Document:

Execution Copy

                      SECURITY TRUST AGREEMENT SUPPLEMENT

Bankers Trust Company, as Security Trustee
Four Albany Street
New York, New York 10006                                         March 15, 2000

Attention:  Corporate Trust & Agency Services -
              Structured Finance

            Re: Security Trust Agreement, dated as of March 3, 1998
                ---------------------------------------------------

     Reference is made to the Security Trust Agreement, dated as of March 3,
1998 (the "Security Trust Agreement"), among MORGAN STANLEY AIRCRAFT FINANCE, a
Delaware business trust created under the Trust Agreement, as amended through
the date hereof, among MS Financing Inc., as depositor, Wilmington Trust
Company, as the Delaware Trustee, the Independent Trustees, the Alternate
Controlling Trustee and the Controlling Trustees party thereto, the ISSUER
SUBSIDIARIES party thereto, CABOT AIRCRAFT SERVICES LIMITED, a company
incorporated under the laws of Ireland, as the Administrative Agent, BANKERS
TRUST COMPANY, a New York banking corporation, as the Cash Manager,
INTERNATIONAL LEASE FINANCE CORPORATION, a corporation incorporated under the
laws of the State of California, as the Servicer, INTERNATIONAL LEASE FINANCE
CORPORATION, as credit facility provider under the Custody and Loan Agreement,
MORGAN STANLEY DEAN WITTER & CO., as credit facility provider under the Loan
Agreement, BANKERS TRUST COMPANY, not in its individual capacity (except as
otherwise provided in the Indenture), but solely in its capacity as trustee
under the Indenture, BANKERS TRUST COMPANY, not in its individual capacity, but
solely as the initial Reference Agent, and BANKERS TRUST COMPANY, not in its
individual capacity (except as otherwise provided pursuant to Sections 6.03(i)
and 6.03(ii) of the Security Trust Agreement), but solely as the initial
Security Trustee (the "Security Trustee"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to them in the
Security Trust Agreement.

     The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Trust Agreement as if it were an original
party thereto and agrees that each reference in the Security Trust Agreement to
"Grantor" shall also mean and be a reference to the undersigned.

     The undersigned hereby assigns and pledges to the Security Trustee for its
benefit and the benefit of the Secured Parties, and hereby grants to the
Security Trustee for its benefit and the benefit of the Secured Parties a
security interest in, all of its right, title and interest in and to:

<PAGE>

                                       2

          (a) all of the following (collectively, the "Non-Trustee Account
     Collateral"):

               (i) all of the Non-Trustee Accounts (to the extent permitted by
          applicable law) in such Grantor's name, all funds held or required by
          the terms of the Indenture and any Guarantor Indenture to be held
          therein and all certificates and instruments, if any, from time to
          time representing or evidencing such Non- Trustee Accounts;

               (ii) all notes, certificates of deposit, deposit accounts,
          checks and other instruments from time to time hereafter delivered to
          or otherwise possessed by the Security Trustee for or on behalf of
          such Grantor in substitution for or in addition to any or all of the
          then existing Non-Trustee Account Collateral; and

               (iii) all interest, dividends, cash, instruments and other
          property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of the then
          existing Non-Trustee Account Collateral;

          (b) all of the following (collectively, the "Cash Collateral"):

               (i) all funds of such Grantor held or required by the terms of
          the Indenture to be held in the Accounts and all certificates and
          instruments, if any, from time to time representing or evidencing
          such funds;

               (ii) all notes, certificates of deposit, deposit accounts,
          checks and other instruments from time to time hereafter delivered to
          or otherwise possessed by the Security Trustee for or on behalf of
          such Grantor in substitution for or in addition to any or all of the
          then existing Cash Collateral; and

               (iii) all interest, dividends, instruments and other property
          from time to time received, receivable or otherwise distributed in
          respect of or in exchange for any or all of the then existing Cash
          Collateral;

          (c) all "investment property" (as defined in Section 9-115(1)(f) of
     the UCC) of such Grantor, and all of the following (the "Investment
     Collateral"):

               (i) all Permitted Account Investments made or acquired from or
          with the proceeds of any Non-Trustee Account Collateral or Cash
          Collateral of such Grantor from time to time and all certificates and
          instruments, if any, from time to time representing or evidencing
          such Permitted Account Investments;

               (ii) all notes, certificates of deposit, deposit accounts,
          checks and other instruments from time to time hereafter delivered to
          or otherwise possessed by the

<PAGE>

                                       3

          Security Trustee for or on behalf of such Grantor in substitution of
          or in addition to any or all of the then existing Investment
          Collateral; and

               (iii) all interest, dividends, instruments and other property
          from time to time received, receivable or otherwise distributed in
          respect of or in exchange for any or all of the then existing
          Investment Collateral; and

          (d) all of the following (the "Security Collateral"):

               (i) all shares of Stock from time to time acquired by such
          Grantor in any manner, and the certificates representing such shares
          and all dividends, cash, instruments and other property from time to
          time received, receivable or otherwise distributed in respect of or
          in exchange for any or all such shares; and

               (ii) all indebtedness from time to time owed to such Grantor by
          any MSAF Group Member and the instruments evidencing such
          indebtedness, and all interest, cash, instruments and other property
          from time to time received, receivable or otherwise distributed in
          respect of or in exchange for any or all of such indebtedness;

          (e) all of such Grantor's right, title and interest in all beneficial
     interests in any MSAF Group members from time to time acquired by such
     Grantor in any manner, all certificates, if any, from time to time
     representing all such beneficial interests and all distributions, cash,
     instruments and other property from time to time received, receivable or
     otherwise distributed in respect of or in exchange for any or all such
     beneficial interests (the "Beneficial Interest Collateral");

          (f) all of such Grantor's right, title and interest in and to all
     Leases to which such Grantor is or may from time to time be party and any
     leasing arrangements among MSAF Group Members with respect to such Leases
     (the "Assigned Leases"), including without limitation, (A) all rights of
     such Grantor to receive moneys due and to become due under or pursuant to
     such Assigned Leases, (B) all rights of such Grantor to receive proceeds
     of any Insurance, indemnity, warranty or guaranty with respect to such
     Assigned Leases, (C) claims of such Grantor for damages arising out of or
     for breach or default under such Assigned Leases and (D) the right of such
     Grantor to terminate such Assigned Leases, to perform thereunder and to
     compel performance and otherwise exercise all remedies thereunder, whether
     arising under such leases or by statute or at law or in equity; and

          (g) all proceeds of any and all of the foregoing collateral
     (including, without limitation, proceeds that constitute property of the
     types described in subsections (a), (b), and (c), above).

<PAGE>

                                       4

     The undersigned hereby makes each representation and warranty set forth in
Section 2.07 of the Security Trust Agreement (as supplemented by the attached
Annexes) and hereby agrees to be bound as a Grantor by all of the terms and
provisions of the Security Trust Agreement. Each reference in the Security
Trust Agreement to the Security Collateral, the Assigned Leases and the
Beneficial Interest Collateral shall be construed to include a reference to the
corresponding Collateral hereunder.

     The undersigned hereby agrees, together with the Issuer, jointly and
severally to indemnify the Security Trustee, its officers, directors, employees
and agents in the manner set forth in Section 9.01 of the Security Trust
Agreement.

     Attached hereto are duly completed copies of Annex I and Annex II.

     This Security Trust Agreement Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.

                                               Very truly yours,

                                               MSA VII

                                               By: /S/ Brian J. Gill
                                                  -----------------------------
                                                  Name: Brian J. Gill
                                                  Title: Authorized Signatory

Acknowledged and agreed to
as of the date first above written:

BANKERS TRUST COMPANY,
  not in its individual capacity, but
  solely as the initial Security Trustee

By: /S/ Jenna Kaufman
   ----------------------------------
   Name:  Jenna Kaufman
   Title: Vice President

<PAGE>

                                                                        ANNEX I
                                                  SECURITY AGREEMENT SUPPLEMENT

                                  TRADE NAMES

    None

<PAGE>

                                                                       ANNEX II
                                                  SECURITY AGREEMENT SUPPLEMENT

                            CHIEF PLACE OF BUSINESS
                                      AND
                      CHIEF EXECUTIVE OR REGISTERED OFFICE

                                                       Chief Executive or
Name of Grantor          Place of Business             Registered Office
---------------          -----------------             ------------------
MSA VII             c/o Wilmington Trust Company   c/o Wilmington Trust Company
                    100 North Market Street        100 North Market Street
                    Rodney Square North            Rodney Square North
                    Wilmington                     Wilmington
                    Delaware 19890                 Delaware 19890
                    USA                            USAEXECUTION COPY

================================================================================

                 SECOND AMENDED AND RESTATED SERVICING AGREEMENT

                                      among

                    INTERNATIONAL LEASE FINANCE CORPORATION,

                    MORGAN STANLEY AIRCRAFT FINANCE ("MSAF"),

      MSA I, AIRCRAFT SPC-5, INC., MSA II, MSA III, MSA IV, MSA V, MSA VI,
                                     MSA VII

                                       AND

                        CABOT AIRCRAFT SERVICES LIMITED,
                                     AS THE
                              ADMINISTRATIVE AGENT

                           Dated as of March 15, 2000

================================================================================

<PAGE>

                                TABLE OF CONTENTS
                           --------------------------

                                                                            PAGE
                                                                            ----

                                    ARTICLE 1
                                   DEFINITIONS

SECTION 1.01.  Definitions.....................................................1

                                    ARTICLE 2
                              APPOINTMENT, SERVICES

SECTION 2.01.  Appointment.....................................................9
SECTION 2.02.  Services.......................................................10
SECTION 2.03.  Compliance with Applicable Laws................................10
SECTION 2.04.  Limitations....................................................10
SECTION 2.05.  Separateness of Rights and Obligations.........................10

                                    ARTICLE 3
         STANDARD OF CARE; CONFLICTS OF INTEREST; STANDARD OF LIABILITY

SECTION 3.01.  Standard of Care...............................................11
SECTION 3.02.  Conflicts of Interest..........................................11
SECTION 3.03.  Standard of Liability..........................................12
SECTION 3.04.  Waiver of Implied Standard.....................................13

                                    ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01.  Aircraft Assets................................................13
SECTION 4.02.  Aircraft Assets Related Documents..............................13
SECTION 4.03.  Accounts and Cashflow..........................................14

                                    ARTICLE 5
                              SERVICER UNDERTAKINGS

SECTION 5.01.  Staff and Resources............................................14
SECTION 5.02.  Access.........................................................14
SECTION 5.03.  Compliance with Law............................................14
SECTION 5.04.  Commingling....................................................15
SECTION 5.05.  Notes Offering.................................................15

<PAGE>

                                                                            PAGE
                                                                            ----

                                    ARTICLE 6
                        UNDERTAKINGS OF MSAF AND THE AOES

SECTION 6.01.  Cooperation....................................................16
SECTION 6.02.  No Representation with Respect to Third Parties................16
SECTION 6.03.  Related Document Amendments....................................16
SECTION 6.04.  Other Servicing Arrangements...................................16
SECTION 6.05.  Communications.................................................16
SECTION 6.06.  Ratification...................................................16
SECTION 6.07.  Execution, Amendment, Modification or Termination of
                 Aircraft Assets Related Documents............................16
SECTION 6.08.  MSAF Group Accounts and Cash Arrangements......................17
SECTION 6.09.  Notification of Bankruptcy.....................................17
SECTION 6.10.  Further Assurances.............................................18

                                    ARTICLE 7
                     SERVICED GROUP RESPONSIBILITY; BUDGETS

SECTION 7.01.  Serviced Group Responsibility..................................18
SECTION 7.02.  Instructions by the Serviced Group.............................18
SECTION 7.03.  Request for Authority..........................................19
SECTION 7.04.  Overall Business Objectives with Respect to Aircraft
                 Assets.......................................................19
SECTION 7.05.  Operating Budget; Aircraft Asset Expenses Budget...............19
SECTION 7.06.  Transaction Approval Requirements..............................22

                                    ARTICLE 8
                                  EFFECTIVENESS

SECTION 8.01.  Effectiveness..................................................24

                                    ARTICLE 9
                            SERVICING FEES; EXPENSES

SECTION 9.01.  Servicing Fees with respect to Aircraft Assets sold and
                 purchased pursuant to the 1997 Purchase Agreement............24
SECTION 9.02.  First Tranche Base Fees........................................24
SECTION 9.03.  First Tranche Rent Fees........................................25
SECTION 9.04.  First Tranche Incentive Fee....................................26
SECTION 9.05.  First Tranche Sales Fees.......................................26

                                       ii

<PAGE>

                                                                            PAGE
                                                                            ----

SECTION 9.06.  Servicing Fees with Respect to Aircraft Assets sold and
                 purchased pursuant to the 1999 Purchase Agreement and with
                 respect to the MSA II Aircraft...............................27
SECTION 9.07.  Second Tranche Base Fees.......................................27
SECTION 9.08.  Second Tranche Rent Fees.......................................28
SECTION 9.09.  Second Tranche Sales Fees......................................28
SECTION 9.10.  Expenses.......................................................29
SECTION 9.11.  Default Interest...............................................31

                                   ARTICLE 10
        TERMS; RIGHTS TO TERMINATE; CONSEQUENCES OF TERMINATION; SURVIVAL

SECTION 10.01.  Term..........................................................31
SECTION 10.02.  Right to Terminate............................................32
SECTION 10.03.  Consequences of Termination...................................36
SECTION 10.04.  Survival......................................................38

                                   ARTICLE 11
                                 INDEMNIFICATION

SECTION 11.01.  Indemnity.....................................................38
SECTION 11.02.  Procedures for Defense of Claims..............................39
SECTION 11.03.  Reimbursement of Costs........................................40

                                   ARTICLE 12
                            ASSIGNMENT AND DELEGATION

SECTION 12.01.  Assignment and Delegation.....................................41

                                   ARTICLE 13
                                  MISCELLANEOUS

SECTION 13.01.  Best Efforts..................................................41
SECTION 13.02.  Notices.......................................................41
SECTION 13.03.  Governing Law.................................................42
SECTION 13.04.  Jurisdiction..................................................43
SECTION 13.05.  WAIVER OF JURY TRIAL..........................................43
SECTION 13.06.  Counterparts; Third Party Beneficiaries.......................43
SECTION 13.07.  Entire Agreement..............................................43
SECTION 13.08.  Power of Attorney.............................................43
SECTION 13.09.  Restrictions on Disclosure....................................44
SECTION 13.10.  Rights of Setoff..............................................45

                                      iii
<PAGE>

                                                                           PAGE
                                                                           ----
                                    SCHEDULES

SCHEDULE 2.02(a)........................................................Services
SCHEDULE 4.01...........................................................Aircraft
SCHEDULE 4.02..........................................................Documents
SCHEDULE 4.03......................................................Bank Accounts
SCHEDULE 1.03(a) to Schedule 2.02(a)...................................Insurance
SCHEDULE 8.01 to Schedule 2.02(a)..................................Weekly Report
EXHIBIT A  ................................................Core Lease Provisions

                                       iv
<PAGE>

           SECOND AMENDED AND RESTATED SERVICING AGREEMENT dated as of March 15,
2000, among INTERNATIONAL LEASE FINANCE CORPORATION, a corporation incorporated
under the laws of California (the "Servicer"), MSAF, a statutory trust
established under the laws of the State of Delaware, Cabot Aircraft Services
Limited, the Administrative Agent and MSA I, MSA II, MSA III, MSA IV, MSA V, MSA
VI, MSA VII each a statutory trust established under the laws of the State of
Delaware, and Aircraft SPC-5, Inc., a corporation organized under the laws of
the State of California (MSA I, MSA II, MSA III, MSA IV, MSA V and SPC-5, Inc.,
together being the "Aircraft Owning Entities" or "AOEs").

           For the consideration set forth herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties each
agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

           SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings.

           "AOE" and "Aircraft Owning Entities" each have the meaning set forth
in the preamble to this Agreement.

           "Administrative Agency Agreement" means the Amended and Restated
Administrative Agency Agreement dated as of March 15, 2000, among the
Administrative Agent, MSAF, the Subsidiaries and certain other Persons, as such
agreement may be amended from time to time.

           "Administrative Agent" means Cabot Aircraft Services Limited.

           "Affiliate" means a Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under common control
with, the Person specified; provided, however, that MSAF and the AOEs, on the
one part, and International Lease Finance Corporation and its subsidiaries, on
the other part, shall not be considered to be Affiliates of each other.

           "After-Tax Basis" means on a basis such that any payment received,
deemed to have been received or receivable by any Person shall, if necessary, be
supplemented by a further payment to that Person so that the sum of the two
payments shall, after deduction of all U.S. federal, state, local or foreign
Taxes, penalties, fines, interest, additions to Tax and other charges resulting
from the receipt (actual or constructive) or accrual of such payments imposed by
or under

<PAGE>

any U.S. federal, state, local or other foreign law or Governmental Authority
(after taking into account any current deduction to which such Person shall be
entitled with respect to the amount that gave rise to the underlying payment),
be equal to the payment received, deemed to have been received or receivable.

           "Aircraft" means the Aircraft as defined in the 1997 Purchase
Agreement and the 1999 Purchase Agreement and the MSA II Aircraft.

           "Aircraft Assets" means all Aircraft and related lease interests
owned by any Person within the Serviced Group; provided, however, that Aircraft
Assets shall not include any Aircraft Asset (x) that shall have ceased to be an
Aircraft Asset pursuant to this Agreement, or (y) in respect of which the
Servicer or MSAF or an AOE shall have terminated the Servicer's obligation to
provide Services in accordance with Article 10 of this Agreement.

           "Aircraft Asset Expenses" has the meaning assigned to such term in
Section 9.10(b)(i) of this Agreement.

           "Aircraft Assets Related Documents" means, with respect to any
Aircraft Asset, the Lease and all other agreements (including any side letters,
assignment of warranties or option agreements) the terms of which relate to or
affect such Aircraft Assets.

           "Applicable Law" with respect to any Person means any law, statute,
ordinance, rule or regulation or code of conduct or practice of any U.S.
federal, state or local Governmental Authority, the foreign or international
Governmental Authority that applies to such Person or any of its properties or
assets.

           "Asset Expenses Budget" has the meaning assigned to such term in
Section 7.05(a)(i) of this Agreement.

           "Approved Budget" has the meaning assigned to such term in Section
7.05(c) of this Agreement.

           "Bank Accounts" has the meaning assigned to such term in Section
6.01(b) of Schedule 2.02(a) to this Agreement.

           "Business Day" means a day on which U.S. dollar deposits may be
traded on the London inter-bank market and commercial banks and foreign exchange
markets are open in New York, New York and London, England.

           "Calculation Date" means the calculation date as defined in the
Administrative Agency Agreement.

                                       2

<PAGE>

           "Change in Control" has the meaning assigned to such term in Section
10.02(b) of this Agreement.

           "Concentration Thresholds" has the meaning assigned to such term in
Section 2.02(a) of Schedule 2.02(a).

           "Conflicts Standard" has the meaning assigned to such term in Section
3.02(b) of this Agreement.

           "control" (including, with its correlative meanings, "controlled by"
and "under common control with") means possession, directly or indirectly, of
the power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).

           "Controlling Trustees" means the controlling trustees of MSAF or any
AOE that is a Delaware statutory business trust as specified in the trust
agreement constituting MSAF or such AOE.

           "Custody and Loan Agreement" means the Amended and Restated Custody
and Loan Agreement dated as of August 6, 1999 among MSAF, the Servicer and other
Persons party thereto.

           "Delivery Date" means, with respect to each Aircraft, the date on
which Buyer (as defined in the 1997 Purchase Agreement or the 1999 Purchase
Agreement) obtains title to such Aircraft (or, in the case of the B767-300
Aircraft MSN 24798, the SPC-5 Shares) and the related Purchased Assets (in each
case as defined in the applicable Purchase Agreement) in accordance with the
applicable Purchase Agreement.

           "Effectiveness Date" has the meaning assigned to such term in Section
10.02(c)(ii) of this Agreement.

           "First Tranche Aircraft Monthly Base Fee" has the meaning assigned to
such term in Section 9.02(a) of this Agreement.

           "First Tranche Aircraft Monthly Base Fee Fraction" has the meaning
assigned to such term in Section 9.02(a) of this Agreement.

           "First Tranche Base Fees" has the meaning assigned to such term in
Section 9.01(a) of this Agreement.

                                       3

<PAGE>

           "First Tranche Base Sales Fee" has the meaning assigned to such term
in Section 9.01(d) of this Agreement.

           "First Tranche Rent Collected Fee" has the meaning assigned to such
term in Section 9.01(b) of this Agreement.

           "First Tranche Rent Fees" has the meaning assigned to such term in
Section 9.01(b) of this Agreement.

           "First Tranche Rent Payable Fee" has the meaning assigned in such
term in Section 9.01(b) of this Agreement.

           "First Tranche Sales Fees" has the meaning assigned to such term in
Section 9.01(d) of this Agreement.

           "First Tranche Sales Incentive Fee" has the meaning assigned to such
term in Section 9.01(d) of this Agreement.

           "First Tranche Target Sales Price" has the meaning assigned to such
term in Section 9.05(a) of this Agreement.

           "First Tranche Incentive Fee" has the meaning assigned to such term
in Section 9.01(c) of this Agreement.

           "Governmental Authority" means any court, administrative agency or
commission or other governmental agency or instrumentality (or any officer or
representative thereof) domestic, foreign or international, of competent
jurisdiction including the European Union.

           "Group" has the meaning assigned to such term in Section 10.02 of
this Agreement.

           "ILFC" means International Lease Finance Corporation, a California
corporation, and its successors.

           "Indenture" has the meaning assigned to such term in Section 7.06(a)
of this Agreement.

           "Initial Approved Budgets" has the meaning assigned to such term in
Section 7.05(a)(ii) of this Agreement.

           "Initial Periods" has the meaning assigned to such term in Section
7.05(a)(ii) of this Agreement.

                                       4

<PAGE>

           "Lease" means, with respect to each Aircraft Asset, the aircraft or
engine lease agreement relating to such Aircraft Asset at any time.

           "Lessee" means each lessee under any Lease, including future lessees
with respect to future leases entered into in accordance with the terms of this
Agreement.

           "Loss" means any and all damage, loss, liability and expense
(including reasonable legal fees, expenses and related charges and costs of
investigation); provided, however, that the term "Loss" shall not include any
indemnified party's management time or overhead expenses except for non-ordinary
course management time or overhead expenses relating to such damage, loss,
liability or expense.

           "MSAF" means Morgan Stanley Aircraft Finance, a Delaware statutory
business trust.

           "MSA I" means MSA I, a Delaware statutory business trust.

           "MSA II" means MSA II, a Delaware statutory business trust.

           "MSA III" means MSA III, a Delaware statutory business trust.

           "MSA IV" means MSA IV, a Delaware statutory business trust.

           "MSA V" means MSA V, a Delaware statutory business trust.

           "MSA VI" means MSA VI, a Delaware statutory business trust.

           "MSA VII" means MSA VII, a Delaware statutory business trust.

           "MSA II Aircraft" means two Fokker 50 aircraft, MSN 20232 and
20233.

           "MSAF Group" has the meaning assigned to such term in Section 2.05 of
this Agreement.

           "Net Cash Proceeds" has the meaning assigned to such term in Section
9.05 of this Agreement.

           "Net Gains" has the meaning assigned to such term in Section 9.05(b)
of this Agreement.

                                       5

<PAGE>

           "Non-MSAF AOE" has the meaning assigned to such term in Section 2.05
of this Agreement.

           "Notes Offering" has the meaning assigned to such term in Section
5.05 of this Agreement.

           "Officer's Certificate" means, as to any Person, a certificate of the
President, any Vice President or Assistant Vice President or the Treasurer.

           "One Year Initial Period" has the meaning assigned to such term in
Section 7.05(a)(ii) of this Agreement.

           "One Year Period" has the meaning assigned to such term in Section
7.05(a)(i) of this Agreement.

           "Operating Budget" has the meaning assigned to such term in Section
7.05(a)(i) of this Agreement.

           "Other Assets" has the meaning assigned to such term in Section
3.02(a)(i) of this Agreement.

           "Overhead Expenses" has the meaning assigned to such term in Section
9.10(a) of this Agreement.

           "Person" means an individual, corporation, partnership, limited
liability company, association, statutory business trust, common law trust or
other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.

           "Precedent Lease" has the meaning assigned to such term in Article 3
of Schedule 2.02(a) to this Agreement.

           "Pro Forma Lease" has the meaning assigned to such term in Article 3
of Schedule 2.02(a) to this Agreement.

           "Purchase Agreement" means the 1997 Purchase Agreement or the 1999
Purchase Agreement or both, as applicable.

           "Rating Decline" has the meaning assigned to such term in Section
10.02(b) of this Agreement.

           "Reimbursable Expenses" has the meaning assigned to such term in
Section 9.10(b) of this Agreement.

                                       6

<PAGE>

           "Related Person" has the meaning assigned to such term in Section
10.02(b) of this Agreement.

           "Replacement Servicer" means a replacement servicer to perform some
or all of the Services under the Servicing Agreement formerly performed by the
Servicer, which is appointed in accordance with Section 10.03(c) of this
Agreement.

           "Second Tranche Aircraft Monthly Base Fee" has the meaning assigned
to such term in Section 9.07.

           "Second Tranche Aircraft Monthly Base Fee Fraction" has the meaning
assigned to such term in Section 9.07.

           "Second Tranche Base Fees" has the meaning assigned to such term in
Section 9.06(a) of this Agreement.

           "Second Tranche Base Sales Fee" has the meaning assigned to such term
in Section 9.06(d) of this Agreement.

           "Second Tranche Incentive Fee" has the meaning assigned to such term
in Section 9.06(c) of this Agreement.

           "Second Tranche Rent Collected Fee" has the meaning assigned to such
term in Section 9.06(b) of this Agreement.

           "Second Tranche Rent Fees" has the meaning assigned to such term in
Section 9.06(b) of this Agreement.

           "Second Tranche Rent Payable Fee" has the meaning assigned to such
term in Section 9.06(b) of this Agreement.

           "Second Tranche Sales Fee" has the meaning assigned to such term in
Section 9.06(d) of this Agreement.

           "Second Tranche Sales Incentive Fee" has the meaning assigned to such
term in Section 9.06(d) of this Agreement.

           "Security Deposits" means, at the time of calculation, with respect
to each Aircraft, all cash amounts, prepayments of rent, letters of credit and
guarantees paid by or issued on behalf of the Lessee for the benefit of the
lessor under the relevant Lease as security for obligations of such Lessee under
such Lease and other Aircraft Assets Related Documents.

                                       7

<PAGE>

           "Serviced Group" has the meaning assigned to such term in Section
2.01(a) of this Agreement.

           "Servicer" means International Lease Finance Corporation.

           "Services" has the meaning assigned to such term in Section 2.02(a)
of this Agreement.

           "SPC-5" shall mean Aircraft SPC-5, Inc., a California corporation.

           "Standard of Care" has the meaning assigned to such term in Section
3.01 of this Agreement.

           "Standard of Liability" has the meaning assigned to such term in
Section 3.03 of this Agreement.

           "Target Net Results" has the meaning assigned to such term in Section
9.04 of this Agreement.

           "Tax" or "Taxes" means (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, registration, recording, documentary,
conveyancing, gains, withholding on amounts paid to or by any Person, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom duty or other tax, governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such tax (domestic
or foreign) (a "Taxing Authority"), or (ii) liability for the payment of any
amounts of the type described in (i) as a result of being party to any agreement
or any express or implied obligation to indemnify any other Person.

           "Termination Notice" has the meaning assigned to such term in Section
10.02(c)(i) of this Agreement.

           "Third Party Claim" means a claim by a third party arising out of a
matter for which an indemnified party is entitled to be indemnified pursuant to
the indemnity provisions of this Agreement.

           "Three Year Initial Period" has the meaning assigned to such term in
Section 7.05(a)(ii) of this Agreement.

                                       8

<PAGE>

           "Three Year Period" has the meaning assigned to such term in Section
7.05(a)(i) of this Agreement.

           "Transaction Approval Requirements" has the meaning assigned to such
term in Section 7.06(c) of this Agreement.

           "Year" means each twelve month period commencing on December 1 and
ending on November 30.

           "1997 Purchase Agreement" means the Asset Purchase Agreement between
International Lease Finance Corporation and MSAF dated as of November 10, 1997.

           "1999 Purchase Agreement" means the Asset Purchase Agreement among
International Lease Finance Corporation, MSA IV and MSA V dated as of August 6,
1999.

                                    ARTICLE 2
                              APPOINTMENT, SERVICES

           SECTION 2.01. Appointment. (a) Each of MSAF and the AOEs hereby
appoints the Servicer as the exclusive provider of the Services (as defined in
Section 2.02 below) to MSAF and the AOEs (collectively, the "Serviced Group") in
respect of the Aircraft Assets on the terms and subject to the conditions set
forth in this Agreement.

            (b) The Servicer hereby accepts such appointment and agrees to
perform the Services on the terms and subject to the conditions set forth in
this Agreement.
In connection with the provision of the Services with respect to the Aircraft
Assets, the Servicer shall when appropriate, where and to the extent
practicable, contract for or otherwise obtain goods and services from third
party providers the cost of which is an Aircraft Asset Expense in the name of,
or as disclosed agent for, MSAF and/or the relevant AOE as applicable; if the
Servicer shall not have contracted for or otherwise obtained such goods and
services in the name of or as disclosed agent for MSAF or the relevant AOE, as
the case may be, the Servicer shall take recourse against any such third party
provider providing goods and services on behalf of MSAF or the relevant AOE, as
the case may be, for any breaches by such third party provider related to the
provision of such goods and services; provided that any such expenses shall be
paid in accordance with Section 9.10 of this Agreement. Any third party provider
discount or rebate related

                                       9

<PAGE>

directly or indirectly to the Aircraft Assets shall be made available to the
relevant AOE on a pro-rated basis.

           (c) MSAF and the AOEs hereby advise the Servicer that each Person
within the Serviced Group has appointed or will appoint the Administrative Agent
to act as its representative with respect to any matter in respect of which MSAF
or any other Person within the Serviced Group is required or permitted to take
any action pursuant to the terms of this Agreement. Accordingly, in connection
with the performance of the Services, unless earlier notified in writing by MSAF
that the Administrative Agent's appointment to act on behalf of Persons within
the Serviced Group has not become effective or has been revoked or terminated,
the Servicer shall in all cases be entitled to rely on the instructions (or
other actions) of the Administrative Agent as representative of each Person
within the Serviced Group.

           SECTION 2.02. Services. (a) The services to be provided by the
Servicer in respect of the Aircraft Assets (the "Services") are as set forth in
Schedule 2.02(a).

            (b) In connection with the performance of the Services, the Servicer
shall in all cases only be obliged to act upon, and shall be entitled to rely
on, the instructions of MSAF or the relevant AOE or, as provided above in
Section 2.01(c), the Administrative Agent on behalf of the Persons within the
Serviced Group. The Servicer shall not be liable to any of MSAF, the AOEs or any
other Person for any act or omission to act taken in accordance with such
instructions, except to the extent provided in Section 3.03 (other than if MSAF,
any AOE or the Administrative Agent has instructed the Servicer to breach the
terms of this Agreement or take any action or omit to take any action required
by the terms of this Agreement or misstate any information).

           SECTION 2.03. Compliance with Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, the Servicer shall not be obligated
to take or refrain from taking any action which would violate any Applicable
Law.

           SECTION 2.04. Limitations. Without prejudice to any provision of each
Purchase Agreement, neither the Servicer nor any of its Affiliates shall assume
any liabilities of any Person within the Serviced Group.

           SECTION 2.05. Separateness of Rights and Obligations. Each of the
parties hereto acknowledges and agrees that each AOE that is not a direct or
indirect subsidiary of MSAF (a "Non-MSAF AOE") is a separate and identifiable
business independent from MSAF and its consolidated subsidiaries (the "MSAF
Group"). Accordingly, all rights and obligations of each Non-MSAF AOE hereunder
belong solely to such Non-MSAF AOE and are not shared with, or

                                       10

<PAGE>

supported or guaranteed in any manner by, MSAF or any other Person within the
MSAF Group. In addition, all rights and obligations hereunder of MSAF and each
Person within the MSAF Group belong solely to MSAF or such Person, unless
otherwise provided for herein, and are not shared with, or supported or
guaranteed in any manner by, any Non-MSAF AOE. All obligations hereunder of MSAF
and each Person within the MSAF Group shall be joint and several obligations of
every Person within the MSAF Group that is a signatory hereto, including
Non-MSAF AOEs that subsequently become direct or indirect consolidated
subsidiaries of MSAF. The Servicer hereby agrees not to commingle funds or other
assets belonging to MSAF or a Person within the MSAF Group, on the one hand, and
any Non-MSAF AOE, on the other other than misdirected funds from Lessees, which
shall be promptly redirected to the appropriate Bank Account. In addition, the
Servicer agrees not to (i) hold out any Non-MSAF AOE as a current member of the
MSAF Group, (ii) hold out any Person within the MSAF Group as belonging to a
group of Non-MSAF AOEs and (iii) in any way state or imply that the obligations
of a Non-MSAF AOE or Person within the MSAF Group are guaranteed or otherwise
supported by a Person within the MSAF Group or a Non-MSAF AOE, respectively.
Each Non-MSAF AOE and MSAF agrees not to hold out the Servicer as a member of
the MSAF Group or affiliated to such Non-MSAF AOE or to in any way state or
imply that the obligations of a Non-MSAF AOE or Person within the MSAF Group are
guaranteed by the Servicer. The Servicer agrees to follow any written
instructions provided to it by the Administrative Agent that are intended to
ensure the separateness of the rights and obligations of any Non-MSAF AOE that
may be party to this Agreement, so long as such instructions do not violate any
laws and are related to the Aircraft Assets or the Services to be performed by
the Servicer. MSAF and any Non-MSAF AOE shall notify Servicer in writing upon
such Non- MSAF AOE becoming a member of the MSAF Group.

                                    ARTICLE 3
         STANDARD OF CARE; CONFLICTS OF INTEREST; STANDARD OF LIABILITY

           SECTION 3.01. Standard of Care. The Servicer shall use reasonable
care and diligence at all times in the performance of the Services as if it were
the owner of the Aircraft Assets (the "Standard of Care").

           SECTION 3.02. Conflicts of Interest. (a) Each of MSAF and the AOEs
acknowledges and agrees that (i) in addition to managing the Aircraft Assets
under this Agreement, the Servicer may manage, and shall be entitled to manage,
from time to time, the separate assets of International Lease Finance
Corporation, its Affiliates and third parties ("Other Assets"); (ii)
notwithstanding Section

                                       11

<PAGE>

3.02(b) below, in the course of conducting such activities, the Servicer may
from time to time have conflicts of interest in performing its duties on behalf
of the various entities to whom it provides management services and with respect
to the various assets in respect of which it provides management services; and
(iii) the Controlling Trustees or other governing body of each Person within the
Serviced Group have approved the transactions contemplated by this Agreement and
desire that such transactions be consummated and, in giving such approval, the
Controlling Trustees or other governing body of each Person within the Serviced
Group have expressly recognized that such conflicts of interest may arise and
that when such conflicts of interest arise the Servicer shall perform the
Services in accordance with the Standard of Care and the Conflicts Standard.

            (b) The Servicer shall affirmatively seek to avoid conflicts of
interest with respect to the Aircraft Assets; however, if conflicts of interest
arise regarding the management of (i) a particular Aircraft Asset, on the one
hand, and another Aircraft Asset, on the other hand, or (ii) any Aircraft
Assets, on the one hand, and Other Assets, on the other hand, the Servicer shall
(A) notify MSAF in the weekly report as set forth in Section 8.01 of Schedule
2.02(a) (and, in the case of any Aircraft Asset owned by a Non-MSAF AOE, such
Non-MSAF AOE by notifying the Administrative Agent) and (B) perform the Services
in good faith and to the extent (i) such Aircraft Assets or (ii) such Aircraft
Asset and such Other Asset are substantially similar in terms of objectively
identifiable characteristics relevant for purposes of the particular Services to
be performed, the Servicer shall not discriminate among such Aircraft Assets or
between such Aircraft Assets and such Other Assets (the standard set forth in
this Section 3.02(b) shall be referred to collectively as the "Conflicts
Standard").

           SECTION 3.03. Standard of Liability. The Servicer shall not be liable
to MSAF or any of the AOEs for any Losses arising (i) as a result of an Aircraft
Asset sold, leased or purchased on less favorable terms than might have been
achieved at any time provided such transactions were entered into on the basis
of a commercial decision of the Servicer, or (ii) in respect of the Servicer's
obligation to apply the Conflicts Standard in respect of its performance of the
Services, except, in either case, in the case of wilful misconduct or fraud on
the part of the Servicer. MSAF and the AOEs shall indemnify, reimburse and hold
harmless the Servicer on an After-Tax Basis in accordance with the provisions of
Article 11 for any Loss arising as a result of the performance of any of the
Servicer's obligations as Servicer or as a result of any action which the
Servicer is requested to take or refrain from taking by MSAF or a Non-MSAF AOE,
unless (i) such Loss has arisen as a result of the wilful misconduct of the
Servicer, (ii) such Loss has directly resulted from a breach by the Servicer of
the express terms and conditions of this Agreement or (iii) such Loss is a Loss
for which the Servicer has indemnified MSAF, the AOEs and their respective
Affiliates and

                                       12

<PAGE>

arises as a result of any material misstatements or omissions in any public
filings relating to information on the Aircraft Assets, Services and the
Servicer provided by the Servicer for disclosure in such public filings (the
liability standards set forth in this Section 3.03, the "Standard of
Liability").

           SECTION 3.04. Waiver of Implied Standard. Except as expressly stated
above in this Article 3, all other warranties, conditions and representations,
express or implied, statutory or otherwise, arising under, Delaware, New York or
California law in relation to either the skill, care, diligence or otherwise in
respect of any service to be performed hereunder or to the quality or fitness
for any particular purpose of any goods are hereby excluded and the Servicer
shall not be liable in contract, tort or otherwise under Delaware, New York or
California law for any loss, damage, expense or injury of any kind whatsoever,
arising out of or in connection with the services to be supplied pursuant to
this Agreement or any goods to be provided or sold in conjunction with such
services.

                                    ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

           Each of the representations and warranties set forth below in this
Article 4 shall be made severally by each AOE with respect to the Aircraft
Assets, Aircraft Assets Related Documents and bank or other similar accounts
owned or held, or to be owned or held, by each such AOE and shall be made
jointly and severally by MSAF and each Person within the MSAF Group with respect
to the Aircraft Assets, Aircraft Assets Related Documents and bank or other
similar accounts owned or held by any Person within the MSAF Group. At the time
any Non- MSAF AOE shall become a subsidiary of MSAF, MSAF and each Person within
the MSAF Group shall be deemed to have made, as of the date hereof and jointly
and severally with such Non-MSAF AOE, the representations and warranties set
forth below with respect to the Aircraft Assets, Aircraft Assets Related
Documents and bank or other similar accounts owned or held by such Non-MSAF AOE.

           SECTION 4.01. Aircraft Assets. Schedule 4.01 contains a true and
complete list of all Aircraft that are or are intended to be Aircraft Assets as
of the date hereof.

           SECTION 4.02. Aircraft Assets Related Documents. Schedule 4.02 sets
forth a true and complete list of all material Aircraft Assets Related
Documents. The Aircraft Assets Related Documents relating to Aircraft owned as
of the date hereof by any AOE have been delivered to the Servicer and the
Aircraft Assets

                                       13

<PAGE>

Related Documents relating to a particular Aircraft yet to be purchased by and
delivered to any AOE shall be delivered to the Servicer on the applicable
Delivery Date. Any Aircraft Assets Related Document received after the relevant
Delivery Date that has not previously been delivered to the Servicer shall be
delivered to the Servicer by the relevant AOE promptly upon receipt after the
relevant Delivery Date. The Servicer shall not be required to perform any
service provided for in any Aircraft Assets Related Documents not delivered to
it.

           SECTION 4.03. Accounts and Cashflow. Schedule 4.03 sets forth (i) a
true and complete list of all bank or other similar accounts relating to the
Aircraft Assets, with respect to which any AOE has authority and (ii) a
description of all material arrangements and procedures relating to the flow of
cash related to the Aircraft Assets.

                                    ARTICLE 5
                              SERVICER UNDERTAKINGS

           SECTION 5.01. Staff and Resources. The Servicer shall employ or
otherwise engage such staff (including in-house legal staff) and maintain such
supporting resources as the Servicer shall deem necessary in accordance with its
usual business practices with respect to its own aircraft, both in number and in
quality, to enable the Servicer to perform the Services in accordance with the
terms of this Agreement.

           SECTION 5.02. Access. The Servicer at such times as MSAF or any Non-
MSAF AOE may reasonably request (which requests shall be no more frequent than
quarterly) shall make available to MSAF or such Non-MSAF AOE and their
respective agents (including the Administrative Agent and auditors) reports,
ledgers, documents, reports and other records (including without limitation,
transaction reports, invoice books, receipts, receipt records, journals and
journal entries) and other information on a "read only" basis (by way of hard
copy or computer disc) related to the Aircraft Assets or the business of MSAF or
any AOE (copies of which MSAF or any AOE shall be entitled to take) to enable
MSAF or any Person within the Serviced Group to monitor the performance of the
Servicer under this Agreement.

           SECTION 5.03. Compliance with Law. The Servicer shall, in connection
with the performance of the Services, comply with all laws, rules and
regulations applicable to the Servicer and with the laws, rules and regulations
applicable to the Aircraft Assets.

                                       14

<PAGE>

           SECTION 5.04. Commingling. The Servicer shall not commingle any funds
of any Person within the Serviced Group with any funds of any other Person other
than Security Deposits held pursuant to the Custody and Loan Agreement and
misdirected funds from Lessees and others which shall be promptly redirected to
a Bank Account.

           SECTION 5.05. Notes Offering. The Servicer agrees to use its best
efforts to cooperate with MSAF and its Affiliates in connection with the public
or private offerings and sales of any securities of MSAF or any of its
Affiliates that relate to the Aircraft Assets (a "Notes Offering") including
participating in customary marketing activities relating to a Notes Offering in
the Servicer's capacity as Servicer of the Aircraft Assets (including road shows
and investor meetings); attending, on reasonable prior notice, and subject to
the reasonable availability of the Servicer's officers and employees, all
meetings with credit rating agencies relating to any Notes Offering; providing
MSAF and its Affiliates, underwriters, credit rating agencies and other advisors
with reasonable opportunities to conduct legal and business due diligence with
respect to the Servicer and provision of Services and with respect to the
Aircraft Assets and Leases including providing any historical financial
information, the names of prior lessees and repossession and restructuring
information (including costs and expenses related thereto that are reasonably
available) with respect to the Aircraft (which information shall not include any
lease document to which no Person within the Serviced Group was a party);
procuring, at MSAF's expense, opinions of counsel with respect to matters
requested by the credit rating agencies and relating to the Aircraft Assets,
Leases and related documents and related collateral and payments thereunder;
assisting with respect to the preparation by the Administrative Agent of
financial statements for the Aircraft Assets as if the Aircraft Assets had been
operated as a business, if and to the extent such financial statements are
required by any regulatory authority; and providing, reviewing (the items which
are specified by MSAF), commenting on and providing customary indemnities
against material misstatements or omissions with respect to, written information
regarding the Aircraft Assets, the Servicer and provision of Services for
inclusion in any securities offering document related to the Aircraft Assets.

           MSAF and its Affiliates agree to provide the Servicer with prior
notice of any pending Notes Offering. The notice shall contain the expected
closing date of such Notes Offering and any assistance required from the
Servicer in connection with such Notes Offering, and shall be given as soon as
MSAF or its Affiliates have knowledge of such information.

                                       15

<PAGE>

                                    ARTICLE 6
                        UNDERTAKINGS OF MSAF AND THE AOES

           SECTION 6.01. Cooperation. Each of MSAF and the AOEs shall at all
times use their best efforts to cooperate with the Servicer to enable the
Servicer to provide the Services, including providing the Servicer with all
powers of attorney as may be reasonably necessary or appropriate to perform the
Services.

           SECTION 6.02. No Representation with Respect to Third Parties. Each
of MSAF and the AOEs agrees that as between the Servicer, on the one hand, and
any Person within the Serviced Group, on the other hand, no representation is
made as to the financial condition and affairs of any Lessee of, or purchaser
of, any Aircraft Asset or any manufacturer, representative, maintenance
facility, contractor, vendor or supplier utilized by the Servicer in connection
with its performance of the Services and, subject to the Standard of Liability,
the Servicer shall have no liability with respect to such third parties.

           SECTION 6.03. Related Document Amendments. Each of MSAF and the AOEs
shall not take any action that would increase in any respect the scope, nature
or level of the Services to be provided under this Agreement without the
Servicer's prior written consent.

           SECTION 6.04. Other Servicing Arrangements. Without the prior written
consent of the Servicer, MSAF and the AOEs shall not (a) enter into, or cause or
permit any Person (other than the Servicer) to enter into on their behalf, any
transaction for the lease or sale of any Aircraft Asset in respect of which the
Servicer is at such time performing Services, or (b) employ any Person other
than the Servicer to perform any of the Services with respect to the Aircraft
Assets.

           SECTION 6.05. Communications. Each of MSAF and the AOEs shall forward
promptly to the Servicer a copy of any written communication received from any
Person in relation to any Aircraft Asset owned directly or indirectly by MSAF or
such AOE.

           SECTION 6.06. Ratification. Each of MSAF and the AOEs hereby ratifies
and confirms and agrees to ratify and confirm whatever the Servicer does in
accordance with this Agreement in the exercise of any of the powers or
authorities conferred upon the Servicer under the terms of this Agreement.

           SECTION 6.07. Execution, Amendment, Modification or Termination of
Aircraft Assets Related Documents. (a) No later than five Business Days after
the date that (i) any agreement, instrument or other document becomes an
Aircraft Assets Related Document or (ii) any Aircraft Assets Related Document
shall have

                                       16

<PAGE>

been amended, modified or terminated, MSAF or the applicable AOE shall deliver
written notice thereof to the Servicer together with (A) in the case of any
newly executed Aircraft Assets Related Document, a true and complete copy of
such Aircraft Assets Related Document, a list of all Aircraft Assets to which it
relates and a description, in reasonable detail, of the relevance of such
Aircraft Assets Related Document to such assets or (B) in the case of any
amendment, modification or termination, a true and complete copy of any related
agreement, instrument or other document; provided, however, that such notice or
such document shall not be required to be delivered if the Servicer was
substantially involved in the preparation and execution of such new, amended,
modified or terminated agreement, instrument or other document.

            (b) MSAF has delivered or shall promptly deliver to the Servicer a
complete copy of each executed Indenture (which shall include a definition of
the relevant calculation date), the Administrative Agency Agreement or similar
agreements, and any amendments, changes, modifications or waivers relating to
any of the aforementioned agreements, in each case excluding any confidential
pricing information contained therein.

            (c) MSAF and each Non-MSAF AOE shall promptly notify the Servicer of
any change in the name, identity and contact details of the Administrative
Agent, and the controlling trustees of MSAF and each Non-MSAF AOE and of any
changes thereto and any other relevant information relating to such parties
reasonably requested by the Servicer.

           SECTION 6.08. MSAF Group Accounts and Cash Arrangements. MSAF or the
applicable Non-MSAF AOE shall promptly notify the Servicer of any new bank or
similar account established by or on behalf of MSAF or any Person within the
MSAF Group or any Non-MSAF AOE or otherwise relating to the Aircraft Assets and
of any such account relating to any Aircraft Assets that become Aircraft Assets
after the date of this Agreement and the closing of any such account. When MSAF
or a Non-MSAF AOE notifies the Servicer that it has established a new bank or
similar account, MSAF or such Non-MSAF AOE shall provide the Servicer with an
updated list of all material arrangements and procedures relating to the flow of
cash related to the Aircraft Assets owned directly or indirectly by MSAF or such
Non-MSAF AOE, respectively.

           SECTION 6.09. Notification of Bankruptcy. If any of MSAF or the AOEs
shall consider taking any action to:

            (a) file any petition or application, commence any proceeding, pass
any resolution or convene a meeting with respect to itself or any of its
Affiliates under any United States federal, state or foreign or international
law relating to the

                                       17

<PAGE>

appointment of a trustee in bankruptcy, liquidator or receiver with respect to
any of MSAF or the AOEs or over the whole or any part of any properties or
assets of any of MSAF or the AOEs or any bankruptcy, reorganization, compromise
arrangements or insolvency of any of MSAF or the AOEs; or

            (b)   make an assignment for the benefit of its creditors generally;

           then MSAF or the relevant AOEs shall notify the Servicer, to the
extent practicable, of such consideration a reasonable period of time prior to
taking any such action, but in any event, prior to taking any such action (it
being understood that the foregoing notice requirement shall not be construed to
prohibit or restrain the taking of any action described in (a) or (b) above). If
any of MSAF or the AOEs becomes aware of the intent or action of any Person
(whether a creditor or member of any of MSAF or the AOEs) to appoint a trustee
in bankruptcy, liquidator or receiver, MSAF or the relevant AOE shall promptly
notify the Servicer.

           SECTION 6.10. Further Assurances. Each of MSAF and the AOEs agrees
that at any time and from time to time upon the written request of the Servicer,
it will execute and deliver such further documents and do such further acts and
things as the Servicer may reasonably request in order to effect the purposes of
this Agreement.

                                    ARTICLE 7
                     SERVICED GROUP RESPONSIBILITY; BUDGETS

           SECTION 7.01. Serviced Group Responsibility. Notwithstanding the
appointment of the Servicer to perform the Services and the related delegation
of authority and responsibility to the Servicer pursuant to this Agreement, each
of MSAF and the AOEs shall remain responsible for all matters related to their
respective business, operations, assets and liabilities.

           SECTION 7.02. Instructions by the Serviced Group. MSAF or any AOE may
at any time deliver written notice to the Servicer directing the Servicer to
limit or terminate any action being taken by it under this Agreement or to take
any action authorized or contemplated by this Agreement (including sale or
disposal of any Aircraft Asset) or the applicable Lease which is described in
reasonable detail in such notice and, upon receipt of such written notice, the
Servicer shall use commercially reasonable efforts to comply with the terms
thereof.

                                       18

<PAGE>

           SECTION 7.03. Request for Authority. (a) Subject to Section 7.03(b),
if the Servicer wishes to take or approve any action which it is not expressly
authorized under this Agreement to take or approve, it shall request authority
from the relevant AOE or MSAF, if such AOE is a direct or indirect wholly owned
subsidiary of MSAF, in order to take or approve the action. The Servicer's
request for authority shall be confirmed in writing (including via e-mail), and
shall include a reasonably detailed explanation of the reason for the request.
If on or prior to the last day for a response by the relevant AOE or MSAF as
specified by the Servicer in its request (being not less than five Business Days
after the request), MSAF or the relevant AOE does not expressly refuse such
request, the Servicer may be deemed to be authorized in writing to take or to
approve such action on behalf of the relevant AOE.

            (b) If the Servicer reasonably determines that an action to protect
the interests of an AOE is required before the expiration of the relevant time
period specified in Section 7.03(a), then the Servicer shall send notification
(including via e-mail) to the relevant AOE or MSAF, if such AOE is a direct or
indirect wholly owned subsidiary of MSAF, of such determination and, unless
otherwise directed by the relevant AOE or MSAF, the action proposed may be
deemed to be authorized in writing on behalf of the relevant AOE.

            (c) In relation to each payment required to be made in relation to
an Aircraft Asset and not certified under any other provision of this Agreement,
the Servicer will submit written documentation (e.g. written invoice) to the
Administrative Agent, giving reasonable details for such payment.

           SECTION 7.04. Overall Business Objectives with Respect to Aircraft
Assets. The Servicer will perform the Services with a view towards maximizing
the present value of the cash flows over the life of the Aircraft Assets from
leasing and re-leasing or selling or otherwise disposing of Aircraft Assets
taking into account the then-existing and anticipated market conditions
affecting the operating lease of used aircraft and the commercial aviation
industry generally and any applicable restrictions within any Indenture.

           SECTION 7.05. Operating Budget; Aircraft Asset Expenses Budget. (a)
(i) MSAF, on behalf of itself and the AOEs within the MSAF Group, shall adopt
with respect to each one Year period (a "One Year Period") and each three Year
period (a "Three Year Period") during the term of this Agreement:

               (A) a separate cash operating budget with respect to the Aircraft
           Assets owned by such AOEs (each, an "Operating Budget"); and

                                       19

<PAGE>

               (B) a separate cash budget with respect to Aircraft Asset
           Expenses related to the Aircraft Assets owned by such AOEs (each, an
           "Asset Expenses Budget").

           The Operating Budgets with respect to Aircraft Assets owned as of the
date hereof by MSA I and SPC-5 for the One Year Period ending November 30, 1999
and for the Three Year Period ending November 30, 2001 are attached hereto as
Exhibit 7.05A.

               (ii) MSA II, MSA IV and MSA V shall adopt, with respect to the
           Initial Periods and, until such time as they are direct or indirect
           wholly owned subsidiaries of MSAF, with respect to each One Year
           Period and each Three Year Period during the term of this Agreement:

               (A) a separate Operating Budget; and

               (B) a separate Asset Expenses Budget.

           The initial Operating Budgets for Aircraft Assets owned by MSA II,
MSA IV and MSA V for the period from the date hereof through November 30, 1999
(the "One Year Initial Period") and through November 30, 2001 (the "Three Year
Initial Period" and together with the One Year Initial Period, the "Initial
Periods"), and the initial Asset Expenses Budgets for the One Year Initial
Period and the Three Year Initial Period, shall be substantially in a form to be
agreed by the parties as soon as practicable following execution of this
Agreement but no later than November 10, 1999 (together, the "Initial Approved
Budgets").

           The Operating Budgets and Asset Expenses Budgets for each One Year
Period and Three Year Period during the term of this Agreement shall be adopted
in accordance with Section 7.05(b).

           The Servicer shall use best efforts to achieve the Initial Approved
Budgets and the Approved Budgets for any One Year Period and Three Year Period.

           (b) In respect of each One Year Period and Three Year Period, MSAF
(and MSA II, MSA IV and MSA V until such time as they become direct or indirect
wholly owned subsidiaries of MSAF) shall prepare, and deliver to the Servicer no
later than the September 30 immediately preceding the commencement of each Year,
proposed One Year and Three Year Operating Budgets and One Year and Three Year
Asset Expenses Budgets for each such period together with reasonably detailed
supporting information and the assumptions underlying such proposed Operating
Budgets or Asset Expenses Budgets. The proposed Operating Budget and Asset
Expenses Budget with

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respect to Aircraft sold and purchased pursuant to the 1997 Purchase Agreement
for the following Year shall include the Target Net Results amount.

           (c) In connection with the preparation of such proposed One Year and
Three Year Operating Budgets and One Year and Three Year Asset Expenses Budgets
for each period, the Servicer shall provide MSAF and the Administrative Agent
(and MSA II, MSA IV and MSA V separately with respect to Aircraft Assets owned
by them if, at such time, MSA II, MSA IV and MSA V are not direct or indirect
wholly owned subsidiaries of MSAF), not later than the August 30 immediately
preceding the commencement of each Year, information in a form to be agreed from
time to time relating to (i) lease rates, (ii) downtime, (iii) technical
expenditures (including any costs to be capitalized) relating to the Aircraft
Assets, (iv) costs relating to insurance, legal, consulting and other similar
expenses and (v) such other Aircraft Assets expense-related information as may
be requested to prepare such budgets, in each case including the assumptions
relating thereto.

           The Servicer shall have the right during the 30-day period following
its receipt of MSAF's (or MSA II's, MSA IV's and MSA V's) proposed Operating
Budgets and Asset Expenses Budgets to express any objections it may reasonably
have to such budgets. During such 30-day period, MSAF (or MSA II, MSA IV and MSA
V, as applicable) shall negotiate in good faith with the Servicer to agree on a
final one Year and three Year Operating Budget and a final one Year and three
Year Asset Expenses Budgets for each Period; provided that MSAF (or MSA II, MSA
IV and MSA V, as applicable) shall not be obligated to agree to any changes to
its proposed Operating Budgets and Asset Expenses Budgets for any One Year
Period or Three Year Period. Not later than the November 10 immediately
preceding the commencement of such Year, MSAF (or MSA II, MSA IV and MSA V, as
applicable) shall deliver to the Servicer final Operating Budgets and Asset
Expenses Budgets for each One Year Period and Three Year Period (the "Approved
Budgets") together with reasonably detailed information regarding MSAF's (or MSA
II's, MSA IV's and MSA V's) underlying assumptions.

            (d) If at any time the Servicer reasonably believes that the
incurrence of any Aircraft Asset Expense is reasonably likely to result in the
actual aggregate Aircraft Asset Expenses of the same category as such Aircraft
Asset Expense (taking into account all Aircraft Asset Expenses of such category
incurred to date) exceeding 110% of the line item amount included in the then
applicable Approved Budget for any One Year Period for such category of Aircraft
Asset Expenses, the Servicer shall not incur such Asset Expense without prior
notification to MSAF (or MSA II, MSA IV and MSA V if the Aircraft Asset Expense
relates to an Aircraft Asset owned by MSA II, MSA IV or MSA V and such entity is
not then a

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<PAGE>

direct or indirect wholly owned subsidiary of MSAF). In connection with the
foregoing, the Servicer may request that the related line item amount included
in the then applicable Approved Budget be increased to the reasonably
anticipated level in such category for the balance of the relevant One Year
Period or One Year Initial Period, as the case may be.

           SECTION 7.06. Transaction Approval Requirements. (a) Consistent with
the overall business objectives of the Persons within the Serviced Group with
respect to the Aircraft Assets, and with the delegation to the Servicer by the
Persons within the Serviced Group of a practicable and workable level of
autonomy, responsibility and authority regarding the performance of the
Services, the Servicer shall not do any of the following without the express
prior written approval of (or, in the case of paragraph (ix) below, prior
written notice to) MSAF or the relevant Non-MSAF AOE if the action relates to an
Aircraft Asset owned directly or indirectly by a Non-MSAF AOE:

               (i) Except as required in accordance with the terms of any Lease
          or other agreement with the Lessee, sell (or enter into any commitment
          or agreement to sell) or otherwise dispose of any Aircraft or any
          Engine;

               (ii) Enter into any new Lease (or any renewal or extension of an
          existing Lease or other agreement with a Lessee) of Aircraft Assets
          owned by any Person within the MSAF Group if such new Lease shall not
          comply with the applicable provision of any indenture or similar
          agreement binding MSAF or any Person within the MSAF Group and related
          to a Notes Offering (each such agreement, an "Indenture").

               (iii) Terminate any Lease or Leases to any single Lessee with
          respect to any Aircraft having an aggregate depreciated net book value
          on the books of the relevant Person (or Persons) in the Serviced Group
          in excess of $100,000,000.

               (iv) Unless provided for in the then current One Year Approved
          Budget, enter into any contract for the modification or maintenance of
          Aircraft Assets (A) if the costs to be incurred thereunder by the
          relevant AOE exceed the greater of (1) the estimated aggregate cost of
          a heavy maintenance "D" check for the airframe and a full restoration
          shop visit for the engines for Aircraft Assets of the type in question
          and (2) the amount of the available maintenance reserve or other
          collateral under the applicable Lease or (B) outside the ordinary
          course of the relevant AOE's business.

                                       22

<PAGE>

               (v) Enter into on behalf of MSAF or any of the AOEs, any capital
          commitment or confirm any order or commitment to acquire, or acquire
          on behalf of any AOE, aircraft or; subject to Section (e) of Article 4
          of Schedule 2.02(a), engines with any aircraft or engine manufacturers
          except Servicer may enter into any capital commitment or order or
          commitment to acquire a replacement engine or spare part for an
          Aircraft so long as the same is provided for in the then applicable
          One Year Approved Budget.

               (vi) Issue any guarantee on behalf of, or otherwise pledge the
          credit for borrowed money of any Person within the Serviced Group.

               (vii) Unless permitted by any other provision of this Section
          7.06, enter into any agreement for services to be provided in respect
          of Aircraft Assets by third parties outside the ordinary course of
          ILFC's business, the cost of which is to be borne by any Person within
          the Serviced Group, except in each case to the extent that the same is
          an Asset Expense provided for in the then applicable One Year Approved
          Budget.

               (viii) Incur on behalf of any Person within the Serviced Group
          any liability (actual or contingent) or cause any such liability to be
          incurred, except for a liability (A) contemplated in the then
          applicable One Year Approved Budget, (B) pursuant to a transaction of
          a type which is subject to another Transaction Approval Requirement or
          which would be subject to another Transaction Approval Requirement if
          the threshold set forth in such Transaction Approval Requirement were
          met or (C) incurred in the ordinary course of the relevant AOE's
          business.

               (ix) On behalf of any Person within the Serviced Group enter
          into, amend or grant a waiver with respect to any transaction with the
          Servicer or any of its Affiliates including without limitation for the
          acquisition, sale or lease of any Aircraft Assets from or to, or the
          obtaining or provision of services by, any such Person.

           (b) Any transaction entered into by the Servicer on behalf of any
Person within the Serviced Group shall be on an arm's length basis and on market
terms, unless otherwise agreed by such Person or MSAF, if such Person is a
direct or indirect wholly owned subsidiary of MSAF, or directed by the Serviced
Group in accordance with Section 7.02.

           (c) The transaction approval requirements (the "Transaction Approval
Requirements") set forth in this Section 7.06 may only be amended by mutual
agreement of the parties, and shall not in any event be amended to reduce or

                                       23

<PAGE>

circumscribe the delegation to the Servicer of the level of autonomy, authority
and responsibility contemplated by the Transaction Approval Requirements with
respect to the performance of the Services.

                                    ARTICLE 8
                                  EFFECTIVENESS

           SECTION 8.01. Effectiveness. This Agreement shall become effective
with respect to all Aircraft Assets (other than those to be sold and purchased
pursuant to the 1999 Purchase Agreement), and the Servicing Agreement dated as
of November 10, 1998 shall thereupon be amended and restated in its entirety,
upon the execution hereof by MSAF, the Servicer, MSA I, MSA II, MSA IV, MSA V,
SPC-5 and the Administrative Agent. This Agreement shall become effective with
respect to each Aircraft Asset to be sold and purchased pursuant to the 1999
Purchase Agreement upon (a) fulfillment of the condition set forth in the
preceding sentence and (b) the delivery of such Aircraft Asset to MSA IV or MSA
V or its designee in accordance with the terms of the 1999 Purchase Agreement.

                                    ARTICLE 9
                            SERVICING FEES; EXPENSES

           SECTION 9.01. Servicing Fees with respect to Aircraft Assets sold and
purchased pursuant to the 1997 Purchase Agreement. In consideration of the
Servicer's performance of the Services with respect to Aircraft Assets sold and
purchased pursuant to the 1997 Purchase Agreement, MSAF shall pay to the
Servicer servicing fees consisting of the fees set forth in (a) Section 9.02
("First Tranche Base Fees"), (b) Section 9.03, the "First Tranche Rent Payable
Fee" and "First Tranche Rent Collected Fee", together, the "First Tranche Rent
Fees"), (c) Section 9.04 (the "First Tranche Incentive Fee") and (d) Section
9.05 (the "First Tranche Base Sales Fee" and "First Tranche Sales Incentive
Fee", together, the "First Tranche Sales Fees").

           SECTION 9.02. First Tranche Base Fees. (a) To the extent not
previously paid, a First Tranche Base Fee shall be paid by MSAF to the Servicer
of (i) $2,000,000 on December 1, 1997 and (ii) an amount with respect to each
Aircraft for each month (the "First Tranche Aircraft Monthly Base Fee") equal to
the amount set forth below opposite the period during which such month occurs,
multiplied by the First Tranche Aircraft Monthly Base Fee Fraction with respect
to such Aircraft for such month:

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<PAGE>

                          Period                                    Amount
                          ------                                    ------
             December 1, 1997-- November 30, 1998               $  83,333.33
             December 1, 1998-- November 30, 1999                 250,000.00
             From December 1, 1999 until the termination
                       or expiration of this Agreement            166,666.66

           The "First Tranche Aircraft Monthly Base Fee Fraction" for any month
means, with respect to each Aircraft, the fraction which is the product of (x)
the quotient of (A) the number of days during such month that MSAF Group owned
such Aircraft (including the relevant Delivery Date and excluding the date of
disposal of such Aircraft) divided by (B) the total number of days in such
month, multiplied by (y) the quotient of (A) the Base Purchase Price of such
Aircraft, as set forth on Exhibit A-1 to the 1997 Purchase Agreement divided by
(B) the sum of the Base Purchase Prices of all the Aircraft.

           (b) For any month in which an Aircraft is initially delivered under
the 1997 Purchase Agreement or disposed of, the First Tranche Aircraft Monthly
Base Fee payable with respect to such Aircraft shall be paid in arrears on the
fifteenth day (or, if not a Business Day, the next succeeding Business Day) of
the month following such month. For any other month, all First Tranche Aircraft
Monthly Base Fees shall be paid in advance on the fifteenth day (or, if not a
Business Day, the next succeeding Business Day) of the month immediately
preceding such month.

           SECTION 9.03. First Tranche Rent Fees. (a) A First Tranche Rent
Payable Fee shall be paid for each month during the term of this Agreement by
MSAF to the Servicer equal to 1% of the aggregate amount of the rent (as defined
in each Lease, but, for the avoidance of doubt, not including any amounts
reimbursable to Lessees) due to the lessor by each Lessee attributable to any
such month, or portion of a month in which the related Aircraft is owned by any
Person within the MSAF Group and shall be paid on the fifteenth day (or, if not
a Business Day, the next succeeding Business Day) of such month. If any Aircraft
shall be initially delivered under the 1997 Purchase Agreement or disposed of
during any such month, the First Tranche Rent Payable Fee with respect to the
related Lessee shall be pro-rated by multiplying the amount of rent attributable
to the relevant month by a fraction, the numerator of which is the actual number
of days the related Aircraft has been owned by MSAF Group in such month
(including the relevant Delivery Date and excluding the date of disposal of such
Aircraft) and the denominator of which is the actual number of days in such
month. If the date of initial delivery or date of disposition occurs after the
tenth day of such month or if any or all of the rent for such Aircraft is based
on a number of flight hours flown by such Aircraft or any other variable rate (a
"power-by-the-hour amount"), the

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<PAGE>

fee in relation to such Aircraft or power-by-the-hour amount shall be paid on
the fifteenth day (or, if not a Business Day, the next succeeding Business Day)
of the next succeeding month.

            (b) A First Tranche Rent Collected Fee shall be paid for each month
during the term of this Agreement by MSAF to the Servicer equal to 1% of the
aggregate amount of the rent (as defined in each Lease but for the avoidance of
doubt, not including any amounts reimbursable to Lessees) actually paid by each
Lessee for such month or portion of a month the related Aircraft is owned by any
Person within the MSAF Group. All payments of the First Tranche Rent Collected
Fee shall be payable in arrears on the fifteenth day (or, if not a Business Day,
the next succeeding Business Day) of the month next succeeding the month in
which the rental payment is made.

           SECTION 9.04. First Tranche Incentive Fee. A First Tranche Incentive
Fee shall be payable during the term of this Agreement by MSAF to the Servicer
for the One Year Initial Period and each subsequent One Year Period in the
amount of (i) 10% of (ii) the amount (if any) by which the actual net results
for such Year (calculated on the same basis as net results is calculated in the
Approved Budget for such Year) shall have exceeded the Target Net Results.
"Target Net Results" for any Year shall be as specified in the Approved Budget
for such Year. All payments of the First Tranche Incentive Fee shall be payable
in arrears on the fifteenth day (or, if not a Business Day, the next succeeding
Business Day) of the month next succeeding the end of the One Year Initial
Period and each subsequent One Year Period.

           SECTION 9.05. First Tranche Sales Fees. (a) A First Tranche Base
Sales Fee shall be payable at any time during the term of this Agreement by MSAF
to the Servicer in the amount of (i) 1.5% of (ii) the lesser of (x) Net Cash
Proceeds (including relating to a disposition of an Aircraft as a result of a
total loss of such Aircraft) and (y) the First Tranche Target Sales Price for
the sale of any Aircraft provided that no First Tranche Sales Fees shall be
payable with respect to sales in connection with a refinancing, restructuring or
reorganization with respect to the MSAF Group or the Aircraft after which the
Servicer shall remain as servicer of such Aircraft. "First Tranche Target Sales
Price" means, with respect to a sale or disposition of any Aircraft, an amount
agreed by MSAF and Servicer, subject to any restrictions imposed by any
Indenture. "Net Cash Proceeds" means the gross cash proceeds of any sale or
disposition of Aircraft net of any transaction costs (including transaction
taxes and the Servicer's out-of-pocket expenses) and brokers' commissions.

            (b) A First Tranche Sales Incentive Fee shall be payable at any time
during the term of this Agreement by MSAF to the Servicer equal to (i) five

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<PAGE>

percent multiplied by (ii) Net Gains earned on the sale or disposition of any
Aircraft. "Net Gains" means, with respect to the sale of any Aircraft, an amount
(not less than zero) of the Net Cash Proceeds in excess of the Target Sales
Price in connection with such sale.

           SECTION 9.06. Servicing Fees with Respect to Aircraft Assets sold and
purchased pursuant to the 1999 Purchase Agreement and with respect to the MSA II
Aircraft. In consideration of the Servicer's performance of the Services with
respect to Aircraft Assets sold and purchased pursuant to the 1999 Purchase
Agreement and with respect to the MSA II Aircraft, MSA II, MSA IV or MSA V, as
applicable, shall pay to the Servicer servicing fees consisting of the fees set
forth in (a) Section 9.07 ("Second Tranche Base Fees"), (b) Section 9.08, the
"Second Tranche Rent Payable Fee" and "Second Tranche Rent Collected Fee",
together, the "Second Tranche Rent Fees"), (c) Section 9.09 (the "Second Tranche
Incentive Fee") and (d) Section 9.10 (the "Second Tranche Base Sales Fee" and
"Second Tranche Sales Incentive Fee", together, the "Second Tranche Sales
Fees"). MSAF hereby fully and unconditionally guarantees payment by MSA II, MSA
IV and MSA V of all fees payable by them pursuant to Sections 9.07, 9.08 and
9.09 with respect to any period during which they are direct or indirect wholly
owned subsidiaries of MSAF.

           SECTION 9.07. Second Tranche Base Fees. To the extent not previously
paid, a Second Tranche Base Fee shall be paid by MSA II, MSA IV or MSA V, as
applicable, to the Servicer in an amount with respect to each Aircraft for each
month (the "Second Tranche Aircraft Monthly Base Fee") equal to $83,333.33
multiplied by the Second Tranche Aircraft Monthly Base Fee Fraction with respect
to such Aircraft for such month.

           The "Second Tranche Aircraft Monthly Base Fee Fraction" for any month
means, with respect to each Aircraft, the fraction which is the product of (x)
the quotient of (A) the number of days during such month that the Servicer was
obliged to provide services with respect to such Aircraft under this Agreement
divided by (B) the total number of days in such month, multiplied by (y) the
quotient of (A) either the Base Purchase Price of such Aircraft as set forth on
Exhibits A-1 and A-2 to the 1999 Purchase Agreement in the case of Aircraft sold
and purchased pursuant to the 1999 Purchase Agreement or $7.0 million for each
of the MSA II Aircraft divided by (B) the sum of the Base Purchase Prices of all
the Aircraft sold and delivered pursuant to the 1999 Purchase Agreement plus
$14.0 million in respect of the MSA II Aircraft.

           (b) For any portion of a month in which the Servicer is first obliged
to perform the Services in respect of either of the MSA II Aircraft or any
Aircraft to be purchased and sold under the 1999 Purchase Agreement, the Second

                                       27

<PAGE>

Tranche Aircraft Monthly Base Fee payable with respect to such Aircraft shall be
paid in arrears on the fifteenth day (or, if not a Business Day, the next
succeeding Business Day) of the month following such month. For any other month,
all Second Tranche Aircraft Monthly Base Fees shall be paid in advance on the
fifteenth day (or, if not a Business Day, the next succeeding Business Day) of
the month immediately preceding such month.

           SECTION 9.08. Second Tranche Rent Fees. (a) A Second Tranche Rent
Payable Fee shall be paid for each month during the term of this Agreement by
MSA II, MSA IV or MSA V, as applicable, to the Servicer equal to 1% of the
aggregate amount of the rent (as defined in each Lease, but, for the avoidance
of doubt, not including any amounts reimbursable to Lessees) due to the lessor
by each Lessee attributable to any such month, or portion of a month in which
the Servicer is obliged to perform the Services with respect to such Aircraft
pursuant to this Agreement and shall be paid on the fifteenth day (or, if not a
Business Day, the next succeeding Business Day) of such month. For any period
less than a full month in which the Servicer is obliged to perform the Services
with respect to such Aircraft pursuant to this Agreement, the Second Tranche
Rent Payable Fee with respect to the related Lessee shall be pro-rated by
multiplying the amount of rent attributable to the relevant month by a fraction,
the numerator of which is the actual number of days the Servicer is obliged to
perform the Services with respect to such Aircraft pursuant to this Agreement in
such month and the denominator of which is the actual number of days in such
month. If the date of initial delivery or date of disposition occurs after the
tenth day of such month or if any or all of the rent for such Aircraft is based
on a number of flight hours flown by such Aircraft or any other variable rate (a
"power-by-the-hour amount"), the fee in relation to such Aircraft or
power-by-the-hour amount shall be paid on the fifteenth day (or, if not a
Business Day, the next succeeding Business Day) of the next succeeding month.

            (b) A Second Tranche Rent Collected Fee shall be paid for each month
during the term of this Agreement by MSAF to the Servicer equal to 1.50% of the
aggregate amount of the rent (as defined in each Lease but for the avoidance of
doubt, not including any amounts reimbursable to Lessees) actually paid by each
Lessee for such month or portion of a month the Servicer is obliged to perform
the Services with respect to such Aircraft pursuant to this Agreement. All
payments of the Second Tranche Rent Collected Fee shall be payable in arrears on
the fifteenth day (or, if not a Business Day, the next succeeding Business Day)
of the month next succeeding the month in which the rental payment is made.

           SECTION 9.09.  Second Tranche Sales Fees.  (a) A Second Tranche Base
Sales Fee shall be payable at any time during the term of this Agreement by MSA
II, MSA IV or MSA V, as applicable, to the Servicer in the amount of  1.5% of

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<PAGE>

the lesser of (x) Net Cash Proceeds (including relating to a disposition of an
Aircraft as a result of a total loss of such Aircraft) and (y) the Second
Tranche Target Sales Price for the sale of any Aircraft provided that no Second
Tranche Sales Fees shall be payable with respect to sales in connection with a
refinancing, restructuring or reorganization with respect to MSA II, MSA IV, MSA
V, MSAF Group or the Aircraft after which the Servicer shall remain as servicer
of such Aircraft. "Second Tranche Target Sales Price" means, with respect to a
sale or disposition of any Aircraft, an amount agreed by MSA II, MSA IV or MSA
V, as applicable, and Servicer, subject to any restrictions imposed by any
Indenture.

           (b) A Second Tranche Sales Incentive Fee shall be payable at any time
during the term of this Agreement by MSA II, MSA IV or MSA V, as applicable, to
the Servicer equal to (i) five percent multiplied by (ii) Net Gains earned on
the sale or disposition of any Aircraft.

           SECTION 9.10. Expenses. (a) With respect to the Servicer's
performance hereunder of the Services for all Aircraft Assets, the Servicer
shall be responsible for, and shall not be entitled to reimbursement for, the
Servicer's overhead expenses ("Overhead Expenses") which shall include, without
limitation:

               (i) salary, bonuses, company cars and benefits of the Servicer's
          employees;

               (ii) travel and entertainment expenses of the Servicer's
          employees;

               (iii) office, office equipment and rental expenses other than
          office and office equipment rental expense charged by independent
          advisors retained by the Servicer with respect to the Aircraft Assets;

               (iv) telecommunications expenses;

               (v) advertising and promotional expenses; and

               (vi) taxes on the income, receipts, profits, gains, net worth or
          franchise of the Servicer and payroll, employment and social security
          taxes for employees of the Servicer.

           (b) (i) Without limiting the Servicer's obligations as Seller under
each Purchase Agreement, each AOE shall be responsible for all costs and
expenses relating to or associated with the Aircraft Assets owned by it other
than Overhead Expenses, ("Aircraft Asset Expenses") which shall include, without
limitation,

                                       29

<PAGE>

                         (A) storage, maintenance, test flight, navigation,
                    landing, ferry flights, fuel, repossession (whether or not
                    successful), reconfiguration, refurbishment and repaid
                    expenses related to Aircraft Assets, including all expenses
                    incurred by the Servicer relating to compliance with
                    airworthiness directives and service bulletins, which
                    includes the fees and expenses of independent technicians
                    and other experts retained for any of the foregoing purposes
                    other than with respect to expenditures specifically agreed
                    to be borne by the Servicer in or in connection with the
                    Lease Novations (as defined in either Purchase Agreement);

                         (B) insurance expense related to Aircraft Assets,
                    including all fees and expenses of insurance advisors and
                    brokers;

                         (C) expenses incurred in connection with the acceptance
                    of delivery of any Aircraft Asset, whether being sold or
                    leased by any Person within the Serviced Group;

                         (D) fees and expenses of independent advisors including
                    office and office equipment rental expense charged by such
                    advisors retained by the Servicer with respect to the
                    Aircraft Assets;

                         (E) outside legal counsel fees and expenses and other
                    professional fees and expenses, (i) related to litigation
                    concerning any Aircraft Asset, (ii) in the case of an
                    Aircraft being leased in a jurisdiction other than a
                    jurisdiction with respect to which the Servicer has both
                    leased an aircraft previously and received an opinion of
                    outside legal counsel (which may be lessee's outside
                    counsel) and (iii) relating to out of the ordinary course of
                    business situations; except as provided in Section
                    11.02(b)(i); and

                         (F) taxes reimbursable to the Servicer pursuant to this
                    Section 9.10;

           If the relevant AOE or MSAF, if such AOE is a direct or indirect
wholly owned subsidiary of MSAF, does not approve the payment of any Asset
Expense, the Servicer shall be entitled to make such payment on behalf of the
relevant AOE and to the extent the Servicer does so, the funds so advanced
("Reimbursable Expenses") shall be repaid by the relevant AOE or MSAF, if such
AOE is a direct or indirect wholly owned subsidiary of MSAF, to the Servicer in
accordance with paragraph 9.10(b)(ii) of this Section 9.10, provided that:

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<PAGE>

                         (G) The Servicer believes that failure to make such
                    payment is reasonably likely to prejudice or otherwise
                    adversely affect the Servicer or its Affiliates' business
                    relationship with the relevant payee;

                         (H) The relevant Asset Expense (when added to all the
                    Aircraft Asset Expenses of the same category incurred to
                    date during such Year) shall not exceed 110% of the line
                    item amount in the applicable One Year Approved Budget for
                    such Year or the Asset Expense shall otherwise have been
                    approved by the relevant AOE or MSAF, if such AOE is a
                    direct or indirect wholly owned subsidiary of MSAF; and

                         (I) The Servicer shall have contracted for or otherwise
                    committed for such Asset Expense prior to such time.

                    (ii) Reimbursable Expenses shall be paid by the relevant AOE
               or MSAF, if such AOE is a direct or indirect wholly owned
               subsidiary of MSAF, to the Servicer on the fifteenth day of the
               month (or, if such date is not a Business Day, the next
               succeeding Business Day) following the month in which payment of
               such Reimbursable Expenses was made by the Servicer.

           SECTION 9.11. Default Interest. Any late payment of fees and
Reimbursable Expenses under this Agreement shall accrue default interest at One
Month LIBOR until payment thereof, other than late payments arising from an
administrative or technical bank payment error or the amount of which the
relevant AOE or MSAF, if such AOE is a direct or indirect wholly owned
subsidiary of MSAF, is contesting in good faith.

                                   ARTICLE 10
        TERMS; RIGHTS TO TERMINATE; CONSEQUENCES OF TERMINATION; SURVIVAL

           SECTION 10.01. Term. With respect to Aircraft sold and purchased
pursuant to the 1997 Purchase Agreement, this Agreement shall expire on the
twenty-fifth anniversary of the last Delivery Date thereunder. With respect to
the MSA II Aircraft and Aircraft sold and purchased pursuant to the 1999
Purchase Agreement, this Agreement shall expire on the twenty-fifth anniversary
of the last Delivery Date under the 1999 Purchase Agreement. During such terms,
this Agreement shall not be terminable by any party with respect to any Aircraft
Asset except as expressly provided in this Article 10.

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<PAGE>

           SECTION 10.02. Right to Terminate. (a) At any time during the term of
this Agreement, the Servicer shall in accordance with Section 10.02(a) be
entitled to terminate this Agreement:

               (i) with respect to any or all Aircraft Assets that are owned by
          any Person within the MSAF Group, if MSAF or any such Person fails to
          make any payment it is required to make to the Servicer within five
          days after written notice from the Servicer of such failure;

               (ii) with respect to any or all Aircraft Assets that are owned by
          any Non-MSAF AOE, if such Non-MSAF AOE fails to make any payment it is
          required to make to the Servicer within five days after written notice
          from the Servicer of such failure;

               (iii) with respect to any or all Aircraft Assets that are owned
          by any Person within the MSAF Group, if MSAF or any such Person shall
          materially breach any of its obligations under this Agreement other
          than payment obligations;

               (iv) with respect to any or all Aircraft Assets that are owned by
          any Non-MSAF AOE, if such Non-MSAF AOE shall materially breach any of
          its obligations under this Agreement other than payment obligations;

               (v) with respect to any or all Aircraft Assets that are owned by
          any Person within the MSAF Group, if all of the public debt of MSAF is
          repaid or defeased in full in accordance with the terms of any
          Indenture;

               (vi) with respect to any or all Aircraft Assets, if all of the
          Aircraft of the Serviced Group are sold;

               (vii) with respect to any or all Aircraft Assets that are owned
          by a Person within the MSAF Group, if an involuntary proceeding shall
          be commenced or an involuntary petition shall be filed in a court of
          competent jurisdiction seeking relief in respect of MSAF or such
          Person or in respect of a substantial part of the property or assets
          of MSAF or such Person under Title 11 of the United States Code, as
          now constituted or hereafter amended, or any other U.S. federal or
          state or foreign bankruptcy, insolvency, receivership or similar law,
          and such proceeding or petition shall continue undismissed for 120
          days or an order or decree approving or ordering any of the foregoing
          shall be entered or MSAF or such Person shall go into liquidation,
          suffer a receiver or mortgagee to take possession of all or
          substantially all of its assets or have an examiner

                                       32

<PAGE>

          appointed over it, or if a petition or proceeding is presented for any
          of the foregoing and not discharged within 120 days;

               (viii) with respect to any or all Aircraft Assets that are owned
          by a Non-MSAF AOE, if an involuntary proceeding shall be commenced or
          an involuntary petition shall be filed in a court of competent
          jurisdiction seeking relief in respect of such Non-MSAF AOE or in
          respect of a substantial part of the property or assets of such
          Non-MSAF AOE under Title 11 of the United States Code, as now
          constituted or hereafter amended, or any other U.S. federal or state
          or foreign bankruptcy, insolvency, receivership or similar law, and
          such proceeding or petition shall continue undismissed for 120 days or
          an order or decree approving or ordering any of the foregoing shall be
          entered or such Non-MSAF AOE shall go into liquidation, suffer a
          receiver or mortgagee to take possession of all or substantially all
          of its assets or have an examiner appointed over it, or if a petition
          or proceeding is presented for any of the foregoing and not discharged
          within 120 days;

               (ix) with respect to any or all Aircraft Assets that are owned by
          any Person within the MSAF Group, if MSAF or such Person shall (A)
          voluntarily commence any proceeding or file any petition seeking
          relief under Title 11 of the United States Code, as now constituted or
          hereafter amended, or any other U.S. federal or state or foreign
          bankruptcy, insolvency, receivership or similar law, (B) consent to
          the institution of, or fail within 120 days to contest the filing of,
          any petition described in clause 10.02(a)(vii) above, (C) file an
          answer admitting the material allegations of a petition filed against
          it in any such proceeding or (D) make a general assignment for the
          benefit of its creditors; or

               (x) with respect to any or all Aircraft Assets that are owned by
          a Non-MSAF AOE, if such Non-MSAF AOE shall (A) voluntarily commence
          any proceeding or file any petition seeking relief under Title 11 of
          the United States Code, as now constituted or hereafter amended, or
          any other U.S. federal or state or foreign bankruptcy, insolvency,
          receivership or similar law, (B) consent to the institution of, or
          fail within 120 days to contest the filing of, any petition described
          in clause 10.02(a)(vii) above, (C) file an answer admitting the
          material allegations of a petition filed against it in any such
          proceeding or (D) make a general assignment for the benefit of its
          creditors.

           (b) At any time during the term of this Agreement, MSAF and the AOEs
shall in accordance with Section 10.02(c) be entitled to terminate this
Agreement with respect to any Aircraft owned directly or indirectly through one
or more

                                       33

<PAGE>

subsidiaries by them; provided, however, that with respect to Section
10.02(b)(iii) below, only MSAF may terminate this Agreement, and then only with
respect to Aircraft owned directly or indirectly by MSAF ; provided, further
however, that MSAF or any AOE within the MSAF Group may not terminate this
Agreement in accordance with Section 10.02(c) for the occurrence of any of the
events listed in this Section 10.02(b) that did not occur to an Aircraft owned
directly or indirectly by a Person within the MSAF Group and a Non-MSAF AOE may
not terminate this Agreement in accordance with Section 10.02(c) for the
occurrence of any of the events listed in this Section 10.02(b) that did not
occur to an Aircraft owned directly or indirectly by such Non-MSAF AOE:

               (i) if the Servicer shall materially breach any of its
          obligations under this Agreement to them or with respect to Aircraft
          Assets owned directly or indirectly by them;

               (ii) if the Servicer fails to, within a reasonable period of
          time, release an Aircraft owned directly or indirectly through one
          or more subsidiaries by them upon the termination of any Lease or sell
          an Aircraft owned directly or indirectly through one or more
          subsidiaries by them upon commercially reasonable written direction
          from the relevant AOE or from MSAF if the AOE that owns the Aircraft
          is a direct or indirect wholly owned subsidiary of MSAF;

               (iii) if all of the public debt of MSAF is repaid or defeased in
          full in accordance with the terms of any Indenture;

               (iv) if all of the Aircraft of the Serviced Group are sold;

               (v) if a Change of Control has occurred and, as a result thereof,
          a Rating Decline occurs. A "Change of Control" will be deemed to have
          occurred at such time as either (A) any Person or any Persons acting
          together that would constitute a "group" (a "Group") for purposes of
          Section 13(d) of the Securities Exchange Act of 1934, or any successor
          provision thereto, together with any Affiliates or Related Persons
          thereof, shall beneficially own (within the meaning of Rule 13d-3
          under the Securities Exchange Act of 1934, or any successor provision
          thereto ("Rule 13d-3")) at least 50% of the aggregate voting power of
          all classes of voting stock of the Servicer; or (B) any Person or
          Group, together with any Affiliates or Related Persons thereof, shall
          succeed in having a sufficient number of its nominees elected to the
          Board of Directors of the Servicer such that such nominees, when added
          to any existing director remaining on the Board of Directors of the
          Servicer after such election who was a nominee of or is an Affiliate
          or Related Person of such Person

                                       34

<PAGE>

          or Group, will constitute a majority of the Board of Directors of the
          Servicer; provided that with respect to both clauses (A) and (B)
          above, a Change of Control shall not be deemed to have occurred if AIG
          continues to beneficially own (within the meaning of Rule 13d-3) at
          least 51% of the aggregate voting power of all classes of voting stock
          of the Servicer.

               A "Rating Decline" will be deemed to have occurred if at any time
          between (a) the date of public notice of a Change of Control, or of
          the intention of the Servicer or of any Person to effect a Change of
          Control and (b) 90 days after the occurrence of the Change in Control
          (which period shall in either event be extended so long as the rating
          of the outstanding senior unsecured long-term debt securities of the
          Servicer is under publicly announced consideration for possible
          downgrade by a credit rating agency), the rating of the outstanding
          senior unsecured long- term debt securities of the Servicer is
          decreased by any credit rating agency.

               A "Related Person" of any Person means any other Person directly
          or indirectly owning (a) 5% or more of the outstanding common stock of
          such Person, (or, in the case of a Person that is not a corporation,
          5% or more of the equity interest in such Person) or (b) 5% or more of
          the combined voting power of the voting stock of such Person.

               (vi) if an involuntary proceeding shall be commenced or an
          involuntary petition shall be filed in a court of competent
          jurisdiction seeking relief in respect of the Servicer or in respect
          of a substantial part of the property or assets of the Servicer, under
          Title 11 of the United States Code, as now constituted or hereafter
          amended, or any other U.S. federal or state or foreign bankruptcy,
          insolvency, receivership or similar law, and such proceeding or
          petition shall continue undismissed for 120 days or an order or decree
          approving or ordering any of the foregoing shall be entered or the
          Servicer shall go into liquidation, suffer a receiver or mortgagee to
          take possession of all or substantially all of its assets or have an
          examiner appointed over it or if a petition or proceeding is presented
          for any of the foregoing and not discharged within 120 days; or

               (vii) if the Servicer shall (A) voluntarily commence any
          proceeding or file any petition seeking relief under Title 11 of the
          United States Code, as now constituted or hereafter amended, or any
          other U.S. federal or state or foreign bankruptcy, insolvency,
          receivership or similar law, (B) consent to the institution of, or
          fail within 120 days to contest the filing of, any petition described
          in clause 10.02(b)(vi) above, (C) file an answer admitting the
          material allegations of a petition filed against it in

                                       35

<PAGE>

          any such proceeding or (D) make a general assignment for the benefit
          of its creditors.

           (c) (i) A terminating party may, at any time during the term of this
Agreement, by written notice ("Termination Notice") to the terminated party, set
forth its determination to terminate this Agreement pursuant to this Section
10.02. Any Termination Notice shall set forth in reasonable detail the basis for
such termination.

               (ii) No later than the fifth Business Day following the delivery
          of the Termination Notice (the "Effectiveness Date"), the terminated
          party shall advise the terminating party in writing whether the
          terminated party (A) intends to cure the basis for such termination
          and, if so, the action it intends to take to effectuate such cure or
          (B) does not intend to cure the basis for such termination (it being
          understood that failure of the terminated party to deliver such
          written advice by such day shall be deemed to constitute notice that
          it does not intend to cure the basis for termination). In the event
          that the terminated party notifies (or is deemed to have notified) the
          terminating party that it does not intend to cure the basis for such
          termination, then this Agreement shall terminate with respect to the
          affected Aircraft Assets, subject to Section 10.03(c)(ii), immediately
          or on such later date that the terminating party shall have indicated
          in the Termination Notice. In the event that the terminated party
          notifies the terminating party by such fifth Business Day that it
          intends to cure the basis for such termination, then the terminated
          party shall (A) have 30 days from the Effectiveness Date to effectuate
          such cure to the satisfaction of the terminating party or (B) if such
          cure cannot reasonably be expected to be effectuated within a 30-day
          period, (1) demonstrate to the satisfaction of the terminating party
          that substantial progress is being made toward the effectuation of
          such cure and (2) effectuate such cure to the reasonable satisfaction
          of the terminating party no later than the sixtieth day following the
          Effectiveness Date. Upon the failure of the terminated party to
          effectuate a cure in accordance with the immediately preceding
          sentence, this Agreement shall terminate on the latest of (A) the day
          immediately following the expiration of such 30 or 60-day period, as
          the case may be, (B) such later date as shall be indicated in the
          Termination Notice and (C) the date as of which a Replacement Servicer
          has been engaged to perform the Services with respect to the Aircraft
          and has accepted such appointment in accordance with the provisions of
          Section 10.03(c).

           SECTION 10.03. Consequences of Termination.

                                       36

<PAGE>

           (a) (i) Upon the expiration or termination of this Agreement in
accordance with this Article 10 with respect to any Aircraft Assets, or upon the
removal of the Servicer with respect to the performance of the Services for any
Aircraft, the Servicer will promptly forward to the relevant AOE or to MSAF, if
such AOE is a direct or indirect wholly owned subsidiary of MSAF, any notices,
reports and communications received by it from any relevant Lessee after
termination or expiration.

               (ii) The relevant AOE or MSAF, if such AOE is a direct or
          indirect wholly owned subsidiary of MSAF, will notify promptly each
          relevant Lessee and any relevant third party of the termination or
          expiration of the Servicer under this Agreement in relation to any of
          the Aircraft and will request that all such notices, reports and
          communications thereafter be made or given directly to or as directed
          by the relevant AOE or by MSAF, if such AOE is a direct or indirect
          wholly owned subsidiary of MSAF.

            (b) A termination or resignation in relation to any or all Aircraft
shall not affect the respective rights and liabilities of any party hereunder
accrued prior to such termination in respect of any prior breaches hereof or
otherwise.

             (c) (i) Upon the expiration or termination of this Agreement in
accordance with this Article 10 with respect to any Aircraft Assets, or upon the
removal of the Servicer with respect to the performance of the Services for any
Aircraft, the Servicer will cooperate with any Replacement Servicer, including
providing all information, documents and records relating to the affected
Aircraft.

               (ii) Other than pursuant to a termination of this Agreement in
          accordance with Section 10.02(a)(i) or (ii), this Agreement may not be
          terminated with respect to the Servicer, in whole or in part, unless a
          Replacement Servicer has been appointed and has accepted such
          appointment; provided, however, that in the event that a Replacement
          Servicer shall not have been appointed within 90 days after any
          termination of this Agreement with respect to the Servicer or any
          resignation by the Servicer, the Servicer may petition any court of
          competent jurisdiction for the appointment of a Replacement Servicer.

           (d) Upon the termination of this Agreement in accordance with this
Article 10 with respect to any Aircraft Assets, or upon the removal of the
Servicer with respect to the performance of the Services for any Aircraft, the
AOE that owns such Aircraft shall continue to pay the Servicing Fees and
Reimbursable Expenses to the Servicer until a Replacement Servicer shall have
been appointed and shall have accepted such appointment in accordance with the
provisions of

                                       37

<PAGE>

Section 10.03(c) and such appointment has become effective. MSAF hereby fully
and unconditionally guarantees the payment of any amount owned under this
Section 10.03(d) by any AOE that is a direct or indirect wholly owned subsidiary
of MSAF.

            (e) Upon the termination of this Agreement in accordance with this
Article 10 with respect to any Aircraft Assets, or upon the removal of the
Servicer with respect to the performance of the Services for any Aircraft, the
Servicer shall promptly return all Security Deposits for all affected Aircraft
held by it and the originals within its possession of all applicable Aircraft
Assets Related Documents and other documents related to the Aircraft Assets to
the relevant AOE and shall provide access to other documentation and information
relating to the business of such AOE (and, to the extent practicable, copies
thereof) within its possession as is reasonably necessary to the conduct of such
AOE's business.

           (f) Upon the expiration or termination of this Agreement in
accordance with this Article 10, the parties shall, subject to Section 10.04 and
Section 10.03(b), be relieved of any obligations hereunder with respect to the
affected Aircraft Assets.

           SECTION 10.04. Survival. Notwithstanding any termination or the
expiration of this Agreement, the obligations of MSAF and the AOEs under Section
3.03, Section 3.04, Section 10.03, Section 10.04, and Article 11 and the
Servicer's obligations under Section 3.03, Section 10.03, Section 10.04, Section
11.01 and Section 13.09 shall survive such termination or expiration, as the
case may be.

                                   ARTICLE 11
                                 INDEMNIFICATION

           SECTION 11.01. Indemnity. (a) MSAF and each Person within the MSAF
Group do hereby assume liability for, and do hereby jointly and severally agree
to indemnify, reimburse and hold harmless on an After-Tax Basis, the Servicer
from any and all Losses that arise as a result of the Servicer's performance of
any of its obligations as Servicer with respect to the Aircraft Assets owned
directly or indirectly by them or as a result of any action which the Servicer
is requested to take or requested to refrain from taking by MSAF or any such
Person; provided that such indemnity shall not extend to (i) any Loss which
arises as a result of the willful misconduct of the Servicer, (ii) any Loss
which directly results from a breach by the Servicer of the express terms and
conditions of this Agreement or (iii) any Loss for which the Servicer
indemnifies MSAF and its Affiliates arising

                                       38

<PAGE>

as a result of any material misstatements or omissions in any public filings
relating to written information on the Aircraft and the Servicer provided by the
Servicer for disclosure in such public filings.

            (b) Each Non-MSAF AOE does hereby assume liability for and agrees to
indemnify, reimburse and hold harmless on an After-Tax-Basis, the Servicer from
any and all Losses that arise as a result of the Servicer's performance of any
of its obligations as Servicer with respect to the Aircraft Assets owned
directly or indirectly by that Non-MSAF AOE or as a result of any action which
the Servicer is requested to take or requested to refrain form taking by that
Non-MSAF AOE; provided that such indemnity shall not extend to (i) any Loss
which arises as a result of the willful misconduct of the Servicer or (ii) any
Loss which directly results from a breach by the Servicer of the express terms
and conditions of this Agreement.

           (c) The Servicer agrees to give MSAF, with respect to a claim under
Section 11.01(a) above, or the relevant Non-MSAF AOE, with respect to a claim
under Section 11.01(b) above, prompt notice of any action, claim, demand,
discovery of fact, proceeding or suit for which the Servicer intends to assert a
right to indemnification under this Agreement; provided, however, that failure
to give such notification shall not affect the Servicer's entitlement to
indemnification under this Section 11.01 unless and only to the extent such
failure results in actual material prejudice to any of MSAF or the MSAF Group
with respect to a claim under Section 11.01(a) above, or to the relevant
Non-MSAF AOE with respect to a claim under Section 11.01(b) above, with respect
to the action, claim, demand, discovery of fact, proceeding or suit for which a
right of indemnification is asserted.

           SECTION 11.02. Procedures for Defense of Claims. (a) If a Third Party
Claim is made against the Servicer, the Servicer shall promptly notify MSAF,
with respect to a claim under Section 11.01(a) above, or the relevant Non-MSAF
AOE, with respect to a claim under Section 11.01(b) above, in writing of such
claim (which notice shall include all relevant information reasonably necessary
for MSAF or the relevant Non-MSAF AOE to understand such claim which is in the
possession or under the control of, or can be obtained by, the Servicer at the
time of such notice, subject to Applicable Laws and confidentiality
obligations), and the Servicer or MSAF or the relevant Non-MSAF AOE (as agreed
between them) will undertake the defense thereof. The failure to notify MSAF or
the relevant Non-MSAF AOE promptly shall not relieve it of its obligations under
this Article 11 unless such failure results in actual material prejudice to any
of MSAF or the MSAF Group with respect to the Aircraft Assets owned directly or
indirectly by them with respect to a claim under Section 11.01(a) above, or to
the relevant Non- MSAF AOE with respect to a claim under Section 11.01(b) above,
with respect to

                                       39

<PAGE>

the action, claim, demand, discovery of fact, proceeding or suit for which a
right of indemnification is asserted.

               (b) If agreed and accepted by the Servicer, MSAF, with respect to
          a claim under Section 11.01(a) above, or the relevant Non-MSAF AOE,
          with respect to a claim under Section 11.01(b) above, shall within 30
          days, undertake the conduct and control, through counsel of its own
          choosing (subject to the consent of the Servicer, such consent not to
          be unreasonably withheld or delayed) and at MSAF's or such Non-MSAF
          AOE's sole risk and expense, of the good faith settlement or defense
          of such claim, and the Servicer shall cooperate fully with MSAF or
          such Non-MSAF AOE, as applicable, in connection therewith; provided
          that (i) at all times the Servicer shall be entitled to participate in
          such settlement or defense through counsel chosen by it (after
          reasonable consultation with MSAF or the relevant Non-MSAF AOE), and
          the fees and expenses of such counsel shall be borne by the Servicer,
          and (ii) none of MSAF or the relevant Non- MSAF AOE shall be entitled
          to settle such claims unless it shall have confirmed in writing the
          obligation of MSAF or the relevant Non-MSAF AOE to indemnify the
          Servicer for the liability asserted in such claim.

            (c) So long as MSAF or the relevant Non-MSAF AOE is reasonably
contesting any such claim in good faith, the Servicer shall fully cooperate with
MSAF or the relevant Non-MSAF AOE in the defense of such claim as reasonably
required by MSAF or the relevant Non-MSAF AOE, and MSAF or the relevant Non-MSAF
AOE shall reimburse the Servicer for reasonable out-of- pocket expenses incurred
in connection with such cooperation. Such cooperation shall include the
retention and the provision of records and information which are reasonably
relevant to such Third Party Claim and the availability on a mutually convenient
basis of directors, officers and employees to provide additional information.
The Servicer shall not settle or compromise any claim without the written
consent of MSAF or the relevant Non-MSAF AOE unless the Servicer agrees in
writing to forego any and all claims for indemnification from MSAF or the
relevant Non-MSAF AOE with respect to such claims.

           SECTION 11.03. Reimbursement of Costs. The costs and expenses,
including fees and disbursements of counsel (except as provided in Section
11.02(b)(i)) and expenses of investigation, incurred by the Servicer in
connection with any Third Party Claim, shall be reimbursed on the fifteenth of
each month (or if not a Business Day, the next succeeding Business Day) by MSAF
or the relevant Non-MSAF AOE upon the submission of evidence reasonably
satisfactory to MSAF or the relevant Non-MSAF AOE that such expenses have been
incurred in the preceding month, without prejudice to MSAF's or the relevant
Non-MSAF AOE's right to contest the Servicer's right to indemnification

                                       40

<PAGE>

and subject to refund in the event that MSAF, or the relevant Non-MSAF AOE is
ultimately held not to be obligated to indemnify the Servicer.

                                   ARTICLE 12
                            ASSIGNMENT AND DELEGATION

           SECTION 12.01. Assignment and Delegation. (a) No party to this
Agreement shall assign or delegate this Agreement or all or any part of its
rights or obligations hereunder to any Person without the prior written consent
of each of the other parties; provided, however, the foregoing provisions on
assignment and delegation shall not limit the ability of (i) the Servicer to
contract with any Person, including any of its Affiliates, for services in
respect of Aircraft Assets or (ii) MSAF or any AOE to transfer or assign the
benefit of the Servicer's representations, warranties, covenants and indemnity
obligations to a special purpose entity or entities established by it or by
Morgan Stanley Dean Witter & Co. ("MSDW") or any entity controlled by MSDW in
connection with a securitization of the Aircraft Assets; provided that the
foregoing shall not require the Servicer to act under any co-servicing or
back-up servicing arrangement.

             (b) Without limiting the foregoing, any Person who shall become a
successor by assignment or otherwise of any of MSAF, the AOEs or the Servicer
(or any of their respective successors) in accordance with this Section 12.01
shall be required as a condition to the effectiveness of any such assignment or
other arrangement to become a party to this Agreement.

                                   ARTICLE 13
                                  MISCELLANEOUS

           SECTION 13.01. Best Efforts. In this Agreement the term "best
efforts" shall mean reasonable best efforts under the commercial circumstances
at the time.

           SECTION 13.02. Notices. Any notice, request or information required
or permissible under this Agreement will be in writing and in English. Notices
will be delivered in person or sent by fax, letter (mailed airmail, certified
and return receipt requested), or by expedited delivery addressed to the parties
as set forth below in this Section. In the case of a fax, notice will be deemed
received upon the date set forth on the confirmation of receipt produced by the
sender's fax machine immediately after the fax is sent. In the case of a mailed
letter, notice

                                       41

<PAGE>

will be deemed received on the tenth (10th) day after mailing. In the case of a
notice sent by expedited delivery, notice will be deemed received on the date of
delivery set forth in the records of the person which accomplished the delivery.
If any notice is sent by more than one of the above listed methods, notice will
be deemed received on the earliest possible date in accordance with the above
provisions. Notices will be addressed as follows:

           if to MSAF or any Subsidiary, to:

                     Administrative Agent
                     Cabot Aircraft Services Limited
                     Regus House
                     Harcourt Centre
                     Harcourt Road
                     Dublin 2
                     Ireland

                     Attention: Kieran O'Keefe
                     Fax: +353-1-402-9496

           if to the Servicer, to:

                     International Lease Finance Corporation
                     1999 Avenue of the Stars
                     39th Floor
                     Los Angeles, CA 90067
                     Attention: Legal Department
                     Fax: +1-310-788-1990

or to such other address as any party hereto shall from time to time designate
in writing to the other parties.

All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 7 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding business day in the place of receipt.

           SECTION 13.03.  Governing Law.  This agreement shall be governed by
and construed in accordance with the law of the State of New York.

                                       42

<PAGE>

           SECTION 13.04. Jurisdiction. Except as otherwise expressly provided
in this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in the United States District Court for the Southern District of New
York or any other New York State court sitting in New York City, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 13.02 shall be deemed
effective service of process on such party.

           SECTION 13.05. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

           SECTION 13.06. Counterparts; Third Party Beneficiaries. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other party
hereto. No provision of this Agreement is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.

           SECTION 13.07. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.

           SECTION 13.08. Power of Attorney. Each of MSAF and the AOEs shall
appoint the Servicer and its successors, and its permitted designees and shall
assign, as their true and lawful attorney-in-fact. All services to be performed
and actions to be taken by the Servicer pursuant to this Agreement shall be
performed to and on behalf of each of the AOEs and MSAF, with respect to
Aircraft Assets owned by a Person within the MSAF Group. The Servicer shall be
entitled to

                                       43

<PAGE>

seek and obtain from each of MSAF and the AOEs a power of attorney in respect of
the execution of any specific action as the Servicer deems appropriate.

           SECTION 13.09. Restrictions on Disclosure. The Servicer agrees that
it shall not, prior to the termination or expiration of this Agreement or within
the three years after such termination or expiration, disclose to any Person any
confidential or proprietary information, whether of a technical, financial,
commercial or other nature, received directly or indirectly from any Person
within the Serviced Group regarding the Serviced Group's business or businesses
or the Aircraft Assets or the Leases, except as authorized in writing by the
relevant Person within the Serviced Group, and except:

           (a) to Representatives of the Servicer and any of its Affiliates in
furtherance of the purpose of this Agreement;

            (b) to the extent required by Applicable Law or by judicial or
administrative process, but in the event of proposed disclosure, the Servicer
shall seek the assistance of MSAF or the relevant AOE to protect information, in
which MSAF or such AOE has an interest, to the maximum extent achievable;

           (c) to the extent that the information:

               (i) was generally available in the public domain;

               (ii) was lawfully obtained from a source under no obligation or
          confidentiality, directly or indirectly, to any Person within the
          Serviced Group;

               (iii) was disclosed to the general public with the approval of
          any Person within the Serviced Group;

               (iv) was in the files, records or knowledge of the Servicer or
          any of the Servicer's Affiliates prior to initial disclosure thereof
          to the Servicer or any of the Servicer's Affiliates by any Person
          within the Serviced Group;

               (v) was provided by any Person within the Serviced Group to the
          Servicer or any of the Servicer's Affiliates without any express
          written restriction on use of or access to such information; or

               (vi) was developed independently by the Servicer or any of the
          Servicer's Affiliates; and

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<PAGE>

            (d) to the extent the Servicer deems necessary to protect and
enforce its rights and remedies under this Agreement.

           SECTION 13.10. Rights of Setoff. To the extent permitted by
Applicable Law, the Servicer hereby waives any right it may have under
Applicable Law to exercise any rights of setoff it has under Applicable Law with
respect to any assets it holds owned by, or money or monies it owes to, any
Person within the Serviced Group pursuant to and in accordance with the terms
and conditions of this Agreement; provided, however, that this Section 13.10
shall not affect any rights of setoff or other rights that the Servicer has or
may have under the express terms and conditions of this Agreement.

                                       45

<PAGE>

           IN WITNESS WHEREOF, this Agreement has been duly executed on the date
first written above.

                               INTERNATIONAL LEASE FINANCE CORPORATION

                               By: /s/ Steven F. Udvar-Hazy
                                 -------------------------------------
                                 Name:  Steven F. Udvar-Hazy
                                 Title: President and CEO

MORGAN STANLEY AIRCRAFT FINANCE

By: /s/ Scott Peterson
  ------------------------------
  Name:
  Title:

MSA I

By: /s/ Scott Peterson
   -----------------------------
   Name:
   Title:

                                       46

<PAGE>

SPC-5

By: /s/ Kieran O'Keefe
   -----------------------------
   Name:
   Title:

MSA II

By: /s/ Scott Peterson
   -----------------------------
   Name:
   Title:

MSA III

By: /s/ Scott Peterson
   -----------------------------
   Name:
   Title:

MSA IV

By: /s/ Scott Peterson
   -----------------------------
   Name:
   Title:

MSA V

By: /s/ Scott Peterson
   -----------------------------
   Name:
   Title:

MSA VI

By: /s/ Scott Peterson
   -----------------------------
   Name:
   Title:

                                       47

<PAGE>

MSA VII

By: /s/ Scott Peterson
   -----------------------------
   Name:
   Title:

 /s/ Kieran O'Keefe
--------------------------------
SIGNED SEALED AND DELIVERED
for and on behalf of
CABOT AIRCRAFT SERVICES LIMITED,
as Administrative Agent
by
its duly authorized attorney in
fact in the presence of:

                                       48

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