lease is terminated, take immediate possession of
any or all of the Equipment, including substituted parts, accessories or
equipment and/or other equipment or property of Lessor in the possession of
Lessee, wherever situated, and for such purpose, enter upon any premises without
liability for doing so;

     (e) Whether or not any action has been taken under Subsections 14 (a), (b),
(c) or (d) above, Lessor may sell any Equipment (with or without the concurrence
or request of Lessee) and Lessor shall retain all proceeds from such sale.  In
addition, if the sales proceeds (reduced by any legal costs or any costs or
expenses of sale, removal, transportation, repair, storage, delivery, or similar
costs and expenses) are less than the Stipulated Loss Value of the Equipment
sold, Lessee shall pay to Lessor any such shortfall;

     (f) Hold, use or lease any Equipment as Lessor in its sole discretion may
decide, and continue to hold Lessee liable for any deficiency between the rent
received by Lessor from others and the Rent payable hereunder for the balance of
the Lease Term of such Equipment;

     (g) Invoke and exercise any other remedy or remedies available to Lessor by
law or in equity.

     No remedy referred to in this Section is intended to be exclusive, but
shall be cumulative and in addition to any other remedy referred to above or
otherwise available to Lessor at law or in equity.  No express or implied waiver
by Lessor of any default shall constitute a waiver of any other default by
Lessee or a waiver of any of Lessor's rights.

     If after default Lessee fails to deliver or converts the Equipment or the
Equipment is destroyed, Lessee shall be liable to Lessor for all unpaid Basic
Rent, Interim Rent and Redelivery Rent to the date of such failure to deliver,
conversion or destruction of such Equipment plus its Stipulated Loss Value at
the time and all loss and damages sustained and all costs and expenses incurred
by reason of the default or the exercise by Lessor of any remedies.  If after
default Lessee delivers Equipment to Lessor or if Lessor repossesses Equipment,
Lessee shall be liable for and Lessor may recover from Lessee all unpaid Basic
Rent, Interim Rent and Redelivery Rent to the date

                                      20
<PAGE>

of such delivery or repossession plus all losses and damages sustained and all
costs and expenses incurred by reason of the default or the exercise by Lessor
of any remedies.

     The receipt and acceptance by Lessor (or its assignee) of any Rent after
the occurrence of an Event of Default shall not be deemed to be a waiver of such
Event of Default on the part of Lessor (or its assigns).  Lessor's failure or
delay in exercising its rights hereunder will not constitute a waiver of such
rights and any single or partial exercise of any rights will not exhaust or
constitute a waiver of such right.

     15.  Equipment To Be and Remain Personal Property.  It is the intention and
          --------------------------------------------
understanding of both Lessor and Lessee that all Equipment shall be and at all
times remain personal property.  Lessee will obtain and record such instruments
and take such steps as may be necessary to prevent any person from acquiring any
rights in the Equipment paramount to the rights of Lessor, by reason of such
Equipment being deemed to be real property.  If, notwithstanding the intention
of the parties and the provisions of this Section 15, any person acquires or
claims to have acquired any rights in any Equipment paramount to the rights of
Lessor, by reason of such Equipment being deemed to be real property, and such
person seeks in any manner to interfere with the continued quiet enjoyment of
the Equipment by Lessee as contemplated by this Equipment Leasing Agreement,
then Lessee shall promptly notify Lessor in writing of such fact (unless the
basis for such interference is waived or eliminated to the satisfaction of
Lessor within a period of ninety (90) days from the date it is asserted) and
Lessee shall within ninety (90) days after such notice pay to Lessor or Lessor's
assignee an amount equal to the Stipulated Loss Value of such Equipment at the
time of payment.  The lease of the Equipment shall continue until such payment
has been received and shall thereupon terminate; and upon such payment all of
Lessor's title to and rights in such Equipment shall automatically pass to
Lessee or its designee.

     16.  Early Buyout Option.  Lessee, if not then in default hereunder and
          --------------------
upon at least ninety (90) days prior written notice to Lessor, shall have the
option to on either the 78/th/ month anniversary or the 108/th/ month
anniversary of the Basic Lease Term Commencement Date for the Aircraft purchase
such Aircraft for the applicable purchase price as set forth in the following
table (plus sales taxes due on the purchase, if any, Rent, and any other amounts
due and owing to Lessor hereunder and subject to appraisal confirmation):

                    Anniversary Date  Purchase Price Amount
                    ----------------  ---------------------

                     78/th/ month      71.0% of Lessor's Cost
                    108/th/ month     55.67% of Lessor's Cost

If Lessee elects to exercise the second early buyout option on the 108/th/ month
anniversary of the Basic Lease Term, Lessor shall adjust the Purchase Price
Amount to take into consideration the recalculation of the Basic Rent, as
described in Section 1(d). If Lessee shall fail to exercise the purchase option
on either anniversary date described in Subsection (i) immediately above, then
Lessor shall have the right to update Schedule A with respect to the remaining
rental payments.

                                      21
<PAGE>

     17.  Purchase of Equipment at Expiry of the Basic Term; Renewal of Lease
          -------------------------------------------------------------------
          Term.
          ----
     (a)  Upon the expiration of the Basic Term of any Equipment leased
hereunder, and with at least ninety (90) days prior written notice to Lessor,
Lessee, if not then in default hereunder, shall have the option either to (i)
renew the Lease Term for such Equipment for a term agreed upon by Lessor and
Lessee ("Extended Term") at a rate equal to the Percentage Rental Factor (as
         -------------
provided in Subsection 1(s)(3)), (ii) purchase the Equipment for its then fair
market value, or (iii) surrender such Unit of Equipment to Lessor pursuant to
Section 11 hereof.  If Lessee notifies Lessor that Lessee will exercise either
option (i) or (ii) above, Lessor and Lessee shall consult for the purpose of
determining the fair rental or fair market value of the Equipment as of the end
of the Basic Term, and any value agreed upon in writing shall constitute such
fair rental or fair market value for the purposes of this Section 17. If Lessor
and Lessee fail to agree upon such value within twenty (20) days after such
notice, they shall appoint a qualified independent appraiser to determine the
amount and his decision shall be final; and, if the parties are unable to agree
on a single qualified independent appraiser, each shall appoint one qualified
independent appraiser and the two so appointed shall, if they are unable to
agree on the fair market value, jointly name a third, in which event the
decisions of a majority of the appraisers as to the fair market value shall be
final.  All fees and expenses of the appraiser(s) shall be borne equally  by
Lessee and Lessor.  For all purposes of this Section 17, fair rental or fair
market value shall be determined on the basis of, and shall equal in value, the
amount which would be obtained in an arm's length transaction between an
informed and willing lessee or buyer-user (other than a used equipment or scrap
dealer and the parties hereto) and an informed and willing lessor or seller
under no compulsion to lease or sell.  If Lessee shall deliver a notice
exercising its right to renew the Lease Term for a Unit, it shall be
conclusively presumed that Lessee has by delivery of such notice represented
that the Extended Term proposed in such notice does not exceed the useful life
of such Unit.  With respect to the Aircraft, if Lessee chooses to either
purchase or extend the term of the lease of such Aircraft pursuant to this
Subsection 17(a), Lessee shall purchase or extend the term of, as the case may
be, the Aircraft and all related equipment.

     (b)  Upon expiration or final termination of the Lease as to any Unit, if
Lessee shall fail to deliver notice to Lessor to purchase or extend the term of
any Unit as specified in Subsection 17(a) above or the Lessor and Lessee cannot
agree on the terms of any such extension or purchase, Lessee shall surrender
such Unit to Lessor at a location in the continental United States reasonably
requested by Lessor, and Lessee shall pay all costs and expenses associated with
the storage of the Unit for a period not to exceed forty-five (45) days.

     18.  Finance Lease Status.  The parties agree that this lease and each ILR
          --------------------
hereunder is a "Finance Lease" as defined by the UCC.  Lessee acknowledges that
Lessee has reviewed and approved any written "Supply Contract" (as such term is
defined in the UCC), covering the Equipment purchased from the "Supplier" (as
such term is defined in the UCC) thereof for lease to Lessee.  Lessee also
acknowledges the following:

     (a)  Lessor has not selected, manufactured, or supplied the Equipment;

     (b)  Lessor acquired or will acquire the Equipment or the right to
possession and use of the Equipment in connection with the ILR; and

                                      22
<PAGE>

     (c)  Lessor provides no warranties or other rights with respect to the
purchase of the Equipment and any and all rights Lessee has with respect to the
purchase of the Equipment are solely against Supplier.

     19.  Disclaimer of Warranties.  LESSEE AGREES AND ACKNOWLEDGES THAT
          ------------------------
ACCEPTANCE OF THE EQUIPMENT FOR LEASE SHALL CONSTITUTE LESSEE'S ACKNOWLEDGEMENT
AND AGREEMENT THAT LESSEE HAS FULLY INSPECTED SUCH EQUIPMENT, AND THAT THE
EQUIPMENT IS IN GOOD ORDER AND CONDITION AND IS OF THE MANUFACTURE, DESIGN,
SPECIFICATIONS AND CAPACITY SELECTED BY LESSEE, THAT LESSEE IS SATISFIED THAT
THE SAME IS SUITABLE FOR ITS PURPOSE, THAT LESSOR IS NOT ENGAGED IN THE SALE OR
DISTRIBUTION OF EQUIPMENT, THAT LESSOR HAS NOT SELECTED, MANUFACTURED OR
SUPPLIED SUCH EQUIPMENT, THAT LESSOR HAS PURCHASED THE EQUIPMENT FROM VENDORS OF
LESSEE'S CHOICE, AND THAT LESSOR HAS NOT MADE AND DOES NOT HEREBY MAKE ANY
REPRESENTATION, EXPRESS WARRANTY, IMPLIED WARRANTY, OR COVENANT WHATSOEVER WITH
RESPECT TO TITLE, MERCHANTABILITY, CONDITION, QUALITY, DURABILITY, SUITABILITY,
OPERATION OR FITNESS OF THE EQUIPMENT IN ANY RESPECT OR IN CONNECTION WITH, OR
FOR ANY PURPOSE OR USE OF LESSEE, OR ANY OTHER REPRESENTATION, WARRANTY OR
COVENANT OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT THERETO.
Lessor shall, at Lessee's sole expense take all action reasonably requested by
Lessee to make available to Lessee any rights of Lessor under any express or
implied warranties of any manufacturer or vendor of the Equipment.  The Lessee
acknowledges and agrees that neither the manufacturer, the supplier, nor any
salesman, representative or other agent of the manufacturer or supplier, is an
agent of Lessor.  No salesman, representative or agent of the manufacturer or
supplier is authorized to waive or alter any term or condition of this Equipment
Leasing Agreement and no representation as to the Equipment or any other matter
by the manufacturer or supplier shall in any way affect Lessee's duty to pay
Rent and perform its other obligations as set forth in this Equipment Leasing
Agreement.

     20.  Assignment by Lessor.  LESSEE ACKNOWLEDGES NOTICE THAT LESSOR MAY, IN
          --------------------
CONNECTION WITH FINANCING ITS ACQUISITION AND OWNERSHIP OF SOME OR ALL OF THE
EQUIPMENT, GRANT PARTICIPATIONS OR SECURITY INTERESTS IN OR SELL OR ASSIGN ITS
INTERESTS IN SUCH EQUIPMENT, THIS EQUIPMENT LEASING AGREEMENT OR ANY BASIC RENT,
INTERIM RENT OR OTHER AMOUNTS DUE HEREUNDER.  Any instrument executed in
connection with such assignment shall contain a provision to the effect that as
long as Lessee is not in default hereunder or under any lease executed pursuant
hereto, it shall be entitled to uninterrupted use and quiet enjoyment of the
Equipment on the terms herein provided.  After such assignment the terms and
provisions of this Equipment Leasing Agreement may not be altered, modified or
waived without the written consent of such assignee.  In connection with such
assignment Lessee agrees to execute such documents as Lessor or its assignee may
reasonably request, including notices, acknowledgements and financing
statements.  Lessee agrees to permit Lessor to record this Equipment Leasing
Agreement.  Upon the written request of such assignee, the Lessee shall make
payment of all Basic Rent, Interim Rent and

                                      23
<PAGE>

other payments due hereunder with respect to such assignment to the assignee,
without abatement, deduction or set off. Such payments shall discharge the
obligations of the Lessee to the Lessor hereunder to the extent of such
payments. Lessee further covenants and agrees that it will not assert against
Lessor's assignee any defense, counterclaim or set off due to a breach of
warranty or otherwise in any action for Basic Rent, Interim Rent or any other
amounts due hereunder or for possession of the Equipment which is brought by
Lessor's assignee. The assignment by the Lessor to the assignee of rights
hereunder shall not impose on the assignee any of the duties or obligations of
the Lessor hereunder, but in all other respects the assignee shall have all the
rights of the Lessor hereunder to the extent necessary to realize upon Basic
Rent, Interim Rent and other amounts due hereunder and to protect the assignee's
security interest in Equipment resulting from such assignment.

     21.  Voluntary Termination .  Twelve months after the Basic Lease Term
          ----------------------
Commencement Date and so long thereafter as no Event of Default shall have
occurred and be continuing, Lessee shall have the right at its option, on at
least 180 days' prior written notice to Lessor, to terminate this Lease with
respect to the Aircraft on the twenty-fifth day of any month or, if not a
Business Day, the next succeeding Business Day (the "Termination Date");

provided, that the Chief Executive Officer, President or Chief Financial Officer
--------
of Lessee shall certify that such Aircraft shall have become obsolete or surplus
with respect to Lessees' requirements.

     During the period of the giving of such notice until the earlier of receipt
by Lessee of notice from the Lessor pursuant to the next to last paragraph of
this Section 21 and the Termination Date, Lessee as agent for Lessor, shall use
its best efforts to obtain bids for the cash purchase on the Termination Date of
such obsolete or surplus Aircraft described in such notice.  Lessee shall
certify to Lessor in writing the terms and amount of each bid received by Lessee
and the name and address of the person (who shall not be Lessee or any person
acting for or affiliated with Lessee or any person who has a commitment to make
a payment to Lessee in connection with the acquisition of the Aircraft by such
person) submitting such bid.  Lessor may also independently obtain bids for such
purchase and certify them to Lessee as provided in the next preceding sentence.
Lessor may submit a bid for the Aircraft upon terms no less favorable than those
available to third-party bidders.

     On the Termination Date, Lessor shall sell the Aircraft for cash to
whomever shall have submitted the highest bid prior to such date.  The total
sales price realized at such sale, net of all expenses of sale (including
commissions) shall be received by Lessor and, in addition, on the date of such
sale Lessee shall pay to Lessor the sum of (A) the amount, if any, by which the
Stipulated Loss Value for the Aircraft computed as of the Termination Date
exceeds the sales price received by Lessor, less all brokerage commissions and
other fees and expenses incurred by Lessor in connection with the sale, (B) the
Basic Rent installment payment due on the Termination Date, if any, and (C) all
other amounts, whether Basic Rent, Supplemental Rent or otherwise, owing by
Lessee to Lessor, this Lease shall terminate and Lessor will transfer without
recourse or warranty to the purchaser thereof, all of Lessor's right, title and
interests in and to the Aircraft.  If no sale shall have occurred on the
Termination Date and Lessor has not notified Lessee pursuant to the next to the
last paragraph of this Section 21, this Lease shall continue in full force and
effect as to the Aircraft and Lessee shall pay the expenses incurred by Lessee
and Lessor in connection with the

                                      24
<PAGE>

proposed sale. Lessor may, but shall be under no duty to, solicit bids, inquire
into efforts of Lessee to obtain bids or otherwise take action in connection
with any such sale other than to transfer to the purchaser named in the highest
cash bid certified by Lessee to Lessor against payment therefor, without
recourse or warranty, all Lessor's right, title and interest in and to such
Aircraft.

     Lessor may, at any time within 30 days after it shall have received a
termination notice from Lessee, give written notice to Lessee that Lessor elects
irrevocably to terminate this Lease with respect to the Aircraft.

     If this Lease shall terminate as to the Aircraft pursuant to this Section
21, Lessee shall deliver the Aircraft to or at the direction of the Lessor in
the same manner as if delivery were made to Lessor under Section 17(b) hereof.

     22.  Net Lease. This Equipment Leasing Agreement is a net lease and Lessee
          ---------
acknowledges and agrees that Lessee's obligations hereunder, including, without
limitation, its obligations to pay all Rent payable hereunder, shall be absolute
and unconditional under any and all circumstances and shall be paid without
notice or demand and without any abatement, reduction, diminution, setoff,
defense, counter-claim or recoupment whatsoever, including, without limitation,
any abatement, reduction, diminution, setoff, defense, counter-claim or
recoupment due or alleged to be due to, or by reason of, any past, present or
future claims which Lessee may have against Lessor, any vendor or manufacturer
of the Equipment or any part thereof, or any other person for any reason
whatsoever; nor shall this Equipment Leasing Agreement terminate, for any other
reason whatsoever, whether similar or dissimilar to any of the foregoing, any
present or future law to the contrary notwithstanding; it being the intention of
the parties hereto that all Rent and other sums payable by Lessee hereunder
shall continue to be payable in all events and in the manner and at the times
herein provided, without notice or demand, unless the obligation to pay the same
shall be terminated pursuant to an express provision of this Equipment Leasing
Agreement.

     23.  Reports and Certificates.  At all times during the continuance of this
          ------------------------
Equipment Leasing Agreement and so long as any amount remains due and owing to
Lessor under this Equipment Leasing Agreement, the Lessee shall furnish to
Lessor:

     (a)  Within one hundred twenty (120) days after the close of its fiscal
year, an annual report of Lessee consisting of (i) its financial statements
including a balance sheet of Lessee as of the end of such fiscal year, and (ii)
statements of income for the year then ended, with all notes thereto in each
case certified as true and correct by the chief financial officer of Lessee;
provided that if Lessee shall have independent certified accountants prepare
such financial statements, Lessee shall furnish such financials to Lessor when
available.

     (b)  Within ninety (90) days after the close of each of the first three
quarterly periods of Lessee's fiscal year, a balance sheet of Lessee as of the
end of such quarter, and a statement of income and earnings for such quarter in
reasonable detail and scope and setting forth the corresponding figure for the
similar quarter certified as true and correct by the chief financial officer of
Lessee.

                                      25
<PAGE>

     (c)  Within the period set forth in (a) above, a certificate of a
responsible financial officer of Lessee stating:  (i) that he has reviewed the
activities of Lessee and that, to the best of his knowledge and upon reasonable
inquiry and investigation, there exists no Event of Default, as such term is
defined in this Equipment Leasing Agreement, and no event which, with the giving
of notice or the lapse of time, or both, would become such an Event of Default;
(ii) that the Equipment is in good operating condition and repair or otherwise
identifying each Unit of Equipment and specifying the repair thereto necessary
in order to maintain such Equipment as required hereunder; (iii) with respect to
insurance coverage then required in accordance with Section 8 of this Equipment
Leasing Agreement, the risks, the amounts and the carriers which have insured
the Units and attaching evidence of such coverage.  With respect to the
Aircraft, such financial officer of Lessee shall also provide Lessor within the
period set forth in (a) above, a Form of Lessee's Annual Aircraft Status
Certificate in the form attached hereto as Exhibit B.

     (d)  From time to time such other information relating to Lessee, including
non-financial information, as Lessor may reasonably request.

     24.  Leasing of Components.  (a)   Lessee may lease components for the
          ---------------------
purpose of upgrading the Equipment, no one of which constitutes a completed unit
of Equipment but all of which shall be assembled into a completed unit of
Equipment.  The completed unit of Equipment and each of the components thereof
shall be owned by Lessor and leased to Lessee hereunder.  A component Individual
Leasing Record shall be executed for each component of Equipment leased
hereunder, and each such component Individual Leasing Record shall be clearly
designated as such on the form of such Individual Leasing Record. The lease of
each component shall be effective from the date of delivery of such component
and the component Individual Leasing Record for such component shall be dated as
of such date.  When delivery is made on one or more components constituting less
than a completed unit of Equipment, Lessee shall cause all such delivered
components to be assembled into a completed unit of Equipment no later than
December 31, 2001 or within such longer period as may be agreed upon in writing
by Lessor.

     (b)  Subject to the provisions of Subsection 24(e) hereof, Lessee shall pay
Interim Rent to Lessor on a monthly basis for all components not yet assembled
into a completed Unit beginning on the date of the applicable component ILR and
continuing to and including the day before the commencement date of the
applicable final ILR.  As used in this Section "Interim Rent" for components
shall equal the product of:  (i) the aggregate acquisition cost of the
components, multiplied by (ii) a fraction having a numerator equal to the number
of days such components are under lease during such month and a denominator of
360, multiplied by (iii) the Percentage Rental Factor as provided for in
Subsection 1(s)(3).

     (c)  Upon assembly into a completed Unit, a final ILR shall be executed,
Basic Rent shall be computed, and the Basic Term shall be deemed to commence for
such Unit as of the date of the final ILR.  The final ILR shall be dated as of
the first day of the next succeeding month following assembly of the components
into a completed Unit.  The component ILRs for the components of the completed
Units shall be canceled on the same date the final ILR shall be dated.  The
acquisition cost

                                      26
<PAGE>

of the completed Unit shall be the sum of the acquisition costs of the
components thereof and all reasonable labor and other expenses incurred in
assembling the Unit, and shall be amortized as provided in Subsection 1(f).

     (d) Notwithstanding the foregoing, at least the provisions of Section 9 and
the first sentence of Section 11 of this Equipment Leasing Agreement shall apply
as between Lessor and Lessee with respect to all components from the time such
components are ordered by Lessor pursuant to a request from Lessee or from the
time such components are delivered to Lessee, whichever shall first occur.

     (e) At the option of the Lessee, Interim Rent may be capitalized and added
to Lessor's Cost hereunder on the last day of each month; provided, however, if,
at any time, Lessor's Cost plus Interim Rent shall exceed $22,300,000, Lessor
may deliver a notice to Lessee stating that Interim Rent shall no longer be
capitalized.  Capitalization of Interim Rent shall thereupon cease as of the
first day of the month following receipt of such notice.  If upon receipt of
such notice Lessor's Cost shall exceed $22,300,000, Lessee shall make an
additional payment to Lessor on the first day of the month following receipt of
such notice equal to such excess.  Lessee shall indicate its intention to
capitalize Interim Rent by indicating at the top of the appropriate ILR,
"Capitalized Interim Rent."

     25. Truth in Leasing.  LESSEE REPRESENTS, WARRANTS AND COVENANTS THAT ANY
         ----------------
USED AIRCRAFT LEASED UNDER THIS EQUIPMENT LEASING AGREEMENT HAVE BEEN MAINTAINED
AND INSPECTED UNDER FAR 91 AND 135 DURING THE PRECEDING TWELVE (12) MONTHS, AND
THAT ALL AIRCRAFT LEASED UNDER THIS EQUIPMENT LEASING AGREEMENT WILL BE
MAINTAINED AND INSPECTED UNDER FAR 91 AND 135 FOR OPERATIONS TO BE CONDUCTED
UNDER THIS EQUIPMENT LEASING AGREEMENT DURING THE DURATION OF THIS EQUIPMENT
LEASING AGREEMENT. CELL THERAPEUTICS CORPORATE DEVELOPMENT, INC., 201 ELLIOTT
AVENUE WEST, SUITE #400, SEATTLE, WASHINGTON  98119-4230 IS CONSIDERED
RESPONSIBLE FOR OPERATIONAL CONTROL OF ALL AIRCRAFT IDENTIFIED AND TO BE
OPERATED UNDER THIS EQUIPMENT LEASING AGREEMENT.  AN EXPLANATION OF THE FACTORS
BEARING ON OPERATIONS CONTROL AND THE PERTINENT FEDERAL AVIATION REGULATIONS CAN
BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE, GENERAL
AVIATION DISTRICT OFFICE, OR AIR CARRIER DISTRICT OFFICE. CELL THERAPEUTICS
CORPORATE DEVELOPMENT, INC. CERTIFIES THAT IT IS RESPONSIBLE FOR OPERATIONAL
CONTROL OF THE AIRCRAFT AND THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR
COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.

     26.  Closing Fees.  (a)  Work Fee.  Prior to the execution of this
          ------------        --------
Equipment Leasing Agreement, Lessor has acknowledged receipt of a work fee from
Lessee in an amount equal to $50,000 (the "Work Fee").  Upon execution of this
Equipment Leasing Agreement, the Work Fee may be applied to Lessee's first
rental payment less any out-of-pocket expenses incurred by Lessor; provided,
however, if Lessor fails to receive its internal credit approval for this
Equipment Leasing

                                      27
<PAGE>

Agreement and therefore Lessor and Lessee fail to execute this Equipment Leasing
Agreement, then such Work Fee shall be refunded to Lessee less any out-of-pocket
expenses incurred by Lessor.

     (b) Structuring Fee. Upon execution of this Equipment Leasing Agreement,
         ---------------
Lessee shall pay to Lessor a non-refundable structuring fee in an amount equal
to one-quarter of one percent (0.25%) of Lessor's Cost of the Aircraft.

     27. Miscellaneous.  (a)  THIS EQUIPMENT LEASING AGREEMENT AND ALL RIGHTS
         -------------
HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BUT WITHOUT REFERENCE TO ITS
PRINCIPLES GOVERNING CONFLICTS OF LAWS.

     (b) Each of the parties hereto acknowledges that the other party shall not
by act, delay, omission or otherwise be deemed to have waived any of its rights
or remedies hereunder or under any other instrument given hereunder unless such
waiver is given in writing and the same shall be binding to the extent therein
provided and only upon the parties signing the same.  A waiver on any one
occasion shall not be construed as a waiver on any future occasion.

     (c) This Equipment Leasing Agreement shall be binding upon and inure to the
benefit of the parties hereto, their permitted successors and assignees.

     (d) All rights, remedies and powers granted herein, or in any other
instrument given in connection herewith, shall be cumulative and may be
exercised singularly or cumulatively.

     (e) This Equipment Leasing Agreement constitutes the entire understanding
or agreement between Lessor and Lessee and there is no understanding or
agreement, oral or written, which is not set forth herein.  The Lessee agrees to
do such further acts and things and to execute and deliver to the Lessor such
additional agreements, powers and instruments as the Lessor may reasonably
require or deem advisable to carry into effect the purposes of this Equipment
Leasing Agreement or to better assure and confirm to the Lessor its rights,
powers and remedies under this Equipment Leasing Agreement.

     (f) Notices to Lessee required pursuant to this Equipment Leasing Agreement
shall be delivered to Cell Therapeutics Corporate Development, Inc. at 201
Elliott Avenue West, Suite #400, Seattle, Washington  98119-4230, Attention:
Louis A. Bianco, Director, or at such other location as Lessee may direct in
writing.  Notices to Lessor required pursuant to this Equipment Leasing
Agreement shall be delivered to Citiflight, Inc. c/o CitiCapital Bankers Leasing
at 450 Mamaroneck  Avenue, 4/th/ Floor, Harrison, New York  10528, Attention:
Business Credit Head, and Citiflight, Inc. at 79 Tower Road, Hangar E-2,
Westchester County Airport, White Plains, New York  10604, or at such other
location as Lessor may direct in writing.

                                      28
<PAGE>

     (g) This Equipment Leasing Agreement may be executed in two or more
counterparts, each of which, when taken together, shall constitute a single
agreement binding upon all the parties hereto.

     (h) If any provision of this Equipment Leasing Agreement is in conflict
with any statute or rule of law in the jurisdiction where it is sought to be
enforced, then such provision shall be deemed null and void to the extent that
it may be in conflict therewith, but without invalidating the remaining
provisions hereof.

     (i) No provisions of this Equipment Leasing Agreement are to be interpreted
for or against any party because that party or that party's legal counsel or
representative drafted such provision.

     (j) LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE THE RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS EQUIPMENT
LEASING AGREEMENT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LESSOR AND
LESSEE TO ENTER INTO THIS EQUIPMENT LEASING AGREEMENT.

     (k) NO EXECUTORY AGREEMENT SHALL BE EFFECTIVE TO CHANGE, MODIFY OR
DISCHARGE, IN WHOLE OR IN PART, THIS AMENDED AND RESTATED EQUIPMENT LEASING
AGREEMENT, OR ANY OTHER INSTRUMENT GIVEN IN CONNECTION HEREWITH UNLESS SUCH
AGREEMENT IS IN WRITING AND SIGNED BY LESSOR AND LESSEE.

                                      29
<PAGE>

     IN WITNESS WHEREOF, Lessor and Lessee have duly executed this Amended and
Restated Equipment Leasing Agreement as of the day and year first above written.

                                    CITIFLIGHT, INC., Lessor
Attest:

By: ____________________________
    Assistant Secretary             By: /s/ Alan H. Goldstein
                                        ------------------------------
                                    Title: TREASURER
                                           ---------------------------
Date:  11/13/01
     -----------------

                                    CELL THERAPEUTICS CORPORATE DEVELOPMENT,
                                    INC., Lessee
Attest:

By: /s/ Pavan Mohan                 By: /s/ Louis A. Bianco
    ----------------------------        ------------------------------
        Secretary
                                    Title: Director
                                           ---------------------------
Date: 11/2/01
      ----------------

                                      30<PAGE>

                                                                   EXHIBIT 10.42

                                      Portions of this Exhibit have been omitted
                                      pursuant to a request for confidential
                                      treatment. The omitted portions are marked
                                      *** and have been filed separately with
                                      the Commission.

                         PACLITAXEL PURCHASE AGREEMENT

THIS PACLITAXEL PURCHASE AGREEMENT (this "Agreement") is made effective as of
this 28th day of September, 2001 (the "Effective Date") by and between Natural
Pharmaceuticals, Inc., a Delaware corporation ("NPI"), having a place of
business at 100 Cummings Center, Suite 414G, Beverly, Massachusetts, 01915-6111
and Cell Therapeutics, Inc., a Washington corporation ("CTI"), having a place of
business at 201 Elliott Avenue West, Suite 400, Seattle, Washington, 98119.

                             W I T N E S S E T H:

     WHEREAS, CTI desires to purchase paclitaxel from NPI and NPI desires to
sell such paclitaxel to CTI in accordance with the terms and conditions set
forth herein.

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

Each of the capitalized terms used in this Agreement (other than the heading of
Articles and Sections), whether used in the singular or the plural, shall have
the meaning as set forth below or, if not listed below, the meaning as
designated in places throughout this Agreement.

1.1  "Act" shall mean the United States Food Drug and Cosmetic Act, as amended,
     and the rules and regulations promulgated thereunder.

1.2  "Active Pharmaceutical Ingredient" shall mean paclitaxel in any form other
     than as incorporated in a finished pharmaceutical product formulated,
     packaged, labeled and intended for use in human beings in a clinical
     setting as part of the CT-2103 Development Program (as hereinafter
     defined).

1.3  "Affiliate" shall mean any entity that directly or indirectly controls, is
     controlled by or is under common control with a party to this Agreement. As
     used in this Section 1.3, "control" shall mean the possession, direct or
                  -----------
     indirect, of the power to direct or cause the direction of the management
     or the policies of the entity, whether through the ownership of voting
     securities, by contract or otherwise.

                                       1
<PAGE>

1.4  "Business Days" shall mean days other than Saturday, Sunday and legal
     holidays.

1.5  "Certificate of Analysis" shall mean the certificate of chemical
     analysis in the form of Exhibit A attached hereto accompanying (i) each
                             ---------
     delivery of Product (as hereinafter defined) delivered hereunder in
     accordance with Section 9 of this Agreement and the Specifications (as
                     ---------
     hereinafter defined) or (ii) any repurchase of Product by NPI pursuant to
     Section 3.2(c) of this Agreement and the Specifications.

1.6  "cGMP" shall mean the current Good Manufacturing Practices regulations
     at 21 CFR, Parts 210 and 211, as promulgated by the FDA (as hereinafter
     defined) and as may be modified from time to time by the FDA.

1.7  "CT-2103 Development Program" shall mean CTI's development program
     using polyglutamate cojugated paclitaxel for the treatment of disease.

1.8  "CTI Product" shall mean any product sold or used by CTI that
     incorporates Product.

1.9  "Days" shall mean calendar days, unless otherwise specified, provided
     that if a deadline falls on a Saturday, Sunday, or legal holiday, it shall
     be extended until the following regular Business Day.

1.10 "DMF" shall mean the Drug Master File submitted to the FDA by NPI or
     other similar document submitted to a regulatory authority for the purpose
     of registration that maintains the confidentiality of information
     proprietary to NPI in connection with Product.

1.11 "FDA" shall mean the United States Food and Drug Administration, or
     any successor entity thereto.

1.12 "ICH" shall mean the International Conference on Harmonization, or any
     successor entity thereto.

1.13 "Kg" shall mean kilograms.

1.14 "Liquidation" shall mean any liquidation, reorganization, dissolution
     or winding up of the affairs of an entity, whether voluntary or
     involuntary, or the appointment of any trustee, receiver or conservator for
     any assets of such entity.

1.15 "Price" shall mean *** of Product, exclusive of any commissions,
     bonds, levees, insurance, taxes, delivery charges and other similar
     amounts. All Prices and other amounts in this Agreement shall be construed
     to be in U.S. dollars ($U.S.).

1.16 "Product" shall mean *** of paclitaxel to be supplied by NPI pursuant
     to this Agreement and in accordance with cGMP, conforming to the
     Specifications and the DMF.

____________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       2
<PAGE>

1.17 "Specifications" shall mean the specifications for Product set forth
     in Schedule A attached to, and made a part of, this Agreement.  The
        ----------
     Specifications shall not be modified without the written agreement of both
     parties expressly referring to this Agreement and the Specifications.

                                   ARTICLE 2

                             MANUFACTURE AND SALE

2.1  Subject to the terms and conditions set forth herein, NPI agrees to make
     commercially reasonable efforts to manufacture, or have manufactured, and
     sell Product to CTI, and CTI agrees to purchase Product as provided herein.

2.2  The purchase and sale of Product shall be made in the amounts and on the
     dates as set forth in Schedule B attached to, and made a part of, this
                           ----------
     Agreement.

                                   ARTICLE 3

                               CERTAIN COVENANTS

3.1  NPI hereby covenants and agrees with CTI that NPI shall conduct its, and
     shall use commercially reasonably efforts to cause its Affiliates and
     subcontractors to conduct their, Product manufacturing operations in
     compliance with all applicable U.S. regulations, including, but not limited
     to, those dealing with occupational safety and health, public safety and
     health, protection of the environment and the disposal of wastes.

3.2  CTI hereby covenants and agrees with NPI as follows:

     (a) CTI shall store Product in compliance with cGMP and maintain the cGMP
         status of such Product from the time of delivery by NPI;

     (b) CTI shall provide written notice to NPI of any adverse reaction with
         Product that is attributed, or which may be attributed, to Product and
         in any event, no later than *** following the determination of such
         adverse reaction, and shall provide NPI with such details as NPI may
         reasonably request relating thereto; and

     (c)  ***.

3.3  Each of NPI and CTI covenants and agrees with the other as follows:

     (a)  If the FDA or any other U.S., foreign or international regulatory
          agency requires a change in the Specifications including, but not
          limited to, the raw materials,

____________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       3
<PAGE>

          sources of raw material or analytical testing method with respect to
          Product, NPI shall at its expense use its reasonable commercial
          efforts to make the change so required by the FDA, or such other
          regulatory agency in the lawful exercise of its jurisdiction. In the
          event that NPI fails to initiate action to make any such required
          change within *** of any request for such change from the FDA or any
          other U.S., foreign or international regulatory agency, CTI may
          immediately terminate this Agreement by providing written notice in
          accordance with the terms hereof;

     (b)  If either CTI or NPI sends a written request to the other party for a
          change in the manufacturing process and the DMF, the Specifications,
          the raw materials, sources of raw material, other than originating
          from Yew trees, or analytical testing method with respect to Product,
          that is not the result of a requirement of the FDA or any other U.S.,
          foreign or international regulatory agency, such other party shall use
          its reasonable commercial efforts to accommodate such request. The
          party requesting such change shall pay all reasonable expenses of the
          other party which are required to make such change and the parties
          will negotiate in good faith a new price for Product taking into
          account any reduced or increased costs associated with such change;

     (c)  Each of CTI and NPI shall promptly, but in any event no later than
          ***, forward to the other copies of any written communication received
          by them from the FDA or other U.S. (including federal, state or
          local), foreign or international regulatory agency that may affect the
          manufacture and sale of Product, as contemplated herein and any
          response to such communication. CTI may provide any such communication
          forwarded to CTI by NPI to third parties upon written notification to
          NPI; and

     (d)  During the term of this Agreement and at all times thereafter, NPI and
          CTI shall keep each other promptly and fully informed of any
          notification or other information received directly or indirectly that
          may affect the marketability, safety or effectiveness of Product.

                                   ARTICLE 4

                          PRICE AND TERMS OF PAYMENT

4.1  The Price for each kilogram of Product delivered pursuant to this Agreement
     shall be ***, with an aggregate Price of ***, payable in United States
     dollars.  Payment will be made in *** installments of ***.  Each shipment
     of Product shall be accompanied by an invoice showing the amount, Price and
     corresponding deduction from the aggregate amount pre-paid by CTI to NPI
     pursuant to this Section 4.1.
                      -----------

____________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       4
<PAGE>

4.2  Notwithstanding any prior inspection or payments, all Product will be
     subject to final inspection and acceptance at CTI's location or other
     destination point within *** after receipt. In case any Product is
     defective or does not meet the Specifications, CTI will have the right to
     reject it by written notice to NPI within *** after receipt. Such notice
     shall include copies of all test records and results relating to the
     returned Product. All Product testing will be done in accordance with the
     procedures set forth in Article 9 hereof. The warranty set forth in
                             ---------
     Article 11 hereof shall survive any acceptance of Product by CTI. CTI will
     ----------
     not be required to pay for any such defective or non-conforming Product, or
     its shipping costs or any other costs related thereto, unless and until it
     is promptly replaced.  CTI will return all defective or non-conforming
     Product to NPI at NPI's expense.

4.3  CTI shall be responsible for sales, use, or custom taxes or duties
     resulting from the sale or delivery of Product.  CTI shall provide tax
     exemption numbers, if applicable, for such purchases.

                                   ARTICLE 5

                             SHIPPING AND DELIVERY

5.1  All deliveries of Product under this Agreement shall be made F.O.B. to a
     location within the United States of America as designated by CTI.  If the
     material is stored by NPI, then delivery shall be deemed to occur when NPI
     provides written notice of release and delivery in accordance with the
     terms hereof.  CTI shall use commercially reasonable efforts to specify
     destination of delivery at least *** prior to each of the delivery dates
     set forth in Schedule B attached hereto.  The packaging for shipment shall
                  ----------
     be in accordance with good commercial practice with respect to protection
     of Product during transportation.  Environmental conditions during shipment
     shall be specified in the Specifications.  NPI shall pay all freight,
     inspection fees and other charges applicable to the sale and transportation
     of Product purchased by CTI.  Title and risk of loss and damages to Product
     shall pass to CTI upon CTI's receipt of Product at its designated
     destination.

5.2  If Product is designated for export, CTI is responsible, at its expense,
     for assuring compliance with applicable export, health and safety laws and
     all freight and duty regulations and will provide NPI with instructions for
     the handling of such export shipments and shall reimburse NPI for all costs
     associated therewith.

5.3  NPI shall deliver Product ordered by CTI within *** of each of the delivery
     dates set forth on Schedule B.  NPI shall immediately notify CTI of any
                        ----------
     anticipated late deliveries and any impending plant or facility shutdowns
     for any reason, including vacation, tool repair, labor difficulties or
     governmental order, which may adversely impact the scheduled delivery
     dates.  In the event that NPI is delinquent with respect to delivery of
     Product to CTI for reasons other than those reasonably attributable to CTI
     or in

____________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       5
<PAGE>

     accordance with Section 18.9 hereof, NPI shall produce and deliver such
                     ------------
     Product to CTI in the most commercially expeditious manner possible and the
     payment of premium costs associated with the production and shipment of
     Product shall be at NPI's expense. The rights and obligations of the
     parties under this Section 5.3 shall not apply to the extent that any delay
                        -----------
     in delivering Product is caused by a relevant delay in performance by CTI
     of its obligations under this Agreement.

5.4  Notwithstanding any of the foregoing provisions of this Article 5, CTI may
                                                             ---------
     defer any scheduled delivery for *** by providing NPI with written notice
     of such deferral *** prior to the scheduled delivery date; provided,
     however, CTI may not deter any scheduled delivery if CTI has accelerated
     such delivery pursuant to Section 5.5 below or if NPI has accelerated such
                               -----------
     delivery pursuant to Section 5.6 below.
                          -----------

5.5  NPI and CTI shall negotiate in good faith any request by CTI to accelerate
     the delivery schedule set forth in Schedule B.  NPI and CTI acknowledge and
                                        -----------
     agree that such acceleration may increase the cost of production of Product
     and therefore may require an increase in the price of Product.

5.6  NPI and CTI hereby agree that NPI may, at its sole discretion, accelerate
     the delivery schedule set forth in Schedule B; provided, however, NPI shall
                                        ----------
     provide CTI with written notice of such acceleration at least *** prior to
     each of the scheduled delivery dates subject to such acceleration.  If NPI
     accelerates the delivery schedule pursuant to this Section 5.6, there shall
                                                        -----------
     be no increase in the price of Product.

                                   ARTICLE 6

                                      ***

6.1  ***.

6.2  ***.

6.3  ***.

                                   ARTICLE 7

                                     TITLE

7.1  Title to Product will pass to CTI upon delivery to the site designated by
     CTI.  Subject to ***, NPI will grant to CTI a security interest in Product
     scheduled to be delivered to CTI hereunder and NPI's rights and obligation
     under *** pursuant to the terms and conditions of the Security Agreement
     executed contemporaneously with this Agreement.

____________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       6
<PAGE>

7.2  In the event of a Liquidation of NPI, NPI hereby agrees that NPI shall (i)
     assign its rights and obligations under *** to CTI, (ii) grant CTI a
     royalty-free sublicense in all of NPI's information, know-how, trade
     secrets, and intellectual property required to produce Product, (iii) give
     CTI access to the DMF and all records that support the DMF including, but
     not limited to, batch production records; provided, however, such
     Liquidation occurs prior to the earlier of (a) NPI's delivery and CTI's
     acceptance of an aggregate of *** of Product and (b) such time that (x)
     Product delivered and accepted by CTI equals or exceeds *** and (y) Product
     in NPI's inventory designated for CTI as set forth in this Agreement
     exceeds ***.

                                   ARTICLE 8

                                    PACKING

8.1  All Product shipped hereunder shall be packed by NPI in accordance with the
     DMF, at no additional charge to CTI, in containers  that comply with FDA
     and International Air Transport Association regulations.

8.2  All Product (i) *** or (ii)

     rejected by CTI pursuant to Section 4.2 above shall be packed by CTI in
                                 -----------
     containers that comply with  FDA and International Air Transport
     Association regulations. ***

                                   ARTICLE 9

                      SAMPLE TESTING & FDA QUALIFICATION

9.1  NPI or its subcontractor shall assay and analyze samples from each batch of
     Product and prepare a Certificate of Analysis stating compliance with the
     Specifications.  NPI shall provide CTI with a copy of such Certificates of
     Analysis with each shipment.

9.2  In testing Product shipped hereunder, NPI or its subcontractor and CTI
     shall use the analytical testing methods that are documented, validated to
     meet ICH guidelines by NPI and mutually agreed upon in good faith in
     writing by NPI and CTI.  At the request of CTI, NPI shall provide such
     methods for CTI's, or its designees, use and shall assist in their transfer
     to CTI or its designee for the purposes of testing Product, at CTI's
     expense.  Pursuant to Section 4.2 hereof, CTI shall analyze Product within
                           -----------
     *** from the date of receipt of Product and shall report any non-
     conformance with Specifications to NPI within *** from such date of
     receipt.  NPI shall use commercially reasonable efforts to replace each
     shipment or Product that does not conform with the Specifications with
     Product that does so conform as soon as reasonably practical after receipt
     of notice of rejection thereof, and in any event shall do so within ***.

9.3  CTI shall represent to NPI that any Product returned to NPI for replacement
     shall have been properly stored by CTI in accordance with the
     Specifications at all times and CTI shall be responsible for any Product
     not so stored.

____________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       7
<PAGE>

9.4  NPI shall analyze Product that is returned to NPI by CTI for replacement
     pursuant to Section 4.2 and shall inform CTI within *** upon receipt of
                 -----------
     such rejected Product of the results of NPI's analysis.  In the event that
     CTI and NPI agree that any quantity of Product failed to comply with the
     Specifications at the time of receipt by CTI, the shipping cost of
     replacement (including freight and insurance) shall be borne by NPI, and
     otherwise by CTI. In case of a disagreement between the parties, Product in
     question shall be submitted for tests, according to mutually agreed
     procedures, and decision to a mutually acceptable laboratory, the
     appointment of which shall not be unreasonably withheld or delayed by
     either party.  The determination of such entity with respect to all or part
     of any shipment of Product shall be final and binding upon the parties.
     The fees and expenses of the laboratory making such determination shall be
     paid by the party against which the determination is made.

9.5  NPI will provide full support and comply with all requests for reasonable
     documentation, information or analyses that CTI may require in connection
     with submissions to, or audits required by, any U.S. or foreign regulatory
     authorities.  CTI shall submit all such requests to NPI in writing.

                                   ARTICLE 10

                                  INSPECTIONS

10.1 NPI will allow CTI into its facility, and the facilities of its Affiliates,
     used in manufacturing Product, and will use commercially reasonable efforts
     to cause its subcontractors to allow CTI into their facilities
     manufacturing Product pursuant to this Agreement, so that any of the
     Product and manufacturing or testing processes may be inspected, upon
     reasonable prior written notice as long as any such inspection will not
     unduly interfere with NPI's or its Affiliates' and subcontractors'
     operations and is conducted at times reasonably acceptable to NPI, its
     Affiliate or subcontractor.  CTI, its agents and its employees shall comply
     with all NPI rules and procedures when in or on NPI's premises and all
     rules and procedures of NPI's Affiliates and subcontractors when in or on
     their respective premises.

10.2 NPI shall maintain manufacturing records, logs and other traceability
     information for Product delivered as NPI would create in the normal course
     of operations or as required by FDA regulations, for a period of *** (or
     such longer period as may be required for CTI to comply with FDA or other
     applicable U.S. or foreign rules and regulations and as to which it has
     informed NPI in writing) after either the expiration or termination of this
     Agreement and shall make such information available to CTI on request.

                                   ARTICLE 11

                                    WARRANTY

______________________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       8
<PAGE>

11.1 NPI warrants that, at the time of delivery, Product manufactured hereunder
     will comply with the Specifications and the DMF and conform with the DMF
     and the information shown on the Certificate of Analysis provided with
     shipment of such Product.  The foregoing warranty does not apply if damage
     arises from mishandling, abuse, improper storage, improper other service or
     maintenance, or misuse (including, without limitation, any use of Product
     beyond the environmental parameters set forth in the applicable
     Specifications and the DMF) in each case other than by NPI, its Affiliates
     or subcontractors; or damage by fire, explosion, power failure, power surge
     or other power irregularity (beyond such parameters which are set forth in
     the Specifications and the DMF), in each case after Product has been
     delivered to CTI pursuant to this Agreement.

11.2 NPI further warrants that Product delivered to CTI hereunder is free and
     clear of all liens and encumbrances at the time of delivery other than
     those created by CTI.

11.3 NPI has good and marketable title to Product, and the right to sell Product
     to CTI in accordance with this Agreement.

11.4 NPI warrants that Product shipped by NPI to CTI hereunder shall not be
     "adulterated" or "misbranded" within the meaning of the Act.

11.5 NPI represents and warrants that (i) it has power to assign its rights and
     obligations under *** to CTI, (ii) its rights in and under *** are free and
     clear of all adverse claims, security interests and restrictions on
     transfer or pledge except as created by the Security Agreement, dated as of
     the date of this Agreement, between NPI and CTI and (iii) NPI has the right
     to grant to CTI a royalty-free sublicense in all NPI information, know-how,
     trade secrets and intellectual property required to produce Product.

11.6 NPI is not debarred under the Act and it does not and will not knowingly
     use in any capacity the services of any person debarred under the Act.
     Neither, NPI, nor, to the best of its knowledge, any of its employees,
     agents or contractors has engaged in any activity that could lead to NPI
     becoming debarred under the Act.

11.7 As of the Effective Date of this Agreement, NPI warrants to that, to the
     best of its knowledge, the NPI processes for manufacture of Product do not
     infringe upon any third party rights including, but not limited to,
     intellectual property rights.

11.8 DISCLAIMER.  THE FOREGOING WARRANTIES CONSTITUTE THE ONLY WARRANTIES,
     GUARANTEES OR CONDITIONS WITH RESPECT TO PRODUCT. SUCH WARRANTIES ARE IN
     LIEU OF ALL OTHER WARRANTIES, GUARANTEES OR CONDITIONS, WRITTEN OR ORAL,
     STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY
     OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT.

______________________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       9
<PAGE>

                                   ARTICLE 12

                                INDEMNIFICATION

12.1 CTI will defend, indemnify and hold harmless NPI, each Affiliate of NPI,
     and their respective officers, directors, employees and agents against any
     out-of-pocket loss, damage, fine, penalty, action, suit, claim, demand,
     prosecution, liability or expense, including, without limitation, product
     liability claims and costs (all referred to hereinafter as "Claim") that
     may be brought, instituted or arise against or be incurred by NPI or any
     such Affiliate, officer, director, employee or agent to the extent such
     Claim is based on, or arises out of, the use or sale by CTI or its
     Affiliates of Product, or any intermediate or final products into which CTI
     or its Affiliate incorporates Product, including, without limitation, any
     investigation by a government agency or any claim for personal injury or
     property damage asserted with respect to the use of Product, or any
     intermediate or final products into which CTI  or its Affiliate
     incorporates Product; provided, however, that CTI will not indemnify and
     hold harmless NPI, each Affiliate of NPI, and their respective officers,
     directors, employees and agents from any Claim to the extent such Claim is
     based on, or arises out of, a breach of the warranties set forth in Article
                                                                         -------
     11 or NPI's gross negligence or willful misconduct in performing its
     --
     obligations hereunder.

12.2 NPI will defend, indemnify and hold harmless CTI, each Affiliate of CTI,
     and their respective officers, directors, employees, and agents against any
     out-of-pocket Claim that may be brought, instituted or arise against, or be
     incurred by, CTI or any such Affiliate or, officer, director, employee or
     agent to the extent such Claim is based on injury to a third party arising
     out of NPI's breach of warranties set forth in Article 11 or NPI's gross
                                                    ----------
     negligence or willful misconduct in performing its obligations hereunder.

12.3 NPI shall maintain comprehensive general liability ("CGL") insurance,
     including broad form contractual liability and product liability coverages,
     in an amount of at least *** for bodily injury and property damage.  CTI
     shall be named as an additional insured under NPI's CGL policy.  NPI shall
     also purchase and maintain adequate insurance coverage for damage to
     Product during shipment and during storage by NPI pursuant to Section 5.1
                                                                   -----------
     hereof.  NPI shall maintain such insurance for a period of five (5) years
     from the date of this Agreement.  Upon request, NPI shall provide CTI with
     a certificate of insurance as evidence of the requested coverages and shall
     give CTI at least thirty (30) Days notice of any cancellation, termination
     or change in such insurance.

                                   ARTICLE 13

                            LIMITATION OF LIABILITY

EXCEPT FOR SECURITY INTERESTS REFERENCED IN ARTICLE 7 AND WITH THE EXCEPTION OF
                                            ---------
VIOLATIONS OF ARTICLE 14 BELOW, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
              ----------
INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL

______________________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       10
<PAGE>

DAMAGES, LOSS OF PROFITS, LOSS OF USE, OR DATA OR INTERRUPTION OF BUSINESS,
WHETHER SUCH ALLEGED DAMAGES ARE LABELED IN TORT, CONTRACT, OR INDEMNITY, EVEN
IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. WITH THE
EXCEPTION OF VIOLATIONS OF ARTICLE 14 BELOW AND PURSUANT TO ARTICLE 12 ABOVE,
                           ----------                       ----------
IN NO EVENT SHALL NPI BE LIABLE FOR DAMAGES FOR ANY CAUSE WHATSOEVER, INCLUDING
BUT NOT LIMITED TO BREACH OF CONTRACT (INCLUDING FUNDAMENTAL BREACH), TORT
(INCLUDING NEGLIGENCE), INDEMNITY OR OTHERWISE, IN AN AMOUNT IN EXCESS OF, IN
THE AGGREGATE, THE PAYMENTS RECEIVED BY NPI FROM CTI PURSUANT TO THIS AGREEMENT
TO THE DATE OF SUCH LIABILITY, OR ***, WHICHEVER IS GREATER.  EXCEPT FOR
SECURITY INTERESTS REFERRED IN ARTICLE 7 AND WITH THE EXCEPTION OF VIOLATIONS
                               ----------
OF ARTICLE 14 BELOW AND PURSUANT TO ARTICLE 12 ABOVE, IN NO EVENT SHALL CTI BE
   ---------                        ----------
LIABLE FOR DAMAGES FOR ANY CAUSE WHATSOEVER, INCLUDING BUT NOT LIMITED TO BREACH
OF CONTRACT (INCLUDING FUNDAMENTAL BREACH), TORT (INCLUDING NEGLIGENCE),
INDEMNITY OR OTHERWISE, IN AN AMOUNT IN EXCESS OF, IN THE AGGREGATE, THE
PAYMENTS PAID AND/OR DUE TO NPI FROM CTI PURSUANT TO THIS AGREEMENT TO THE DATE
OF SUCH LIABILITY, OR ***, WHICHEVER IS GREATER.

                                   ARTICLE 14

          INTELLECTUAL PROPERTY RIGHTS AND CONFIDENTIALITY PROVISIONS

All technical information, specifications, drawings, documentation and "know-
how" of every kind and description whatsoever disclosed in writing and
identified as confidential by either party to the other under this Agreement
(the "Information"), except insofar as it may be in the public domain or be
established to have been independently developed and so documented by the other
party or obtained by any person not in breach of any confidentiality obligations
to the disclosing party, is the exclusive property of the disclosing party. The
recipient party, except as specifically authorized in writing by the disclosing
party, or as permitted hereunder, shall treat and protect the Information as
confidential, shall not reproduce the Information except to the extent
reasonably required for the performance of this Agreement, shall not divulge the
Information in whole or in part to any third parties (except for, in the case of
NPI, NPI Affiliates, subcontractors and suppliers as necessary for NPI's
performance under this Agreement and except in the case of CTI, CTI Affiliates,
and in each such case, who have agreed, in writing, to be bound by the
confidentiality provisions set forth above) and shall use the Information only
for purposes necessary for the performance of this Agreement or as may be
required for the use of Product provided hereunder.  This obligation shall
survive the completion of this Agreement for a period of five (5) years.  Each
party shall disclose the Information only to those of its employees or agents
who shall have a "need-to-know" the Information for the purposes described
herein after such employees or agents have agreed, in writing, to be bound by
the confidentiality obligations set forth above.  CTI acknowledges and agrees
that NPI shall be the owner of all

______________________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       11
<PAGE>

patent, copyright, trademark, trade secret and other industrial or intellectual
property rights in any Product supplied by NPI to CTI. NPI acknowledges and
agrees CTI shall be the owner of all patent, copyright, trademark, trade secret
and other industrial or intellectual property rights in CTI Product, except as
set forth in the preceding sentence.

                                   ARTICLE 15

                                  TERMINATION

15.1 Unless earlier terminated pursuant to the terms hereof, this Agreement
     shall terminate on the date upon which all of the purchase, sale and
     delivery obligations of the parties hereunder have been satisfied in
     accordance herewith or *** from the Effective Date hereof, whichever is
     later.

15.2 This Agreement may be terminated by either party upon written notice by
     reason of a material breach by the other party; provided, that the
     breaching party fails to remedy such breach within *** after written notice
     thereof.  Notwithstanding the foregoing, (i) in the event of a non-monetary
     breach that cannot be cured within such *** period, the notifying party
     cannot terminate this Agreement if the breaching party continues to use
     diligent efforts to cure such breach until actually cured; provided,
     however, that the notifying party may terminate this Agreement if such
     breach is not cured within *** of the original notice of breach, and (ii)
     in the event a breach cannot in good faith be cured using commercially
     reasonable efforts, the breaching party may terminate this Agreement by
     notice to the other party given in writing *** after the occurrence of such
     breach.

15.3 Either party may terminate this Agreement upon the Liquidation of the other
     party.

                                   ARTICLE 16

                              ACCRUED OBLIGATIONS

No termination or expiry of this Agreement shall release any party from any
obligation (including payment obligations) that have accrued or become payable
at or prior to the date of termination or expiry.

                                   ARTICLE 17

                                  ARBITRATION

Except with respect to the provisions contained in Article 14 hereof, any
                                                   ----------
dispute or controversy relating to the validity, construction and performance of
this Agreement or the breach or termination of this Agreement will be settled by
binding arbitration before three arbitrators.  Each party shall select one
arbitrator and the two arbitrators selected by the parties shall select a third.
If the arbitration proceeding is requested by NPI, such proceeding shall take
place in the

______________________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       12
<PAGE>

City of Boston, Massachusetts.  If the arbitration proceeding is requested by
CTI, such proceeding shall take place in the City of Seattle, Washington.  Such
arbitration shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, as modified by this Article 17 or
                                                                   ----------
by further written agreement of the parties.  No discovery shall be permitted by
the arbitrators under the aforesaid rules. The arbitrators shall be selected
from a panel of persons (such as retired jurists or distinguished legal or
business professionals) knowledgeable in the specific areas that may be relevant
to the dispute or controversy and who have had more than ten (10) years of
relevant experience in such areas. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The parties
each shall give the other not less than sixty (60) Days prior written notice of
any intention to submit any controversy or claim relating to this Agreement to
arbitration. During such 60-Day period, the parties shall engage in discussions
and pursue alternative dispute resolutions mechanisms (such as the appointment
of a mutually agreeable mediator if deemed appropriate by either party) in a
good faith effort to resolve such controversy or claim without resorting to
arbitration. The arbitrators shall have the right to award to the prevailing
party in such arbitration an amount equal to some or all of the attorney's fees
and other costs and expenses incurred by such prevailing party in the
arbitration. In furtherance of the foregoing, neither party shall commence any
legal proceeding relating to this Agreement against the other party in any court
in any jurisdiction, except for a proceeding to enforce any award by the
arbitrators.

                                   ARTICLE 18

                                    GENERAL

18.1 SEVERABILITY.  In the event that any provision of this Agreement is found
     to be invalid, voidable or unenforceable, the parties agree that unless
     such provision materially affects the entire intent and purpose of this
     Agreement, such invalidity, voidability or unenforceability shall affect
     neither the validity of this Agreement nor the remaining portions hereof,
     and that the provision in question shall be deemed to be replaced with a
     valid and enforceable provision most closely reflecting the intent and
     purpose of the original provision.

18.2 SURVIVAL.  Notwithstanding any termination or expiry of this Agreement, the
     provisions of Articles 1 (Definitions), 4 (Price and Payment Terms), 7
     (Title), 11 (Warranty), 12 (Indemnification), 13 (Limitation of Liability),
     14 (Intellectual Property Rights and Confidentiality Provisions), 15
     (Termination), 16 (Accrued Obligations), 17 (Arbitration), 18 (General),
     the provisions of Sections 3.3d, 6.2 and 10.2 and all consequent rights,
     obligations and liabilities shall survive the termination or the expiry of
     this Agreement.

18.3 ASSIGNMENT.  Neither party shall assign its rights or delegate its duties
     under this Agreement without the prior written consent of the other;
     provided, such consent shall not be unreasonably withheld; provided,
     further, that CTI may assign all of its rights hereunder as part of a sale
     of substantially all of the assets or business of CTI and NPI may assign
     all of its obligations hereunder as part of a sale of substantially all of
     the

                                       13
<PAGE>

     assets or business of NPI or its Affiliates used in fulfilling such
     obligations, subject to the terms hereof.  Notwithstanding the foregoing,
     NPI shall have the right to delegate or assign this Agreement to any
     Affiliate subject to the prior written consent of CTI, which consent shall
     not be unreasonably withheld.  NPI may subcontract any of its obligations
     hereunder with the prior written consent of CTI, provided such consent is
     not unreasonably withheld.  This Agreement shall inure to the benefit of
     its successors and assigns.

18.4 WAIVER.  The failure of either party to enforce at any time or for any
     period of time any of the provisions of this Agreement shall not constitute
     a waiver of such provisions or the right of either party to enforce each
     and every provision.

18.5 GOVERNING LAW.  The rights and obligations arising under the Agreement
     shall be governed by and construed in accordance with the laws of the State
     of New York and the federal laws of the United States applicable therein,
     without regard to its conflicts of law rules.

18.6 NOTICES.

          18.6.1  Any and all notices or other information required to be given
                  by one of the parties to the other shall be deemed
                  sufficiently given when forwarded by prepaid registered mail
                  return receipt requested, overnight delivery service, cable,
                  telegrams, facsimile, telex or hand-delivery to the other
                  party at the following address:

                  CTI -
                  Cell Therapeutics, Inc.
                  201 Elliott Avenue West, Suite 400
                  Seattle, Washington, 98119
                  Attention:  Chief Operating Officer
                  Fax:  (206) 213-8300

                  Copy to:
                  Cell Therapeutics, Inc.
                  201 Elliott Avenue West, Suite 400
                  Seattle, Washington 98119
                  Attention:  Legal Affairs
                  Fax:  (206) 270-8397

______________________________
* The information above marked by *** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.

                                       14
<PAGE>

                    NPI
                    -Natural Pharmaceuticals, Inc.
                    100 Cummings Center, Suite 414G
                    Beverly, Massachusetts 01915
                    Attention: Dr. Roland R. Franke
                    Fax: 978-524-8156

                    Copy to:
                    Heller Ehrman White & McAuliffe LLP
                    101 Orchard Ridge Drive, Suite 300
                    Gaithersburg, Maryland 20878
                    Attention:  Leslie E. Davis, Esq.
                    Fax:  301-721-6299

          18.6.2    Such notices shall be deemed to have been received seven (7)
                    Days after mailing if forwarded by mail, and the following
                    Day if forwarded by telegram, telex, overnight service,
                    facsimile or hand delivery.

          18.6.3    The aforementioned address of either party may be changed at
                    any time by giving fifteen (15) Days prior notice to the
                    other party in accordance with the foregoing.

          18.6.4    In the event of a generally prevailing labor dispute or
                    other situation which will delay or impede the giving of
                    notice by any such means, the notice shall be given by such
                    specified mode as will be most reliable and expeditious and
                    least affected by such dispute or situation.

18.7 U.N. CONVENTION ON CONTRACTS. The parties agree that the U.N. Convention on
     Contracts for the International Sale of Goods (Vienna, 1980) and the 1974
     Convention on the Limitation Period in the International Sale of Goods (the
     "1974 Convention") and the Protocol amending the 1974 Convention, done at
     Vienna April 11, 1980, shall not apply to this Agreement nor to any dispute
     or transaction arising out of this Agreement.

18.8 PUBLICITY. Prior to the publication or use by a party hereto of any
     advertising, sale promotions, press releases or other publicity matters
     relating to Product or this Agreement in which the names or logo of the
     other party is mentioned or can be reasonably inferred, the party shall
     obtain the prior written consent of the other party. Such consent shall not
     be unreasonably withheld. Terms, conditions, and general terms of this
     Agreement shall be held in confidence by both parties and only disclosed as
     may be agreed to in writing by both parties or as may be required to meet
     securities disclosure or export permit requirements or as may be otherwise
     required by applicable law. Neither party shall make public statements or
     issue publicity or media releases with regard to this Agreement or the
     relationship between the parties without the prior written approval of the
     other party, except as may be otherwise required by law, securities
     regulators or stock exchange regulations. Nothing herein shall prevent a
     party from

_________________________
* The information above marked by *** has been omitted by a request for
confidential treatment.  The omitted portion has been separately filed with the
Commission.

                                       15
<PAGE>

       disclosing the terms of this Agreement to potential investors as
       reasonably required by such potential investors to evaluate a potential
       investment in, or purchase of assets of, such party, provided that all
       such potential investors agree in writing to keep such information in
       confidence and to use such information solely for purposes of evaluating
       the business and financial condition of such party. Notwithstanding
       anything to the contrary, CTI shall have the right to issue a press
       release announcing the execution of this Agreement subject to the
       approval, that shall not be unreasonably withheld, of such press release
       by NPI.

18.9   FORCE MAJEURE. Neither party shall be responsible or liable to the other
       party for any delay or failure to perform hereunder, other than the
       failure to pay money when due, if such delay or failure results from
       fire, explosion, labor dispute, earthquake, casualty or accident, lack or
       failure of transportation facilities, epidemic, flood, drought, or by
       reason of war, declared or undeclared, revolution, civil commotion, the
       act of a public enemy, blockade or embargo, act of God, any inability to
       obtain any requisite license, permit or authorization, or by reason of
       law, proclamation, regulation, ordinance, demand, or requirement of any
       government or by reason of any other cause whatsoever, whether similar or
       dissimilar to those enumerated, beyond the reasonable control of the
       party. With respect to labor disputes as described above, no party shall
       be obligated to accede to any demands being made by employees or other
       personnel. All such causes will delay performance hereunder for a period
       equal to the delay resulting from any such causes and such additional
       period as may be reasonably necessary to allow the party to resume its
       obligations (not to exceed sixty (60) Days).

18.10  REPRESENTATION OF CORPORATE AUTHORITY. Each of NPI and CTI represents and
       warrants to the other that (i) it has the full right, power and corporate
       authority to enter into this Agreement and to make the promises set forth
       in this Agreement and that there are no outstanding agreements,
       assignments or encumbrances in existence inconsistent with the provisions
       of this Agreement, and (ii) the execution, delivery and performance of
       this Agreement does not conflict with any agreement, instrument or
       understanding, oral or written, to which it is a party or by which it is
       bound, nor to its knowledge, violate any law or regulation of any court,
       governmental body or administrative or other agency having jurisdiction
       over it.

18.11  ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules hereto
       set forth the entire agreement and understanding between the parties and
       supersede and cancel all previous negotiations, agreements, commitments
       and writings in respect of the subject matter hereof and there are no
       understandings representations, conditions, warranties, express or
       implied, statutory or otherwise made or assumed by the parties, other
       than those expressly contained in this Agreement. Neither party shall be
       bound by any term, clause, provision or conditions save as expressly
       provided herein or as duly set forth on or subsequent to the date of this
       Agreement in writing signed by duly authorized officers of each of the
       parties.

_________________________
* The information above marked by *** has been omitted by a request for
confidential treatment.  The omitted portion has been separately filed with the
Commission.

                                       16
<PAGE>

18.12  COUNTERPARTS.  This Agreement may be signed in two or more counterparts,
       each of which shall be an original, but all of which together shall
       constitute one and the same instrument.

_________________________
* The information above marked by *** has been omitted by a request for
confidential treatment.  The omitted portion has been separately filed with the
Commission.

                                       17
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal attested by the hands of their duly authorized representative on dates
indicated below.

     CELL THERAPEUTICS, INC.                NATURAL PHARMACEUTICALS, INC.

     /s/ James A. Bianco                    /s/Roland R. Franke
     -------------------                    -------------------
     By:                                    By:
     Name:   James A. Bianco                Name: Roland R. Franke
     Title:  President and Chief Executive  Title:President and Chief
             Officer                              Executive Officer

_________________________
* The information above marked by *** has been omitted by a request for
confidential treatment.  The omitted portion has been separately filed with the
Commission.

                                       18
<PAGE>

                                  SCHEDULE A

                                Specifications

     ***

_________________________
* The information above marked by *** has been omitted by a request for
confidential treatment.  The omitted portion has been separately filed with the
Commission.

                                       19
<PAGE>

                                  SCHEDULE B

     ***

_________________________
* The information above marked by *** has been omitted by a request for
confidential treatment.  The omitted portion has been separately filed with the
Commission.

                                       20

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]