Document:

_________________________________________________________________

THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS.
TO THE EXTENT, IF ANY, THAT THIS LEASE AGREEMENT CONSTITUTES
CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL
CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY
INTEREST IN THIS LEASE AGREEMENT MAY BE CREATED THROUGH THE
TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL
EXECUTED COUNTERPART CONTAINING THE RECEIPT EXECUTED BY LESSOR
OR, IF LESSOR HAS ASSIGNED ITS RIGHTS TO A THIRD PARTY IN
ACCORDANCE WITH THIS LEASE AGREEMENT, SUCH THIRD PARTY ON THE
SIGNATURE PAGE OF THIS LEASE AGREEMENT.
________________________________________________________________

                    DATED: October 19, 1999

                      AIRCRAFT 22122, INC.

                            (Lessor)

                            - and -

                    VANGUARD AIRLINES, INC.

                            (Lessee)

              ___________________________________

                     LEASE AGREEMENT 22122
                        - relating to -
                    Boeing 737-230 Aircraft
                 Manufacturers Serial No: 22122
                 U.S. Registration Mark N124NJ
             _____________________________________

                FELTMAN, KARESH, MAJOR & FARBMAN,
                  Limited Liability Partnership
                       Carnegie Hall Tower
                      152 West 57th Street
                    New York, New York 10019

<PAGE>
                       TABLE OF CONTENTS

CLAUSE                                                      PAGE

1.   DEFINITIONS and INTERPRETATION                           1
     1.1  Definitions                                         1
     1.2  Interpretation                                     19

2.   REPRESENTATIONS and WARRANTIES                          19
     2.1  Lessee's Representations and Warranties            19
     2.2  Lessee's Further Representations and Warranties    21
     2.3  Repetition                                         22
     2.4  Lessor's Representations and Warranties            22
     2.5  Repetition                                         23

3.   CONDITIONS PRECEDENT                                    23
     3.1  Lessor's Documentary Conditions Precedent          23
     3.2  Lessor's Other Conditions Precedent                25
     3.3  Lessor's Waiver                                    25
     3.4  Lessee's Conditions Precedent                      25
     3.5  Lessee's Waiver                                    26

4.   COMMENCEMENT                                            27
     4.1  Leasing                                            27
     4.2  Delivery                                           27
     4.3  Delayed Delivery                                   29
     4.4  Acceptance and Risk                                30

5.   PAYMENTS                                                30
     5.1  Security Deposit; Letter of Credit                 30
     5.2  Rental Periods                                     32
     5.3  Basic Rent                                         32
     5.4  Additional Rent                                    33
     5.5  Lessor's Moneys                                    34
     5.6  Payments                                           34
     5.7  Gross-up                                           35
     5.8  Taxation                                           36
     5.9  Information                                        36
     5.10 Taxation of Indemnity Payments                     37
     5.11 Default Interest                                   37
     5.12 Contest                                            38
<PAGE>
     5.13 Absolute                                           39

6.   MANUFACTURER'S WARRANTIES                               40
     6.1  Assignment                                         40
     6.2  Proceeds                                           40
     6.3  Parts                                              41
     6.4  Agreement                                          41

7.   LESSOR'S COVENANTS and DISCLAIMERS                      42
     7.1  Quiet Enjoyment                                    42
     7.2  Lessor's Maintenance Contribution                  42
     7.3  Lessor's Engine Maintenance Contribution           45
     7.4  Lessor's AD Cost Sharing Contribution              45
     7.5  Registration and Filings                           46
     7.6  Agreed Maintenance Performers                      46
     7.7  Exclusion                                          47
     7.8  Lessee's Waiver                                    47
     7.9  Lessee's Confirmation                              47

8.   LESSEE'S COVENANTS                                      48
     8.1  Duration                                           48
     8.2  Information                                        48
     8.3  Lawful and Safe Operation                          50
     8.4  Taxes and Other Charges                            52
     8.5  Sub-Leasing                                        52
     8.6  Inspection                                         54
     8.7  Protection of Title                                55
     8.8  General                                            56
     8.9  Records                                            57
     8.10 Registration and Filings                           57
     8.11 Maintenance and Repair                             58
     8.12 Removal of Engines and Parts                       59
     8.13 Installation of Engines and Parts                  60
     8.14 Non-Installed Engines and Parts                    62
     8.15 Pooling of Engines and Parts                       63
     8.16 Equipment Changes                                  63
     8.17 Title to Engines and Parts                         64
     8.18 Third Parties                                      65
     8.19 Non-Discrimination                                 65

9.   INSURANCE                                               65
     9.1  Insurances                                         65
     9.2  Requirements                                       66
<PAGE>
     9.3  Insurance Covenants                                66
     9.4  Failure to Insure                                  68
     9.5  Continuing Indemnity                               68
     9.6  Application of Insurance Proceeds                  69

10.  INDEMNITY                                               70
     10.1 General                                            70
     10.2 Mitigation                                         71
     10.3 Duration                                           72

11.  EVENTS OF LOSS                                          72
     11.1 Total Loss                                         72
     11.2 Engine Loss                                        73
     11.3 Requisition                                        74

12.  RETURN OF AIRCRAFT                                      75
     12.1 Redelivery                                         75
     12.2 Final Checks                                       75
     12.3 Final Inspection                                   76
     12.4 Non-Compliance                                     77
     12.5 Export Documentation                               77
     12.6 Acknowledgment                                     78
     12.7 Maintenance Program                                78
     12.8 Storage                                            78

13.  DEFAULT                                                 79
     13.1 Events                                             79
     13.2 Rights                                             83
     13.3 Export                                             84
     13.4 Default Payments                                   84
     13.5 Waiver of Certain Article 2A Rights                85

14.  ASSIGNMENT and TRANSFER                                 85
     14.1 No Assignment by Lessee                            85
     14.2 Lessor Assignment                                  85
     14.3 Grants of Security Interests                       88
     14.4 Sale and Leaseback by Lessor                       90
     14.5 Further Acknowledgments                            90
     14.6 Certain Protections for Lessee's Benefit           90

15.  MISCELLANEOUS                                           91
     15.1 Waivers, Remedies Cumulative                       91
     15.2 Delegation                                         91
<PAGE>
     15.3 Appropriation                                      91
     15.4 Currency Indemnity                                 91
     15.5 Payment by the Lessor                              92
     15.6 Severability                                       92
     15.7 Remedy                                             92
     15.8 Expenses                                           92
     15.9 Time of Essence                                    93
    15.10 Notices                                            93
    15.11 Law and Jurisdiction                               94
    15.12 Sole and Entire Agreement                          95
    15.13 Indemnities                                        95
    15.14 Counterparts                                       95
    15.15 Confidentiality                                    96

<PAGE>
SCHEDULES

     1.   Basic Rent and Other Terms                         98
     2.   Aircraft Specification                            100
     3.   Operating Condition at Delivery                   107
     4.   Operating Condition at Redelivery                 112
     5.   Insurance Requirements                            117

EXHIBITS

     A.   Form of Certificate of Acceptance                 122
     B.   Form of Certificate of Delivery Condition         124
     C.   Form of Consent                                   128
     D.   Form of Legal Opinion                             129
     E.   Form of Letter of Credit                          130
     F.   Form of Monthly Status Report                     131
     G.   Form of Certificate of Redelivery                 135
<PAGE>
THIS LEASE AGREEMENT 22122 is made the ____ day of October, 1999

BETWEEN:

(1)  AIRCRAFT 22122, INC., a Delaware corporation having its
     principal place of business at c/o Unicapital Air Group,
     Inc., 1900 Summit Tower Blvd., Suite 860, Orlando, Florida
     32810 (the "Lessor"), and

(2)  VANGUARD AIRLINES, INC., a company organized and existing
     under the laws of the State of Delaware having its principal
     place of business at 533 Mexico City Avenue, Kansas City
     International Airport, Kansas City, Missouri 64153 (the
     "Lessee").

WHEREAS:

(A)  Pursuant to a Sale Agreement, dated as of December 23, 1997,
     between the Previous Operator, as seller, and NSJ
     Corporation of Florida, Inc., as buyer ("NSJ-Florida"), as
     assigned by the Previous Operator to the Previous Owner and
     by NSJ-Florida to Lessor pursuant to the Assignment,
     Assumption and Consent Agreement, dated as of October __,
     1999, Lessor has agreed to purchase the Leased Property from
     the Previous Owner on or before the Delivery Date.

(B)  Lessor wishes to lease the Leased Property to the Lessee,
     and Lessee agrees to lease the Leased Property from the
     Lessor, with effect immediately from the purchase of the
     Aircraft upon and subject to the covenants, terms and
     conditions set out in this Agreement.

NOW IT IS HEREBY AGREED as follows:

1.   DEFINITIONS AND INTERPRETATION

     1.1 DEFINITIONS

     In this Agreement the following expressions shall, unless
     the context otherwise requires, have the following
     respective meanings:

     Actual Cost              as it applies to any maintenance
                              work on the Aircraft, means the
                              actual cost of replacement parts
                              plus the cost of the associated
                              labor at Lessee's in-house labor
                              rates (if the work is performed by
                              Lessee) or at third party costs
                              charged to Lessee (if the work is
                              performed by third parties) and
                              shall in no event include late
                              charges, mark-ups, interest or
                              other similar amounts.
<PAGE>
     Additional Rent          collectively, Airframe Additional
                              Rent, APU Additional Rent, Engine
                              Additional Rent and Landing Gear
                              Additional Rent.

     Affiliate                in relation to any Person, any
                              other Person controlled directly or
                              indirectly by that Person, any
                              other Person that controls directly
                              or indirectly that Person or any
                              other Person under common control
                              with that Person.  For this purpose
                              "control" of any Person means
                              ownership of a majority of the
                              voting power of such Person.

     Agreed Maintenance
       Performer              the Lessee or any other reputable
                              maintenance  organization that is
                              (i) experienced in maintaining
                              aircraft and/or engines of the same
                              type as the Aircraft and the
                              Engines, (ii) duly certificated by
                              the FAA under FAR Part 145, and
                              (iii) not objected to by Lessor
                              pursuant to Clause 7.6.

     Agreed Maintenance
       Program                the Lessee's current Maintenance
                              Program, which shall at all times
                              be in compliance with the
                              Manufacturer's MPD and the Engine
                              Manufacturer's MPD, as the same may
                              be amended from time to time in
                              accordance with this Agreement.

     Agreed Value             the amount set forth on Schedule 1.

     Aircraft                 the aircraft described in Part l of
                              Schedule 2 (which term includes,
                              where the context admits, a
                              separate reference to all Engines
                              and Parts).

     Aircraft Documents       the documents, data and records
                              identified in Part 2 of Schedule 2
                              and all additions, renewals,
                              revisions and replacements from
                              time to time made in accordance
                              with this Agreement.

     Airframe                 the Aircraft, excluding the Engines
                              and the Aircraft Documents.

     Airframe Additional
       Rent                   as defined in Clause 5.4(a)(i).
<PAGE>
     Airframe Additional
       Rent Rate              the amount set forth in Schedule 1.

     Airframe Reimbursable
       Expenses               as defined in Clause 7.2(a)(i).

     Applicable Law           all applicable (i) laws, treaties
                              and international agreements of any
                              national government, (ii) laws of
                              any state, province, territory,
                              locality or other political
                              subdivision of a national
                              government, and (iii) rules,
                              regulations, judgments, decrees,
                              orders, injunctions, writs,
                              directives, licenses and permits of
                              any Government Entity or
                              arbitration authority.

     Appraisal Procedure      with respect to any amount to be
                              determined, the amount mutually
                              agreed by Lessor and Lessee or, if
                              Lessor and Lessee are unable to
                              agree upon any such amount to be
                              determined, the average of the
                              amounts determined by three
                              FAA-approved service centers in the
                              continental United States, one such
                              service center appointed by Lessor,
                              one by Lessee and one by their
                              appointed service centers, except
                              that if any party fails to appoint
                              a service center the Manufacturer
                              or the Engine Manufacturer
                              (whichever is appropriate) shall be
                              deemed appointed.

     APU                      (i) the auxiliary power unit listed
                              in Schedule 2, (ii) any and all
                              Parts, so long as such Parts are
                              incorporated in, installed on or
                              attached to such auxiliary power
                              unit or so long as title to such
                              Parts is vested in the Lessor in
                              accordance with the terms of Clause
                              8.17(b) after removal from such
                              auxiliary power unit, and
                              (iii) insofar as the same belong to
                              Lessor, all substitutions,
                              replacements or renewals from time
                              to time made in or to such
                              auxiliary power unit or to any of
                              the Parts referred to in clause
                              (ii) above, as required or
                              permitted under this Agreement.

     APU Additional Rent      as defined in Clause 5.4(a)(iv).

     APU Additional Rent
       Rate                   the amount set forth in Schedule 1.

     APU Reimbursable
       Expenses               as defined in Clause 7.2(d)(i).
<PAGE>
     Assignment               the Assignment of Lease Agreement,
                              dated the Delivery Date, between
                              Lessor and Mortgagee, and any
                              present or future assignment by the
                              Lessor in favor of any Financing
                              Party of the Lessor's rights under
                              this Agreement as security for its
                              obligations to a Financing Party.

     Aviation Authority       the FAA or, if the State of
                              Registration ceases to be the
                              United States of America, the
                              authority and/or Government Entity
                              and/or agency which, under the laws
                              of the State of Registration, from
                              time to time (i) has control or
                              supervision of civil aviation; or
                              (ii) has jurisdiction over
                              registration, airworthiness or
                              operation of the Aircraft.

     Basic Rent               all amounts payable pursuant to
                              Clause 5.3.

     Basic Rent Amount        the amount set forth in Schedule 1.

     Business Day             a day (other than a Saturday or
                              Sunday) on which business of the
                              nature required by this Agreement
                              is carried out in Orlando, Florida
                              and the city in which Lessee's
                              office listed in Clause 15.10(b) is
                              located or, where used in relation
                              to payments, on which banks are
                              open for business in New York, New
                              York.

     C-Check                  a maintenance check on the Airframe
                              under the Agreed Maintenance
                              Program designated as a "C" check
                              and consisting of full and complete
                              zonal, systems and structural check
                              including the corresponding lower
                              checks ("A" and "B" or equivalent)
                              and any other maintenance and
                              inspections tasks that are a part
                              of such checks, all in accordance
                              with the Agreed Maintenance
                              Program, or if the Agreed
                              Maintenance Program changes and no
                              longer refers to a full and
                              complete zonal, systems and
                              structural block "C" check, then a
                              check consisting of those items of
                              maintenance characterized by the
                              MPD and best industry practice as a
                              "C" check (or its equivalent), but
                              in any event not including repairs
                              arising as the result of
                              operational or maintenance
                              mishandling or accidental damage.
<PAGE>
     CER                      an engine refurbishment, including
                              with respect to any Engine the
                              complete visual inspection and
                              repair as necessary of required
                              modules of the Engine in an engine
                              repair/overhaul station, including
                              complete or partial disassembly,
                              complete or partial visual
                              inspection, de-blading of LLPs as
                              required, visual inspection of all
                              LLPs, verification that all snap
                              diameters on LLPs are within
                              limits, inspection of all blades
                              for proper chord dimensions and
                              cracking, repair or replacement of
                              all blades below minimums,
                              inspection and repair of stators as
                              necessary, blade-up of LLPs using
                              new lock plates, assembly of rotors
                              in the turbine, balance of all
                              rotors, and installation of rotors
                              in the Engine.

     Certificate of
       Acceptance             a certificate in the form attached
                              as Exhibit A to be completed and
                              executed by Lessor and Lessee on
                              Delivery.

     Certificate of
       Delivery Condition     a certificate in the form attached
                              as Exhibit B to be completed and
                              executed by Lessor and Lessee on
                              Delivery.

     Certificate of
       Redelivery             a certificate in the form attached
                              as Exhibit G to be completed and
                              executed by Lessor upon redelivery
                              of the Aircraft and Aircraft
                              Documents in accordance with this
                              Agreement.

     Consent                  the Lessee's Acknowledgment of and
                              Consent to Assignment of Lease,
                              dated the Delivery Date, between
                              Lessor, Lessee and Mortgagee in the
                              form attached as Exhibit C pursuant
                              to which, inter alia, Lessee
                              consents to the Assignment and
                              Mortgagee covenants to preserve
                              Lessee's quiet enjoyment.

     Coopesa                  The Self-Managed Cooperative of
                              Aero Industrial Services R.L.

     CPCP                     Lessee's Corrosion Prevention and
                              Control Program under the Agreed
                              Maintenance Program.
<PAGE>
     Credit Agreement         the Secured Loan Agreement, dated
                              as of October __, 1999, between
                              Lender and Lessor.

     Cycle                    one take-off and landing of an
                              airframe.

     Damage Notification
       Threshold              the amount set forth in Schedule 1.

     Default                  any Event of Default and any event,
                              which with the giving of notice,
                              lapse of time or fulfilment of any
                              other condition or any combination
                              of the foregoing would constitute
                              an Event of Default.

     Default Rate             at any time and from time to time,
                              3.0% plus the prime or base
                              commercial lending rate as
                              announced (i) if the Mortgagee is a
                              bank or trust company, by the
                              Mortgagee at its principal banking
                              office in New York City, New York,
                              or (ii) if the Mortgagee is not a
                              bank or trust company, by Citibank,
                              N.A., in either case compounded
                              monthly and calculated on the basis
                              of the actual number of days
                              elapsed and on a 360 day year.

     Delivery                 the delivery of the Aircraft to the
                              Lessee in accordance with the terms
                              of this Agreement.

     Delivery Date            the date on which Delivery takes
                              place, which shall be the Scheduled
                              Delivery Date or such other date
                              notified by Lessor to Lessee in
                              accordance with the provisions of
                              this Agreement, including Clauses
                              4.2(e) and 4.3.

     Delivery Location        Kansas City International Airport,
                              Kansas City, Missouri.

     Dollars and $            the lawful currency of the United
                              States of America.

     Engine                   whether or not installed on the
                              Aircraft:

                              (a)  each engine of the
                                   manufacture, model and serial
                                   number specified in Part 1 of
                                   Schedule 2 and having 750 or
                                   more rated take-off<PAGE>
                                   horsepower, title to which
                                   shall belong to the Lessor; or

                              (b)  any engine which replaces that
                                   engine, title to which passes
                                   to the Lessor in accordance
                                   with Clause 8.17(d);

                              and in each case includes all
                              modules and Parts from time to time
                              belonging to, installed in or
                              appurtenant to that engine.

     Engine Additional Rent   as defined in Clause 5.4(a)(ii).

     Engine Additional Rent
       Rate                   the amount set forth in Schedule 1.

     Engine Loss              the occurrence, with respect to an
                              Engine, of one of the events set
                              forth in clauses (a) through (d) of
                              the definition of "Total Loss" as
                              if references to the "Airframe"
                              were to such "Engine".

     Engine Loss Date         the relevant date determined in
                              accordance with the definition of
                              "Total Loss Date" as if that
                              definition applied to an Engine
                              Loss.

     Engine Manufacturer      the Pratt & Whitney Division of
                              United Technologies Corporation.

     Engine Reimbursable
       Expenses               as defined in Clause 7.2(b)(i).

     Engine Shop Visit        a shop visit requiring disassembly
                              of an Engine (but excluding for
                              this purpose any removal,
                              installation, maintenance and
                              repair of "Quick Engine Change"
                              kits) and during which there shall
                              be performed a hot section
                              restoration or repair or a cold
                              section restoration or repair or a
                              replacement of LLPs.

     Equipment Change         as defined in Clause 8.16(a).

     Event of Default         an event specified in Clause 13.1.

     Excusable Delay          with respect to delivery of the
                              Aircraft, delay or non-performance
                              due to or arising out of acts of
                              God<PAGE> or public enemy, civil
                              war, insurrection or riot, fire,
                              flood, explosion, earthquake,
                              serious accident, epidemic,
                              quarantine restriction, import
                              restriction, any act of government,
                              governmental priority, allocation,
                              regulation or order affecting
                              directly or indirectly, the
                              Aircraft, any manufacturer, Lessor
                              or any materials or facilities,
                              strike or labor dispute causing
                              cessation, slowdown or interruption
                              of work, inability after due and
                              timely diligence to procure
                              equipment, data or materials from
                              manufacturers, suppliers, any
                              existing owner, seller or lessee in
                              a timely manner, damage,
                              destruction or loss, adverse
                              weather conditions preventing any
                              services, inspections or flights of
                              the Aircraft or any other cause to
                              the extent that such cause is
                              beyond the control of Lessor,
                              whether above mentioned or not and
                              whether or not similar to the
                              foregoing.

     Expiry Date              the Scheduled Expiry Date or any
                              other date on which:

                              (a)  the Aircraft has been
                                   redelivered in accordance with
                                   this Agreement and all
                                   obligations of Lessee have
                                   been satisfied; or

                              (b)  the Lessor receives the Agreed
                                   Value following a Total Loss
                                   and any other amounts then due
                                   and owing in accordance with
                                   this Agreement.

     FAA                      the Federal Aviation Administration
                              of the U.S. Department of
                              Transportation, or any successor
                              Government Entity succeeding to the
                              functions thereof.

     FARs                     the Federal Aviation Regulations
                              for the time being in force, issued
                              by the FAA pursuant to the Federal
                              Aviation Law and published in Title
                              14 of the Code of Federal
                              Regulations.

     Federal Aviation Law     Title 49 of the United States Code,
                              as amended, or any successor
                              statutory provisions and the
                              regulations promulgated under such
                              provisions.
<PAGE>
     Financial Indebtedness   any indebtedness in respect of:

                              (a)  moneys borrowed;

                              (b)  any liability under any
                                   debenture, bond, note, loan
                                   stock, acceptance credit,
                                   documentary credit or other
                                   security;
                              (c)  the acquisition cost of any
                                   asset to the extent payable
                                   before or after the time of
                                   acquisition or possession; or

                              (d)  the capitalized value
                                   (determined in accordance with
                                   accounting practices generally
                                   accepted in the United States
                                   of America) of obligations
                                   under finance leases; or

                              (e)  any guarantee, indemnity or
                                   similar assurance against
                                   financial loss of any Person
                                   in respect of the above.

     Financing Parties        collectively (i) Lender, (ii)
                              Mortgagee, (iii) any Additional
                              Mortgagee, (iv) any Person that
                              lends money to Lessor and for whom
                              an Additional Mortgagee holds a
                              Security Interest in the Leased
                              Property, and (v) the successors
                              and permitted assigns of such
                              Persons.

     Flight Hour              each hour or part thereof (rounded
                              up to one decimal place) elapsing
                              from the moment the wheels of the
                              Airframe leave the ground on take
                              off until the moment the wheels of
                              the Airframe next touch the ground.

     GAAP                     generally accepted accounting
                              principles as in effect from time
                              to time and, subject to changes in
                              such principles from time to time,
                              consistently applied in accordance
                              with the past practices of a
                              Person.

     Government Entity             (a)  any national, state or
                                   local government, political
                                   subdivision thereof or local
                                   jurisdiction therein;
<PAGE>
                              (b)  any board, commission,
                                   department, division,
                                   instrumentality, court, agency
                                   or political subdivision
                                   thereof; and

                              (c)  any association, organization
                                   or institution of which any of
                                   the above is a member or to
                                   whose jurisdiction any thereof
                                   is subject or in whose
                                   activities any of the above is
                                   a participant.

     Heavy Check              the maintenance checks under the
                              Agreed Maintenance Program
                              designated as "Q1" and "Q2", or any
                              comparable major airframe overhaul
                              under any other or amended
                              maintenance program.

     IATA                     the International Air Transport
                              Association.

     Indemnitees              Lessor, each of the Financing
                              Parties, the respective successors
                              and assigns of such Persons and the
                              shareholders, directors, officers,
                              agents and employees of such
                              Persons.

     Insurances               as defined in Clause 9.1.

     Landing Gear             the landing gear assembly of the
                              Aircraft excluding the wheels and
                              brake units.

     Landing Gear Additional
       Rent                   as defined in Clause 5.4(a)(iii).

     Landing Gear Additional
       Rent Rate              the amount set forth in Schedule 1.

     Landing Gear
       Reimbursable Expenses  as defined in Clause 7.2(c)(i).

     Leased Property          the Aircraft and the Aircraft
                              Documents.

     Lender                   FINOVA Capital Corporation and its
                              successors and assigns as "Lender"
                              under the Credit Agreement.

     Lessee Installed Part    a Part installed on the Aircraft
                              after Delivery not in replacement
                              for any Part and not required under
                              the<PAGE> FARs on the Aircraft,
                              title to which is held by Lessee
                              (and which may be subject to a
                              Security Interest in favor of an
                              unrelated third party) or title to
                              which is held by an unrelated third
                              party and such Part is leased or
                              conditionally sold to Lessee.

     Lessor Lien                   (a)  the Mortgage and any
                                   other Security Interest
                                   whatever from time to time
                                   created by or arising through
                                   the Lessor and/or any
                                   Financing Party in connection
                                   with the financing or
                                   refinancing of the Aircraft;

                              (b)  any other Security Interest in
                                   respect of the Aircraft that
                                   results from acts or omissions
                                   of, or claims against, the
                                   Lessor and/or any Financing
                                   Party not related to the
                                   operation of the Aircraft or
                                   the transactions contemplated
                                   by or permitted under this
                                   Agreement; and

                              (c)  liens in respect of the
                                   Aircraft for Non-Indemnified
                                   Taxes.

     Letter of Credit         an irrevocable standby letter of
                              credit, in the form set out in
                              Exhibit E or otherwise in form and
                              substance reasonably satisfactory
                              to Lessor, to be issued (at the
                              Lessee's option) in favor of Lessor
                              (or, if designated by Lessor, in
                              favor of Mortgagee) by a bank
                              reasonably acceptable to Lessor and
                              Mortgagee for the payment of the
                              Security Deposit.

     LLPs                     life limited Parts.

     Maintenance Program      an Aviation Authority approved
                              maintenance program for the
                              Aircraft encompassing scheduled
                              maintenance, condition monitored
                              maintenance and/or on-condition
                              maintenance of Airframe, Engines
                              and Parts, including servicing,
                              testing, preventative maintenance,
                              repairs, structural inspections,
                              system checks, overhauls, approved
                              modifications, service bulletins,
                              engineering orders, airworthiness
                              directives, corrosion control,
                              inspections and treatments.
<PAGE>
     Major Checks             any Heavy Check, C-Check, "C"
                              check, multiple or phase "C" check,
                              "D" check or annual heavy
                              maintenance visit or segment
                              thereof suggested for commercial
                              aircraft of the same model as the
                              Aircraft by the Manufacturer
                              (however denominated in the Agreed
                              Maintenance Program).

     Manufacturer             The Boeing Company, a Delaware
                              corporation with a place of
                              business in Seattle, Washington.

     Minimum Liability
       Coverage               the amount set forth on Schedule 1.

     Mortgage                 the First Priority Aircraft Chattel
                              Mortgage and Security Agreement,
                              dated the Delivery Date, between
                              Lessor, as debtor, and Mortgagee,
                              as secured party, whereby Lessor
                              has granted to Mortgagee a first
                              priority security interest in the
                              Aircraft and its right, title and
                              interest in the Operative
                              Documents.

     Mortgagee                FINOVA Capital Corporation and its
                              successors and assigns as mortgagee
                              under the Mortgage.

     MPD                      for any manufacturer, such
                              manufacturer's Maintenance Planning
                              Document.

     Non-Indemnified
       Taxes                       (a)  Taxes imposed as a direct
                                   result of activities of any
                                   Tax Indemnitee in the
                                   jurisdictions imposing the
                                   liability unrelated to such
                                   Tax Indemnitee's dealings with
                                   Lessee pursuant to the
                                   Operative Documents or to the
                                   transactions contemplated by
                                   the Operative Documents or the
                                   operation of the Aircraft by
                                   Lessee;

                              (b)  Taxes on or measured by the
                                   income, profits, gains,
                                   capital or net worth
                                   (including minimum taxes,
                                   withholding taxes and taxes on
                                   or measured by any items of
                                   tax preference) and any doing
                                   business or franchise taxes,
                                   and interest, additions to
                                   tax, penalties or other
                                   charges in respect thereof,
                                   imposed on any Tax Indemnitee
                                   (i) by any Federal Government
                                   Entity in the United States of
                                   America, (ii) by<PAGE> any
                                   Government Entity in the
                                   jurisdictions where such Tax
                                   Indemnitee is incorporated,
                                   formed or organized or has its
                                   principal place of business,
                                   (iii) by any state or local
                                   Government Entity in the
                                   United States of America in
                                   which such Tax Indemnitee has
                                   a nexus as a result of
                                   activities other than those
                                   contemplated by the Operative
                                   Documents, or (iv) by any
                                   Government Entity in any other
                                   jurisdiction where such Tax
                                   Indemnitee is liable for such
                                   Taxes in the absence of the
                                   transactions contemplated by
                                   this Agreement;

                              (c)  Taxes imposed with respect to
                                   any period ending or event
                                   occurring before the date of
                                   this Agreement or any period
                                   commencing or event occurring
                                   after the Expiry Date;

                              (d)  Taxes imposed as a direct
                                   result of the sale, financing
                                   or other disposition or
                                   assignment of the Aircraft, or
                                   any interest in any trust or
                                   other entity that holds a
                                   direct or indirect interest in
                                   the Aircraft, unless such sale
                                   or disposition occurs as a
                                   consequence of an Event of
                                   Default;

                              (e)  Taxes imposed by a taxing
                                   jurisdiction for a particular
                                   tax period in which none of
                                   the following is true for that
                                   tax period:  (i) the
                                   operation, registration,
                                   location, presence or use of
                                   the Aircraft, the Airframe,
                                   any Engine or any Part
                                   thereof in such jurisdiction,
                                   (ii) the place of
                                   incorporation, commercial
                                   domicile or other presence in
                                   such jurisdiction of the
                                   Lessee, any sublessee or any
                                   user of or Person in
                                   possession of the Aircraft,
                                   the Airframe, any Engine or
                                   any Part thereof in such
                                   jurisdiction, or (iii) any
                                   payments made under this
                                   Agreement and related
                                   documents being made from such
                                   jurisdiction;
<PAGE>
                              (f)  Taxes to the extent caused by
                                   the gross negligence or
                                   willful misconduct of any Tax
                                   Indemnitee or the breach by
                                   any Tax Indemnitee of any of
                                   their obligations under the
                                   Operative Documents;

                              (g)  Taxes to the extent caused by
                                   a failure by any Tax
                                   Indemnitee to furnish in a
                                   timely manner notice or
                                   information which it is
                                   required to furnish to Lessee
                                   by the terms of this
                                   Agreement;

                              (h)  any Taxes imposed on or with
                                   respect to a transferee or
                                   assignee of the Aircraft or
                                   any interest therein to the
                                   extent that, under Applicable
                                   Law in effect at the time of
                                   the transfer or assignment,
                                   such Taxes would not have been
                                   imposed on or with respect to
                                   the transferor or assignor;
                                   and

                              (i)  any Taxes resulting from or
                                   attributable to a Lessor Lien.

     Operative Documents      this Agreement, the Certificate of
                              Acceptance, the Certificate of
                              Delivery Condition and the Consent.

     Part                     whether or not installed on the
                              Aircraft:

                              (a)  any component, furnishing or
                                   equipment (other than a
                                   complete Engine) furnished
                                   with, installed on or
                                   appurtenant to the Airframe
                                   and Engines on Delivery; and

                              (b)  any other component,
                                   furnishing or equipment (other
                                   than a complete Engine) title
                                   to which has, or should have,
                                   passed to the Lessor pursuant
                                   to the Sale Agreement or
                                   Clause 8.17(b),

                              but excludes any such items title
                              to which has, or should have,
                              passed to Lessee pursuant to
                              Clause 8.17(c) and any Lessee
                              Installed Part.
<PAGE>
     Permitted Lien           (a)  any lien for Taxes not
                                   assessed or, if assessed, not
                                   yet due and payable, or being
                                   contested in good faith by
                                   appropriate proceedings;

                              (b)  any lien of a repairer,
                                   mechanic, carrier, hangar
                                   keeper, unpaid seller or other
                                   similar lien arising in the
                                   ordinary course of business or
                                   by operation of law in respect
                                   of obligations which are not
                                   overdue in accordance with
                                   Applicable Law (or, if
                                   applicable, generally accepted
                                   accounting principles and
                                   practices in the relevant
                                   jurisdiction) or are being
                                   contested in good faith by
                                   appropriate proceedings; and

                              (c)  any Lessor Lien;

                              but only if, in the case of (a) and
                              (b):  (i) adequate reserves have
                              been provided by Lessee for the
                              payment of the Taxes or obligations
                              in accordance with generally
                              accounting principles and practices
                              in the relevant jurisdiction; and
                              (ii) such proceedings, or the
                              continued existence of the lien, do
                              not give rise to any reasonable
                              likelihood of the sale, forfeiture
                              or other loss of the Aircraft or
                              any interest therein or of criminal
                              liability on the Lessor or any
                              Financing Party.

     Person                   any individual, corporation,
                              partnership, limited liability
                              company, limited liability
                              partnership, joint venture,
                              association, joint stock company,
                              trust, unincorporated organization
                              or Government Entity.

     Previous Operator        Deutsche Lufthansa
                              Aktiengesellschaft.

     Previous Owner           First Security Bank, National
                              Association, as trustee f/b/o the
                              Previous Operator

     Redelivery Location      Kansas City International Airport
                              or any other location agreed by
                              Lessor and Lessee.
<PAGE>
     Reimbursable Expenses    collectively, Airframe Reimbursable
                              Expenses, APU Reimbursable
                              Expenses, Engine Reimbursable
                              Expenses and Landing Gear
                              Reimbursable Expenses.

     Rent                     collectively, all Basic Rent,
                              Additional Rent and Supplemental
                              Rent.

     Rental Period            each period ascertained in
                              accordance with Clause 5.2.

     Rent Date                the Delivery Date and the
                              corresponding day of each calendar
                              month during the Term or, for any
                              calendar month that does not have a
                              corresponding day, the last day of
                              such calendar month.

     Scheduled Delivery Date  October __, 1999.

     Scheduled Expiry Date    the fifth anniversary of the
                              Delivery Date.

     Security Deposit         the amount set forth on Schedule 1.

     Security Interest        any mortgage, charge, pledge, lien,
                              assignment, hypothecation, right of
                              set-off, or any agreement or
                              arrangement having the effect of
                              creating a security interest.

     Special FAA Counsel      McAfee & Taft of Oklahoma City,
                              Oklahoma.

     SRM                      the Manufacturer's structural
                              repair manual.

     State of Incorporation   State of Delaware.

     State of Registration    United States of America.

     Subsidiary               (a)  in relation to any
                                   reference to accounts, any
                                   company wholly or partially
                                   owned by Lessee whose accounts
                                   are consolidated with the
                                   accounts of the Lessee in
                                   accordance with accounting
                                   principles generally accepted
                                   under accounting standards of
                                   the State of Incorporation;
                                   and

                              (b)  for any other purpose, an
                                   entity from time to time:
<PAGE>
                                    (i) of which another has
                                        direct or indirect
                                        control or owns directly
                                        or indirectly more than
                                        50% of the voting share
                                        capital; or

                                   (ii) which is a direct or
                                        indirect subsidiary of
                                        another under the laws of
                                        the jurisdiction of its
                                        incorporation.

     Supplemental Rent        all amounts, liabilities and
                              obligations (other than Basic Rent
                              and Additional Rent) that Lessee
                              assumes or agrees to pay under this
                              Agreement to Lessor or any other
                              Person, including payment of
                              deposits, indemnities and the
                              Agreed Value.

     Tax Indemnitees          Lessor and each of the Financing
                              Parties.

     Taxes                    all present and future taxes,
                              levies, imposts, duties or charges
                              in the nature of taxes, whatever
                              and wherever imposed, including
                              customs duties, value added taxes
                              or similar taxes and any franchise,
                              transfer, sales, use, business,
                              occupation, excise, personal
                              property, stamp or other tax or
                              duty imposed by any national or
                              local taxing or fiscal authority or
                              agency, together with any
                              withholding, penalties, additions
                              to tax, fines or interest thereon
                              or with respect thereto.

     Term                     the period commencing on the
                              Delivery Date and ending on the
                              Expiry Date or any later date
                              pursuant to Clause 12.4.

     Total Loss               with respect to the Airframe:

                              (a)  the actual, arranged or
                                   constructive total loss of the
                                   Airframe (including any damage
                                   to the Airframe which results
                                   in an insurance settlement on
                                   the basis of a total loss, or
                                   requisition for use or hire
                                   which results in an insurance
                                   settlement on the basis of a
                                   total loss);
<PAGE>
                              (b)  the Airframe being destroyed,
                                   damaged beyond repair or
                                   permanently rendered unfit for
                                   normal use for any reason
                                   whatsoever;

                              (c)  the requisition of title, or
                                   other compulsory acquisition,
                                   capture, seizure, deprivation,
                                   confiscation or detention for
                                   any reason of the Airframe by
                                   the government of the State of
                                   Registration (whether de jure
                                   or de facto), but excluding
                                   requisition for use or hire
                                   not involving requisition of
                                   title; or

                              (d)  the hi-jacking, theft,
                                   condemnation, confiscation,
                                   seizure or requisition for use
                                   or hire of the Airframe
                                   (excluding any of the
                                   foregoing which is
                                   attributable to a Lessor Lien
                                   or the enforcement thereof)
                                   which deprives any Person
                                   permitted by this Agreement to
                                   have possession and/or use of
                                   the Airframe for more than 60
                                   consecutive days.

     Total Loss Date               (a)  in the case of an actual
                                   total loss, the actual date on
                                   which the loss occurs or, if
                                   such date is unknown, the day
                                   on which the Aircraft was last
                                   heard of;

                              (b)  in the case of any of the
                                   events described in
                                   sub-paragraph (a) of the
                                   definition of "Total Loss"
                                   (other than an actual total
                                   loss), the earlier of (i) 30
                                   days after the date on which
                                   notice claiming such total
                                   loss is given to the relevant
                                   insurers, and (ii) the date on
                                   which such loss is admitted or
                                   compromised by the insurers;

                              (c)  in the case of any of the
                                   events described in
                                   sub-paragraph (b) of the
                                   definition of "Total Loss",
                                   the date on which such
                                   destruction, damage or
                                   rendering unfit occurs;
<PAGE>
                              (d)  in the case of any of the
                                   events described in
                                   sub-paragraph (c) of the
                                   definition of "Total Loss",
                                   the date on which the relevant
                                   requisition of title or other
                                   compulsory acquisition,
                                   capture, seizure, deprivation,
                                   confiscation or detention
                                   occurs;

                              (e)  in the case of any of the
                                   events described in
                                   sub-paragraph (d) of the
                                   definition of "Total Loss",
                                   the expiry of the period of 60
                                   days referred to in such
                                   sub-paragraph (d);

                              and, in each case, the Total Loss
                              shall be deemed to have occurred at
                              noon Greenwich Mean Time on such
                              date.

     1.2  INTERPRETATION

          (a)  In this Agreement, unless the contrary intention
          is stated, a reference to:

                (i) each of "Lessor", "Lessee", "Financing Party"
                    or any other Person includes without
                    prejudice to the provisions of this Agreement
                    any successor in title to it and any
                    permitted assignee;

               (ii) words importing the plural shall include the
                    singular and vice versa;

              (iii) the term "including", when used in this
                    Agreement, means "including without
                    limitation" and "including but not limited
                    to".

               (iv) any document shall include that document as
                    amended, novated or supplemented from time to
                    time unless expressly stated to the contrary;

               (v)  a law (1) includes any statute, decree,
                    constitution, regulation, order, judgment or
                    directive of any Government Entity; (2)
                    includes any treaty, pact, compact or other
                    agreement to which any Government Entity is a
                    signatory or party; (3) includes any judicial
                    or administrative interpretation or
                    application thereof; and (4) is a reference
                    to that provision as amended, substituted or
                    re-enacted; and

               (vi) a Clause, Schedule or Exhibit is a reference
                    to a clause of, a schedule to or an exhibit
                    to this Agreement.
<PAGE>
          (b)  The headings in this Agreement are to be ignored
               in construing this Agreement.

2.   REPRESENTATIONS AND WARRANTIES

     2.1  LESSEE'S REPRESENTATIONS AND WARRANTIES

          The Lessee represents and warrants as of the date
     hereof to the Lessor as follows:

          (a)  STATUS:  The Lessee is a corporation duly
               organized, validly existing and in good standing
               under the laws of the State of Incorporation, has
               the corporate power to own its assets and carry on
               its business as it is being conducted and is (or
               will at the relevant time be) the holder of all
               necessary air transportation licenses required in
               connection therewith and with the use and
               operation of the Aircraft.

          (b)  POWER AND AUTHORITY:  The Lessee has the corporate
               power to enter into and perform, and has taken all
               necessary corporate action to authorize the entry
               into, performance and delivery of, each of the
               Operative Documents and the transactions
               contemplated by the Operative Documents.

          (c)  LEGAL VALIDITY:  Each of the Operative Documents
               constitutes the Lessee's legal, valid and binding
               agreement, enforceable against Lessee in
               accordance with its terms.

          (d)  NON-CONFLICT:  The entry into and performance by
               the Lessee of, and the transactions contemplated
               by, the Operative Documents do not and will not:

                (i) conflict with any Applicable Laws binding on
                    the Lessee;

               (ii) conflict with the constitutional documents of
                    the Lessee; or

              (iii) conflict with or result in default under any
                    document which is binding upon the Lessee or
                    any of its assets, or result in the creation
                    of any Security Interest over any of its
                    assets, other than Permitted Liens.

          (e)  AUTHORIZATION:  All authorizations, consents and
               registrations required by, and all notifications
               to be given by, the Lessee in connection with the
               entry into, performance, validity and
               enforceability of, the Operative Documents and the
               transactions contemplated by the Operative
               Documents have been (or will on or before Delivery
               have been) obtained, effected or given (as<PAGE>
               appropriate) and are (or will on their being
               obtained or effected be) in full force and effect.

          (f)  NO IMMUNITY:

                (i) The Lessee is subject to civil commercial law
                    with respect to its obligations under this
                    Agreement.

               (ii) Neither the Lessee nor any of its assets is
                    entitled to any right of immunity and the
                    entry into and performance of the Operative
                    Documents by the Lessee constitute private
                    and commercial acts.

          (g)  FINANCIAL STATEMENTS:  the audited consolidated
               financial statements of the Lessee and its
               Subsidiaries most recently delivered to the
               Lessor:

                (i) have been prepared in accordance with
                    accounting principles and practices generally
                    accepted and consistently applied in the
                    State of Registration; and
               (ii) fairly present the consolidated financial
                    condition of the Lessee and its Subsidiaries
                    as at the date to which they were drawn up
                    and the consolidated results of operations of
                    the Lessee and its Subsidiaries for the
                    periods covered by such statements.

          (h)  PARI PASSU:  The obligations of the Lessee under
               this Agreement rank at least pari passu with all
               other present and future unsecured and
               unsubordinated obligations (including contingent
               obligations) of the Lessee, with the exception of
               such obligations as are mandatorily preferred by
               law and not by virtue of any contract.

     2.2  LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES

          The Lessee further represents and warrants as of the
          date hereof to the Lessor that:

          (a)  NO DEFAULT:  No Event of Default has occurred and
               is continuing or might reasonably be expected to
               result from the entry into or performance of any
               of the Operative Documents.

          (b)  REGISTRATION:

                (i) It is not necessary or advisable under the
                    laws of the State of Registration in order to
                    ensure the validity, effectiveness and
                    enforceability of the Operative Documents or
                    to establish, perfect or<PAGE> protect the
                    property rights of Lessor or any Financing
                    Party in the Leased Property that any
                    instrument relating thereto other than this
                    Agreement, the Certificate of Acceptance, the
                    Assignment or the Mortgage be filed,
                    registered or recorded or that any other
                    action be taken or, if any such filings,
                    registrations, recordings or other actions
                    are necessary, the same have been effected or
                    will have been effected on or before
                    Delivery.

               (ii) Under all Applicable Laws, including the laws
                    of the State of Incorporation and the State
                    of Registration, the property rights of the
                    Lessor and the Financing Parties (pursuant to
                    the Assignment and Mortgage) in the Leased
                    Property as of the Delivery Date have been
                    fully established, perfected and protected
                    and this Agreement will have priority in all
                    respects over the claims of all  creditors of
                    the Lessee, with the exception of such claims
                    as are mandatorily preferred by law and not
                    by virtue of any contract.

          (c)  LITIGATION:  No litigation, arbitration or
               administrative proceedings are pending or, to the
               Lessee's knowledge, threatened against the Lessee
               which, if adversely determined, would have a
               material adverse effect upon its financial
               condition or business or its ability to perform
               its obligations under the Operative Documents.

          (d)  TAXES:  The Lessee has delivered all necessary
               returns and payments due to all tax authorities
               having jurisdiction over Lessee, including those
               in the State of Incorporation and the State of
               Registration, except where the failure to do so
               would not have a material adverse effect upon its
               financial condition or business or its ability to
               perform its obligations under the Operative
               Documents, and based upon the representations of
               Lessor in Clause 2.4 and on the assumption that
               Lessor is a "United States person" within the
               meaning of Section 7701(a)(30) of the Internal
               Revenue Code of 1986, as amended, Lessee is not
               required by law to deduct or withhold any Taxes
               from any payments under this Agreement.

     2.3  REPETITION

          The representations and warranties in Clause 2.1 and
          Clause 2.2 will survive the execution of this
          Agreement.  The representations and warranties
          contained in Clause 2.1 and Clause 2.2 will be deemed
          to be repeated by the Lessee on Delivery with reference
          to the facts and circumstances then existing.  The
          representations and warranties contained in Clause 2.1
          will be deemed to be repeated by the Lessee on each
          Rent Date as if made with reference to the facts and
          circumstances then existing.
<PAGE>
     2.4  LESSOR'S REPRESENTATIONS AND WARRANTIES

          The Lessor represents and warrants to the Lessee that:

          (a)  STATUS: Lessor is a corporation duly organized,
               validly existing and in good standing under the
               laws of the State of Delaware and has the
               corporate power to own the Leased Property and
               carry on the business contemplated of Lessor under
               the Operative Documents.  Lessor is a "citizen of
               the United States" within the meaning of Section
               40102(a)(15) of the Federal Aviation Law.

          (b)  POWER AND AUTHORITY:  Lessor has the corporate
               power to enter into and perform, and has taken all
               necessary corporate action to authorize the entry
               into, performance and delivery of, each of the
               Operative Documents and the transactions
               contemplated by the Operative Documents.

          (c)  LEGAL VALIDITY:  Each of the Operative Documents
               constitutes Lessor's legal, valid and binding
               agreement, enforceable against Lessor in
               accordance with its terms.

          (d)  NON-CONFLICT:  The entry into and performance by
               Lessor of, and the transactions contemplated by,
               the Operative Documents do not and will not:

                (i) conflict with any Applicable Laws binding on
                    Lessor;

               (ii) conflict with the certificate of
                    incorporation or bylaws of Lessor; or

              (iii) conflict with or result in default under any
                    document which is binding upon Lessor or any
                    of its assets.

          (e)  AUTHORIZATION:  So far as concerns the obligations
               of Lessor, all authorizations, consents,
               registrations and notifications required in
               connection with the entry into, performance,
               validity and enforceability of, and the
               transactions contemplated by, the Operative
               Documents by Lessor have been (or will on or
               before Delivery have been) obtained, effected or
               given (as appropriate) and are (or will on their
               being obtained or effected be) in full force and
               effect.
<PAGE>
          (f)  NO IMMUNITY:

                (i) Lessor is subject to civil commercial law
                    with respect to its obligations under the
                    Operative Documents.

               (ii) Neither Lessor nor any of its assets is
                    entitled to any right of immunity and the
                    entry into and performance of the Operative
                    Documents by Lessor constitute private and
                    commercial acts.

          (g)  RIGHT TO LEASE:  On the Delivery Date, Lessor
               shall have the right to lease the Aircraft to
               Lessee under this Agreement.

     2.5  REPETITION

          The representations and warranties in Clause 2.4 will
          survive the execution of this Agreement.  The
          representations and warranties contained in Clause 2.4
          will be deemed to be repeated by Lessor on Delivery and
          on each subsequent Rent Date as if made with reference
          to the facts and circumstances then existing.

3.   CONDITIONS PRECEDENT

     3.1  LESSOR'S DOCUMENTARY CONDITIONS PRECEDENT

          Lessor's obligation to lease the Leased Property to
          Lessee under this Agreement is subject to the receipt
          of the following by Lessor and Mortgagee from Lessee on
          or before Delivery in form and substance satisfactory
          to the Lessor, provided that it shall not be a
          condition precedent to the obligations of the Lessor
          that any document be produced, or action taken, which
          is to be produced or taken by it or any Person within
          its control:

          (a)  CONSTITUTIONAL DOCUMENTS:  a copy of the
               constitutional documents of the Lessee;

          (b)  RESOLUTIONS:  a copy of a resolution of the board
               of directors of the Lessee approving the terms of,
               and the transactions contemplated by, the
               Operative Documents, resolving that it enter into
               the Operative Documents, and authorizing a
               specified individual or individuals to execute the
               Operative Documents and accept delivery of the
               Aircraft on its behalf;

          (c)  OPINIONS: (i) an opinion, in the form set out in
               Exhibit D, in respect of Lessee's obligations
               under the Operative Documents issued by
               independent<PAGE> legal counsel acceptable to
               Lessor, and (ii) an opinion from Special FAA
               Counsel as to such matters as Lessor may
               reasonably request;

          (d)  APPROVALS:  evidence of the issuance of each
               approval, license and consent which may be
               required in relation to, or in connection with,
               the performance by Lessee of any of its
               obligations hereunder;

          (e)  LICENSES:  copies of the Lessee's air transport
               license, air operator's certificate and all other
               licenses, certificates and permits required by the
               Lessee in relation to, or in connection with, the
               operation of the Aircraft;

          (f)  CERTIFICATE:  a certificate of a duly authorized
               officer of the Lessee:

                (i) setting out a specimen of each signature
                    referred to in Clause 3.1(b); and

               (ii) certifying that each copy of a document
                    specified in this Clause 3.1 is correct,
                    complete and in full force and effect;

          (g)  INSURANCES:  certificates of insurance, brokers'
               undertakings and other evidence satisfactory to
               the Lessor and Mortgagee that the Lessee is taking
               the required steps to ensure due compliance with
               the provisions of this Agreement as to insurances
               with effect on and after Delivery;

          (h)  FILINGS:  evidence that all filings,
               registrations, recordings and other actions have
               been or will be taken which are necessary to
               ensure the validity, effectiveness and
               enforceability of the Operative Documents and to
               protect the respective rights of the Lessor and
               the Mortgagee in the Leased Property; and

          (i)  GENERAL:  such other documents as Lessor may
               reasonably request.

     3.2  LESSOR'S OTHER CONDITIONS PRECEDENT

          The obligation of the Lessor to deliver and lease the
          Leased Property under this Agreement is also subject to
          the following additional conditions precedent:

          (a)  REPRESENTATIONS AND WARRANTIES:  the
               representations and warranties of Lessee under
               Clauses 2.1 and 2.2 are correct and would be
               correct if repeated on Delivery; and
<PAGE>
          (b)  PAYMENTS:  all payments due to Lessor under this
               Agreement on or before Delivery, including the
               first payment of Basic Rent, shall have been
               received by Lessor.

     3.3  LESSOR'S WAIVER

          The conditions specified in Clauses 3.1 and 3.2(a) and
          (b) are for the sole benefit of the Lessor and the
          Financing Parties and may be waived or deferred in
          whole or in part and with or without conditions by the
          Lessor.

     3.4  LESSEE'S CONDITIONS PRECEDENT

          The Lessee's obligation to accept the Leased Property
          on lease from Lessor under this Agreement is subject to
          the satisfaction by the Lessor of the following
          conditions precedent:

          (a)  RESOLUTIONS:  a copy of a resolution of the board
               of directors of the Lessor approving the terms of,
               and the transactions contemplated by, the
               Operative Documents, resolving that it enter into
               the Operative Documents, and authorizing a
               specified individual or individuals to execute the
               Operative Documents;

          (b)  CERTIFICATE:  the receipt by the Lessee of a
               certificate of a duly authorized officer of the
               Lessor:

                (i) setting out a specimen of each signature
                    referred to in sub-clause (a) above; and

               (ii) certifying that the copy of the resolutions
                    referred to in sub-clause (a) above is
                    correct, complete and in full force and
                    effect;

          (c)  REPRESENTATIONS AND WARRANTIES:  the
               representations and warranties of the Lessor under
               Clause 2.4 are correct and would be correct if
               repeated on Delivery;

          (d)  REGISTRATION:  evidence that title to the Aircraft
               is held by Lessor and that the Aircraft has been
               validly registered under the laws of the State of
               Registration;

          (e)  DELIVERY CONDITION:  the Aircraft shall be in the
               condition set forth on Schedule 3;
<PAGE>
          (f)  CONSENT:  the receipt by Lessee of the Consent,
               duly signed by Lessor and Mortgagee;

          (g)  NO INJUNCTIONS:  no action or proceedings shall
               have been instituted nor shall governmental action
               be threatened before any Government Entity, nor
               shall any order, judgment or decree have been
               issued or proposed to be issued by any Government
               Entity at the time of the Delivery Date to set
               aside, restrain, enjoin or prevent the completion
               and consummation of this Agreement or the
               transactions contemplated hereby;

          (h)  OPERATIVE DOCUMENTS:  Lessee shall have received
               executed counterparts of each of the Operative
               Documents; and

          (i)  NO CHANGE IN LAW:  no change shall have occurred
               after the date of this Agreement in Applicable Law
               (including changes in interpretations thereof by
               Government Entities) which, in the reasonable
               opinion of Lessee, would make it a violation of
               Applicable Law for Lessee to enter into any
               transaction contemplated by the Operative
               Documents.

     3.5  LESSEE'S WAIVER

          The conditions specified in Clause 3.4 are for the sole
          benefit of the Lessee and may be waived or deferred in
          whole or in part and with or without conditions by the
          Lessee.  If any of those conditions are not satisfied
          on or before Delivery and the Lessee (in its absolute
          discretion) nonetheless agrees to lease the Leased
          Property from the Lessor, then Lessor will ensure that
          those conditions are fulfilled within one month after
          the Delivery Date.

4.   COMMENCEMENT

     4.1  LEASING

          (a)  The Lessor will lease the Leased Property to the
               Lessee and the Lessee will take the Leased
               Property on lease in accordance with this
               Agreement for the duration of the Term.

          (b)  The Lessor and the Lessee intend that this
               Agreement constitute a "true lease" and a lease
               for all United States federal income tax purposes.
               Lessor and Lessee further intend and agree that
               the Lessor shall be entitled to the full benefits
               afforded lessors of aircraft under 11 U.S.C.
               Section 1110, as amended.
<PAGE>
     4.2  DELIVERY

          (a)  DELIVERY CONDITION:  Lessor shall deliver the
               Leased Property in compliance with the delivery
               conditions set forth in Schedule 3 and otherwise
               "as is, where is and with all faults", except for
               any items set forth on Annex 2 to the Certificate
               of Delivery Condition and any other items agreed
               in writing by Lessor and Lessee.  Lessor
               represents and warrants to Lessee that Lessor has
               an agreement with Coopesa for the modification of
               the Aircraft, which commenced __________, 1999, to
               cause the Aircraft to comply with the delivery
               conditions set forth on Schedule 3.

          (b)  DELIVERY INSPECTION:  Before the Delivery Date,
               Lessor shall cause Coopesa to make the Leased
               Property available for Lessee to conduct a ground
               inspection of the Aircraft and an inspection of
               the Aircraft Documents to its satisfaction
               (collectively, the "Ground Inspection").  The
               Ground Inspection of the Aircraft shall include
               the following:

                (i) Lessee shall be entitled to perform, at
                    Lessee's expense, a videotape borescope
                    inspection of all accessible gas path
                    sections of each Engine (accessible whether
                    by borescope port or other means), including
                    the low pressure and high pressure
                    compressors and the turbine area of such
                    Engine.  All items beyond the Engine
                    Manufacturer's maintenance manual limits will
                    be rectified at Lessor's sole cost and
                    expense.  No Engine will be "on watch" for
                    any reason requiring special or out of
                    sequence inspection.

               (ii) In accordance with the Engine Manufacturer's
                    MPD, Lessor shall cause Coopesa to perform a
                    maximum power assurance run and condition,
                    acceleration and bleed valve scheduling
                    checks on each Engine.  Coopesa will record
                    and evaluate each Engine's performance, with
                    Lessee's representatives entitled to be
                    present.  Each Engine shall pass such tests
                    without operational limitations throughout
                    the operating envelope in accordance with the
                    Engine Manufacturer's maintenance manual.

              (iii) Lessor shall perform a videotape borescope
                    inspection of the APU, and all items beyond
                    the manufacturer's recommended limits will be
                    rectified at Lessee's sole cost and expense.

               (iv) The Aircraft shall be weighed just prior to
                    Delivery.
<PAGE>
          (c)  AIRCRAFT DOCUMENTS:  The Aircraft will be
               accompanied by the Aircraft Documents listed on
               Part 2 of Schedule 2.  Lessor will also provide to
               Lessee all historical and current maintenance
               manuals, aircraft and engine technical records and
               data, and other aircraft documentation provided to
               the Lessor by the Previous Operator.  Upon the
               request of Lessee, Lessor shall use reasonable
               efforts to obtain any required maintenance and
               technical records or documents not in its custody.

          (d)  ACCEPTANCE FLIGHT:  Before the Delivery Date,
               Lessee shall be entitled to perform an acceptance
               flight of the Aircraft of up to two hours with up
               to four representatives of Previous Operator and
               Lessor on-board as observers (the "Acceptance
               Flight") in accordance with Lessee's acceptance
               flight protocol.  Lessee shall also perform on
               behalf of Lessor such further acceptance flights
               as may be necessary in the event that the first or
               subsequent flights do not confirm that the
               Aircraft complies with the delivery requirements
               of this Agreement.  Lessee shall insure the
               Aircraft during all such acceptance flights, and
               Lessor shall reimburse Lessee for all of its costs
               in connection with all such acceptance flights.

          (e)  CORRECTION OF DISCREPANCIES:  The obligation of
               Lessee to lease the Leased Property from Lessor is
               subject to Lessor delivering the Leased Property
               to Lessee in compliance with the conditions set
               forth on Schedule 3.  If Lessor corrects all
               material discrepancies from the conditions set
               forth on Schedule 3 before delivery, or if Lessor
               and Lessee agree that Lessor will correct or pay
               for their correction as set forth on Annex 2 to
               the Certificate of Delivery Condition, then Lessee
               shall accept the Leased Property.  If, on the
               Scheduled Delivery Date, the Aircraft is not, in
               all material respects, in the condition set forth
               in Schedule 3 and Lessor and Lessee do not agree
               upon the correction of or payment for such
               material discrepancies within 60 days after the
               Scheduled Delivery Date, then Lessee may by notice
               to Lessor given not later than 75 days after the
               Scheduled Delivery Date terminate this Agreement.
               If Lessee fails to give any such termination
               notice within 75 days after the Scheduled Delivery
               Date, Lessee shall be deemed to have accepted the
               Leased Property for all purposes of this
               Agreement.

          (f)  LESSEE'S PRE-DELIVERY MODIFICATIONS:  During the
               pre-Delivery modifications performed by Coopesa,
               Lessee shall be permitted to request that Lessor
               cause Coopesa to replace or deactivate certain
               aircraft systems identified by Lessee, so long as
               such requested maintenance work will not  prevent
               Lessor from delivering the Aircraft on the
               Scheduled Delivery Date and are reasonably agreed
               to by Lessor.  Lessee shall pay Coopesa, or
               reimburse Lessor for, all charges of Coopesa for
               performing such replacement or deactivation.
               Any<PAGE> materials or components that are removed
               from the Aircraft and replaced shall be the
               property of Lessee.  Any materials or components
               that are deactivated or are otherwise removed and
               not replaced shall remain the property of Lessor
               and be returned to Lessor at Lessor's cost.

          (g)  FERRY FLIGHT:  Following completion of the
               Delivery Inspection, the Acceptance Flight and the
               correction by Lessor of all discrepancies
               discovered during the Delivery Inspection and/or
               the Acceptance Flight (or, at Lessee's option, the
               agreement of Lessor and Lessee to correct some or
               all of such discrepancies after Delivery), Lessee
               shall irrevocably accept the condition of the
               Leased Property.  Following such technical
               acceptance of the Aircraft, Lessee shall ferry the
               Aircraft from Coopesa's maintenance facility to
               the Delivery Location on behalf of, and pursuant
               to an agreement with, the Previous Owner, Previous
               Operator and Lessor (the "Ferry Flight").  All
               costs and expenses in connection with the ferry
               flight shall be borne by Lessee.

     4.3  DELAYED DELIVERY

          If owing to Coopesa delaying in the completion of the
          performance of the pre-Delivery modifications referred
          to in Clause 4.2(f) above or any Excusable Delay,
          Lessor delays in the delivery of, or fails to deliver,
          the Aircraft under this Agreement on the Scheduled
          Delivery Date, then in any such case:

          (a)  Lessor will not be responsible for any losses,
               including loss of profit, costs or expenses
               arising from or in connection with the delay or
               failure suffered or incurred by Lessee; and

          (b)  Lessee will not be entitled to terminate this
               Agreement or to reject the Aircraft when tendered
               for delivery by Lessor, on the grounds of any such
               delay, unless 60 days have elapsed after the
               Scheduled Delivery Date and Lessee has given
               written notice to Lessor to the effect that Lessee
               terminates this Agreement.

     4.4  ACCEPTANCE AND RISK

          (a)  The Leased Property will be delivered to, and will
               be accepted by, the Lessee at the Delivery
               Location on the Delivery Date immediately
               following satisfaction of the conditions precedent
               specified in Clauses 3.1, 3.2 and 3.4 (or their
               waiver or deferral by the party entitled to grant
               such waiver or deferral).

          (b)  Immediately following satisfaction of the
               conditions precedent specified in Clauses 3.1, 3.2
               and 3.4 (or their waiver or deferral by the party
               entitled to<PAGE> grant such waiver or deferral),
               the Lessee and the Lessor shall forthwith complete
               Annex 1 to the Certificate of Delivery Condition
               (specifying the maintenance status of the
               Airframe, Engines, APU and Landing Gear) and
               Lessor and Lessee shall sign and deliver to each
               other the Certificate of Acceptance and the
               Certificate of Delivery Condition.  Delivery of
               the signed Certificate of Acceptance to the Lessor
               shall constitute deemed delivery of the Aircraft
               to the Lessee.

          (c)  On and from Delivery, the Leased Property will be
               in every respect at the sole risk of the Lessee,
               which will bear all risk of loss, theft, damage or
               destruction to the Leased Property from any cause
               whatsoever.

          (d)  Concurrently with Delivery, Lessor shall file for
               recordation this Agreement at the FAA Aircraft
               Registry.

5.   PAYMENTS

     5.1  SECURITY DEPOSIT; LETTER OF CREDIT

          (a)  SECURITY DEPOSIT:  On the date of this Agreement,
               Lessee shall pay to Lessor an amount that, when
               added to amounts previously paid to Lessor, equal
               the Security Deposit.  The Security Deposit shall
               constitute additional security for performance by
               Lessee of its obligations under this Agreement,
               and the following provisions shall apply:

               (i   If an Event of Default occurs and for as long
                    as it continues, the Lessor may (but shall
                    not be obligated to) apply all or any portion
                    of the Security Deposit in or towards
                    satisfaction of any sums due and payable to
                    the Lessor under the Operative Documents or
                    to compensate the Lessor for any sums which
                    it may, in its discretion, advance or expend
                    as a result of any such Event of Default.
                    Notwithstanding any such use or application
                    by the Lessor, the Lessee shall remain in
                    default under this Agreement until the full
                    amount owed by the Lessee, including interest
                    accrued thereon pursuant to Clause 5.11,
                    shall have been paid to the Lessor.  If the
                    Lessor so uses or applies all or any portion
                    of the Security Deposit, the Lessee shall, on
                    demand of the Lessor, replenish the Security
                    Deposit in an amount equal to the amount so
                    used or applied within five Business Days
                    after Lessor's demand therefor.

               (ii  Lessor may commingle the Security Deposit
                    with its general funds and may deposit the
                    Security Deposit in any account selected by
                    Lessor,<PAGE> whether interest-bearing or
                    not, and any interest earned on the Security
                    Deposit will be the sole property of Lessor.

              (iii  The Security Deposit shall be returned to
                    Lessee within five Business Days of (1)
                    delivery to Lessor of a Letter of Credit in
                    accordance with Clause 5.1(b), (2) redelivery
                    of the Aircraft to the Lessor in the
                    condition required by Clause 12 and Schedule
                    4, or (3) receipt by the Lessor of the Agreed
                    Value following a Total Loss and all other
                    amounts due under Clause 11.1(b); provided,
                    that if, upon the occurrence of any event
                    specified in the foregoing subclause (1), (2)
                    or (3), any amounts payable by Lessee under
                    this Agreement remain outstanding, then the
                    Security Deposit shall be returned to Lessee
                    within five Business Days of the Lessor being
                    satisfied that the Lessee has irrevocably
                    paid to the Lessor all amounts that are at
                    that time outstanding under this Agreement.

          (b   LETTER OF CREDIT:  At any time on or after the
               Delivery Date, Lessee shall be entitled, instead
               of paying and having the Lessor hold the Security
               Deposit in cash in accordance with Clause 5.1(a)
               above, to provide the Lessor with the Letter of
               Credit.  In the event that the Lessee elects to
               provide the Letter of Credit, the following
               provisions shall apply:

               (i   Lessee shall cause the Letter of Credit to be
                    renewed or replaced by the issuing bank not
                    later than 30 days before the expiration of
                    such Letter of Credit, and shall cause the
                    Letter of Credit to remain in effect, as
                    renewed, until 90 days after the Expiry Date,
                    subject to Clause 5.1(b)(iii) below.

               (ii  If an Event of Default occurs and for as long
                    as it continues, the Lessor may (but shall
                    not be obliged to) call on the Letter of
                    Credit and use or apply the proceeds in or
                    towards satisfaction of any sums due and
                    payable to the Lessor under this Agreement or
                    to compensate the Lessor for any sums which
                    it may, in its discretion, advance or expend
                    as a result of any such Event of Default.
                    Notwithstanding any such use or application
                    by the Lessor, the Lessee shall remain in
                    default under this Agreement until the full
                    amount owed by the Lessee, including interest
                    accrued thereon pursuant to Clause 5.11,
                    shall have been paid to the Lessor.  If the
                    Lessor so uses or applies all or any portion
                    of the amount available under the Letter of
                    Credit, the Lessee shall immediately, on
                    demand of the Lessor, procure the issue of a
                    new Letter of Credit acceptable to the Lessor
                    for an amount equal to the amount so used or
                    applied, or shall pay to the Lessor an
                    amount<PAGE> in cash equal to the amount so
                    used or applied to be held pursuant to Clause
                    5.1(a).

             (iii   The Letter of Credit shall be returned to the
                    Lessee within five Business Days of:

                    (1)  redelivery of the Aircraft to the Lessor
                         in the condition required by Clause 12
                         and Schedule 3; or

                    (2)  receipt by the Lessor of the Agreed
                         Value following a Total Loss and all
                         other amounts due under Clause 11.1(b);

               provided, that if, upon the occurrence of any
               event specified in the foregoing subclause (1) or
               (2), any amounts payable by Lessee under this
               Agreement remain outstanding, then the Letter of
               Credit shall be returned to Lessee within five
               Business Days of the Lessor being satisfied that
               the Lessee has irrevocably paid to the Lessor all
               amounts which are at that time outstanding under
               this Agreement.

     5.2  RENTAL PERIODS

          The first Rental Period will commence on the Delivery
          Date and each subsequent Rental Period will commence on
          the date succeeding the last day of the previous Rental
          Period.  Each Rental Period will end on the date
          immediately preceding the next succeeding Rent Date
          except that if a Rental Period would otherwise overrun
          the Expiry Date, it will end on the Expiry Date.

     5.3  BASIC RENT

          (a   TIME OF PAYMENT:  The Lessee will pay to the
               Lessor or its order Basic Rent in advance on each
               Rent Date.  Payment must be initiated adequately
               in advance of the Rent Date to ensure that the
               Lessor receives credit for the payment on the Rent
               Date.

          (b   AMOUNT:  The Basic Rent payable in respect of each
               Rental Period will be the Basic Rent Amount as set
               forth in Schedule 1.
<PAGE>
     5.4  ADDITIONAL RENT

          (a   AMOUNT:  Subject to the proviso to Clause
               7.2(e)(iii), Lessee will pay to Lessor Additional
               Rent in relation to each calendar month (or
               portion thereof) during the Term on the 12th day
               following the end of that calendar month (or, with
               respect to the last calendar month during the
               Term, on the Expiry Date):

               (i   in respect of the Airframe, the Airframe
                    Additional Rent Rate for each Flight Hour
                    flown by the Airframe during that calendar
                    month ("Airframe Additional Rent");

               (ii  in respect of the Engines, the Engine
                    Additional Rent Rate for each Flight Hour
                    operated by each Engine during that calendar
                    month ("Engine Additional Rent");

              (iii  in respect of the Landing Gear, the Landing
                    Gear Additional Rent Rate for each Flight
                    Hour flown by the Airframe during that
                    calendar month ("Landing Gear Additional
                    Rent"); and

              (iv   in respect of the APU, the APU Additional
                    Rent Rate for each Flight Hour flown by the
                    Airframe during that calendar month ("APU
                    Additional Rent");

          (b   ADJUSTMENT:  Lessor and Lessee, acting in good
               faith, may mutually adjust the amount of
               Additional Rent after the Delivery Date, upon
               notice from one to the other, not more frequently
               than annually based on the following:

               (i   by reference to increases in the Consumer
                    Price Index as released by the Bureau of
                    Labor Statistics, United States Department of
                    Labor since the date of this Agreement;

               (ii  by reference to Manufacturer's and Engine
                    Manufacturer's recommendations, industry
                    experience, any change in the operational
                    environment of the Aircraft that materially
                    affects the cost of maintaining the Aircraft
                    and any change in the Flight Hour to Cycle
                    ratio of the operation of the Aircraft (it
                    being understood that the Additional Rent is
                    based on the assumption that the operation of
                    the Aircraft during the Term will, on
                    average, be not less than one Flight Hour for
                    each Cycle); and

              (iii  by reference to the Actual Costs experienced
                    by Lessee in the maintenance of the Aircraft
                    under this Agreement.
<PAGE>
     5.5  LESSOR'S MONEYS:  Lessor and Lessee intend that the
          Additional Rent are amounts paid by Lessee to the
          Lessor in consideration for the use of the Leased
          Property by the Lessee and the satisfaction of the
          Lessor's obligations under the Operative Documents and
          that, when paid, the Additional Rent is irrevocably and
          unconditionally the property of Lessor.
          Notwithstanding that stated intent, if and to the
          extent that the Additional Rent or any part thereof,
          under any Applicable Law or otherwise, is determined to
          be security deposits or otherwise the property of
          Lessee or if it is so determined those moneys are a
          debt owed to Lessee or that the Lessee shall have any
          interest in those moneys  (the "Lessors's Moneys"),
          Lessee and Lessor agree that subclauses (a) and (b)
          below shall apply:

          (a   To the fullest extent permitted by law and by way
               of continuing security, Lessee grants a Security
               Interest in the Lessor's Moneys and all rights of
               Lessee to payment thereof, the debt represented
               thereby and all interest thereon and/or any and
               all interest of Lessee therein to Lessor by way of
               first priority Security Interest as security for
               the Lessee's obligations and liability under this
               Agreement (the "Lessee's Liabilities").  Except as
               expressly permitted under this Agreement, Lessee
               will not be entitled to payment of the Lessor's
               Moneys.  Lessee will not assign, transfer or
               otherwise dispose of all or part of its rights or
               interest in the Lessor's Moneys and Lessee agrees
               that it will enter into any additional documents
               and instruments necessary or reasonably requested
               by Lessor or the Mortgagee to evidence, create or
               perfect the Lessor's rights to the Lessor's
               Moneys.

          (b   If Lessee fails to comply with any provision of
               this Agreement or any Event of Default has
               occurred and is continuing, Lessor may immediately
               or at any time thereafter, without prior notice to
               Lessee:

               (i   offset all or any part of the Lessee's
                    Liabilities against the liabilities of the
                    Lessor in respect of the Lessor's Moneys; or

               (ii  apply or appropriate the Lessor's Moneys in
                    or towards the payment or discharge of the
                    Lessee's Liabilities in such order as Lessor
                    sees fit.

     5.6  PAYMENTS

          (a   All payments of Rent by the Lessee to the Lessor
               under this Agreement will be made for value on the
               due date, for the full amount due, in Dollars and
               in same day funds, settled through the New York
               Clearing House System or such other funds as may
               for the time being be customary for the settlement
               in New York City of payments in Dollars by
               telegraphic transfer to the account<PAGE> of the
               Mortgagee at Citibank, N.A., ABA No. 021000089,
               Account No. 4068-0522, Reference: "Vanguard
               22122".

          (b   If any Rent or other payment would otherwise
               become due on a day which is not a Business Day,
               it shall be due on the immediately succeeding
               Business Day.

     5.7  GROSS-UP

          (a   All payments by the Lessee under or in connection
               with this Agreement will be made without offset or
               counterclaim, free and clear of and without
               deduction or withholding for or on account of any
               Taxes (other than Non-Indemnified Taxes that
               Lessee is compelled by law to deduct or withhold).

          (b   All Taxes (other than Non-Indemnified Taxes) in
               respect of payments under this Agreement shall be
               for the account of the Lessee.

          (c   If the Lessee is compelled by law to make payment
               to an Indemnitee under or in connection with this
               Agreement subject to any Tax and such Indemnitee
               does not actually receive for its own benefit on
               the due date a net amount equal to the full amount
               provided for under this Agreement (other than
               Non-Indemnified Taxes that Lessee is compelled by
               law to deduct or withhold), the Lessee will pay
               all necessary additional amounts to ensure receipt
               by such Indemnitee of the full amount (other than
               Non-Indemnified Taxes that Lessee is compelled by
               law to deduct or withhold) so provided for.
<PAGE>
     5.8  TAXATION

          (a   The Lessee will on demand pay and indemnify each
               Tax Indemnitee against all Taxes (other than
               Non-Indemnified Taxes) levied or imposed against
               or upon such Tax Indemnitee or the Lessee and
               relating to or attributable to the Lessee, the
               Operative Documents or the Aircraft directly or
               indirectly in connection with the registration,
               ownership, leasing, sub-leasing, delivery,
               possession, use, operation, repair, maintenance,
               overhaul, transportation, landing, storage,
               presence or redelivery of the Aircraft or any part
               thereof or any rent, receipts, insurance proceeds,
               income or other amounts arising therefrom.

          (b   If any Tax Indemnitee shall realize any Tax
               savings (by way of refund, deduction, credit or
               otherwise) in respect of any amount with respect
               to which the Lessee shall have made a payment (or
               increased payment) pursuant to Clause 5.7 or 5.10
               or shall have indemnified such Tax Indemnitee
               pursuant to Clause 5.8(a), or in respect of the
               occurrence or transaction which gave rise to such
               payment or indemnification, and such Tax savings
               shall not have been taken into account previously
               in calculating any indemnity payment made by the
               Lessee, then such Tax Indemnitee shall, subject to
               the Lessee's obligations to repay such amount to
               such Tax Indemnitee if the relevant savings are
               subsequently disallowed or canceled, pay to the
               Lessee the amount of such Tax savings (together
               with, in the case of a refund, any interest
               received thereon); provided, that no Tax
               Indemnitee shall be obliged to make any payment to
               the Lessee pursuant to this Clause 5.8(b) to the
               extent that the amount of any Tax savings in
               respect of which such payment is to be made would
               exceed the aggregate amount of all prior payments
               made by the Lessee to, on behalf of or as
               indemnification of such Tax Indemnitee under this
               Agreement for Taxes less the amount of all prior
               payments made pursuant to this Clause 5.8(b) in
               respect of such Tax savings.  The Lessee
               acknowledges that nothing contained in this Clause
               5.8(b) shall interfere with the right of any Tax
               Indemnitee to arrange its tax affairs in
               whatsoever proper manner it thinks fit and, in
               particular, no Tax Indemnitee shall be under any
               obligation to claim any Tax savings in priority to
               any other savings available to it; provided, that
               subject to the foregoing each Tax Indemnitee shall
               use reasonable good faith diligence to realize Tax
               savings as described above.

     5.9  INFORMATION
<PAGE>
          If Lessee is required by any Applicable Law, or by any
          third party, to deliver any report or return in
          connection with any Taxes (other than Non-Indemnified
          Taxes), the Lessee will duly complete the same and, in
          particular, will not state therein that any Person
          other than Lessee is responsible for the use and
          operation of the Aircraft and for the Taxes (other than
          Non-Indemnified Taxes) arising therefrom, and the
          Lessee will, on request, supply a copy of the report or
          return to any Tax Indemnitee.  If Lessee requires any
          information or cooperation from any Tax Indemnitee in
          order to satisfy its obligations as set forth above,
          such Tax Indemnitee shall promptly furnish such
          information or cooperation as Lessee may reasonably
          request upon written request by Lessee.  If actual
          notice is given by any taxing authority to Lessor that
          a report or return is required to be filed with respect
          to any Taxes (other than Non-Indemnified Taxes), the
          Lessor shall promptly notify Lessee of such required
          report or return.

     5.10 TAXATION OF INDEMNITY PAYMENTS

          (a   If and to the extent that any sums payable to any
               Tax Indemnitee by Lessee under this Agreement by
               way of indemnity are insufficient, by reason of
               any Taxes (other than Non-Indemnified Taxes)
               payable in respect of those sums, for such Tax
               Indemnitee to discharge the corresponding
               liability to the relevant third party (including
               any taxation authority), or to reimburse such Tax
               Indemnitee for the cost incurred by it to a third
               party (including any taxation authority), Lessee
               will pay to such Tax Indemnitee such sum as will,
               after the tax liability has been fully satisfied,
               leave such Tax Indemnitee with the same amount as
               it would have been entitled to receive in the
               absence of that liability, together with interest
               on the amount of the deficit at the Default Rate
               in respect of the period commencing on the date on
               which the payment of taxation is finally due until
               payment by the Lessee (both before and after
               judgment).

          (b   If and to the extent that any sums constituting
               (directly or indirectly) an indemnity to any Tax
               Indemnitee but paid by the Lessee to any Person
               other than such Tax Indemnitee are treated as
               taxable in the hands of such Tax Indemnitee (other
               than as a result of Non-Indemnified Taxes), then
               Lessee will pay to such Tax Indemnitee such sum as
               will, after the tax liability has been fully
               satisfied, indemnify such Tax Indemnitee to the
               same extent as it would have been indemnified in
               the absence of such liability, together with
               interest on the amount payable by Lessee under
               this Clause 5.10(b) at the Default Rate in respect
               of the period commencing on the date on which the
               payment of taxation is finally due until payment
               by the Lessee (both before and after judgment).
<PAGE>
     5.11 DEFAULT INTEREST

          If the Lessee fails to pay any amount payable under
          this Agreement on the due date, the Lessee will pay on
          demand from time to time to Lessor or any Financing
          Party (as the case may be) interest (both before and
          after judgment) at the Default Rate on such amount from
          the due date to the day of payment in full by Lessee to
          Lessor or such Financing Party.  All such interest
          shall be compounded monthly and calculated on the basis
          of the actual number of days elapsed assuming a year of
          360 days.

     5.12 CONTEST

          If written claim is made against any Tax Indemnitee for
          or with respect to any Taxes (other than
          Non-Indemnified Taxes), such Tax Indemnitee shall
          promptly notify the Lessee.  If reasonably requested by
          the Lessee in writing within 30 days after such
          notification, such Tax Indemnitee shall, upon receipt
          of indemnity satisfactory to such Tax Indemnitee and at
          the expense of the Lessee (including all reasonable
          out-of-pocket costs, expenses, losses, legal and
          accountants' fees and disbursements, penalties and
          interest), in good faith contest or to the extent
          permissible by law allow Lessee to contest in Lessee's
          or such Tax Indemnitee's name, the validity,
          applicability or amount of such Taxes by either (i)
          resisting payment thereof if practicable and permitted
          by Applicable Law, or (ii) if payment is made, using
          reasonable efforts to obtain a refund thereof in
          appropriate administrative and judicial proceedings,
          and in the contest of any such claim by any Tax
          Indemnitee, such Tax Indemnitee shall apprise the
          Lessee of all material developments with respect to
          such contest, shall forward copies of all material
          submissions made in such contest and shall materially
          comply in good faith with any reasonable request
          concerning the conduct of any such contest; provided,
          that no Tax Indemnitee will be obliged to take any such
          action:

          (a   if it waives its right under this Agreement to the
               indemnity at issue in such contest; or

          (b   unless there is a reasonable basis for such
               contest, and if the amount of Tax in controversy
               exceeds $50,000, Lessee provides such Tax
               Indemnitee with an opinion of independent tax
               counsel satisfactory to such Tax Indemnitee, both
               as to counsel and substance, to the effect that
               there is a reasonable basis for such contest; or

          (c   for which Lessee has not made adequate provision
               to the reasonable satisfaction of the Lessor or
               such Financing Party (as the case may be) in
               respect of the expense concerned; or
<PAGE>
          (d   if such action gives rise to any material
               likelihood of the Aircraft or any interest therein
               being sold, forfeited or otherwise lost or of
               criminal liability on the part of the Lessor or
               any Financing Party.

          If any Tax Indemnitee, in accordance with the
          foregoing, determines to pay such Taxes and seek a
          refund, Lessee will either pay such Taxes on such Tax
          Indemnitee's behalf and pay such Tax Indemnitee any
          amount due with respect to such payment or will
          promptly reimburse such Tax Indemnitee for such Taxes.
          If any Tax Indemnitee shall obtain a refund of all or
          any part of such Taxes paid by the Lessee, such Tax
          Indemnitee shall pay Lessee the amount of such refund;
          provided, that such amount shall not be payable before
          such time as the Lessee shall have made all payments or
          indemnities to any Tax Indemnitee then due with respect
          to Taxes and so long as no Default has occurred and is
          continuing.  If in addition to such refund any Tax
          Indemnitee shall receive an amount representing
          interest, attorneys fees or any other amount with
          respect to such refund, Lessee shall be paid that
          proportion of such interest, attorneys fees or any
          other amount which is fairly attributable to the Taxes
          paid by the Lessee prior to the receipt of such refund.
          No Tax Indemnitee shall enter into a settlement or
          other compromise with respect to, or otherwise concede,
          any claim by a taxing authority on account of Taxes
          being contested by Lessee pursuant to this Clause 5.12
          without the written consent of Lessee, which consent
          shall not be unreasonably withheld.  If a Tax
          Indemnitee enters into a settlement or other compromise
          without the written consent of Lessee in accordance
          with the preceding sentence, such Tax Indemnitee shall
          be deemed to have waived its right to be indemnified by
          Lessee with respect to such claim (but not with respect
          to any future claims).

     5.13 ABSOLUTE

          Lessee's obligations under this Agreement are absolute
          and unconditional irrespective of any contingency
          whatever including (but not limited to):

          (a   any right of offset, counterclaim, recoupment,
               defense or other right which either party to this
               Agreement may have against the other;

          (b   any unavailability of the Aircraft for any reason,
               including a requisition of the Aircraft or any
               prohibition or interruption of, interference with
               or other restriction against the Lessee's use,
               operation or possession of the Aircraft;

          (c   any lack or invalidity of title or any other
               defect in title, airworthiness, merchantability,
               fitness for any purpose, condition, design or
               operation of any kind or nature of the Aircraft
               for any particular use or trade, or for
               registration<PAGE> or documentation under the laws
               of any relevant jurisdiction, or any Total Loss in
               respect of or any damage to the Aircraft;

          (d   any insolvency, bankruptcy, reorganization,
               arrangement, readjustment of debt, dissolution,
               liquidation or similar proceedings by or against
               the Lessor or the Lessee;

          (e   any invalidity, unenforceability or lack of due
               authorization of, or other defect in, this
               Agreement; or

          (f   any other cause which, but for this provision,
               would or might otherwise have the effect of
               terminating or in any way affecting any obligation
               of the Lessee under this Agreement;

          provided always, however, that this Clause 5.13 shall
          be without prejudice to the Lessee's right to claim
          damages and other relief from the courts in the event
          of any breach by the Lessor of its obligations under
          this Agreement, or in the event that, as a result of
          any lack or invalidity of title to the Aircraft on the
          part of the Lessor, the Lessee is deprived of its
          possession of the Aircraft.

6.   MANUFACTURER'S WARRANTIES

     6.1  ASSIGNMENT

          Notwithstanding this Agreement and subject to the
          rights of Mortgagee pursuant to the Assignment, the
          Lessor will remain entitled to the benefit of each
          warranty, express or implied, and any unexpired
          customer and/or product support given or provided in
          respect of the Aircraft, any Engine or Part by any
          manufacturer, vendor, maintenance performer,
          subcontractor or supplier.  Unless an Event of Default
          shall have occurred and be continuing, Lessor hereby
          authorizes Lessee to pursue any claim thereunder in
          relation to defects affecting the Aircraft, any Engine
          or Part, and the Lessee agrees diligently to pursue any
          such claim which arises at its own cost.  The Lessee
          will notify the Lessor promptly upon becoming aware of
          any such claim.  The Lessor will provide such
          assistance to the Lessee in making a claim under any
          such warranties or customer and/or product support as
          the Lessee may reasonably request, and, if requested by
          the Lessee and at the Lessee's expense, will pursue a
          claim in its own name where the relevant manufacturer,
          vendor, maintenance performer, subcontractor or
          supplier has refused to acknowledge the Lessee's right
          to pursue that claim.
<PAGE>
     6.2  PROCEEDS

          Unless an Event of Default shall have occurred and be
          continuing, all proceeds of any such claim as is
          referred to in Clause 6.1 and which exceed $250,000
          will be paid directly to Lessor at the account set
          forth in Clause 5.6(a), but if and to the extent that
          such claim relates:

          (a   to defects affecting the Aircraft which the Lessee
               has rectified; or

          (b   to compensation for loss of use of the Aircraft,
               an Engine or any Part during the Term; or

          (c   to costs incurred by the Lessee in pursuing such
               claim (whether or not proceeds of such claim are
               payable to the Lessee);

          and provided no Default shall have occurred and be
          continuing, the proceeds will be promptly paid to the
          Lessee by Lessor but, in the case of (a), only on
          receipt of evidence reasonably satisfactory to Lessor
          that Lessee has rectified the relevant defect.

     6.3  PARTS

          Except to the extent the Lessor otherwise agrees in a
          particular case, the Lessee will procure that all
          engines, components, furnishings or equipment provided
          by the manufacturer, vendor, maintenance performer,
          subcontractor or supplier as a replacement for a
          defective Engine or Part pursuant to the terms of any
          warranty or customer and/or product support arrangement
          comply with Clause 8.13(a), are installed on the
          Aircraft promptly and that title thereto vests in the
          Lessor in accordance with Clause 8.17(a).  On
          installation those items will be deemed to be an Engine
          or Part, as applicable.

     6.4  AGREEMENT

          To the extent any warranties or customer and/or product
          support relating to the Aircraft are made available
          under an agreement between any manufacturer, vendor,
          maintenance performer, subcontractor or supplier and
          the Lessee, this Clause 6 is subject to that agreement.
          However, Lessee will:

          (a   pay the proceeds of any claim thereunder that
               exceed $250,000 to Lessor at the account set forth
               in Clause 5.6(a) to be applied pursuant to
               Clause 6.2 and, pending such payment, will hold
               the claim and the proceeds on trust for Lessor;
               and
<PAGE>
          (b   take all such steps as are necessary and requested
               by the Lessor at the end of the Term to ensure the
               benefit of any of those warranties or customer
               and/or product support which have not expired are
               vested in the Lessor (but subject to the rights of
               Mortgagee under the Mortgage).

7.   LESSOR'S COVENANTS AND DISCLAIMERS

     7.1  QUIET ENJOYMENT

          Provided no Event of Default shall have occurred and be
          continuing, none of the Lessor, its successors and
          assigns, any Financing Party or any Person claiming by,
          through or on account of any of such parties will
          interfere with the quiet use, possession and enjoyment
          of the Aircraft by the Lessee.

     7.2  LESSOR'S MAINTENANCE CONTRIBUTION

          (a   AIRFRAME REIMBURSABLE EXPENSES:

               (i   Upon the performance by Lessee of a Heavy
                    Check on the Airframe during the Term of this
                    Lease, the Lessee's Actual Costs incurred in
                    completing, with respect to the Airframe, all
                    routine Heavy Check tasks shall constitute
                    "Airframe Reimbursable Expenses".

               (ii  In connection with the performance of any
                    part of a Heavy Check, Lessee shall present
                    written evidence satisfactory to Lessor as to
                    the workscope to be performed and payment
                    installments relating to the performance
                    thereof in connection with such Heavy Check
                    and the amount of the Airframe Reimbursable
                    Expenses for approval by Lessor.  Upon
                    receipt of such written evidence, and
                    provided there then exists no Default, Lessor
                    shall pay to Lessee, or to the independent
                    repair facility performing such work if
                    directed by Lessee, an amount equal to the
                    lesser of (i) the Airframe Reimbursable
                    Expenses or (ii) an amount equal to (1) all
                    Airframe Additional Rent previously paid by
                    Lessee under this Lease, minus (2) all
                    previous payments by Lessor under this Clause
                    7.2(a).
<PAGE>
          (b   ENGINE REIMBURSABLE EXPENSES:

               (i   Upon the accomplishment of any CER for any
                    Engine during the Term requiring shop repair,
                    including any premature removal of an Engine
                    due to accelerated performance deterioration
                    revealed by Lessee's trend monitoring data
                    and replacement of LLPs during any such shop
                    visit, the Lessee's Actual Cost incurred in
                    completing such CER shall constitute "Engine
                    Reimbursable Expenses".

               (ii  Upon accomplishment of any CER for an Engine,
                    Lessee shall present written evidence
                    satisfactory to Lessor as to the completion
                    of such CER to such Engine and the amount of
                    Engine Reimbursable Expenses for approval by
                    Lessor.  Such shop visit shall include a
                    build standard to be mutually agreed upon by
                    Lessor and Lessee. Upon receipt of such
                    written evidence, and provided there then
                    exists no Default, Lessor shall pay to
                    Lessee, or to the independent repair facility
                    performing such work if directed by Lessee,
                    an amount equal to the lesser of (i) the
                    Engine Reimbursable Expenses with respect to
                    such Engine or (ii) an amount equal to (1)
                    all Engine Additional Rent previously paid by
                    Lessee for such Engine pursuant to this
                    Lease, minus (2) all previous payments for
                    such Engine by Lessor under this Clause
                    7.2(b).

          (c   LANDING GEAR REIMBURSABLE EXPENSES:

               (i   Upon the performance by Lessee of an overhaul
                    of any Landing Gear or the replacement of
                    LLPs of any Landing Gear, in each case in
                    accordance with the Agreed Maintenance
                    Program, the Lessee's Actual Cost incurred in
                    completing such overhaul shall constitute
                    "Landing Gear Reimbursable Expenses".

               (ii  Upon accomplishment of any such overhaul,
                    Lessee shall present written evidence
                    satisfactory to Lessor as to the completion
                    of such overhaul and the amount of Landing
                    Gear Reimbursable Expenses for approval by
                    Lessor.  Upon receipt of such written
                    evidence, and provided there then exists no
                    Default, Lessor shall pay to Lessee, or to
                    the independent repair facility performing
                    such work if directed by Lessee, an amount
                    equal to the lesser of (i) the Landing Gear
                    Reimbursable Expenses or (ii) an amount equal
                    to (1) all Landing Gear Additional Rent
                    previously paid by Lessee pursuant to this
                    Lease, minus (2) all previous payments by
                    Lessor under this Clause 7.2(c).
<PAGE>
          (d   APU REIMBURSABLE EXPENSES:

               (i   Upon the performance by Lessee of an overhaul
                    of the APU in accordance with the Agreed
                    Maintenance Program, the Lessee's Actual Cost
                    incurred in completing such overhaul shall
                    constitute "APU Reimbursable Expenses".

               (ii  Upon accomplishment of any such overhaul,
                    Lessee shall present written evidence
                    satisfactory to Lessor as to the completion
                    of such overhaul and the amount of APU
                    Reimbursable Expenses for approval by Lessor.
                    Upon receipt of such written evidence, and
                    provided there then exists no Default, Lessor
                    shall pay to Lessee, or to the independent
                    repair facility performing such work if
                    directed by Lessee, an amount equal to the
                    lesser of (i) the APU Reimbursable Expenses
                    or (ii) an amount equal to (1) all APU
                    Additional Rent previously paid by Lessee
                    pursuant to this Lease, minus (2) all
                    previous payments by Lessor under this Clause
                    7.2(d).

          (e   ADDITIONAL PROVISIONS:

               (i   Notwithstanding the provisions of Clauses
                    7.2(a)(i), (b)(i), (c)(i) and (d)(i),
                    Reimbursable Expenses shall not include the
                    cost of (1) any replacements or repairs
                    caused by foreign object damage, ingestion,
                    accident, faulty maintenance or installation,
                    any incident, improper operations, abuse,
                    neglect, misuse or elective parts replacement
                    (except to the extent ordinarily accomplished
                    during such maintenance or overhaul), (2) any
                    modifications or interior reconfiguration,
                    (3) the accomplishment of all airworthiness
                    directives or manufacturer's service
                    bulletins not incorporated into the
                    Maintenance Program, (4) maintenance work
                    that is reimbursable by a claim under the
                    manufacturer's warranties or by insurance
                    (but including deductibles for purposes of
                    this provision) or (5) any overhaul of time
                    controlled components accomplished during the
                    Heavy Check, CER or overhaul except such as
                    are part of the routine tasks included at
                    such Heavy Check, CER or overhaul or that,
                    when tested during such Heavy Check, CER or
                    overhaul, fail and need to be replaced.

               (ii  Notwithstanding anything to the contrary
                    contained in this Clause 7.2, any such
                    maintenance and the extent and nature of such
                    maintenance to be performed shall be
                    conducted at an Agreed Maintenance Performer.
                    Lessor shall be entitled to have
                    representatives present<PAGE> during the
                    performance of such maintenance to oversee
                    and approve all aspects of such performance,
                    including the workscope thereof to ensure
                    that such maintenance is in accordance with
                    the Agreed Maintenance Program.  Lessor shall
                    be notified by Lessee prior to the
                    commencement of any maintenance work
                    described in this Clause 7.2, including as to
                    the Agreed Maintenance Performer and for
                    Lessor's approval of the workscope.

              (iii  Lessee acknowledges that Lessee is required
                    to pay the full cost of and to perform (or
                    cause to be performed) any check, shop visit,
                    overhaul or other maintenance required by the
                    Agreed Maintenance Program, whether or not
                    Lessor is required to make any payments
                    pursuant to this Clause 7.2, and any costs
                    incurred by Lessee in performing any such
                    check, shop visit, overhaul or other
                    maintenance required by the Agreed
                    Maintenance Program shall be for Lessee's
                    account solely; provided, that if Lessor's
                    contribution pursuant to Clause 7.2(a), (b),
                    (c) or (d) above is ever less than the
                    Reimbursable Expenses incurred by Lessee with
                    respect to the Airframe, Engines, Landing
                    Gear or APU, then Lessee's obligation under
                    Clause 5.4 to make payments of Additional
                    Rent with respect to the Airframe, Engines,
                    Landing Gear or APU, respectively, shall be
                    suspended until an equivalent amount to such
                    shortfall has been retained by Lessee.

               (iv  Lessor shall deposit all Additional Rent in
                    an interest-bearing account with the
                    Mortgagee or with another financial
                    institution that Mortgagee uses for other
                    similar amounts deposited with it.  Lessor
                    shall not commingle its general funds in such
                    account, but such account may hold security
                    deposits, additional rent and similar
                    payments paid to Affiliates of Lessor under
                    other aircraft leases.  Any interest earned
                    on the Additional Rent will be added to and
                    become a part of the Additional Rent.

     7.3  LESSOR'S ENGINE MAINTENANCE CONTRIBUTION

          Provided no Default has occurred and is continuing,
          upon the performance by  Lessee of the first CER during
          the Term on the Engine bearing manufacturer's serial
          number 687338, Lessor will pay to Lessee, by way of
          contribution to the cost of maintenance of the
          Aircraft, an amount equal to the product of (a) the
          difference between 4,000 Flight Hours or Cycles
          (whichever is more limiting) and the number of Flight
          Hours or Cycles, as the case may be, remaining to the
          first limiter on such Engine at Delivery, multiplied by
          (b) the Engine Additional Rent Rate then in effect.
<PAGE>
     7.4  LESSOR'S AD COST SHARING CONTRIBUTION

          (a   Provided no Default has occurred and is
               continuing, upon the performance by  Lessee of
               "Qualifying AD Work" (as hereinafter defined)
               relating to (i) any single airworthiness directive
               issued by the Aviation Authority after the
               Delivery Date and requiring terminating action
               during the Term, (ii) any FAR regulation
               promulgated after the Delivery Date requiring the
               installation on the Aircraft during the Term of a
               16-parameter flight data recorder or (iii) any FAR
               regulation promulgated after the Delivery Date
               requiring the installation in the cargo
               compartment of the Aircraft during the Term of
               fire indicators, Lessor will pay to Lessee, by way
               of contribution to the cost of maintenance of the
               Aircraft, an amount equal to the product of
               (1) the amount by which the Actual Cost of the
               Qualifying AD Work for such single airworthiness
               directive or either of such regulations exceeds
               $50,000, multiplied by (2) a fraction the
               numerator of which is 84 minus the number of
               months (rounded to the nearest whole number of
               months) from the Delivery Date to the date of
               completion of such Qualifying AD Work and the
               denominator is 84.

          (b   "Qualifying AD Work" means maintenance work
               performed on the Aircraft solely in order to
               comply fully with airworthiness directives issued
               by the Aviation Authority after the Delivery Date
               on a terminating action basis or with the two FAR
               regulations described in Clause 7.4(a)(ii) and
               (iii), and excluding work performed for any other
               purpose, such as compliance with airworthiness
               directives by means of repetitive inspections,
               recording compliance work in the Aircraft
               Documents and all other maintenance work.

          (c   The Lessor will be obligated to pay any amount
               specified in Clause 7.4(a) within 14 days after
               submission by the Lessee to the Lessor of an
               invoice and supporting documentation reasonably
               satisfactory to the Lessor evidencing the
               performance of Qualifying AD Work for an
               airworthiness directive.
<PAGE>
     7.5  REGISTRATION AND FILINGS

          The Lessor shall, at the Lessor's cost:

          (a   maintain the registration of the Aircraft with the
               Aviation Authority reflecting (so far as permitted
               by Applicable Law) the respective interests of
               Lessor and Lessee and not do or suffer to be done
               anything which might reasonably be expected to
               adversely affect that registration; and

          (b   do all acts and things (including making any
               filing or registration with the Aviation Authority
               or any other Government Entity) as may be required
               following any change in the ownership or financing
               of the Aircraft.

     7.6  AGREED MAINTENANCE PERFORMERS

          The Lessor may object to and may exclude any
          maintenance organization (other than Lessee) being
          included as an "Agreed Maintenance Performer" for a
          valid business reason; provided, that Lessor must
          provide such objection within 45 days of scheduled
          maintenance.  The Lessor shall furnish to Lessee in
          writing from time to time a list of all maintenance
          organizations excluded from the definition of "Agreed
          Maintenance Performer" pursuant to the preceding
          sentence, which list may be amended by Lessor from time
          to time.  The Lessor and the Lessee shall consult in
          good faith regarding any organizations on such list
          from time to time at the request of either party.

     7.7  EXCLUSION

          THE AIRCRAFT IS ACCEPTED BY THE LESSEE "AS IS, WHERE IS
          WITH ALL FAULTS" AND LESSEE AGREES AND ACKNOWLEDGES
          THAT, SAVE AS IS EXPRESSLY STATED IN THIS AGREEMENT,
          LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND
          LESSOR HAS NOT AND WILL NOT BE DEEMED TO HAVE MADE OR
          GIVEN, ANY CONDITIONS, WARRANTIES OR REPRESENTATIONS,
          EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT,
          INCLUDING:

          (a   THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY,
               FITNESS FOR ANY USE OR PURPOSE, VALUE, CONDITION,
               OR DESIGN, OF THE AIRCRAFT OR ANY PART; OR

          (b   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY
               IN TORT, WHETHER OR NOT ARISING FROM LESSOR'S
               NEGLIGENCE, ACTUAL OR IMPUTED (BUT EXCLUDING ANY
               SUCH OBLIGATION,<PAGE> LIABILITY, RIGHT, CLAIM OR
               REMEDY IN TORT WHICH ARISES FROM LESSOR'S GROSS
               NEGLIGENCE OR WILFUL MISCONDUCT); OR

          (c   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY
               FOR LOSS OF OR DAMAGE TO THE AIRCRAFT, FOR ANY
               LIABILITY OF LESSEE TO ANY THIRD PARTY, OR FOR ANY
               OTHER DIRECT, INDIRECT, INCIDENTAL OR
               CONSEQUENTIAL DAMAGES.

     7.8  LESSEE'S WAIVER

          LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR,
          ALL ITS RIGHTS IN RESPECT OF ANY CONDITION, WARRANTY OR
          REPRESENTATION, EXPRESS OR IMPLIED, ON THE PART OF
          LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND
          WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF
          THE OPERATION OR PERFORMANCE OF THE AIRCRAFT OR THIS
          AGREEMENT EXCEPT AS IS OTHERWISE EXPRESSLY STATED IN
          THIS AGREEMENT.

     7.9  LESSEE'S CONFIRMATION

          LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE
          PROVISIONS OF CLAUSES 7.7 AND 7.8 AND ACKNOWLEDGES THAT
          BASIC RENT AND OTHER AMOUNTS HAVE BEEN CALCULATED
          NOTWITHSTANDING ITS PROVISIONS.

8.   LESSEE'S COVENANTS

     8.1  DURATION

          The undertakings in this Clause 8 and in Clause 12
          will:

          (a   except as otherwise stated, be performed at the
               expense of the Lessee; and

          (b   remain in force until redelivery of the Aircraft
               to the Lessor in accordance with this Agreement
               and thereafter to the extent of any accrued rights
               of the Lessor in relation to those undertakings.

     8.2  INFORMATION

          The Lessee shall:
<PAGE>
          (a   furnish to the Lessor, with a copy to Mortgagee:

               (i   within 60 days after the last day of the
                    first three fiscal quarters of each fiscal
                    year of the Lessee, unaudited consolidated
                    quarterly financial statements of the Lessee
                    prepared for such quarter, including a
                    consolidated balance sheet of the Lessee and
                    its Subsidiaries as of the last day of such
                    quarter and consolidated statements of income
                    and retained earnings for such fiscal quarter
                    and for the year to date and, on a
                    comparative basis, figures for the
                    corresponding periods of the immediately
                    preceding fiscal year, all in reasonable
                    detail, each such statement to be certified
                    in a certificate of Lessee's chief financial
                    officer or chief accounting officer as fairly
                    presenting the financial position and the
                    results of operations of the Lessee as at its
                    date and for such quarter (subject to year-
                    end audit adjustments) and as having been
                    prepared in accordance with GAAP;

               (ii  as soon as available but not in any event
                    later than 105 days after the last day of
                    each fiscal year of the Lessee, audited
                    consolidated financial statements of the
                    Lessee prepared for such year, including a
                    consolidated balance sheet of the Lessee and
                    its Subsidiaries as of the last day of such
                    year, consolidated statements of income and
                    retained earnings of the Lessee and its
                    Subsidiaries for such fiscal year, a
                    consolidating balance sheet of the Lessee and
                    its Subsidiaries as of the last day of such
                    year and consolidating statements of income
                    and retained earnings of the Lessee and its
                    Subsidiaries for such fiscal year and in all
                    cases on a comparative basis figures for the
                    immediately preceding fiscal year, all in
                    reasonable detail, each prepared in
                    accordance with GAAP and certified without
                    qualification by Ernst & Young or another of
                    the largest international firms of
                    independent certified public accountants as
                    fairly presenting the financial position and
                    the results of operations of Lessee and its
                    Subsidiaries at the end of and for such
                    fiscal year and as having been prepared in
                    accordance with GAAP;

              (iii  in lieu of delivering the financial
                    statements referred to in sub-clauses (i) and
                    (ii) above, (1) Lessee may deliver Quarterly
                    Reports on Form 10-Q and Annual Reports on
                    Form 10-K for the respective periods filed by
                    the Lessee pursuant to and in accordance with
                    the Securities Exchange Act of 1934, as
                    amended, and (2) Lessee may cause such
                    financial statements (or 10-Qs and 10-Ks) to
                    be publicly available on the internet through
                    EDGAR filings with the Securities and
                    Exchange Commission or otherwise;
<PAGE>
               (iv  at the same time as it is issued to the
                    creditors of the Lessee, a copy of each
                    notice or circular issued to the Lessee's
                    creditors as a group; and

               (v   on request from time to time such other
                    information regarding the Lessee and its
                    business and affairs as the Lessor or
                    Mortgagee may reasonably request;

          (b   on request, inform the Lessor as to the current
               location of the Airframe and Engines and the
               serial number and owner of any engine installed on
               the Airframe;

          (c   promptly furnish to Lessor all information that
               Lessor from time to time reasonably requests
               regarding the Aircraft, any Engine or any Part and
               its use, location and condition, including the
               hours available on the Aircraft and any Engine
               until the next scheduled check, inspection,
               overhaul or shop visit, as the case may be;

          (d   on request, furnish to the Lessor evidence
               reasonably satisfactory to the Lessor that all
               Taxes and charges incurred by the Lessee with
               respect to the Aircraft have been paid and
               discharged in full;

          (e   provide to the Lessor, within five days following
               the end of each calendar month during the Term, a
               monthly report on the Aircraft in the form set out
               in Exhibit F or such other form as the Lessee may
               select providing substantially the same
               information;

          (f)  promptly notify Lessor and Mortgagee of:

                (i) any Total Loss, any Engine Loss, any theft of
                    the Airframe or any Engine, any damage to the
                    Aircraft if the potential cost of repair may
                    reasonably be expected to exceed the Damage
                    Notification Threshold or any modification to
                    the Aircraft if the potential cost may
                    reasonably be expected to exceed the Damage
                    Notification Threshold;

               (ii) any claim or other occurrence likely to give
                    rise to a claim under the Insurances (but, in
                    the case of hull claims only, in excess of
                    the Damage Notification Threshold) and
                    details of any negotiations with the
                    insurance brokers over any such claim; and
<PAGE>
              (iii) any litigation, arbitration or administrative
                    proceedings that are pending or, to the
                    Lessee's knowledge, threatened against the
                    Lessee which, if adversely determined, would
                    have a material adverse effect upon its
                    financial condition or business or its
                    ability to perform its obligations under this
                    Agreement.

     8.3  LAWFUL AND SAFE OPERATION

          The Lessee shall:

          (a)  comply with all Applicable Law for the time being
               in force in any country or jurisdiction in which
               the Aircraft is being operated which is applicable
               to the Aircraft or the use and operation of the
               Aircraft;

          (b)  not use the Aircraft in any manner contrary to any
               requirement or regulation of the Aviation
               Authority or for any purpose for which the
               Aircraft is not designed or reasonably suitable;

          (c)  ensure that the crew and engineers employed by it
               in connection with the operation and maintenance
               of the Aircraft have the qualifications and hold
               the licenses required by the Aviation Authority
               and Applicable Law;

          (d)  use the Aircraft solely in commercial or other
               operations for which the Lessee is duly authorized
               by the Aviation Authority and Applicable Law;

          (e)  not knowingly use the Aircraft (or use it when the
               Lessee ought reasonably to have known that it was
               being so used) for the carriage of:

                (i) whole animals, living or dead, except in the
                    cargo compartments according to IATA
                    regulations, and except domestic pet animals
                    carried in a suitable container to prevent
                    the escape of any liquid and to ensure the
                    welfare of the animal;

               (ii) acids, toxic chemicals, other corrosive
                    materials, explosives, nuclear fuels, nuclear
                    wastes or any nuclear assemblies or
                    components, except as permitted for cargo
                    aircraft under the "Restriction of Goods"
                    schedule issued by IATA from time to time and
                    provided that all the requirements for
                    packaging or otherwise contained therein are
                    fulfilled;
<PAGE>
              (iii) any other goods, materials or items of cargo
                    which could reasonably be expected to cause
                    damage to the Aircraft and which would not be
                    adequately covered by the Insurances; or

               (iv) any item or substance whose carriage is
                    illegal under Applicable Law;

          (f)  not utilize the Aircraft for purposes of training,
               qualifying or re-confirming the status of cockpit
               personnel except for the benefit of the Lessee's
               cockpit personnel, and then only if the use of the
               Aircraft for such purpose is not disproportionate
               to the use for such purpose of other aircraft of
               the same type operated by the Lessee;

          (g)  not (other than for bona fide safety reasons)
               cause or permit the Aircraft to proceed to, or
               remain at, any location which is for the time
               being the subject of a prohibition order (or any
               similar order or directive) by:

                (i) any Government Entity of the State of
                    Registration; or

               (ii) any Government Entity of the country in which
                    such location is situated; or

              (iii) any Government Entity having jurisdiction
                    over the Lessee or the Aircraft;

          (h)  obtain and maintain in full force all
               certificates, licenses, permits and authorizations
               required for the use and operation of the Aircraft
               for the time being, and for the making of payments
               required by, and the compliance by the Lessee with
               its other obligations under, this Agreement.

     8.4  TAXES AND OTHER CHARGES

          The Lessee will promptly pay:

          (a)  all license and registration fees, Taxes (other
               than Non-Indemnified Taxes) and other amounts of
               any nature imposed by any Government Entity that
               are imposed on the Lessee or for which the Lessee
               is responsible under this Agreement with respect
               to the Aircraft, including the purchase,
               ownership, delivery, leasing, possession, use,
               operation, return, sale or other disposition of
               the Aircraft; and
<PAGE>
          (b)  all rent, fees, charges, Taxes (other than
               Non-Indemnified Taxes) imposed on the Lessee and
               other amounts in respect of any premises where the
               Aircraft or any Part thereof is located from time
               to time during the Term;

     except to the extent that such payment is being contested in
     good faith by appropriate proceedings in accordance with
     Clause 5.12.

     8.5  SUB-LEASING

          Lessee will not sub-lease or otherwise part with
          possession of the Aircraft, the Engines or any Part
          except that the Lessee may part with possession:

          (a)  with respect to the Aircraft, the Engines or any
               Part, to the relevant manufacturers for testing or
               similar purposes or to an Agreed Maintenance
               Performer for service, repair, maintenance or
               overhaul work or for alterations, modifications or
               additions to the extent required or permitted by
               this Agreement;

          (b)  with respect to an Engine or Part, as expressly
               permitted by this Agreement;

          (c)  with respect to the Aircraft or an Engine,
               pursuant to an ACMI (aircraft crew, maintenance
               and insurance) "wet" lease or charter of the
               Aircraft in which operational control of the
               Aircraft remains with the Lessee at all times,
               provided the Aircraft remains registered with the
               Aviation Authority;

          (d)  with respect to the Aircraft or an Engine, and
               with the consent of Lessor and Mortgagee (which
               consent shall not be unreasonably withheld),
               pursuant to a sublease to a certificated air
               carrier under the following conditions:

                (i) no Default shall have occurred and be
                    continuing;

               (ii) notwithstanding such sublease, Lessee shall
                    remain primarily responsible to Lessor
                    hereunder and the sublease, by its terms,
                    shall be expressly subject and subordinate in
                    all respect to this Agreement;

              (iii) the sublease shall include clauses identical
                    to or having the same substantive effect as
                    Clauses 2.1, 2.2, 5, 7.7, 7.8, 8, 9, 10, 13,
                    15.11 and Schedule 5 of this Agreement,
                    except that a sublease may impose additional
                    or more stringent obligations on, or give
                    fewer rights to, any sublessee than are
                    imposed on Lessee under the provisions of
                    this Agreement and that the term of the
                    sublease shall not be capable of extending
                    beyond the Expiry Date; provided, that any
                    sublease to a<PAGE> certificated air carrier
                    that is an Affiliate of Lessee (an "Affiliate
                    Sublease") need only include clauses
                    identical to or having the same substantive
                    effect as Clauses 8 and 9 and Schedule 5 of
                    this Agreement;

               (iv) the rights, title and interests of Lessor and
                    the Financing Parties in and to the Leased
                    Property and this Agreement shall be duly
                    evidenced and protected to the satisfaction
                    of Lessor and such Financing Parties
                    (including as to the making of all necessary
                    filings and registrations) and such interests
                    shall not, in Lessor's reasonable opinion, be
                    prejudiced by the sublease;

               (v)  Lessee and the sublessee shall have executed
                    and delivered to Lessor a security assignment
                    in respect of the sublease together with an
                    acknowledgment of such assignment, each such
                    document to be in such form as Lessor and
                    Mortgagee shall reasonably require;

               (vi) the sublessee shall be a reputable air
                    carrier, experienced in operating aircraft of
                    the same type as the Aircraft, shall hold all
                    necessary consents, licenses, permits and
                    authorizations required under the applicable
                    law of the state of incorporation or
                    establishment  of such carrier for the public
                    transport of passengers and cargo, and shall
                    not be subject to any event of the types
                    described in Clauses 13.1(g), (h) or (i) as
                    of the commencement of the sublease;

              (vii) the Aircraft shall not be based or re-
                    registered outside the State of Registration
                    if the Lessor or Mortgagee determines, in its
                    absolute discretion, that the foreign
                    jurisdiction is not acceptable in terms of
                    political and judicial risk;

             (viii) Lessee shall give written notice to Lessor
                    and the Financing Parties of any proposed
                    sublease at least 30 days prior to the date
                    on which it is proposed that such sublease be
                    executed (which notice shall include the
                    identity of any proposed change in the State
                    of Registration and, if then determined, the
                    term and the delivery date of the proposed
                    Sublease), and within a reasonable period
                    prior to the execution by Lessee of any
                    sublease, Lessee will provide Lessor and the
                    Financing Parties with a copy of the draft
                    sublease in order for Lessor and the
                    Financing Parties to satisfy themselves that
                    the conditions set out in this Clause 8.5(d)
                    as to the form of the sublease are fulfilled;
                    provided, that in connection with an
                    Affiliate Sublease that does not contemplate
                    a change in the State of Registration, Lessee
                    need only give Lessor<PAGE> and the Financing
                    Parties written notice of such Affiliate
                    Sublease five days prior to the date on which
                    such Affiliate Sublease is proposed to be
                    executed;

               (ix) prior to delivery of the Aircraft to the
                    sublessee under any sublease, Lessee shall
                    deliver to Lessor an original counterpart of
                    the sublease duly executed by Lessee and
                    sublessee, and except in connection with an
                    Affiliate Sublease shall provide Lessor with
                    the equivalent of the conditions precedent
                    set forth in Clause 3.1 and 3.2 applicable to
                    such sublessee;

               (x)  Lessee shall be responsible for all
                    reasonable costs incurred by Lessor and any
                    Financing Party in connection with the
                    Sublease; and

               (xi) the sublease shall provide that no further
                    subleases of the Aircraft by the sublessee
                    shall be permitted.

     8.6  INSPECTION

          (a)  Lessor, any Financing Party and any Person
               designated by Lessor or any Financing Party may at
               any time visit, inspect and survey the Aircraft,
               any Engine or any Part and for such purpose may,
               subject to any applicable Aviation Authority
               regulation, travel on the flight deck as observer.
               Subject to Clause 8.6(c)(ii) below, Lessor, any
               Financing Party or any designee shall not be
               restricted during such inspection from opening any
               panels, bays or doors on the Aircraft or from
               inspecting any part of the Aircraft.

          (b)  Lessee shall have no responsibility for the costs
               and expenses of Lessor and any Financing Party in
               connection with any such visit, inspection or
               survey.

          (c)  The Lessor shall:

                (i) have no duty to make, or liability arising
                    out of, any such visit, inspection or survey;
                    and

               (ii) so long as no Default has occurred and is
                    continuing, not exercise such right other
                    than on reasonable notice and so as not to
                    disrupt unreasonably the maintenance or
                    operation of the Aircraft.

     8.7  PROTECTION OF TITLE

          The Lessee shall:
<PAGE>
          (a)  not do or knowingly permit to be done or omit or
               knowingly permit to be omitted to be done any act
               or thing which might reasonably be expected to
               jeopardize the respective rights, title and
               interest of Mortgagee as mortgagee of the Aircraft
               and assignee of this Agreement or the Lessor as
               owner of the Aircraft and lessor under this
               Agreement or the validity, enforceability or
               priority of the Mortgage and the Assignment;

          (b)  on all occasions when the ownership of the
               Aircraft, any Engine or any Part is relevant, make
               clear to third parties that title is held by the
               Lessor and is subject to the Mortgage;

          (c)  not at any time:

                (i) represent or hold out the Lessor or any
                    Financing Party as carrying goods or
                    passengers on the Aircraft or as being in any
                    way connected or associated with any
                    operation or carriage (whether for hire or
                    reward or gratuitously) which may be
                    undertaken by the Lessee; or

               (ii) pledge the credit of the Lessor or any
                    Financing Party;

          (d)  ensure that there is always affixed, and not
               removed or in any way obscured, a fireproof plate
               (having dimensions of not less than 6 in. x 4 in.)
               in a reasonably prominent position on the Aircraft
               and on each Engine stating:

                    "This [Aircraft/Engine] is owned by
                    Aircraft 22122, Inc., is leased to
                    Vanguard Airlines, Inc. and is subject
                    to a mortgage and security agreement in
                    favor of FINOVA Capital Corporation.  It
                    may not be operated by any other person
                    without the prior written consent of
                    Aircraft 22122, Inc. and FINOVA Capital
                    Corporation."

          (e)  not create or permit to exist any Security
               Interest upon the Aircraft, any Engine or any
               Part, except Permitted Liens;

          (f)  not do or permit to be done anything which may
               reasonably be expected to expose the Aircraft, any
               Engine or any Part to penalty, forfeiture,
               impounding, detention, appropriation, damage or
               destruction and, without prejudice to the
               foregoing, if any such penalty, forfeiture,
               impounding, detention, appropriation, damage or
               destruction occurs, give the Lessor notice and use
               its best efforts to procure the immediate release
               of the Aircraft, such Engine or such Part, as the
               case may be;
<PAGE>
          (g)  not abandon the Aircraft, the Engine or any Part;

          (h)  pay and discharge or cause to be paid and
               discharged when due and payable or make adequate
               provision by way of security or otherwise for all
               debts, damages, claims and liabilities which have
               given or might reasonably be expected to give rise
               to a Security Interest (other than a Permitted
               Lien) over or affecting the Aircraft, any Engine
               or any Part; and

          (i)  not attempt, or hold itself out as having any
               power, to sell, lease or otherwise dispose of the
               Aircraft, any Engine or any Part other than as
               expressly permitted by this Agreement.

     8.8  GENERAL

          Lessee will:

          (a)  not make any substantial change in the nature of
               the business in which it is engaged if such
               change, in the reasonable opinion of the Lessor or
               Mortgagee, might reasonably be expected to have a
               material adverse effect on the Lessee's
               performance of its obligations under this
               Agreement;

          (b)  preserve its corporate existence, and will not
               merge or consolidate with any Person unless the
               successor Person resulting from such merger or
               consolidation (the "Successor")

                (i) is a Person incorporated, formed or organized
                    under the laws of a State of the United
                    States of America;

               (ii) shall have a net worth immediately after such
                    merger or consolidation of not less than the
                    Lessee's net worth immediately prior thereto;

              (iii) shall be authorized under Applicable Law to
                    perform the Lessee's obligations under this
                    Agreement to the same extent as the Lessee;

               (iv) shall deliver to Lessor and Mortgagee an
                    agreement in form and substance reasonably
                    satisfactory to Lessor containing an
                    assumption by the Successor of Lessee's
                    representations and warranties under this
                    Agreement, together with the due and punctual
                    performance of all of Lessee's obligations
                    under this Agreement; and

               (v)  shall deliver to Lessor and Mortgagee an
                    opinion of counsel reasonably satisfactory in
                    form and substance to Lessor and<PAGE>
                    Mortgagee covering the Operative Documents
                    and the agreement referred to in sub-clause
                    (iv) above and substantially in the form of
                    the legal opinion set forth in Exhibit D.

     8.9  RECORDS

          The Lessee shall procure that accurate, complete and
          current records of all flights made by, and all
          maintenance carried out on, the Aircraft (including, in
          relation to each Engine or Part subsequently installed,
          before its installation) are kept in English, and shall
          keep the records in such manner as the Aviation
          Authority may from time to time require.  The records
          will form part of the Aircraft Documents.

     8.10 REGISTRATION AND FILINGS

          Lessee shall:

          (a)  not do anything that might reasonably be expected
               to adversely affect the registration of the
               Aircraft with the Aviation Authority reflecting
               (so far as permitted by Applicable Law) the
               respective interests of the Lessor and Mortgagee;
               and

          (b)  do all acts and things (including making any
               filing or registration with the Aviation Authority
               or any other Government Entity) and executing and
               delivering all documents (including any amendment
               of this Agreement) as may be required by the
               Lessor following any modification of the Aircraft,
               any Engine or any Part or the permanent
               replacement of any Engine or Part in accordance
               with this Agreement, so as to ensure that the
               respective rights of the Lessor and Mortgagee
               under this Agreement apply with the same effect as
               before.

     8.11 MAINTENANCE AND REPAIR

          The Lessee shall:

          (a)  keep the Aircraft airworthy in all respects and in
               good repair and condition, and all maintenance
               will be carried out in accordance with the Agreed
               Maintenance Program;

          (b)  advise the Lessor and Mortgagee in writing of all
               material changes to the Agreed Maintenance
               Program;
<PAGE>
          (c)  maintain the Aircraft in accordance with the
               Agreed Maintenance Program through Agreed
               Maintenance Performers and perform (at the
               respective intervals provided in the Agreed
               Maintenance Program) all Major Checks, and before
               performing any Major Check Lessee will consult
               with Lessor as to the workscope for such Major
               Check;

          (d)  maintain the Aircraft in accordance with FAR Part
               121 and all other rules and regulations of the
               Aviation Authority as are applicable to aircraft
               of the same type as the Aircraft operated by
               United States of America air carriers;

          (e)  without limiting the provisions of Clause 7.4,
               comply with all mandatory inspection and
               modification requirements, airworthiness
               directives and similar requirements applicable to
               the Aircraft, any Engine or Part having a
               compliance date on or before 90 days after the
               Expiry Date and that are required by the Aviation
               Authority;

          (f)  comply with all alert service bulletins issued by
               any manufacturer of the Aircraft, Engines or
               Parts, and comply (including scheduling compliance
               work and then performing such work on schedule)
               with all other service bulletins issued by any
               such manufacturer if and to the extent that the
               Lessee brings or schedules to bring in compliance
               at least one-half of the applicable aircraft it
               operates (excluding for purposes of such
               calculation aircraft acquired from unrelated third
               parties that already comply with such other
               service bulletins);

          (g)  comply with all Applicable Laws and the
               regulations of the Aviation Authority and any
               other aviation authorities with jurisdiction over
               the Lessee or the Aircraft, any Engine or Part
               that relate to the maintenance, condition, use or
               operation of the Aircraft or require any
               modification or alteration to the Aircraft, any
               Engine or Part;

          (h)  maintain in good standing a current U.S. Standard
               Transport Category Certificate of Airworthiness
               for the Aircraft issued by the Aviation Authority
               in accordance with FAR Part 21 except when the
               Aircraft is undergoing maintenance, modification
               or repair required or permitted by this Agreement,
               and shall from time to time provide to the Lessor
               a copy on request;

          (i)  if required by the Aviation Authority, maintain a
               current certification as to maintenance issued by
               or on behalf of the Aviation Authority in respect
               of the Aircraft and shall from time to time
               provide to the Lessor a copy on request;
<PAGE>
          (j)  maintain the Engines with respect to overhaul
               build standards and disc replacements at a level
               which is consistent with the level applied by the
               Lessee in relation to other engines of the same
               type as the Engines in its fleet;

          (k)  maintain the Engines and the APU in an "on
               condition" program as set forth in the respective
               manufacturer's maintenance planning document;

          (l)  subject to Clause 11.2, procure promptly the
               replacement of any Engine or Part which has become
               time, cycle or calendar expired, lost, stolen,
               seized, confiscated, destroyed, damaged beyond
               repair, unserviceable or permanently rendered
               unfit for use, with an engine or part complying
               with the conditions set out in Clause 8.13(a); and

          (m)  maintain the Airframe at all times in compliance
               with the requirements of the Manufacturer's Aging
               Aircraft Program, SID Program and CPCP and related
               mandates of the Aviation Authority, with all
               documentation necessary to assure and demonstrate
               compliance becoming part of the Aircraft
               Documents.

     8.12 REMOVAL OF ENGINES AND PARTS

          The Lessee will ensure that no Engine or Part installed
          on the Aircraft is at any time removed from the
          Aircraft other than:

          (a)  if replaced as expressly permitted by this
               Agreement; or

          (b)  If the removal is of an obsolete item and is in
               accordance with the Agreed Maintenance Program; or

          (c)  pursuant to, and in accordance with, Clause 8.15;
               or

          (d)   (i) during the course of maintaining,
                    servicing, repairing, overhauling or testing
                    that Engine or the Aircraft, as the case may
                    be; or

               (ii) as part of a normal engine or part rotation
                    program; or

              (iii) for the purpose of making such modifications
                    to the Engine or the Aircraft, as the case
                    may be, as are permitted under this
                    Agreement,

               and then in each case only if it is reinstalled or
               replaced by an engine or part complying with
               Clause 8.13(a) as soon as practicable and in any
               event no later than the Expiry Date.
<PAGE>
     8.13 INSTALLATION OF ENGINES AND PARTS

          (a)  The Lessee will ensure that, except as permitted
               by this Agreement, no engine or part is installed
               on the Aircraft unless:

                (i) in the case of an engine, it is an engine of
                    the same model as, or an improved or advanced
                    version of the Engine it replaces (provided,
                    in the case of an improved or advanced
                    version, it can be installed and operated on
                    the Airframe without modification of the
                    Airframe or the engine, whether or not the
                    other installed Engine is also such an
                    improved or advanced version), which has
                    attached to it a current "serviceable tag"
                    issued by the manufacturer or supplier
                    indicating that the engine is new,
                    serviceable or overhauled, and the Lessee
                    shall retain all such tags;

               (ii) in the case of a part, it is in as good
                    operating condition, is of the same
                    interchangeable modification status as the
                    replaced Part and has attached to it a
                    current "serviceable tag" issued by the
                    manufacturer or supplier indicating that the
                    part is new, serviceable or overhauled, and
                    the Lessee shall retain all such tags;

              (iii) in the case of a part, it has become and
                    remains the property of the Lessor free from
                    Security Interests and on installation on the
                    Aircraft will, without further act, be
                    subject to this Agreement and to the Security
                    Interest created by the Mortgage, in which
                    case title to the removed part shall
                    automatically become vested in Lessee without
                    further action or warranty on the part of
                    Lessor except that such Part shall be free of
                    Lessor Liens; and

               (iv) in each case, the Lessee has full details as
                    to its source and maintenance records.

          (b)  If no Event of Default has occurred which is
               continuing, the Lessee will be entitled to install
               any engine or part on the Aircraft by way of
               replacement notwithstanding Clause 8.13(a) if:

                (i) there is not available to Lessee at the time
                    and in the place that engine or part is
                    required to be installed on the Aircraft a
                    replacement engine or part complying with the
                    requirements of Clause 8.13(a);

               (ii) it would result in an unreasonable disruption
                    of the operation of the Aircraft or the
                    business of Lessee to ground the Aircraft
                    until an<PAGE> engine or part complying with
                    Clause 8.13(a) becomes available for
                    installation on the Aircraft; and

              (iii) as soon as practicable after installation of
                    the same on the Aircraft but, in any event,
                    no later than the earlier of (1) 90 days
                    after such installation and (2) the Expiry
                    Date, the Lessee removes any such engine or
                    part and replaces it with the Engine or Part
                    replaced by it or by an engine or part
                    complying with Clause 8.13(a).

          (c)  If no Default has occurred which is continuing,
               the Lessee will be entitled to install Lessee
               Installed Parts on the Airframe by way of
               replacement notwithstanding Clause 8.13(a)(iii) so
               long as:

                (i) the terms of any lease, conditional sale
                    agreement or security agreement, as the case
                    may be, covering such Lessee Installed Part
                    will not have the effect of prejudicing the
                    title and interest of the Lessor in and to
                    the Aircraft (including its Engines and
                    Parts) or the interest of Mortgagee in
                    respect thereof under the Mortgage;

               (ii) the secured party, lessor or conditional
                    vendor, as the case may be, of such Lessee
                    Installed Part has confirmed and acknowledged
                    in writing (which confirmation and
                    acknowledgment may be contained in the lease,
                    conditional sale agreement or security
                    agreement covering such Lessee Installed
                    Part) to the Lessor and Mortgagee that it
                    will recognize the respective rights, title
                    and interest of the Lessor and Mortgagee in
                    and to the Aircraft (including its Engines
                    and Parts) and that it will not seek to
                    exercise any rights whatever in relation
                    thereto; and

              (iii) before the Expiry Date the Lessee removes any
                    such Lessee Installed Part and replaces it
                    with the Part replaced by it or by another
                    part, in either case complying with
                    Clause 8.13(a).

          (d)  Lessor agrees, for the benefit of Lessee and any
               mortgagee or holder of any other Security Interest
               in any engine (other than an Engine) or Lessee
               Installed Part owned by the Lessee, any lessor of
               any engine (other than an Engine leased to the
               Lessee) or Lessee Installed Part and any
               conditional vendor of any engine (other than an
               Engine purchased by the Lessee subject to a
               conditional sale agreement or any other security
               agreement) or Lessee Installed Part, that no
               right, title to or interest in any such engine or
               Lessee Installed Part shall be exercised or
               asserted by the Lessor and the Lessor acknowledges
               and confirms that it will not acquire any right,
               title or interest<PAGE> to or in any such engine
               or Lessee Installed Part as a result of its
               installation on the Airframe.

     8.14 NON-INSTALLED ENGINES AND PARTS

          (a)  The Lessee shall ensure that any Engine or Part
               which is not installed on the Airframe (or any
               other airframe as permitted by this Agreement) is,
               except as expressly permitted by this Agreement,
               properly and safely stored and kept free from
               Security Interests (other than Permitted Liens),
               with insurance thereon complying with the
               requirements of this Agreement.

          (b)  Notwithstanding Clause 8.14(a), the Lessee shall
               be permitted, if no Default has occurred and is
               continuing, to install any Engine on an airframe
               and any Part on an airframe or engine:

                (i) owned and operated by the Lessee free from
                    Security Interests, other than Permitted
                    Liens;

               (ii) leased or hired to the Lessee pursuant to a
                    lease or conditional sale agreement on a
                    long-term basis and on terms whereby the
                    Lessee has full operational control of that
                    aircraft or engine; or

              (iii) acquired or financed by the Lessee and
                    operated by the Lessee on terms that
                    ownership of that aircraft or engine, as the
                    case may be, pursuant to a lease, conditional
                    sale agreement or Security Interest is vested
                    in or held by any other Person;

               provided that in the case of (ii) and (iii):

               (1)  the terms of any such lease, conditional sale
                    agreement or Security Interest will not have
                    the effect of prejudicing the title and
                    interest of the Lessor in and to that Engine
                    or Part or the interest of Mortgagee in
                    respect thereof under the Mortgage; and

               (2)  the lessor under such lease, the seller under
                    such conditional sale agreement or the
                    secured party of such Security Interest, as
                    the case may be, has confirmed and
                    acknowledged in writing (which such
                    confirmation and acknowledgment may be
                    contained in the lease, conditional sale
                    agreement or document creating the Security
                    Interest covering that Engine or Part) to the
                    Lessor and Mortgagee, in form and substance
                    satisfactory to the Lessor, that it will
                    recognize the respective rights, title and
                    interest of the Lessor and Mortgagee to
                    and<PAGE> in that Engine or Part and that it
                    will not seek to exercise any rights whatever
                    in relation thereto.

     8.15 POOLING OF ENGINES AND PARTS

          The Lessee will not enter into nor permit any pooling
          agreement or arrangement in respect of an Engine or
          Part without the prior written consent of the Lessor
          and Mortgagee, such consent not to be unreasonably
          withheld in any case where an Engine or Part is leased,
          let on hire or otherwise made available by the Lessee
          (on terms conferring no more than a contractual right
          in personam against the Lessee and not a right in rem
          against such Engine or Part) pursuant to a pooling
          agreement to which the Lessee is a party and:

          (a)  the other parties to which are reputable, solvent
               commercial air carriers or the manufacturers or
               suppliers of the Engine or Part (or other
               reputable, solvent organizations whose business
               includes the administration of and participation
               in such pooling agreements or arrangements); and

          (b)  which does not contemplate the transfer of title
               to the pooled Engine or Part; and

          (c)  either provides that Lessor (or Mortgagee, as the
               case may be) will be sole loss payee in respect of
               any loss or damage to the Engine or Part, or
               provides for Lessor to acquire title to a
               substitute engine or part satisfying the
               conditions set out in Clause 8.13(a) if the Engine
               or Part is destroyed.

     8.16 EQUIPMENT CHANGES

          (a)  The Lessee will not make any modification or
               addition to the Aircraft (each an "Equipment
               Change"), except for an Equipment Change that:

                (i) is expressly permitted by any other provision
                    of this Agreement, or

               (ii) has the prior written approval of the Lessor
                    and Mortgagee (which approval shall not be
                    unreasonably withheld provided the proposed
                    Equipment Change will not, in the reasonable
                    opinion of the Lessor and Mortgagee, diminish
                    the value, utility, condition or
                    airworthiness of the Aircraft), except for
                    painting or minor cabin interior
                    modifications not affecting the structure of
                    the Airframe, any or all of which may be made
                    without such prior approval.
<PAGE>
          (b)  So long as no Event of Default has occurred and is
               continuing, the Lessee may remove any Equipment
               Change if it can be removed from the Aircraft
               without diminishing or impairing the value,
               utility, condition or airworthiness of the
               Aircraft.

     8.17 TITLE TO ENGINES AND PARTS

          (a)  Title to any engine installed on the Aircraft,
               whether by way of replacement as the result of an
               Equipment Change or otherwise (except as provided
               for replacement engines pursuant to Clause 11.2
               below) will not vest in Lessor.

          (b)  Title to all Parts installed on the Aircraft,
               whether by way of replacement as the result of an
               Equipment Change or otherwise (except those
               installed pursuant to Clause 8.13(b) or Clause
               8.15) will on installation, without further act,
               vest in the Lessor subject to this Agreement free
               and clear of all Security Interests other than the
               Mortgage.  The Lessee will at its own expense take
               all such steps and execute, and procure the
               execution of, all such instruments that are
               necessary to ensure that title so passes to the
               Lessor and is subject to the Security Interest
               created by the Mortgage according to all
               Applicable Laws.  At any time when requested by
               the Lessor, the Lessee will provide evidence to
               the Lessor's reasonable satisfaction (including
               the provision, if required, to the Lessor of one
               of more legal opinions) that title has so passed
               to the Lessor and is subject to the Security
               Interest created by the Mortgage.

          (c)  The Lessor may require the Lessee to remove any
               Equipment Change other than an Equipment Change
               permitted under Clause 8.16(a), and to restore the
               Aircraft to its condition prior to that Equipment
               Change.

          (d)  Any Engine at any time removed from the Aircraft
               will remain the property of the Lessor until, in
               the event of an Engine Loss, a replacement has
               been made in accordance with Clause 11.2 and title
               to that replacement has passed, according to
               Applicable Laws and pursuant to Clause 11.2, to
               the Lessor subject to this Agreement free of all
               Security Interests, whereupon title to the removed
               Engine will, provided no Default has occurred and
               is continuing, pass to the Lessee free of Lessor
               Liens.  Except as referred to in Clause 8.16(b),
               any Part at any time removed from the Aircraft
               will remain the property of the Lessor until a
               replacement has been made in accordance with this
               Agreement and until title to that replacement has
               passed, according to Clause 8.17(b) and Applicable
               Laws, to the Lessor subject to this Agreement free
               of all Security Interests, whereupon title to the
               removed Part will, provided no Default has
               occurred and is continuing, pass to the Lessee
               free of Lessor Liens.
<PAGE>
     8.18 THIRD PARTIES

          The Lessee shall procure that no Person having
          possession of the Aircraft during the Term will act in
          any manner inconsistent with the Lessee's obligations
          under this Agreement and that all such Persons shall
          comply with those obligations as if references to
          "Lessee" included a separate reference to those
          Persons.

     8.19 NON-DISCRIMINATION

          (a)  Lessee shall not discriminate against the Aircraft
               in its use, maintenance or operation of the
               Aircraft compared to other similar Aircraft owned
               or operated by Lessee, and Lessee shall service,
               repair, maintain and overhaul the Aircraft so as
               to keep the Aircraft maintained in the same manner
               and with the same care as used by Lessee with
               similar aircraft owned or operated by Lessee.

          (b)  Subject to a sublease permitted pursuant to Clause
               8.5, Lessee shall continue to use the Aircraft in
               its regular commercial passenger operations until
               delivery to the Return Location immediately prior
               to the Final Inspection.

          (c)  Lessee further agrees that normal progressive
               maintenance will continue to be performed on the
               Aircraft throughout the Term, and no unusual
               maintenance procedures or cessation of maintenance
               shall occur during the one year period prior to
               the Expiry Date.

9.   INSURANCE

     9.1  INSURANCES

          The Lessee will maintain in full force and effect
          during the Term insurances in respect of the Aircraft
          in accordance with this Clause 9 and Schedule 5 (the
          "Insurances") through such brokers and with such
          insurers and having such deductibles and being subject
          to such exclusions as are usual and customary in the
          worldwide aviation insurance marketplace for major
          international air carriers operating similar equipment
          who are similarly situated with Lessee.  The Insurances
          will be effected either:

          (a)  on a direct basis with insurers of recognized
               standing who normally participate in aviation
               insurances in the leading international insurance
               markets and led by reputable underwriters approved
               by Lessor and the Mortgagee, or

          (b)  with a single insurer or group of insurers
               approved by Lessor and the Mortgagee who does not
               retain the risk, but effects substantial
               reinsurance in<PAGE> the leading international
               insurance markets and through brokers of
               recognized standing and acceptable to Lessor and
               the Mortgagee for a percentage acceptable to the
               Lessor and the Mortgagee of all risks insured,

          and Lessor acknowledges and confirms that the current
          deductibles and exclusions, together with the existing
          brokers and insurers, in respect of the insurances
          maintained by Lessee on the date of this Agreement are
          acceptable to it and Mortgagee.

     9.2  REQUIREMENTS

          The Lessor's current requirements as to Insurances are
          as specified in this Clause 9 and in Part 1 of Schedule
          5.  Except for the amount of the Agreed Value, the
          Minimum Liability Coverage and the deductible under
          Lessee's hull and war risk insurance policies, the
          Lessor may from time to time stipulate such other
          requirements for the Insurances as the Lessor
          reasonably considers necessary to ensure that the scope
          and level of cover is maintained in accordance with the
          then prevailing industry practice in relation to
          aircraft of the same type as the Aircraft and in
          relation to operators of similar standing to the
          Lessee.  In the event that it proposes any such
          stipulation, Lessor shall notify the Lessee accordingly
          and the Lessor and/or its brokers will then consult in
          good faith with the Lessee and the Lessee's approved
          independent insurance brokers with regard to such
          proposed stipulation.  If, following the consultation,
          the Lessee's independent insurance brokers confirm that
          the proposed stipulation is in accordance with
          prevailing industry practice for airlines similarly
          situated to Lessee, then Lessee shall comply with the
          proposed requirements at the time of its next renewal
          of Insurances.

     9.3  INSURANCE COVENANTS

          The Lessee shall:

          (a)  ensure that all legal requirements as to insurance
               of the Aircraft, any Engine or any Part that may
               from time to time be imposed by the laws of the
               State of Registration or any jurisdiction to, from
               or over which the Aircraft may be flown, in so far
               as they affect or concern the operation of the
               Aircraft, are complied with and, in particular,
               those requirements compliance with which is
               necessary to ensure that:

                (i) the Aircraft does not become subject to
                    detention or forfeiture;

               (ii) the Insurances remain valid and in full force
                    and effect; and
<PAGE>
              (iii) the interests of the Indemnitees in the
                    Insurances and the Aircraft or any Part are
                    not thereby prejudiced;

          (b)  not use, cause or permit the Aircraft, any Engine
               or any Part to be used for any purpose or in any
               manner not covered by the Insurances or outside
               any geographical limit imposed by the Insurances;

          (c)  comply with the terms and conditions of each
               policy of the Insurances and not do, consent or
               agree to any act or omission that:

                (i) invalidates or may reasonably be expected to
                    invalidate the Insurances;

               (ii) renders or may reasonably be expected to
                    render void or voidable the whole or any part
                    of any of the Insurances; or

              (iii) brings any particular liability within the
                    scope of an exclusion or exception to the
                    Insurances;

          (d)  not take out without the prior written approval of
               the Lessor any insurance in respect of the
               Aircraft other than those of the type required
               under this Agreement unless relating solely to
               hull total loss, business interruption, engine
               break-down, profit commission and deductible risk
               or which would otherwise have no adverse impact on
               the Insurances required to be carried by Lessee
               under this Agreement;

          (e)  commence renewal procedures at least 30 days prior
               to the expiration of any of the Insurances and
               provide to the Lessor and Mortgagee:

                (i) if requested by the Lessor, a written status
                    report of renewal negotiations 14 days prior
                    to each expiration date;

               (ii) telefaxed confirmation of completion of
                    renewal prior to each expiration date; and

              (iii) a certificate of insurance and broker's
                    letter of undertaking substantially in the
                    form set out in Parts 2 and 3 of Schedule 5,
                    detailing the coverage and confirming the
                    insurers' agreement to the specified
                    insurance requirements of this Agreement
                    within seven days after each renewal date;

          (f)  provide to the Lessor and Mortgagee copies of
               those documents evidencing the Insurances which
               the Lessor and Mortgagee may reasonably request;
<PAGE>
          (g)  on request, provide to the Lessor and Mortgagee
               evidence that the Insurance premiums have been
               paid;

          (h)  not make any modification or alteration to the
               Insurances material and adverse to the interests
               of any of the Indemnitees;

          (i)  be responsible for any deductible under the
               Insurances; and

          (j)  provide any other insurance related information,
               or assistance, in respect of the Insurances as the
               Lessor may reasonably request.

     9.4  FAILURE TO INSURE

          If the Lessee fails to maintain the Insurances in
          compliance with this Agreement, each of the Indemnitees
          will be entitled but not obligated (without prejudice
          to any other rights of the Lessor under this
          Agreement):

          (a)  to pay the premiums due or to effect and maintain
               insurances satisfactory to it or otherwise remedy
               the Lessee's failure in such manner (including to
               effect and maintain an "owner's interest" policy)
               as it considers appropriate, and any sums so
               expended by it will become immediately due and
               payable by the Lessee to the Lessor on demand
               (such demand being made as soon as reasonably
               practicable following the incurring of such
               expenditure), together with interest thereon at
               the Default Rate from the date of expenditure by
               it up to the date of reimbursement by the Lessee
               (before and after any judgment); and

          (b)  at any time while such failure is continuing to
               require the Aircraft to remain at any airport or
               to proceed to and remain at any airport designated
               by it until the failure is remedied to its
               reasonable satisfaction.

     9.5  CONTINUING INDEMNITY

          (a)  Lessor may require Lessee to effect and to
               maintain insurance after the Expiry Date with
               respect to its liability under the indemnities in
               Clause 10 for such period as the Lessor may
               reasonably require (but in any event not more than
               three years) providing for each Indemnitee to be
               named as additional insured.

          (b)  Lessee's obligation under this Clause 9.5 shall
               not be affected by the Lessee ceasing to be lessee
               of the Aircraft or any of the Indemnitees ceasing
               to have any interest in respect of the Aircraft,
               and upon a Transfer pursuant to Clause<PAGE> 14.2
               Lessee shall continue to name the Indemnitees as
               additional insureds under the Insurance policies
               covered by Clause 1(d) of Schedule 5 for three
               years after the Transfer date.

     9.6  APPLICATION OF INSURANCE PROCEEDS

          As between Lessor and Lessee:

          (a)  All insurance payments, up to the Agreed Value,
               received as the result of a Total Loss occurring
               during the Term will be paid to Mortgagee.

          (b)  All insurance proceeds in respect of any damage or
               loss to the Aircraft, any Engine or any Part
               occurring during the Term not constituting a Total
               Loss and involving insurance proceeds in excess of
               the Damage Notification Threshold will be paid to
               Mortgagee and applied in payment (or to reimburse
               Lessee) for repairs or replacement property upon
               Lessor and Mortgagee being reasonably satisfied
               that the repairs or replacement have been effected
               in accordance with this Agreement.  Insurance
               proceeds in amounts less than the Damage
               Notification Threshold may be paid by the insurer
               directly to the Lessee.  Any balance remaining may
               be retained by the Lessee.

          (c)  All insurance proceeds in respect of third party
               liability will be paid to the relevant third
               party.

          (d)  Notwithstanding Clauses 9.6(a) and (b), if at the
               time of the payment of any such insurance proceeds
               a Default has occurred and is continuing, all such
               proceeds will be paid to or retained by Mortgagee
               to be applied toward payment of any amounts that
               may be or become payable by the Lessee in such
               order as the Lessor and Mortgagee see fit or as
               the Lessor and Mortgagee may elect.  In the event
               that the Lessee remedies any such Default to the
               reasonable satisfaction of Lessor, then Lessor
               shall procure that all such insurance proceeds
               then held by Mortgagee in excess of the amounts
               (if any) applied by Lessor in accordance with this
               sub-clause (d) shall be paid promptly to Lessee.
<PAGE>
10.  INDEMNITY

     10.1 GENERAL

          The Lessee shall defend, indemnify and hold harmless
          the Indemnitees from and against any and all claims,
          proceedings, losses, liabilities, suits, judgments,
          costs, expenses, penalties or fines (each a "Claim")
          regardless of when the same is made or incurred,
          whether during or after the Term (but not before):

          (a)  that may at any time be suffered or incurred
               directly or indirectly as a result of or connected
               with possession, delivery, performance,
               management, registration, control, maintenance,
               condition, service, repair, overhaul, leasing,
               subleasing, use, operation or return of the
               Aircraft, any Engine or Part (either in the air or
               on the ground) whether or not the Claim may be
               attributable to any defect in the Aircraft, any
               Engine or any Part or to its design, testing, use
               or otherwise, and regardless of when the same
               arises or whether it arises out of or is
               attributable to any act or omission, negligent or
               otherwise, of any Indemnitee;

          (b)  that arise out of any act or omission that
               invalidates or that renders voidable any of the
               Insurances;

          (c)  that may at any time be suffered or incurred as a
               consequence of any design, article or material in
               the Aircraft, any Engine or any Part or its
               operation or use constituting an infringement of
               patent, copyright, trademark, design or other
               proprietary right or a breach of any obligation of
               confidentiality owed to any Person,

          but excluding any Claim to the extent that:

               (1)  it arises directly as a result of the wilful
                    misconduct or gross negligence of an
                    Indemnitee;

               (2)  it arises directly as a result of a breach by
                    an Indemnitee of its express obligations
                    under any Operative Document or as a result
                    of a representation or warranty given by an
                    Indemnitee in any Operative Document not
                    being true and correct at the date when, or
                    when deemed to have been, given or made;

               (3)  it constitutes or is attributable to a
                    Non-Indemnified Tax or Lessor Lien;
<PAGE>
               (4)  it represents or is attributable to a Tax or
                    loss of tax benefits (the Lessee's
                    liabilities for which, to the extent thereof,
                    are set out in Clauses 5.7, 5.8 and 5.10);

               (5)  it constitutes or is attributable to a cost
                    or expense that is required to be borne by
                    the Lessor in accordance with another
                    provision of this Agreement;

               (6)  it results from any disposition of all or any
                    part of an Indemnitee's rights, title or
                    interest in or to the Aircraft or under any
                    Operative Document, unless such disposition
                    occurs as a consequence of an Event of
                    Default;

               (7)  it is attributable to an event occurring
                    after the Term unless the Claim results from
                    or arises out of an act or omission by the
                    Lessee, or any circumstance existing, during
                    the Term; or

               (8)  it is brought after the Term and relates to a
                    claimed patent infringement by the
                    Manufacturer occurring during the Term.
<PAGE>
     10.2 MITIGATION

          (a)  The Lessor agrees that it shall, as soon as
               reasonably practicable after it becomes aware of
               any circumstances that would, or would reasonably
               be expected to, become the subject of a claim for
               indemnification pursuant to Clause 10.1, notify
               the Lessee in writing accordingly.  Lessor (and
               any other Indemnitee seeking indemnification, as
               the case may be) and Lessee shall then consult
               with one another in good faith in order to
               determine what action (if any) may reasonably be
               taken to avoid or mitigate such Claim.  The Lessee
               shall have the right to take all reasonable action
               (on behalf and, if necessary, in the name of the
               Lessor or such other Indemnitee) in order to
               resist, defend or settle (provided such settlement
               is accompanied by payment) any claims by third
               parties giving rise to such Claim, provided always
               that the Lessee shall not be entitled to take any
               such action unless adequate provision, reasonably
               satisfactory to the Lessor and such other
               Indemnitee, shall have been made in respect of the
               third party claim and the costs thereof.  The
               Lessee or, if the Claim is covered by Lessee's
               Insurances, the Lessee's insurers shall be
               entitled to select any counsel to represent it or
               them, the Lessor and such other Indemnitee in
               connection with any such action, subject in the
               case of Lessee to the approval of the Lessor and
               such other Indemnitee (such approval not to be
               unreasonably withheld) and any action taken by the
               Lessee shall be on a full indemnity basis in
               respect of the Lessor and such other Indemnitee.

          (b)  Any sums paid by the Lessee to the Lessor or any
               Indemnitee in respect of any Claim pursuant to
               Clause 10.1 shall be paid subject to the condition
               that, in the event that the Lessor or such
               Indemnitee is subsequently reimbursed in respect
               of that Claim by any other Person, the Lessor or
               such Indemnitee shall, provided no Default shall
               have occurred and be continuing, promptly pay to
               the Lessee an amount equal to the sum paid to it
               by the Lessee, including any interest on such
               amount to the extent attributable thereto and
               received by the Lessor or such Indemnitee, less
               any Tax payable by the Lessor or such Indemnitee
               in respect of such reimbursement (net of any tax
               benefit derived from the Claim or the
               reimbursement of Lessee by Lessor).

     10.3 DURATION

          The indemnities contained in this Agreement will
          survive and continue in full force after the Expiry
          Date.
<PAGE>
11.  EVENTS OF LOSS

     11.1 TOTAL LOSS

          (a)  PRE-DELIVERY AIRFRAME LOSS:  If a Total Loss
               occurs prior to Delivery, this Agreement will
               immediately terminate and, except as expressly
               stated in this Agreement, neither party will have
               any further obligation or liability under this
               Agreement except that the Lessor will rebate to
               the Lessee the Security Deposit (if theretofore
               paid pursuant to Clause 5.1) or, as the case may
               be, return the Letter of Credit to the Lessee.

          (b)  POST-DELIVERY AIRFRAME LOSS:  If a Total Loss
               occurs after Delivery, the Lessee will pay the
               Agreed Value to Mortgagee on the earlier of
               (i) the date of receipt of the insurance proceeds
               payable as a result of the Total Loss, or (ii) the
               60th day after the Total Loss Date (the
               "Settlement Date"), unless the Aircraft is
               restored to the Lessor or the Lessee within that
               period (or, in the case of a Total Loss coming
               within paragraph (c) of the definition of Total
               Loss and involving the loss of the Lessor's title
               to the Aircraft, if both the Aircraft and the
               Lessor's title thereto are restored to Lessor or,
               in the case of the Aircraft, to Lessee and
               Mortgagee's rights under the Mortgage are fully
               restored).  The receipt by Mortgagee of the
               insurance proceeds in respect of the Total Loss on
               or prior to the Settlement Date shall discharge
               the Lessee from its obligation to pay the Agreed
               Value to the Lessor pursuant to this
               Clause 11.1(b), provided such proceeds are not
               less than the Agreed Value.  In the event that the
               insurance proceeds are paid initially to the
               Lessee and not to Mortgagee, they may be retained
               by the Lessee if the Lessee shall have paid the
               Agreed Value to Mortgagee, otherwise the Lessee
               shall pay the Agreed Value to Mortgagee not later
               than the next Business Day following receipt by
               the Lessee of such proceeds.  In the event that
               the Lessee pays the Agreed Value to the Lessor or
               Mortgagee in accordance with this Clause 11.1(b),
               the Lessor shall promptly assign to the Lessee its
               rights under the Insurances to receive the
               insurance proceeds in respect of the Total Loss to
               the extent that such proceeds shall not have been
               paid to the Lessee.  Subject to the rights of any
               insurers or other third parties, upon irrevocable
               payment in full to the Lessor or Mortgagee of that
               amount and all other amounts that may be or become
               payable to the Lessor under this Agreement, the
               Lessor shall:

                (i) without recourse or warranty (except as to
                    the absence of Lessor Liens), and without
                    further act, be deemed to have transferred to
                    the Lessee all of the Lessor's rights to any
                    Engines or Parts not installed when the Total
                    Loss occurred, all on an "as-is where is"
                    basis, and<PAGE> shall, at the Lessee's
                    expense, execute and deliver such bills of
                    sale and other documents and instruments as
                    the Lessee may reasonably request to evidence
                    (on the public record or otherwise) the
                    transfer and the vesting of the Lessor's
                    rights in such Engines and Parts in the
                    Lessee, free and clear of all rights of the
                    Lessor and any Lessor Liens; and

               (ii) pay to Lessee, as a rebate of prepaid Basic
                    Rent, and amount equal to the product of (1)
                    one month's Basic Rent multiplied by (2) a
                    fraction the numerator of which is the number
                    of days remaining in the then current Rental
                    Period and the denominator of which is the
                    number of days in the then current Rental
                    Period.

     11.2 ENGINE LOSS

          Upon the occurrence of an Engine Loss (including, for
          the avoidance of doubt, at a time when the Engine is
          not installed on the Airframe) in circumstances in
          which there has not also occurred a Total Loss, the
          Lessee shall give the Lessor and Mortgagee written
          notice promptly upon becoming aware of the same and
          shall (unless the Lessor has received the insurance
          proceeds relating to such Engine Loss), within 60 days
          after the Engine Loss Date, convey or cause to be
          conveyed to the Lessor, as replacement for such Engine,
          title to a replacement engine that is in the same or
          better operating condition, has the same or greater
          value and utility as the lost Engine and that complies
          with the conditions set out in Clause 8.13(a).  The
          Lessee will at its own expense take all such steps and
          execute, and procure the execution of, a full warranty
          bill of sale covering such replacement engine, a
          supplement to this Agreement adding such replacement
          engine to the Leased Property and all such other
          agreements and instruments that are necessary to ensure
          that title to such Engine passes to the Lessor and is
          subject to the Security Interest created by the
          Mortgage and such replacement engine becomes an
          "Engine", all according to Applicable Laws.  At any
          time when requested by the Lessor, the Lessee will
          provide evidence to the Lessor's reasonable
          satisfaction (including the provision, if required, to
          the Lessor of one of more legal opinions) that title
          has so passed to the Lessor and is subject to the
          Security Interest created by the Mortgage.  Upon
          compliance with the foregoing title transfer
          provisions, the leasing of the replaced Engine the
          subject of the Engine Loss shall cease and title to
          such replaced Engine shall (subject to any salvage
          rights of insurers) vest in the Lessee free of Lessor
          Liens.  If the Lessor or Mortgagee subsequently
          receives any insurance proceeds relating to such Engine
          Loss, the Lessor shall promptly remit such proceeds or
          cause such proceeds to be remitted to the Lessee.  No
          Engine Loss with respect to any Engine that is replaced
          in accordance with the provisions of this Clause 11.2
          shall result in any increase or decrease in Basic Rent,
          Additional Rent or the Agreed Value.
<PAGE>
     11.3 REQUISITION

          During any requisition for use or hire of the Aircraft,
          any Engine or Part that does not constitute a Total
          Loss:

          (a)  the Basic Rent, Additional Rent and Supplemental
               Rent payable under this Agreement will not be
               suspended or abated either in whole or in part,
               and the Lessee will not be released from any of
               its other obligations under this Agreement (other
               than operational obligations with which the Lessee
               is unable to comply solely by virtue of the
               requisition); and

          (b)  so long as no Default has occurred and is
               continuing, the Lessee will be entitled to any
               compensation payable by the requisitioning
               authority in respect of the Term.  The Lessee
               will, as soon as practicable after the end of any
               such requisition (with the Term being extended if
               and to the extent that the period of requisition
               continues beyond the Scheduled Expiry Date), cause
               the Aircraft to be put into the condition required
               by this Agreement.  The Lessor will be entitled to
               all compensation payable by the requisitioning
               authority in respect of any change in the
               structure, state or condition of the Aircraft
               arising during the period of requisition, and the
               Lessor will apply such compensation in reimbursing
               the Lessee for the cost of complying with its
               obligations under this Agreement in respect of any
               such change; provided, that, if any Default has
               occurred and is continuing, the Lessor may apply
               the compensation in or towards settlement of any
               amounts owing by the Lessee under this Agreement.
               All such sums shall be held by Mortgagee.

12.  RETURN OF AIRCRAFT

     12.1 REDELIVERY

          On the Expiry Date or termination of the leasing of the
          Aircraft under this Agreement, the Lessee shall, unless
          a Total Loss has occurred, at its expense, redeliver
          the Aircraft and Aircraft Documents to the Lessor at
          the Redelivery Location in a condition complying with
          this Clause 12 and Schedule 4, free and clear of all
          Security Interests and Permitted Liens (other than
          Lessor Liens).

     12.2 FINAL CHECKS

          Immediately prior to return of the Aircraft, Lessee
          shall perform the following:
<PAGE>
          (a)  Lessee shall perform (or have performed by an
               Agreed Maintenance Performer) a C-Check.  At
               return, the Airframe will have zero Flight Hours
               since such C-Check, except for the acceptance
               flights and the ferry flight to the Redelivery
               Location.  Lessee will also weigh the Aircraft.
               Any discrepancies revealed during such inspection
               will be corrected in accordance with
               Manufacturer's maintenance and repair manuals or
               FAA-approved data.  Lessee shall also perform
               during such check, to the extent it is able, any
               other work reasonably required by Lessor (and not
               otherwise required under this Agreement) so long
               as such work does not prevent Lessee from
               returning the Aircraft on the Expiry Date or
               extend the time the Aircraft is in maintenance,
               and Lessor shall reimburse Lessee for the Actual
               Cost of such work at Lessee's preferred customer
               rates (if the work is performed by Lessee) or at
               the third party rates charged Lessee.

          (b)  Lessee shall perform (or have performed by an
               Agreed Maintenance Performer) an internal and
               external corrosion inspection in accordance with
               the CPCP so that CPCP inspection items will be
               free of requirements for a minimum of two years
               after the Expiry Date, and any discrepancies will
               be addressed in accordance with the
               recommendations of the Manufacturer and the SRM.
               In addition, all inspected areas will be properly
               treated with corrosion inhibitor as recommended by
               Manufacturer.

          (c)  If Lessee performed any structural inspections or
               tasks on a sampling basis on aircraft similar to
               the Aircraft but did not perform such inspections
               on the Aircraft, such work shall also be performed
               on the Aircraft.

          (d)  Lessor shall perform, at Lessor's expense, a
               videotape borescope inspection of all accessible
               gas path sections of each Engine (accessible
               whether by borescope port or other means),
               including the low pressure and high pressure
               compressors and the turbine area of such Engine.
               All items beyond the Engine Manufacturer's
               maintenance manual limits will be rectified at
               Lessee's sole cost and expense.  No Engine will be
               "on watch" for any reason requiring special or out
               of sequence inspection.

          (e)  In accordance with the Engine Manufacturer's MPD,
               Lessee shall perform a maximum power assurance run
               and condition, acceleration and bleed valve
               scheduling checks on each Engine.  Lessee will
               record and evaluate each Engine's performance,
               with Lessor and/or its representatives entitled to
               be present.  Each Engine shall pass such tests
               without operational limitations throughout the
               operating envelope in accordance with the Engine
               Manufacturer's maintenance manual.
<PAGE>
          (f)  Lessee shall perform a videotape borescope
               inspection of the APU, and all items beyond the
               manufacturer's recommended limits will be
               rectified at Lessee's sole cost and expense.

          (g)  Lessee shall have removed and blended all external
               and interior markings.

          (h)  If any historical and technical records, condition
               trend monitoring data, power assurance runs or
               borescope inspection indicate an abnormal
               acceleration in the rate of performance
               deterioration or oil consumption in any Engine or
               the APU, Lessee shall correct such conditions
               causing the accelerated rate of deterioration.

     12.3 FINAL INSPECTION

          (a)  During the C-check prior to redelivery of the
               Aircraft, the Lessee will make the Aircraft and
               Aircraft Documents available to representatives of
               Lessor and the Financing Parties for inspection
               ("Final Inspection") in order to verify that the
               condition of the Aircraft complies with this
               Agreement.  The Final Inspection will be long
               enough to permit the representatives of Lessor and
               the Financing Parties to inspect, at their own
               cost, the Aircraft Documents, the Aircraft and any
               uninstalled Parts and Engines.  The
               representatives of Lessor and the Financing
               Parties shall attend and conduct the Final
               Inspection diligently and, without limiting their
               right to conduct the full Final Inspection
               permitted by this Agreement, will cooperate with
               Lessee in order to complete the Final Inspection
               as soon as reasonably practical.

          (b)  Lessor and the Financing Parties shall also be
               entitled, as part of the Final Inspection, to
               require Lessee to perform an acceptance flight of
               up to two hours at Lessee's cost (with up to four
               representatives of Lessor and the Financing
               Parties on-board as observers) and such further
               acceptance flights as may be necessary in the
               event that the first or subsequent flights do not
               confirm that the Aircraft complies with the
               redelivery requirements of this Agreement.

          (c)  At the request of Lessor, Lessee shall perform
               "bridging" maintenance procedures for the purpose
               of standardizing the Aircraft to the maintenance
               program of any subsequent operator of the
               Aircraft; provided, that Lessor shall pay to
               Lessee the Actual Cost of all "bridging"
               procedures that are in excess of or not in lieu of
               the "C" Check to be performed pursuant to
               Clause 12.2 and Schedule 4.

     12.4 NON-COMPLIANCE
<PAGE>
          To the extent that, at the time of Final Inspection,
          the condition of the Aircraft does not comply with this
          Agreement, the Lessee shall immediately rectify the
          non-compliance and, to the extent that the
          non-compliance extends beyond the Expiry Date, the Term
          will be automatically extended until the non-compliance
          has been rectified.  If, on any date more than 14 days
          after the Expiry Date, the condition of the Aircraft
          still does not comply with this Agreement, the Lessee
          shall, at the option of the Lessor and Mortgagee
          exercised by notice to Lessee, redeliver the Aircraft
          to the Lessor and indemnify the Lessor, and provide
          security reasonably acceptable to the Lessor and
          Mortgagee for that indemnity, against the cost of
          putting the Aircraft into the condition required by
          this Agreement.  During any extension of the Term
          pursuant to this Clause 12.4, this Agreement will
          remain in full force and effect, including the
          obligation to pay Basic Rent (which Lessee shall pay on
          a per diem basis weekly in advance); provided, however,
          that Lessee shall not operate, or permit others to
          operate, the Aircraft after the Expiry Date except for
          acceptance flights pursuant to Clause 12.2 and a ferry
          flight to the Redelivery Location.

     12.5 EXPORT DOCUMENTATION

          Upon redelivery and upon request by the Lessor, the
          Lessee shall (a) provide to the Lessor all documents
          necessary to export the Aircraft from the State of
          Registration (including a valid and subsisting export
          license for the Aircraft), and (b) provide any
          documents reasonably requested by the Lessor in
          connection with, and otherwise cooperate with, the
          deregistration of the Aircraft by the Aviation
          Authority, including causing the Aviation Authority to
          issue an Export Certificate of Airworthiness to a
          country specified by the Lessor.

     12.6 ACKNOWLEDGMENT

          Provided the Lessee has complied with its obligations
          under this Agreement, upon redelivery of the Aircraft
          by the Lessee to the Lessor at the Redelivery Location,
          the Lessor will deliver simultaneously to the Lessee
          the Certificate of Redelivery.
<PAGE>
     12.7 MAINTENANCE PROGRAM

          (a)  During the 20 day period preceding the Scheduled
               Expiry Date and upon the Lessor's request, the
               Lessee will provide the Lessor or its agent
               reasonable access to the Agreed Maintenance
               Program and the Aircraft Documents in order to
               facilitate the Aircraft's integration into any
               subsequent operator's fleet.  The Lessor agrees
               that it will not disclose (and will not permit its
               agents to disclose) the contents of the Agreed
               Maintenance Program to any Person except to the
               extent necessary to monitor the Lessee's
               compliance with this Agreement and/or to bridge
               the maintenance program for the Aircraft from the
               Agreed Maintenance Program to another program
               after the Expiry Date.

          (b)  Concurrent with providing the Aircraft Documents
               for Lessor's review, Lessee shall provide to
               Lessor a written summary of all sampling programs
               involving or affecting the Aircraft.

     12.8 STORAGE

          If the Lessor so requests, and subject to the
          availability of the requisite space, the Lessee shall
          park and store the Aircraft at a secure storage area,
          which may be at the Redelivery Location or at any other
          suitable facility of the Lessee selected by the Lessee,
          wherever located (the "Storage Location"), on behalf of
          the Lessor for a period not exceeding 30 days from the
          Expiry Date.  During that period the Aircraft shall be
          at the Lessor's risk (save as to any loss or damage
          caused by the Lessee's wilful misconduct or gross
          negligence), and the Lessee shall maintain and store
          the Aircraft in accordance with the respective
          manufacturer?s maintenance planning document and shall
          insure the Aircraft in accordance with a "ground risk
          only" policy  usual and customary in the worldwide
          aviation insurance marketplace.  All storage,
          maintenance and insurance costs (which shall be at
          Lessee's preferred customer rates or at the actual
          third-party rates charged to Lessee) shall be borne by
          the Lessor.

13.  DEFAULT

     13.1 EVENTS

          Each of the following events will constitute an Event
          of Default and a repudiation of this Agreement by the
          Lessee:

          (a)  NON-PAYMENT: Lessee (i) fails to pay the Agreed
               Value and all other amounts required under Clause
               11.1(b) on the Settlement Date, (ii) fails to make
               any payment of Basic Rent or Additional Rent
               within five Business Days after the date on which
               such payment is due, or (iii) fails to pay any
               other amount<PAGE> payable by it under this
               Agreement within five Business Days after written
               notice from Lessor or Mortgagee that such amounts
               are due; or

          (b)  MATERIAL COVENANTS:  Lessee (i) fails to maintain
               in full force and effect any insurance required to
               be maintained under Clause 9, or (ii) transfers
               possession of the Airframe or any Engine to
               another Person other than as permitted by this
               Agreement; or

          (c)  BREACH:  Lessee fails to comply with any other
               provision of this Agreement and, if such failure
               is, in the reasonable opinion of the Lessor,
               capable of remedy, the failure continues for 30
               days after notice from the Lessor to the Lessee,
               provided, that if such failure cannot reasonably
               be remedied within such 30 day period and the
               Lessee is diligently undertaking all necessary
               remedial action, the 30 day period shall be
               extended for a further 30 days; or

          (d)  REPRESENTATION:  any representation or warranty
               made (or deemed to be repeated) by the Lessee in
               this Agreement or in any document or certificate
               furnished to the Lessor pursuant to or in
               connection with this Agreement is or proves to
               have been incorrect in any material respect when
               made or deemed to be repeated and the Lessee's
               ability to comply with its obligations under this
               Agreement, and/or the Lessor's or Mortgagee's
               rights, title and interest to and in the Aircraft
               and/or under this Agreement, are thereby
               materially and adversely affected; or

          (e)  CROSS DEFAULT:

                (i) any Financial Indebtedness of the Lessee or
                    any of its Affiliates that exceeds $2,000,000
                    is not paid when due and any applicable grace
                    period shall have expired;

               (ii) the security for any Financial Indebtedness
                    is enforced; or

              (iii) any lease, conditional sale, installment sale
                    or forward purchase agreement of the Lessee
                    or any of its Affiliates in respect of an
                    aircraft is terminated as a consequence of an
                    event of default or termination event
                    (however described);

               provided always, in any such case, it shall not
               constitute an Event of Default under this
               Agreement:

               (1)  if the relevant Financial Indebtedness
                    constitutes non-recourse borrowing or
                    financing; or
<PAGE>
               (2)  if the non-payment, acceleration, termination
                    or event in question is being contested by
                    the Lessee in good faith and on reasonable
                    grounds and any declaration of default,
                    termination of agreement or enforcement of
                    security has been stayed by a court of
                    competent jurisdiction; or

          (f)  APPROVALS:  any consent, authorization, license,
               certificate or approval of or registration with or
               declaration to any Government Entity in connection
               with this Agreement, including:

                (i) any authorization required by the Lessee of,
                    or in connection with, the execution,
                    delivery, validity, enforceability or
                    admissibility in evidence of this Agreement
                    or the performance by the Lessee of its
                    obligations under this Agreement; or

               (ii) any airline license, air transport license,
                    franchise, concession, permit, certificate,
                    right or privilege required by the Lessee for
                    the conduct of its business,

               is modified, withheld, revoked, suspended,
               canceled, withdrawn, terminated or not renewed, or
               otherwise ceases to be in full force and is not
               reissued, reinstated or renewed within 30 days,
               provided however that any such modification,
               withholding, revocation, suspension, cancellation,
               withdrawal, termination or non-renewal shall only
               constitute an Event of Default if it has a
               material adverse effect on the Lessee's ability to
               perform its obligations under the Operative
               Documents or on the Lessor's rights, title and
               interest to and in the Aircraft or under this
               Agreement; or

          (g)  INSOLVENCY:

                (i) the Lessee or any of its Affiliates is, or is
                    deemed for the purposes of any relevant law
                    to be, unable to pay its debts as they fall
                    due or to be insolvent, or admits inability
                    to pay its debts as they fall due; or

               (ii) the Lessee or any of its Affiliates suspends
                    making payments on all or any class of its
                    debts or announces an intention to do so, or
                    a moratorium is declared in respect of any of
                    its indebtedness; or

          (h)  BANKRUPTCY AND SIMILAR PROCEEDINGS
<PAGE>
                (i) Lessee shall consent to the appointment of a
                    receiver, trustee or liquidator for itself or
                    for a substantial part of its property; or

               (ii) Lessee shall admit in writing its inability
                    to pay its debts generally as they become
                    due, or Lessee shall make a general
                    assignment for the benefit of creditors; or

              (iii) Lessee shall file a voluntary petition in
                    bankruptcy or a voluntary petition or answer
                    seeking reorganization in a proceeding under
                    11 U.S.C. Sections 101 et seq. or under any other
                    laws dealing with bankruptcy, insolvency,
                    moratorium or creditors' rights generally
                    (any or all of which are hereinafter referred
                    to as "Bankruptcy Laws"), or an answer
                    admitting the material allegations of a
                    petition filed against Lessee in any such
                    proceeding, or Lessee shall by voluntary
                    petition or answer consent to or fail to
                    oppose the seeking of relief under the
                    provisions of any Bankruptcy Laws; or

               (iv) any order, judgment or decree is entered by a
                    court of competent jurisdiction appointing a
                    receiver, trustee or liquidator of Lessee or
                    a substantial part of its property, or
                    ordering a substantial part of Lessee's
                    property to be sequestered, is instituted or
                    done with the consent of Lessee or, if
                    instituted by another Person, the order,
                    judgment or decree is  not dismissed,
                    remedied or relinquished within 60 days; or

               (v)  a petition against Lessee in a proceeding
                    under any Bankruptcy Laws shall be filed and
                    shall not be withdrawn or dismissed within 60
                    days thereafter, or if, under the provisions
                    of any Bankruptcy Laws that may apply to
                    Lessee, any court of competent jurisdiction
                    shall assume jurisdiction, custody or control
                    of Lessee or of any substantial part of its
                    property; or

               (vi) any step (including petition, proposal or
                    convening a meeting) is taken with a view to
                    a composition, assignment or arrangement with
                    any creditors of, or the reorganization,
                    rehabilitation, administration, liquidation,
                    or dissolution of, the Lessee or any of its
                    Affiliates or any other insolvency
                    proceedings involving the Lessee or any of
                    its Affiliates; or

          (i)  OTHER JURISDICTION:  there occurs in relation to
               the Lessee any event anywhere which, in the
               reasonable opinion of the Lessor, corresponds with
               any of those mentioned in Clause 13.1(h); or
<PAGE>
          (j)  UNLAWFUL:  it becomes unlawful for the Lessee to
               perform any of its material obligations under this
               Agreement or this Agreement becomes wholly or
               partly invalid or unenforceable, provided that any
               such partial invalidity or unenforceability shall
               only constitute an Event of Default if  it has a
               material adverse effect on the Lessee's ability to
               perform its obligations under this Agreement or
               the Lessor's rights, title and interest in and to
               the Aircraft or under this Agreement; or

          (k)  SUSPENSION OF BUSINESS:  the Lessee suspends or
               ceases to carry on all or a substantial part of
               its business; or

          (l)  DISPOSAL:  the Lessee disposes or threatens to
               dispose of all or a material part of its assets,
               whether by one or a series of transactions,
               related or not, other than pursuant to a merger or
               consolidation as referred to in, and subject to,
               Clause 8.8(b) or for the purpose of any other
               reorganization or amalgamation the terms of which
               have received the previous consent in writing of
               the Lessor; or

          (m)  RIGHTS:  the existence, validity, enforceability
               or priority of the rights of the Lessor as owner
               and lessor in respect of the Aircraft or the
               rights of Mortgagee as mortgagee of the Aircraft
               and assignee of this Agreement are challenged by
               the Lessee or any other Person claiming by or
               through the Lessee and, in the case of a Person
               other than Lessee, such claim presents a material
               risk of loss or forfeiture of the rights of Lessor
               or Mortgagee with respect to the Aircraft; or

          (n)  DELIVERY:  the Lessee fails to accept delivery of
               the Aircraft when validly tendered pursuant to
               this Agreement by the Lessor (provided that the
               Lessor shall have satisfied the conditions
               precedent set out in Clause 3.4); or

          (o)  ADVERSE CHANGE:  any event or series of events
               occurs which, in the reasonable opinion of the
               Lessor, could be expected to have a material
               adverse effect on the financial condition or
               operations of the Lessee and its Affiliates or on
               the ability of the Lessee to comply with its
               obligations under this Agreement; or

          (p)  LETTER OF CREDIT: if the Lessee has elected to
               deliver the Letter of Credit in lieu of the
               Security Deposit pursuant to Clause 5.1(b), the
               Letter of Credit ceases for any reason to be in
               full force and effect or is not renewed or
               replaced 30 days before its expiration in
               accordance with Clause 5.1(b) and the Lessee does
               not immediately provide the Lessor with cash in an
               amount equal to the Security Deposit.
<PAGE>
     13.2 RIGHTS

          If an Event of Default occurs, and for as long as it
          shall continue, the Lessor may at its option (and
          without prejudice to any of its other rights under this
          Agreement or that may arise by operation of Applicable
          Law), at any time thereafter:

          (a)  treat such event as a repudiation by the Lessee of
               its obligations under this Agreement and by notice
               to the Lessee with immediate effect terminate the
               leasing of the Aircraft (but without prejudice to
               the continuing obligations of the Lessee under
               this Agreement), whereupon all rights of the
               Lessee under this Agreement shall cease; and/or

          (b)  proceed by appropriate court action or actions to
               enforce performance of this Agreement or to
               recover damages for the breach of this Agreement;
               and/or

          (c)  either:

                (i) take possession of the Aircraft, for which
                    purpose the Lessor may enter any premises
                    belonging to, occupied by or under the
                    control of the Lessee (for which purpose the
                    Lessee hereby grants to the Lessor an
                    irrevocable license to the extent permitted
                    by Applicable Law) where the Aircraft may be
                    located, or cause the Aircraft to be
                    redelivered to the Lessor at the Redelivery
                    Location (or such other location as the
                    Lessor may require), and the Lessor is hereby
                    irrevocably authorized and empowered, to the
                    extent permitted by Applicable Law,  to
                    direct pilots of the Lessee or other pilots
                    to fly the Aircraft to that airport and will
                    have all the powers and authorizations
                    necessary for taking such action; or

               (ii) by serving notice, require Lessee to
                    redeliver the Aircraft to Lessor at the
                    Redelivery Location (or such other location
                    as Lessor may require) in the condition
                    required by Clause 12 and Schedule 4.

     13.3 EXPORT

          If an Event of Default occurs, and for as long as it
          shall continue, the Lessor may sell or otherwise deal
          with the Aircraft as if this Agreement had never been
          made and the Lessee will, at the request of the Lessor,
          take all steps necessary to deregister the Aircraft
          from the aircraft registry of the State of Registration
          (if other than the United States of America) and export
          the Aircraft from the country where the Aircraft is for
          the time being registered or situated and any other
          steps necessary to enable the Aircraft to be
          redelivered to the Lessor in accordance with this
          Agreement.  The<PAGE> Lessee hereby irrevocably and by
          way of security for its obligations under this
          Agreement authorizes and empowers the Lessor as its
          attorney-in-fact and agent (such agency being coupled
          with an interest), in Lessor's own name or in the name
          of Lessee, to execute and deliver any documentation and
          to do any act or thing required in connection with the
          foregoing.

     13.4 DEFAULT PAYMENTS

          If a Default occurs, the Lessee will indemnify and pay
          to Lessor on demand against any loss, damage, expense,
          cost or liability which the Lessor may sustain or incur
          directly or indirectly as a result, including:

          (a)  all unpaid Basic Rent, Additional Rent and
               Supplemental Rent then due and unpaid;

          (b)  any loss of profit (calculated on an after-tax
               basis) suffered by the Lessor because of the
               Lessor's inability to place the Aircraft on lease
               with another Lessee on terms as favorable to the
               Lessor as this Agreement or because whatever use,
               if any, to which the Lessor is able to put the
               Aircraft upon its return to the Lessor, is not as
               profitable (calculated on an after-tax basis) to
               the Lessor as this Agreement would have been but
               for such Default or non-delivery;

          (c)  in the event that the Aircraft is sold prior to
               Lessor entering into a replacement lease, the
               amount (if any) by which (i) the aggregate of (1)
               the net sale proceeds (calculated by deducting the
               costs of sale together with the cost of preparing
               the Aircraft for sale and the repayment of any
               outstanding indebtedness in relation to the
               financing of the Aircraft) plus (2) the present
               value of the anticipated after-tax net income to
               be derived from such net sale proceeds up to the
               Scheduled Expiry Date, discounted on a monthly
               basis using 9.5% per annum as the discount rate,
               are less than (ii) the aggregate of (1) the
               present value of the anticipated net sale proceeds
               (computed on the same basis as the net sale
               proceeds referred to in  (i)(1) above), assuming
               that the Aircraft would have been sold as soon as
               reasonably practicable following the Scheduled
               Expiry Date plus (2) the present value of the
               income that would have been derived from the
               future Basic Rent payable until the Scheduled
               Expiry Date, discounted on a monthly basis using
               9.5% per annum as the discount rate;

          (d)  any amount of principal, interest, fees or other
               sums whatsoever paid or payable on account of
               funds borrowed in order to carry any amount unpaid
               by the Lessee;
<PAGE>
          (e)  any loss, premium, penalty or expense that may be
               incurred in repaying funds raised to finance the
               Aircraft or in unwinding any swap, forward
               interest rate agreement or other financial
               instrument relating in whole or in part to the
               Lessor's financing of the Aircraft; and

          (f)  any loss, cost, expense or liability sustained or
               incurred by the Lessor owing to the Lessee's
               failure to redeliver the Aircraft on the date, at
               the place and in the condition required by this
               Agreement.

          For the avoidance of doubt, the provisions of Clause
          5.7(a) will apply to any sums payable by the Lessee
          pursuant to this Clause 13.4.

     13.5 WAIVER OF CERTAIN ARTICLE 2A RIGHTS

          To the fullest extent permitted by Applicable Law, each
          of Lessor and Lessee hereby agree that no rights or
          remedies referred to in Article 2A of the Uniform
          Commercial Code shall be conferred upon either Lessor
          or Lessee unless otherwise expressly granted in this
          Agreement.

14.  ASSIGNMENT AND TRANSFER

     14.1 NO ASSIGNMENT BY LESSEE

          The Lessee will not assign any of its right, title,
          interests, duties, obligations or liabilities in, to or
          under this Agreement, or create or permit to exist any
          Security Interest (other than Permitted Liens) over any
          of its rights under this Agreement, and any such
          purported assignment or grant of a security interest
          shall be void ab initio and of no force or effect.

     14.2 LESSOR ASSIGNMENT

          The Lessor may sell, assign (for purposes of this
          Clause 14.2, not including an assignment for security
          purposes) or transfer all or any of its rights under
          this Agreement and in the Leased Property provided that
          the provisions of this Clause 14.2 are satisfied (a
          "Transfer") and the Lessor will have no further
          obligations under this Agreement following a Transfer
          (other than obligations that are outstanding as of the
          date of such Transfer) but, notwithstanding any
          Transfer, will remain entitled to the benefit of each
          indemnity under this Agreement.

          (a)  In connection with any Transfer, the following
               conditions shall apply:
<PAGE>
                (i) Lessor shall give Lessee written notice of
                    such Transfer at least 10 Business Days
                    before the date of such Transfer, specifying
                    the name and address of the proposed
                    purchaser, assignee or transferee (the
                    "Transferee");

               (ii) the Transferee will be either (1) a Person
                    reasonably experienced in aircraft leasing
                    (or the Transferee's rights and powers under
                    this Agreement shall be exercised or serviced
                    on its behalf pursuant to an appropriate
                    management or servicing agreement by a Person
                    having such experience) with a net worth in
                    excess of $15,000,000, or (2) a Person with
                    at least 10 years of experience (or whose
                    principals have at least 10 years of
                    experience) in aircraft leasing (or the
                    Transferee's rights and powers under this
                    Agreement shall be exercised or serviced on
                    its behalf pursuant to an appropriate
                    management or servicing agreement by a Person
                    having such experience) with a net worth in
                    excess of $7,500,000 and which causes a
                    United States bank, trust company or other
                    financial institution to agree to hold all
                    Additional Rent paid to Lessor in a
                    segregated, interest-bearing account of such
                    institution to be applied to the obligations
                    of Lessor pursuant to Clause 7.2 of this
                    Agreement;

              (iii) the Transferee will be a "citizen of the
                    United States" within the meaning of
                    Section 40102(a)(15) of the Federal Aviation
                    Law and have full corporate power and
                    authority to enter into and perform the
                    transactions contemplated by this Agreement
                    on the part of "Lessor";

               (iv) on the Transfer date the Lessor and the
                    Transferee shall enter into an agreement or
                    agreements acceptable to Lessee in its
                    reasonable discretion in which the Transferee
                    confirms that it shall be deemed a party to
                    this Agreement and agrees to be bound by all
                    the terms of, and to undertake all of the
                    obligations of, the Lessor contained in this
                    Agreement;

               (v)  such Transfer shall not violate any
                    Applicable Law;

               (vi) the Transferee shall provide to Lessee an
                    opinion of its regular independent counsel as
                    to the matters set forth in sub-clause (iii)
                    and as to the legality, validity, binding
                    effect and enforceability of the agreement or
                    agreements between Lessor and Transferee
                    referred to in sub-clause (iv); and
<PAGE>
              (vii) Lessee shall have no obligation to consent to
                    any changes in this Agreement requested by
                    the Lessor or Transferee.

          (b)  Upon any Transfer, the Transferee shall be deemed
               Lessor for all purposes of this Agreement, each
               reference in this Agreement to the "Lessor" shall
               thereafter be deemed for all purposes to refer to
               the Transferee, and  the transferor shall be
               relieved of all obligations of the "Lessor" under
               this Agreement arising after the time of such
               Transfer except to the extent attributable to acts
               or events occurring prior to the time of such
               Transfer.

          (c)  Upon compliance by Lessor and a Transferee with
               the terms and conditions of Clause 14.2(a), Lessee
               shall at the time of Transfer, at the specific
               written request of Lessor and with Lessor paying
               all of Lessee's reasonable out-of-pocket costs and
               expenses and, if Lessee does not use outside
               counsel in connection with such Transfer, Lessee's
               reasonable internal legal costs:

                (i) execute and deliver to Lessor and to such
                    Transferee an agreement, in form and
                    substance satisfactory to Lessor, Lessee and
                    such Transferee, dated the date of such
                    transfer, consenting to such transfer,
                    agreeing to pay all or such portion of the
                    Basic Rent, Additional Rent and other
                    payments under this Agreement to such
                    Transferee or its designee as such Transferee
                    shall direct, and agreeing that such
                    Transferee shall be entitled to rely on all
                    representations and warranties made by Lessee
                    in the Operative Documents as though such
                    Transferee was the original "Lessor";
                    provided, that such representations shall not
                    be deemed to be re-made as of the date of any
                    Transfer;

               (ii) execute and deliver to Lessor or such
                    Transferee, as the case may be, precautionary
                    Uniform Commercial Code financing statements
                    or amendments reflecting the interests of
                    such Transferee in the Aircraft and this
                    Agreement;

              (iii) deliver to Lessor and to such Transferee a
                    certificate, signed by a duly authorized
                    officer of Lessee, dated the date of such
                    transfer, to the effect that no Event of
                    Default has occurred and is continuing or, if
                    one is then continuing, describing such Event
                    of Default;

               (iv) cause to be delivered to Lessor and such
                    Transferee certificates of insurance and
                    broker's letter of undertaking substantially
                    in the form set out in Parts 2 and 3 of
                    Schedule 5, detailing the coverage and
                    confirming the insurers' agreement to the
                    specified insurance requirements of this
                    Agreement and listing the Lessor and
                    Transferee<PAGE> as additional insureds and
                    the Transferee as sole loss payee (subject to
                    other direction by Mortgagee);

               (v)  deliver to Lessor and to such Transferee an
                    opinion of Lessee's counsel (which may be
                    Lessee's General Counsel), addressed to
                    Lessor and such Transferee  to the effect
                    that the agreement referred to in sub-clause
                    (i) has been duly authorized and executed by
                    Lessee and constitutes the legal, valid and
                    binding obligation of Lessee, enforceable
                    against Lessee in accordance with its terms
                    (subject to customary exceptions), and (if
                    such counsel delivered the opinion attached
                    as Exhibit D on the Delivery Date) to the
                    effect that such Transferee may rely on the
                    opinion delivered by such counsel in
                    connection with this Agreement on the
                    Delivery Date with the same force and effect
                    as if such Transferee was an original
                    addressee of such opinion when given;

               (vi) deliver to Lessor and such Transferee
                    information on the location of the Airframe
                    and Engines at all times requested by Lessor
                    in order to permit the Transfer to take place
                    at a time and on a date so as to eliminate or
                    minimize any Taxes applicable to the
                    Transfer; and

              (vii) such other documents as Lessor or such
                    Transferee may reasonably request.

     14.3 GRANTS OF SECURITY INTERESTS

          The Lessor shall be entitled at any time after Delivery
          to grant a security interest in the Leased Property or
          its right, title and interest in this Agreement (each,
          an "Additional Mortgage") in favor of any Person (each,
          an "Additional Mortgagee").  Any Additional Mortgage
          may be a successor mortgage to the Security Interest
          granted to Mortgagee, or may be in addition to
          Mortgagee's Security Interest and previous Additional
          Mortgages and with a priority senior, equal or
          subordinate to Mortgagee's Security Interest and
          previous Additional Mortgages as Mortgagee and previous
          Additional Mortgagees may permit.  In the case of any
          such grant by Lessor of an Additional Mortgage to an
          Additional Mortgagee in all or any portion of Lessor's
          rights, title and interest in and to the Aircraft and
          this Agreement, Lessee shall promptly, at the specific
          written request of Lessor and with Lessor paying all of
          Lessee's reasonable out-of-pocket costs and expenses:

          (a)  execute and delivery to Lessor and to such
               Additional Mortgagee an agreement, substantially
               in the form of the Consent and otherwise in form
               and substance satisfactory to Lessor, such
               Additional Mortgagee and Lessee, dated the date of
               the grant of such Additional Mortgage,
               (i) consenting to<PAGE> such Additional Mortgage and to
               any assignment of Lessor's rights, title and
               interest in and to this Agreement to such
               Additional Mortgagee for security purposes,
               (ii) if requested by Lessor and consented to by
               the previous payee, agreeing that Lessee will pay
               the Basic Rent and other payments under this
               Agreement to such Additional Mortgagee, and
               (iii) agreeing that such Additional Mortgagee
               shall be entitled to rely on all representations
               and warranties made by Lessee in this Agreement or
               in any certificate or document furnished by Lessee
               in connection with this Agreement Documents as
               though such Additional Mortgagee was originally
               the "Mortgagee";

          (b)  execute and deliver to Lessor and such Additional
               Mortgagee such agreements as the Lessor may
               reasonably require and which are acceptable to
               Lessee for the purposes of effecting all necessary
               amendments to this Agreement;

          (c)  execute and deliver to Lessor or such Additional
               Mortgagee, as the case may be, precautionary
               Uniform Commercial Code financing statements or
               amendments reflecting the assignment of Lessor's
               interests in the Operative Documents to such
               Additional Mortgagee;

          (d)  deliver to Lessor and such Additional Mortgagee a
               certificate, signed by a duly authorized officer
               of Lessee, dated the date of the grant of the
               Additional Mortgage, to the effect that no Event
               of Default has occurred and is continuing or, if
               one is then continuing, describing such Event of
               Default;

          (e)  cause to be delivered to Lessor and such
               Additional Mortgagee certificates of insurance and
               broker's letter of undertaking substantially in
               the form set out in Parts 2 and 3 of Schedule 5,
               detailing the coverage and confirming the
               insurers' agreement to the specified insurance
               requirements of this Agreement, adding such
               Additional Mortgagee as an additional insured and,
               if requested by Lessor and consented to by the
               previous loss payee, listing such Additional
               Mortgagee as sole loss payee;

          (f)  deliver to Lessor and such Additional Mortgagee an
               opinion of Lessee's counsel (which may be Lessee's
               General Counsel), addressed to Lessor and such
               Additional Mortgagee (i)  to the effect that the
               agreements referred to in sub-clauses (a) and (b)
               have been duly authorized and executed by Lessee
               and constitute the legal, valid and binding
               obligations of Lessee, enforceable against Lessee
               in accordance with their terms (subject to
               customary exceptions), and (ii)  if such counsel
               delivered the opinion attached as Exhibit D on the
               Delivery Date, to the effect that such Additional
               Mortgagee may rely on the opinion delivered by
               such counsel in connection with this
               Agreement<PAGE> on the Delivery Date with the same
               force and effect as if such Additional Mortgagee
               was an original addressee of such opinion when
               given; and

          (g)  such other documents as Lessor or such Additional
               Mortgagee may reasonably request.

     14.4 SALE AND LEASEBACK BY LESSOR

          In addition to the Transfers and grants of Security
          Interests permitted by Clauses 14.2 and 14.3, but
          subject to the provisions thereof, Lessor shall be
          entitled to transfer its right, title and interests in
          and to the Leased Property to any Person and lease the
          Aircraft from such Person (a "Head Lessor"), and in
          such event Lessor shall retain its rights and
          obligations as the "Lessor" under this Agreement.  In
          the event of such a sale and lease-back by Lessor,
          (a) the Head Lessor shall meet the requirements for a
          "Transferee" as defined in Clause 14.2(a)(ii) above,
          (b) the Lessor shall be entitled to assign its rights
          in this Agreement to such Head Lessor as security for
          its obligations under the head lease, (c) the Head
          Lessor shall be entitled to grant to one or more
          purchase money lenders, or to an indenture trustee on
          behalf of such lenders, an Additional Mortgage covering
          the Leased Property and the Operative Documents,
          (d) Lessee shall execute and deliver to Lessor, such
          Head Lessor, such Additional Mortgagee and any trustees
          on their behalf, as appropriate, the documents
          specified in Clauses 14.2(c)(i) through (vi) and
          Clauses 14.3(a) through (f) above, and  Lessee shall
          cooperate with Lessor to make such other changes to
          this Agreement as Lessor may reasonably request so long
          as such changes do not adversely affect the rights or
          increase or extend the obligations of Lessee under this
          Agreement or otherwise adversely affect Lessee and with
          Lessor paying all of Lessee's reasonable out-of-pocket
          costs and expenses.

     14.5 FURTHER ACKNOWLEDGMENTS

          Lessee further acknowledges that any Transferee or
          Additional Mortgagee shall in turn have the rights of,
          and be subject to the conditions to, transfer and
          grants of Security Interests set forth above in this
          Clause 14.

     14.6 CERTAIN PROTECTIONS FOR LESSEE'S BENEFIT

          The rights of Lessee under this Agreement shall be
          superior to the rights of any Additional Mortgagee or
          Head Lessor, and the Lessor shall require each
          Additional Mortgagee and Head Lessor to agree in
          writing with the Lessee that such Additional
          Mortgagee's and Head Lessor's rights in and to the
          Leased Property shall be subject to the terms of this
          Agreement, including to the Lessee's rights to the
          quiet use, possession and enjoyment provisions
          contained in this Agreement.  The Lessor's<PAGE>
          obligations to perform the terms and conditions of this
          Agreement shall remain in full force and effect
          notwithstanding the creation of any Additional Mortgage
          or Head Lease.  Lessor shall not create any Additional
          Mortgage or enter into any Head Lease that violates the
          terms of this Clause 14.6.

15.  MISCELLANEOUS

     15.1 WAIVERS, REMEDIES CUMULATIVE

          The rights of Lessor or Lessee under this Agreement may
          be exercised as often as necessary, are cumulative and
          not exclusive of that party's rights under any law and
          may be waived only in writing and specifically.  Delay
          in exercising or non-exercise of any such right is not
          a waiver of that right.

     15.2 DELEGATION

          Lessor or any Financing Party may delegate to any
          Person or Persons all or any of the trusts, powers or
          discretions vested in it by this Agreement and any such
          delegation may be made upon such terms and conditions
          and subject to such regulations (including power to
          sub-delegate) as the Lessor or such Financing Party,
          respectively, in its absolute discretion thinks fit.

     15.3 APPROPRIATION

          If any sum paid or recovered in respect of the
          liabilities of the Lessee under this Agreement is less
          than the amount then due, the Lessor may apply that sum
          to amounts due under this Agreement in such proportions
          and order and generally in such manner as the Lessor
          may determine.

     15.4 CURRENCY INDEMNITY

          (a)  If the Lessor receives an amount in respect of the
               Lessee's liability under this Agreement or if such
               liability is converted into a claim, proof,
               judgment or order in a currency other than
               Dollars:

                (i) the Lessee will indemnify the Lessor, as an
                    independent obligation, against any loss
                    arising out of or as a result of such
                    conversion;

               (ii) if the amount received by the Lessor, when
                    converted into Dollars (at the market rate at
                    which the Lessor is able on the relevant date
                    to purchase Dollars in New York City with
                    that other currency) is less than the amount
                    owed in Dollars, the Lessee will, forthwith
                    on<PAGE> demand, pay to the Lessor an amount
                    in Dollars equal to the deficit; and

              (iii) the Lessee will pay to the Lessor on demand
                    any exchange costs and Taxes payable in
                    connection with the conversion.

          (b)  The Lessee waives, to the extent permitted by
               Applicable Law,  any right it may have in any
               jurisdiction to pay any amount under this
               Agreement in a currency other than Dollars.

     15.5 PAYMENT BY THE LESSOR

          The Lessor will not be obliged to pay any amounts to
          the Lessee under this Agreement so long as any sums
          which are then due from the Lessee under this Agreement
          remain unpaid and any such amounts which would
          otherwise be due will fall due only if and when the
          Lessee has paid all such sums.

     15.6 SEVERABILITY

          If a provision of this Agreement is or becomes illegal,
          invalid or unenforceable in any jurisdiction, that will
          not affect:

          (a)  the legality, validity or enforceability in that
               jurisdiction of any  other provision of this
               Agreement; or

          (b)  the legality, validity or enforceability in any
               other jurisdiction of that or any other provision
               of this Agreement.

     15.7 REMEDY

          If the Lessee fails to comply with any provision of
          this Agreement, the Lessor may, without being in any
          way obliged to do so or responsible for so doing and
          without prejudice to the ability of the Lessor to treat
          the non-compliance as a Default, effect compliance on
          behalf of the Lessee, whereupon the Lessee shall become
          liable to pay immediately any sums expended by the
          Lessor together with all costs and expenses (including
          reasonable legal costs) necessarily incurred in
          connection therewith.

     15.8 EXPENSES

          (a)  The Lessor and the Lessee shall each bear their
               respective expenses (including legal, professional
               and out-of-pocket expenses) incurred or payable in
               connection with the negotiation, preparation and
               execution of this Agreement,<PAGE> and shall share
               equally the fees and expenses of Special FAA
               Counsel in connection with the transactions
               contemplated by this Agreement, including in
               connection with the Assignment and Mortgage.
               Lessor shall otherwise bear and be responsible for
               all fees and expenses in connection with the
               importation and registration of the Aircraft and
               the registration and recording of the Assignment
               and Mortgage.

          (b)  The Lessee shall pay to the Lessor on demand all
               expenses (including legal, professional and
               out-of-pocket expenses) incurred or payable by the
               Lessor in connection with the granting of any
               waiver or consent under this Agreement.

          (c)  The Lessee will pay to the Lessor on demand all
               expenses (including reasonable legal, survey and
               other costs) payable or incurred by the Lessor in
               contemplation of, or otherwise in connection with,
               the enforcement of or preservation of any of the
               Lessor's rights under this Agreement, or in
               respect of the repossession of the Aircraft.

          (d)  The Lessor will pay to the Lessee on demand all
               expenses (including reasonable legal costs)
               payable or incurred by the Lessee in contemplation
               of, or otherwise in connection with, the
               enforcement of or preservation of any of the
               Lessee's rights under this Agreement.

     15.9 TIME OF ESSENCE

          The time stipulated in this Agreement for all payments
          payable by the Lessee to the Lessor and for the
          performance of the Lessee's other obligations under
          this Agreement that are due on a specified or
          determinable date will be of the essence of this
          Agreement (subject always to any applicable grace
          period).

    15.10 NOTICES

          (a)  All notices and other communications given under
               or in connection with this Agreement shall be in
               writing (including telegram) and shall be deemed
               to have been received when delivered to the
               address specified in clause 15.10(b).

          (b)  All such notices, requests, demands and other
               communications shall be sent:
<PAGE>
               (i)  to Lessor at:  c/o Unicapital Air Group, Inc.
                                   1900 Summit Tower Blvd.
                                   Suite 860
                                   Orlando, Florida  32810
                                   Attention:  Mr. Samuel J. Thornton
                                   Telephone:  +1-407-916-8000
                                   Telefax:    +1-407-916-8001

               copied to
               Mortgagee
               at:            FINOVA Capital Corporation
                              1850 North Central Avenue
                              Phoenix, Arizona 85002
                              Attention:  Vice President - Operations
                                          Management
                              Telefax:    +1-602-262-1551

               (ii) to Lessee
                    at:       7000 Squibb Road, 3rd Floor
                              Mission, Kansas 66202
                              Attention:  Mr. William A. Garrett, III
                              Telephone:  +1-913-789-1769
                              Telefax:    +1-913-789-1779

          or to such other address as shall have been notified by
          one party to the other in the manner set out in this
          Clause 15.10.

    15.11 LAW AND JURISDICTION

          (a)  THIS AGREEMENT SHALL, IN ALL RESPECTS, INCLUDING
               ALL MATTERS OF CONSTRUCTION, VALIDITY AND
               PERFORMANCE, BE GOVERNED BY AND CONSTRUED IN
               ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
               APPLICABLE TO CONTRACTS ENTERED INTO IN THE STATE
               OF NEW YORK BY RESIDENTS OF SUCH STATE AND TO BE
               PERFORMED ENTIRELY WITHIN SUCH STATE.

          (b)  The Lessor and the Lessee hereby irrevocably agree
               to submit to the non-exclusive jurisdiction of the
               United States District Court for the Southern
               District of New York and the Supreme Court of the
               State of New York located in the Borough of
               Manhattan, County of New York (the "Agreed
               Courts") in the event of any claims or disputes
               arising under this Agreement.  Such submission to
               jurisdiction shall not be construed so as to limit
               the right of either party to take proceedings
               against the other in whatever jurisdiction shall
               to it seem fit nor shall the taking of proceedings
               in any one or more jurisdictions preclude the
               taking of proceedings in any other
               jurisdiction,<PAGE> whether concurrently or not.
               Final judgment against Lessor or Lessee in any
               such suit shall be conclusive and may be enforced
               in any other jurisdiction by suit on the judgment
               or as otherwise permitted by Applicable Law, a
               certified or true copy of which shall be
               conclusive evidence of the facts and of the amount
               of any indebtedness or liability of Lessor or
               Lessee.  Each of Lessor and Lessee hereby
               irrevocably waives any objection which it may now
               or hereafter have to the laying of venue in any
               suit, action or proceeding brought in any Agreed
               Court, and irrevocably waives any claim that any
               such suit, action or proceeding brought in any
               Agreed Court has been brought in an inconvenient
               forum.

          (c)  THE LESSEE AND THE LESSOR HEREBY WAIVE TRIAL BY
               JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE
               PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY
               MATTER ARISING OUT OF OR RELATING TO THIS
               AGREEMENT.

          (d)  Without prejudice to any other mode of service,
               each of the Lessor and the Lessee consents to the
               service of process relating to any proceedings
               involving, directly or indirectly, any matter
               arising out of or relating to this Agreement by
               U.S. Postal Service registered mail (prepaid,
               return receipt requested) of a copy of the process
               to the Lessee's address identified in Clause
               15.10(b).

    15.12 SOLE AND ENTIRE AGREEMENT

          This Agreement is the sole and entire agreement between
          the Lessor and the Lessee in relation to the leasing of
          the Aircraft, and supersedes all previous agreements in
          relation to that leasing.  The terms and conditions of
          this Agreement can only be varied by an instrument in
          writing executed by both parties or by their duly
          authorized representatives.

    15.13 INDEMNITIES

          All rights expressed to be granted to each Indemnitee
          under this Agreement (other than any Financing Party)
          are given to the Lessor as agent for and on behalf of
          that Indemnitee.

    15.14 COUNTERPARTS

          This Agreement may be executed in one or more
          counterparts, each of which shall constitute an
          original and, when taken together, all of which shall
          constitute one and the same Agreement.
<PAGE>
    15.15 CONFIDENTIALITY

          Neither the Lessor nor the Lessee shall, without the
          other's prior written consent, communicate or disclose
          the terms of this Agreement or any information or
          documents furnished pursuant to this Agreement (except
          to the extent that the same are within the public
          domain) to any third party (other than any Financing
          Party, any prospective Transferee, any material
          investor in the Lessee or creditor in Lessee,
          Additional Mortgagees or Head Lessors, the respective
          external legal advisers, auditors, insurance brokers or
          underwriters of Lessor, Lessee and such parties, and
          the Manufacturer and Engine Manufacturer); provided,
          that disclosure will be permitted, to the extent
          required:

          (a)  pursuant to an order of any court of competent
               jurisdiction; or

          (b)  pursuant to any procedure for discovery of
               documents in any proceedings before any such
               court; or

          (c)  pursuant to any law or regulation having the force
               of law; or

          (d)  pursuant to a lawful requirement of any authority
               with whose requirements the disclosing party is
               legally obliged to comply; or

          (e)  in order to perfect any assignment of any
               assignable warranties.

                    [SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF Lessor and Lessee have executed this Lease
Agreement 22122 on the date shown at the beginning of this
Agreement.

                                   SIGNED on behalf of
                                   AIRCRAFT 22122, INC.

                                   By:/s/ Richard Giles

                                   Name: Richard Giles
                                   Title: Vice President

                                   SIGNED on behalf of
                                   VANGUARD AIRLINES, INC.

                                   By:/s/ William A. Garrett

                                   Name:  William A. Garrett
                                   Title: Vice President - Finance
                                          and Chief Financial
                                          Officer

          [FINOVA Capital Corporation hereby acknowledges receipt
of this Original Executed Counterpart of Lease Agreement 22122 in
Phoenix, Arizona on this ____ day of October 1999.

                                   FINOVA CAPITAL CORPORATION

                                   By:__________________________

                                   Name:
                                   Title]<F1>

[FN]
<F1>
This  text will only appear on one counterpart of Lease Agreement
22122.
</FN>
<PAGE>

                           SCHEDULE 1

                   BASIC RENT AND OTHER TERMS

              [Intentionally Omitted as Containing
                 Confidential Information]<F2>

1.   ADDITIONAL DEFINITIONS

     In addition to the definitions set forth in Clause 1.1, the
     following expressions shall, unless the context otherwise
     requires, have the following respective meanings in this
     Agreement:

     Agreed Value                          $8,250,000.00

     Airframe Additional Rent Rate                $70.00

     APU Additional Rent Rate                      $7.00

     Basic Rent Amount                       $115,000.00

     Security Deposit                        $230,000.00

     Damage Notification Threshold           $250,000.00

     Engine Additional Rent Rate                  $85.00

     Hull Insurance Deductible               $500,000.00

     Landing Gear Additional Rent Rate            $12.00

     Minimum Liability Coverage          $600,000,000.00 on each occurrence.

[FN]
<F2>
2.  For inclusion on FAA filed copies of this Lease Agreement in
lieu of the following information.
</FN>

<PAGE>
2.   RETURN CONDITION FINANCIAL ADJUSTMENTS

In addition to the requirements set forth in Clause 12 and
Schedule 4, on the Expiry Date (other than by reason of the
occurrence of a Total Loss) Lessor and Lessee will make the
following payments:

(a)  For each Engine, if the number of Flight Hours or Cycles
     (whichever is more limiting) of such Engine until its next
     scheduled Engine Shop Visit on the Expiry Date is more than
     the number of Flight Hours or Cycles (as the case may be) of
     such Engine until its next scheduled Engine Shop Visit on
     the Delivery Date, in each case under the Agreed Maintenance
     Program, then Lessor shall pay to Lessee a Dollar amount
     equal to (i) the product of such difference (based on actual
     Delivery and redelivery) multiplied by the Engine Additional
     Rent Rate, minus (ii) all amounts previously paid to Lessee
     pursuant to Clause 7.3.

(b)  For each Engine, if the number of Flight Hours or Cycles
     (whichever is more limiting) of such Engine until its next
     scheduled Engine Shop Visit on the Expiry Date is fewer than
     the number of Flight Hours or Cycles (as the case may be) of
     such Engine until its next scheduled Engine Shop Visit on
     the Delivery Date, in each case under the Agreed Maintenance
     Program, then Lessee shall pay to Lessor a Dollar amount
     equal to the product of such difference (based on actual
     Delivery and redelivery) multiplied by the Engine Additional
     Rent Rate.

(c)  Any amounts owed by Lessee to Lessor pursuant to Clause 2(b)
     of this Schedule 1 with respect to an Engine may be offset
     by an amount equal to the lesser of (i) such amount owed or
     (ii) an amount equal to (1) all Engine Additional Rent
     previously paid by Lessee for such Engine pursuant to this
     Agreement, minus (2) all previous payments for such Engine
     by Lessor under Clause 7.2(b).
<PAGE>
                           SCHEDULE 2

                             PART 1

                     AIRCRAFT SPECIFICATION

IDENTIFICATION:

     Aircraft Model:          Boeing Model 737-230
     Registration Mark:       N124NJ
     Serial Number:           22122
     Date of Manufacture:     February 1981

WEIGHT DATA:

     Maximum Taxi Weight:          120,000 lbs. (subject to
                                   Item 1(g) of Schedule 3)
     Maximum Takeoff Weight:       119,500 lbs. (subject to
                                   Item 1(g) of Schedule 3)
     Maximum Landing Weight:       103,000 lbs.
     Maximum Zero Fuel Weight:  95,000 lbs.
     Fuel Capacity:             34,469 U.S. Gallons

AIRFRAME AND INTERIOR EQUIPMENT:

     Galleys            four    Locations:          two forward; two aft
     Lavatories         three   Locations:          ___ forward and ___ aft
     Air Stairs          ___    Locations:          ___ forward
     Passenger Seats     105    Locations/Types:    12 first class;
                                                      93 economy class
     Overhead bins       ___
     Cargo Door          ___

ENGINES:

     Manufacturer:       Pratt & Whitney

     Position            No.1           No.2
     Model:              JT8D-15        JT8D-15
     Serial Numbers:     702911         687338

<PAGE>
APU:

     Model:         [_____]
     Serial Number:      [_____]

LANDING GEAR:

     Position:      Nose        Left Main    Right Main
     Type:          [_____]     [_____]      [_____]
     Serial Number: [_____]     [_____]      [_____]

HARD TIME COMPONENTS:

[to be supplied, as listed in Exhibit B to LOI]

MAJOR AVIONICS EQUIPMENT:

     Description         Manufacturer   Part No.  Quantity

[to be supplied]
<PAGE>
                             PART 2

                       AIRCRAFT DOCUMENTS

1.   MANUALS

     The following manuals shall be delivered with the Aircraft.
     Each manual shall be current and include all temporary
     revisions.  Each manual shall be in the English language.

     (a)  FAA-Approved Airplane Flight Manual.

     (b)  Weight and Balance Control and Cargo Loading Manual and
          Supplements (load and trim sheet).  Include last weight
          paperwork and delivery equipment list with Previous
          Operator running W&B computation sheets.

     (c)  Operations Manual and Quick Reference Handbook
          including Cabin Safety/F/A Manual (PAX A/C).

     (d)  Structural Repair Manual

     (e)  Aircraft/Engine/APU Maintenance Manuals

     (f)  Boeing Component Overhaul Manuals, including Galley
          Manuals (CMM, IPC, OHM)

     (g)  Aircraft/Engine/APU Illustrated Parts Catalog (IPC)
          (Operator Customized)

     (h)  Wiring Diagram Manual including the following:

          (i)  Equipment List
         (ii)  Standard Practices (Chapter 20)
        (iii)  Charts and Graphs (Chapter 91)
         (iv)  Hook Up Charts
          (v)  Splice List
         (vi)  Ground List
        (vii)  Terminal List

     (i)  Engine and APU Overhaul Manuals

     (j)  Previous Operator's Maintenance Schedule and (COSL)
          component operating an<PAGE> storage limits manual

2.   AIRWORTHINESS DIRECTIVES ("A.D.") DOCUMENTATION

     The following data will be provided as well as all records
     associated with A.D. compliance:

     (a)  A single, complete and current A.D. status list of each
          airframe, appliances, Engine and APU Airworthiness
          Directive applicable to each Aircraft, appliances,
          Engine and APU.  This list shall be consistent with the
          preliminary A.D. status reports received during the
          initial inspection.  The list shall be typed, certified
          and signed by authorized quality assurance
          representative of Previous Operator.

     (b)  Lessor will provide legible copies of the completion
          documentation that accomplish each A.D.  If the A.D. is
          a repetitive inspection documentation, the last
          accomplishment is sufficient.  If the original
          completion documents are not available, Lessor shall
          provide at a minimum a copy of the job card of
          engineering order that accomplished the A.D., plus a
          certification letter signed by Previous Operator's
          airworthiness department stating that the A.D. in
          question was accomplished at a certain time and cycles,
          date and reference all pertinent support documentation
          (i.e. engineering order, alternate means of compliance,
          etc.).  However, any A.D. that was complied with by an
          alternate means of compliance must have all original
          documentation and necessary air authority approvals.

     (c)  Exemptions or deviations granted by the FAA to the
          Previous Operator on A.D. compliance, including copy of
          exemption request.

3.   ENGINEERING DOCUMENTATION

     (a)  Lessor shall provide a single, current list in English
          language (except for the ADA list referenced in
          3(a)(ii) below:

           (i) Service Bulletin status based on the Boeing
               provided summary of all Boeing service bulletins
               to the Aircraft and consistent with the "reference
               only" status report provided during the initial
               inspection.

          (ii) List of all Previous Operator initiated on-
               aircraft modifications consistent with the ADA
               list covering all Spec. 100 ATA chapters.   A
               current copy of all engineering orders listed on
               the ADA list shall be provided with appropriate
               certification stamp on the ADA list.

         (iii) Major repairs list
<PAGE>
          (iv) Supplement Type Certificate list

     (b)  Data package covering all non-manufacturer/non-Aviation
          Authority approved repairs or alterations, including
          the submittal to the Previous Operator's aviation
          authority for an approval, if applicable.

4.   ADDITIONAL DOCUMENTATION

     (a)  Master Minimum Equipment List and Configuration
          Deviation List

     (b)  Set of cockpit drawings (full scale preferably)

     (c)  Quarterly Reliability Reports for one (1) year (if
          available)

     (d)  Location map of emergency equipment with description

     (e)  Interior configuration drawings

     (f)  Passenger/Cargo Equipment List (seats, galleys,
          lavatories, entertainment)

     (g)  Complete paperwork for last "D" Check overhaul and last
          "A", "B" and/or "C" check inspections (if available)

     (h)  Compass card and F.D.R. calibration documentation

     (i)  All life records for the assemblies and rotable parts
          installed during the last overhaul for each nose, left
          hand and right hand main landing gears

5.   INDIVIDUAL AIRCRAFT AND ENGINE RECORDS

     (a)  Letter of Declaration for each major aircraft/engine
          accident or major incident which shall include complete
          documentation reports, if any

     (b)  Major structural damage reports, if any

     (c)  Engine trend monitoring data (1 year minimum provided
          the Engine was operated by Lessee) for each Engine

     (d)  Copies of logbook entries for the last twelve (12)
          months of operation (at delivery) (if available)

     (e)  List of open items, watch items, deferred items
<PAGE>
     (f)  Serviceable/overhaul tags for all life limited parts,
          hard time components listed in the rotable components
          list; serviceable overhaul tags for OC (on condition)
          and CM (condition monitored) parts listed in the
          rotable components list for the last 12 months as at
          delivery shall be provided to Lessor by Previous
          Operator on a case by case basis up to a maximum of one
          (1) year after delivery)(if available)

     (g)  Listing of Aircraft, Engine and APU components status
          by P/N-S/N-Description Position TBO-TSI-TSO-TSN, total
          time, next due time, including interpretation keys,
          (Rotable Component List)

     (h)  Engine and APU logbooks or equivalent reports or
          documentation (if available)

     (i)  Aircraft and Engine time status at delivery with serial
          number, total time, total cycles and times of the last
          letter check inspection

     (j)  Engine time report and engine on log which shall
          include ASB 6038 status for each engine

     (k)  All Engine and APU records, for the last heavy
          maintenance shop visit including back to birth history
          for each engine life limited part.  Exceptions will be
          acceptable for parts introduced to Previous Operator
          before 1993 when back to birth history records was not
          mandatory, however Previous Operator has agreed to
          assist Lessor in obtaining full traceability on these
          parts, if any

     (l)  Manufacturer's delivery documents for Engines

     (m)  Manufacturer's Electrical Load Analysis documents and
          data

     (n)  Last power plant test cell run documents for Engines
          and APU

     (o)  Letter certifying that at the time of delivery the
          Aircraft is a non-SSID candidate aircraft

     (p)  Previous Operator's Corrosion Control Program (See
          Maintenance Schedule)

     (q)  Aircraft Readiness Log (from aircraft manufacturer)

     (r)  Copies of all applicable Master Changes (M.C.)
          performed on each aircraft

     (s)  Previous Operator's aviation authority approvals and
          Previous Operator's certification reports for major
          modifications alterations and repairs which are not
          covered by<PAGE> manufacturers service bulletins.  For
          minor modifications not covered by manufacturers
          service bulletins, Lessor shall cause Previous Operator
          to provide the requested substantiation work. (i.e.
          certification reports to the extent required by the
          Previous Operator's aviation authority)

     (t)  Fire blocking status for all seats, interior
          fabrics/material, including burn test documentation and
          certification

     (u)  Current Aging Aircraft and CPCP Status Report

     (v)  Current list outlining all waiver items/components not
          approved by the FAA

     (w)  Any historical records applicable to the aircraft,
          engines or APU that may be available at reasonable
          effort and within reasonable time by the Previous
          Operator

     (x)  List detailing Previous Operator's component shop
          history for all components on the rotable components
          list on a case by case basis (up to a maximum of one
          (1) year after aircraft delivery)
<PAGE>
                           SCHEDULE 3

                OPERATING CONDITION AT DELIVERY

On the Expiry Date the Aircraft, subject to fair wear and tear
generally, will be in the condition set out below.

1.   GENERAL CONDITION

     The Aircraft will:

     (a)  be clean to a standard of aircraft fresh from overhaul;

     (b)  have installed the full of parts, accessories and loose
          equipment required under the Agreed Maintenance
          Program;

     (c)  be airworthy, conform to type design and be in a
          condition suitable for immediate, safe operation in
          commercial service with all equipment, components and
          systems operating in accordance with their intended use
          and within limits established by the manufacturer and
          approved by the Aviation Authority, and all pilot
          discrepancies and deferred maintenance items cleared on
          a terminating action basis;

     (d)  have a U.S. Standard Transport Category Certificate of
          Airworthiness issued by the FAA in accordance with FAR
          Part 21 and unconditionally meet all Aviation Authority
          requirements for immediate operations under FAR Part
          121;

     (e)  be fresh from a Manufacturer's MPD "D" Check (phases C1
          through C7), including 20,000 hour structural items and
          complete CPCP inspection;

     (f)  have all gauges (including dipsticks) converted from
          the metric system to the U.S. imperial system (pounds)
          and accompanied by all required documentation from the
          Manufacturer relative to the gauges; in addition, the
          cockpit switches shall be reconfigured into the
          Manufacturer's standard;

     (g)  be certified to operate at 120,000 lbs. Maximum Take
          Off Weight; provided, that Lessee agrees to accept
          delivery of the Aircraft at a Maximum Take Off Weight
          of 116,000 lbs. subject to Lessor providing evidence to
          Lessee that the weight upgrade has been ordered from
          Boeing;

     (h)  have had accomplished all outstanding airworthiness
          directives and mandatory orders<PAGE> affecting that
          model of Aircraft issued by the Aviation Authority that
          are due within 90 days after the Delivery Date on a
          terminating action basis; airworthiness directives and
          mandatory orders that do not have a terminating action
          will be accomplished at the highest level of inspection
          or modification permitted;

     (j)  no special or unique manufacturer inspection or check
          requirements specific to the Aircraft will exist (which
          shall not include airworthiness directives or service
          bulletins) unless there is no terminating action
          available from any source;

     (k)  have TCAS, Windhsear, 11 parameter DFDR and escape path
          lighting installed in accordance with FAA requirements;

     (l)  be free of any system-related leaks;

     (m)  all fluid reservoirs (including fuel, oil, oxygen,
          hydraulic and water) will be full, and the waste tank
          serviced in accordance with the manufacturer's
          instructions;

     (n)  all fuel tanks will have recently undergone an
          anti-fungus/biological growth contamination laboratory
          evaluation, and any excessive levels of contamination
          corrected;

     (o)  have all FAA-required signs and decals clean, secure
          and legible and in the English language;

     (p)  shall be stripped and painted in the Lessee's livery
          (including wings and stabilizers) in accordance with
          the SRM and the paint manufacturer's instructions and
          avoiding any overspray on other surfaces; and

     (q)  shall be accompanied by the aircraft records listed on
          Part 2 of Schedule 2.

2.   PARTS

     (a)  The Aircraft shall have installed the hard time
          components as listed in Part 1 of Schedule 2.

     (b)  Each life limited or hard time controlled Part,
          excluding Engine Parts, shall have not less than 50% of
          the number of Flight Hours or Cycles (whichever is the
          more limiting factor) remaining to the next scheduled
          removal in accordance with the Agreed Maintenance
          Program.

     (c)  Each calendar limited Part (including hard time
          controlled Parts with calendar limits) will have 50% of
          its life or time between removals, as the case may be
          (but not less<PAGE> than 12 months), remaining to its
          next scheduled removal in accordance with the Agreed
          Maintenance Program.

3.   ENGINES

     (a)  The Aircraft shall have installed two serviceable Pratt
          & Whitney JT8D-15 engines, and each such Engine shall
          have installed a Nordam stage III LGW hushkit.

     (b)  The Engine bearing manufacturer's serial number 702911
          shall have at least ____ Flight Hours and ____ Cycles
          remaining to its next limiter under the Agreed
          Maintenance Program.  The Engine bearing manufacturer's
          serial number 687338 shall have at least ____ Flight
          Hours and ____ Cycles remaining to its next limiter
          under the Agreed Maintenance Program.

     (c)  No Engine shall be "on engineering watch", on a reduced
          interval inspection or otherwise have any defect that
          reduces the Flight Hours or Cycles (whichever is more
          limiting) of remaining life pursuant to Engine
          Manufacturer's or airworthiness requirements until shop
          visit to less than the number specified for such Engine
          in Item 3(b) of this Schedule 3.

     (d)  The historical and technical records, condition trend
          monitoring data, power assurance runs and borescope
          inspection shall not indicate an abnormal acceleration
          in the rate of performance deterioration or oil
          consumption in any Engine.

4.   FUSELAGE, WINDOWS AND DOORS

     (a)  The fuselage will not contain any dents, corrosion or
          abrasions that exceed the prescribed limits under the
          SRM and shall be free of loose, pulled or missing
          rivets.

     (b)  The windows will not contain any delamination,
          blemishes or crazing that exceed the prescribed limits
          under the Manufacturer's maintenance manual and will be
          properly sealed.

     (c)  The doors will be free moving, correctly rigged and
          fitted with serviceable seals.

5.   WINGS AND EMPENNAGE

     (a)  The leading edges will not contain any damage that
          exceeds the prescribed limits under the SRM.

     (b)  All unpainted cowlings and fairings will be polished.
<PAGE>
     (c)  All wings will be free of fuel leaks.

6.   INTERIOR

     (a)  The interior will be fully serviceable and in a
          120-seats all economy configuration as operated by
          Lessee with Weber 4001 passenger seats installed
          including the installation of one G4 galley; all other
          galleys installed in the Aircraft during the Lessee's
          preliminary inspection will be removed or remain
          installed pursuant to the Lessee's interior
          configuration LOPA, and the Lessee shall be responsible
          for providing all approved engineering documentation
          relative to the installation of such interior
          configuration.

     (b)  All emergency equipment installed in accordance with
          Lessee's Emergency Equipment Diagram having a calendar
          life will have a minimum of one year or 100% of its
          total approved life remaining, whichever is less.

     (c)  All curtains, carpets, seat covers and seat cushions
          installed in accordance with Lessee's requirements will
          be serviceable, clean and free from stains and worn out
          (threadbare) areas and will conform to FAR fire
          resistance regulations as applicable to an FAR Part 121
          operator.

7.   COCKPIT

     (a)  All fairing panels shall be free of stains and cracks,
          clean, secure and repainted as necessary.

     (b)  All floor coverings will be clean and effectively
          sealed.

     (c)  All seat covers will be in good condition, clean and
          free of stains and will conform to FAR fire resistance
          regulations as applicable to an FAR Part 121 operator.

     (d)  All seats will be serviceable, in good condition and
          repainted as necessary.

8.   CARGO COMPARTMENTS

     (a)  All panels will be in serviceable condition and
          effectively sealed in accordance with FAA requirements.

     (b)  All nets will be in serviceable condition in accordance
          with FAA requirements.

     (c)  The cargo compartments will comply with FAR fire
          resistance and containment regulations as applicable to
          an FAR Part 121 operator.
<PAGE>
9.   LANDING GEAR

     (a)  The installed main and nose landing gear components and
          their associated actuators and parts shall be zero time
          from overhaul, and shall have not less than 13,000
          Cycles remaining for all life limited components.

     (b)  The tires and brakes will have 50% of the wear, as
          specified by the manufacturer as serviceable limits,
          remaining until next removal.

     (c)  The landing gear and wheel wells will be clean, free of
          leaks and repaired as necessary.

10.  APU

     (a)  The APU shall be serviceable in accordance with the
          Agreed Maintenance Program parameters.

     (b)  The historical and technical records, condition trend
          monitoring data, power assurance runs and borescope
          inspection shall not indicate an abnormal acceleration
          in the rate of performance deterioration or oil
          consumption in the APU.

11.  CORROSION

     (a)  The Aircraft will be in compliance with the CPCP and
          will have been inspected and treated with respect to
          corrosion as required by the CPCP; and

     (b)  The biocide treatment program for the fuel tanks will
          be in operation and up-to-date under the Agreed
          Maintenance Program.
<PAGE>
                           SCHEDULE 4

               OPERATING CONDITION AT REDELIVERY

On the Expiry Date the Aircraft, subject to fair wear and tear
generally, will be in the condition set out below.

1.   GENERAL CONDITION

     The Aircraft will:

     (a)  be clean by United States airline standards;

     (b)  have installed the full complement of engines and other
          equipment, parts and accessories and loose equipment
          required under the Agreed Maintenance Program and
          usually installed in the other Boeing 737-200 aircraft
          operated by Lessee (together with any additions and
          improvements thereto, or replacements thereof, effected
          pursuant to and in accordance with this Agreement);

     (c)  be airworthy, conform to type design and be in a
          condition suitable for immediate, safe operation in
          commercial service with all equipment, components and
          systems operating in accordance with their intended use
          and within limits established by the manufacturer and
          approved by the Aviation Authority, and all pilot
          discrepancies and deferred maintenance items cleared on
          a terminating action basis;

     (d)  have a U.S. Standard Transport Category Certificate of
          Airworthiness issued by the FAA in accordance with FAR
          Part 21 (or if required by the Lessor, a valid export
          certificate of airworthiness with respect to the
          Aircraft issued by the Aviation Authority) and
          unconditionally meet all Aviation Authority
          requirements for immediate operations under FAR Part
          121;

     (e)  comply with the manufacturer's original specification
          to the extent that it so complied on the Delivery Date
          and subject to any alterations made pursuant to and in
          accordance with this Agreement after such date;

     (f)  have undergone, immediately prior to redelivery, a "C"
          Check in accordance with Clause 12.2(a) (so that all
          Airframe inspections falling due within the next
          following 3,000 Flight Hours or 13 months of operation
          in accordance with the Agreed Maintenance Program have
          been accomplished);
<PAGE>
     (g)  have at least two years remaining until the next Heavy
          Check (or equivalent heavy maintenance check) under the
          Agreed Maintenance Program;

     (h)  have had accomplished all outstanding airworthiness
          directives and mandatory orders affecting that model of
          Aircraft issued by the Aviation Authority that are due
          during the Term or within 90 days after the Expiry Date
          on a terminating action basis; airworthiness directives
          and mandatory orders that do not have a terminating
          action will be accomplished at the highest level of
          inspection or modification permitted;

     (i)  be in compliance with the requirements of Clause
          8.11(m);

     (j)  have no special or unique manufacturer inspection or
          check requirements specific to the Aircraft (which
          shall not include airworthiness directives or service
          bulletins) unless there is no terminating action
          available from any source;

     (k)  have installed all applicable vendor's and
          manufacturer's service bulletin kits received free of
          charge by the Lessee that are appropriate for the
          Aircraft and, to the extent not installed, those kits
          retained by Lessee will be furnished free of charge to
          the Lessor;

     (l)  be free of any system-related leaks;

     (m)  all fluid reservoirs (including fuel, oil, oxygen,
          hydraulic and water) will be full, and the waste tank
          serviced in accordance with the manufacturer's
          instructions;

     (o)  have all signs and decals clean, secure and legible;
          and

     (p)  shall be stripped of Lessee's livery and either painted
          white or painted in the livery of the next operator, as
          identified by Lessor so long as such follow-on livery
          is substantially the same as Lessee (and with Lessor
          furnishing the next operator's paint scheme and logo
          pounce pattern), in either case in accordance with the
          SRM and the paint manufacturer's instructions and
          avoiding any overspray on other surfaces; provided,
          that Lessor shall bear any cost to Lessee of stripping
          and painting the Aircraft in excess of $60,000.

2.   PARTS

     (a)  Each life limited or hard time controlled Part,
          excluding Engine Parts, shall have not less than 50% of
          the number of Flight Hours or Cycles (whichever is the
          more limiting factor) remaining to the next scheduled
          removal in accordance with the Agreed Maintenance
          Program; and
<PAGE>
     (b)  Each calendar limited Part (including hard time
          controlled Parts with calendar limits) will have 50% of
          its life or time between removals, as the case may be
          (but not less than 12 months), remaining to its next
          scheduled removal in accordance with the Agreed
          Maintenance Program.

3.   ENGINES

     (a)  Each engine installed on the Aircraft shall be an
          Engine and (if not the engine installed at Delivery)
          shall, to the extent not previously provided to the
          Lessor, be accompanied by all documentation the Lessor
          may require to evidence that title thereto is properly
          vested in the Lessor in accordance with Clause 8.17(d).

     (b)  Each Engine shall have at least the same number of
          Flight Hours and Cycles remaining to the next LLP
          replacement as on the Delivery Date, and shall have at
          least 4,000 Flight Hours and 4,000 Cycles remaining
          until the next scheduled CER under the Agreed
          Maintenance Program;

     (c)  No Engine shall be "on engineering watch", on a reduced
          interval inspection or otherwise have any defect that
          reduces the Flight Hours or Cycles (whichever is more
          limiting) of remaining life pursuant to Engine
          Manufacturer's or airworthiness requirements until
          overhaul to less than 4,000; and

     (d)  The historical and technical records, condition trend
          monitoring data, power assurance runs and borescope
          inspection shall not indicate an abnormal acceleration
          in the rate of performance deterioration or oil
          consumption in any Engine.

4.   FUSELAGE, WINDOWS AND DOORS

     (a)  The fuselage will not contain any dents, corrosion or
          abrasions that exceed the prescribed parameters under
          the SRM and shall be free of loose, pulled or missing
          rivets.  All repairs to the fuselage performed during
          the Term will be flush instead of scab patches unless a
          flush repair is not feasible.

     (b)  The windows will not contain any delamination,
          blemishes or crazing that exceed the prescribed
          parameters under the Manufacturer's maintenance manual
          and will be properly sealed.

     (c)  The doors will be free moving, correctly rigged and
          fitted with serviceable seals.

5.   WINGS AND EMPENNAGE

     (a)  The leading edges will not contain any damage that
          exceeds the prescribed parameters<PAGE> under the SRM.

     (b)  All unpainted cowlings and fairings will be polished.

     (c)  All wings will be free of fuel leaks.

6.   INTERIOR

     (a)  The interior will be fully serviceable and in the
          configuration as at the Delivery Date.

     (b)  All emergency equipment having a calendar life will
          have a minimum of one year or 100% of its total
          approved life remaining, whichever is less.

     (c)  All curtains, carpets, seat covers and seat cushions
          will be clean and free from stains and worn out
          (threadbare) areas and will conform to FAR fire
          resistance regulations as applicable to an FAR Part 121
          operator.

7.   COCKPIT

     (a)  All fairing panels shall be free of stains and cracks,
          clean, secure and repainted as necessary.

     (b)  All floor coverings will be clean and effectively
          sealed.

     (c)  All seat covers will be in good condition, clean and
          free of stains and will conform to FAR fire resistance
          regulations as applicable to an FAR Part 121 operator.

     (d)  All seats will be serviceable, in good condition and
          repainted as necessary.

8.   CARGO COMPARTMENTS

     (a)  All panels will be in good condition and effectively
          sealed.

     (b)  All nets will be in good condition.

     (c)  The cargo compartments will comply with FAR fire
          resistance and containment regulations as applicable to
          an FAR Part 121 operator.
<PAGE>
9.   LANDING GEAR

     (a)  The installed main and nose landing gear components and
          their associated actuators and parts will be cleared of
          all inspections for not less than 12 months, 3,000
          Flight Hours or 3,000 Cycles of operation (whichever is
          more limiting).

     (b)  The tires and brakes will have 50% of the wear, as
          specified by the manufacturer as serviceable limits,
          remaining until next removal.

     (c)  The landing gear and wheel wells will be clean, free of
          leaks and repaired as necessary.

10.  APU

     (a)  The APU shall be serviceable in accordance with the
          Agreed Maintenance Program.

11.  CORROSION

     (a)  The Aircraft will be in compliance with the CPCP and
          will have been inspected and treated with respect to
          corrosion as required by the CPCP; and

     (b)  The biocide treatment program for the fuel tanks will
          be in operation and up-to-date under the Agreed
          Maintenance Program.
<PAGE>
                           SCHEDULE 5

                             PART 1

                    (INSURANCE REQUIREMENTS)

1.   The Insurances required to be maintained are as follows:

     (a)  HULL "ALL RISKS" of loss or damage while flying and on
          the ground with respect to the Aircraft for the Agreed
          Value and with a deductible not exceeding the Hull
          Insurance Deductible.

     (b)  HULL WAR AND ALLIED PERILS, covering those war risks
          excluded from the Hull "All Risks" Policy to the extent
          such coverage is available from the leading
          international insurance markets, including confiscation
          and requisition by the State of Registration, for the
          Agreed Value;

     (c)  "ALL RISKS" PROPERTY INSURANCE (INCLUDING WAR AND
          ALLIED RISK except when on the ground or in transit
          other than by air or sea) on all Engines and Parts when
          not installed on the Aircraft (to the extent not
          covered under the Aircraft hull insurances described in
          paragraphs (a) and (b) above), including Engine test
          and running risks, in an amount equal to replacement
          value in the case of the Engines;

     (d)  AIRCRAFT THIRD PARTY, BODILY INJURY/PROPERTY DAMAGE,
          PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL
          THIRD PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a
          combined single limit (Bodily Injury/Property Damage)
          of an amount not less than the Minimum Liability
          Coverage for the time being in respect of any one
          occurrence (but, in respect of products liability, this
          limit may be an aggregate limit for any and all losses
          occurring during the currency of the policy, and in
          respect of liability arising out of certain offences,
          the limit (within the said combined single limit) may
          be $25,000,000 in respect of any one offence and in the
          aggregate, and cargo and mail legal liability may be
          subject to a limit of $1,000,000 any one occurrence);
          War and Allied Risks are also to be covered under the
          Policy to the extent available in the leading
          international insurance markets.  The Minimum Liability
          Coverage may be adjusted upwards from time to time to
          such an amount as the Lessor may be advised by its
          insurance brokers constitutes the standard Minimum
          Liability Coverage applicable to Boeing 737-200 series
          aircraft operating in North America by an airline
          similarly situated as Lessee.  If the Lessee disputes
          any such adjustment, the matter shall be referred to a
          reputable independent insurance broker in the United
          States of America appointed by the Lessor, whose
          decision, acting as expert, shall be<PAGE> conclusive
          and binding on the Lessee.

2.   All required hull and spares insurance specified in Clauses
     1(a), 1(b) and 1(c) above, so far as it relates to the
     Aircraft, will:

     (a)  provide that any loss will be settled with the Lessee
          (who undertakes to consult with the Lessor and
          Mortgagee in regard thereto), and any claim that
          becomes payable on the basis of a Total Loss shall be
          paid in Dollars to Mortgagee as loss payee as its
          interests may appear up to the Agreed Value, and loss
          proceeds in excess of the Agreed Value shall be payable
          to Lessee, with any other claim being payable as may be
          necessary for the repair of the damage to which it
          relates;

     (b)  if separate Hull "All Risks" and "War Risks" insurances
          are arranged, include a 50/50 provision in the terms of
          Lloyd's endorsement AVS103 or its equivalent; and

     (c)  confirm that the Insurers are not entitled to replace
          the Aircraft in the event of a Total Loss.

3.   All required liability insurances specified in Clause 1(d)
     above will:

     (a)  include the Indemnitees and, for a period of three
          years after the Delivery Date, the Previous Owner and
          the Previous Operator as additional assureds for their
          respective rights and interests, warranted (each as to
          itself only) no operational interest; but the coverage
          provided will not include claims arising out of their
          legal liability as manufacturer, repairer or servicing
          agent of the aircraft or any part thereof;

     (b)  include a severability of interest clause;

     (c)  contain a provision confirming that the policy is
          primary without right of contribution and that the
          liability of the insurers will not be affected by any
          other insurance of which any Indemnitee or the Lessee
          have the benefit; and

     (d)  accept and insure the indemnity provisions of this
          Agreement to the extent of the risks covered by the
          relevant policy or policies.

4.   All Insurances will:

     (a)  be in accordance with normal industry practice of
          Persons operating similar aircraft in similar
          circumstances;

     (b)  provide coverage on a worldwide basis subject to those
          territorial exclusions which are usual and customary
          for carriers similarly situated with Lessee in the case
          of War Risks and Allied Perils coverage which are
          advised to and approved by Lessor, such<PAGE> approval
          not to be unreasonably withheld;

     (c)  acknowledge that the insurers are aware that the
          Aircraft is owned by the Lessor and is subject to this
          Agreement;

     (d)  provide that, in relation to the interests of each of
          the additional assureds, the Insurances will not be
          invalidated by any act or omission of the Insured which
          results in a breach of any terms, conditions or
          warranty of the policies;

     (e)  provide that the Insurers will waive any rights of
          recourse and/or subrogation against each additional
          assured to the same extent that Lessee has waived or
          has no rights of recovery against such additional
          assured in the Lease;

     (f)  provide that the additional assureds will have no
          obligation or responsibility for the payment of any
          premiums (but reserve the right to pay the same should
          any of them elect to do so) and that the Insurers will
          waive any right of offset or counterclaim against the
          respective additional assureds other than for
          outstanding premiums in respect of the Aircraft, any
          Engine or Part;

     (g)  provide that, except in the case of any provision for
          cancellation or automatic termination specified in the
          policies or endorsements thereof, the Insurance can
          only be canceled or materially altered in a manner
          adverse to the additional assureds by giving at least
          30 days' written notice to the Lessor and each
          Financing Party, except in the case of  war risks (or
          radioactive contamination), for which seven days'
          written notice (or such lesser period as is or may be
          customarily available in respect thereof) will be
          given; and

     (h)  include a services of suit clause; and

     (i)  provide coverage with respect to losses in connection
          with the change of year from 1999 to 2000, the change
          of date from 21 August 1999 to 22 August 1999 and/or
          any other change of year, date or time to the fullest
          extent available in the worldwide aviation insurance
          market including date recognition limited coverage
          clauses AVN2001 and AVN2002 or their equivalent.
<PAGE>
                             PART 2

                 (FORM OF BROKER'S UNDERTAKING)

[To be supplied by Lessee's Broker]

<PAGE>
                             PART 3

                [FORM OF INSURANCE CERTIFICATE]

[To be supplied by Lessee's Broker]
<PAGE>
                           EXHIBIT A

                   CERTIFICATE OF ACCEPTANCE

          This Certificate of Acceptance is delivered on the date
set forth in paragraph 1 below by Vanguard Airlines, Inc. (the
"Lessee") to Aircraft 22122, Inc. (the "Lessor") pursuant to
Lease Agreement 22122, dated October __, 1999, between the Lessor
and the Lessee (the "Agreement").  Capitalized terms used but not
defined in this Certificate of Acceptance shall have the meaning
given to such terms in the Agreement.

1.   DETAILS OF ACCEPTANCE

     The Lessee hereby confirms to the Lessor that the Lessee has
     at __:__ _.m. G.M.T. on this _____ day of October __, 1999,
     at San Jose, Costa Rica, accepted the following, in
     accordance with the provisions of the Agreement.

     (a)  one Boeing Model 737-230 airframe, bearing
          manufacturer's serial number22122 and U.S. registration
          mark N124NJ;

     (b)  two Pratt & Whitney Model JT8D-15 engines, bearing
          manufacturer's serial numbers 702911 and 687338;

     (c)  all Parts installed on, attached to or appurtenant to
          the Airframe and Engines; and

     (d)  the Aircraft Documents specified in Schedule 1 - Part 2
          of the Agreement.

2.   LESSEE'S CONFIRMATION  The Lessee confirms to the Lessor
     that as at the time indicated above, being the time of
     Delivery:

     (a)  the Lessee's representations and warranties contained
          in Clauses 2.1 and 2.2 of the Agreement are hereby
          repeated;

     (b)  the Aircraft is insured as required by the Agreement;
          and

     (c)  the Lessee confirms that there have been affixed to the
          Aircraft and the Engines the fireproof notices required
          by the Agreement.

3.   LESSOR'S CONFIRMATION  The Lessor confirms to the Lessee
     that, as at the time indicated above, being the time of
     Delivery, the Lessor's representations and warranties
     contained in Clause 2.4 of the Agreement are hereby
     repeated.
<PAGE>
IN WITNESS WHEREOF Lessor and Lessee have executed this
Certificate of Acceptance on the date set forth in Clause 1 of
this Certificate.

                                   SIGNED on behalf of
                                   AIRCRAFT 22122, INC.

                                   By:__________________________
                                   Name:
                                   Title:

                                   SIGNED on behalf of
                                   VANGUARD AIRLINES, INC.

                                   By:__________________________
                                   Name:
                                   Title:

<PAGE>
                           EXHIBIT B

               CERTIFICATE OF DELIVERY CONDITION

          This Certificate of Delivery Condition is delivered on
October __, 1999 by Vanguard Airlines, Inc. (the "Lessee") to
Aircraft 22122, Inc. (the "Lessor") pursuant to Lease Agreement
22122, dated October __, 1999, between the Lessor and the Lessee
(the "Agreement").  Capitalized terms used but not defined in
this Certificate of Delivery Condition shall have the meaning
given to such terms in the Agreement.

1.   AIRCRAFT ACCEPTANCE:  Lessee hereby confirms to Lessor that,
pursuant to the Agreement, Lessee has accepted the Boeing Model
737-230 airframe bearing manufacturer's serial number 22122 and
U.S. registration mark N124NJ, together with the two Pratt &
Whitney Model JT8D-15 engines bearing manufacturer's serial
numbers 702911 and 687338, all Parts installed on, attached to or
appurtenant to the Airframe and Engines and the Aircraft
Documents, and Lessor and Lessee agree that such Airframe,
Engines and Parts are in the condition set forth on the attached
Annex 1.

2.   CONFIRMATION OF DELIVERY CONDITION:  Lessee confirms to
Lessor that at the time of acceptance of the Leased Property, the
Leased Property complied in all respects with the condition
required at Delivery under Clause 4.2 and Schedule 3 of the
Agreement, except for the items (if any) listed on the attached
Annex 2 (the "Discrepancies").  Lessor and Lessee agree that the
Discrepancies (if any) shall be corrected as set forth on the
attached Annex 2.

IN WITNESS WHEREOF Lessor and Lessee have executed this
Certificate of Acceptance on the date set forth at the beginning
of this Certificate.

SIGNED on behalf of                SIGNED on behalf of
AIRCRAFT 22122, INC.               VANGUARD AIRLINES, INC.

By:______________________          By:________________________
Name:                              Name:
Title:                             Title:
<PAGE>
                                                          ANNEX 1

                 MAINTENANCE STATUS AT DELIVERY

                     DATE: October __, 1999

AIRFRAME TIME:

     Total Flight Hours: _____
     Total Cycles:       _____

AIRFRAME LIMITS:

     Type of Check:           C Check
     Check Interval:          13 Month
     Time Since Last Check:   0

ENGINE DATA:

     Position:                          No.1           No.2
     Model:                             JT8D-15        JT8D-15
     Serial Numbers:                    702911         687338

     Total Flight Hours:                 _____         _____
     Total Cycles:                       _____         _____
     Flight Hours Since Last CER:          0             0
     Cycles Since Last CER:                0             0
     Flight Hours to Next Hard Limit:    _____         _____
     Cycles to Next Hard Limit:          _____         _____

APU:

     Model:   GTCP85-1298
     Serial Number:   P-137

     Total Flight Hours:                     ______
     Total Cycles:                           ______
     Flight Hours Since Last CER:                0
     Cycles Since Last CER:                      0
     Flight Hours Remaining on LLPs:         No LLPs
     Cycles Remaining on LLPs:               No LLPs
<PAGE>
LANDING GEAR LIMITS:

     Position:                Nose      Left      Right
     Overhaul Interval:       20,000H   20,000H   20,000H
     Time Since Overhaul:         0         0         0
     Time to Next Overhaul:   20,000H   20,000H   20,000H
<PAGE>
                                                          ANNEX 2

                         DISCREPANCIES

DESCRIPTION OF DISCREPANCY              AGREED CORRECTIVE ACTION

<PAGE>
                           EXHIBIT C

                        FORM OF CONSENT

[To be Supplied]
<PAGE>
                           EXHIBIT D

                     FORM OF LEGAL OPINION

[To be Supplied]
<PAGE>
                           EXHIBIT E

                    FORM OF LETTER OF CREDIT

[N/A]
<PAGE>
                           EXHIBIT F

                 FORM OF MONTHLY STATUS REPORT

AIRCRAFT TYPE       REG. MARK    SERIAL NO.        MONTH ENDING

 Boeing 737-230       N124NJ       22122      ......................

1.   AIRCRAFT UTILIZATION:

(a)  Airframe Total Flight Hours               .............

(b)  Airframe Total Cycles                     .............

(c)  Airframe Flight Hours for Month           .............

(d)  Airframe Cycles for Month                 .............

(e)  Airframe Flight Hours since Overhaul      .............

(f)  Airframe Cycles since Overhaul            .............

(g)  Airframe Flight Hours since C-Check       .............

(h)  Airframe Cycles since C-Check             .............

2.   POWERPLANT STATUS:                      NO.1              NO.2

(a)  Serial Nos. of Delivered Engines        702911            687338

(b)  Serial Nos. of Replacement Engines      ............      .............
     (if applicable)

(c)  Serial Nos. of Installed Engines        ............      .............
     (if different from (a) or (b) above)

(d)  Current Location of Delivered or        ............      .............
     Replacement Engines (as applicable)
     (if not installed on Airframe)
<PAGE>
(e)  Total Time Since New of Delivered       ............      .............
     or Replacement Engines (as applicable)

(f)  Total Cycles Since New of Delivered     ............      .............
     or Replacement Engines (as applicable)

(g)  Total Time Since Last Service           ............      .............

(h)  Total Cycles Since Last Service         ............      .............

(i)  Flight Hours to Limiter                 ............      .............

(j)  Cycles to Limiter                       ............      .............

(k)  Limiter                                 ............      .............

(l)  Total Flight Hours for the Month for    ............      .............
     each Delivered or Replacement Engine
     (as applicable)

(m)  Total Cycles for the Month for each     ............      .............
     Delivered or Replacement Engine
     (as applicable)

(n)  Serial No. of Delivered APU             .............

(o)  Serial No. of Replacement APU           .............
     (if applicable)

(p)  Serial No. of Installed APU             .............
     (if different from (a) or (b) above)

(q)  Current Location of Delivered or        .............
     Replacement APU (as applicable)
     (if not installed on Airframe)

(r)  Total Time Since New of Delivered       .............
     or Replacement APU (as applicable)

(s)  Total Cycles Since New of Delivered     .............
     or Replacement APU (as applicable)
<PAGE>
(t)  Total Hours for the Month for           .............
     Delivered or Replacement APU
     (as applicable)

(u)  Total Cycles for the Month for          .............
     Delivered or Replacement APU
     (as applicable)

3.   ROUTINE CHECKS / A.D. AND S.B. COMPLIANCE:

(a)  Routine Checks (A and above) performed during Month:

(b)  Airworthiness Directives complied with during Month:

(c)  Service Bulletins complied with during Month:

4.   AIRCRAFT DAMAGE OR ENGINE CHANGES:

     Details of any repairs carried out to the Aircraft beyond
     SRM limits and Engine changes, giving reasons for repair or
     change:

5.   UPCOMING MAINTENANCE CHECKS

(a)  Maintenance Checks (C segment and above) scheduled or
     expected to be performed on the Airframe during the next 12
     months:

(b)  Scheduled shop visits or heavy maintenance visits scheduled
     or expected to be performed on the Engines during the next
     12 months:

(c)  Overhauls, or replacements scheduled or expected to be
     performed on the APU or Landing Gear during the next 12
     months:

Date:___________, ___    CERTIFIED FOR AND ON BEHALF OF VANGUARD
                         AIRLINES, INC.

                         By:_______________________________
                         Name:
                         Title:
<PAGE>
                           EXHIBIT G

                   CERTIFICATE OF REDELIVERY

          This Certificate of Redelivery is delivered by Aircraft
22122, Inc. (the "Lessor") to Vanguard Airlines, Inc. (the
"Lessee") pursuant to Lease Agreement 22122, dated October __,
1999, between the Lessor and the Lessee (the "Agreement").
Capitalized terms used but not defined in this Certificate of
Acceptance shall have the meaning given to such terms in the
Agreement.

1.   DETAILS OF ACCEPTANCE

     The Lessor hereby confirms to the Lessee that the Lessor has
     at __:__ _.m. G.M.T. on this _____ day of _________, at
     __________, ________ accepted for redelivery the following,
     in accordance with the provisions of the Agreement.

     (a)  one Boeing Model 737-230 airframe, bearing
          manufacturer's serial number 22122 and U.S.
          registration mark N124NJ;

     (b)  two Pratt & Whitney Model JT8D-15 engines, bearing
          manufacturer's serial numbers [______] and [______];

     (c)  all Parts installed on, attached to or appurtenant to
          the Airframe and Engines; and

     (d)  the Aircraft Documents specified in Schedule 1 - Part 2
          of the Agreement.

2.   LESSOR'S CONFIRMATION  The Lessee confirms to the Lessor
     that as at the time indicated above the Lessor is satisfied
     that the Aircraft is in the condition required Clause 12 and
     Schedule 4 of the Agreement and has been redelivered to the
     Lessor in accordance with the Agreement.

IN WITNESS WHEREOF, Lessor has executed this Certificate of
Redelivery on the date set forth in Clause 1 of this Certificate
of Redelivery.

                                   AIRCRAFT 22122, INC.

                                   By:___________________________
                                   Name:
                                   Title:
<PAGE>AIRCRAFT LEASE AGREEMENT
                           (MSN 22882)

      This AIRCRAFT LEASE AGREEMENT (MSN 22882), dated as of
February 22, 2000 (this "Agreement" or "Lease"), is entered by
and between US AIRWAYS, INC., a Delaware corporation, as lessor
("Lessor"), and VANGUARD AIRLINES, INC., a Delaware corporation,
as lessee ("Lessee").

                            RECITALS:

      WHEREAS, Lessee desires to lease from Lessor and Lessor is
willing to lease to Lessee the Aircraft described herein upon the
terms and conditions of this Lease.

      NOW, THEREFORE, for and in consideration of the premises
and the mutual agreements contained herein and for other good and
valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:

SECTION 1.  DEFINITIONS AND CONSTRUCTION

     Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference, and
shall be construed and interpreted in the manner described, in
Annex A.

SECTION 2.  DELIVERY AND ACCEPTANCE

     2.1  AGREEMENT TO LEASE

     Subject to the satisfaction or waiver of the conditions set
forth herein, Lessor hereby agrees to lease to Lessee hereunder,
and Lessee hereby agrees to lease from Lessor hereunder, the
Aircraft for the Term, as evidenced by the execution by Lessor
and Lessee of a Lease Supplement leasing the Aircraft hereunder.

     2.2  ACCEPTANCE BY LESSEE

     By executing and delivering Lease Supplement No. 1, Lessee
confirms to Lessor that (i) Lessee has duly  accepted delivery of
the Aircraft and Aircraft Documents for all purposes of this
Agreement, (ii) Lessee has duly  accepted the Aircraft and
Aircraft Documents as being in satisfactory condition and in good
working order, without defect in design, operation or fitness for
use, whether or not discoverable by Lessee and (iii) the Aircraft
has been duly marked in accordance with Section 7.1.3(a). Subject
to the satisfaction of the conditions set forth in Section 1 of
Letter Agreement No. 1, Lessee acknowledges and agrees that
Lessee shall accept the Aircraft and Aircraft Documents in their
respective "AS-IS, WHERE-IS" condition and that Lessee shall
execute and deliver Lease Supplement No. 1, as evidence of such
satisfaction and acceptance, immediately upon tender of the
Aircraft and Aircraft Documents by Lessor to Lessee on the
Delivery Date.
<PAGE>
     2.3  CONDITIONS TO LESSOR'S OBLIGATIONS

     Lessor's obligation to deliver the Aircraft to Lessee for
lease hereunder shall be subject to Lessor's receipt of the
following documents or other evidence, and to the completion of
the following actions and other requirements, in each case in
form and substance satisfactory to Lessor, on or before the
Delivery Date:

     (a)  This Lease, Letter Agreement No. 1 and Lease Supplement
No. 1, each executed by Lessee and Lessor;

     (b)  A certificate of the corporate secretary or other
officer of Lessee (i) certifying the incumbency of the person or
persons authorized to execute and deliver this Lease and the
other Operative Agreements and the documents related hereto and
thereto on behalf of Lessee and (ii) certifying and attaching a
copy of the authorizing resolutions of Lessee's Board of
Directors.

     (c)  A certificate signed by an authorized officer of Lessee
stating that:  (i) the representations and warranties of Lessee
set forth in Schedule 4 hereto are true and accurate on and as of
such date as though made on and as of such date (except, to the
extent that such representations and warranties relate solely to
an earlier date), in which case it shall state that  such
representations and warranties are true and accurate as of such
earlier date, and (ii) no Default or Event of Default has
occurred and is continuing, or would result from the lease of the
Aircraft pursuant to the Lease;

     (d)  An insurance certificate and broker's opinion letter
signed by Lessee's insurance brokers evidencing compliance with
the insurance provisions of Section 10 not later than five (5)
Business Days before the Delivery Date;

     (e)  A favorable opinion of counsel to Lessee, dated the
Delivery Date, insubstantially the form of Schedule 4 hereto,
addressed to Lessor;

     (f)  [Intentionally Omitted]; (g)  [Intentionally Omitted];

     (h)  Such other evidence as Lessor may reasonably require
with respect to the satisfaction of the conditions precedent set
forth in this Lease;

     (i)  Lessor's receipt of the first installment of Basic Rent
hereunder not later than  the Delivery Date; and

     (j)  Lessor's receipt of the aggregate amount of the
Security Deposit not later than two (2) Business Days before the
Delivery Date.

SECTION 3.  TERM, RENT AND SECURITY DEPOSIT

      3.1  TERM

      The Term of this Lease will commence on the Delivery Date
and expire on the Expiration Date, unless this Agreement or the
leasing of the Aircraft is earlier terminated in accordance with
any provision of this Agreement.
<PAGE>
      3.2  RENT

           3.2.1  BASIC RENT

          During the Term, Lessee shall pay to Lessor, on each
Payment Date, in the manner and in funds of the type specified in
Section 3.4, Basic Rent, monthly in advance, in the amount
specified in Schedule 1 hereto.

          3.2.2  SUPPLEMENTAL RENT

          Lessee shall also pay to Lessor, or to whosoever shall
be entitled thereto, any and all Supplemental Rent when and as
the same shall become due and owing.  Lessee will also pay to
Lessor, or to whosoever shall be entitled thereto, on demand, as
Supplemental Rent, to the extent permitted by applicable law,
interest at the Payment Due Rate on any part of any amount of
Rent (including, without limitation, Supplemental Rent) not paid
by 3:00 PM, New York City time, on the date when due, for the
period from and including the date on which the same was due to,
but excluding, the date of payment in full.

          3.2.3  HOURLY RENT

          Lessee shall pay with respect to each Hourly Rent
Interval, additional Rent for the use of the Aircraft during the
Term as follows:

          (a)  Rent for the "Q"-Check equal to the "Q"-Check
Hourly Rate multiplied by the number of Cycle/Flight Hours
(measured to two decimal places) operated by Lessee during such
Hourly Rent Interval (""Q"-Check Hourly Rent");

          (b)  Rent for each Engine equal to the Engine Hourly
Rate multiplied by the number of Cycle/Flight Hours (measured to
two decimal places) operated by Lessee during such Hourly Rent
Interval (for each Engine, "Engine Hourly Rent"); and

          (c)  Rent for each landing gear equal to the Landing
Gear Hourly Rate multiplied by the number of Cycle/Flight Hours
(measured to two decimal places) operated by Lessee during such
Hourly Rent Interval (for each year, "Landing Gear Hourly Rent").

          The "Q"-Check Hourly Rent, the Engine Hourly Rent and
the Landing Gear Hourly Rent shall accrue during each Hourly Rent
Interval and shall be paid by Lessee to Lessor as Supplemental
Rent in the manner provided by Section 3.2.2 not later than 15
days after the conclusion of the Hourly Rent Interval for which
it is calculated.  Concurrently with the payment thereof, Lessee
shall report to Lessor the number of flight hours and cycles
accumulated in respect of  the Hourly Rent Interval for which
payment is being made.

          All Hourly Rent is the property of Lessor.  As such,
Lessor may commingle all Hourly Rent payments with its general
funds and Lessee has no interest therein and except as otherwise
provided in this Agreement, Lessee has no right to seek to use
any such payments, and all Hourly Rent Balances may be applied by
Lessor in its sole and reasonable discretion to satisfy any of
Lessee's obligations under the Operative Agreements.
<PAGE>

     3.3  SECURITY DEPOSIT

     (a)   Before the Delivery Date, Lessee shall pay to Lessor
the aggregate amount of the Security Deposit (the "Cash Deposit")
in immediately available funds, as follows:  (i) Lessor hereby
acknowledges receipt of the Initial Deposit; (ii) the Additional
Deposit is payable by Lessee upon its execution of this Lease;
and (iii) the Final Deposit is payable by Lessee not later than
two (2) Business Days prior to the Delivery Date.  The Cash
Deposit shall be nonrefundable unless (x) the Aircraft suffers a
total loss prior to the Delivery Date or (y) the Aircraft suffers
material deterioration to the agreed delivery condition thereof
as set forth in Letter Agreement No. 1 prior to the Delivery Date
and Lessor does not undertake to correct or cause the correction
of such material deterioration within 30 days after the projected
delivery date of February 18, 2000.  Notwithstanding the
foregoing and subject to the delivery of the sixth Boeing 737-200
Advanced aircraft to Lessee from Lessor as contemplated by the
LOI, and so long as no Default or Event of Default has occurred
and is continuing hereunder, Lessee may substitute an irrevocable
freely transferable letter of credit in the amount of the Final
Deposit, in form and substance and from a U.S. bank reasonably
acceptable to Lessor for the equivalent amount of the Cash
Deposit ("Letter of Credit") which Letter of Credit together with
the balance of the Cash Deposit shall comprise the Security
Deposit.  Within five (5) Business Days of Lessor's  receipt of
the Letter of Credit, Lessor shall promptly return the amount of
the Final Deposit to Lessee.

     (b)  The Security Deposit shall be held by Lessor as
security for the timely payment by Lessee of all amounts payable
by it hereunder, under each other Operative Agreement and any
other aircraft lease agreement between Lessor or any of its
Affiliates and Lessee or any of its Affiliates ("Other Lease
Agreement"), so long as Lessor and/or any of its Affiliates has
an interest hereunder and under any such Other Lease Agreement,
and the due and punctual performance by Lessee of all of its
obligations hereunder and thereunder, and Lessee hereby assigns,
transfers and pledges to Lessor, and hereby grants to Lessor a
first-priority security interest in, the Security Deposit to
secure such payment and such performance.  Lessee shall not
assign, transfer, pledge or otherwise dispose of any of its
rights or interests in the Security Deposit except as provided in
the preceding sentence.

     (c)  The Security Deposit may be assigned, pledged, or
charged by Lessor to or in favor of any Permitted Transferee.
Interest shall accrue on the Cash Deposit at the simple interest
rate (i.e., no compounding) of three percent (3%) per annum, and
such interest shall be retained in the Cash Deposit.  Upon
Lessee's request, Lessor shall provide to Lessee on or before
January 31 of each year during the Term (or within 30 days of
such request in the event that Lessee makes such request after
January 1 of any year during the Term).

     (d)  If an Event of Default occurs, in addition to all other
rights Lessor shall have as a secured party under applicable law,
Lessor may apply the Security Deposit as provided in Section
13.15 hereof.  If Lessor applies all or any portion of such
Security Deposit, such application shall not be deemed a cure of
any such Event of Default, unless Lessee shall within three (3)
Business Days after written demand therefor by Lessor cause the
Cash Deposit to be restored to its original amount of $220,000 or
the amount of the Final Deposit if a Letter of Credit has been
furnished by Lessee and either (i) cause the credit available
under the Letter of Credit comprising a portion of the Security
Deposit to be restored to its original level or (ii) cause a new
Letter of Credit to be issued by a bank reasonably acceptable to
the Lessor in the <PAGE> original amount.  The failure of Lessee
to do so shall be an Event of Default under this Lease.  The Cash
Deposit may be commingled with other amounts of Lessor (or its
designee).  The Letter of Credit and Cash Deposit (including
accrued interest) comprising the Security Deposit shall be
released or returned by Lessor, within five (5) Business Days of
the  expiration or earlier termination of this Lease and
performance by Lessee of all its obligations hereunder, and the
Letter of Credit shall expire no earlier than 30 days after the
return of the Aircraft to Lessor.

      3.4  PAYMENTS

      (a)  Payments of Rent and any and all other amounts payable
by Lessee hereunder and under any other Operative Agreement shall
be paid by wire transfer of immediately available Dollars, in
such manner that Lessor receives the full amount of such payments
not later than 3:00 PM, New York City time, on the date when due,
to the account of Lessor specified under "Payment Location" on
Schedule 2 hereto or to such other account in the United States
as directed by Lessor to Lessee in writing or, in the case of any
payment of Supplemental Rent expressly payable to a person other
than Lessor, to the person that shall be entitled thereto to such
account in the United States as such person may specify from time
to time to Lessee.

      (b)  Except as otherwise expressly provided herein,
whenever any payment of Rent, or any other amount payable under
this Agreement, Letter Agreement No. 1 or any other Operative
Agreement shall be due on a day that is not a Business Day, such
payment shall be made on the next day that is a Business Day,
and, if such payment is made on such next Business Day, no
interest shall accrue on the amount of such payment during such
extension.

      (c)  All computations of interest under this Agreement
shall be made on the basis of a year of 360 days comprised of
twelve 30-day months.

SECTION 4.  DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION
            1110 MATTERS

       4.1  DISCLAIMER

      UPON LESSEE'S EXECUTION AND DELIVERY OF LEASE SUPPLEMENT
NO. 1, LESSOR LEASES AND LESSEE ACCEPTS AND TAKES THE AIRCRAFT IN
ITS "AS-IS, WHERE-IS" CONDITION.  EXCEPT AS OTHERWISE PROVIDED IN
THE OPERATIVE AGREEMENTS, LESSEE ACKNOWLEDGES AND AGREES THAT AS
BETWEEN LESSEE AND LESSOR (i) THE AIRFRAME AND EACH ENGINE ARE OF
A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED BY AND
ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT THE AIRFRAME
AND EACH ENGINE ARE SUITABLE FOR THEIR RESPECTIVE PURPOSES, AND
(iii)  LESSOR DOES NOT MAKE, HAS NOT MADE AND SHALL NOT BE DEEMED
TO HAVE MADE, AND WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED,
AND LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES, ANY WARRANTY,
REPRESENTATION, GUARANTY, LIABILITY AND OBLIGATION OF LESSOR AND
ANY RIGHT, CLAIM AND REMEDY OF LESSEE AGAINST LESSOR, EXPRESS OR
IMPLIED, ARISING BY OPERATION OF LAW, COURSE OF PERFORMANCE,
COURSE OF DEALING, USAGE OF TRADE OR OTHERWISE, AS TO:
<PAGE>
       (w)  THE TITLE, AIRWORTHINESS, VALUE, CONDITION, DESIGN,
            OPERATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY
            OR FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF
            THE AIRFRAME, ANY ENGINE, ANY PART, ANY DATA OR ANY
            OTHER THING DELIVERED, SOLD OR TRANSFERRED
            HEREUNDER,

       (x)  THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH
            RESPECT TO THE AIRFRAME, ANY ENGINE, ANY PART, ANY
            DATA OR ANY OTHER THING DELIVERED, SOLD OR
            TRANSFERRED HEREUNDER,

       (y)  THE ABSENCE OF LATENT OR ANY OTHER DEFECT OR
            NONCONFORMANCE IN THE AIRFRAME, ANY ENGINE, ANY
            PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
            TRANSFERRED HEREUNDER, WHETHER OR NOT DISCOVERABLE,
            OR

       (z)  THE ABSENCE OF ANY ACTUAL OR ALLEGED INFRINGEMENT OF
            ANY PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE.

EXCEPT AS OTHERWISE PROVIDED IN THIS LEASE, LESSEE FURTHER
WAIVES, DISCLAIMS, RELEASES AND RENOUNCES ANY LIABILITY, RIGHT,
CLAIM, REMEDY OR OBLIGATION BASED ON TORT, INCLUDING STRICT
LIABILITY, WHETHER OR NOT ARISING FROM THE NEGLIGENCE (WHETHER
ACTIVE, PASSIVE OR IMPUTED) OF LESSOR, ANY OBLIGATION, LIABILITY,
RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO THE AIRFRAME, ANY
ENGINE, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED HEREUNDER, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRFRAME, ANY
ENGINE, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED HEREUNDER.

      4.2  CERTAIN AGREEMENTS OF LESSOR

      So long as no Default or Event of Default shall have
occurred and be continuing, Lessor agrees to make available to
Lessee such rights as Lessor may have under any warranty with
respect to the Aircraft made, or made available, by Airframe
Manufacturer or Engine Manufacturer or any of their respective
subcontractors or suppliers, as the case may be, or any other
party to the extent the same may be assignable.

      4.3  QUIET ENJOYMENT

      So long as no Default or Event of Default shall have
occurred and be continuing, Lessor shall not interfere, and shall
not permit any Person lawfully claiming through Lessor to
interfere, with Lessee's rights hereunder to quiet use,
possession and enjoyment of the Aircraft during the Term.  THE
FOREGOING COVENANT IS IN LIEU OF ANY RIGHT OF LESSEE UNDER
SECTION 2A-211(1) OF THE NEW YORK UNIFORM COMMERCIAL CODE OR ANY
SIMILAR LAW, WHICH RIGHT LESSEE HEREBY WAIVES, RELEASES AND
<PAGE> RENOUNCES AND LESSOR EXPRESSLY DISCLAIMS.  The foregoing,
however, shall not be construed or deemed to modify or condition
in any respect the obligations of Lessee pursuant to Section 15,
which obligations are absolute and unconditional.

      4.4  TITLE TRANSFERS BY LESSOR

      If Lessor shall be required to transfer title to the
Aircraft, Airframe or any Engine to Lessee or any other person
pursuant to Sections 5.3 or 18.1, as the case may be, then (a)
Lessor shall (1) transfer to Lessee or such other person, as the
case may be, all of Lessor's right, title and interest in and to
the Aircraft, Airframe or such Engine, as the case may be, in its
respective "AS-IS, WHERE-IS" condition, (2) assign to Lessee or
such other person, as the case may be, all warranties of Airframe
Manufacturer, Engine Manufacturer or any other party with respect
to the Aircraft, Airframe or such Engine, to the extent the same
may be assignable and (3) assign to Lessee or such other person,
as the case may be, if and to the extent permitted, all claims,
if any, for damage to the Aircraft, Airframe or such Engine, in
each case free of Lessor Liens, and without recourse or warranty
of any kind whatsoever (except as to the transfer described in
clause (1) above and as to the absence of such Lessor Liens, as
aforesaid), and (b) Lessor shall promptly deliver to Lessee or
such other person, as the case may be, a bill of sale and
agreements of assignment, as aforesaid, and such other
instruments of transfer, all in form and substance reasonably
satisfactory to Lessor and Lessee (or such other person, as the
case may be), as Lessee (or such other person, as the case may
be) may reasonably request.

      4.5  LESSOR'S INTEREST IN CERTAIN ENGINES

      In the event Lessee shall have received from the lessor,
conditional seller, indenture trustee or secured party of any
airframe leased to, or purchased by, Lessee (which is subject to
a lease, conditional sale, trust indenture or other security
agreement) a written agreement complying with clause (b) of
Section 7.2.5, Lessor hereby agrees for the benefit of such
lessor, conditional seller, indenture trustee or secured party
that Lessor will not acquire or claim, as against such lessor,
conditional seller, indenture trustee or secured party, any
right, title or interest in any engine as the result of such
engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale, trust
indenture or other security agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security
interest in favor of such indenture trustee or secured party.

     4.6  LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES;
          SECTION 1110 OF BANKRUPTCY CODE

      (a)  Lessee and Lessor agree that this Lease is, and shall
be treated as, a lease for U.S. federal income tax purposes of
the Aircraft, Airframe, Engines, Parts and Aircraft Documents.

      (b)  It is the intention of each of Lessee and Lessor that
Lessor shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft,
Airframe, Engines, Parts and Aircraft Documents as provided in
this Lease, and in any instance where more than one construction
of the terms and conditions of this Lease or any other pertinent
Operative Agreement is possible, or of the facts and
circumstances underlying the transactions contemplated herein or
therein, Lessor and Lessee agree that a construction which would
create <PAGE> and preserve such benefits shall control over any
construction which would not create and preserve such benefits.
Lessee covenants and agrees with Lessor that to better ensure the
availability of such benefits, Lessee shall support any motion,
petition or application filed by Lessor with any bankruptcy court
having jurisdiction over Lessee, whereby Lessor seeks recovery of
possession of the Aircraft under said Section 1110 and shall not
in any way oppose such action by Lessor unless Lessee shall have
complied with the requirements of said Section 1110 to be
fulfilled in order to entitle Lessee to continued use and
possession of the Aircraft hereunder.  In the event said Section
1110 is amended, or if it is repealed and another statute is
enacted in lieu thereof, Lessor and Lessee agree to amend this
Agreement and take such other action not inconsistent with this
Agreement as Lessor reasonably deems necessary so as to afford to
Lessor the rights and benefits as such amended or substituted
statute confers upon

      (c)  Lessor and Lessee agree that, for all purposes of
applicable Law, this Lease constitutes an agreement of lease and
nothing contained herein shall be construed as conveying to
Lessee any right, title or interest in the Aircraft, Airframe,
Engines, Parts or Aircraft Documents except as a lessee only.

      4.7  CONTRIBUTION BY LESSOR FOR CERTAIN MAINTENANCE AND
           OVERHAULS

      Upon submission by Lessee to Lessor of invoices,
statements, certificates,  receipts or mutually acceptable
documentation which may include internal Lessee documents
(collectively, "Maintenance Invoices") in detail reasonably
satisfactory to Lessor as to the identity of the specific
Airframe, Engine or landing gear, the content of the work,
completion of the work, the date of completion of the work and
the cost of the work from an FAA-approved  maintenance facility
or maintenance facility included in Lessee's FAA-approved
operations specification evidencing the performance of such
maintenance:

      (a)  for the Airframe, for the accomplishment of a
completed scheduled "Q"-Check (a major inspection and
rectification of structural deficiencies or overhauls of an
Airframe) in accordance with Lessee's Maintenance Program (""Q"-
Check Maintenance");

      (b)  for any Engine, for performance of a completed engine
shop visit (i.e. heavy maintenance visit) for an Engine which, at
a minimum, includes the repair or refurbishment of one or more of
the following:  the hot section, the high pressure section, the
high or low turbines, the low compressor or high compressor,
casings, shafts, bearings, N1 Gearbox, N2 Gearbox or life limited
parts (LLPs) replacement; and

      (c)  with respect to any landing gear, for the
performance of an  overhaul of such landing gear assembly,
including replacement of any LLPs ("Landing Gear Maintenance").

      Lessor shall, so long as no Financial Default or Event of
Default exists, pay, as an independent obligation to (i) Lessee,
or (ii) at Lessor's option, to the maintenance or overhaul
facility, if Lessee has not paid such maintenance performer such
amounts if they are due, in the case of "Q"-Check Maintenance,
from the applicable "Q"-Check Hourly Rent Balance for such
Airframe, in the case of Engine Maintenance, from the applicable
Engine Hourly Rent Balance for such Engine, and, in the case of
Landing Gear Maintenance, from the applicable Landing Gear Hourly
Rent Balance for such gear, a sum equal to the applicable amount
evidenced by <PAGE> such Maintenance Invoices to the extent that
there are funds sufficient for such payment then remaining from
the applicable Hourly Rent Balance, as the case may be.  To the
extent the applicable Hourly Rent Balance is insufficient to pay
such Maintenance Invoice in full, the deficiency shall be the
responsibility of Lessee and paid by Lessee to the applicable
maintenance performer, and Lessee shall not be entitled to
payment with respect to an inapplicable or insufficient Hourly
Rent Balance, nor to a credit against Hourly Rent payments then
payable or to be made in the future or to be made against any
other Item or Part.

      Lessee understands and agrees that in no event shall
Lessor be required to make any payments if there exists a zero or
deficit balance in any specific Hourly Rent Balance nor shall
Lessor be obliged to apply funds from any other Hourly Rent
Balance or otherwise.  Lessee further understands and agrees that
Lessor shall have no obligation to reimburse or otherwise pay,
indemnify or compensate Lessee for the cost of any maintenance or
repair except as expressly and specifically enumerated in sub-
clauses (a) - (c) of this Section 4.7.  Without limiting the
generality of the foregoing, and except as otherwise provided
herein, it is understood that Lessor shall not reimburse Lessee
for maintenance or repairs covered by insurance or warranty or
required as a result of an airworthiness directive (including
Stage 3 noise regulations), manufacturer's service bulletin,
routine airframe maintenance, i.e., "A," "B," or "C" checks, non-
routine or improper operations, misuse, neglect, accident,
ingestion, foreign object damage or other accidental cause.  No
other reimbursement of Hourly Rent will be made in any other
circumstances.

      Hourly Rent Balances shall bear simple interest (i.e.,
without compounding) at a rate of three percent (3%) per annum.
Such interest shall be deemed to become part of the respective
Hourly Rent Balances and may be available for the above-described
maintenance.

SECTION 5.  RETURN OF AIRCRAFT

      5.1  COMPLIANCE WITH ANNEX B

      Lessee shall comply with each of the provisions of Annex B
hereto, which provisions are hereby incorporated by this
reference as if set forth in full herein.  Without limiting any
other rights of Lessor under this Lease or any other Operative
Agreement, Lessee acknowledges that the provisions of this
Section 5 and of Annex B, are of the essence of this Lease and
the transactions contemplated herein.

      5.2  RETURN OF OTHER ENGINES

      In the event that any Engine owned by Lessor shall not be
installed on the Airframe at the time of return hereunder, such
Engine shall be deemed to have suffered an Event of Loss as of
the sixty-first day prior to the date of such return, with the
effect that Lessee shall be required to return the Airframe
hereunder with a Replacement Engine meeting the requirements of,
and in accordance with, Section 10 hereof and Annex B hereto.

      5.3  FAILURE TO RETURN AIRCRAFT

      If Lessee shall, for any reason whatsoever, fail to return
the Aircraft and the Aircraft Documents at the time specified
herein, all obligations of Lessee under this Lease (including,
<PAGE> without limitation, the obligation to pay Basic Rent
hereunder, at a daily rate equal to (a)  Basic Rent divided by 30
days for the first 15 days and (b) 150% of Basic Rent  divided by
30 days for each day in excess of 15 days, shall continue in
effect with respect to the Aircraft until the Aircraft is
returned to Lessor in compliance with the requirements of this
Section 5 and Annex B to this Lease; provided, however, that this
Section 5.3 shall not be construed as permitting Lessee to fail
to meet its obligation to return the Aircraft or the Aircraft
Documents in accordance with the requirements hereof or
constitute, or be deemed to constitute, a waiver of any Event of
Default resulting from Lessee's failure to return the Aircraft or
the Aircraft Documents or otherwise.

SECTION 6.  LIENS

      Lessee shall not, directly or indirectly, create, incur,
assume or suffer to exist any Lien on or with respect to the
Aircraft, the Airframe, any Engine, any Part or any Aircraft
Documents, title to any of the foregoing or any interest therein,
or this Lease or any interest of Lessor herein, or any amount
payable hereunder, including, without limitation, any Rent,
except (a) the respective rights of Lessor or Lessee under the
Operative Agreements, or of any Permitted Sublessee under any
Permitted Sublease; (b) Lessor Liens; (c) the rights of others
under agreements or arrangements to the extent expressly
permitted by the terms of Sections 7.2 and 7.3 and Section F of
Annex C; (d) Liens for Taxes of Lessee (and its U.S. federal tax
law consolidated group), or Liens for Taxes of any Tax Indemnitee
(and its U.S. federal tax law consolidated group) for which
Lessee is obligated to indemnify such Tax Indemnitee under any of
the Operative Agreements, in any such case either not yet due or
being contested in good faith by appropriate proceedings so long
as such Liens and such proceedings do not involve any material
risk of the sale, forfeiture or loss (including loss of use) of
the Aircraft, the Airframe, any Engine or any of the Aircraft
Documents, or any interest therein or any discernible risk of
criminal liability or any material risk of civil penalty against
Lessor; (e) materialmen's, mechanics', workers', repairers',
employees' or other like Liens arising in the ordinary course of
business for amounts the payment of which is either not yet
delinquent or is being contested in good faith by appropriate
proceedings, so long as such Liens and such proceedings do not
involve any material risk of the sale, forfeiture or loss
(including loss of use) of the Aircraft, the Airframe, any Engine
or any of the Aircraft Documents, or any interest therein or any
discernible risk of criminal liability or any material risk of
civil penalty against Lessor; and (f) Liens arising out of any
judgment or award against Lessee (or any Permitted Sublessee), so
long as such judgment shall, within 30 days after the entry
thereof, have been discharged or vacated, or execution thereof
stayed pending appeal or shall have been discharged, vacated or
reversed within 30 days after the expiration of such stay, and so
long as during any such 30-day period there is not, or any such
judgment or award does not involve, any material risk of the
sale, forfeiture or loss (including loss of use) of the Aircraft,
the Airframe, any Engine or any of the Aircraft Documents, or any
interest therein or any discernible risk of criminal liability or
any material risk of civil penalty against Lessor.  Lessee shall
promptly take such action as may be necessary duly to pay,
satisfy, remove and discharge any Lien on or with respect to the
Aircraft, the Airframe, any Engine, any Part or any Aircraft
Documents, title to any of the foregoing or any interest therein,
or this Lease or any interest of Lessor herein, or any amount
payable hereunder not excepted above if the same shall at any
time arise in respect of the Aircraft, the Airframe, any Engine,
any Part, or the Aircraft Documents and shall promptly provide to
Lessor evidence of such payment, satisfaction, removal or
discharge.
<PAGE>
SECTION 7.  REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND
            RECORDS

     7.1  REGISTRATION AND OPERATION

          7.1.1  REGISTRATION AND RECORDATION

          Lessor shall cause the Aircraft to be, and at all times
during the Term to remain, duly registered with the FAA under the
Act in the name of Lessor as owner and lessor, at Lessor's
expense.

          7.1.2  MARKINGS

          (a)  On or prior to the Delivery Date, Lessee will
cause to be affixed to, and maintained in, the cockpit of the
Airframe and on each Engine, in each case, in a clearly visible
location (it being understood that the location of such placards,
as identified to the Lessor prior to the Delivery Date, shall be
deemed to be in compliance with this requirement), a placard of a
reasonable size and shape bearing the legend, in English, set
forth under the option "Lease Identification" in Schedule 3.
Lessee shall not remove or permit the removal of such placards,
except that such placards may be removed temporarily, if
necessary, in the course of maintenance of the Airframe or
Engines.  If any such placard is damaged or becomes illegible,
Lessee shall promptly replace it with a placard complying with
the requirements of this Section 7.1.2.

          (b)  During the Term, Lessee may letter, paint or mark
the Aircraft with the name and logo of Lessee or any Permitted
Sublessee and may cause the Aircraft to bear insignia plates or
other markings identifying the supplier or manufacturer of the
Airframe or the Engines or any Parts.  Except as provided above,
Lessee will not allow the name of any person to be placed on the
Airframe or on any Engine as a designation that could reasonably
be interpreted as a claim of ownership.

          7.1.3  COMPLIANCE WITH LAWS

          Lessee shall not, and shall not allow any other person
to, operate, use, maintain, service, repair, overhaul or
otherwise similarly deal with the Aircraft (a) in violation of
any Law binding on or applicable to the Lessee or to the
Aircraft, the Airframe or any Engine, or any of the Aircraft
Documents, or to the operation, use, maintenance, service, repair
or overhaul of, or similar dealings in, the Aircraft, Airframe or
any Engine, or (b) in violation of any airworthiness certificate,
license or registration of any Government Entity relating to
Lessee or to the Aircraft, the Airframe or any Engine, except (1)
immaterial or non-recurring violations of which Lessee or any
Permitted Sublessee had no prior knowledge or information and
with respect to which corrective measures are taken promptly by
Lessee or a Permitted Sublessee, as the case may be, upon
discovery thereof, and (2) to the extent Lessee or any Permitted
Sublessee is contesting the validity or application of any such
law, rule, regulation, order, certificate, license or
registration in good faith in any reasonable manner which does
not involve any material risk of the sale, forfeiture or loss
(including loss of use) of the Aircraft, the Airframe, any Engine
or any of the Aircraft Documents or any interest therein or any
discernible risk of criminal liability or any material risk of
civil penalty against Lessor.
<PAGE>

          7.1.4  OPERATION

          Lessee agrees not to operate, use or locate the
Aircraft, the Airframe or any Engine, or allow the Aircraft, the
Airframe or any Engine to be operated, used or located (a) in any
area excluded from coverage by any insurance required by the
terms of Section 10, or (b) in any recognized or threatened area
of hostilities.

     7.2  POSSESSION

     Lessee will not, without the prior written consent of
Lessor, sublease or otherwise in any manner deliver, transfer or
relinquish possession of the Aircraft, the Airframe or any Engine
or install any Engine, or permit any Engine to be installed, on
any airframe other than the Airframe; provided, however, subject
to the provisions of Section 7.3, that if and for so long as (a)
no Event of Default shall have occurred and be continuing, (b)
with respect to any sublease or transfer contemplated by Section
7.2.6 below, no Default or Event of Default shall have occurred
and be continuing at the time of such sublease and (c) all
approvals, consents or authorizations required by the FAA in
connection with any such sublease or such delivery, transfer or
relinquishment of possession have been obtained and remain in
full force and effect, then Lessee may, without such prior
written consent:

          7.2.1  INTERCHANGE AND POOLING

          Subject or permit any Permitted Sublessee to subject
any Engine to normal interchange agreements or pooling agreements
or arrangements, in each case customary in the commercial airline
industry and entered into in writing by Lessee or such Permitted
Sublessee, as the case may be, in the ordinary course of business
and with any U.S. Air Carrier.  If, notwithstanding the
foregoing, Lessor's title to any such Engine is divested under
any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such
divestiture, with the effect that Lessee shall be required to
replace such Engine with a Replacement Engine meeting the
requirements of, and in accordance with, Section 9.

          7.2.2  TESTING AND SERVICE

          Deliver or permit any Permitted Sublessee to deliver
possession of the Aircraft, Airframe, any Engine or any Part to
the manufacturer thereof or, to the extent permitted by Section B
of Annex C, to any third-party maintenance provider, for testing,
service, repair, maintenance or overhaul work on the Aircraft,
Airframe, any Engine or any Part, or, to the extent required or
permitted by the terms of Section D of Annex C, for alterations
or modifications in or additions to the Aircraft, Airframe or any
Engine, it being understood that, with respect to Engines and
Parts, delivery may be accomplished by transport on licensed or
bonded common carriers qualified in the shipping and transport of
such items.

          7.2.3  INSTALLATION OF ENGINES ON OWNED AIRCRAFT

          Install or permit any Permitted Sublessee to install an
Engine on an airframe owned by Lessee or such Permitted
Sublessee, as the case may be, free and clear of all Liens,
except (a) those of the type permitted under clauses (d), (e) and
(f) of Section 6 and those that <PAGE> apply only to engines
(other than Engines) and/or only to parts, appliances,
instruments, appurtenances, accessories, furnishings and other
equipment (other than Parts), and (b) the rights of third parties
under normal interchange or pooling agreements and arrangements
of the type that would be permitted under Section 7.2.1.

          7.2.4  INSTALLATION OF ENGINES ON OTHER AIRFRAMES

          Install or permit any Permitted Sublessee to install an
Engine on an airframe leased to Lessee or such Permitted
Sublessee, or purchased by Lessee or such Permitted Sublessee
subject to a mortgage, security agreement, conditional sale or
other secured financing arrangement, but only if (a) such
airframe is free and clear of all Liens, except (i) the rights of
the parties to such lease, or any such secured financing
arrangement, covering such airframe and (ii) Liens of the type
permitted by clauses (a) and (b) of Section 7.2.3 and (b) Lessee
shall have received from the lessor, mortgagee, secured party or
conditional seller, in respect of such airframe, a written
agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such
airframe), whereby such Person agrees, for the effective and
enforceable benefit of, among others, Lessor, that neither such
Person nor its successors or assigns will acquire or claim any
right, title or interest in, or Lien on, such Engine by reason of
such Engine being installed on such airframe.

          7.2.5  INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT

          Install or permit any Permitted Sublessee to install an
Engine on an airframe owned by Lessee or such Permitted
Sublessee, leased to Lessee or such Permitted Sublessee, or
purchased by Lessee or such Permitted Sublessee subject to a
conditional sale or other security agreement under circumstances
where neither Section 7.2.3 or 7.2.4 is applicable; provided,
however, that in the event of any such installation, such Engine
shall be deemed to have suffered an Event of Loss as of the date
of such installation, with the effect that Lessee shall be
required to replace such Engine with a Replacement Engine meeting
the requirements of, and in accordance with, Section 10.  Until
Section 10 has been fully complied with, Lessor's interest in any
such Engine shall continue in full force and effect.

          7.2.6  SUBLEASING

          With respect to the Aircraft, Airframe or any Engine,
enter into a sublease with any U.S. Air Carrier or certificated
Canadian air carrier, but only if:

          (a)  Lessee shall provide 15 days' advance written
notice to Lessor;

          (b)  At the time that Lessee enters into such sublease,
no such U.S. Air Carrier or certificated Canadian air carrier
shall be insolvent or subject to any bankruptcy, insolvency,
liquidation, reorganization, dissolution or similar proceeding,
or any similar non-ordinary course transaction, shall be seeking
any reorganization or any readjustment of its debts or shall be,
or shall have substantially all of its property, in the
possession of any liquidator, trustee, receiver or similar
person;

          (c)  No such sublease shall provide for payment of
rent, or any amount in lieu of rent, (i) more than three months
in advance, or (ii) less frequently than once every month;
<PAGE>
          (d)  Any such sublease (i) shall include provisions for
the registration, maintenance, operation, possession, insurance
and inspection of the Aircraft that are substantially the same
as, or (from a lessor's perspective) more favorable than, the
applicable provisions of Sections 7, 10 and 11, (ii) shall
provide that such U.S. Air Carrier or certificated Canadian air
carrier may not further sublease or transfer its interests
(except transfers of the type permitted in Sections 7.2.1 through
7.2.5, inclusive) in the Aircraft, Airframe, Engines or Aircraft
Documents, (iii) shall not extend beyond the end of the Term, and
(iv) shall be expressly subject and subordinate to all the terms
of this Agreement and to the rights, powers and remedies of
Lessor hereunder, including, without limitation, Lessor's rights
under Section 14 to repossess the Aircraft, Airframe, Engines and
Aircraft Documents and to terminate such sublease, upon the
occurrence of an Event of Default;

          (e)  Lessee shall furnish to Lessor evidence reasonably
satisfactory to Lessor that the insurance required by Section 10
remains in effect;

          (f)  All necessary action, if any, shall have been
taken to continue in full force and effect (i) the perfection of
Lessor's title to and interest in the Aircraft, Airframe, Engines
and Aircraft Documents and (ii) Lessor's rights under this Lease;

          (g)  All necessary documents shall have been duly
filed, registered or recorded in such public offices as may be
required fully to preserve the title of, and the priority of the
interest of, Lessor and Lessor's Lender, if any, in the Aircraft,
Airframe, Engines and Aircraft Documents;

          (h)  Each such sublease shall be assigned by Lessee to
Lessor as security for the performance of all of Lessee's
obligations under this Lease (with Lessee retaining all rights of
sublessor thereunder, to the extent consistent with this Section
7.2.6, (i) except the right to receive rents and (ii) if and for
so long as there shall not have occurred and be continuing an
Event of Default);

          (i)  Lessee shall reimburse the reasonable out-of-
pocket fees and expenses, including, without limitation,
reasonable fees and disbursements of counsel, incurred by Lessor
in connection with any such sublease; and

          (j)  For all purposes of this Section 7.2.6, the term
"sublease" shall be deemed to include interchange agreements with
respect to the Aircraft or Airframe.

     7.3  CERTAIN LIMITATIONS ON SUBLEASING OR OTHER
RELINQUISHMENT OF POSSESSION

     Notwithstanding anything to the contrary in Section 7.2:

     (a)  The rights of any person that receives possession of
the Aircraft in accordance with Section 7.2 shall be subject and
subordinate to all the terms of this Lease, and to Lessor's
rights, powers and remedies hereunder, including, without
limitation (i) Lessor's right to repossess the Aircraft pursuant
to Section 14, (ii) Lessor's right to terminate and avoid such
sublease, delivery, transfer or relinquishment of possession upon
the occurrence of an Event of Default and (iii) the right to
require such person to forthwith deliver the Aircraft, the
Airframe, Engines and Aircraft Documents subject to such transfer
upon the occurrence of an Event of Default;
<PAGE>

     (b)  Lessee shall remain primarily liable hereunder for the
performance of all the terms of this Lease to the same extent as
if such transfer had not occurred and no transfer of possession
of the Aircraft, the Airframe or any Engine, any Part or any
Aircraft Documents shall in any way discharge or diminish any of
Lessee's obligations to Lessor hereunder or under any Operative
Agreement;

     (c)  Lessee shall ensure that no sublease, delivery,
transfer or relinquishment permitted under Section 7.2 shall
affect the United States registration of the Aircraft;

     (d)  Any event that constitutes or would, with the passage
of time, constitute an Event of Loss under paragraph (c), (d), or
(e) of the definition of such term (as set forth in Annex A)
shall not be deemed to violate the provisions of Section 7.2; and

     (e)  Any Wet Lease customary in the North American
commercial airline industry and entered into by Lessee for a term
of less than six (6) months in the ordinary course of its
business with U.S. Air Carriers and certificated Canadian air
carriers that are not insolvent or subject to any bankruptcy,
insolvency, liquidation, reorganization, dissolution or similar
proceeding, or any similar non-ordinary course transaction, shall
be seeking any reorganization or any readjustment of its debts or
shall be, or shall have substantially all of its property, in the
possession of any liquidator, trustee, receiver or similar person
shall not constitute a delivery, transfer or relinquishment of
possession for purposes of Section 7.2.

SECTION 8.  MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
            ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER
            LESSEE COVENANTS

      8.1  MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
           ALTERATIONS, MODIFICATIONS AND ADDITIONS

      At all times during the Term, Lessee shall comply with, or
cause to be complied with, each of the provisions of Annex C,
which provisions are hereby incorporated by this reference as if
set forth in full herein.  Without limiting any other rights of
Lessor under this Lease or any other Operative Agreement, Lessee
acknowledges that the provisions of this Section 8 and of Annex C
are of the essence of this Lease and the transactions
contemplated herein.

      8.2 Information, Certificates, Notices and Reports

          8.2.1  FINANCIAL INFORMATION

          Upon Lessor's request, Lessee will furnish to Lessor to
the extent not already provided pursuant to Section 8.2.3:

         (a)  Within 60 days after the end of each of the first
three fiscal quarters in each fiscal year of Lessee, a
consolidated balance sheet of Lessee as of the end of such
quarter and related statements of income and cash flows for the
period commencing at the end of the previous fiscal year and
ending with the end of such quarter, setting forth in each case
in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year, prepared in
accordance with GAAP; provided that so long as Lessee is subject
to the <PAGE> reporting requirements of the Securities Exchange
Act of 1934, a copy of Lessee's report on Form 10-Q for such
fiscal quarter (together with all documents containing such
financial information incorporated by reference therein) will
satisfy this paragraph (a).

         (b)  Within 120 days after the end of each fiscal year
of Lessee, a consolidated balance sheet of Lessee as of the end
of such fiscal year and related statements of income and cash
flows of Lessee for such fiscal year, in comparative form with
the preceding fiscal year, prepared in accordance with GAAP,
together with a report of Lessee's independent certified public
accountants with respect to their audit of such financial
statements; provided that so long as Lessee is subject to the
reporting requirements of the Securities Exchange Act of 1934, a
copy of Lessee's report on Form 10-K for such fiscal year
(including all corresponding publicly-available annual reports to
stockholders, if not previously furnished) will satisfy this
paragraph (b).

          8.2.2  ANNUAL CERTIFICATE

          Upon Lessor's request, within 120 days after the close
of each fiscal year of Lessee, Lessee shall deliver to Lessor a
certificate of Lessee, signed by any Vice President of Lessee, to
the effect that such Vice President is familiar with or has
reviewed or caused to be reviewed the relevant terms of this
Lease and the other Operative Agreements and has made, or caused
to be made under his or her supervision, a review of the
transactions and condition of Lessee during the preceding fiscal
year, and that such review has not disclosed the existence during
such fiscal year, nor does such Vice President have knowledge of
the existence as at the date of such certificate, of any Default
or Event of Default or, if any such Default or Event of Default
existed or exists, specifying the nature and period of existence
thereof and the action Lessee has taken or is taking or proposes
to take with respect thereto.

          8.2.3  SEC REPORTS

          Lessee will furnish to Lessor:

         (a)  upon Lessor's request, promptly after filing with
the SEC, copies of Lessee's annual reports on Form 10-K
(including all corresponding publicly-available annual reports to
stockholders, if not previously furnished), and quarterly reports
on Form 10-Q (in each case, excluding exhibits unless Lessor
requests otherwise); and

         (b)  promptly after filing with the SEC, copies of
current reports on Form 8-K, or any similar reports filed with
the SEC (in each case, excluding exhibits unless Lessor  requests
otherwise), and (ii) upon Lessor's request, promptly upon
distribution thereof, copies of all periodic reports furnished by
Lessee to its stockholders generally.

          8.2.4  NOTICE OF DEFAULT

          Lessee will furnish to Lessor, immediately upon any
senior officer or financial officer of Lessee, or other
administrative officer of Lessee having any material
responsibility for Lessee's day-to-day compliance with its
obligations under this Lease, becoming aware that a Default or an
Event of Default has occurred, a certificate of Lessee, signed by
any such officer of <PAGE> Lessee, describing such Default or
Event of Default in reasonable detail, with a statement
describing the action Lessee has taken or is taking or proposes
to take with respect thereto.

          8.2.5  INFORMATION FOR FILINGS

          Lessee shall promptly furnish to Lessor such
information (other than with respect to the citizenship of
Lessor) within Lessee's or any Permitted Sublessee's possession,
or reasonably available to or obtainable by Lessee or such
Permitted Sublessee, as may be required to enable Lessor timely
to file any reports required to be filed by it as lessor under
the Lease with any Government Entity because of, or in connection
with, the interest of Lessor in the Aircraft, Airframe, Engines
or Aircraft Documents or this Lease; provided, however, that with
respect to any such information which Lessee reasonably deems
commercially sensitive or confidential, Lessor shall afford
Lessee a reasonable opportunity to seek from any such Government
Entity a waiver of the obligation of Lessor to file any such
information, or shall consent to the filing of such information
directly by Lessee in lieu of filing by Lessor and if any such
waiver or consent is evidenced to the reasonable satisfaction of
Lessor, then Lessee shall not be required to furnish such
information to Lessor.

          8.2.6  OTHER INFORMATION

          Lessee shall provide to Lessor from time to time such
other information or data as Lessor may reasonably request
concerning the Aircraft, Airframe, Engines or Aircraft Documents,
or Lessee's financial condition, or otherwise relating to the
transactions or matters contemplated herein and in the other
Operative Agreements, in each case if and to the extent within
Lessee's or any Permitted Sublessee's possession, or reasonably
available to or obtainable by Lessee or such Permitted Sublessee.

      8.3  REPRESENTATIONS AND WARRANTIES

      (a)  Lessee hereby makes each of the representations and
warranties set forth in Part A of Schedule 3 hereto.

      (b)  Lessor hereby makes each of the representations and
warranties set forth in Part B of Schedule 3 hereto.

SECTION 9.  LOSS, DESTRUCTION, REQUISITION, ETC.

      9.1  EVENT OF LOSS WITH RESPECT TO AIRCRAFT

           9.1.1  NOTICE

          (a)  Upon the occurrence of an Event of Loss with
respect to the Airframe, or the Airframe and the Engines and/or
engines installed thereon at the time of such Event of Loss,
Lessee shall promptly (and in any event within five (5) days
after such occurrence) give Lessor written notice of such Event
of Loss.
<PAGE>
          9.1.2  PAYMENT OF LOSS AND TERMINATION OF LEASE

          (a)  On or before the Business Day next following the
earlier of (x) the sixty-first day following the date of the
occurrence of such Event of Loss, and (y) the second Business Day
following the receipt of insurance proceeds with respect to such
occurrence (the actual date of payment being sometimes referred
to as the "Event of Loss Payment Date"), Lessee shall pay to
Lessor: (A) the Stipulated Loss Value of the Aircraft, plus
(B) all unpaid Basic Rent due on or before the Event of Loss
Payment Date, plus (C) all unpaid Supplemental Rent due on or
prior to the Event of Loss Payment Date, minus (D) any prepaid
Basic Rent applicable to the period following the date of payment
in full of all amounts specified in clauses (A) - (C).

          (b)  Upon payment in full of all amounts described in
the foregoing paragraph (a), (i) the obligation of Lessee to pay
Basic Rent hereunder with respect to the Aircraft shall
terminate, (ii) the Term for the Aircraft shall end, and (iii)
Lessor will transfer the Aircraft to Lessee in its "AS-IS, WHERE-
IS" condition and subject to any insurer's salvage rights, but
otherwise in the manner described in Section 4.5.

      9.2  EVENT OF LOSS WITH RESPECT TO AN ENGINE

          9.2.1  NOTICE

          Upon the occurrence of an Event of Loss with respect to
an Engine under circumstances in which an Event of Loss with
respect to the Airframe has not occurred, Lessee shall promptly
(and in any event within 15 days after such occurrence) give
Lessor written notice of such Event of Loss.

          9.2.2  REPLACEMENT OF ENGINE

          Lessee shall, as promptly as possible and in any event
within 60 days after the occurrence of such Event of Loss, convey
or cause to be conveyed to Lessor, in compliance with Section
9.2.3 and as replacement for the Engine with respect to which any
Event of Loss occurred, title to a Replacement Engine free and
clear of all Liens other than Permitted Liens.  Such Replacement
Engine shall be an engine manufactured by Engine Manufacturer
that is the same model and modification status as the Engine to
be replaced thereby, or an improved model and/or modification
status, and that is suitable for installation and use on the
Airframe, and that has performance and durability
characteristics, and a value, utility and remaining useful life,
at least equal to, and is in at least as good operating condition
as, the Engine to be replaced thereby (assuming that such Engine
was of the value and utility and in the condition and repair
required by the terms hereof immediately prior to the occurrence
of the Event of Loss).

          9.2.3  CONDITIONS TO REPLACEMENT OF ENGINE

          Prior to or at the time of conveyance of title to any
Replacement Engine to Lessor, Lessee shall promptly take each of
the following actions at its cost and expense, and shall promptly
furnish the following agreements, instruments, certificates and
documents to (and in each case reasonably satisfactory in form
and substance to) Lessor:
<PAGE>
          (a)  furnish Lessor with a full warranty bill of sale
duly conveying to Lessor such Replacement Engine, together with
such evidence of title as Lessor may reasonably request;

          (b)  cause (i) a Lease Supplement subjecting such
Replacement Engine to this Lease, duly executed by Lessee, to be
delivered to Lessor for execution and, upon such execution, to be
filed for recordation with the FAA pursuant to the Act and (ii)
such Financing Statements and other filings, as Lessor  may
reasonably request, duly executed by Lessee and, to the extent
applicable, Lessor (and Lessor shall execute and deliver the
same), to be filed in such locations as any such party may
reasonably request;

          (c)  furnish such evidence of compliance with the
insurance provisions of Section 10 with respect to such
Replacement Engine as Lessor may reasonably request;

          (d)  furnish an opinion of Lessee's counsel reasonably
satisfactory to Lessor to the effect that (i) upon such
conveyance, Lessor will acquire full legal and marketable title
to such Replacement Engine free and clear of all Liens other than
Permitted Liens, (ii) such Replacement Engine will be leased
hereunder to the same extent as the Engine replaced thereby and
(iii) to such further effect as Lessor may reasonably request;

          (e)  furnish an opinion of Crowe & Dunlevy, as special
FAA counsel, at Lessee's cost and expense, as to the due
recordation of each Lease Supplement with respect to such
Replacement Engine and as to such other matters concerning the
Act as Lessor may reasonably request;

          (f)  furnish a certificate of an Appraiser, certifying
that such Replacement Engine has performance and durability
characteristics, and a value, utility and remaining useful life
at least equal to, and is in at least as good operating condition
as, the Engine so replaced, assuming such Engine was of the
value, utility and remaining useful life, and in the condition
and repair required by the terms hereof immediately prior to the
occurrence of such Event of Loss;

          (g)  take such other actions and furnish such other
certificates and documents, as Lessor may reasonably request in
order that such Replacement Engine be duly and properly titled in
Lessor and leased hereunder to the same extent as initially
required with respect to the Engine so replaced.

          9.2.4  CONVEYANCE TO LESSEE

          Upon full compliance by Lessee with the applicable
terms of Sections 9.2.2 and 9.2.3, Lessor will transfer to Lessee
the Airframe or Engine, as the case may be, with respect to which
such Event of Loss occurred, in accordance with Section 4.4,
provided that Lessor shall not be required to effect any such
transfer if and for so long as there shall have occurred and be
continuing any Default (other than with respect to Section 14.4
or 14.5) or Event of Default.
<PAGE>

     9.3  APPLICATION OF PAYMENTS

     Any amounts, other than insurance proceeds in respect of
damage or loss not constituting an Event of Loss (the application
of which is provided for in Section 10), received at any time by
Lessor, Lessee or any Permitted Sublessee from any Person in
respect of any Event of Loss will be applied as follows:

          9.3.1  LOSS OF AIRFRAME

          If such amounts are received, in whole or in part, with
respect to the Airframe, such amounts shall be applied as
follows:

          (a)  first, if the sum described in Section 9.1.2 has
not then been paid in full by Lessee, such amounts shall be paid
to Lessor to the extent necessary to pay in full such sum;

          (b)  second, the remainder, if any, shall, subject to
Section 9.4, be paid to Lessee.

          9.3.2  LOSS OF ENGINE

          If such amounts are received with respect to an Engine
under the circumstances contemplated in Section 9.2.1, such
amounts shall be paid over to, or retained by, Lessor and shall
be held in accordance with Section 9.4 and if, and at such time
as, Lessee shall have fully complied with the applicable terms of
Sections 9.2.2 and 9.2.3 with respect to the Event of Loss for
which such amounts are received, such amounts shall, subject to
Section 9.4, be paid to Lessee.

      9.4  APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT

      Any amount described in this Section 9 that is payable or
creditable to, or retainable by, Lessee shall not be paid or
credited to, or retained by, Lessee if at the time such payment,
credit or retention would otherwise occur a Default or an Event
of Default shall have occurred and be continuing, but shall
instead be held by or paid over to Lessor as security for the
obligations of Lessee under this Lease and the other Operative
Agreements and applied to Lessee's obligations under this Lease
and the other Operative Agreements as and when due.  At such time
as there shall not be continuing any Default or any Event of
Default, such amount shall be paid to Lessee to the extent not
previously applied in accordance with this Section 9.4.

SECTION 10.  INSURANCE

     10.1  LESSEE'S OBLIGATION TO INSURE

     Lessee shall comply with, or cause to be complied with, each
of the provisions of Annex D, which provisions are hereby
incorporated by this reference as if set forth in full herein.
Without limiting any other rights of Lessor under this Lease or
any other Operative Agreement, Lessee acknowledges that the
provisions of this Section 10 and of Annex D are of the essence
of this Lease and the transactions contemplated herein.
<PAGE>
     10.2  LESSOR'S RIGHT TO MAINTAIN INSURANCE

     In the event that Lessee shall fail to maintain, or cause to
be maintained, insurance as herein provided, Lessor may at its
option (but shall not be obligated to) provide such insurance
and, in such event, Lessee shall, upon demand, reimburse Lessor,
as Supplemental Rent, for the cost thereof.  No such payment,
performance or compliance shall be deemed to cure any Default or
Event of Default or otherwise relieve Lessee of its obligations
with respect thereto.

     10.3  INSURANCE FOR OWN ACCOUNT

     Nothing in Section 10 shall limit or prohibit (a) Lessee
from maintaining the policies of insurance required under Annex D
with higher limits than those specified in Annex D, or (b) Lessor
from obtaining insurance for its own account (and any proceeds
payable under such separate insurance shall be payable as
provided in the policy relating thereto); provided, however, that
no insurance may be obtained or maintained by Lessee or Lessor
that would limit or otherwise adversely affect the coverage of
any insurance required to be obtained or maintained by Lessee
pursuant to this Section 10 and Annex D.

     10.4  APPLICATION OF INSURANCE PROCEEDS

     As between Lessor and Lessee, all insurance proceeds
received as a result of the occurrence of an Event of Loss with
respect to the Aircraft or any Engine under policies required to
be maintained by Lessee pursuant to this Section 10 will be
applied in accordance with Section 9.3.  All proceeds of
insurance required to be maintained by Lessee, in accordance with
Section 10 and Section B of Annex D, in respect of any property
damage or loss not constituting an Event of Loss with respect to
the Aircraft, Airframe or any Engine will be applied in payment
(or to reimburse Lessee) for repairs or for replacement property
in accordance with the terms of Section 8.1, and any balance
remaining after compliance with said Section 8.1 with respect to
such damage or loss shall be paid over to, or retained by,
Lessee.

      10.5  APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT

      Any amount described in this Section 10 that is payable or
creditable to, or retainable by, Lessee shall not be paid or
credited to, or retained by, Lessee if at the time such payment,
credit or retention would otherwise occur a Default or an Event
of Default shall have occurred and be continuing, but shall
instead be held by or paid over to Lessor as security for the
obligations of Lessee under this Lease and the other Operative
Agreements and applied  to Lessee's obligations under this Lease
and the other Operative Agreements as and when due.  At such time
as there shall not be continuing any Default or any Event of
Default, such amount shall be paid to Lessee to the extent not
previously applied in accordance with this Section 10.5.

SECTION 11.  INSPECTION

      (a)  At all reasonable times Lessor and its  authorized
representatives (collectively, the "Inspecting Parties") may
inspect the Aircraft, Airframe, Engines and Aircraft Documents
and Lessee shall cooperate, and shall cause any Permitted
Sublessee to cooperate, with the Inspecting Parties in connection
with any such inspection (including, without limitation,
permitting any <PAGE> such Inspecting Party to make copies of
such Aircraft Documents not reasonably deemed confidential by
Lessee or such Permitted Sublessee).

      (b)  Subject to the provisions of Section 11(c)(ii) below,
such inspection of the Aircraft hereunder shall not restrict
Lessor from opening any panels, bays, doors, etc..

      (c)  With respect to such rights of inspection, Lessor
shall not:

          (i)  have any duty or liability to make, or any duty
      or liability arising out of, any such visit, inspection or
      survey or failure to make any such visit, inspection or
      survey; or

          (ii) so long as no Default or Event of Default has
      occurred and is continuing, exercise its inspection rights
      hereunder other than on reasonable notice and so as not to
      unreasonably interfere with Lessee's maintenance and
      operation of the Aircraft, Airframe and Engines.

      (d)  Each Inspecting Party inspecting the Aircraft,
Airframe, Engines and Aircraft Documents hereunder shall bear its
own expenses in connection with any such inspection, unless (i) a
Default or Event of Default has occurred and is continuing or
(ii) such person discovers, in connection therewith, any material
failure by Lessee or any Permitted Sublessee to comply with the
provisions of this Lease, in each such case Lessee shall bear all
such expenses.

      (e)  Lessor will indemnify and hold harmless Lessee from
and against all losses arising from death or injury to any
Inspecting Party in connection with any such visit, inspection or
survey unless arising from the gross negligence or willful
misconduct of Lessee.

      (f)  If requested by Lessor, Lessee shall give, or shall
cause any Permitted Sublessee to give, reasonable prior notice to
Lessor of the date upon which the Aircraft, Airframe or any
Engine undergoes its next scheduled maintenance visit and/or next
major check, and with respect to any Engine the next off-the-wing
maintenance, and shall advise Lessor of the name and location of
the relevant maintenance performer and shall, at least 5 days
prior to commencement of such major check or maintenance, make
available for inspection by Lessor all relevant Aircraft
Documents at Lessee's records facility in the United States, or
at such Permitted Sublessee's records facility, or at the
premises of the maintenance performer.

SECTION 12.  ASSIGNMENT; MERGER; LESSEE COVENANTS

      12.1  IN GENERAL

      (a)  This Lease and the other Operative Agreements shall
be binding upon and inure to the benefit of Lessor and Lessee and
their respective successors and permitted assigns.  Except as
otherwise expressly permitted in Section 7.2 or 7.3, or as
permitted by Section 12.2.1, Lessee will not, without the prior
written consent of Lessor, assign any of its rights under this
Lease.

      (b)  Lessee acknowledges and agrees that Lessor shall have
the absolute right to transfer or assign to any person, firm,
corporation or other entity (whether or not an affiliate of
Lessor), including, but not limited to, a special purpose
corporation owned directly or indirectly <PAGE> by Lessor, any or
all of Lessor's rights, obligations, benefits and interests under
this Lease, including, without limitation, the right to receive
Rent or any other payment due under this Lease, the right to
transfer, assign or pledge title to any Item or to transfer or
assign the right to purchase any Item and the right to make all
waivers and agreements, to give all notices, consents and
releases, to take all action upon the occurrence of an Event of
Default, or to do any and all other things which Lessor is or may
become entitled to do under this Lease; provided, however, that
in the event any transfer, pledge or assignment would otherwise
cause any increase in the tax indemnification obligations of
Lessee, Lessee's obligations in respect of any tax
indemnification obligations hereunder shall be limited to the
amount that would have been payable had no such transfer, pledge
or assignment taken place.  Notwithstanding the foregoing, Lessor
shall not transfer, assign or pledge title to the Aircraft or any
Item (i) if, as a result of such transfer, assignment or pledge,
the Aircraft would be deregistered or (ii) if such transferee,
assignee or pledgee shall be a Person (other than a special
purpose corporation owned directly or indirectly by Lessor) with
a Net Worth of less than $20,000,000.  Lessee agrees that no such
transfer, pledge or assignment will materially change the duty of
or materially increase the burden of risk imposed on Lessee, and
Lessee waives any provision of applicable Law that would or might
grant Lessee the right to demand assurances or compensation of
any kind from the transferee or to require the transferee to take
any action on account of such transfer or assignment, other than
as expressly required herein.  Lessee acknowledges that, if
Lessor should sell or transfer to a third party all of Lessor's
interest under this Lease and in the Aircraft, Lessor shall
thereupon be relieved of all of its obligations hereunder (except
in the case of a transfer to a special purpose corporation owned
or controlled by Lessor) and Lessor's transferee (and, if the
transferee is a trust, the beneficial owners of such trust) shall
succeed to all of Lessor's rights, interests and obligations
under this Lease as though Lessor's transferee had been the
initial lessor hereunder.  Lessor shall notify Lessee in writing
written 10 days of any assignment or transfer pursuant to this
Section 12.1(b) (but failure to do so shall not constitute a
default by Lessor under this Lease).

      (c)  Without limiting the generality of Section 12.1(b),
Lessee acknowledges and agrees that the terms and conditions of
this Lease have been agreed to by Lessor in anticipation of its
being able to sell, assign, transfer or otherwise dispose of its
rights under and interests in this Lease and its rights in the
Aircraft and/or its being able to grant a pledge or security
interest in all or any of its rights and interest under this
Lease and in the Aircraft or any Item to one or more lenders, to
an agent or trustee representing such lenders, or to any other
party having an interest in any Item or participation in the
transaction which is the subject of this Lease, any or all of
which may rely on and shall be entitled to the benefit of the
provisions of this Section 12.1(c).  Lessee shall, upon the
written instruction of Lessor:  (i) consent to and recognize any
such assignment or pledge; (ii) accept the directions or demands
or such assignee in place of those of Lessor; (iii) surrender any
leased property only to such assignee; (iv) pay all Rent payable
hereunder and do any and all things required of Lessee hereunder
directly to or for the benefit of such assignee, and not
terminate this Lease, notwithstanding any default by Lessor or
the existence of any other liability or obligation of any kind or
character on the part of Lessor to Lessee whether or not arising
hereunder; provided, however, nothing herein shall constitute a
waiver by Lessee of any rights or claims it may have against
Lessor with respect to such default, liability or obligation; (v)
not require any assignee or pledgee of this Lease to perform any
duty,  covenant or condition required to be performed by Lessor
under the terms of this Lease for which Lessor agrees to remain
liable, all rights of Lessee in any such connection aforesaid
being <PAGE> hereby waived as to any and all such assignees to
the extent permitted by applicable law; (vi) expand general tax
indemnity and general indemnity obligations under Sections 16 and
17 to cover, and cause to be named as loss payee/additional
insured under policies of insurance maintained by Lessee under
Section 10, as instructed by Lessor, any purchaser/assignee of
the Aircraft and this Lease or any lender/collateral
assignee/pledgee of the Aircraft and this Lease, while
maintaining such indemnity obligations for the benefit of Lessor;
(vii) extend to such assignees, representations, warranties,
waivers and disclaimers of Lessee under the Operative Agreements
which remain in effect on the date of any such sale, assignment,
transfer, other disposition, grant or pledge, and otherwise
cooperate and execute or provide any documents, certificates or
opinions which Lessor may reasonably request in order to
effectuate any such transfer, pledge or assignment or any of the
foregoing; (viii) execute an estoppel certificate regarding the
existence or absence of defaults hereunder and a consent to such
financing, in each case in such form and containing such
additional terms as Lessor may reasonably request and at Lessor's
sole cost and expense; (ix) enter into a lease amendment and
novation agreement and/or a pledge agreement between Lessor, the
Pledgee and Lessee (or any permitted sublessee) in its capacity
of third party holder of the pledged Aircraft in each case in
such form as Lessor may reasonably request to the extent that
such lease amendment and novation agreement and/or pledge
agreement does not adversely affect Lessee's rights in any
material respect or materially increase Lessee's obligations
under the Operative Agreements; and (x) subject to mutual
agreement between the parties as to schedule, Lessee will,
consistent with its operational requirements, make the Aircraft
and the Aircraft Documents available for inspection by any
potential transferee or assignee of Lessor; provided that
arrangements for such inspection are made through Lessor and that
such potential transferee or assignee shall be accompanied by
Lessor during such inspection.  Notwithstanding the foregoing,
Lessor agrees to  obtain from any lender/collateral
assignee/pledgee of the Aircraft or Lease on behalf of Lessee
quiet enjoyment rights substantially equivalent to the rights
provided under Section 4.3  hereof.  Lessor further agrees that
to the extent Lessee incurs reasonable out-of-pocket costs,
including, without limitation, reasonable attorneys' fee, in
connection with the preparation, review and execution of
documentation referenced in the foregoing clauses (vii), (viii)
and (ix) of this Section 12.1(c), such costs shall be for the
account of Lessor.

     12.2  MERGER OF LESSEE

           12.2.1  IN GENERAL

           Lessee shall not consolidate or merge with or into any
other Person under circumstances in which Lessee is not the
surviving corporation, or convey, transfer or lease in one or
more transactions all or substantially all of its assets to any
other Person, unless:

           (a)  such person is organized, existing and in good
standing under the Laws of the United States, any State of the
United States or the District Columbia;

           (b)  such person is a U.S. Air Carrier;
<PAGE>
           (c)  such person executes and delivers to Lessor a duly
authorized, legal, valid, binding and enforceable agreement,
reasonably satisfactory in form and substance to Lessor,
containing an express assumption by such person of the due and
punctual performance and observance of each covenant, agreement
and condition in the Operative Agreements to be performed or
observed by Lessee;

           (d)  such person makes such filings and recordings,
including, without limitation, any filing or recording with the
FAA pursuant to the Act, as shall be necessary or desirable to
evidence such consolidation or merger;

           (e)  immediately after giving effect to such
consolidation or merger (i) no Default or Event of Default shall
have occurred and be continuing and (ii) the Net Worth of such
person shall not be less than the Net Worth of Lessee immediately
prior to such consolidation or merger; and

           (f)  Lessee shall deliver to Lessor a certificate
signed by the President or any Vice President of Lessee stating
that such consolidation or merger and the assumption agreement
described in clause (c) above comply with this Section 12.2, and
an opinion in form and substance satisfactory to Lessor of
outside counsel satisfactory to Lessor to the effect that the
agreements entered into to effect such consolidation or merger
and such assumption agreement are legal, valid and binding
obligations of such person, and such other matters as Lessor may
reasonably request.

           12.2.2  EFFECT OF MERGER

           Upon any such consolidation or merger of Lessee with or
into, or the conveyance, transfer or lease by Lessee of all or
substantially all of its assets to, any Person in accordance with
this Section 12.2, such Person will succeed to, and be
substituted for, and may exercise every right and power of,
Lessee under the Operative Agreements with the same effect as if
such person had been named as "Lessee" therein.  No such
consolidation or merger, or conveyance, transfer or lease, shall
have the effect of releasing Lessee or such Person from any of
the obligations, liabilities, covenants or undertakings of Lessee
under the Operative Agreements.

     12.3  COVENANTS OF LESSEE

     Lessee covenants and agrees, at its own cost and expense, as
follows:

     (a)  Lessee shall at all times maintain its corporate
existence, except as permitted by Section 12.2 of this Lease, and
shall not wind-up, liquidate or dissolve or take any action, or
fail to take any action, that would have the effect of any of the
foregoing.  Lessee will do or cause to be done all things
necessary to preserve and keep in full force and effect its
rights (charter and statutory) and franchises, except that Lessee
shall not be required to preserve or keep in full force and
effect any right or franchise if Lessee shall reasonably
determine that the preservation thereof is no longer necessary or
desirable in the conduct of its business and if the loss thereof
does not (i) adversely affect or diminish the rights of Lessor
under the Operative Agreements or (ii) materially and adversely
affect Lessee's ability to observe or perform its obligations,
liabilities and agreements under the Operative Agreements.
<PAGE>
      (b)  Lessee shall at all times remain a U.S. Air Carrier
and shall at all times be otherwise certificated and registered
to the extent necessary to entitle Lessor the rights afforded to
lessors of aircraft equipment under Section 1110.

      (c)  Lessee will give Lessor timely written notice (but in
any event not later than three Business Days after its
occurrence) of any relocation of its chief executive office (as
such term is defined in Article 9 of the UCC) from its then
present location and will promptly take any action required by
Section 12.3(d)(iii) as a result of such relocation.

      (d)(i)  Lessee shall duly execute, acknowledge and
deliver, or shall cause to be executed, acknowledged and
delivered, all such further agreements, instruments, certificates
or documents, and shall do and cause to be done such further acts
and things, in any case, as Lessor shall reasonably request in
connection with its administration of, or to carry out more
effectually the purposes of, or to better assure and confirm unto
it the rights and benefits to be provided under, this Agreement
and the other Operative Agreements; provided, however, that no
such agreement, instrument, certificate or document shall
adversely affect Lessor's rights in any material respect or
materially increase Lessee's obligations under the Operative
Agreements.

              (ii)  Lessee shall promptly take such action with
respect to the recording, filing, rerecording and refiling of
this Lease and the supplements hereto, including, without
limitation, Lease Supplement No. 1, as shall be necessary to
establish, perfect and protect the interests and rights of Lessor
in and to the Aircraft and under the Lease.  Lessee shall furnish
to Lessor such information in Lessee's possession or otherwise
reasonably available to Lessee as may be required to enable
Lessor to make application for registration of the Aircraft under
the Act (subject to Lessee's rights under Section 7.1.2 of this
Lease).  Lessee shall bear the reasonable attorneys' fees and
disbursements of Crowe & Dunlevy, special FAA Counsel, in
connection with the filing for recordation of the FAA Filed
Documents with the FAA Aircraft Registry in Oklahoma City.

              (iii)  Lessee, at its sole cost and expense, will
cause the Financing Statements and all continuation statements
(and any amendments necessitated by any combination,
consolidation or merger pursuant to Section 12.2 of this Lease,
or any relocation of its chief executive office) in respect of
the Financing Statements to be prepared and, subject only to the
execution and delivery thereof by Lessor, duly and timely filed
and recorded, or filed for recordation, to the extent permitted
under the UCC or similar law of any other applicable
jurisdiction.

       (e)  Neither Lessee nor any person authorized to act on
its behalf will directly or indirectly offer any beneficial
interest or Security relating to the ownership of the Aircraft or
this Lease for sale to, or solicit any offer to acquire any such
interest or Security from, or sell any such interest or Security
to, any person in violation of the Securities Act or applicable
state or foreign securities Laws.

SECTION 13.  EVENTS OF DEFAULT

      The occurrence of any one or more of the following
circumstances, conditions, acts or events, for any reason
whatsoever and whether any such circumstance, condition, act or
event <PAGE> shall be voluntary or involuntary or come about or
be effected by operation of Law or pursuant to or in compliance
with any judgment, decree, order, rule or regulation of any
Government Entity, shall constitute an Event of Default:

      13.1  PAYMENTS

      Lessee shall fail to pay any amount of Basic Rent,
Supplemental Rent and/or Stipulated Loss Value within three (3)
Business Days after the same shall have become due, or Lessee
shall fail to pay any other amount due hereunder or under any
other Operative Agreement related to this Lease and such failure
shall continue for a period in excess of ten (10) days from and
after the date of any written demand therefor from Lessor,
accompanied by reasonably detailed invoices or other supporting
documentation establishing that Lessor is entitled to the amount
demanded.

      13.2  INSURANCE

      Lessee shall fail to carry and maintain, or cause to be
carried and maintained, insurance on and in respect of the
Aircraft, Airframe and Engines in accordance with the provisions
of Section 10, or Lessee shall operate the Aircraft, Airframe or
Engines, or permit the Aircraft, Airframe or Engines to be
operated, at any time when such insurance shall not be in effect.

      13.3  CORPORATE EXISTENCE

      Lessee shall fail to maintain at all times its corporate
existence (except as permitted by Section 12.2), or Lessee shall
otherwise wind-up, liquidate or dissolve, or Lessee shall take or
fail to take any action that would have the effect of any of the
foregoing.

      13.4  CERTAIN COVENANTS

      Lessee shall not observe, perform or comply with, or shall
otherwise breach, any of its obligations under Section 7.1 (other
than Sections 7.1.3 and 7.1.4, which shall be subject to Section
13.5), Section 7.2 (in respect of the Aircraft or Airframe) or
Sections 12.1 or 12.2.

      13.5  OTHER COVENANTS

      Lessee shall fail to observe, perform or comply with, or
shall otherwise breach, any other covenant, agreement or
obligation set forth herein or in any other Operative Agreement
(other than the covenants, agreements and obligations set forth
in the first sentence of Section 4.6 (a) of this Lease), and such
failure shall continue unremedied for a period of ten (10) days
(or any shorter period as may be expressly set forth in such
other Operative Agreement) from and after the earliest of (i) the
date of written notice thereof to Lessee and (ii) an officer of
Lessee having actual or constructive knowledge of such failure to
perform or observe; provided, that if the Airworthiness
Certificate of an Aircraft is revoked and Lessor provides Lessee
with written notice of such revocation or Lessee has actual or
constructive knowledge of such revocation, any subsequent flight
operation of such Aircraft shall constitute an immediate Event of
Default.
<PAGE>

      13.6  REPRESENTATIONS AND WARRANTIES

      Any representation or warranty made by Lessee herein or in
any other Operative Agreement (a) shall prove to have been
untrue, inaccurate or misleading in any material respect as of
the date made, and (b) if curable, the same shall remain uncured
for a period in excess of 10 days from and after the earlier of
(i) the date of written notice thereof to Lessee and (ii) an
officer of the Lessee having actual or constructive knowledge of
the falsity of such representation or warranty.

      13.7  BANKRUPTCY AND INSOLVENCY

      (a)  Lessee shall consent to the appointment of or the
taking of possession by a receiver, trustee or liquidator of
itself or of a substantial part of its property, or Lessee shall
admit in writing its inability to pay its debts generally as they
come due, or does not pay its debts generally as they become due
or shall make a general assignment for the benefit of creditors,
or Lessee shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization,
liquidation or other relief in a case under any bankruptcy Laws
or other insolvency Laws (as in effect at such time) or an answer
admitting the material allegations of a petition filed against
Lessee in any such case, or Lessee shall seek relief by voluntary
petition, answer or consent, under the provisions of any other
bankruptcy or other similar Law providing for the reorganization
or winding-up of corporations (as in effect at such time) or
Lessee shall seek an agreement, composition, extension or
adjustment with its creditors under such Laws, or Lessee's board
of directors shall adopt a resolution authorizing corporate
action in furtherance of any of the foregoing; or

      (b)  an order, judgment or decree shall be entered by any
court of competent jurisdiction appointing, without the consent
of Lessee, a receiver, trustee or liquidator of Lessee or of any
substantial part of its property, or any substantial part of the
property of Lessee shall be sequestered, or granting any other
relief in respect of Lessee as a debtor under any bankruptcy Laws
or other insolvency Laws (as in effect at such time), and any
such order, judgment or decree of appointment or sequestration
shall remain in force undismissed, unstayed and unvacated for a
period of 60 days after the date of entry thereof; or

      (c)  a petition against Lessee in a case under any
bankruptcy Laws or other insolvency Laws (as in effect at such
time) is filed and not withdrawn or dismissed within 60 days
thereafter, or if, under the provisions of any Law providing for
reorganization or winding-up of corporations which may apply to
Lessee, any court of competent jurisdiction assumes jurisdiction,
custody or control of Lessee or of any substantial part of its
property and such jurisdiction, custody or control remains in
force unrelinquished, unstayed and unterminated for a period of
60 days.

      13.8  OTHER AGREEMENTS WITH LESSOR

      Any "Event of Default" exists under any Other Lease
Agreement between Lessee and Lessor (or any Affiliate of either)
so long as either Lessor or any Affiliate thereof is the owner of
the Aircraft and/or the aircraft subject to such Other  Lease
Agreement at the time of such "Event of Default."
<PAGE>

      13.9  DEREGISTRATION

      Lessee causes the Aircraft to be deregistered in
contravention of Section 7.1.1 hereof or ceases to be a U.S. Air
Carrier.

      13.10  TRANSFER

      Lessee wrongfully transfers possession of the Aircraft,
Airframe, any Engine or any Part.

      13.11  JUDGMENTS

      A single uninsured judgment rendered by a court of
competent jurisdiction against the Lessee for the payment of more
than $1,000,000 is entered and not stayed, bonded (to Lessor's
reasonable satisfaction), or discharged within 30 days of the
date of entry.

      13.12  MATERIAL ADVERSE CHANGE

      Any Material Adverse Change, as determined by Lessor in
its sole and reasonable discretion, shall occur.

      13.13  INDEBTEDNESS

      Any indebtedness (defined in the broadest context) of at
least $1,000,000 in principal amount shall be accelerated by
reason of default.

      13.14  OPERATIVE AGREEMENTS

      The validity or enforceability of any Operative Agreement
shall be contested by Lessee.

      13.15  SECURITY DEPOSIT

      Upon the occurrence of an Event of Default hereunder,
Lessor shall have the right to apply all or any portion of the
Cash Deposit and to draw immediately, and without notice to
Lessee, upon the Letter of Credit.  One or more drawings may be
made upon, or cash applied from, the Security Deposit up to the
amount of Lessor's damages resulting from all existing Events of
Default.  If Lessor applies all or any portion of the amount so
drawn or applied for the purpose of curing any Event of Default
of Lessee hereunder, such Event of Default shall not be deemed
cured unless Lessee shall, within three (3) Business Days after
written demand therefor by Lessor, cause (i) the credit available
under the original Letter of Credit or any new or replacement
Letter of Credit and (ii) the Cash Deposit, together comprising
the Security Deposit, to be restored to their respective levels
(i.e., prior to such application or draw, as the case may be).
<PAGE>

SECTION 14.  REMEDIES AND WAIVERS

      14.1  REMEDIES

      If any Event of Default shall occur and be continuing,
Lessor may, at its option and at any time and from time to time,
exercise any one or more of the following remedies as Lessor in
its sole discretion shall elect:

          14.1.1  RETURN AND REPOSSESSION

          Lessor may cause Lessee, upon giving written notice to
Lessee, to return promptly, and Lessee shall return promptly, all
or any part of the Aircraft, Airframe, Engines and Aircraft
Documents as Lessor may so demand, to Lessor or its order in the
manner and condition required by, and otherwise in accordance
with, all the provisions of Section 5 as if the Aircraft or
Aircraft Documents or any part thereof were being returned at the
end of the Term, or Lessor, at its option, may enter upon the
premises where the Aircraft, Airframe, any Engine, Aircraft
Documents, or any part thereof, are located and take immediate
possession of and remove the same by summary proceedings or
otherwise, all without liability accruing to Lessor for or by
reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or
otherwise (except for any thereof arising from Lessor's gross
negligence or willful misconduct), and Lessee expressly waives
any right it may have under applicable Law to a hearing prior to
repossession of the Aircraft, Airframe, any Engine, Aircraft
Documents, or any part thereof.

          14.1.2  SALE AND USE

          Lessor may sell the Aircraft, Airframe, any Engine,
Aircraft Documents, or any part thereof, at public or private
sale, at such times and places, and to such Persons (including
Lessor), as Lessor may determine and, without limiting the
generality of the provisions of this Section 14, Lessor may hold
Lessee liable for the payment of any Basic Rent or Supplemental
Rent remaining unpaid at the time of such sale and relating to
any period prior to the date of such sale; or Lessor may
otherwise dispose of, hold, use, operate, lease to others or keep
idle the Aircraft, Airframe, any Engine, Aircraft Documents, or
any part thereof, as Lessor, in its sole discretion, may
determine, all free and clear of any rights of Lessee, except as
hereinafter set forth in this Section 14, and without any duty to
account to Lessee with respect to such action or inaction or for
any proceeds with respect thereto (except in connection with any
calculation of liquidated damages under Section 14.1.3(b) below
and except to the extent that such proceeds would constitute,
under applicable Law, a mitigation of Lessor's damages suffered
or incurred as a result of the subject Event of Default).

          14.1.3  CERTAIN LIQUIDATED DAMAGES

          Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under Section
14.1.1 or 14.1.2 with respect to the Aircraft, Airframe, any
Engine, Aircraft Documents, or any part thereof, Lessor, by
written notice to Lessee specifying a payment date (which shall
be a Payment Date occurring not less than 10 days after the date
of such notice), may demand Lessee to pay to Lessor, and Lessee
shall pay to Lessor, on the payment date so specified and in the
manner and in funds of the type specified in Section 3.3, <PAGE>
as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent for the Aircraft in respect of all
periods commencing on or after the date specified for payment in
such notice), the following amounts:

          (a)  all unpaid Basic Rent and Supplemental Rent due at
any time prior to the Payment Date specified in such notice; plus

          (b)  whichever of the following amounts that Lessor, in
its sole discretion, shall specify in such notice:

               (i)  the amount, if any, by which the aggregate
     Rent for the remainder of the Term (determined without
     reference to any right of Lessor to terminate the leasing of
     the Aircraft, whether or not such right is exercised),
     discounted periodically (equal to installment frequency) to
     present worth at the Discount Rate, exceeds the Fair Market
     Rental Value of the Aircraft for the remainder of the Term,
     after discounting such Fair Market Rental Value periodically
     (equal to installment frequency) to present worth as of the
     Payment Date specified in such notice at the Discount Rate;
     or

               (ii) if Lessor shall have re-let the Aircraft,
      the amount, if any, by which the aggregate Rent for the
      Aircraft, which would otherwise have become due over the
      remainder of the Term (determined without reference to any
      right of Lessor to terminate the leasing of the Aircraft,
      whether or not such right is exercised), discounted
      periodically (equal to installment frequency) to present
      worth as of the date of re-letting at the Discount Rate,
      exceeds the aggregate basic rental payments to become due
      under the re-letting from the date of such re-letting to
      the date upon which the Term for the Aircraft would have
      expired but for Lessee's default, discounted periodically
      (equal to installment frequency) to present worth as of the
      date of the re-letting at the Discount Rate; plus

          (c)  interest on the amounts specified in the foregoing
clause (a) at the Payment Due Rate from and including the date on
which any such amount was due to the date of payment of such
amount in full; plus

          (d)  interest on the amount specified in the foregoing
clause (b)(i) or (b)(ii), according to Lessor's election, at the
Payment Due Rate from and including the Payment Date specified in
such notice to the date of payment of such amount in full.

          14.1.4  RESCISSION, COSTS AND LOSSES

          Lessor may (i) at its option, rescind or terminate this
Lease as to the Aircraft, Airframe, any Engine, Aircraft
Documents, or any part thereof, or (ii) exercise any other right
or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof
or to recover damages for the breach hereof, including, without
limitation:

          (a)  all Rent and other amounts which are or become due
and payable hereunder prior to the date Lessor recovers
possession of the Aircraft;
<PAGE>

          (b)  at Lessor's election, either one of the amounts
determined pursuant to Section 14.1.3(b) or any lost profits
suffered by Lessor as a consequence of Lessor's inability to
place the Aircraft with another lessee on financial terms that
are as favorable to Lessor as the terms of this Agreement;

         (c)  all costs associated with Lessor's exercise of its
remedies hereunder, including, but not limited to, repossession
costs, legal fees, Aircraft storage costs, Aircraft re-lease or
sale costs, any other out-of-pocket costs incurred by Lessor;

         (d)  any loss, cost, expense or liability sustained by
Lessor due to Lessee's failure to redeliver the Aircraft in the
condition required by this Agreement; and

         (e)  any other losses (including lost profits), damage,
expense, cost or liability which Lessor suffers or incurs as a
result of the Event of Default and/or termination of this
Agreement, including an amount sufficient to fully compensate
Lessor for any loss of or damage to Lessor's residual interest in
the Aircraft caused by such Event of Default.

          14.1.5  OTHER REMEDIES

          In addition to the foregoing remedies (but without
duplication of amounts otherwise paid under this Section 14),
Lessee shall be liable for any and all unpaid Rent due hereunder
before, during or after (except as otherwise provided in Sections
14.1.2, 14.1.3 and 14.1.4 hereof ) the exercise of any of the
foregoing remedies and for all attorneys' fees and other costs
and expenses of Lessor, including, without limitation, interest
on overdue Rent at the rate as herein provided, incurred by
reason of the occurrence of any Event of Default or the exercise
of Lessor's remedies with respect thereto, including all costs
and expenses incurred in connection with the return of the
Aircraft, Airframe, any Engine, the Aircraft Documents, or any
part thereof, in accordance with the terms of Section 5 or in
placing the Aircraft, Airframe, any Engine, the Aircraft
Documents, or any part thereof, in the condition and
airworthiness required by Section 5.

      14.2  RIGHT TO PERFORM FOR LESSEE

      If Lessee fails to make any payment of Rent required to be
made by it hereunder or fails to perform or comply with any of
its agreements contained herein, Lessor may (but shall not be
obligated to) make such payment or perform or comply with such
agreement, and the amount of such payment and the amount of the
expenses of Lessor incurred in connection with such payment or
the performance of or compliance with such agreement, as the case
may be, together with interest thereon at the Payment Due Rate,
shall be deemed Supplemental Rent, payable by Lessee upon demand.
No such payment, performance or compliance by Lessor shall be
deemed to cure any Default or Event of Default or otherwise
relieve Lessee of its obligations with respect thereto.

      14.3  DETERMINATION OF FAIR MARKET RENTAL VALUE
<PAGE>

      For the purpose of this Section 14, the "Fair Market
Rental Value" of the Aircraft, Airframe or any Engine, or any
part thereof shall be determined on an "AS-IS, WHERE-IS" basis
and shall take into account customary brokerage and other out-of-
pocket fees and expenses which typically would be incurred in
connection with a re-lease or sale of the Aircraft, Airframe or
any Engine.  Any such determination shall be made by an Appraiser
selected by Lessor and the costs and expenses associated
therewith shall be borne by Lessee, unless Lessor does not obtain
possession of the Aircraft, Airframe, Engines and Aircraft
Documents pursuant to this Section 14, in which case an Appraiser
shall not be appointed and Fair Market Rental Value for purposes
of this Section 14 shall be zero.

      14.4  LESSOR APPOINTED ATTORNEY-IN-FACT

      Lessee hereby appoints Lessor as the attorney-in-fact of
Lessee, with full authority in the place and stead of Lessee and
in the name of Lessee or otherwise, for the purpose of carrying
out the provisions of this and any other Operative Agreement and
taking any action and executing any instrument that Lessor may
deem necessary or advisable to accomplish the purposes hereof;
provided, however, that Lessor may only take action or execute
instruments under this Section 14.4 after a Event of Default has
occurred and is continuing.  Lessee hereby declares that the
foregoing powers are granted for valuable consideration,
constitute powers granted as security for the performance of the
obligations of Lessee hereunder and are coupled with an interest
and shall be irrevocable.  Without limiting the generality of the
foregoing or any other rights of Lessor under the Operative
Agreements, upon the occurrence and during the continuation of an
Event of Default, Lessor shall have the sole and exclusive right
and power to (i) settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to or pertaining to
the Aircraft, Airframe or any Engine, or this Lease and (ii) make
proof of loss, appear in and prosecute any action arising from
any policy or policies of insurance maintained pursuant to this
Lease, and settle, adjust or compromise any claims for loss,
damage or destruction under, or take any other action in respect
of, any such policy or policies.

      14.5  REMEDIES CUMULATIVE

      Nothing contained in this Lease shall be construed to limit
in any way any right, power, remedy or privilege of Lessor
hereunder or under any other Operative Agreement or now or
hereafter existing at law or in equity.  Each and every right,
power, remedy and privilege hereby given to, or retained by,
Lessor in this Lease shall be in addition to and not in
limitation of every other right, power, remedy and privilege
given under the Operative Agreements or now or hereafter existing
at law or in equity.  Each and every right, power, remedy and
privilege of Lessor under this Lease and any other Operative
Agreement may be exercised from time to time or simultaneously
and as often and in such order as may be deemed expedient by
Lessor.  All such rights, powers, remedies and privileges shall
be cumulative and not mutually exclusive, and except as expressly
provided herein, the exercise of one shall not be deemed a waiver
of the right to exercise any other.  Lessee hereby waives to the
extent permitted by applicable Law any right which it may have to
require Lessor to choose or elect remedies.
<PAGE>

SECTION 15.  LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.

      (a)  Lessee's obligation to pay Rent and all other amounts
payable hereunder, under Letter Agreement No. 1 or under any
other Operative Agreement shall be absolute and unconditional,
and shall be construed as covenants separate and independent from
the agreements or undertakings of any other Person, including,
without limitation, Lessor, and shall not be affected by any
event or circumstance, including, without limitation:  (i) any
setoff, counterclaim, recoupment, defense or other right that
Lessee may have against Lessor, Airframe Manufacturer, Engine
Manufacturer, any Indemnitee or any other Person for any reason
whatsoever; (ii) any defect in the title, airworthiness,
condition, design, operation or fitness for use of, or any damage
to or loss or destruction of, the Aircraft, Airframe or any
Engine, or any interruption or cessation in the use or possession
thereof by Lessee for any reason whatsoever; (iii) any
insolvency, bankruptcy, reorganization or similar proceedings by
or against Lessee or any other Person; (iv) any restriction,
prevention or curtailment of or interference with any use of the
Aircraft, Airframe, any Engine, Aircraft Documents, or any part
thereof; (v) any change, waiver, extension, indulgence or other
action or omission in respect of any obligation or liability of
Lessee or Lessor; (vi) any claim that Lessee has or might have
against any Person; (vii) any failure on the part of Lessor to
perform or comply with any of the terms of this Lease or any
other Operative Agreement; (viii) any invalidity or
unenforceability or disaffirmance of this Lease or any provision
hereof or any of the other Operative Agreements or any provision
thereof, in each case whether against or by Lessee or otherwise;
or (ix) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.

      (b)  If for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of Law or otherwise
except as specifically provided herein, Lessee nonetheless agrees
to pay an amount equal to each Basic Rent and Supplemental Rent
payment at the time such payment would have become due and
payable in accordance with the terms hereof had this Agreement
not been terminated in whole or in part.  All Rent payable by
Lessee shall be paid without notice or demand (except as
otherwise expressly provided) and without abatement, suspension,
deferment, deduction, diminution or proration by reason of any
circumstance or occurrence whatsoever.  Lessee hereby waives, to
the extent permitted by applicable Law, any and all rights that
it may now have or that at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Agreement or any part hereof, or to any abatement,
suppression, deferment, diminution, reduction or proration of
Rent, except in accordance with the express terms hereof.  Each
payment of Rent made by Lessee shall be final as to Lessor and
Lessee and, except for any manifest clerical computational error,
Lessee will not seek to recover all or any part of any such
payment of Rent for any reason whatsoever.

      (c)  All obligations, liabilities, covenants and
undertakings of Lessee in this Agreement or in any other
Operative Agreement shall be performed, observed and complied
with at Lessee's sole cost and expense, whether or not so
expressed, unless otherwise expressly provided.

      (d)  Nothing set forth in this Section 15 shall be
construed to prohibit Lessee from separately pursuing any claim
that it may have from time to time against Lessor or any other
Person with respect to any matter (other than the absolute and
unconditional nature of Lessee's obligations hereunder to pay
Rent, and other than the matters specified in paragraphs (b) and
(c) above).
<PAGE>

SECTION 16.  GENERAL TAX INDEMNITY

     16.1  GENERAL

     (a)  Indemnity

     Lessee agrees to pay and, on written demand, in indemnify,
protect, save and hold Lessor and any of its successors,
Permitted Transferees and affiliates ("Tax Indemnitee") harmless
from all license, recording, documentation and registration fees,
sales and use taxes, personal property taxes, value added and any
and all other taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever together
with any and all penalties, additions to tax, fines or interest
thereon (collectively, "Taxes") imposed against Tax Indemnitee,
Lessee or any Item of Equipment, by any Federal, state or local
government or taxing authority in the United States, or territory
or possession of the United States, or by any taxing authority or
governmental subdivision of a foreign country or international
organization, upon or in connection with or with respect to any
Item of Equipment arising out of this Agreement, or upon the
ownership, delivery, leasing, charter, subleasing, possession,
presence, use operation, registration, change in registration,
transfer or title, documentation, landing, rejection, departure,
financing, maintenance, repair, overhaul, location, storage,
replacement, improvement, modification, abandonment, return or
other disposition thereof pursuant to this Agreement, or upon the
rentals, receipts or upon the earnings of Lessee arising
therefrom, or upon or with respect to this Lease or related
documents and amendments and supplements hereto and thereto and
the transactions contemplated thereby,

     (b)  Limitation on Indemnity

     Notwithstanding the provisions or paragraph (a) of this
Section 16.1, Lessee shall have no obligation thereunder as to
(i) Taxes based on or measured by the gross receipts or net
income of Lessor (including, without limitation, capital gains
taxes, minimum taxes, and taxes on tax preference items and
whether imposed by withholding or otherwise) and taxes which are
capital, doing business, franchise excess profits or net worth
taxes and interest, additions to tax, penalties or other charges
in respect thereof  but excluding sales, use and similar taxes
(collectively, "Income Taxes").imposed by the United States of
America or by any state or local taxing authorities within the
United States and Income Taxes  a Tax Indemnitee by the country
of tax domicile of any such Tax Indemnitee; provided, however,
Lessee shall be liable for Income Taxes based on or measured by
such Tax Indemnitee's net income if, but only if, (a) such taxes
are in lieu of Income Taxes on any Item of Equipment which Lessee
would otherwise be required to pay hereunder, or (b)such Tax
Indemnitee would not otherwise be subject to Income Taxes in such
taxing jurisdiction, but for use or operation of any Item of
Equipment within the jurisdiction of such taxing authority or
other activities or the residency of Lessee in the jurisdiction
of such taxing authority; (ii) Taxes imposed upon a sale,
transfer or assignment of any interest in any Item of Equipment
by such Tax Indemnitee other than in the exercise of its remedies
hereunder after an Event of Default or upon Lessee's request;
(iii) Taxes to the extent they exceed  the Taxes which would have
been imposed had there not been a sale, transfer or assignment of
any interest in any Item of Equipment by Lessor, but excluding
any transfer in the exercise of Lessor's remedies hereunder after
an Event of Default or upon Lessee's request, (; and (iv) Taxes
imposed with respect to any period prior to Delivery Date or
after the return of <PAGE> possession of the Aircraft to Lessor
in accordance with the terms of this Lease; (v) Taxes resulting
from or attributable to a Lessor Lien; (vi) Taxes imposed as a
result of a Tax Indemnitee's gross negligence, misconduct, breach
of this Lease or misrepresentation; and (vii) Taxes for which Tax
Indemnitee's entitlement to indemnification is governed by
Section 17.3.  If there is a change in any law after the date
hereof that results in the imposition of Taxes that would be the
responsibility of Lessee under this Section 16, Lessor shall
reasonably cooperate with Lessee, upon Lessee's written request
and at Lessee's expense, to minimize in a lawful manner such
Taxes relating to the Aircraft; provided, however, that Lessor
shall not be obligated under this paragraph to take any action
which in Lessor's reasonable judgment would increase Lessor's
risk or expenses under, or adversely affect Lessor's financial
interests in, this Lease or the Aircraft or any interest therein
or which would result in any other material detriment to Lessor's
commercial interests.

     16.2  AFTER-TAX NATURE OF INDEMNITY

     Lessee further agrees that, with respect to any payment or
indemnity hereunder, such payment or indemnity shall include any
amount necessary to hold Tax Indemnitee harmless on an after-tax
basis from all Taxes required to be paid  by the Tax Indemnitee
with respect to such payment or indemnity under the laws of any
Federal, state or local government or taxing authority in the
United States, or under the laws of any taxing authority or
governmental subdivision of a foreign country or international
organization; provided that, if Tax Indemnitee realizes a tax
benefit by reason of such payment or indemnity (whether such tax
benefit shall be by means of a depreciation deduction or
otherwise) and actually utilizes such benefit in reducing its
Taxes, Tax Indemnitee shall pay Lessee an amount equal to the net
value to Tax Indemnitee of such tax benefit when, as, if and to
the extent realized (such payments not to exceed in the aggregate
the amount of the related indemnity paid by Lessee including,
without limitation, payments made in respect to withholding taxes
under Section 16.5 hereof), but not before Lessee shall have made
all payments of indemnities to Tax Indemnitee required pursuant
to this Section 16; provided further, however, that if
subsequent to any payment to Lessee in accordance with the
foregoing, it is determined that such tax benefit is not
allowable in whole or in part, Lessee shall return the
appropriate portion of the payment made to Lessee by such Tax
Indemnitee..  Tax Indemnitee shall in good faith use reasonable
diligence in filing its tax returns and in dealing with taxing
authorities to seek and claim any such tax benefit.

     16.3  CONTEST

     If written claim is made against a Tax Indemnitee for any
Taxes referred to in this Section 16, Tax Indemnitee shall
promptly notify Lessee, provided that a failure to so notify
shall not relieve the Lessee of its obligation under this Section
16 unless it actually or effectively precludes or materially
adversely impacts a contest of such claim.  If reasonably
requested by Lessee in writing within 30 days after such
notification, Tax Indemnitee shall upon receipt of an indemnity
satisfactory to it and at the expense of Lessee (including,
without limitation, all reasonable costs, expenses, losses, legal
and accountants' fees and disbursements, penalties and interest)
in good faith contest the validity, applicability or amount of
such Taxes by either (i) resisting payment thereof if
practicable, or (ii) if payment is made, using reasonable efforts
to obtain a refund thereof in appropriate administrative and
judicial proceedings; provided, however, that the Tax Indemnitee
shall not be required to take any action to contest a claim
<PAGE> unless (a) Lessee provides with such written request an
opinion of independent counsel, satisfactory both as to counsel
and substance, to the effect that there is a meritorious basis
for such contest, (b) such action to be taken will not result in
a material risk of a sale, forfeiture or loss of, or creation of
a Lien (other than a Permitted Lien) on, any Item of Equipment,
(c) the Lessee acknowledges its liability under this Section 16
for any Taxes being contested, and (d) no Event of Default shall
have occurred or be continuing.  If Tax Indemnitee determines to
pay such Taxes and seek a refund, Lessee will either pay such
Taxes on Tax Indemnitee's behalf and pay Tax Indemnitee any
amount due with respect to such payment pursuant to Section 16.2
hereof or will promptly reimburse Tax Indemnitee for such Taxes
pursuant to Sections 16.1 and 16.2.  If Tax Indemnitee shall
obtain a refund of all or any part of such Taxes paid by Lessee,
Tax Indemnitee shall pay Lessee the amount of such refund net of
any recovery expenses; provided that such amount shall not be
payable during such time as a Default or Event of Default shall
have occurred and be continuing or before such time as Lessee
shall have made all payments of indemnities to Tax Indemnitee
then due under this Section 16 and such payment shall be limited
to the amount previously paid by Lessee hereunder with respect to
such Taxes.  If in addition to such refund Tax Indemnitee shall
receive an amount representing interest on the amount of such
refund, Lessee shall be paid that proportion of such interest
which is fairly attributable to the Taxes paid by Lessee prior to
the receipt of such refund.  In case any report or return is
required to be made with respect to any obligation of Lessee
under this Section 16 or arising out of this Section 16, Lessee
will promptly notify Lessor of such requirement and will inform
Lessor whether Lessee (i) will file such report or return in such
manner as will show the ownership in Lessor of each Item of
Equipment and send a copy of such report or return to Lessor or
(ii) will make such report or return for filing by Lessor in such
manner as shall be satisfactory to Lessor.  In the event of a
contest of any Taxes hereunder, Tax Indemnitee shall apprise
Lessee of all material developments with respect to such contest,
shall forward copies of all material submissions made in such
contest and the forum of such contest, shall consider in good
faith any request concerning the conduct of any such contest and
without waiving its right to be indemnified hereunder with
respect to such claim shall not settle or concede any such
contest without the written consent of Lessee.  At Lessee's
written request and at Lessee's expense (including, without
limitation, all reasonable costs, expenses, losses, legal and
accountant's fees and disbursements, penalties, if any, and
interest). Tax Indemnitee shall appeal an adverse decision at the
administrative or judicial level to the appropriate forum,
provided that Tax Indemnitee shall not be required to request a
hearing before the U.S. Supreme Court.

     16.4  APPLICATION OF PAYMENTS DURING EXISTENCE OF EVENT OF
           DEFAULT

     Any amount payable to Lessee pursuant to the terms of this
Section 16 shall not be paid to or retained by Lessee if at the
time of such payment or retention a Financial Default or an Event
of Default shall have occurred and be continuing under the Lease.
At such time as there shall not be continuing any such Financial
Default or Event of Default, such amount shall be paid to Lessee
to the extent not previously applied against Lessee's obligations
hereunder as and when due.

     16.5  WITHHOLDING TAX

     Notwithstanding any other provision of this Section 16, in
the event a withholding tax is imposed by a jurisdiction outside
the United States in connection with any payment due by <PAGE>
Lessee hereunder, Lessee agrees to (i) pay Tax Indemnitee an
additional amount such that the net amount actually received per
month by Tax Indemnitee equals the amount which Tax Indemnitee
would have received under the terms hereof from Lessee had such
withholding tax not been imposed, (ii) pay to the relevant
taxation or other authority the full amount of the withheld tax,
and (iii) provide Tax Indemnitee with proof that such tax has
been paid as set forth in clause (ii).

     16.6  SURVIVAL OF INDEMNITIES

     All of the obligations of Lessee under this Section 16 shall
continue in full force and effect notwithstanding the expiration
or earlier termination of this Lease and are expressly made for
the benefit of, and shall be enforceable by, the Tax Indemnitees
and their successors and assigns.

SECTION 17.  GENERAL INDEMNIFICATION

     17.1  THE INDEMNITY

     Lessee agrees to assume liability for, and does hereby
indemnify, protect, save and keep harmless Lessor and its
affiliates and Permitted Transferees, and the respective
directors, officers, employees, agents and servants of each of
the foregoing and the successors and assigns thereof (all of the
foregoing, an "Indemnitee") from and against any and all claims,
damages, losses, liabilities (including, but not limited to, any
claim or liability for strict liability in tort or otherwise
imposed including, without limitation, liability arising under
any applicable environment or noise or pollution control statute,
rule or regulation), obligations, demands, suits, penalties,
judgments or causes of action and all legal proceedings, whether
civil or criminal, penalties, fines and other sanctions
("Claims"), and any costs and expenses in connection therewith
including, without limitation, reasonable legal fees and expenses
of whatever kind and nature (whether or not also indemnified
against by any other person under any other document and whether
arising before, on or after the Delivery Date), which may result
from or grow or arise in any manner directly or indirectly out of
any one or more of the following:

     (a)  the condition, ownership, manufacture, construction,
design (including, without limitation, latent and other defects
whether or not discoverable by Lessee or Lessor and any claim for
patent, trademark or copyright infringement), acceptance, non-
acceptance, rejection, delivery, lease, possession, return,
disposition, use or operation during the Term (in each and every
case) of the Aircraft or any Item of Equipment either in the air
or on the ground (except claims arising out of the gross
negligence or willful misconduct of an Indemnitee or its
successors or assigns), or

     (b)  from the material or any article used in the Aircraft
or any Item of Equipment or from the design, testing or use
thereof or from any maintenance, service, repair, overhaul or
testing of the Aircraft or any Item regardless of when such
defect shall be discovered, whether or not such Aircraft or any
Item is at the time in the possession of Lessee and whether it is
in the United States of America or any other country, or

     (c ) any breach of or failure to perform or observe, or any
other noncompliance with, any covenant or agreement or other
obligation to be performed by Lessee under any Operative <PAGE>
Agreement or the falsity of any representation or warranty of
Lessee in any Operative Agreement or the occurrence of any
Default or Event of Default, or

     (d)  any claim or penalty arising out of violations of
applicable Law by Lessee, or

     (e)  tort liability, or

     (f)  death or property damage of passengers, shippers or
others, or

     (g)  environmental control, noise or pollution, or

     (h)  any Liens in respect of the Aircraft or any Item of
Equipment.

     As to claims arising upon or prior to the end of the Term,
the indemnities contained in this Section shall continue in full
force and effect, notwithstanding the assignment, expiration or
other termination of this Lease.

     17.2  EXCEPTIONS TO GENERAL INDEMNITY

     The indemnity provided for in Section 17.1 will not extend
to Claims of or against any Indemnitee to the extent arising from
or attributable to any one or more of the following:

     (a)  The gross negligence or willful misconduct of an
Indemnitee;

     (b)  Acts or events occurring prior to the Delivery Date or
after the return of possession of the Aircraft to Lessor in
accordance with the terms of this Lease;

     (c)  Claims representing Taxes, it being acknowledged that
the terms of Section 16 are the exclusive provisions governing
Lessee's indemnity obligations for Taxes;

     (d)  A breach by Lessor of any of the terms of this
Agreement or any other Operative Agreement;

     (e)  The inaccuracy of any representation or warranty made
by Lessor in this Agreement or any other Operative Agreement;

     (f)  Expenses which under the terms of this Agreement or any
other Operative Agreement are required to be paid by an
Indemnitee;

     (g)  The existence, incurrence, recordation, release,
discharge, assignment or enforcement of any Lessor Lien;or

(h)  The sale, assignment, transfer, pledge or other disposition
of the Aircraft or any interest therein or in the Operative
Agreements other than a transfer in the exercise of Lessor's
remedies hereunder after an Event of Default.

     17.3  THE LESSEE WAIVER
<PAGE>

     Lessee hereby waives and releases any claim now or hereafter
existing against Lessor and any other Indemnitee on account of
any and all claims, demands, suits, judgments or causes of action
for or on account of or arising or in any way connected with
injury to or death of personnel of Lessee or loss or damage to
property of Lessee or the loss of use of any property which may
result from or grow or arise in any manner out of the condition,
use or operation of the Aircraft or any Item, either in the air
or on the ground during the Term hereof (except claims arising
out of the gross negligence or willful misconduct of such
Indemnitee), or which may be caused during the Term hereof by any
defect (whether latent or patent) in the Aircraft or any Item
from the material or any article used therein or from the design,
testing or use thereof or from any maintenance, service, repair,
overhaul or testing of the Aircraft or any Item regardless of
when such defect shall be discovered, whether or not such
Aircraft or any Item is at the time in the possession of Lessee
and whether it is in the United States of America or any other
country.

     17.4  THE GROSS-UP

     Lessee further agrees that, with respect to any payment or
indemnity hereunder, such payment or indemnity shall include any
amount necessary to hold the recipient of the indemnity harmless
on an after-tax basis from all taxes required to be paid  by such
recipient with respect to such payment or indemnity under the
laws of any Federal, state or local government or taxing
authority in the United States, or under the laws of any taxing
authority or governmental subdivision of a foreign country;
provided that, if any recipient of a payment or indemnity
realizes a tax benefit by reason of such payment or indemnity
(whether such tax benefit shall be by means of a depreciation
deduction or otherwise), such recipient shall pay Lessee an
amount equal to the sum of such tax benefit plus any tax benefit
realized as the result of any payment made pursuant to this
proviso, when, as, if and to the extent realized (such payments
not to exceed in the aggregate the amount of the related
indemnity paid by Lessee) but not before Lessee shall have made
all payments or indemnities to such recipient with respect to
such loss pursuant to the provisions of this Section 17; provided
further, however, that if any Indemnitee loses such benefit
subsequent to any payment to Lessee with respect thereto, Lessee
shall indemnify such Indemnitee with respect to such loss
pursuant to the provisions of Section 16 (but without regard to
Section 16.1(b) thereof).  Each such recipient shall in good
faith use reasonable efforts in filing its tax returns and in
dealing with taxing authorities to seek and claim any such tax
benefit.

SECTION 18.  MISCELLANEOUS

     18.1  PURCHASE OPTIONS

     Lessor hereby grants to Lessee, or its assignee for
financing purposes, an option to purchase the Aircraft on the
respective dates and at the applicable Purchase Price set forth
in Schedule 1 plus the amount, if any, contributed by Lessor to
the performance of ADs and/or FARs pursuant to Section D.2 of
Annex C attached hereto.  Not less than ten (10) days prior to
the Delivery Date and ninety (90) days prior to each six month
anniversary of the Delivery Date, up to and including the twenty
four month anniversary thereof, Lessee may give Lessor written
notice irrevocably electing to purchase the Aircraft and Aircraft
Documents pursuant to the provisions hereof.  Should Lessee elect
to purchase the Aircraft and Aircraft Documents as <PAGE> above
provided, then Lessee shall pay such purchase price, plus all
taxes, recordation fees and other charges and expenses incurred
or payable in connection with such purchase, and all other
amounts due and owing hereunder or in any Operative Agreement in
immediately available funds, and Lessor shall transfer to Lessee
all of its right, title and interest in and to the Aircraft and
the Aircraft Documents, with a warranty of good title (other than
for Liens arising by, through or under Lessee), in its "AS-IS,
WHERE-IS" condition, and otherwise without recourse,
representation or warranty, express or implied.  Also, in
connection with such purchase of the Aircraft and Aircraft
Documents by Lessee, Lessor shall issue a credit memorandum in
favor of Lessee in the amount of $100,000, which may be used by
Lessee to purchase engines, parts, other equipment and/or
services (including simulator time) that Lessor has for sale from
time-to-time.  Further, Lessor agrees to provide Lessee with a
25% discount on then-current rates for services and simulator
time in the event that Lessee elects to use such credit
memorandum to purchase services (including simulator time) from
Lessor.

     18.2  AMENDMENTS

     No provision of this Agreement may be amended, supplemented,
waived, modified, discharged, terminated or otherwise varied
orally, but only by an instrument in writing that specifically
identifies the provision of this Agreement that it purports to
amend, supplement, waive, modify, discharge, terminate or
otherwise vary and is signed by Lessor and Lessee.  Each such
amendment, supplement, waiver, modification, discharge,
termination or variance shall be effective only in the specific
instance and for the specific purpose for which it is given.  No
provision of this Agreement shall be varied or contradicted by
oral communication, course of dealing or performance or other
manner not set forth in an agreement, document or instrument in
writing and signed by Lessor and Lessee.

      18.3  SEVERABILITY

      If any provision hereof shall be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the
extent permitted by Law (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and (b) such
invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of such provision in any
other jurisdiction.  If, however, any Law pursuant to which such
provisions are held invalid, illegal or unenforceable may be
waived, such Law is hereby waived by the parties hereto to the
full extent permitted, to the end that this Agreement shall be
deemed to be a valid and binding agreement in all respects,
enforceable in accordance with its terms.

      18.4  SURVIVAL

      The representations, warranties, indemnities and covenants
set forth herein shall survive the delivery or return of the
Aircraft, the transfer of any interest of Lessor in this
Agreement and the other Operative Agreements, and the expiration
or other termination of this Agreement or any other Operative
Agreement.

      18.5  REPRODUCTION OF DOCUMENTS

      This Agreement, all annexes, schedules and exhibits hereto
and all agreements, instruments and documents relating hereto,
including, without limitation (a) consents, waivers <PAGE> and
modifications that may hereafter be executed and (b) financial
statements, certificates and other information previously or
hereafter furnished to any party hereto, may be reproduced by
such party by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process, and such
party may destroy any original documents so reproduced.  Any such
reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such
reproduction was made by such party in the regular course of
business) and any enlargement, facsimile or further reproduction
of such reproduction likewise is admissible in evidence.

      18.6  COUNTERPARTS

      This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts
(or upon separate signature pages bound together into one or more
counterparts), each of which when so executed shall be deemed to
be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.

      18.7  NO WAIVER

      No failure on the part of Lessor to exercise, and no delay
by Lessor in exercising, any of its rights, powers, remedies or
privileges under this Agreement or provided at Law, in equity or
otherwise shall impair, prejudice or constitute a waiver of any
such right, power, remedy or privilege or be construed as a
waiver of any breach hereof or default hereunder or as an
acquiescence therein, nor shall any single or partial exercise of
any such right, power, remedy or privilege preclude any other or
further exercise thereof by Lessor or the exercise of any other
right, power, remedy or privilege by Lessor.  No notice to or
demand on Lessee in any case shall, unless otherwise required
under this Agreement, entitle Lessee to any other or further
notice or demand in similar or other circumstances or constitute
a waiver of the rights of Lessor to any other or further action
in any circumstances without notice or demand.

      18.8  NOTICES

      Unless otherwise expressly permitted by the terms hereof,
all notices, requests, demands, authorizations, directions,
consents, waivers and other communications required or permitted
to be made, given, furnished or filed hereunder shall be in
writing (it being understood that the specification of a writing
in certain instances and not in others does not imply an
intention that a writing is not required as to the latter), shall
refer specifically to this Agreement and shall be personally
delivered, sent by registered mail or certified mail, return
receipt requested, postage prepaid, or sent by overnight courier
service, in each case to the respective address or facsimile
number set forth for such party in Schedule 3 hereto to, or to
such other address or number as either party hereto may hereafter
specify by notice to the other party hereto.  Each such notice,
request, demand, authorization, direction, consent, waiver or
other communication shall be effective when received or, if made,
given, furnished or filed (a) by facsimile or telecommunication
transmission, when confirmed, or (b) by registered or certified
mail, three Business Days after being deposited, properly
addressed, with the U.S. Postal Service.

      18.9  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
<PAGE>
      (a)  THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS.  THIS AGREEMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.

      (b)  Each party hereto agrees that the United States
District Court for the Eastern District of Virginia and any
Virginia court of general jurisdiction in the district where
Lessor is located are to have nonexclusive jurisdiction to settle
any disputes arising out of or relating to this Agreement and
submits itself and its property to the nonexclusive jurisdiction
of the foregoing courts with respect to such disputes.

      (c)  Without prejudice to any other mode of service, each
party hereto consents to the service of process relating to any
such proceedings by prepaid mailing by air mail, certified or
registered mail of a copy of the process, at the address for such
party set forth in Schedule 3.

      (d)  LESSEE HEREBY:

               (i)  WAIVES TO THE FULLEST EXTENT PERMITTED BY
      LAW ANY OBJECTION WHICH LESSEE MAY NOW OR HEREAFTER HAVE TO
      THE COURTS REFERRED TO IN 18.9(b) ABOVE ON GROUNDS OF
      INCONVENIENT FORUM OR OTHERWISE AS REGARDS PROCEEDINGS IN
      CONNECTION WITH THIS AGREEMENT;

               (ii) WAIVES TO THE FULLEST EXTENT PERMITTED BY
      LAW ANY OBJECTION WHICH LESSEE MAY NOW OR HEREAFTER HAVE TO
      THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING
      ARISING OUT OF OR RELATING TO THIS AGREEMENT BROUGHT IN THE
      COURTS REFERRED TO IN SECTION 18.9(b); AND

               (iii)AGREES THAT A JUDGMENT OR ORDER OF ANY COURT
      REFERRED TO IN SECTION 18.9(b)  IN CONNECTION WITH THIS
      AGREEMENT IS CONCLUSIVE AND BINDING ON IT AND MAY BE
      ENFORCED AGAINST IT IN THE COURTS OF ANY OTHER
      JURISDICTION.

      (e)  NOTHING IN THIS SECTION 18.9 LIMITS THE RIGHT OF
EITHER PARTY TO BRING PROCEEDINGS AGAINST THE OTHER PARTY IN
CONNECTION WITH THIS AGREEMENT:

           (i)  IN ANY OTHER COURT OF COMPETENT JURISDICTION; OR

           (ii) CONCURRENTLY IN MORE THAN ONE JURISDICTION.

      (f)  LESSEE AND LESSOR EACH HEREBY IRREVOCABLY AND
UNCONDITIONALLY:

               (i)  WAIVE ANY RIGHT OF IMMUNITY IN RELATION TO
      THIS AGREEMENT NO IMMUNITY FROM SUCH LEGAL PROCEEDINGS
      (WHICH <PAGE> WILL BE DEEMED TO INCLUDE WITHOUT LIMITATION,
      SUIT, ATTACHMENT PRIOR TO JUDGMENT, OTHER ATTACHMENT, THE
      OBTAINING OF JUDGMENT, EXECUTION OR OTHER ENFORCEMENT WHICH
      IT OR ITS ASSETS NOW HAS OR MAY IN THE FUTURE ACQUIRE; AND

               (ii) CONSENT GENERALLY IN RESPECT OF ANY SUCH
      PROCEEDINGS TO THE GIVING OF ANY RELIEF OR THE ISSUE OF ANY
      PROCESS IN CONNECTION WITH SUCH PROCEEDINGS INCLUDING,
      WITHOUT LIMITATION, THE MAKING, ENFORCEMENT OR EXECUTION
      AGAINST ANY PROPERTY WHATSOEVER (IRRESPECTIVE OF ITS USE OR
      INTENDED USE) OF ANY ORDER OR JUDGMENT WHICH MAY BE MADE OR
      GIVEN IN SUCH PROCEEDINGS.

      (g)  NOTHING HEREIN SHALL, OR SHALL BE CONSTRUED SO AS TO,
LIMIT THE RIGHT OF EITHER PARTY HERETO TO DEFEND OR TO ASSERT A
COUNTERCLAIM IN, OR TO SEEK RECOGNITION OF OR ENFORCEMENT OF ANY
JUDGMENT RENDERED IN, ANY ACTION, SUIT OR PROCEEDING IN THE
COURTS OF WHATEVER JURISDICTION THAT MAY BE APPROPRIATE IN THE
OPINION OF EITHER SUCH PARTY.

      18.10  THIRD-PARTY BENEFICIARY

      This Agreement is not intended to, and shall not, provide
any person not a party hereto with any rights of any nature
whatsoever against either of the parties hereto, and no person
not a party hereto shall have any right, power or privilege in
respect of, or have any benefit or interest arising out of, this
Agreement.

      18.11  ENTIRE AGREEMENT

      This Agreement, together with the other Operative
Agreements, on and as of the date hereof constitutes the entire
agreement of the parties hereto with respect to the subject
matter hereof, and all prior or contemporaneous understandings or
agreements, whether written or oral, between the parties hereto
with respect to such subject matter are hereby superseded in
their entireties.

             [This space intentionally left blank.]
<PAGE>

      IN WITNESS WHEREOF, Lessor and Lessee have each caused
this Aircraft Lease Agreement to be duly executed as of the day
and year first above written.

                          US AIRWAYS, INC., as Lessor

                          By:/s/ Thomas A. Fink
                             Name:  Thomas A. Fink
                             Title:  Vice President - Purchasing

                          VANGUARD AIRLINES, INC., as Lessee

                          By:/s/ Robert J. Spane
                             Name: Robert J. Spane
                             Title: Chief Executive Officer
                                    and President
<PAGE>

                             ANNEX A

                           DEFINITIONS

GENERAL PROVISIONS

     (a)  In each Operative Agreement, unless otherwise expressly
provided, a reference to:

         (i)  each of "Lessee," "Lessor" or any other person
     includes, without prejudice to the provisions of any
     Operative Agreement, any successor in interest to it and any
     permitted transferee, permitted purchaser or permitted
     assignee of it;

        (ii)  words importing the plural include the singular
     and words importing the singular include the plural;

       (iii)  any agreement, instrument or document, or any
     annex, schedule or exhibit thereto, or any other part
     thereof, includes, without prejudice to the provisions of
     any Operative Agreement, that agreement, instrument or
     document, or annex, schedule or exhibit, or part,
     respectively, as amended, modified or supplemented from time
     to time in accordance with its terms and in accordance with
     the Operative Agreements, and any agreement, instrument or
     document entered into in substitution or replacement
     therefor;

        (iv)  any provision of any Law includes any such
     provision as amended, modified, supplemented, substituted,
     reissued or reenacted prior to the Delivery Date, and
     thereafter from time to time;

         (v)  the words "Agreement," "this Agreement," "hereby,"
     "herein," "hereto," "hereof" and "hereunder" and words of
     similar import when used in any Operative Agreement refer to
     such Operative Agreement as a whole and not to any
     particular provision of such Operative Agreement;

        (vi)  the words "including," "including, without
     limitation," "including, but not limited to," and terms or
     phrases of similar import when used in any Operative
     Agreement, with respect to any matter or thing, mean
     including, without limitation, such matter or thing; and

       (vii)  a "Section," an "Exhibit," an "Annex" or a
     "Schedule" in any Operative Agreement, or in any annex
     thereto, is a reference to a section of, or an exhibit, an
     annex or a schedule to, such Operative Agreement or such
     annex, respectively.

     (b)  Each exhibit, annex and schedule to each Operative
Agreement is incorporated in, and shall be deemed to be a part
of, such Operative Agreement.
<PAGE>
     (c)  Unless otherwise defined or specified in any Operative
Agreement, all accounting terms therein shall be construed and
all accounting determinations thereunder shall be made in
accordance with GAAP.

     (d)  Headings used in any Operative Agreement are for
convenience only and shall not in any way affect the construction
of, or be taken into consideration in interpreting, such
Operative Agreement.

DEFINED TERMS

     "ACT" means Part A of Subtitle VII of Title 49, United
States Code.

     "ACTUAL KNOWLEDGE" as it applies to Lessee or Lessor, means
actual knowledge of a Vice President or more senior officer of
Lessor or Lessee, respectively, or any other officer of  Lessor
or Lessee, respectively, in each case having responsibility for
the transactions contemplated by the Operative Agreements;
provided, that each of Lessee and Lessor shall be deemed to have
"Actual Knowledge" of any matter as to which it has received
notice from the other, such notice having been given pursuant to
Section 18.8 of the Lease.

     "ADDITIONAL DEPOSIT" is defined in Schedule 1 to the Lease.

     "ADDITIONAL INSURED" is defined by reference to Section 10
of and Annex D to the Lease.

     "AFFILIATE" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person.  For purposes of this
definition, "control" means the power, directly or indirectly, to
direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities
or by contract or otherwise and "controlling," "controlled by"
and "under common control with" have correlative meanings.

     "AIRCRAFT" means, collectively, the Airframe, Engines and
Aircraft Documents.

     "AIRCRAFT DOCUMENTS" means all updated and current technical
data, manuals and log books, and all inspection, modification and
overhaul records and other service, repair, maintenance and
technical records, including without limitation, Airworthiness
Directives (ADs) status and method of compliance and Supplemental
Type Certificates (STC) amended to the latest amendment revision,
that are required by the FAA, the Lease or the Maintenance
Program to be maintained with respect to the Aircraft, Airframe,
Engines or Parts, or that are of a type required to be delivered
by Lessee upon return of the Aircraft, Airframe or Engines under
Section 5 of the Lease; and such term shall include all
additions, renewals, revisions and replacements of any such
materials from time to time made, or required to be made, in
accordance with the Lease, the Maintenance Program or applicable
FAA Regulations, and in each case in whatever form and by
whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may
be maintained or retained by or on behalf of Lessee (provided,
that all such materials shall be maintained in the English
language); and such term shall include, without limitation, the
documents described in Section N of Annex B to the Lease.
<PAGE>
     "AIRFRAME" means (a) the Aircraft (excluding Engines or
engines from time to time installed thereon) manufactured by
Airframe Manufacturer and identified by Airframe Manufacturer's
model number, United States registration number and Airframe
Manufacturer's serial number set forth in Lease Supplement No. 1
and (b) any and all Parts incorporated or installed in or
attached or appurtenant to such airframe, and any and all Parts
removed from such airframe, unless title to such Parts shall not
be vested in Lessor in accordance with Section 8.1 and Annex C of
the Lease.

     "AIRFRAME MANUFACTURER" means The Boeing Company, a Delaware
corporation.

     "APPRAISER" means a firm of internationally recognized,
independent aircraft appraisers.

     "APU" means the auxiliary power unit installed on the
Aircraft on the Delivery Date, whether or not installed on the
Aircraft from time to time thereafter, unless title to such APU
shall not be vested in Lessor in accordance with Section 8.1 of
the Lease, and any replacement or substituted auxiliary power
unit installed on the Aircraft in accordance with the Lease.

     "AVIATION AUTHORITY" means the FAA.

     "BANKRUPTCY CODE" means the United States Bankruptcy Code,
11 U.S.C. Sections 101 et seq.

     "BASIC RENT" means the rent payable for the Aircraft
pursuant to Section 3.2.1 of the Lease.

      "BUSINESS DAY" means any day other than a Saturday, Sunday
or other day on which commercial banks are authorized or required
by law to close in New York, New York, Pittsburgh, Pennsylvania,
or Kansas City, Missouri.

     "CITIZEN OF THE UNITED STATES" is defined in Section
40102(a)(15) of the Act and in the FAA Regulations.

     "CLOSING" means the closing of the transactions contemplated
by the  Lease on the Delivery Date.

     "CYCLE/FLIGHT HOURS" for the Airframe, any Engine or any
landing gear, means the number of flight hours or cycles,
whichever is greater, flown by Lessee on such Airframe, Engines,
landing gear during such Hourly Rent Interval.

     "DAMAGE PAYMENT THRESHOLD" is defined in Schedule 1 to the
Lease.

     "DEBT" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter
of credit transaction or any other liabilities evidenced or to be
evidenced by bonds, debentures, notes or other similar
instruments.

     "DEFAULT" means any condition, circumstance, act or event
that, with the giving of notice, the lapse of time or both, would
constitute an Event of Default.
<PAGE>
     "DELIVERY DATE" means the Business Day specified in Lease
Supplement No. 1 as the date on which, among other things, the
Aircraft is delivered to and accepted by Lessee under the Lease
and the Closing occurs.

     "DISCOUNT RATE" is defined in Schedule 1.

     "DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful
currency of the United States.

     "DOT" means the Department of Transportation of the United
States or any Government Entity succeeding to the functions of
such Department of Transportation.

     "ENGINE" means (a) each of the engines manufactured by
Engine Manufacturer and identified by Engine Manufacturer's model
number and Engine Manufacturer's serial number set forth in Lease
Supplement No. 1 and any Replacement Engine, in any case whether
or not from time to time installed on such Airframe or installed
on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such
engine, and any and all Parts removed from such engine, unless
title to such Parts shall not be vested in Lessor in accordance
with Section 8.1 and Annex C of the Lease.  Upon substitution of
a Replacement Engine under and in accordance with the Lease, such
Replacement Engine shall become subject to the Lease and shall be
an "Engine" for all purposes of the Lease and the other Operative
Agreements and thereupon the Engine for which the substitution is
made shall no longer be subject to the Lease, and such replaced
Engine shall cease to be an "Engine."

     "ENGINE HOURLY RATE" is defined in Schedule 1.

     "ENGINE HOURLY RENT BALANCE" means with respect to each
Engine, all Engine Hourly Rent received by Lessor with respect to
such Engine, less any payments made by Lessor for Engine
Maintenance for such Engine or as otherwise applied by Lessor in
its sole and reasonable discretion in connection with an
obligation of Lessee under the Operative Agreement.

     "ENGINE MANUFACTURER" means Pratt & Whitney/United
Technologies.

     "ERISA" means the Employee Retirement Income Security Act of
1974 and any regulations and rulings issued thereunder all as
amended and in effect from time to time.

     "EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the
Lease.

     "EVENT OF LOSS" means, with respect to the Aircraft,
Airframe or any Engine, any of the following circumstances,
conditions or events with respect to such property, for any
reason whatsoever:

          (a) the destruction of such property, damage to such
     property beyond practical or economic repair or rendition of
     such property permanently unfit for normal use;

          (b) the actual or constructive total loss of such
     property or any damage to such property, or requisition of
     title or use of such property, which results in an insurance
     <PAGE> settlement with respect to such property on the basis
     of a total loss or constructive or compromised total loss;

          (c) any loss of such property or loss of use of such
     property for a period of 90 days or more as a consequence of
     any theft, hijacking or disappearance of such property;

          (d) any seizure, condemnation, confiscation, taking or
     requisition of title to such property by any Government
     Entity or purported non-U.S. Government Entity;

          (e) any seizure, condemnation, confiscation, taking or
     requisition of use of such property, that continues until
     the earliest of (i) the last day of the Term, (ii) the date
     upon which the Aircraft is modified, altered or adapted in
     such a manner as would render conversion of such property
     for use in normal commercial passenger service impractical
     or uneconomical, (iii) the date on which such property is
     operated or located in any area excluded from coverage by
     any insurance policy required to be maintained in respect of
     such property pursuant to the Lease (unless an indemnity in
     lieu of insurance is provided to Lessor in accordance with
     Section 10.4 of the Lease) or (iv) the date that is 90 days
     following the commencement of such loss of use (unless such
     loss of use results from action by the U.S. Government, in
     which case this clause (iv) shall not apply to such loss of
     use); and

          (f) as a result of any law, rule, regulation, order or
     other action by the Aviation Authority or by any Government
     Entity of the government of registry of the Aircraft or by
     any Government Entity otherwise having jurisdiction over the
     operation or use of the Aircraft, the use of such property
     in the normal course of Lessee's business of passenger air
     transportation is prohibited for a period expiring on the
     earlier to occur of (i) the last day of the Term or (ii) the
     date that is 180 days following commencement of such
     prohibition, provided, that if Lessee, prior to the
     expiration of such 180-day period, shall have undertaken and
     shall be diligently carrying forward all steps which are
     necessary or desirable to permit the normal use of such
     property by Lessee, then the date that is 360 days following
     commencement of such prohibition.

The date of such Event of Loss shall be the date of such loss,
damage, insurance settlement, seizure, condemnation,
confiscation, taking or requisition of title or use or
prohibition, except that for purposes of clauses (c), (e) and (f)
above, no Event of Loss shall be deemed to have occurred until
the date of expiration of the applicable period referred to
therein.

     "EXPENSES" means any and all liabilities, obligations,
losses, damages, settlements, penalties, claims (including,
without limitation, claims or liabilities based or asserted upon
(a) negligence, (b) strict or absolute liability, (c) liability
in tort, (d) infringement of patent, trademark or other property
or other right and (e) liabilities arising out of violation of
any Law), actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other
professionals, and costs of investigation), including, without
limitation, all such costs, expenses and disbursements incurred
by any person in asserting or establishing, or in defending any
claims arising out of its assertion of, any rights it may have
under, or its cooperation in connection with any Expenses
indemnified pursuant to, this Lease.

<PAGE>
     "EXPIRATION DATE" means the Business Day next preceding the
fifth anniversary of the Delivery Date.

     "FAA" means the Federal Aviation Administration of the
United States or any Government Entity succeeding to the
functions of such Federal Aviation Administration.

     "FAA FILED DOCUMENTS" means the Lease and Lease Supplement
No. 1.

     "FAA REGULATIONS" means the Federal Aviation Regulations
(FARs) issued or promulgated pursuant to the Act from time to
time.

     "FAIR MARKET RENTAL VALUE" has the meaning specified in
Section 14.4 of the Lease.

     "FINAL DEPOSIT" is defined in Schedule 1 to the Lease.

     "FINANCING STATEMENTS" means, collectively, UCC-l (and,
where appropriate, UCC-3) financing statements covering the Lease
and the Aircraft, as a precautionary matter, by Lessee, as
lessee, showing Lessor as lessor for filing in the office of the
Secretary of State of the State of Missouri and each other
jurisdiction that, in the opinion of Lessor, is reasonably
desirable.

     "GAAP" means generally accepted accounting principles as set
forth in the statements of financial accounting standards issued
by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants, as such principles may
at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and,
with respect to any person, shall mean such principles applied on
a basis consistent with prior periods except as may be disclosed
in such person's financial statements.

     "GOVERNMENT ENTITY" means (a) any federal, state, provincial
or similar government, and any body, board, department,
commission, court, tribunal, authority, agency or other
instrumentality of any such government or otherwise exercising
any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other
government entity having jurisdiction over any matter
contemplated by the Operative Agreements or relating to the
observance or performance of the obligations of any of the
parties to the operative Agreements.

     "HOURLY RENT" means Engine Hourly Rent, "Q"-Check Hourly
Rent and Landing Gear Hourly Rent, collectively.

     "HOURLY RENT BALANCE" means the Engine Hourly Rent Balance,
the "Q"-Check Hourly Rent Balance and the Landing Gear Hourly
Rent Balance, collectively.

     "HOURLY RENT INTERVAL" means the time period commencing on
the first day of each calendar month during the Term of this
Lease and ending on the last day of such calendar month, except
that with respect to the final Hourly Rent Interval, such period
shall end on the last day of the Term of this Lease.
<PAGE>
     "INDEMNITEE" means (a) Lessor, (b) Lessor's Lender, if any,
(c) each Affiliate of Lessor and Lessor's Lender, if any, (d) the
respective directors, officers, employees, agents and servants of
each of the persons described in clauses (a) through (c), and (e)
the successors and permitted assigns of the persons described in
clauses (a) through (d), inclusive.

     "INITIAL DEPOSIT" is defined in Schedule 1 to the Lease.

     "LANDING GEAR HOURLY RATE" is defined in Schedule 1.

     "LANDING GEAR HOURLY RENT BALANCE" for each landing gear
(i.e., one of the three (3) such gear installed on the Airframe),
means all Landing Gear Hourly Rent received by Lessor with
respect to such gear, less any payments made by Lessor for
Landing Gear Maintenance for the applicable gear or as otherwise
applied by Lessor in its sole discretion in connection with an
obligation of Lessee under the Operative Agreements.

     "LAW" means (a) any constitution, treaty, statute, law,
decree, regulation, order, rule or directive of any Government
Entity, and (b) any judicial or administrative interpretation or
application of, or decision under, any of the foregoing.

     "LEASE" or "LEASE AGREEMENT" means the Aircraft Lease
Agreement (MSN 22882), dated as of February 22, 2000, between
Lessor and Lessee, as supplemented by Lease Supplement No. 1, as
the same may be subsequently amended, modified or supplemented.

     "LEASE SUPPLEMENT" means a supplement to the Lease, in the
form of Exhibit A to the Lease.

     "LEASE SUPPLEMENT NO. 1" means the initial Lease Supplement,
dated the Delivery Date.

     "LESSEE" means Vanguard Airlines, Inc., a Delaware
corporation.

     "LESSEE PERSON" means Lessee, any sublessee, assignee or
successor of Lessee or any other user, or person in possession,
of the Aircraft, the Airframe or any Engine, with or without
color of right, or any Affiliate of any of the foregoing (other
than any Indemnitee or any Affiliate thereof).

     "LESSOR" means US Airways, Inc., a Delaware corporation, or
any successor lessor under the Lease.

     "LESSOR LIEN" with respect to the Aircraft, Airframe or an
Engine means (a) any Lien on such property whatsoever from time
to time created by or through Lessor in connection with the
financing of the Aircraft, (b) any other Lien on such property
which results from acts of or claims against Lessor not related
to the transactions contemplated by or permitted under this
Agreement, or (c) any Lien on such property imposed as a result
of Taxes against which Lessor (or any other Tax Indemnitee) is
not required to be indemnified by Lessee under this Lease;
provided, that any Lien that would otherwise constitute a Lessor
Lien hereunder shall not constitute a Lessor Lien hereunder, so
long as (A) the existence of such Lien poses no material risk of
the sale, forfeiture or loss of the Aircraft, Airframe or any
Engine or any interest therein, <PAGE> (B) the existence of such
Lien does not interfere in any way with the use or operation of
the Aircraft by Lessee (or any Permitted Sublessee), (C) Lessor
is diligently contesting such Lien by appropriate proceedings,
and (D) any property subject to such Lien is not then required to
be conveyed to any other Person pursuant to Section 4.5 of the
Lease.

     "LESSOR'S LENDER" means the financial institution(s) or
other Person(s) in whose favor Lessor may, from time to time,
grant a security interest in the Aircraft and/or this Lease
pursuant to Section 12.1(c) of the Lease in connection with any
financing made available to Lessor by such financial
institution(s) or Person(s), including any trustee or collateral
agent acting on behalf of any such financial institution(s) or
other Person(s).

     "LETTER AGREEMENT NO. 1" means that certain Letter Agreement
No. 1, dated as of February 22, 2000 between Lessor and Lessee
relating to certain matters with respect to the Aircraft.

     "LIABILITY DEDUCTIBLE" is defined in Schedule 1 to the
Lease.

     "LIEN" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease or security interest affecting the title to or
any interest in property.

     "LOI" means that certain Letter of Intent dated October 29,
1999 between Lessor and Lessee, with respect to the proposed
lease of six (6) Boeing Model 737-200 Advanced aircraft.

     "MAINTENANCE PROGRAM" is defined in Annex C to the Lease.

     "MATERIAL ADVERSE CHANGE" means, with respect to any person,
any event, condition or circumstance that materially and
adversely affects such person's business or consolidated
financial condition, or its ability to observe or perform its
obligations, liabilities and agreements under the Operative
Agreements.

      "MINIMUM LIABILITY INSURANCE AMOUNT" is defined in Schedule
1 to the Lease.

     "NET WORTH" means, for any person, the excess of its total
assets over its total liabilities.

     "OFFICER'S CERTIFICATE" means, a certificate signed by the
Chairman, the President, any Vice President, the Treasurer or the
Secretary of such party.

     "OPERATIVE AGREEMENTS" means, collectively, the Lease, Lease
Supplement No. 1, any other Lease Supplements, Letter Agreement
No. 1, and each other agreement between Lessor and Lessee
relating to the transactions contemplated by the Lease.

      "PARTS" means all appliances, parts, components,
instruments, appurtenances, accessories, furnishings, seats and
other equipment of whatever nature (including, without
limitation, all avionics, the APU and Passenger Convenience
Equipment, but excluding Engines or engines), that may from time
to time be installed or incorporated in or attached or
appurtenant to the Airframe or any Engine; provided, that the
term "Parts" shall not be deemed to include any Passenger
Convenience Equipment if and for so long as such Equipment shall
be owned by, or <PAGE> shall be subject to a security interest,
license or other interest of, another Person (other than any
Affiliate of Lessee) as provided under Section D.3 of Annex C to
the Lease.

     "PASSENGER CONVENIENCE EQUIPMENT" means components or
systems installed on or affixed to the Airframe that are used to
provide individual telecommunications or electronic entertainment
to passengers aboard the Aircraft.

     "PAYMENT DATE" means the Delivery Date and the numerically
corresponding day in each successive calendar month thereafter
during the Term or, if any such day is not a Business Day, the
immediately succeeding Business Day.

     "PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.

      "PERMITTED LIEN" means any Lien described in clauses (a)
through (f), inclusive, of Section 6 of the Lease.

     "PERMITTED SUBLEASE" means a sublease permitted under
Section 7.2.6 of the Lease.

     "PERMITTED SUBLESSEE" means the sublessee under a Permitted
Sublease.

     "PERMITTED TRANSFEREE" means any Person that (i)
acknowledges, accepts and confirms in writing for the benefit of
Lessee the obligations set forth in Section 4.3 of the Lease,
(ii) is a Citizen of the United States,  (iii) is neither a
commercial airline in the business of operating scheduled
passenger flights nor an Affiliate of a commercial airlines and
(iv) has a minimum net worth of $20,000,000.

     "PERSONS" or "PERSONS" means individuals, firms,
partnerships, joint ventures, trusts, trustees, Government
Entities, organizations, associations, corporations, government
agencies, committees, departments, authorities and other bodies,
corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.

     ""Q"-CHECK HOURLY RATE" is defined in Schedule 1 to the
Lease.

     ""Q"-CHECK HOURLY RENT BALANCE" means all "Q"-Check Hourly
Rent received by Lessor with respect to the Airframe, less any
payments made by Lessor for "Q"-Check Maintenance for the
Airframe or as otherwise applied by Lessor in its sole discretion
in connection with an obligation of Lessee under the Operative
Agreements.

     "RENT" means, collectively, Basic Rent and Supplemental
Rent.

     "REPLACEMENT ENGINE" means an engine substituted for an
Engine pursuant to Section 5.3, 7.2, 8 or 9 of or Annex C to the
Lease.

     RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance
Supplement, dated as of the date the Aircraft is returned to
Lessor pursuant to Section 5 of the Lease, by Lessor and Lessee
substantially in the form of Exhibit B to Annex B to the Lease.
<PAGE>
     "RETURN LOCATION" means Kansas City, Missouri or such other
location as may be mutually agreed to by Lessor and Lessee.

     "SEC" means the Securities and Exchange Commission of the
United States, or any Government Entity succeeding to the
functions of such Securities and Exchange Commission.

     "SECTION 1110" means 11 U.S.C. Sections 1110 of the
Bankruptcy Code or any successor or analogous section of the
federal bankruptcy Law in effect from time to time.

     "SECURITIES ACT" means the Securities Act of 1933.

     "SECURITY" means a "security" as defined in Section 2(1) of
the Securities Act.

     "STIPULATED LOSS VALUE" is defined in Schedule 1 to the
Lease.

     "SUPPLEMENTAL RENT" means all Hourly Rent, Expenses, and all
other amounts, liabilities, indemnities and obligations (other
than Basic Rent) that Lessee assumes or becomes obliged to or
agrees to pay under the Lease to or on behalf of Lessor or any
other person, including, without limitation, payments of
Stipulated Loss Value and payments of indemnities under the
Lease.

     "TAXES" means all license, recording, documentary,
registration and other similar fees and all taxes, levies,
imposts, duties, charges, assessments or withholdings of any
nature whatsoever imposed by any Taxing Authority, together with
any penalties, additions to tax, fines or interest thereon or
additions thereto.

     "TAX INDEMNITEE" means (a) Lessor, (b) Lessor's Lender, if
any, (c) any Affiliate of Lessor, (d) each group of corporations
(and each member thereof) that includes  Lessor and Lessor's
Leader, if any, and for which a consolidated, combined, unitary
or other group tax return is filed, and (d) each of the
respective successors, assigns, directors, officers, agents and
servants of the persons described in clauses (a) through (c).

     "TAXING AUTHORITY" means any federal, state or local
government or other taxing authority in the United States, any
government or other taxing authority in any jurisdiction outside
the United States, and any international taxing authority.

     "TERM" means the term of five years, commencing on the
Delivery Date and ending on the Expiration Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease.

     "UCC" means the Uniform Commercial Code as in effect in any
applicable jurisdiction.

     U.S. AIR CARRIER" means any United States air carrier as to
which there is in force a certificate issued pursuant to Section
41101 of the Act, and as to which there is in force an air
carrier operating certificate issued pursuant to Part 121 of the
regulations promulgated under the Act, or which may operate as an
air carrier by certification or otherwise under any successor or
substitute provisions therefor or in the absence thereof.
<PAGE>
     "UNITED STATES" or "U.S." means the United States of
America; provided, that for geographic purposes, "United States"
means, in aggregate, the 50 states and the District of Columbia
of the United States of America.

     "U.S. GOVERNMENT" means the federal government of the United
States, or any instrumentality or agency thereof the obligations
of which are guaranteed by the full faith and credit of the
federal government of the United States.

     WET LEASE" means any arrangement whereby Lessee agrees to
furnish the Airframe and Engines or engines installed thereon to
a third party pursuant to which the Airframe and such Engines or
engines (i) shall at all times be in the sole possession and
control of Lessee, (ii) shall be operated in all respects solely
by regular employees of Lessee possessing all current
certificates and licenses that are required under the Act or any
FAA Regulations for the possession, use and operation of the
Airframe and such Engines or engines, and (iii) shall in all
events be maintained, insured and otherwise used and operated in
compliance with the terms and provisions of the Lease.
<PAGE>
                             ANNEX B

                     [INTENTIONALLY OMITTED]
<PAGE>
                             ANNEX C

                     [INTENTIONALLY OMITTED]
<PAGE>
                                                        ANNEX D -
                                                        INSURANCE

                          ANNEX D

                         INSURANCE

     Capitalized terms used but not defined herein shall have the
respective meanings set forth or incorporated by reference in
Annex A to the Lease.

A.  LIABILITY INSURANCE

     As of the Delivery Date and throughout the Term and, subject
to the provisions of Section G, for a period of two years
following the termination or expiration of the Lease, Lessee will
carry or cause to be carried at all times, at no expense to
Lessor, comprehensive airline legal liability (including, without
limitation, third-party and passenger liability and property
damage, including baggage (checked and unchecked), cargo and mail
and premises, hangarkeeper's and products liability and
contractual liability insurance with respect to the Aircraft, the
Airframe and the Engines, which is:

         (i)  in an amount not less than the greater of (x) the
     amount of comprehensive airline legal liability insurance
     from time to time applicable to aircraft owned or leased and
     operated by Lessee of the same type and operating on similar
     routes as the Aircraft and (y) the Minimum Liability
     Insurance Amount per occurrence;

        (ii)  of the type usually carried by prudent major
     United States commercial air carriers, engaged in the same
     or similar business, similarly situated, and owning or
     operating similar aircraft and engines and which covers
     risks of the kind customarily insured against by such
     prudent United States commercial air carriers; and

       (iii)  maintained in effect with insurers of nationally
     or internationally recognized reputation and responsibility
     and substantial financial capacity used by other major
     United States commercial air carriers which are reasonably
     acceptable  to Lessor (such insurers being referred to
     herein as "Approved Insurers").

B.   HULL INSURANCE

     As of the Delivery Date and throughout the Term, Lessee will
carry or cause to be carried at all times, at no expense to
Lessor, with Approved Insurers:

          (1)  "all-risk"  aircraft hull insurance covering each
     Aircraft (including the Engines when they are installed on
     the Airframe or any other airframe) for an amount
     denominated in United States Dollars not less than the
     Stipulated Loss Value of the Aircraft; and
<PAGE>
        (ii)  all risk of physical loss or damage (including
     while in transit and including the risks of fire, flood, and
     earthquake, and including war and confiscation while in
     international transit) insurance on Engines and Parts while
     removed from the Aircraft (to the extent such Engines and
     Parts are not covered by aircraft hull insurance) in amounts
     not less than that usually carried by prudent major United
     States commercial air carriers and in no event less than the
     replacement cost of such Engines and Parts.

     Any policies of insurance carried in accordance with this
Section B covering the Aircraft and any policies taken out in
substitution or replacement for any such policies shall name
Lessor as exclusive loss payee for any proceeds to be paid under
such policies up to an amount equal to the Stipulated Loss Value
pursuant to a loss payable clause in the form attached as Exhibit
D-l hereto.

C.  WAR-RISK, HIJACKING AND ALLIED PERILS INSURANCE

     If Lessee (or any Permitted Sublessee) shall at any time
operate or propose to operate the Aircraft, Airframe or any
Engine in any area of recognized or threatened hostilities, or if
war-risk, hijacking or allied perils insurance is maintained by
Lessee (or any Permitted Sublessee) with respect to other
aircraft owned or operated by Lessee (or any Permitted Sublessee)
on the same routes or in such areas, or if the Aircraft is
operated outside the United States or Canada, Lessee shall
maintain or cause to be maintained war-risk, hijacking and
related perils insurance of substantially the same type carried
by major United States commercial air carriers operating the same
or comparable models of aircraft on similar routes or in such
areas and in no event in an amount less than (x) the amount set
forth in Section A with respect to liability coverage and (y) the
values stated in Sections B(i) and (ii) with respect to hull
coverage, and such insurance shall, to the extent available,
cover the perils of (i) war, invasion, acts of foreign enemies,
hostilities (whether war be declared or not), civil war,
rebellion, revolution, insurrection, martial law, military or
usurped power or attempts at usurpation of power; (ii) strikes,
riots, civil commotion or labor disturbances; (iii) any act of
one or more Persons, whether or not agents of a sovereign power,
for political or terrorist purposes and whether the loss or
damage resulting therefrom is accidental or intentional; (iv) any
malicious act or act of sabotage; (v) confiscation,
nationalization, seizure, restraint, detention, appropriation,
requisition for title or use by or under the order of any
government (whether civil, military or de facto) or public or
local authority; and (vi) hijacking or any unlawful seizure or
wrongful exercise of control of the Aircraft or any Engine or any
airframe on which any Engine is installed or of crew in flight
(including any attempt at such seizure or control) made by any
Person or Persons on board the Aircraft or such airframe acting
without the consent of Lessee.

D.  GENERAL PROVISIONS

     Any policies of insurance carried in accordance with
Sections A, B and C, including any policies taken out in
substitution or replacement for such policies:

          (i)  shall name each Indemnitee as an additional
     insured (collectively, the "Additional Insureds");
<PAGE>
        (ii)  shall apply worldwide and have no territorial
     restrictions or limitations (except only in the case of war,
     hijacking and related perils insurance required under
     Section C, which shall apply to the fullest extent available
     in the international insurance market);

       (iii)  by means of an endorsement submitted to and
     approved by Lessor, prior to the Delivery Date, shall
     provide that, in respect of the interests of the Additional
     Insureds in such policies, the insurance shall not be
     invalidated or impaired by any act or omission (including
     misrepresentation and nondisclosure) by Lessee (or any
     Permitted Sublessee) or any other Person  and shall insure
     the Additional Insureds regardless of any breach or
     violation of any representation, warranty, declaration, term
     or condition contained in such policies by Lessee (or any
     Permitted Sublessee) or any other Person;

        (iv)  shall provide that, if the insurers cancel such
     insurance for any reason whatsoever, or if the same is
     allowed to lapse for nonpayment of premium, or if any
     material change is made in the insurance which adversely
     affects the interest of any of the Additional Insureds, such
     cancellation, lapse or change shall not be effective as to
     the Additional Insureds for (a) except only in the case set
     forth in subclause (b) below, 30 calendar days after receipt
     by Lessor of written notice by such insurers of such
     cancellation, lapse or change or (b) in respect of war,
     hijacking and related perils insurance required under
     Section C, seven days (or such shorter period as may be
     available in the international insurance market with respect
     to such insurance) after the receipt by Lessor of written
     notice of such cancellation, lapse or change, as the case
     may be;

         (v)  shall waive any rights of setoff (including for
     unpaid premiums), recoupment, counterclaim or other
     deduction, whether by attachment or otherwise, against each
     Additional Insured;

        (vi)  shall waive any right of recourse, subrogation,
     setoff, recoupment, counterclaim or other deduction against
     any Additional Insured;

       (vii)  shall be primary without right of contribution
     from any other insurance that may be available to any
     Additional Insured;

      (viii)  shall provide that all of the liability insurance
     provisions thereof, except the limits of liability, shall
     operate in all respects as if a separate policy had been
     issued covering each party insured thereunder;

        (ix)  shall provide that none of the Additional Insureds
     shall be liable for any insurance premium;

         (x)  shall contain a 50/50% Clause per Lloyd's Aviation
     Underwriters' Association Standard Policy Form AVS 103 or
     it's current equivalent; and

          (xi) shall contain endorsements reversing any data
     recognition exclusions; and
<PAGE>
        (xii) shall specifically refer to this Annex D.

E.   REPORTS AND CERTIFICATES; OTHER INFORMATION

     On or prior to the Delivery Date and on or prior to each
renewal date of its insurance policies, Lessee will furnish or
cause to be furnished to Lessor insurance certificates describing
in reasonable detail the hull and liability insurance (and
property insurance for detached Engines and Parts) and a report,
signed by a nationally recognized insurance broker (the
"Insurance Broker"), stating the opinion of such Insurance Broker
that (a) all premiums in connection with the insurance then due
have been paid, (b) such insurance complies with the terms of
this Annex D, and (c) such insurance provides coverage against
risks that are customarily insured against by major United States
commercial air carriers.  Such Insurance Broker shall further
agree to advise Lessor in writing of any default in the payment
of any premium and of any other act or omission on the part of
Lessee of which it has knowledge and which might invalidate or
render unenforceable, in whole or in part, any insurance on the
Aircraft or Engines or cause the cancellation or termination of
such insurance, and to advise Lessor in writing at least 30 days
(seven days in the case of war-risk and allied perils coverage or
such shorter period as may be available in the international
insurance market, as the case may be) prior to the cancellation,
lapse or material adverse change of any insurance maintained
pursuant to this Annex D.  The Additional Insureds shall also be
entitled to such other information as they may reasonably request
of Lessee, the Approved Insurers or the Insurance Broker from
time to time with respect to the insurances to be provided
hereunder.

F.   RIGHT TO PAY PREMIUMS

     The Additional Insureds shall have the rights but not the
obligations of an additional named insured.  Neither Lessor nor
any other Additional Insured shall have any obligation to pay any
premium, commission, assessment or call due on any such insurance
(including reinsurance).  Notwithstanding the foregoing, the
insurer shall agree that, in the event of cancellation of any
insurance due to the nonpayment of premiums, Lessor shall have
the option, in its sole discretion, to pay any such premium
reasonably set by insurers in respect of the Aircraft Engines and
Parts that is due in respect of the coverage pursuant to the
Lease and to maintain such coverage, as Lessor may require, until
the natural expiration date of such insurance.

G.  EXPIRATION OR TERMINATION OF THE LEASE

     Lessee covenants and agrees that, upon expiration or
termination of the Lease, it shall carry the following insurance
coverage:

     (a)  During each portion of the two-year period following
such expiration or termination that Lessee shall be the owner or
operator of the Aircraft or any Engine (whether resulting from
the purchase of the Aircraft or any Engine from Lessor or
otherwise), Lessee shall carry or cause to be carried, at its own
expense, liability insurance of the types and in the amounts
required under Section A and containing the terms set forth in
Section D in regard to each Indemnitee, each of whom shall be
named as an Additional Insured thereunder; and
<PAGE>
          (b)  During each portion of such two-year period that
Lessee shall not be the owner or operator of the Aircraft or any
Engine, Lessee shall carry or cause to be carried products
(completed operations) liability insurance in the amount required
under Section A and containing the terms set forth in Section D
in regard to each Indemnitee, each of whom shall be named as an
Additional Insured thereunder.
<PAGE>
                LOSS PAYABLE CLAUSE (HULL)

(1)  All losses shall be adjusted by Lessee, unless Lessor shall
     have notified the underwriters that any Default or an Event
     of Default has occurred and is continuing, in which event
     all losses shall be adjusted by Lessor or its designee.

(2)  (a)  The sum in respect of which the Aircraft, Airframe
          and Engines are insured for total loss or the sum
          negotiated in settlement of a constructive or
          compromised or agreed or arranged total loss shall be
          paid in full to Lessor as exclusive loss payee in
          United States Dollars without any deduction or
          deductions whatsoever to an account in the United
          States designated by Lessor;

     (b)  All recoveries, in respect of repairable damage to the
          Aircraft, Airframe or Engines, or the loss or
          destruction of any Engine, not exceeding the Damage
          Payment Threshold in any one case, shall be paid in
          full to Lessee; provided, however, that if Lessor shall
          have notified the underwriters that any Default or an
          Event of Default has occurred and is continuing, all
          such recoveries shall be paid in full to Lessor; and

     (c)  All recoveries in respect of repairable damage to the
          Aircraft, Airframe or Engines, or the loss or
          destruction of any Engine, exceeding the Damage Payment
          Threshold in any one case shall be paid in full to
          Lessor as exclusive loss payee in United States Dollars
          to an account in the United States designated by
          Lessor.
<PAGE>
                                             EXHIBIT A -
                                          LEASE SUPPLEMENT

                 LEASE SUPPLEMENT NO. 1

     LEASE SUPPLEMENT No. 1, dated ________, 2000, between  US
Airways, Inc., a Delaware corporation ("Lessor"), and Vanguard
Airlines, Inc., as Lessee ("Lessee").

     Lessor and Lessee have heretofore entered into that certain
Aircraft Lease Agreement dated as of February 22, 2000, relating
to one Boeing Model 737-200 Advanced aircraft (herein called the
"Lease" and the defined terms therein being hereinafter used with
the same meanings).  The Lease provides for the execution and
delivery of this Lease Supplement for the purpose of evidencing
the effectiveness of the Lease with respect to the Aircraft and
Engines.

     The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease to which this Lease
Supplement is attached and of which this Lease Supplement is a
part, is being filed for recordation on the date hereof with the
Federal Aviation Administration as one document.

     NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree
as follows:

     1.   Lessor hereby delivers and leases to Lessee under the
Lease and Lessee hereby accepts and leases from Lessor under the
Lease the following described Boeing Model 737-200 Advanced
aircraft (the "Aircraft"), which Aircraft as of the date hereof
consists of the following components:

         (i)  Airframe:  U.S. Registration No. N270AU;
     manufacturer's serial no. 22882; and

        (ii)  Engines:  two (2) Pratt & Whitney JT8D-15 engines
     bearing, respectively, manufacturer's serial nos. P700178
     and P654988 (each of which engines has 750 or more rated
     takeoff horsepower or the equivalent of such horsepower).

     2.  The Delivery Date of the Aircraft is the date of this
Lease Supplement set forth in the opening paragraph hereof.

     3.  Lessee hereby confirms its agreement to pay Lessor Rent
for the Aircraft in accordance with Section 3, and the other
provisions, of the Lease.

     4.  Lessee hereby confirms to Lessor that Lessee has duly
accepted the Aircraft under and for all purposes hereof, of the
Lease and of the other Operative Agreements.

     5.  All of the terms and provisions of this Lease Supplement
are hereby incorporated by reference in the Lease to the same
extent as if fully set forth therein.
<PAGE>
     6.  This Lease Supplement may be executed by the parties
hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.

     7.  To the extent, if any, that this Lease Supplement
constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Supplement may be created through
the transfer or possession of any counterpart other than the
original executed counterpart, which shall be identified as the
counterpart that states on the signature page thereof that it is
the original chattel paper counterpart.

             [This space intentionally left blank.]
<PAGE>
     IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease Supplement to be duly executed as of the day and year first
above written.

                 US AIRWAYS, INC.,
                 as Lessor

                 By______________________________
                   Name:
                   Title:

                 VANGUARD AIRLINES, INC.,
                          as Lessee

                 By______________________________
                   Name:
                   Title:
<PAGE>
                                  SCHEDULE 1 - CERTAIN TERMS

                       CERTAIN TERMS

DEFINED TERM                       DEFINITION

Additional Deposit                 $55,000

Basic Rent                         $110,000 per month

Damage Payment Threshold           $1,000,000

Discount Rate                      The highest rate for Federal
                                   Funds as quoted in the Wall
                                   Street Journal on the
                                   Business Day preceding the
                                   date of determination.

Engine Hourly Rate                 $95.00 per flight hour or
                                   flight cycle, whichever is
                                   greater

Final Deposit                      $110,000

Initial Deposit                    $55,000

Landing Gear Hourly Rate           $14.00 for the shipset of
                                   landing gears per flight
                                   hour, allocated $4.00 per
                                   flight hour for each of the
                                   two main gear and $6.00 per
                                   flight hour for the nose gear

Liability Deductible               $500,000

Minimum Liability Insurance        $500,000,000
Amount

Payment Due Rate                   The lesser of (a) the
                                   Citibank, N.A.'s prime rate
                                   plus 2% or (b) the maximum
                                   rate permitted under
                                   applicable Law
<PAGE>
                                  SCHEDULE 1 - CERTAIN TERMS

Purchase Price                     Delivery Date:  $6,150,000
                                   Six Month Anniversary:
                                   $5,800,000
                                   Twelve Month Anniversary:
                                   $5,450,000
                                   Eighteen Month Anniversary:
                                   $5,100,000
                                   Twenty Four Month
                                   Anniversary:  $4,750,000

"Q"-Check Hourly Rate              $75.00 per flight hour
                                   (provided, however, this rate
                                   will be reviewed following
                                   the initial "Q"-Checks
                                   performed on the first four
                                   (4) 737-200 Advanced aircraft
                                   to be leased by Lessor to
                                   Lessee (as contemplated by
                                   the LOI) based on the total
                                   agreed costs applicable to
                                   such "Q"-Checks.  The maximum
                                   rate will be $80.00 and the
                                   minimum will be $70.00.  If
                                   the parties do not mutually
                                   agree to a revised rate, the
                                   rate shall remain at $75.00
                                   per flight hour.

Stipulated Loss Value              $7,072,500
<PAGE>
                                  SCHEDULE 2 -
                           LEASE IDENTIFICATION, ETC.

LEASE IDENTIFICATION AND OTHER INFORMATION

Lease Identification:    "Leased from US Airways, Inc. as Owner
                         and Lessor"

Lessee's Address:        Vanguard Airlines, Inc.
                         533 Mexico City Avenue
                         Kansas City, MO  64153
                         Attention: Chief Financial Officer
                         Telephone: (816) 243-2121
                         Telecopy: (816) 243-2165
                         With a copy to:Brian S. Gilman
                         Vice President and General Counsel
                         Vanguard Airlines, Inc.
                         533 Mexico City Avenue
                         Kansas City, MO  64153
                         Telephone:  (816) 243-2102
                         Telecopy:    (816) 243-2165

Lessor's Address:        US Airways, Inc.
                         Crystal Park Four
                         2345 Crystal Drive
                         Arlington, VA 22227
                         Attention: Stuart Peebles
                         Director - Aircraft Sales
                         Telephone: (703) 872-7504
                         Telecopy: (703) 872-7515
                         With a copy to:
                         Howard L. Wu
                         Associate General Counsel
                         US Airways, Inc.
                         Crystal Park Four
                         2345 Crystal Drive, 8th Floor
                         Arlington, VA 22227
                         Telephone:  (703) 872-5228
                         Telecopy:  (703) 872-5252

Payment Location:        PNC Bank
                         Pittsburgh, Pennsylvania
                         United States of America
                         For the account of
                         Account Number: 101-09-29184
                         For the account of: US Airways, Inc.
                         ABA Number 043000096
                         Reference: Vanguard MSN 22882
<PAGE>
                                   SCHEDULE 3 -
                         REPRESENTATIONS AND WARRANTIES -
                                      PART A

REPRESENTATIONS AND WARRANTIES

PART A.   LESSEE'S REPRESENTATIONS AND WARRANTIES

      Lessee represents and warrants to Lessor, as of the date
hereof, that:

             (i)  Lessee is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State
of Delaware and has the corporate power and authority to conduct
the business in which it is currently engaged and to own or hold
under lease its properties and to enter into and perform its
obligations under the Operative Agreements.  Lessee is duly
qualified to do business as a foreign corporation in good
standing in the State of Missouri and in all other jurisdictions
required by Law or in which the nature and extent of the business
conducted by it, or the ownership of its properties, makes such
qualification necessary or desirable except where the failure to
be so qualified would not give rise to a Material Adverse Change
to Lessee.

             (ii)  Lessee has taken, or caused to be taken, all
necessary corporate action to authorize the execution and
delivery of each of the Operative Agreements and the performance
of its obligations thereunder.

             (iii)  The execution and delivery by Lessee of the
Operative Agreements and the performance by Lessee of its
obligations thereunder do not and will not (a) violate or
contravene any provision of the Certificate of Incorporation or
By-Laws of Lessee, (b) violate or contravene any Law applicable
to or binding on Lessee, or (c) violate, contravene or constitute
any default under, or result in the creation of any Lien (other
than as permitted under this Lease) upon any property of Lessee
or any of its subsidiaries under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract,
lease, loan or other material agreement, instrument or document
to which Lessee is a party or by which Lessee or any of its
properties is or may be bound or affected.

             (iv)  The execution and delivery by Lessee of the
Operative Agreements and the performance by Lessee of its
obligations thereunder do not and will not require the consent,
approval or authorization of, or the giving of notice to, or the
registration with, or the recording or filing of any documents
with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of Lessee and (b) any
Government Entity, other than the filing of the FAA Filed
Documents and the Financing Statements (and continuation
statements periodically) and filings, recordings, notices or
other ministerial actions pursuant to any routine recording,
contractual or regulatory requirements applicable to it.

             (v)  The Operative Agreements have been duly
authorized, executed and delivered by Lessee and, assuming the
due authorization, execution and delivery thereof by the other
party or parties thereto, constitute the legal, valid and binding
obligations of Lessee and are enforceable against Lessee in
accordance with the respective terms thereof, except as such
<PAGE> enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws
affecting the rights of creditors generally and general
principles of equity, whether considered in a proceeding at law
or in equity.

             (vi)  Except as set forth in Lessee's most recent
Annual Report on Form 10-K or its Quarterly Report on Form 10-Q
filed by Lessee with the SEC on or prior to the Delivery Date
(copies of which (excluding exhibits), in each case, have been
furnished to Lessor by Lessee), no action, claim or proceeding is
now pending or, to the Actual Knowledge of Lessee, threatened,
against Lessee, at law, in equity or otherwise, before any court,
board, commission, agency or instrumentality of any foreign
government or any federal, state or local government or of any
agency or subdivision thereof, or before any arbitrator or panel
of arbitrators, which is reasonably likely to be determined
adversely to Lessee and if determined adversely to Lessee would
result in a Material Adverse Change to Lessee.

             (vii)  Lessee has filed or caused to be filed all
material tax returns, reports and statements that are required to
be filed and has paid or caused to be paid all taxes shown to be
due and payable by such returns, reports or statements and any
tax assessments received by Lessee to the extent that such taxes
have become due and payable (except to the extent being contested
in good faith and for the payment of which adequate reserves have
been provided except where the failure to do so would not have a
material adverse effect upon its financial condition or business
or its ability to perform its obligations under the Operative
Agreements).

             (viii)  The audited consolidated balance sheet of
Lessee as of December 31, 1998 and the related consolidated
statements of cash flows and nonredeemable preferred stock and
common stockholders' deficit for the period then ended (copies of
which have been furnished to Lessor) have been prepared in
accordance with GAAP and fairly present in all material respects
the financial condition of Lessee and its consolidated
subsidiaries as of such date and the results of its operations
and cash flows for such period, and since December 31, 1998 there
has been no material adverse change in such financial condition
or operations, except for matters disclosed in the financial
statements referred to above or in any subsequent Annual Report
on Form 10-K, Quarterly Report on Form 10-Q or Current Report on
Form 8-K filed by Lessee with the SEC on or prior to the date
hereof (copies of which (excluding exhibits) have been delivered
to Lessor by Lessee).

             (ix)  Except for (a) the filing for recordation
(and recordation) of the FAA Filed Documents, (b) the filing of
the Financing Statements (and continuation statements relating
thereto at periodic intervals), (c) the taking of possession and
retention by Lessor of the original counterparts of the Lease and
Lease Supplement No. 1 and (d) the affixation of the nameplates
referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any
financing statement in respect thereof under Article 9 of the
UCC) is necessary or advisable in order to establish and perfect
the right, title or interest of Lessor in the Aircraft and the
Lease, as against Lessee or any other Person, in each case, in
any applicable jurisdictions.

               (x)  The chief executive office (as such term is
defined in Article 9 of the UCC) of Lessee is located at 533
Mexico City Avenue, Kansas City, MO  64153.
<PAGE>
             (xi)  No event which, if the Aircraft were subject
to the Lease, would constitute a Default or Event of Default has
occurred and is continuing.

             (xii)  No Event of Loss has occurred with respect
to the Airframe or any Engine, and, to the Actual Knowledge of
Lessee, no circumstance, condition, act or event occurred that,
with the giving of notice or lapse of time or both gives rise to
or constitutes an Event of Loss with respect to the Airframe or
any Engine.

             (xiii)(A)  Lessee is not in default under, or in
violation of, any Law applicable to Lessee or to which Lessee is
subject, the violation of which would give rise to a Material
Adverse Change to Lessee.

                     (B)  Without limiting the generality of
Part A, Section (xiii)(A) of this Schedule 3:

                         (I)  Lessee is a U.S. Air Carrier;

                         (II)  Lessee holds all licenses, permits
and franchises from the appropriate Government Entities necessary
to authorize Lessee to lawfully engage in air transportation and
to carry on scheduled commercial passenger service as currently
conducted, except where the failure to so hold any such license,
permit or franchise would not give rise to a Material Adverse
Change to Lessee;

              (xiv)  No Person acting on behalf of Lessee other
than IAMG is or will be entitled to any broker's fee, commission
or finder's fee in connection with the transactions contemplated
by the Lease and the other Operative Agreements.

               (xv)  Lessor, as lessor under the Lease, is
entitled to the benefits of Section 1110 (as currently in effect)
with respect to the right to take possession of the Airframe and
Engines as provided in the Lease in the event of a case under
Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
<PAGE>
                                   SCHEDULE 3 REPRESENTATIONS
                                     AND WARRANTIES - PART B

PART B.   LESSOR'S REPRESENTATIONS AND WARRANTIES

      Lessor represents and warrants to Lessee, as of the date
hereof, that:

             (i)  Lessor is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State
of Delaware and has the corporate power and authority to conduct
the business in which it is currently engaged and to own or hold
under lease its properties and to enter into, and perform its
obligations under the Operative Agreements.

             (ii)  Lessor has taken, or caused to be taken, all
necessary corporate action to authorize the execution and
delivery of each of the Operative Agreements, and the performance
of its obligations thereunder.

             (iii)  The execution and delivery by Lessor of the
Operative Agreements, the performance by Lessor of its
obligations thereunder and the consummation by Lessor on the
Delivery Date of the transactions contemplated thereby, do not
and will not (a) violate or contravene any provision of the
Certificate of Incorporation or By-Laws of Lessor, (b) violate or
contravene any Law applicable to or binding on Lessor of or (c)
violate, contravene or constitute any default under, or result in
the creation of any Lien (other than as provided for or otherwise
permitted in the Operative Agreements) upon the Aircraft under,
any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, loan or other material
agreement, instrument or document to which Lessor is a party or
by which Lessor or any of its properties is or may be bound or
affected.

             (iv)  The execution and delivery by Lessor of the
Operative Agreements, the performance by Lessor of its
obligations thereunder and the consummation by Lessor on the
Delivery Date of the transactions contemplated thereby do not and
will not require the consent, approval or authorization of, or
the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any
other action in respect of, (a) any trustee or other holder of
any Debt of Lessor and (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements.

             (v)  The Operative Agreements have been duly
authorized, executed and delivered by Lessor and, assuming the
due authorization, execution and delivery by the other party or
parties thereto, constitute the legal, valid and binding
obligations of Lessor and are enforceable against Lessor in
accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws
affecting the rights of creditors generally and general
principles of equity, whether considered in a proceeding at law
or in equity.

             (vi)  Lessor shall have the right to lease the
Aircraft to Lessee in accordance with the terms hereof.
<PAGE>

             (vii)     Lessor is a Citizen of the United States.

             (viii)  On the Delivery Date, there are no Lessor
Liens in respect of the Aircraft.

              (ix)  There are no pending or, to the Actual
Knowledge of Lessor, threatened actions or proceedings against
Lessor before any court, administrative agency or tribunal which,
if determined adversely to Lessor, would materially adversely
affect the ability of Lessor to perform its obligations under the
Operative Agreements.

               (x)  No Person acting on behalf of Lessor is or
will be entitled to any broker's fee, commission or finder's fee
in connection with the transactions contemplated by the Lease and
the other Operative Agreements.
<PAGE>

                                   SCHEDULE 4 -
                         OPINION OF LESSEE'S COUNSEL

               FORM OF OPINION OF LESSEE'S COUNSEL

                            [TO COME]
<PAGE>

     THIS AIRCRAFT LEASE AGREEMENT CONTAINS CONFIDENTIAL AND
                     PROPRIETARY INFORMATION

______________________________________________________________________

                    AIRCRAFT LEASE AGREEMENT

                           (MSN 22882)

                  Dated as of February 22, 2000

                             Between

                        US AIRWAYS, INC.

                             Lessor

                               and

                     VANGUARD AIRLINES, INC.

                             Lessee

           One Boeing Model 737-200 Advanced Aircraft
        Bearing United States Registration No. N270AU and
             Bearing Manufacturer's Serial No. 22882
            with two Pratt & Whitney JT8D-15 Engines
  Bearing Engine Manufacturer's Serial Nos. P700178 and P654988

______________________________________________________________________
______________________________________________________________________

This Aircraft Lease Agreement has been executed in multiple
counterparts; to the extent, if any, that this Aircraft Lease
Agreement constitutes chattel paper (as defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no
security interest in Lessor's right, title and interest in and to
this Aircraft Lease Agreement may be perfected through the
delivery or possession of any counterpart of this Aircraft Lease
Agreement other than the counterpart of this Aircraft Lease
Agreement that states on the signature page thereof that it is
the original chattel paper counterpart.
<PAGE>
                        TABLE OF CONTENTS

                                                  Page

SECTION 1. DEFINITIONS AND CONSTRUCTION                    1

SECTION 2. DELIVERY AND ACCEPTANCE                         1
          2.1 Agreement to Lease                           1
          2.2 Acceptance by Lessee                         1
          2.3 Conditions to Lessor's Obligations           2

SECTION 3. TERM, RENT AND SECURITY DEPOSIT                 3
          3.1 Term                                         3
          3.2 Rent                                         3
          3.3 Security Deposit                             4
          3.4 Payments                                     5

SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
          SECTION 1110 MATTERS                             5
          4.1 Disclaimer                                   5
          4.2 Certain Agreements of Lessor                 6
          4.3 Quiet Enjoyment                              7
          4.4 Title Transfers by Lessor                    7
          4.5 Lessor's Interest in Certain Engines         7
          4.6 Lease For U.S. Federal Income Tax Law
                  Purposes; Section 1110 of Bankruptcy
                  Code                                     8
          4.7 Contribution by Lessor for Certain
                  Maintenance and Overhauls                8

SECTION 5. RETURN OF AIRCRAFT                             10
          5.1 Compliance with Annex B                     10
          5.2 Storage and Related Matters                 10
          5.3 Return of Other Engines                     10
          5.4 Failure to Return Aircraft                  10

SECTION 6. LIENS                                          11

SECTION 7. REGISTRATION, OPERATION, POSSESSION,
          SUBLEASING AND RECORDS                          12
          7.1 Registration and Operation                  12
          7.2 Possession                                  13
          7.3 Certain Limitations on Subleasing or
                  Other Relinquishment of Possession      15
<PAGE>

SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF
          PARTS; ALTERATIONS, MODIFICATIONS AND
          ADDITIONS; OTHER LESSEE COVENANTS               16
          8.1 Maintenance; Replacement and Pooling of
                  Parts; Alterations, Modifications and
                  Additions                               16
          8.2 Information, Certificates, Notices and
                  Reports                                 16
          8.3 Representations and Warranties              18

SECTION 9. LOSS, DESTRUCTION, REQUISITION, ETC.           18
          9.1 Event of Loss With Respect to Aircraft      18
          9.2 Event of Loss With Respect to an Engine     19
          9.3 Application of Payments                     21
          9.4 Application of Payments During Existence
                  of Default                              21

SECTION 10 INSURANCE                                      21
          10.1 Lessee's Obligation to Insure              21
          10.2 Lessor's Right to Maintain Insurance       22
          10.3 Insurance for Own Account                  22
          10.4 Application of Insurance Proceeds          22
          10.5 Application of Payments During Existence
                  of Default                              22

SECTION 11. INSPECTION                                    22

SECTION 12. ASSIGNMENT; MERGER                            23
          12.1 In General                                 23
          12.2 Merger of Lessee                           25
          12.3  Covenants of Lessee                       26

SECTION 13. EVENTS OF DEFAULT                             27
          13.1 Payments                                   27
          13.2 Insurance                                  27
          13.3 Corporate Existence                        28
          13.4 Certain Covenants                          28
          13.5 Other Covenants                            28
          13.6 Representations and Warranties             28
          13.7 Bankruptcy and Insolvency                  28
          13.8 Other Agreements with Lessor               29
          13.9 Deregistration                             29
          13.10 Transfer                                  29
<PAGE>
          13.11 Judgments                                 29
          13.12 Materially Adverse Effect                 29
          13.13 Indebtedness                              29
          13.14 Operative Agreements                      30
          13.15 Security Deposit                          30

SECTION 14. REMEDIES AND WAIVERS                          30
          14.1 Remedies                                   30
          14.2 Right to Perform for Lessee                33
          14.3 Determination of Fair Market Rental
                  Value                                   33
          14.4 Lessor Appointed Attorney-in-Fact          33
          14.5 Remedies Cumulative                        34

SECTION 15. LESSEE'S OBLIGATIONS; NO SETOFF,
          COUNTERCLAIM, ETC.                              34

SECTION 16. GENERAL TAX INDEMNITY                         35
          16.1 General                                    35
          16.2 After-Tax Nature of Indemnity              36
          16.3 Contest                                    37
          16.4 Application of Payments During Existence
                  of Event of Default                     38
          16.5 Withholding Tax                            38
          16.6 Survival of Indemnities                    38

SECTION 17. GENERAL INDEMNIFICATION                       38
          17.1 The Indemnity                              38
          17.2 The Lessee Waiver                          39
          17.3 The Gross-Up                               40

SECTION 18. MISCELLANEOUS                                 40
          18.1 Purchase Options                           40
          18.2 Amendments                                 41
          18.3 Severability                               41
          18.4 Survival                                   41
          18.5 Reproduction of Documents                  41
          18.6 Counterparts                               42
          18.7 No Waiver                                  42
          18.8 Notices                                    42
          18.9 Governing Law; Submission To
                  Jurisdiction; Venue                     42
<PAGE>
          18.10 Third-Party Beneficiary                   44
          18.11 Entire Agreement                          44

ANNEXES, EXHIBITS AND SCHEDULES

ANNEX A      Definitions
ANNEX B      Return Conditions
ANNEX C      Maintenance
ANNEX D      Insurance

EXHIBIT A    Form of Lease Supplement

SCHEDULE  1  Certain Terms
SCHEDULE  2  Lease Identification and Other Information
SCHEDULE  3  Representations and Warranties
SCHEDULE  4  Opinion of Lessee's Counsel

<PAGE>

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