Document:

EXECUTION COPY

                            AIRCRAFT LEASE AGREEMENT

                                   Dated as of

                                 January 7, 2000

                                     between

                        AVIATION FINANCIAL SERVICES INC.

        a wholly owned subsidiary of General Electric Capital Corporation

                                       as

                                     Lessor

                                       and

                             FRONTIER AIRLINES, INC.

                                       as

                                     Lessee

                                  in respect of

Aircraft :                 Boeing 737-36E

Serial No:                 25263

U.S. Reg. No.:             N317FL

Note:    This Aircraft Lease Agreement has been executed in several counterparts
         of which this is  Counterpart  No.  ___.  See Clause  16.15  hereof for
         information concerning the distinction between various counterparts.

                                     INDEX

CLAUSE                                                                      PAGE
------                                                                      ----

1. Interpretation..............................................................1
         1.1 Definitions.......................................................1
         1.2 Construction.....................................................15
2. Representations and Warranties.............................................16
         2.1 Lessee's Representations and Warranties..........................16
         2.2 Lessee's Further Representations and Warranties..................17
         2.3 Repetition.......................................................19
         2.4 Lessor's Representations and Warranties..........................19
3. Conditions Precedent.......................................................20
         3.1 Conditions Precedent.............................................20
         3.2 Further conditions precedent.....................................23
         3.3 Waiver...........................................................23
4. Commencement...............................................................24
         4.1 Leasing..........................................................24
         4.2 Delivery.........................................................24
         4.3 Delayed Delivery.................................................24
         4.4 Licenses.........................................................25
         4.5 Inspection.......................................................25
         4.6 Indemnity........................................................25
5. Payments...................................................................25
         5.1 Deposit..........................................................25
         5.2 Rental Periods...................................................25
         5.3 Rent.............................................................26
         5.4 Maintenance Reserves.............................................26
         5.5 Payments.........................................................26
         5.6 Withholding......................................................27
         5.7 General Tax indemnity............................................27
         5.8 Sales and Use Taxes..............................................29
         5.9 Information......................................................30
         5.10 Indemnity Payments to be Made on an After-Tax Basis.............30
         5.11 Default Interest................................................30
         5.12 Contest.........................................................31
         5.13 Net Lease.......................................................32
         5.14 Security........................................................32
         5.14 Security........................................................33
6. Manufacturer's Warranties..................................................34
         6.1 Assignment.......................................................34
         6.2 Proceeds.........................................................34
         6.3 Parts............................................................34
         6.4 Agreement........................................................34
7. Lessor's Covenants.........................................................35
         7.1 Quiet Enjoyment..................................................35
         7.2 Release of Maintenance Reserves..................................35
         7.3 Lessor Obligations Following Expiry Date.........................36
8. Lessee's Covenants.........................................................36
         8.1 Duration.........................................................36
         8.2 Information......................................................36
         8.3 Lawful and Safe Operation........................................37
         8.4 Taxes and other Outgoings........................................39
         8.5 Sub-Leasing and Wet-Leasing......................................39
         8.6 Inspection.......................................................40
         8.7 Title............................................................40
         8.8 General..........................................................41
         8.9 Records..........................................................41
         8.10 Protection......................................................42
         8.11 Maintenance and Repair..........................................42
         8.12 Removal of Engines and Parts....................................43
         8.13 Installation of Engines and Parts...............................44
         8.14 Non-Installed Engines and Parts.................................44
         8.15 Pooling of Engines and Parts....................................45
         8.16 Equipment Changes...............................................45
         8.17 Title on an Equipment Change....................................46
         8.18 Third Party.....................................................46
9. Insurance..................................................................46
         9.1 Insurances.......................................................46
         9.2 Requirements.....................................................47
         9.3 Change...........................................................47
         9.4 Insurance Covenants..............................................47
         9.5 Failure to Insure................................................48
         9.6 Continuing Indemnity.............................................48
         9.7 Application of Insurance Proceeds................................48
         9.7 Application of Insurance Proceeds................................49
10. Indemnity.................................................................49
         10.1 General.........................................................49
         10.2 Duration........................................................50
11. Events of Loss............................................................50
         11.1 Events of Loss..................................................50
         11.2 Substitute Aircraft.............................................51
         11.3 Requisition.....................................................52
12. Return of Aircraft........................................................52
         12.1 Return..........................................................52
         12.2 Final Inspection................................................52
         12.3 Non-Compliance..................................................53
         12.4 Redelivery......................................................53
         12.5  Acknowledgment.................................................53
         12.6 Maintenance Program.............................................53
         12.7 Fuel............................................................53
         12.8 Automatic Extension of  Term....................................54
13. Default...................................................................54
         13.1 Events..........................................................54
         13.2 Rights..........................................................57
         13.3 Deregistration..................................................61
14. Assignment................................................................61
         14.1 Lessee's Assignment.............................................61
         14.2 Lessor's Assignment.............................................61
         14.3 Transfer........................................................61
15. Illegality................................................................61
16. Miscellaneous.............................................................62
         16.1 Waivers, Remedies Cumulative....................................62
         16.2 Delegation......................................................62
         16.3 Certificates....................................................62
         16.4 Appropriation...................................................62
         16.5 Currency........................................................62
         16.6 Set-off.........................................................62
         16.7 Severability....................................................63
         16.8 Remedy..........................................................63
         16.9 Expenses........................................................63
         16.10 Time of Essence................................................63
         16.11 Notices........................................................64
         16.12 Governing Law and Jurisdiction.................................64
         16.13 Sole and Entire Agreement......................................66
         16.14 Indemnities....................................................66
         16.15 Counterparts...................................................66
         16.16 Language.......................................................66
         16.17 No Brokers.....................................................66
17. Disclaimers and Waivers...................................................68
         17.1 Exclusion.......................................................68
         17.2 Waiver..........................................................68
         17.3 Disclaimer of Consequential Damages.............................69
         17.4 Confirmation....................................................69
18. Section 1110..............................................................69
19. Usury Laws................................................................69
20. Modification or Revision..................................................70
21. Witness...................................................................71
SCHEDULES.....................................................................72
SCHEDULE 1.   Description of Aircraft.........................................72
SCHEDULE 2.   Certificate of Technical Acceptance.............................78
SCHEDULE 3.   Operating Condition at Redelivery...............................84
SCHEDULE 4.   Insurances Requirements.........................................88
SCHEDULE 5.   Intentionally Omitted...........................................91
SCHEDULE 6.   Lease Supplement No.____........................................92
SCHEDULE 7.   Form of Lease Termination Certificate...........................95
SCHEDULE 8.    Form of Aircraft Usage Report..................................97

<PAGE>

                            AIRCRAFT LEASE AGREEMENT

THIS AGREEMENT is made as of the 7th day of January, 2000 between:-

(1)       AVIATION  FINANCIAL  SERVICES INC., a company  incorporated  under the
          laws of Delaware and a wholly  owned  subsidiary  of General  Electric
          Capital  Corporation  whose  principal  place of business is at c/o GE
          Capital  Aviation  Services,  Inc.,  201 High  Ridge  Road,  Stamford,
          Connecticut, 06927 ("Lessor"); and

(2)       FRONTIER AIRLINES,  INC., a company incorporated under the laws of the
          State of Colorado whose  principal  place of business is at 12015 East
          46th  Avenue,  Denver,  Colorado,  80239,  United  States  of  America
          ("Lessee").

     WHEREAS:  Lessor  wishes to lease to Lessee  and Lessee is willing to lease
     from Lessor the  Aircraft on the terms of this  Agreement.  IT IS AGREED as
     follows:-

1.         INTERPRETATION

1.1        DEFINITIONS

           In this Agreement the following expressions have the meanings set out
           opposite:-

           After-Tax Basis
                         in the  case of any  amount  payable  on an  "After-Tax
                    Basis" to or for the  benefit of any Person  (including  any
                    amount  payable  pursuant to this  definition)  (a "Required
                    Payment"),  the total amount that must be paid is the amount
                    such that,  after  deduction  of the net amount of all Taxes
                    required  to be paid  by such  Person  with  respect  to the
                    receipt or accrual by it of such amount (and  assuming  that
                    such Person is subject to (i) United States  Federal  income
                    tax  at the  highest  marginal  statutory  rate  imposed  on
                    corporations  for the relevant  period,  (ii) United  States
                    state and local income taxes at the composite of the highest
                    marginal  statutory  rates  imposed  on such  Person for the
                    relevant  period,  as such composite rate shall be certified
                    by a  financial  officer of such  Person,  and (iii)  income
                    taxes (if any)  imposed  by  countries  outside  the  United
                    States at the actual  rates  imposed on such Person) the net
                    amount received is the amount of the Required Payment.

           Agreed Value
                         the  amount   specified  for  Agreed  Value  in  Letter
                    Agreement No. 1.

           Air Authority
                         Federal Aviation Administration ("FAA").

           Aircraft
                         the aircraft  described in Part 1 of Schedule 1, (which
                    term includes where the context admits a separate  reference
                    to  all  Engines,  Parts  and  Aircraft  Documents)  or  any
                    aircraft  substituted  in place  thereof  pursuant to Clause
                    11.1 or 11.2.

           Aircraft
                         Documents the documents, data and records identified in
                    Part 2 of Schedule 1 and all additions,  renewals, revisions
                    and  replacements  from time to time made in accordance with
                    this Agreement.

           Airframe
                         the  Aircraft,   excluding  the  Engines  and  Aircraft
                    Documents.
           Appraisal Procedure
                         the  following  procedure  for  determining  the  "fair
                    market  rental  value" of the  Aircraft:  (a)  Lessor  shall
                    select an  independent  aircraft  appraiser who shall make a
                    determination of "fair market rental value" of the Aircraft;
                    and (b) the fees and expenses of the appraiser shall be paid
                    by Lessee.  "Fair market  rental value" shall mean the value
                    determined  by an  appraisal  completed  on an  "as-is"  and
                    "where-is" basis.

           APU
                         the auxiliary  power unit  installed on the Aircraft on
                    the Delivery Date and any  replacement  auxiliary power unit
                    installed in accordance with this Agreement.

           Boeing
                         The Boeing  Company,  a Delaware  corporation  with its
                    principal office in Seattle, State of Washington, U.S.A.

           Business
                         Day a day (other  than a  Saturday  or Sunday) on which
                    business of the nature required by this Agreement is carried
                    out in the State of  Incorporation or where used in relation
                    to  payments  on which  banks are open for  business  in New
                    York.

           Certificated Air Carrier
                         any Person (except the United States  Government)  that
                    is a citizen of the United  States of America (as defined in
                    Section  40102 of Title 49 of the  United  States  Code) and
                    holding a Certificate  of Public  Convenience  and Necessity
                    issued under  Section 41102 of Title 49 of the United States
                    Code by the Department of  Transportation or any predecessor
                    or  successor   agency  thereto,   or,  in  the  event  such
                    certificates  shall no longer be issued,  any Person (except
                    the  United  States  Government)  that is a  citizen  of the
                    United  States of America  (as  defined in Section  40102 of
                    Title 49 of the United  States Code) and legally  engaged in
                    the business of transporting for hire passengers or cargo by
                    air  predominantly  to,  from or between  points  within the
                    United States of America,  and, in either  event,  operating
                    commercial  jet  aircraft  capable of  carrying  ten or more
                    individuals or 6,000 pounds or more of cargo,  which also is
                    certificated  so as to entitle Lessor,  as a lessor,  to the
                    benefits  of Section  1110 of Title 11 of the United  States
                    Code with respect to the Aircraft.

           Cold Section Refurbishment
                         with  respect  to  any  Engine  the  completion  of the
                    following:  completely unstacking either high or low or both
                    compressor sections, if needed, and completing the following
                    for   the   appropriate   section(s):   visual   inspection;
                    de-blading    discs   as    necessary;    visual   and   NDT
                    (Non-Destructive  Testing)  inspections  as necessary of all
                    discs;  verification  that all snap  diameters  on discs are
                    within  limits;  inspection  of all blades for proper  chord
                    dimensions  and cracking;  repair or  replacement  of blades
                    below   minimums;   inspection  and  repair  of  stators  as
                    necessary; blade-up of discs using new lock plates; assembly
                    of rotors in the  compressor;  balance  of all  rotors;  and
                    installation of rotors in the engine.

           Cycle
                         one take-off and landing of the Aircraft.

           DGAC
                         means the Civil Aviation Authority of Spain.

           Damage Notification Threshold
                         the amount  specified  therefor in Letter Agreement No.
                    1.

           Default
                         any  Event of  Default  and any  event  which  with the
                    giving  of   notice,   lapse  of  time,   determination   of
                    materiality  or  fulfillment   of  other   condition   would
                    constitute an Event of Default.

           Delivery Condition Requirements
                         the requirements specified on Part 1 of Schedule 1.

           Delivery Date
                         the date on which the Aircraft is tendered for delivery
                    by Lessor in accordance with this Agreement.

           Delivery Location
                         Marana, Arizona.

           Deposit
                         all amounts  payable  pursuant to Clause 5.1 whether in
                    cash or by Letter of Credit.

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

           Engine
                         whether or not installed on the Aircraft:-

                         (a) each engine of the  manufacture and model specified
                    in Part 1 of Schedule 1 (each of which has 750 or more rated
                    takeoff  horsepower or the  equivalent  of such  horsepower)
                    which Lessor elects to tender to Lessee with the Aircraft on
                    the Delivery Date, such engines being described as to serial
                    numbers on the  certificate  of acceptance to be executed by
                    Lessee  upon  delivery  of the  Aircraft;  or
                         (b) any engine which has replaced that engine, title to
                    which has or  should  have,  passed to Lessor in  accordance
                    with this  Agreement;  and in each case includes all modules
                    and Parts from time to time  belonging  to or  installed  in
                    that engine but excludes any properly  replaced engine title
                    to which has, or should have,  passed to Lessee  pursuant to
                    this Agreement.

           Engine Event of Loss
                         the occurrence with respect to an Engine only,  whether
                    or not  installed  on the  Airframe,  of any of those events
                    described in provisions (a) through (d) of the definition of
                    Event of Loss.  Engine  Flight  Hour means each hour or part
                    thereof an Engine is operated, elapsing from the moment that
                    wheels of an  aircraft  on which  such  Engine is  installed
                    leave the  ground  until the  wheels of such  aircraft  next
                    touch the ground.

           Engine Refurbishment
                         a complete  disassembly,  inspection  and repair of the
                    modules  of  an  Engine   per  the   engine   manufacturer's
                    maintenance manual, so that such Engine shall have a minimum
                    expected on-wing life of * hours and * cycles.

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

           Event of Default
                         an event or condition specified in Clause 13.1.

           Event of Loss
                         with  respect  to  the  Aircraft   (including  for  the
                    purposes of this definition the Airframe):-

                         (a)  the  actual  or  constructive  total  loss  of the
                    Aircraft (including any damage to the Aircraft which results
                    in an insurance  settlement on the basis of a total loss, or
                    requisition  for use or hire which  results in an  insurance
                    settlement on the basis of a total loss); or

                         (b)  it  being  destroyed,  damaged  beyond  repair  or
                    permanently  rendered  unfit for  normal  use for any reason
                    whatsoever; or

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

                         (d) the hi-jacking, theft, condemnation,  confiscation,
                    seizure or requisition for use or hire of the Aircraft which
                    deprives  any person  permitted  by this  Agreement  to have
                    possession  and/or  use of the  Aircraft  of its  possession
                    and/or use for more than * days (or, if earlier,  beyond the
                    Expiry Date).

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

           Expiry Date
                         the day preceding the numerically  corresponding  day *
                    months  after the  Delivery  Date or if earlier  the date on
                    which:-

                         (a) the date  Lessor,  acting  in  accordance  with the
                    terms  of  this  Agreement  terminates  the  leasing  of the
                    Aircraft to Lessee under this Agreement; or

                         (b) Lessor  receives the Agreed Value together with any
                    other  amounts  then due and unpaid by Lessee  following  an
                    Event of Loss.

           FAA
                         the  Federal  Aviation  Administration  of  the  United
                    States of America and any successor thereof.

           FAR
                         the Federal Aviation  Regulations set forth in Title 14
                    of the United States Code of Federal Regulations, as amended
                    and modified from time to time.

           Federal Aviation  Act
                         The  Transportation  Laws of the  United  States as set
                    forth  at 49  United  States  Code  et seq.  or any  similar
                    legislation  of the  United  States of  America  enacted  in
                    substitution or replacement thereof.

           Financing Statements
                         Uniform Commercial Code Financing Statements in respect
                    of the Aircraft and Engines leased  hereunder  prepared in a
                    form  acceptable for filing with the  applicable  Government
                    Entities in the Habitual  Base, the state in which the chief
                    executive  office  (as that term is  defined in Article 9 of
                    the  Uniform  Commercial  Code as in effect in the  Habitual
                    Base) and such other jurisdiction as Lessor shall reasonably
                    require.

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

           GAAP
                         generally accepted accounting  principles in the United
                    States.
           Governing Law
                         the laws of the State of New York.

           Government Entity
                         (a)  any  national  government,  political  subdivision
                    thereof, or local jurisdiction therein;
                         (b) any instrumentality,  board, commission,  court, or
                    agency of any thereof, however constituted; and

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

           Gross Negligence
                         means any intentional, conscious or voluntary action or
                    decision which is taken with wanton, reckless,  flagrant and
                    culpable  disregard for the  consequences  of such action or
                    decision.
           Guaranty
                         means  a   Guaranty   of   General   Electric   Capital
                    Corporation  to Lessee with respect to Lessor  substantially
                    in the form attached hereto as Exhibit A to Letter Agreement
                    No. 1.

           Habitual Base
                         the State of Colorado or,  subject to the prior written
                    consent of Lessor, any other state,  country or countries in
                    which the Aircraft is for the time being habitually based.

           Hot Section Refurbishment
                         with  respect  to  any  Engine,   the  complete  visual
                    inspection and repair as necessary of the combustion section
                    of an Engine in an engine repair/overhaul  station including
                    without limitation  complete unstacking of the high pressure
                    or low pressure  turbine or both if needed;  complete visual
                    inspection  of  such  turbine(s);  de-blading  of  discs  as
                    required;  visual  and  NDT  inspections  of  all  discs  as
                    required;  verification that all snap diameters on discs are
                    within  limits;  inspection  of all blades for proper  chord
                    dimensions and cracking; repair or replacement of all blades
                    below   minimums;   inspection  and  repair  of  stators  as
                    necessary; blade-up of discs using new lock plates; assembly
                    of  rotors  in  the  turbine;  balance  of all  rotors;  and
                    installation of rotors in the engine.

           Indemnitee
                         each of GE Capital Aviation Services,  Inc. ("GECASI"),
                    GE Capital Aviation Services Limited ("GECASL"), Lessor, and
                    any   of   their   respective    successors   and   assigns,
                    shareholders,     subsidiaries,     affiliates,    partners,
                    contractors,   directors,  officers,  servants,  agents  and
                    employees and indemnitees;  provided,  however, that no such
                    Indemnitee  shall be entitled to an  indemnification  to the
                    extent such Indemnitee is manufacturer of the Aircraft,  any
                    Engines, or Parts in its capacity as such.

           Insurances
                         as defined in Clause 9.1 hereof.

           Landing Gear
                         the landing gear assembly of the Aircraft excluding any
                    rotable components.

           Law
                         shall  mean  and  include  (a)  any  statute,   decree,
                    constitution,  regulation, order judgment or other directive
                    of any Governmental Entity; (b) any treaty, pact, compact or
                    other  agreement  to  which  any  Governmental  Entity  is a
                    signatory  or  party;  (c) any  judicial  or  administrative
                    interpretation or application of any Law described in (a) or
                    (b) above;  and (d) any  amendment  or  revision  of any Law
                    described in (a), (b) or (c) above.

           Lease Supplement
                         a  Lease  Supplement,  substantially  in  the  form  of
                    Schedule 6 hereto, entered into between Lessor and Lessee.

           Lessee's Maintenance Program
                         the Maintenance  Program  specifically  approved by the
                    Air Authority for Lessee's maintenance of the Aircraft.

           Lessor Lien
                         (a) any Security Interest  whatsoever from time to time
                    created  by  or  through  Lessor  in  connection   with  the
                    financing of the Aircraft;

                         (b) any  other  Security  Interest  in  respect  of the
                    Aircraft which results from acts of or claims against Lessor
                    not related to the transactions contemplated by or permitted
                    under this Agreement; and

                         (c)  Security  Interests in respect of the Aircraft for
                    Lessor Taxes.

           Lessor Taxes
                         Taxes:-

                         (a) imposed as a direct  result of activities of Lessor
                    in the  jurisdiction  imposing the Tax unrelated to Lessor's
                    dealings with Lessee or to the transactions  contemplated by
                    this  Agreement or the  operation of the Aircraft by Lessee;
                    or

                         (b)  imposed  on the net  income,  profits  or gains of
                    Lessor  by any  Government  Entity  in the  United  State of
                    America;  provided,  however,  that  Lessor  Taxes shall not
                    include  any  Tax  imposed  by  any   government  or  taxing
                    authority of any jurisdiction if and to the extent that such
                    Tax  results  from  (i)  the  use,  operation,  presence  or
                    registration  of the Aircraft,  the Airframe,  any Engine or
                    any Part in the  jurisdiction  imposing the Tax, or (ii) the
                    situs of organization, any place of business or any activity
                    of Lessee or any other  Person  having  use,  possession  or
                    custody of the  Aircraft,  the  Airframe,  any Engine or any
                    Part in the jurisdiction imposing the Tax; or

                         (c) imposed  with respect to any period  commencing  or
                    event  occurring  after the  Expiry  Date and  unrelated  to
                    Lessor's   dealings  with  Lessee  or  to  the  transactions
                    contemplated by this Agreement;

                         provided  always,  that Lessor  Taxes shall not include
                    any income  taxes or other  amounts  payable  and subject to
                    indemnification in favor of Lessor pursuant to the Lease.

           Letter Agreement No. 1
                         that certain Letter  Agreement No. 1 between Lessor and
                    Lessee dated as of the date hereof.

           MACRS Deductions
                         means cost recovery  deductions  for *% of the Lessor's
                    cost of the  Aircraft  pursuant  to  Section  168(b)  of the
                    Internal Revenue Code of 1986, as amended, commencing in the
                    year 2000,  computed  (i) on the basis that the  Aircraft is
                    "7-year  property"  (within the meaning of Section 168(e) of
                    the Code),  (ii) by using the *%  declining  balance  method
                    over   a  7  year   recovery   period,   switching   to  the
                    straight-line  method  for  the  first  taxable  year of the
                    Lessor during the term for which such method yields a larger
                    allowance,  (iii) assuming salvage value is zero, (iv) using
                    a half-year convention and (v) assuming that the Aircraft is
                    sold at the end of the Term of * months.

           Letter of  Credit
                         means any letter of credit  issued in  relation  to the
                    Lease  pursuant  to  Section  5.15  and any  replacement  or
                    renewal of that letter of credit.

           Maintenance Performer
                         the Lessee, Tramco, USAir Inc., or such other Person as
                    is  approved  by  the  FAA  to  perform  maintenance  and/or
                    modification   services  on   commercial   aircraft   and/or
                    commercial aircraft engines, which Person shall be agreed by
                    Lessor  and   Lessee  to  have   recognized   standing   and
                    experience, suitable facilities for the level of maintenance
                    being  carried out and  suitable  equipment  to perform such
                    services on aircraft  and/or engines of the same or improved
                    model  as the  Aircraft  or,  in the  case of  engines,  the
                    Engines.

           Maintenance Program
                         an Air Authority approved  maintenance  program for the
                    Aircraft  based  upon  the  Manufacturer's   specifications,
                    service bulletins,  planning documents,  maintenance manuals
                    and  documents  and   encompassing   scheduled   maintenance
                    (including    block    maintenance),     condition-monitored
                    maintenance,  and/or  on-condition  maintenance of Airframe,
                    Engines and Parts,  including but not limited to, servicing,
                    testing,   preventive   maintenance,   repairs,   structural
                    inspections,     system    checks,    overhauls,    approved
                    modifications,   service  bulletins,   engineering   orders,
                    airworthiness directives, corrosion control, inspections and
                    treatments.

           Major Checks
                         any C-Check,  multiple C-Check, D-Check or annual heavy
                    maintenance   visit  or  segment   thereof   suggested   for
                    commercial aircraft of the same model as the Aircraft by its
                    manufacturer  (however  denominated)  as set out in Lessee's
                    Maintenance Program.

           Manufacturer
                         Boeing.

           Minimum Liability Coverage
                         the amount set forth therefore in Letter  Agreement No.
                    1.

           Mortgage Convention
                         shall  mean  the  Convention   for  the   International
                    Recognition of Rights in Aircraft, signed (ad referendum) at
                    Geneva, Switzerland, on June 19, 1948, and amended from time
                    to time, but excluding the terms of any adhesion  thereto or
                    ratification  thereof  containing  reservations to which the
                    United States of America does not accede.

           Operative Documents
                         shall  mean  this  Agreement,   all  Lease  Supplements
                    hereto, Letter Agreement No. 1, the Guaranty,  any schedules
                    or  documents  prepared  in  conformance  to  the  Schedules
                    hereto, any side-letters  related hereto and any amendments,
                    revisions, supplements or modifications hereto or thereto.

           Other Agreements
                         any agreement (other than this Agreement) made or to be
                    made between Lessor (or an associate or affiliate thereof or
                    a trustee-lessor acting for Lessor as beneficiary, including
                    without  limitation  Polaris Holding Company) or AerFi Group
                    plc (or an associate or affiliate thereof) and Lessee (or an
                    associate or affiliate thereof).

           Part
                         whether or not installed on the Aircraft:-

                         (a) any component,  furnishing or equipment (other than
                    a  complete  Engine)  furnished  with  the  Aircraft  on the
                    Delivery Date; and

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

                         but  excludes  any such items  title to which  has,  or
                    should have, passed to Lessee pursuant to this Agreement.

           Permitted Lien
                         (a) any lien for Taxes not  assessed  or, if  assessed,
                    not yet due and payable, or being contested in good faith by
                    appropriate proceedings;

                         (b)  any  lien  of  a  repairer,   mechanic,   carrier,
                    hangarkeeper  or other  similar lien arising in the ordinary
                    course of  business  or by  operation  of Law in  respect of
                    obligations  which are not overdue or are being contested in
                    good faith by appropriate proceedings; and

                         (c) any Lessor Lien.

                         but  only if (in the  case of  both  (a) and  (b))  (i)
                    adequate  resources  have been  provided  by Lessee  for the
                    payment  of  the  Taxes  or   obligations;   and  (ii)  such
                    proceedings,  or the continued existence of the lien, do not
                    give rise to any likelihood of the sale, forfeiture or other
                    loss of the Aircraft or any interest  therein or of criminal
                    liability on Lessor.

           Person
                         any individual person, corporation,  partnership, firm,
                    joint  stock   company,   joint  venture,   trust,   estate,
                    unincorporated organization, association, Government Entity,
                    or  organization or association of which any of the above is
                    a member or a participant.

           Redelivery Location
                         a  location  on  Lessee's  route  system in the  United
                    States  designated  by  Lessor,  or such other  location  as
                    Lessor and Lessee shall agree.

           Related Agreements
                         any agreement (other than this Agreement) made or to be
                    made  between or with Lessor (or an  associate  or affiliate
                    thereof   or  a   trustee-lessor   acting   for   Lessor  as
                    beneficiary,  including without  limitation  Polaris Holding
                    Company)  and  Lessee  (or  an  associate  or  affiliate  of
                    Lessee).

           Replacement Engine
                         an  engine  of the same  manufacturer  and  model,  and
                    having equivalent value, utility,  modification status, time
                    elapsed  since Hot Section  Refurbishment  and Cold  Section
                    Refurbishment and remaining warranty status as the Engine it
                    is intended to replace under Clause 11.1(c),  or at Lessee's
                    option,  an engine of the same  manufacturer  as such Engine
                    but of an improved  model,  and  otherwise of an  equivalent
                    value and utility and suitable for  installation  and use on
                    the Airframe  without  impairing the value or utility of the
                    Airframe and compatible with the remaining installed Engine.

           Rent
                         all amounts payable pursuant to Clause 5.3.

           Rental Period
                         each period ascertained in accordance with Clause 5.2.

           Rent Date
                         the first day of each Rental Period.

           Required LC Expiry Date
                         means the date being * days after the Expiry Date.

           Return Occasion
                         the date on which the Aircraft is redelivered to Lessor
                    in accordance with Clause 12 hereof.

           Scheduled Delivery Month
                         *.

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

           State of Incorporation
                         State of Colorado.

           State of Registration
                         United States of America.

           Subsidiary
                         (a) in  relation  to any  reference  to  accounts,  any
                    company whose accounts are consolidated with the accounts of
                    Lessee in accordance with GAAP;

                         (b) for any other purpose an entity from time to time:-

                         (i) of which another has direct or indirect  control or
                    owns  directly  or  indirectly  more than 50 per cent of the
                    voting share capital; or

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

           Supplemental Rent
                         all amounts payable under Clause 5.4(a).

           Tax Indemnitee
                         means an  Indemnitee  and for any taxable year in which
                    the  Lessor  joins in the filing of a  consolidated  federal
                    income  tax  return,   shall  include  each  member  of  the
                    affiliated  group (within the meaning of Section 1504 of the
                    Internal Revenue Code of 1986, as amended,  or any successor
                    provision thereto) of which the Lessor is a member.

           Taxes
                         any  and  all   present  and  future   taxes,   duties,
                    withholdings,  levies, assessments,  imposts, fees and other
                    governmental   charges  of  all  kinds   together  with  any
                    penalties,  fines,  surcharges and interest  thereon and any
                    additions thereto.

           Term
                         the period  commencing  on the Delivery Date and ending
                    on the Expiry  Date,  except  that the Term may be  extended
                    beyond the Expiry Date if the Return  Occasion is delayed in
                    the circumstances  specified,  and subject to the limitation
                    described, in Clause 12.3.

           United States
                         the United States of America

           Viva
                         collectively  means (i) Viva Vuelos  Internacionales de
                    Vacaciones,  S.A. (ii) Hispamer  Servicos  Financieros EFC -
                    S.A. and (iii) Leasebanesto S.A

           Wet Lease
                         any  arrangement  whereby  Lessee agrees to furnish the
                    Aircraft to a third party pursuant to which the Aircraft (i)
                    shall be solely within the operational control of Lessee and
                    shall be  operated  solely by  regular  employees  of Lessee
                    possessing all current  certificates and licenses that would
                    be  required   under  the  Federal   Aviation  Act  for  the
                    performance  by such employees of similar  functions  within
                    the United  States of America,  (ii) shall be  maintained by
                    Lessee in accordance with Lessee's  Maintenance  Program and
                    (iii)  shall be and remain  subject and  subordinate  to all
                    other  terms and  conditions  of this  Agreement;  provided,
                    however,  that Lessee shall remain  primarily liable for the
                    performance   of  all  of  the   terms  of  this   Agreement
                    (including, without limitation, its obligations set forth in
                    Clause 9 of this  Agreement)  to the same  extent as if such
                    arrangement had not been entered into.

1.2        CONSTRUCTION

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

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

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

     (iii) any  document  shall  include  that  document as amended,  novated or
     supplemented;

     (iv) a Clause or a Schedule is a reference  to a clause of or a schedule to
     this Agreement;

     (v) a reference to "Agreement",  "the Agreement" or "this Agreement" shall,
     unless expressly provided  otherwise,  mean and include this Aircraft Lease
     Agreement and each of the other Operative Documents; and

(b)  the  headings  in this  Agreement  are to be  ignored  in  construing  this
     Agreement.

2.         REPRESENTATIONS AND WARRANTIES

2.1        Lessee's  Representations  and  Warranties:   Lessee  represents  and
           warrants to Lessor that:-

(a)  Status:  Lessee is a corporation  duly  incorporated  and validly  existing
     under the laws of the State of Incorporation and has the corporate power to
     own its assets and carry on its  business as it is being  conducted  and is
     the  holder  of all  necessary  air  transportation  licenses  required  in
     connection therewith and with the use and operation of the Aircraft;

(b)  Power and  authority:  Lessee  has the  corporate  power to enter  into and
     perform,  and has taken all  necessary  corporate  action to authorize  the
     entry  into,   performance   and  delivery  of,  this   Agreement  and  the
     transactions contemplated by this Agreement;

(c)  Legal validity:  this Agreement has been duly entered into and delivered by
     Lessee, and this Agreement does, and the Operative Documents to which it is
     a party when executed and delivered by Lessee will, constitute legal, valid
     and binding  obligations of Lessee,  enforceable  in accordance  with their
     respective  terms,  except  as may be  limited  by  applicable  bankruptcy,
     insolvency, reorganization,  moratorium or other similar Laws affecting the
     enforcement of creditors' rights generally, and, to the extent that certain
     remedies require or may require  enforcement by a court of equity,  by such
     principles  of  equity  (regardless  of  whether  such   enforceability  is
     considered  in a  proceeding  in  equity  or  at  law)  as a  court  having
     jurisdiction  may impose and by Laws which may affect some of such remedies
     but which do not make the available remedies inadequate for the substantial
     realization of the benefits provided herein;

(d)  Non-conflict:  the  entry  into  and  performance  by  Lessee  of,  and the
     transactions contemplated by, this Agreement do not and will not:-

     (i) conflict with any laws binding on Lessee; or

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

     (iii)  conflict  with or result in default under any  indenture,  mortgage,
     chattel mortgage,  deed of trust,  conditional sales contract,  lease, bank
     loan or credit agreement or other agreement which is binding upon Lessee or
     any of its assets nor result in the creation of any Security  Interest over
     any of its assets;

(e)  Authorization:    all   authorizations,    consents,    registrations   and
     notifications  required in  connection  with the entry  into,  performance,
     validity  and  enforceability  of,  this  Agreement  and  the  transactions
     contemplated  by this  Agreement,  have  been  (or  will on or  before  the
     Delivery Date have been) obtained or effected (as  appropriate) and are (or
     will on their being obtained or effected be) in full force and effect;

(f)  No Immunity:

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

     (ii)  neither  Lessee  nor any of its  assets is  entitled  to any right of
     immunity  and the entry into and  performance  of this  Agreement by Lessee
     constitute private and commercial acts;

(g)  Accounts:  the audited consolidated accounts of Lessee and its Subsidiaries
     most recently delivered to Lessor,  including balance sheets and statements
     of income and retained earnings:-

     (i) have been prepared in accordance with GAAP; and

     (ii) fairly  represent the consolidated  financial  condition of Lessee and
     its Subsidiaries as at the date to which they were drawn up;

(h)  Restricted  Countries:  Lessee does not hold a contract or other obligation
     to operate the  Aircraft to or for any of the  countries  designated  under
     U.S. Code of Federal  Regulations 31 CFR Parts 500-599  including,  without
     limitation,   Cuba,  Iraq,  Iran,  Libya,   North  Korea,  the  Bosnia-Serb
     controlled  areas of the Republic of Bosnia and  Herzegovina  and the Unita
     Rebels of Angola.

(i)  Chief Executive's Office:  Lessee's Chief Executive Office (as that term is
     defined in  Article 9 of the  Uniform  Commercial  Code as in effect in the
     State of Colorado) is located at 12015 East 46th Avenue, Suite 200, Denver,
     Colorado, United States of America;

(j)  Certificated Air Carrier:  Lessee is a Certificated Air Carrier and Lessor,
     as lessor of the Aircraft to Lessee, is entitled to the benefits of Section
     1110 of Title 11 of the United  States Code with  respect to the  Aircraft;
     and

(j)  Citizen of the United States: Lessee is a "citizen of the United States" as
     defined in Section 40102 of Title 49 of the United States Code.

2.2        Lessee's  Further  Representations  and  Warranties:  Lessee  further
           represents and warrants to Lessor that:-

(a)  No Default:

     (i) no Default has  occurred  and is  continuing  or might  result from the
     entry into or performance  of the Operative  Documents to which Lessee is a
     party; and

     (ii) no other event or  condition  has  occurred  and is  continuing  which
     constitutes (or with the giving of notice, lapse of time,  determination of
     materiality  or the  fulfillment of any other  applicable  condition or any
     combination of the foregoing,  might  constitute) a material  default under
     any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
     contract,  lease, bank loan or credit agreement or other agreement which is
     binding on Lessee or any assets of Lessee;

(b)  Registration:

     (i) except for the filing for  recordation  of this  Agreement  and a Lease
     Supplement  with  the  FAA,  and the  filing  of any  Financing  Statements
     required (and continuation  statements at periodic  intervals),  no further
     filing or recording of this Agreement or of any other  document  (including
     any financing statement under Article 9 of the Uniform Commercial Code) and
     no further  action,  is or will be  necessary  under the Laws of the United
     States,  the State of  Incorporation,  and the State of  Registration,  the
     Habitual Base or any other states in order to (A) fully establish,  perfect
     and protect  Lessor's title to, and interest in, the Aircraft or any Engine
     or Part as against  Lessee or any third party,  or (B) ensure the validity,
     effectiveness  and  enforceability of this Agreement or any other Operative
     Document to which the Lessee is a party; and

     (ii)  under  the  laws  of  the  State  of  Incorporation,   the  State  of
     Registration  and the Habitual  Base the  property  rights of Lessor in the
     Aircraft  have been fully  established,  perfected  and  protected and this
     Agreement  will  have  priority  in all  respects  over the  claims  of all
     creditors of Lessee;

(c)  Litigation:  no litigation,  arbitration or administrative  proceedings are
     pending or to its knowledge  threatened  against Lessee which, if adversely
     determined,  would  have a  material  adverse  effect  upon  its  financial
     condition or business or its ability to perform its obligations  under this
     Agreement;

(d)  Pari Passu:  the  obligations  of Lessee under the  Operative  Documents to
     which it is a party rank at least pari  passu  with all other  present  and
     future  unsecured  and  unsubordinated  obligations  (including  contingent
     obligations)  of Lessee,  with the  exception  of such  obligations  as are
     mandatorily preferred by law and not by virtue of any contract;

(e)  Material  Adverse Change:  there has been no material adverse change in the
     consolidated  financial  condition  of Lessee and its  Subsidiaries  or the
     financial  condition of Lessee  since the date to which the  accounts  most
     recently provided to Lessor on or prior to the Delivery Date were drawn up;

(f)  Taxes:  Lessee has delivered all necessary  returns and payments due to the
     tax  authorities in the State of  Incorporation,  the State of Registration
     and the  Habitual  Base and is not required by Law to deduct any Taxes from
     any payments under this Agreement;

(g)  Information:  the  financial and other  information  furnished by Lessee in
     connection  with this  Agreement  does not contain any untrue  statement or
     omit to state facts, the omission of which makes the statements therein, in
     the light of the circumstances under which they were made, misleading,  nor
     omits to  disclose  any  material  matter to Lessor and all  forecasts  and
     opinions  contained therein were honestly made on reasonable  grounds after
     due and careful inquiry by Lessee; and

(h)  ERISA: Lessee is not engaged in any transaction in connection with which it
     could be subjected to either a civil penalty  assessed  pursuant to Section
     502 of ERISA or any tax  imposed by Section  4975 of the  Internal  Revenue
     Code; no material liability to the Pension Benefit Guaranty Corporation has
     been or is expected by Lessee to be incurred  with  respect to any employee
     pension  benefit  plan (as  defined  in Section 3 of ERISA)  maintained  by
     Lessee or by any trade or  business  (whether  or not  incorporated)  which
     together  with Lessee would be treated as a single  employer  under Section
     4001 of ERISA and Section 414 of the Internal  Revenue Code; there has been
     no reportable  event (as defined in Section  4043(b) of ERISA) with respect
     to any such employee pension benefit plan; no notice of intent to terminate
     any such employee  pension benefit plan has been filed or is expected to be
     filed,  nor has any such  employee  pension  benefit  been  terminated;  no
     circumstance  exists or is anticipated that constitutes or would constitute
     grounds  under  Section  4042 of ERISA  for the  Pension  Benefit  Guaranty
     Corporation to institute proceedings to terminate,  or to appoint a trustee
     to manage the administration of, such an employee pension benefit plan; and
     no  accumulated  funding  deficiency (as defined in Section 302 of ERISA or
     Section 412 of the Internal  Revenue Code),  whether or not waived,  exists
     with respect to any such employee pension benefit plan.

2.3        Repetition:  The  representations  and  warranties  in Clause 2.1 and
           Clause  2.2  will  survive  the  execution  of  this  Agreement.  The
           representations and warranties contained in Clause 2.1 and Clause 2.2
           will be deemed to be  repeated  by Lessee on the  Delivery  Date with
           reference  to  the  facts  and  circumstances   then  existing.   The
           representations and warranties contained in Clause 2.1 will be deemed
           to be repeated by Lessee on each Rent Date as if made with  reference
           to the facts and circumstances then existing.

2.4        Lessor's  Representations  and  Warranties:  Lessor  represents   and
           warrants to Lessee that:-

(a)  Status:  Lessor is a company duly  incorporated  and validly existing under
     the laws of the  State of New York and has the  corporate  power to own its
     assets and carry on its business as it is now being conducted;

(b)  Power and  authority:  Lessor  has the  corporate  power to enter  into and
     perform,  and has taken all  necessary  corporate  action to authorize  the
     entry into,  performance and delivery of, the Operative  Documents to which
     it is a party and the transactions  contemplated by the Operative Documents
     to which it is a party;

(c)  Legal validity:  the Operative  Documents to which it is a party constitute
     Lessor's legal, valid and binding obligation;

(d)  Non-conflict:  the  entry  into  and  performance  by  Lessor  of,  and the
     transactions  contemplated  by, the  Operative  Documents  to which it is a
     party do not and will not:-

     (i) conflict with any laws binding on Lessor; or

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

     (iii) conflict with any document which is binding upon Lessor or any of its
     assets;

(e)  Authorization:   so  far  as  concerns  the  obligations  of  Lessor,   all
     authorizations,  consents,  registrations and notifications  required under
     the laws of the  State  of New York in  connection  with  the  entry  into,
     performance,   validity  and   enforceability   of,  and  the  transactions
     contemplated  by, the Operative  Documents to which it is a party by Lessor
     have been (or will on or before the  Delivery  Date have been)  obtained or
     effected  (as  appropriate)  and are (or will on their  being  obtained  or
     effected be) in full force and effect; and

(f)  No Immunity:

     (i)  Lessor  is  subject  to  civil  commercial  law  with  respect  to its
     obligations under the Operative Documents to which it is a party; and

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

3.         CONDITIONS PRECEDENT

3.1        Conditions  Precedent:  Lessor's  obligation to deliver and lease the
           Aircraft under this Agreement is subject  to  satisfaction of each of
           the following conditions:-

(a)  receipt by Lessor from  Lessee not later than * Business  Days prior to the
     Delivery  Date of the  following  satisfactory  in form  and  substance  to
     Lessor:-

     (i) Constitutional  Documents:  a copy of the  constitutional  documents of
     Lessee including without limitation articles of incorporation, bylaws and a
     current  certificate of good standing  issued by the secretary of the state
     for the State of Incorporation;

     (ii)  Resolutions:  a copy of a  resolution  of the board of  directors  of
     Lessee approving the terms of, and the  transactions  contemplated by, this
     Agreement,  resolving that it enter into this Agreement,  and authorizing a
     specified  person  or  persons  to  execute  this  Agreement  and the other
     Operative  Documents  to which it is a party  and  accept  delivery  of the
     Aircraft on its behalf;

     (iii) Opinion:  evidence that opinions as reasonably  agreed by Lessor will
     be issued on the Delivery Date by legal counsel acceptable to Lessor;

     (iv) FAA  Opinion:  a draft of an opinion of Crowe & Dunlevy  P.C. or other
     counsel acceptable to Lessor who are recognized  specialists with regard to
     FAA registration  matters in form acceptable to Lessor as to the due filing
     for recordation of this  Agreement,  to be delivered in executed final form
     to Lessor and Lessee upon such filing and recordation;

     (v) Approvals:  evidence of the issue of each approval, license and consent
     which  may  be  required  in  relation  to,  or  in  connection  with,  the
     performance  by  Lessee  of any of its  obligations  hereunder  (including,
     without  limitation,  any  consent to the export of the  Aircraft  from the
     Habitual  Base and consent to the  deregistration  of the Aircraft upon the
     termination of the leasing of the Aircraft under this Agreement);

     (vi) Licenses: copies of Lessee's Certificate of Convenience and Necessity,
     Radio License, FAR Part 121 operator's certificates and all other licenses,
     certificates  and  permits  required  by  Lessee  in  relation  to,  or  in
     connection with, the operation of the Aircraft;

     (vii) Process Agent: a letter from the process agent appointed by Lessee in
     this Agreement accepting that appointment;

     (viii) Certificate: a certificate of a duly authorized officer of Lessee:-

          (a)  setting out a specimen  of each  signature  referred to in Clause
          3.1(a)(ii);

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

          (c) certifying that Lessee's  representations and warranties contained
          in Clause 2.1 and 2.2 are true and correct on the Delivery  Date as if
          given on such date; and

          (d)  certifying  that there has been no  material  change in  Lessee's
          Constitutional  Documents  since  originally  delivered  by  Lessee to
          Lessor;

     (ix) Air  Traffic  Control:  a letter from Lessee  addressed  to  Transport
     Canada or other relevant air traffic  control  authority  pursuant to which
     Lessee  authorizes the addressee to issue to Lessor,  upon Lessor's request
     from time to time,  a statement of account of all sums due by Lessee to the
     authority in respect of all aircraft  (including,  without limitation,  the
     Aircraft) operated by Lessee;

     (x)  Deregistration  Power:  an irrevocable  power of attorney  authorizing
     Lessor or such other  person as Lessor may from time to time  specify to do
     any thing or act or to give any consent or  approval  which may be required
     to obtain  deregistration  of the Aircraft and to export the Aircraft  from
     the Habitual  Base upon  termination  of the leasing of the Aircraft  under
     this Agreement, duly notarized and legalized;

     (xi) Certificate of Lease  Termination:  a certificate of lease termination
     executed by a duly authorized officer of Lessee,  substantially in the form
     of Schedule 7 hereto,  acknowledging  that this  Agreement  is no longer in
     effect with respect to the Aircraft and Engines,  which certificate  Lessor
     will hold in escrow to be filed at the FAA upon the  expiration of the Term
     or  other  termination  of the  leasing  of  the  Aircraft  to  the  Lessee
     hereunder; and

     (xii) General: such other documents as Lessor may reasonably request;

(b)  the receipt by Lessor on or before the Delivery Date of:-

     (i)  Opinions:  a signed  original of each of the  opinions  referred to in
     Clause 3.1(a)(iii) and 3.1(a)(iv);

     (ii) Payments: all sums due to Lessor under this Agreement on or before the
     Delivery Date including, without limitation, the first payment of Rent;

     (iii) Insurances:  certificates of insurance,  an undertaking from Lessee's
     insurance  broker and other evidence  satisfactory to Lessor that Lessee is
     taking the required steps to ensure due  compliance  with the provisions of
     this Agreement as to Insurances with effect on and after the Delivery Date;

     (iv) Lease Supplement No. 1: in the form of Schedule 6 hereto,  to be dated
     the Delivery Date,  fully completed and executed by Lessor and Lessee,  and
     filed for recording at the FAA;

     (v) Certificate of Technical Acceptance:  in the form of Schedule 2 hereto,
     to be dated  and  fully  completed,  and  executed  by  Lessor  and  Lessee
     certifying  that Lessee has  completed  its  inspection  of the Aircraft in
     accordance  with  Clause  4.5  hereof  and that  Aircraft  conforms  to the
     provisions  set forth therein and is in all respects  acceptable to Lessee,
     or if not so acceptable,  then setting forth  discrepancies  and corrective
     action to be taken;

     (vi)  Accounts:  the latest  available  accounts of Lessee as  described in
     Clause 8.2(b)(i) and (ii);

     (vii)  Documents:  a  confirmation  of  receipt of the  Aircraft  Documents
     delivered with the Aircraft on the Delivery Date;

     (viii)  UCC-1  Financing  Statements:  in form  acceptable  to Lessor,  and
     suitable  for filing in the States of  Colorado  and New York and signed by
     Lessee; and

     (ix) General: such other documents as Lessor may reasonably request.

(c)  receipt  by  Lessor  of such  information  and  documents  relating  to the
     proposed Maintenance Program as Lessor may require and Lessor having agreed
     the proposed Maintenance Program on or prior to the Delivery Date; and

(d)  evidence  that  on the  Delivery  Date  that  all  filings,  registrations,
     recordings and other actions have been or will be taken which are necessary
     or advisable to ensure the validity,  effectiveness  and  enforceability of
     this Agreement and the  Assignments  and to protect the property  rights of
     Lessor in the Aircraft or any Part.

3.2        Further conditions precedent:  The  obligations  of Lessor to deliver
           and  lease  the  Aircraft  under  this  Agreement  are subject to the
           further conditions precedent that:-

(a)  the  representations and warranties of Lessee under Clauses 2.1 and 2.2 are
     correct and would be correct if repeated on delivery of the Aircraft  under
     this Agreement; and

(b)  no Default has occurred and is  continuing or might result from the leasing
     of the Aircraft to Lessee under this Agreement.

3.3        Waiver:  The conditions  specified in Clauses 3.1 and 3.2 are for the
           sole  benefit of Lessor and may be waived or  deferred in whole or in
           part  and  with or  without  conditions  by  Lessor.  If any of those
           conditions  are not satisfied on the Delivery Date and Lessor (in its
           absolute  discretion)  nonetheless  agrees to deliver the Aircraft to
           Lessee, Lessee will ensure that those conditions are fulfilled within
           * days  after the  Delivery  Date and Lessor may treat as an Event of
           Default the failure of Lessee to do so.

<PAGE>

4.         COMMENCEMENT

4.1        Leasing:  Lessor  will lease the  Aircraft  to Lessee and Lessee will
           take the Aircraft on lease in accordance  with this Agreement for the
           duration of the Term.  Lessor will deliver and Lessee will accept the
           Aircraft  on the day in the  Scheduled  Delivery  Month  notified  by
           Lessor to Lessee at least * Business  Days in advance of such date or
           such other day as may be agreed. In the event (a) Lessee is unwilling
           or unable to accept  delivery of the Aircraft on the date notified by
           Lessor as the  Delivery  Date,  and (b) the Aircraft  meets  Delivery
           Condition Requirements then Lessee's obligation to pay Rent hereunder
           shall commence on such Delivery Date  notwithstanding that Lessee has
           not accepted possession of the Aircraft.  After delivery the Aircraft
           and every  Part will be in every  respect at the sole risk of Lessee,
           who will bear all risk of loss,  theft,  damage or destruction to the
           Aircraft from any cause whatsoever.

4.2        Delivery: The Aircraft will be delivered to and accepted by Lessee at
           the Delivery Location or such other location as may be agreed. Lessee
           will effect  acceptance  of the Aircraft by execution and delivery to
           Lessor of the duly  completed and executed  Certificate of Acceptance
           in the form of Schedule 2 and a duly  completed  and  executed  Lease
           Supplement  No. 1 in the form of Schedule 6 hereto and by authorizing
           the filing at the FAA of an  executed  copy of such Lease  Supplement
           with an executed copy of this Agreement attached thereto.

4.3        Delayed Delivery: If owing to:-

(a)  any seller, manufacturer or existing lessee of the Aircraft delaying in the
     delivery  of, or failing to deliver,  the Aircraft to Lessor for any reason
     (other  than  because of any  default of Lessor in the  performance  of its
     obligations  under an agreement  with that seller,  manufacturer  or lessee
     unless the default  arises  from any act or omission of Lessee)  whether or
     not in  circumstances  entitling  that  seller,  manufacturer  or lessee to
     terminate that agreement;

(b)  any purchase  agreement for the Aircraft  terminating  prior to delivery of
     the  Aircraft  (other  than  because  of  any  default  of  Lessor  in  the
     performance  of its  obligations  under that  agreement  unless the default
     arises from any act or omission of Lessee);

(c)  any Excusable Delay; or

(d)  notification of any defect or non-conformity pursuant to Clause 4.5;

Lessor delays in the delivery of, or fails to deliver,  the Aircraft  under this
Agreement:-

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

           (ii)     subject  to  Clause  4.5,  Lessee  will not be  entitled  to
                    terminate  this  Agreement  or to reject the  Aircraft  when
                    tendered for delivery by Lessor,  on the grounds of any such
                    delay;

           (iii)    in  the  case of termination of a purchase agreement, Lessor
                    may  at  any  time  after  the  termination  terminate  this
                    Agreement; and

           (iv)     upon any such termination or termination  pursuant to Clause
                    4.5  neither   Lessor  nor  Lessee  will  have  any  further
                    obligation to the other under this  Agreement  other than as
                    expressly set out in this Agreement, except that Lessor will
                    repay to Lessee  the  Deposit  if paid in cash or cancel and
                    return the Letter of Credit, as applicable.

4.4        Licenses: Lessee will at its expense obtain all licenses, permits and
           approvals  which may be  necessary  to export the  Aircraft  from the
           Delivery  Location.  Lessor will furnish such data and information as
           may be reasonably  requested by Lessee in connection  with  obtaining
           any such license, permit or approval.

4.5        Inspection:  Prior  to  the  Delivery Date, subject to any applicable
           purchase or lease agreement, Lessor will give Lessee an opportunity:-

(a)  to inspect the Aircraft at the Delivery Location; and

(b)  to  assign  up  to 2  representatives  to  participate  as  observers  in a
     demonstration flight to demonstrate the condition of the Aircraft.

           If Lessee  notifies Lessor promptly prior to the Delivery Date of any
           defect  or  non-conformity   with  Schedule  1  observed  during  the
           inspection or  demonstration  flight,  Lessor will correct or procure
           the  correction  of the  defect  or  non-conformity  as  promptly  as
           practicable  (except to the extent  otherwise agreed or to the extent
           in  the  opinion  of  Lessor  it is  impracticable  or  prohibitively
           expensive to do so).  Subject to Clause 4.3,  Lessor may postpone the
           Delivery Date in such a case to the date which Lessor notifies Lessee
           that the defect or non-conformity has been rectified.  Lessee will be
           entitled  to  terminate  this  Agreement  if Lessor  notifies it that
           Lessor does not intend to correct the defect or non-conformity.

4.6        Indemnity:  Lessee will  indemnify and hold harmless the  Indemnitees
           from and against  all Claims (as  defined in Clause 10) arising  from
           death  or  injury  to any  observer  or any  employee  of  Lessee  in
           connection  with  any  demonstration  flight  or  inspection  of  the
           Aircraft by Lessee.

5.         PAYMENTS

5.1        Deposit:  Lessee shall pay to Lessor a Deposit in cash or pursuant to
           a Letter of Credit in form and  substance  reasonably  acceptable  to
           Lessor in the  amounts  set forth in the  definition  of  Deposit  in
           Letter  Agreement No. 1 and in accordance with the schedule set forth
           therein.  So long as no  Default  or Event of  Default  then  exists,
           Lessor shall  refund to Lessee all Deposits  then held by Lessor upon
           return and final  acceptance  of the Aircraft by Lessor on the Expiry
           Date or promptly  after receipt of the Agreed Value after an Event of
           Loss.

5.2        Rental Periods: The Term will consist of consecutive whole or partial
           Rental Periods set forth in Letter  Agreement No. 1. The first Rental
           Period will commence on the Delivery Date and each subsequent  Rental
           Period  will  commence  on the  date  succeeding  the last day of the
           previous  Rental  Period.  Each  Rental  Period  will end on the date
           immediately  preceding the calendar day in the next month numerically
           corresponding to the Delivery Date, except that:

(a)  if there is no such  numerically  corresponding  day in that month, it will
     end on the last day of that month; and

(b)  if a Rental Period would otherwise  overrun the Expiry Date, it will end on
     the Expiry Date.

5.3        Rent:  Lessee will pay to Lessor or its order on each Rent Date, Rent
           in advance in the amount  specified as "Rent" in Letter Agreement No.
           1. Payment must be initiated  adequately  in advance of the Rent Date
           to ensure  that  Lessor  receives  credit for the payment on the Rent
           Date.  If a Rental  Period  begins on a  non-Business  Day,  the Rent
           payable  in  respect  of  that  Rental  Period  shall  be paid on the
           Business  Day  immediately  preceding  the date on which such  Rental
           Period commences.

5.4        Supplemental Rent:

(a)  Amount:  Lessee will further pay to Lessor Supplemental Rent in relation to
     each  calendar  month or portion  thereof  during the Term and for the last
     Rental  Period of the Term no later than the 10th day  following the end of
     such calendar month as follows:-

                    (i) in respect of the Airframe,  the product of the Airframe
                    Maintenance Reserve Rate specified in Letter Agreement No. 1
                    and the  number of Flight  Hours  operated  by the  Aircraft
                    during that calendar month ("Airframe  Supplemental  Rent");
                    and

                    (ii) in respect of the  life-limited  Parts ("LLP") for each
                    Engine,  the product of the Life-Limited  Parts Reserve Rate
                    specified in Letter Agreement No. 1 and the number of Engine
                    Flight  Hours (or fraction  thereof)  operated by the Engine
                    during  that  calendar  month  ("Engine  LLP   Refurbishment
                    Reserves"); and

                    (iii) in respect of Engine  Refurbishment  for each  Engine,
                    the  product  of  the  Engine  Refurbishment   Reserve  Rate
                    specified in Letter Agreement No. 1 and the number of Engine
                    Flight  Hours (or fraction  thereof)  operated by the Engine
                    during   that   calendar   month   ("Engine    Refurbishment
                    Reserves"); and

                    (iv) in  respect of the  Landing  Gear,  the  product of the
                    Landing Gear Reserve Rate specified in Letter  Agreement No.
                    1 and the number of Flight  Hours  operated  by the  Landing
                    Gear during that calendar month ("Landing Gear  Supplemental
                    Rent").

(b)  Adjustment:  Lessor may adjust  the amount of  Supplemental  Rent after the
     Delivery  Date upon  notice to Lessee  not more  frequently  than  annually
     utilizing the Escalation  Adjustment  set forth in Letter  Agreement No. 1.
     The Engine Reserve Rate may be further  adjusted not more  frequently  than
     annually as provided in Section III of Letter Agreement No. 1.

5.5        Payments:  All payments by Lessee to Lessor under this Agreement will
           be made for  value on the due date in  Dollars  and in same day funds
           settled  through  the New York  Clearing  House  System or such other
           funds as may for the time being be customary  for the  settlement  in
           New York City of  international  payments  in Dollars by  telegraphic
           transfer to Bankers  Trust  Company,  ABA number * for the account of
           GECC T&I Air  Depository  Account,  Account  No.  * or to such  other
           account as Lessor may advise Lessee in writing.

5.6        Withholding:  All  payments  by  Lessee  pursuant  to  the  Operative
           Documents to which it is a party shall be free of all withholdings of
           any nature whatsoever except to the extent otherwise required by Law,
           and if any such  withholding  is so required,  Lessee shall pay on an
           After-Tax Basis an additional amount such that after the deduction of
           all amounts required to be withheld, the net amount actually received
           by Lessor on an  After-Tax  Basis will equal the amount  that  Lessor
           would have received on an After-Tax Basis if such withholding had not
           been  required;  provided,  however,  that if  Lessee  pays  any such
           additional  amount to compensate  for the  withholding  of any Lessor
           Tax,  Lessor  shall  repay to Lessee  within * days after  receipt of
           Lessee's  written  request  therefor  (which  request shall include a
           description  in reasonable  detail of the Lessor Tax involved and the
           calculation of the additional amount to be repaid) the amount of such
           additional amount to the extent attributable to any Lessor Tax.

5.7        General Tax Indemnity:

(a)  General:

                    (i) Lessee will on demand pay and indemnify each  Indemnitee
                    against  all  Taxes  (other  than  Lessor  Taxes)  levied or
                    imposed  against or upon or payable  by such  Indemnitee  or
                    Lessee and arising  from,  with respect to or in  connection
                    with the transactions pursuant to the Operative Documents to
                    which it is a party including (but not limited to) all Taxes
                    relating or attributable to Lessee,  any Operative  Document
                    or the Aircraft  directly or indirectly  in connection  with
                    the  importation,   exportation,   registration,  ownership,
                    leasing, sub-leasing,  purchase, delivery,  possession, use,
                    operation,  repair, maintenance,  overhaul,  transportation,
                    landing,  storage, presence or redelivery of the Aircraft or
                    any part thereof or any rent, receipts,  insurance proceeds,
                    income or other amounts arising therefrom.

                    (ii) All Taxes indemnified pursuant to this Clause 5.7 shall
                    be  paid  by  Lessee  directly  to  the  appropriate  taxing
                    authority (to the extent  permitted by applicable Law) at or
                    before the time  prescribed  by  applicable  Law.  After any
                    payment by Lessee of any Tax directly to a taxing authority,
                    Lessee shall furnish to Lessor, on request, a certified copy
                    of a receipt for Lessee's  payment of such Tax or such other
                    evidence of payment of such Tax as is reasonably  obtainable
                    by Lessee and reasonably acceptable to Lessor.

                    (iii) Any amount payable by Lessee to an Indemnitee pursuant
                    to Clause 5.7 shall be paid within * days after receipt of a
                    written  demand   therefor  from  the  relevant   Indemnitee
                    accompanied by a written statement  describing in reasonable
                    detail the basis for such  indemnity and the  computation of
                    the  amount so  payable,  provided  that if an amount of any
                    indemnified Tax is being contested in accordance with Clause
                    5.12  and  Lessee  shall  have  duly  performed  (and  shall
                    continue to perform) all its  obligations  under Clause 5.12
                    with respect to such contest,  then payment of the indemnity
                    with  respect  to such  Tax  under  Clause  5.12  shall , at
                    Lessee's  election,  be deferred  until the date the contest
                    has been completed.

(b)  MACRS Tax Indemnity

         Lessee will on demand pay and  indemnify  each Tax  Indemnitee  for any
         loss,  disallowance,  or deferral of, or delay in  claiming,  the MACRS
         Deductions  resulting  from (A)  Lessee's  using the Aircraft in such a
         manner as to cause the  Aircraft  to be treated as "used  predominantly
         outside the United  States" within the meaning of Section 168(g) of The
         Internal  Revenue  Code of 1986,  as  amended  (the  "Code") or (B) the
         Aircraft being treated as "tax-exempt use property"  within the meaning
         of  Section  168(h) of the Code  other  than as a result of the  Lessor
         being a "tax-exempt entity" under Section 168(h)(2) of the Code (either
         (A) or (B) hereinafter  referred to as a "MACRS Loss").  In determining
         the  indemnity  required  in  connection  with a MACRS  Loss to the Tax
         Indemnitee under this Clause,  the Tax Indemnitees  shall be assumed to
         be  subject  to a  combined  U. S. and state  income tax rate of (after
         giving effect to the deductibility of such state income taxes for U. S.
         income  tax  purposes)  *% in 2000  and in each  year  thereafter  (the
         "Assumed  Tax  Rate"),  and the Tax  Indemnitee  will  have  sufficient
         taxable  income  to be  taxed  at  the  Assumed  Tax  Rate  after  full
         utilization of the MACRS  Deductions.  The amount of the MACRS Loss for
         any taxable year or years shall be computed as the  difference  between
         (X) the present  value of the MACRS  Deductions  for such year or years
         and all  subsequent  years using a discount rate of * per cent (*%) per
         annum, and (Y) the present value of the actual cost recovery deductions
         attributable to the Aircraft realized by the Tax Indemnitee as a result
         of the MACRS Loss (but assuming that the Aircraft is sold by the Lessor
         at the end of the Term of * months using a discount  rate of * per cent
         (*%) per annum.  The amount payable under this  indemnity  shall be the
         amount that, after deduction by the Tax Indemnitee of the amount of all
         additional U.S., state,  local and foreign taxes required to be paid by
         the Tax Indemnitee in respect of the receipt or accrual of such amount,
         will equal the amount of the MACRS Loss as  computed  in the  preceding
         sentence,  plus  the  amount  of any  actual  interest,  penalties  and
         additions  to tax  payable by the Tax  Indemnitee  with  respect to the
         MACRS Loss.

(c)  Foreign Tax Credit Indemnity

         If, as a result of the use or  operation  or location  of the  Aircraft
         outside the United States by Lessee,  more than the *% (the  "Permitted
         Percentage") of any item of income,  deduction, or loss with respect to
         the transactions  contemplated by the Lease will be treated for Federal
         income tax purposes as derived from, or allocable to,  sources  outside
         the United States (an "Excess Foreign Allocation"),  and if as a result
         thereof the amount of the foreign tax credits available for utilization
         by the Lessor for any taxable year shall be less than the amount of the
         foreign tax credits that would have been  available for  utilization by
         the Lessor if the Lessee had not used the  Aircraft  outside the United
         States more than the Permitted Percentage (such event being referred to
         herein as a "Foreign  Tax Credit  Loss"),  then the Lessee shall pay to
         the Lessor as an  indemnity  an amount  which,  after  deduction of the
         amount  of all  additional  federal,  state,  local and  foreign  taxes
         actually required to be paid by the Lessor in respect of the receipt or
         accrual of such amount,  is equal to the actual increase in the Federal
         income  taxes  payable  by (or not  refundable  to) the Lessor for such
         taxable  year as a result of such  Foreign  Tax Credit  Loss,  plus the
         amount of any  interest,  penalties and additions to tax payable by the
         Lessor as a result of such Foreign Tax Credit Loss.

(d)  Payment

         Each payment by the Lessee  pursuant to Clauses 5.7(b) and (c) shall be
         made  within  *  days  after  receipt  of  a  written  demand  therefor
         accompanied by a written statement  describing in reasonable detail the
         MACRS  Loss or  Foreign  Tax  Credit  Loss in  question,  the amount of
         additional Federal income tax, interest, penalties and additions to tax
         and the  calculation  of the payment due in request  thereof (but in no
         event shall be required to be paid  earlier  than * (*)  Business  Days
         prior to the date  such  additional  Federal  income  taxes  are  due);
         provided  that,  if a contest of the MACRS  Loss or Foreign  Tax Credit
         Loss is being conducted pursuant to Clause 5.12 hereof,  payment (other
         than  payments  required  under Clause 5.12) shall not be required from
         the Lessee until * days after the final determination of such contest.

5.8.       Sales and Use Taxes:

(a)  Lessee  shall pay to Lessor  (or, if  permitted  by  applicable  Law and if
     requested by Lessor, Lessee shall pay to the relevant tax authority for the
     account of  Lessor),  in addition  to the  amounts  specified  as "Rent" in
     Letter Agreement No. 1:

                    (i) all sales, use, rental,  value added, goods and services
                    and similar taxes ("Sales Taxes") required to be paid to the
                    tax  authority  of the  jurisdiction  in which the  Delivery
                    Location  is situated  or to the  jurisdiction  in which the
                    Aircraft is  habitually  based with  respect to the lease of
                    the Aircraft to Lessee  pursuant to the Operative  Documents
                    to which it is a party unless  Lessee  delivers to Lessor on
                    or prior to the Delivery Date such exemption  certificate or
                    other  document as may be  acceptable  to Lessor to evidence
                    Lessee's  entitlement  to  exemption  from all  Sales  Taxes
                    imposed by such  jurisdiction  with  respect to the lease of
                    the Aircraft  pursuant to the  Operative  Documents to which
                    Lessee is a party; and

                    (ii)  all  Sales  Taxes  required  to be  paid  to  the  tax
                    authority of any  jurisdiction  in which the Aircraft may be
                    used, operated or otherwise located from time to time unless
                    Lessee  delivers to Lessor such  exemption  certificates  or
                    other  documents  as may be  required by  applicable  Law to
                    evidence  Lessee's  entitlement  to exemption from all Sales
                    Taxes imposed by each such  jurisdiction with respect to the
                    lease of the Aircraft pursuant to the Operative Documents to
                    which Lessee is a party.

(b)  Lessee will cooperate with Lessor in connection  with the  preparation  and
     filing of any exemption  application or similar document that is reasonably
     necessary or desirable under  applicable Law to avoid the imposition of any
     Sales Taxes with respect to the transactions  contemplated by the Operative
     Documents to which Lessee is a party.

(c)  The specific  obligations  with respect to sales and use taxes set forth in
     this Clause 5.8 are in addition  to, and are not in  substitution  for, the
     Lessee's obligation to indemnify for sales and use taxes pursuant to Clause
     5.7.

5.9        Information:

(a)  If Lessee is required by any  applicable  Law,  or by any third  party,  to
     deliver any report or return in connection  with any Taxes for which Lessee
     would be  obligated to indemnify  Lessor under the  Operative  Documents to
     which  Lessee is a party,  Lessee will  complete  the same and, on request,
     supply a copy of the report or return to Lessor.

(b)  If any report,  return or  statement  is required to be made by Lessor with
     respect to any Tax for which  there is an  indemnity  obligation  of Lessee
     under this Clause 5, Lessee will promptly  notify Lessor of the requirement
     and:

                    (i) if permitted  by  applicable  Law,  make and timely file
                    such  report,  return or  statement  (except for any report,
                    return or  statement  that Lessor has  notified  Lessee that
                    Lessor intends to prepare and file),  prepare such return in
                    such manner as will show the  ownership  of the  Aircraft in
                    Lessor if required or  appropriate,  and provide Lessor upon
                    request a copy of each  such  report,  return  or  statement
                    filed by Lessee, or

                    (ii) if Lessee is not  permitted by  applicable  Law to file
                    any such report,  return or  statement,  Lessee will prepare
                    and deliver to Lessor a proposed form of such report, return
                    or statement within a reasonable time prior to the time such
                    report, return or statement is to be filed.

           Lessee will  provide  such  information  and  documents as Lessor may
           reasonably  request to enable  Lessor to comply  with its tax filing,
           audit and litigation obligations.

5.10       Indemnity  Payments to be Made on an After-Tax  Basis:  Lessee agrees
           that, with respect to any payment or indemnity pursuant to Clause 5.7
           (Tax  Indemnity),  Clause  5.8  (Sales  and Use  Taxes)  or Clause 10
           (Indemnity)  to or  for  the  benefit  of  any  Indemnitee,  Lessee's
           indemnity  obligations  shall include such amount as may be necessary
           to hold such Indemnitee harmless on an After-Tax Basis from all Taxes
           required to be paid by such  Indemnitee  with respect to such payment
           or indemnity  (including any payments  pursuant to this Clause 5.10),
           determined based on the assumption that at the time each such payment
           or  indemnity  accrues to the  relevant  Indemnitee,  such payment or
           indemnity  will be subject to (i) United States Federal income tax at
           the highest  marginal  statutory tax rate applicable to corporations,
           (ii) United  States state and local income taxes at the  composite of
           the highest marginal statutory tax rates applicable to the Indemnitee
           and (iii)  income  taxes (if any)  imposed by  countries  outside the
           United States at the actual rates imposed on the relevant Indemnitee.

5.11       Default  Interest:  If Lessee fails to pay any amount  payable  under
           this  Agreement on the due date,  Lessee will pay on demand from time
           to time to Lessor  interest (both before and after  judgment) on that
           amount, from the due date to the date of payment in full by Lessee to
           Lessor,  at the Interest  Rate  specified in Letter  Agreement No. 1;
           provided,  however,  that in no event  shall  such  rate  exceed  the
           maximum  permitted  by Law.  All  such  interest  will be  compounded
           monthly  and  calculated  on the basis of the  actual  number of days
           elapsed in the month assuming a * day month and a * day year.

5.12       Contest:

(a)  If an  Indemnitee  receives  a written  claim for any Tax for which  Lessee
     would be required to pay an indemnity pursuant to Clause 5.7 or Clause 5.8,
     such Indemnitee  shall notify Lessee promptly of such claim,  provided that
     any  failure  to  provide  such  notice  will  not  relieve  Lessee  of any
     indemnification  obligation  pursuant  to  Clause  5.7 or  Clause  5.8.  If
     requested by Lessee in writing promptly after receipt of such  Indemnitee's
     notice, such Indemnitee shall, upon receipt of indemnity satisfactory to it
     and at the expense of Lessee  (including,  without  limitation,  all costs,
     expenses,  legal and accountants'  fees and  disbursements,  and penalties,
     interest and  additions to tax incurred in  contesting  such claim) in good
     faith contest or (if permitted by applicable Law in the case of Taxes other
     than those  payable  pursuant to Clauses  5.7(b) and (c)) permit  Lessee to
     contest such claim by (i)  resisting  payment  thereof if  practicable  and
     appropriate,  (ii) not paying the same except  under  protest if protest is
     necessary and proper, or (iii) if payment is made, using reasonable efforts
     to obtain a refund of such Taxes in appropriate administrative and judicial
     proceedings.  Such  Indemnitee  shall  determine  the method of any contest
     conducted by such Indemnitee and (in good faith  consultation  with Lessee)
     control the  conduct  thereof.  Lessee  shall  determine  the method of any
     contest  conducted  by Lessee  and (in good  faith  consultation  with such
     Indemnitee)  control  the  conduct  thereof.  Lessee  shall pay in full all
     payments  of Rent and  other  amounts  payable  pursuant  to the  Operative
     Documents to which Lessee is a party,  without  reduction for or on account
     of any Tax, while such contest is continuing.  Such Indemnitee shall not be
     required  to contest,  or to  continue to contest,  a claim for Taxes under
     this  Clause 5.12 if (w) in the case of Taxes  payable  pursuant to Clauses
     5.7(b) or (c),  the amount in dispute is less than $*, or (x) such  contest
     would result in a risk of criminal  penalties or of a sale,  forfeiture  or
     loss of, or the imposition of a Lien (other than a Permitted  Lien) on, the
     Aircraft,  or (y) Lessee shall not have furnished an opinion of independent
     tax counsel  selected by such  Indemnitee  and reasonably  satisfactory  to
     Lessee,  that a reasonable basis exists for such contest,  or (z) a Default
     or an Event of  Default  shall be  continuing  (unless  Lessee  shall  have
     provided  security  reasonably  satisfactory  to such  Indemnitee  securing
     Lessee's  performance  of its  obligations  under  this  Clause 5). If such
     Indemnitee  contests  any claim for Taxes by making a payment and seeking a
     refund  thereof,  then  Lessee  shall  advance  to such  Indemnitee,  on an
     interest-free  basis,  an  amount  equal  to the  Taxes  to be paid by such
     Indemnitee  in  connection  with  the  contest  and  shall  indemnify  such
     Indemnitee on an After-Tax  Basis for any adverse tax  consequences to such
     Indemnitee of such interest-free  advance.  Upon the final determination of
     any contest  pursuant to this Clause 5.12 in respect of any Taxes for which
     Lessee shall have made an advance to such Indemnitee in accordance with the
     immediately preceding sentence,  the amount of Lessee's obligation shall be
     determined as if such advance had not been made;  any indemnity  obligation
     of Lessee to such  Indemnitee  under  this  Clause 5 and such  Indemnitee's
     obligation to repay the advance will be satisfied  first by setoff  against
     each other,  and any difference  owing by either party shall be paid within
     ten days after such final determination.

(b)  If an Indemnitee obtains a refund of all or any part of any Taxes for which
     a full indemnity was paid by Lessee,  such Indemnitee  shall pay Lessee the
     amount of such refund,  reduced by any Taxes imposed on such  Indemnitee on
     receipt or accrual of such refund and  increased by any Taxes saved by such
     Indemnitee  by  reason  of  the  deductibility  of  such  payment  by  such
     Indemnitee.  If, in addition to such refund,  such  Indemnitee  receives an
     amount of interest on such refund,  such Indemnitee shall pay to Lessee the
     portion  of such  interest  which is fairly  attributable  to such  refund,
     reduced by any Taxes  imposed on such  Indemnitee  on receipt or accrual of
     such   interest  and  increased  by  any  Taxes  saved  by  reason  of  the
     deductibility of such payment by such Indemnitee. Such Indemnitee shall not
     be required to make any payment to Lessee  pursuant to this Clause 5.12 if,
     and for so long  as,  an  Event  of  Default  shall  have  occurred  and be
     continuing.

(c)  Any  Indemnitee in its sole  discretion  (by written  notice to Lessee) may
     waive its rights to indemnification  pursuant to Clause 5.7 with respect to
     any claim for any Tax and may refrain from  contesting  or  continuing  the
     contest of such claim,  in which event Lessee shall have no  obligation  to
     indemnify such Indemnitee for the Taxes that are the subject of such claim.
     If an Indemnitee agrees to a settlement of any contest  conducted  pursuant
     to this Clause  5.11  without the prior  written  consent of Lessee,  which
     consent shall not be unreasonably withheld,  then Lessor shall be deemed to
     have waived its rights to the  indemnification  provided  for in Clause 5.7
     with respect to the Tax liability accepted in such settlement.

5.13       Net Lease: This Agreement is a net lease.  Lessee's obligations under
           this  Agreement  are  absolute  and unconditional irrespective of any
           contingency whatsoever including (but not limited to):-

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

(b)  any  unavailability  of the  Aircraft  for any reason,  including,  but not
     limited  to,  a  requisition   of  the  Aircraft  or  any   prohibition  or
     interruption of or interference with or other restriction  against Lessee's
     use, operation or possession of the Aircraft;

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

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

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

(f)  and Security Interests with respect to the Aircraft or Taxes; and/or

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

5.14       Security

(a)  To the fullest  extent  permitted by Law and by way of continuing  security
     Lessee as sole  beneficial  owner charges the Deposit and the  Supplemental
     Rent and all rights of Lessee to payment  thereof and the debt  represented
     thereby  (the  "Charged  Monies") to Lessor by way of first fixed charge as
     security for Lessee's  obligations and liabilities under this Agreement and
     the Related  Agreements  (the "Secured  Liabilities").  Except as expressly
     permitted under this  Agreement,  Lessee will not be entitled to payment of
     the Charged Monies.  Lessee will not assign,  transfer or otherwise dispose
     of all or part of its rights in the  Charged  Monies and it will enter into
     any  additional  documents  and  instruments   necessary  or  advisable  to
     evidence, create or perfect Lessor's rights to the Charged Monies;

(b)  If Lessee fails to comply with any provision of this Agreement or any Event
     of Default has  occurred and is  continuing,  in addition to all rights and
     remedies  accorded to Lessor elsewhere in this Agreement and under Law as a
     secured party in respect of the Charged  Monies,  Lessor may immediately or
     at any time thereafter, without prior notice to Lessee:-

                    (i)  set-off  all or any  part  of the  Secured  Liabilities
                    against the  liabilities of Lessor in respect of the Charged
                    Monies; or

                    (ii) apply or  appropriate  the Charged Monies in or towards
                    the payment or discharge of the Secured  Liabilities in such
                    order as Lessor sees fit; and

(c)  If Lessor has  exercised  the set-off  described in  sub-clause  (b) above,
     Lessee  shall,  following  a demand in writing  from  Lessor,  restore  the
     Charged Monies to the level at which they stood  immediately  prior to such
     set-off.

5.15       Letter of Credit

(a)  If Lessee elects to provide Lessor with a Letter of Credit,  the provisions
     of this  Section  shall apply.  Any Letter of Credit  provided by Lessee to
     Lessor  will be issued and  payable by USBank or  another  bank  reasonably
     acceptable to Lessor in its reasonable discretion and in form and substance
     reasonably acceptable to Lessor, and, if not issued by USBank or by the New
     York  branch  of a  major  bank  reasonably  acceptable  to  Lessor  in its
     reasonable  discretion  from time to time, will be confirmed by and payable
     at the New York branch of a major bank  reasonably  acceptable to Lessor in
     its reasonable  discretion from time to time, and will be issued in lieu of
     a cash Deposit as security for all payment  obligations of Lessee under the
     Lease  and each  Other  Agreement  (including  any and all  obligations  to
     indemnify Lessor for Losses suffered or incurred by it), which shall remain
     in full force and effect and may be drawn down by Lessor upon demand at any
     time or times  following  the  occurrence  of an Event of Default until the
     Required LC Expiry Date.

(b)  With the prior written  consent of Lessor,  the Letter of Credit may have a
     validity  period or periods  ending  prior to the  Required LC Expiry Date,
     provided that (i) the Letter of Credit shall,  in each case, be renewed and
     delivered  to Lessor not later than * days prior to its expiry;  and (ii) a
     Letter of Credit  shall  remain in force at all times up to the Required LC
     Expiry Date.

(c)  If at any  time  during  the  Term,  Lessor  reasonably  determines  in its
     reasonable  discretion  that the current issuing or confirming bank for the
     Letter of Credit is no longer an  acceptable  issuing  or  confirming  bank
     (whether by virtue of a material adverse change in its financial condition,
     a  decrease  in  any  credit  rating  of  its  long-term   unsecured   debt
     obligations,  or for any other reason) Lessee shall  promptly  procure that
     the Letter of Credit is  replaced  by a Letter of Credit  issued by another
     bank reasonably  acceptable to Lessor in its reasonable  discretion and (if
     reasonably  requested  by Lessor in its  reasonable  discretion)  that such
     replacement  Letter of Credit  is  confirmed  by  another  bank  reasonably
     acceptable to Lessor in its reasonable discretion.

(d)  If  Lessor  makes a drawing  under the  Letter  of  Credit,  Lessee  shall,
     following  a demand in  writing  by Lessor,  immediately  procure  that the
     maximum amount available for drawing under the Letter of Credit is promptly
     restored to the level at which it stood immediately prior to such drawing.

6.         MANUFACTURER'S WARRANTIES

6.1        Assignment:   Notwithstanding  this  Agreement,  Lessor  will  remain
           entitled to the benefit of each  warranty,  express or implied,  with
           respect to the  Aircraft,  any Engine or Part so far as concerns  any
           manufacturer, vendor, subcontractor or supplier. Except to the extent
           Lessor otherwise  directs,  Lessor hereby authorizes Lessee to pursue
           any claim  thereunder in relation to defects  affecting the Aircraft,
           any Engine or Part and Lessee  agrees  diligently  to pursue any such
           claim  which  arises  at its own  cost.  Lessee  will  notify  Lessor
           promptly upon becoming aware of any such claim.

6.2        Proceeds:   Except  to  the  extent  Lessor  otherwise  agrees  in  a
           particular case, all proceeds of any such claim will be paid directly
           to Lessor but if and to the extent that such claim relates:-

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

(b)  to  compensation  for loss of use of the  Aircraft,  an  Engine or any Part
     during the Term; and provided no Default has occurred and is continuing the
     proceeds will be paid to Lessee by Lessor but in the case of (a) above only
     on receipt of evidence satisfactory to Lessor that Lessee has rectified the
     relevant defect.

6.3        Parts:  Except to the extent Lessor  otherwise agrees in a particular
           case, Lessee will procure that all engines,  components,  furnishings
           or equipment provided by the manufacturer,  vendor,  subcontractor or
           supplier in replacement of a defective Engine or Part pursuant to the
           terms of any warranty  will be installed  promptly by Lessee and that
           title  thereto  free  of  Security  Interests  vests  in  Lessor.  On
           installation  each part will be deemed to be a Part. In the case of a
           Replacement  Engine,  Lessee will  satisfy  and  perform  each of the
           conditions  and  covenants  set  forth in  Clause  11.1(c),  and upon
           satisfaction  of such  conditions,  such  Replacement  Engine will be
           deemed an "Engine" for all purposes of this Agreement.

6.4        Agreement:  To the extent any warranties relating to the Aircraft are
           made  available  under an agreement between any manufacturer, vendor,
           subcontractor  or  supplier  and  Lessee, this Clause 6 is subject to
           that agreement.  However Lessee will:-

(a)  pay the proceeds of any claim  thereunder to Lessor to be applied  pursuant
     to Clause 6.2 and pending such payment will hold the claim and the proceeds
     on trust for Lessor; and

(b)  Lessee will take all such steps as are  necessary at the end of the Term to
     ensure the  benefit of any of those  warranties  which have not expired are
     vested in Lessor.

7.         LESSOR'S COVENANTS

7.1        Quiet  Enjoyment:  Lessor  will not  interfere  with the  quiet  use,
           possession  and  enjoyment of the Aircraft by Lessee but the exercise
           by Lessor of its rights under or in  connection  with this  Agreement
           will not  constitute  such an  interference.  Lessor will  procure at
           Lessee's request an undertaking of quiet enjoyment for the benefit of
           Lessee with respect to any prospective Lessor Lien.

7.2        Release of Supplemental Rent: Provided no Default has occurred and is
           continuing  Lessor will release funds to Lessee from the Supplemental
           Rent respecting  maintenance work performed upon submission by Lessee
           to Lessor within * months of the commencement of that maintenance and
           before * (*)  months  following  the Expiry  Date of an  invoice  and
           supporting    documentation   reasonably   satisfactory   to   Lessor
           evidencing:-

(a)  with respect to the  Airframe,  the  completion,  in  accordance  with this
     Agreement,  of those items of maintenance (excluding any repairs arising as
     the result of operational or maintenance mishandling)  characterized by the
     Manufacturer's  maintenance planning document and best industry practice as
     "D" Check and/or individual  structural  inspections  having an interval of
     not less than * Flight  Hours or * years  for the  Aircraft  or any  lesser
     interval for an equivalent major  structural  inspection if required by the
     Manufacturer's  maintenance  planning  document  subject to retroactive and
     prospective  adjustment  of the  Reserve  Rates as  deemed  appropriate  by
     Lessor,  the lesser of (i) the amount of that  invoice  and (ii) the amount
     equal to the aggregate amount of Airframe Supplemental Rent paid under this
     Agreement  at the  time  of  commencement  of  that  maintenance  less  the
     aggregate amount previously released by Lessor under this sub-clause;

(b)  with  respect to any  Engine,  the  performance,  in  accordance  with this
     Agreement,  of all shop visits requiring engine disassembly (other than (i)
     repairs  arising as a result of foreign  object  damage or  operational  or
     maintenance mishandling and/or (ii) removal, installation,  maintenance and
     repair of Quick Engine Change ("QEC")  kits),  the lesser of (i) the amount
     of that invoice and (ii) the amount equal to the aggregate amount of Engine
     Refurbishment  Reserves paid in respect of that Engine under this Agreement
     at the time of commencement of that  maintenance  less the aggregate amount
     previously paid in respect of that Engine by Lessor under this sub-clause;

(c)  with respect to life limited parts within any Engine,  the performance,  in
     accordance with this Agreement,  of any such parts replacement  (other than
     (i) replacement  arising as a result of accidents or incidents  (whether or
     not eligible for recovery under Lessee's insurance),  foreign object damage
     or   operational   or   maintenance   mishandling   and/or  (ii)   removal,
     installation, maintenance and repair of QEC kits) and/or (iii) any elective
     parts  replacement),  the lesser of (i) the amount of that invoice and (ii)
     the amount equal to the aggregate of Engine LLP Refurbishment Reserves paid
     in respect of that Engine under this Agreement at the time of  commencement
     of that maintenance less the aggregate amount previously paid in respect of
     that Engine by Lessor under this sub-clause; and

(d)  with respect to the Landing Gear, the  performance in accordance  with this
     Agreement,  of all work on the landing  gear in the nature of overhaul  and
     requiring removal and disassembly (other than repairs arising as the result
     of operational or maintenance mishandling), the lesser of (i) the amount of
     that invoice and (ii) the amount equal to the  aggregate  amount of Landing
     Gear   Supplemental   Rent  paid  under  this  Agreement  at  the  time  of
     commencement of that maintenance less the aggregate amount  previously paid
     by Lessor under this sub-clause.

7.3        Lessor Obligations Following Expiry Date: Within * Business Days of:-

(a)  redelivery  of  the  Aircraft  to  Lessor  in  accordance  with  and in the
     condition required by this Agreement; or

(b)  payment to Lessor of the Agreed Value  following an Event of Loss after the
     Delivery  Date;  or in each case such  later  time as Lessor is  reasonably
     satisfied  Lessee has irrevocably paid to Lessor all amounts which may then
     be outstanding or become payable under this Agreement,  the other Operative
     Documents to which Lessee is a party or the Related  Agreements and Lessee,
     Lessor will pay to Lessee:-

                    (i) the balance of the Deposit if paid in cash or cancel and
                    return the Letter of Credit, as applicable; and

                    (ii) the  amount  of any Rent  received  in  respect  of any
                    period  falling after the date of redelivery of the Aircraft
                    or  payment  of the  Agreed  Value,  as the case may be; and
                    shall  return  to Lessee  the  warrant  certificate,  if not
                    previously exercised, representing the Warrant.

8.         LESSEE'S COVENANTS

8.1        Duration: The undertakings in this Clause and in Clause 12 will:-

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

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

8.2        Information: Lessee will:-

(a)  notify Lessor forthwith of the occurrence of any Default or any other event
     which  might  adversely  affect  Lessee's  ability  to  perform  any of its
     obligations under this Agreement;

(b)  furnish to Lessor:-

                    (i) upon request,  the consolidated  management  accounts of
                    Lessee  (comprising  a  balance  sheet and  profit  and loss
                    statement)  prepared for the most recent previous  financial
                    quarter;

                    (ii) as soon as available  but not in any event later than *
                    days  after the last day of each  financial  year of Lessee,
                    its audited  consolidated  balance  sheet as of such day and
                    its audited  consolidated  profit and loss statement for the
                    year ending on such day;

                    (iii) at the same time as it is  issued to the  shareholders
                    or  creditors  of Lessee,  a copy of each notice or circular
                    issued to Lessee's shareholders or creditors as a group; and

                    (iv) on  request  from time to time such  other  information
                    regarding  Lessee and its business and affairs as Lessor may
                    reasonably request;

(c)  keep Lessor  informed as to current  serial  numbers of the Engines and any
     engine installed on the Aircraft;

(d)  promptly  furnish  to  Lessor  all  information  Lessor  from  time to time
     reasonably  requests  regarding the Aircraft,  any Engine or any Part,  its
     use,  location  and  condition  including,  without  limitation,  the hours
     available on the Aircraft  and any Engine until the next  scheduled  check,
     inspection, overhaul, refurbishment or shop visit, as the case may be;

(e)  on request,  within * days after the end of any Rental  Period,  furnish to
     Lessor  evidence  satisfactory to Lessor of payment of all Taxes due during
     that or any previous Rental Period;

(f)  on  request,  furnish to Lessor  evidence  satisfactory  to Lessor that all
     Taxes  and  charges  incurred  by  Lessee  with  respect  to the  Aircraft,
     including  without  limitation all payments due to the relevant air traffic
     control authorities, have been paid and discharged in full;

(g)  within * days after the end of each calendar month during the Term, provide
     Lessor with a monthly  report on the  Aircraft  and each Engine in the form
     set out in Schedule 8 hereto;

(h)  give  Lessor  not  less  than * days'  written  notice  as to the  time and
     location of all Major Checks; and

(i)  promptly notify Lessor of:-

                    (i) any loss, theft,  damage or destruction to the Aircraft,
                    any Engine or any Part, or any  modification to the Aircraft
                    if the  potential  cost may exceed  the Damage  Notification
                    Threshold; and

                    (ii) any claim or other occurrence  likely to give rise to a
                    claim under the  Insurances  (but in the case of hull claims
                    only in excess of the  Damage  Notification  Threshold)  and
                    details of any negotiations  with the insurance brokers over
                    any such claim.

8.3        Lawful and Safe Operation: Lessee will:-

(a)  comply  with  the law  for the  time  being  in  force  in any  country  or
     jurisdiction  which may for the time being be  applicable  to the  Aircraft
     (including without limitation Laws mandating insurance coverage) or, so far
     as concerns  the use and  operation of the Aircraft or an owner or operator
     thereof and take all  reasonable  steps to ensure that the  Aircraft is not
     used for any illegal purpose;

(b)  not use the Aircraft in any manner  contrary to any  recommendation  of the
     manufacturers of the Aircraft, any Engine or any Part or any recommendation
     or  regulation  of the Air  Authority  or for any  purpose  for  which  the
     Aircraft is not designed or reasonably suitable;

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

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

(e)  not use the Aircraft for the carriage of:-

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

                    (ii) acids,  toxic  chemicals,  other  corrosive  materials,
                    explosives,  nuclear fuels,  nuclear wastes,  or any nuclear
                    assemblies or components,  except as permitted for passenger
                    aircraft under the "Restriction of Goods" schedule issued by
                    I.A.T.A.  from  time  to  time  and  provided  that  all the
                    requirements  for packaging or otherwise  contained  therein
                    are fulfilled;

                    (iii) any other  goods,  materials  or items of cargo  which
                    could reasonably be expected to cause damage to the Aircraft
                    and which would not be adequately covered by the Insurances;
                    or

                    (iv) any illegal item or substance;

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

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

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

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

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

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

(i)  not operate the Aircraft,  or suffer or permit the Aircraft to operate,  to
     or for any  country or entity that is the  subject of  sanctions  under the
     U.S.  International  Economic Emergency Powers Act or U.N. Security Council
     directives  (presently Iraq, Iran, Libya, the Bosnia-Serb  controlled areas
     of the Republic of Bosnia and  Herzegovina and the Unita Rebels of Angola).
     Lessee also covenants and agrees (i) not to operate or locate, or suffer or
     permit to be operated or located,  the  Aircraft in any country  restricted
     under  the  U.S.   Trading   with  the  Enemy  Act  and  the  U.S.   Export
     Administration  Act except as may be permitted  by operating in  accordance
     with the conditions specified by the U.S. Export Administration Regulations
     (15  CFR  Parts  730-799),  General  License  GATS  (15  CFR  Part  771.19)
     (presently  Cuba, Iran,  North Korea,  Sudan,  and Syria),  and (ii) not to
     operate the Aircraft between Cuba and the United States; and

(j)  not use,  operate,  or locate the  Aircraft,  or cause suffer or permit the
     Aircraft to be used,  operated or located during the Term in any manner not
     covered by the  Insurances  or in any area  excluded  from  coverage by the
     Insurances  or in any manner  which would  prejudice  the  interests of the
     Indemnitees in the Insurances, the Aircraft, any Engine or any Part.

8.4        Taxes and other Outgoings: Lessee will promptly pay:-

(a)  all license and  registration  fees,  Taxes  (other than Lessor  Taxes) and
     other amounts of any nature imposed by any  Government  Entity with respect
     to the Aircraft,  including  without  limitation  the purchase,  ownership,
     delivery,  leasing,  possession,  use,  operation,  return,  sale or  other
     disposition of the Aircraft; and

(b)  all rent, fees, charges,  Taxes (other than Lessor Taxes) and other amounts
     in  respect  of any  premises  where the  Aircraft  or any Part  thereof is
     located from time to time;

           except to the extent  that in the  reasonable  opinion of Lessor such
           payment is being contested in good faith by appropriate  proceedings,
           in respect of which  adequate  resources have been provided by Lessee
           and  non-payment  of  which  does  not  give  rise  to  any  material
           likelihood  of the  Aircraft  or any  interest  therein  being  sold,
           forfeited or otherwise  lost or of criminal  liability on the part of
           Lessor.

8.5        Sub-Leasing  and  Wet-Leasing:  LESSEE  WILL NOT,  WITHOUT  THE PRIOR
           WRITTEN  CONSENT  OF  LESSOR,  SUB-LEASE,  WET  LEASE  OR  PART  WITH
           POSSESSION  OF THE  AIRCRAFT,  THE  ENGINES OR ANY PART  EXCEPT  THAT
           LESSEE MAY PART WITH POSSESSION (A) WITH RESPECT TO THE AIRCRAFT, THE
           ENGINES  OR ANY PART TO THE  RELEVANT  MANUFACTURERS  FOR  TESTING OR
           SIMILAR PURPOSES OR TO THE MAINTENANCE PERFORMER FOR SERVICE, REPAIR,
           MAINTENANCE  OR  OVERHAUL  WORK,  OR  ALTERATION,   MODIFICATIONS  OR
           ADDITIONS TO THE EXTENT REQUIRED OR PERMITTED BY THIS AGREEMENT,  AND
           (B) WITH RESPECT TO AN ENGINE OR PART, AS EXPRESSLY PERMITTED BY THIS
           AGREEMENT.  LESSEE MAY ENTER INTO A WET LEASE FOR THE  AIRCRAFT,  THE
           ENGINES OR ANY PART FOR A TERM NOT TO  CONTINUE  BEYOND THE TERM,  ON
           TERMS  CUSTOMARY  IN THE  INDUSTRY  FOR WET LEASES OF SUCH  DURATION;
           PROVIDED,  HOWEVER, THAT LESSEE SHALL REMAIN PRIMARILY LIABLE FOR THE
           PERFORMANCE OF ALL OF THE TERMS OF THIS AGREEMENT  (INCLUDING WITHOUT
           LIMITATION, ITS OBLIGATIONS UNDER CLAUSES 8 AND 9) TO THE SAME EXTENT
           AS IF SUCH WET LEASE HAD NOT BEEN ENTERED INTO AND PROVIDED, FURTHER,
           THAT NO SUCH WET  LEASE  INVOLVES  OR  RELATES  TO A  CONTRACT  OR AN
           OPERATION PROHIBITED UNDER CLAUSE 2.1(H) HEREOF.

8.6        Inspection:

(a)  Lessor and any person  designated by Lessor may at any time visit,  inspect
     and survey the  Aircraft,  any Engine or any Part and for such purpose may,
     subject to any  applicable Air Authority  regulation,  travel on the flight
     deck as observer;

(b)  Lessee will pay to Lessor on an  After-Tax  Basis on demand all  reasonable
     out-of-pocket  expenses  incurred  by  Lessor in  connection  with any such
     visit, inspection or survey; and

(c)  Lessor will:-

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

                    (ii) so long as no Default has occurred  and is  continuing,
                    not exercise such right other than on reasonable  notice and
                    so as not to disrupt unreasonably the commercial  operations
                    of Lessee,  provided,  however, Lessee will take such action
                    as  may  be  reasonably   required  to  facilitate  Lessor's
                    inspection.

8.7        Title: Lessee will:-

(a)  not do or  knowingly  permit to be done or omit or  knowingly  permit to be
     omitted to be done any act or thing which might  reasonably  be expected to
     jeopardize the rights of Lessor as owner of the Aircraft;

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

(c)  not at any time (i)  represent  or hold out  Lessor,  GECASI  or  GACASL as
     carrying  goods  or  passengers  on the  Aircraft  or as  being  in any way
     connected or associated with any operation or carriage (whether for hire or
     reward or  gratuitously)  which may be  undertaken by Lessee or (ii) pledge
     the credit of Lessor;

(d)  ensure  that  there  is  always  affixed,  and  not  removed  or in any way
     obscured,  a fireproof plate (having dimensions of not less than 10 cm. x 7
     cm.) in a reasonably  prominent position in the cockpit of the Aircraft and
     on each Engine stating:-

"This Aircraft/Engine is owned by Aviation Financial Services Inc. and is leased
to Frontier  Airlines,  Inc. and may not be operated by any other person without
the prior written consent of Aviation Financial Services Inc.";

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

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

(g)  not abandon the Aircraft, the Engine or any Part;

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

(i)  not  attempt,  or hold  itself out as having any power,  to sell,  lease or
     otherwise dispose of the Aircraft, any Engine or any Part; and

(j)  obtain a waiver of any  mechanic's  lien or right  thereto  from any vendor
     providing  maintenance services for Lessee prior to delivering the Aircraft
     or any Engine or Part to such vendor.

8.8        General: Lessee will:-

(a)  not make any  substantial  change in the nature of the business in which it
     is engaged, will preserve its corporate existence (other than in connection
     with a solvent  reconstruction  the terms of which  have been  approved  by
     Lessor,  such approval not to be unreasonably  withheld),  and will conduct
     its  business in an orderly and  efficient  and will  maintain  all rights,
     privileges,  licenses  and  franchises  material  thereto  or  material  to
     performing its obligations under this Agreement;

(b)  ensure  that no change  will  occur in the  Habitual  Base of the  Aircraft
     without the prior written consent of Lessor;

(c)  not without  giving  Lessor * days prior  notice (in  accordance  with this
     Agreement),  change its chief executive  office (as such term is defined in
     Article  9 of the  Uniform  Commercial  Code as in  effect  in the State of
     Colorado)  from 12015 East 46th Avenue,  Denver,  Colorado,  80239,  United
     States of America;

(d)  remain a Certified Air Carrier and maintain, without limitation, its status
     so as to fall within the preview of Section  1110 of Title 11 of the United
     States Code or any analogous Statute; and

(e)  remain a  "citizen  of the United  States"  as defined in Section  40102 of
     Title 49 of the United States Code.

8.9        Records: Lessee will:-

(a)  procure that accurate, complete and current records of all flights made by,
     and all maintenance  carried out on, the Aircraft (including in relation to
     each Engine and Part subsequently  installed,  before the installation) are
     kept; keep the_records in such manner as the Air Authority may from time to
     time require.  All records must be maintained in English.  The records will
     form part of the Aircraft Documents; and

(b)  maintain,  with appropriate  revisions in English,  all Aircraft Documents,
     records,  logs, and other  materials  required by applicable  Laws and best
     practice of major  international air transport  operators in respect of the
     Aircraft.

8.10       Protection: Lessee will:-

(a)  maintain the registration of the Aircraft with the Air Authority reflecting
     (so far as permitted by  applicable  Law) the interest of Lessor and not do
     or  suffer  to  be  done  anything  which  might   adversely   affect  that
     registration; and

(b)  do all acts and things (including, without limitation, making any filing or
     registration  with the Air Authority or any other  Government  Entity or as
     required to comply  with the  Mortgage  Convention  where  applicable)  and
     execute and deliver  all  documents  (including,  without  limitation,  any
     amendment of this Agreement) as may be required by Lessor:-

                    (i) following any change or proposed change in the ownership
                    or financing of the Aircraft; or

                    (ii) following any modification of the Aircraft,  any Engine
                    or any Part or the  permanent  replacement  of any Engine or
                    Part in accordance with this Agreement, so as to ensure that
                    the  rights of Lessor  under this  Agreement  apply with the
                    same effect as before; or

                    (iii) to establish,  maintain, preserve, perfect and protect
                    the rights of Lessor under this  Agreement  and the interest
                    of Lessor in the Aircraft.

8.11       Maintenance and Repair: Lessee will:-

(a)  keep  the  Aircraft  airworthy  in all  respects  and in  good  repair  and
     condition;

(b)  not change the  Maintenance  Performer  without  providing  the Lessor with
     prior written notice;

(c)  not materially change the Lessee's  Maintenance  Program or the schedule of
     the  Lessee's  Maintenance  Program  without the prior  written  consent of
     Lessor;

(d)  maintain the  Aircraft in  accordance  with  Lessee's  Maintenance  Program
     through the Maintenance  Performer and perform (at the respective intervals
     provided in Lessee's Maintenance Program) all Major Checks;

(e)  maintain  the  Aircraft in  accordance  with the  standard  of  maintenance
     required by FAR Part 121,  Subpart L and any other rules and regulations of
     the FAA and in at least the same  manner  and with at least the same  care,
     including, without limitation, maintenance scheduling,  modification status
     and technical  condition,  as is the case with respect to similar  aircraft
     owned or  otherwise  operated by Lessee and as if Lessee were to retain and
     continue  operating  the  Aircraft  in its  fleet  after the  Expiry  Date,
     including,  without limitation, all maintenance to the Airframe, any Engine
     or any Part required to maintain all warranties,  performance guarantees or
     service  life  policies  in full force and  effect  except to the extent of
     conflict with the rules and regulations of the Air Authority;

(f)  subject to Letter Agreement No. 1, comply with all outstanding  (i.e. at or
     prior  to  the  Expiry  Date)   mandatory   inspection   and   modification
     requirements,  airworthiness directives and similar requirements applicable
     to the  Aircraft,  any Engine or Part having a  compliance  date during the
     Term or within * days after the Expiry  Date and which are  required by the
     Air Authority  and/or  mandated by any  manufacturer  of the Aircraft,  any
     Engine or Part (an "Airworthiness Directive);

(g)  comply with all  applicable  Laws and the  regulations of the Air Authority
     and  other  aviation  authorities  with  jurisdiction  over  Lessee  or the
     Aircraft,  any Engine or Part regardless of upon whom such requirements are
     imposed and which relate to the maintenance, condition, use or operation of
     the Aircraft or require any modification or alteration to the Aircraft, any
     Engine or Part;

(h)  maintain in good standing a current  certificate of  airworthiness  (in the
     appropriate  category for the nature of the operations of the Aircraft) for
     the  Aircraft  issued by the Air  Authority  except  where the  Aircraft is
     undergoing  maintenance,  modification  or repair  required or permitted by
     this  Agreement  and will  from  time to time  provide  to Lessor a copy on
     request;

(i)  if required by the Air Authority,  maintain a current  certification  as to
     maintenance  issued by or on behalf of the Air  Authority in respect of the
     Aircraft  and will from time to time  provide to Lessor a copy on  request;
     and

(j)  procure  promptly  the  replacement  of any Engine or Part which has become
     time,  cycle  or  calendar  expired,  lost,  stolen,  seized,  confiscated,
     destroyed,  damaged beyond repair,  unserviceable  or permanently  rendered
     unfit for use, with an engine or part complying with the conditions set out
     in Clause  8.13(a)  and in the case of any Engine  which  suffers an Engine
     Event of Loss,  shall procure that such engine complies with the provisions
     of Clause 11.1(c).

8.12       Removal  of  Engines  and Parts: Lessee will ensure that no Engine or
           Part  installed  on the  Aircraft  is  at  any  time removed from the
           Aircraft other than:-

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

(b)  if the removal is of an obsolete  item and is in  accordance  with Lessee's
     Maintenance Program; or

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

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

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

                    and then in each case (A) with respect to a Part, only if it
                    is  reinstalled  or replaced by a part complying with Clause
                    8.13(a)  as soon as  practicable  and in any  event no later
                    than the  Expiry  Date,  and (B) with  respect to an Engine,
                    title to such Engine shall remain vested in Lessor.

8.13       Installation of Engines and Parts: Lessee will:-

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

                    (i) in the case of an  engine,  it is an  engine of the same
                    model as, or an improved  or advanced  version of the Engine
                    it  replaces,  which  is in the  same  or  better  operating
                    condition,  has substantially  similar hours available until
                    the next scheduled checks,  inspections,  overhauls and shop
                    visits and has the same or greater  value and utility as the
                    replaced Engine;

                    (ii)  in the  case of a  part,  it is in as  good  operating
                    condition,  has substantially  similar hours available until
                    the next scheduled checks,  inspections,  overhauls and shop
                    visits, is of the same or a more advanced make and model and
                    is of the same  interchangeable  modification  status as the
                    replaced Part;

                    (iii) in the case of a part,  it has become and  remains the
                    property  of  Owner  free  from  Security  Interests  and on
                    installation  on the Aircraft  will  without  further act be
                    subject to this Agreement; and

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

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

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

                    (ii) it would result in an  unreasonable  disruption  of the
                    operation of the  Aircraft  and/or the business of Lessee to
                    ground the Aircraft until an engine or part, as the case may
                    be,  complying  with Clause  8.13(a)  becomes  available for
                    installation on the Aircraft; and

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

8.14       Non-Installed Engines and Parts: Lessee will:-

(a)  ensure that any Engine or Part which is not  installed  on the Aircraft (or
     any other aircraft as permitted by this  Agreement) is, except as expressly
     permitted by this Agreement, properly and safely stored, and kept free from
     Security Interests;

(b)  notify  Lessor  whenever any Engine is removed from the Aircraft  and, from
     time to time, on request  procure that any person to whom  possession of an
     Engine is given  acknowledges  in writing to Lessor,  in form and substance
     satisfactory to Lessor,  that it will respect the interest of Lessor in the
     Engine and will not seek to exercise any rights  whatsoever  in relation to
     it;

(c)  (notwithstanding   the  foregoing   provisions  of  this  sub-clause),   be
     permitted,  if no Default has  occurred and is  continuing,  to install any
     Engine or Part on an aircraft, or in the case of a Part on an engine:-

                    (i)  owned  and  operated  by  Lessee  free  from   Security
                    Interests; or

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

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

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

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

           (2)        the  lessor  under  such  lease,  the  seller  under  such
                      conditional  sale agreement or the holder of such Security
                      Interest,   as  the  case  may  be,  has   confirmed   and
                      acknowledged  in writing to Lessor,  in form and substance
                      satisfactory to Lessor,  that it will respect the interest
                      of Lessor in  respect  of that  Engine or Part and that it
                      will  not  seek  to  exercise  any  rights  whatsoever  in
                      relation thereto.

8.15      Pooling of Engines  and Parts:  Lessee  will not enter into nor permit
          any pooling  agreement or  arrangement in respect of an Engine or Part
          without the prior written consent of Lessor.

8.16       Equipment Changes:

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

                    (i) is expressly permitted by this Agreement, or

                    (ii) has the prior written approval of Lessor and which does
                    not diminish the value, utility, condition, or airworthiness
                    of the Aircraft;

(b)  So long as a Default has not occurred and is continuing,  Lessee may remove
     any  Equipment  Change  if it can be  removed  from  the  Aircraft  without
     diminishing or impairing the value, utility,  condition or airworthiness of
     the Aircraft; and

(c)  Lessee shall  indemnify  Lessor on an After-Tax Basis for any and all Taxes
     payable by Lessor as the case may be, as a result of an Equipment Change.

8.17       Title on an Equipment Change:

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

(b)  Lessor may require Lessee to remove any Equipment Change and to restore the
     Aircraft to its condition prior to that Equipment Change; and

(c)  Except as  referred  to in Clause  8.17(b)  any  Engine or Part at any time
     removed  from the  Aircraft  will  remain  the  property  of Owner  until a
     replacement has been made in accordance with this Agreement and until title
     in that  replacement  has passed,  according to applicable  Laws, to Lessor
     subject to this Agreement and free of all Security Interests. Upon title to
     such  replacement  so passing to Lessor,  title to the  replaced  Engine or
     Part,  will,  provided no Default has occurred and is  continuing,  pass to
     Lessee.

8.18       Third Party:  Lessee will procure that no person  (other than Lessor)
           will act in any manner  inconsistent  with its obligations under this
           Agreement and that all persons will comply with those  obligations as
           if  references  to "Lessee"  included a separate  reference  to those
           persons.

9.         INSURANCE

9.1        Insurances:  Lessee will maintain in full force during the Term,  and
           thereafter  as expressly  required in this  Agreement,  insurances in
           respect of the Aircraft in form and substance  satisfactory to Lessor
           (the  "Insurances"  which expression  includes,  where the context so
           admits, any relevant  re-insurance(s))  through such brokers and with
           such insurers and having such  deductibles  and being subject to such
           exclusions  as may be  approved  by  Lessor  from  time to time.  The
           Insurances will be effected either:-

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

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

9.2        Requirements: Lessor's current requirements as to required Insurances
           are as  specified  in this  Clause and in Schedule 4. Lessor may from
           time to time stipulate other  requirements for the Insurances so that
           the scope and level of cover is maintained in line with best industry
           practice and the interests of Lessor protected.

9.3        Change:  If at any time Lessor  wishes to revoke its  approval of any
           insurer,  reinsurer,  insurance  or  reinsurance,  Lessor  and/or its
           brokers will  consult  with Lessee and  Lessee's  brokers (as for the
           time being approved by Lessor) regarding whether that approval should
           be revoked to protect  the  interests  of the  parties  insured.  If,
           following the  consultation,  Lessor considers that any change should
           be made,  Lessee  will then  arrange or procure  the  arrangement  of
           alternative cover satisfactory to Lessor.

9.4        Insurance Covenants: Lessee will:-

(a)  ensure that all legal  requirements  as to insurance of the  Aircraft,  any
     Engine or any Part  which may from time to time be  imposed  by the laws of
     the State of  Registration or any state to, from or over which the Aircraft
     may be flown,  in so far as they  affect or concern  the  operation  of the
     Aircraft, are complied with and in particular those requirements compliance
     with which is necessary to ensure that (i) the Aircraft is not in danger of
     detention or forfeiture, (ii) the Insurances remain valid and in full force
     and effect,  and (iii) the interests of the  Indemnitees  in the Insurances
     and the Aircraft or any Part are not thereby prejudiced;

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

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

                    (i) invalidates or may invalidate the Insurances; or

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

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

(d)  not take out without the prior written  approval of Lessor any insurance or
     reinsurance in respect of the Aircraft other than those required under this
     Agreement unless relating solely to hull total loss, business interruption,
     profit commission and deductible risk;

(e)  commence  renewal  procedures at least * days prior to expiry of any of the
     Insurances and provide to Lessor:-

                    (i) if  requested  by  Lessor,  a written  status  report of
                    renewal negotiation * days prior to each expiry date;

                    (ii) telexed telecopy  confirmation of completion of renewal
                    prior to each expiry date; and

                    (iii)  certificates  of  insurance  (and  where  appropriate
                    certificates   of   reinsurance),   and  broker's  (and  any
                    reinsurance  brokers')  letter  of  undertaking  in  a  form
                    acceptable to Lessor in English,  detailing the coverage and
                    confirming the insurers' (and any reinsurers')  agreement to
                    the  specified  insurance  requirements  of  this  Agreement
                    within * days after each renewal date;

(f)  on request,  provide to Lessor  copies of  documents  or other  information
     evidencing the Insurances;

(g)  on request,  provide to Lessor  evidence that the  Insurance  premiums have
     been paid;

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

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

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

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

(a)  to pay the premiums due or to effect and maintain  insurances  satisfactory
     to it or  otherwise  remedy  Lessee's  failure in such  manner  (including,
     without  limitation to effect and maintain an "owner's interest" policy) as
     it  considers  appropriate.   Any  sums  so  expended  by  it  will  become
     immediately  due and  payable  by Lessee to  Lessor on an  After-Tax  Basis
     together with interest  thereon at the rate specified in Clause 5.11,  from
     the date of  expenditure by it up to the date of  reimbursement  by Lessee;
     and

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

9.6        Continuing  Indemnity:  Lessee shall  effect and  maintain  insurance
           after  the  Expiry  Date  with  respect  to its  liability  under the
           Indemnity in Clause 10 for * years which provides for each Indemnitee
           to be named as additional insured. Lessee's obligation in this Clause
           shall not be affected by Lessee  ceasing to be lessee of the Aircraft
           and/or any of the Indemnitees ceasing to have any interest in respect
           of the Aircraft.

9.7        Application of Insurance Proceeds:-

           As between Lessor and Lessee:-

(a)        all insurance  payments received as the result of an Event of Loss or
           Engine Event of Loss occurring during the Term will be paid to Lessor
           and  Lessor  will pay the  balance of those  amounts to Lessee  after
           deduction of all amounts which may be or become  payable by Lessee to
           Lessor under this Agreement (including under Clause 11.1(b));

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

(c)        all  insurance  proceeds  in respect of third party  liability  will,
           except to the  extent  paid by the  insurers  to the  relevant  third
           party,  be paid to Lessor to be paid directly in  satisfaction of the
           relevant  liability or to Lessee in  reimbursement  of any payment so
           made; and

(d)        notwithstanding  Clauses  9.7(a),  (b) or (c),  if at the time of the
           payment of any such insurance  proceeds a Default has occurred and is
           continuing,  all such  proceeds will be paid to or retained by Lessor
           to be applied  toward  payment of any amounts  which may be or become
           payable by Lessee in such  order as Lessor  sees fit or as Lessor may
           elect.

           To the extent insurance proceeds are paid to Lessee, Lessee agrees to
           comply  with the  foregoing  provisions  and  apply or pay over  such
           proceeds as so required.

9.8        Previous  Owner as  Additional  Insured:-  Lessee  shall  effect  and
           maintain  insurance  naming  Viva  as  an  additional  insured  under
           Lessee's public liability  policy,  to the extent of Viva's interest,
           for the  period  commencing  on the  Delivery  Date and ending on the
           earlier to occur of (i) the second  anniversary  of the Delivery Date
           or (ii) the date of  completion  of the next  scheduled  annual heavy
           maintenance visit.

10.        INDEMNITY

10.1       GENERAL:  LESSEE  AGREES TO DEFEND,  INDEMNIFY  AND HOLD HARMLESS THE
           INDEMNITEES  ON AN  AFTER-TAX  BASIS  FROM  AND  AGAINST  ANY AND ALL
           CLAIMS, PROCEEDINGS,  LOSSES,  LIABILITIES,  SUITS, JUDGMENTS, COSTS,
           EXPENSES, PENALTIES OR FINES (EACH A "CLAIM") (REGARDLESS OF WHEN THE
           SAME IS MADE OR INCURRED,  WHETHER  DURING OR AFTER THE TERM (BUT NOT
           BEFORE)):-

(A)  WHICH MAY AT ANY TIME BE SUFFERED OR INCURRED  DIRECTLY OR  INDIRECTLY AS A
     RESULT  OF  OR  CONNECTED  WITH  THE  POSSESSION,   DELIVERY,  PERFORMANCE,
     MANAGEMENT,  OWNERSHIP,  REGISTRATION,   CONTROL,  MAINTENANCE,  CONDITION,
     SERVICE,  REPAIR,  OVERHAUL,  LEASING,  USE, OPERATION,  DATE PROCESSING OR
     RETURN OF THE  AIRCRAFT,  ANY  ENGINE OR PART  (EITHER IN THE AIR OR ON THE
     GROUND)  WHETHER OR NOT THE CLAIM MAY BE  ATTRIBUTABLE TO ANY DEFECT IN THE
     AIRCRAFT,  ANY  ENGINE  OR ANY  PART OR TO ITS  DESIGN,  TESTING  OR USE OR
     OTHERWISE,  AND REGARDLESS OF WHEN THE SAME ARISES OR WHETHER IT ARISES OUT
     OF OR IS  ATTRIBUTABLE TO ANY ACT OR OMISSION,  NEGLIGENT OR OTHERWISE,  OF
     ANY INDEMNITEE;

(B)  WHICH ARISE OUT OF ANY ACT OR OMISSION  WHICH  INVALIDATES OR WHICH RENDERS
     VOIDABLE ANY OF THE INSURANCES; AND

(C)  WHICH MAY AT ANY TIME BE  SUFFERED  OR  INCURRED  AS A  CONSEQUENCE  OF ANY
     DESIGN,  ARTICLE OR MATERIAL IN THE AIRCRAFT, ANY ENGINE OR ANY PART OR ITS
     OPERATION  OR  USE  CONSTITUTING  AN  INFRINGEMENT  OF  PATENT,  COPYRIGHT,
     TRADEMARK,  DESIGN OR OTHER PROPRIETARY RIGHT OR A BREACH OF ANY OBLIGATION
     OF CONFIDENTIALITY OWED TO ANY PERSON;

           BUT EXCLUDING ANY CLAIM IN RELATION TO A PARTICULAR INDEMNITEE TO THE
           EXTENT  THAT THAT CLAIM IS  COVERED  PURSUANT  TO  ANOTHER  INDEMNITY
           PROVISION OF THIS  AGREEMENT  OR TO THE EXTENT IT ARISES  SOLELY AS A
           RESULT  OF  THE  GROSS  NEGLIGENCE  OR  WILLFUL  MISCONDUCT  OF  THAT
           INDEMNITEE, LESSOR TAXES OR A LESSOR LIEN.

10.2       Duration:  The indemnities  contained in this agreement will continue
           in full  force  following  the end of the  Term  notwithstanding  any
           breach or  repudiation  by Lessor or Lessee of this  Agreement or any
           termination of the lease of the Aircraft hereunder.

11.        EVENTS OF LOSS

11.1

(a)  Pre-delivery:  If an Event of Loss occurs prior to delivery of the Aircraft
     to Lessee, Lessor will have the option, exercisable by giving Lessee notice
     in writing, to substitute an alternative  aircraft of the same manufacture,
     model, value and utility as the Aircraft.  If Lessor exercises such option,
     Lessee shall be obliged to lease such substitute  aircraft  pursuant to the
     terms and conditions of this Agreement and such  substitute  aircraft shall
     constitute  the Aircraft for all purposes of this  Agreement.  Lessor shall
     provide  Lessee with details of the  substitute  aircraft as soon as may be
     practicable  after the  occurrence of the Event of Loss. If Lessor  advises
     Lessee that Lessor does not wish to exercise  such option,  this  Agreement
     will immediately terminate and except as expressly stated in this Agreement
     neither  party will have any further  obligation  or  liability  under this
     Agreement other than pursuant to Clause 16.9 except that Lessor will return
     the  Deposit if paid in cash or cancel and return the Letter of Credit,  as
     applicable, to Lessee; and

(b)  Post-delivery: If an Event of Loss occurs after delivery of the Aircraft to
     Lessee,  Lessee  will pay the  Agreed  Value to  Lessor  on or prior to the
     earlier of (i) * Business Days after the Event of Loss and (ii) the date of
     receipt of insurance  proceeds in respect of that Event of Loss. Subject to
     the rights of any  insurers  and  reinsurers  or other  third  party,  upon
     irrevocable  payment in full to Lessor of that amount and all other amounts
     which may be or become payable to Lessor under this Agreement,  Lessor will
     without  recourse  or warranty  (except as to  Lessor's  Liens) and without
     further act, be deemed to have transferred to Lessee all of Lessor's rights
     to any Engines and Parts not installed when the Event of Loss occurred, all
     on an as-is  where-is  basis,  and will at  Lessee's  expense,  execute and
     deliver such bills of sale and other  documents and  instruments  as Lessee
     may reasonably  request to evidence (on the public record or otherwise) the
     transfer  and the vesting of Lessor's  rights in such  Engines and Parts in
     Lessee, free and clear of all rights of Lessor and Lessor Liens.

(c)  Engine Event of Loss:  From the Delivery Date upon an Engine Event of Loss,
     Lessee shall give Lessor prompt written notice thereof and shall,  within *
     days after such occurrence, convey to Lessor, as replacement for the Engine
     suffering  such event,  title to a  Replacement  Engine.  Each  Replacement
     Engine shall be free of all Security  Interests  and shall be in as good an
     operating condition as the Engine being replaced, assuming the Engine being
     replaced  was in the  condition  and repair  required  by the terms  hereof
     immediately  prior to the Engine  Event of Loss.  Upon full  compliance  by
     Lessee  with the terms of this  Clause  11.1(c),  Lessor  will  transfer to
     Lessee title to the Engine which  suffered the Engine Event of Loss.  Prior
     to or at the time of any such conveyance,  Lessee, at its own expense, will
     promptly (i) furnish  Lessor with a full warranty bill of sale, in form and
     substance   reasonably   satisfactory  to  Lessor,  with  respect  to  such
     Replacement  Engine;  (ii) cause a lease  supplement (in form and substance
     satisfactory  to  Lessor)   subjecting  such  Replacement  Engine  to  this
     Agreement,  to be  duly  executed  by  Lessee,  and  recorded  pursuant  to
     applicable  Law;  (iii) furnish  Lessor with such evidence of title to such
     Replacement  Engine as Lessor may reasonably  request;  (iv) furnish Lessor
     with an  opinion  of  Lessee's  counsel  to the  effect  that title to such
     Replacement  Engine  has been  duly  conveyed  to  Lessor  subject  to this
     Agreement,  free  and  clear  of all  Security  Interests,  and  that  such
     Replacement  Engine is duly leased  hereunder;  (v)  furnish a  certificate
     signed  by a duly  authorized  financial  officer  or  executive  of Lessee
     certifying that, upon consummation of such replacement, no Event of Default
     will  have  occurred  or be  continuing;  (vi)  furnish  Lessor  with  such
     documents  as  Lessor  may  reasonably   request  in  connection  with  the
     consummation of the  transactions  contemplated by this Clause 11.1(c),  in
     each case in form and substance  satisfactory to Lessor;  and (vii) furnish
     such Financing  Statements  incorporating the Replacement  Engine as may be
     requested by Lessor. For all purposes hereof,  each such Replacement Engine
     shall be deemed part of the property leased  hereunder,  shall be deemed an
     "Engine" as defined herein and shall be deemed part of the same Aircraft as
     was the Engine  replaced  thereof.  No Engine Event of Loss covered by this
     Clause  11.1(c)  shall result in any  reduction in Rent or affect  Lessee's
     obligation to pay Engine Supplemental Rent or the amount thereof to be paid
     by Lessee.

Lessee shall indemnify each Indemnitee on an After-Tax Basis for any adverse tax
consequence  to  such  Indemnitee  of the  replacement  of one or  more  Engines
pursuant to this Clause 11.1.

11.2       Substitute Aircraft:

(a)  Without prejudice to the provisions of Clause 11.1 (b), if an Event of Loss
     occurs  after  delivery  of the  Aircraft  to Lessee,  Lessor will have the
     option,  exercisable  by giving Lessee notice in writing,  to substitute an
     alternative  aircraft (the  "Substitute  Aircraft") of the same manufacture
     and model as the Aircraft and having a value,  utility and condition  equal
     to or greater than the Aircraft as at the date of  occurrence  of the Event
     of Loss which  Substitute  Aircraft  will be leased by Lessor to Lessee for
     the  remainder  of the Term  pursuant to the terms and  conditions  of this
     Agreement.  If Lessor exercises such option,  the Substitute  Aircraft will
     constitute  the Aircraft  for all purposes of this  Agreement in respect of
     facts and  circumstances  arising  after the date of  delivery  thereof  to
     Lessee. Lessor shall provide Lessee with details of the Substitute Aircraft
     as soon as may be practicable after the occurrence of the Event of Loss;

(b)  Lessor will use all reasonable endeavors to deliver the Substitute Aircraft
     to Lessee as soon as may be practicable following the date of occurrence of
     the Event of Loss but not later than * months after such date; and

(c)  Lessee  agrees to enter into such  documentation  as Lessor may  require in
     order to  reflect  the  leasing of the  Substitute  Aircraft  as  aforesaid
     including, without limitation, documentation in respect of the Insurances.

Lessee shall indemnify each Indemnitee on an After-Tax Basis for any adverse tax
consequence  to such  Indemnitee of the  replacement of the Aircraft or Airframe
pursuant to this Clause 11.2.

11.3       Requisition:  During any requisition for use or hire of the Aircraft,
           any Engine or Part which does not constitute an Event of Loss:-

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

(b)  so long as no  Default  has  occurred  and is  continuing,  Lessee  will be
     entitled to any hire paid by the requisitioning authority in respect of the
     Term.  Lessee  will,  as  soon as  practicable  after  the end of any  such
     requisition,  cause the Aircraft to be put into the  condition  required by
     this Agreement.  Lessor will be entitled to all compensation payable by the
     requisitioning  authority in respect of any change in the structure,  state
     or condition of the Aircraft arising during the period of requisition,  and
     Lessor will apply such  compensation in reimbursing  Lessee for the cost of
     complying with its obligations  under this Agreement in respect of any such
     change, but so that, if any Default has occurred and is continuing,  Lessor
     may apply the compensation or hire in or towards  settlement of any amounts
     owing by Lessee under this Agreement.

12.        RETURN OF AIRCRAFT

12.1       Return:  On the Expiry Date or redelivery of the Aircraft pursuant to
           Clause 13.2 or  termination of the leasing of the Aircraft under this
           Agreement Lessee will,  unless an Event of Loss has occurred,  at its
           expense,  redeliver the Aircraft and Aircraft  Documents to Lessor at
           the  Redelivery  Location  or  such  other  airport  as  is  mutually
           acceptable to the parties  hereto,  in accordance with the procedures
           and in compliance  with the  conditions set forth in Schedule 3, free
           and clear of all Security  Interests and Permitted  Liens (other than
           Lessor   Liens)  and  in  a  condition   qualifying   for   immediate
           certification  of  airworthiness by the FAA or as otherwise agreed by
           Lessor and Lessee.

12.2       Final  Inspection:  Immediately  prior to redelivery of the Aircraft,
           Lessee  will  make  the  Aircraft  available to Lessor for inspection
           ("Final Inspection")  in  order  to  verify that the condition of the
           Aircraft complies with this  Agreement.  The  Final  Inspection  will
           permit, and be of sufficient duration for, Lessor to:-

(a)        inspect the Aircraft Documents;

(b)        inspect the Aircraft and uninstalled Parts;

(c)        inspect the Engines,  including  without  limitation  (i) a borescope
           inspection of (A) the low pressure and high pressure  compressors and
           (B) turbine and  combustion  areas,  (ii) engine  condition  runs and
           (iii)  review of  Engine  trend  monitoring  data and  technical  log
           reports covering the last * (*) days of operation; and

(d)        perform a complete borescope inspection of the APU; and

(e)        observe a * hour demonstration flight (with Lessor's  representatives
           as on-board observers).

12.3       Non-Compliance: To the extent that,  at the time of Final Inspection,
           the condition  of  the  Aircraft does not comply with this Agreement,
           Lessee will at Lessor's option:-

(a)        immediately   rectify  the  non-compliance  and  to  the  extent  the
           non-compliance  extends  beyond  the  Expiry  Date,  the Term will be
           automatically  extended and this Agreement will remain in force until
           the non-compliance has been rectified as provided in Clause 12.8; or

(b)        redeliver the Aircraft to Lessor and indemnify Lessor on an After-Tax
           Basis, and provide to Lessor's satisfaction cash as security for that
           indemnity,  against  the  cost  of  putting  the  Aircraft  into  the
           condition required by this Agreement.

12.4       Redelivery:  Upon  redelivery  Lessee  will  provide to Lessor,  upon
           Lessor's request, all documents necessary to export the Aircraft from
           the  Habitual  Base  (including,  without  limitation,  a  valid  and
           subsisting  export license for the Aircraft) and required in relation
           to the deregistration of the Aircraft with the Air Authority.

12.5       Acknowledgment:  Provided  Lessee has complied  with its  obligations
           under this Agreement,  following redelivery of the Aircraft by Lessee
           to Lessor at the Redelivery  Location,  Lessor will deliver to Lessee
           an acknowledgment confirming that Lessee has redelivered the Aircraft
           to Lessor in accordance with this Agreement.

12.6       Maintenance Program:

(a)        Prior to the  Expiry  Date and upon  Lessor's  request,  Lessee  will
           provide Lessor or its agent reasonable access to Lessee's Maintenance
           Program  and the  Aircraft  Documents  in  order  to  facilitate  the
           Aircraft's integration into any subsequent operator's fleet; and

(b)        Lessee  will,  if  requested  by Lessor to do so,  upon return of the
           Aircraft deliver to Lessor a certified true current and complete copy
           of  Lessee's  Maintenance  Program.  Lessor  agrees  that it will not
           disclose the contents of Lessee's  Maintenance  Program to any person
           or  entity  except  to  the  extent  necessary  to  monitor  Lessee's
           compliance  with this  Agreement  and/or to  bridge  the  maintenance
           program for the Aircraft from Lessee's Maintenance Program to another
           program after the Expiry Date.

12.7       Fuel: Upon  redelivery of the Aircraft to Lessor,  an adjustment will
           be made in  respect  of fuel on  board on the  Delivery  Date and the
           Expiry Date at the price then prevailing at the Redelivery Location.

12.8       Automatic Extension of Term: In the event of Lessee's failure to make
           the Aircraft  available to Lessor for timely  inspection  pursuant to
           Clauses 12.1 hereof,  non-compliance of the condition of the Aircraft
           under  Clause  12.3  hereof or any  other  failure  of  Lessee  which
           prevents  timely  Redelivery  of the Aircraft to Lessor,  the Term of
           this Agreement will be automatically extended and this Agreement will
           remain in force until such  non-compliance  has been rectified,  with
           Lessee being  obligated to pay Rent at a rate specified in Clause 5.3
           plus * percent on a per diem basis with respect to the period of such
           extension.

13.        DEFAULT

13.1       Events:  Each of the  following  events will  constitute  an Event of
           Default and a repudiation  (but not a termination)  of this Agreement
           by Lessee  (whether  any such  event or  condition  is  voluntary  or
           involuntary  or  occurs  by  operation  of law or  pursuant  to or in
           compliance  with any  judgment,  decree  or order of any court or any
           order,  rule  or  regulation  of  any  Government   Entity).   Lessee
           acknowledges  that  the  occurrence  of any  Event of  Default  would
           represent a material  default in the  performance of its  obligations
           under this Agreement:-

(a)        Non-payment: Lessee fails to make any payment under this Agreement on
           the due date; or

(b)        Insurance:  Lessee  fails to comply with any provision of Clause 9 or
           any  insurance  required  to  be  maintained  under this Agreement is
           canceled or terminated or notice of cancellation is  given in respect
           of any such insurance; or

(c)        Breach:  Lessee  fails to  comply  with any other  provision  of this
           Agreement and, if such failure is in the reasonable opinion of Lessor
           capable of remedy, the failure continues for * days after notice from
           Lessor to Lessee; or

(d)        Representation: any  representation or warranty made (or deemed to be
           repeated)  by  Lessee  in  or  pursuant  to  this Agreement or in any
           document or certificate or  statement  is  or  proves  to  have  been
           incorrect in any material respect when made or deemed to be repeated;
           or

(e)        Cross Default:

           (i)        a final  judgment  for the payment of money not covered by
                      insurance in excess of * Dollars ($*), or final  judgments
                      for the  payment  of money not  covered  by  insurance  in
                      excess  of *  Dollars  ($*)  in the  aggregate,  shall  be
                      rendered   against   Lessee  and  the  same  shall  remain
                      undischarged  for a  period  of * (*)  days  during  which
                      execution  thereof  shall  not be  effectively  stayed  by
                      agreement of the parties  involved,  stayed by court order
                      or adequately bonded; or

           (ii)       attachments or other Security Interests shall be issued or
                      entered  against  substantially  all  of the  property  of
                      Lessee and shall remain undischarged or unbonded for * (*)
                      days except for Security  Interests  created in connection
                      with monies borrowed or obligations agreed to by Lessee in
                      the ordinary course of its business; or

           (iii)      Lessee  shall  default  in the payment of any sum which by
                      itself is in excess  of  $* or any sums which in aggregate
                      exceed  $*  notwithstanding that any particular individual
                      sum  thereof  does  not  exceed  $*  of  any  one  or more
                      obligations for the payment of  borrowed  money,  for  the
                      deferred purchase price of property or for  the payment of
                      rent  or  hire  under  any lease of aircraft when the same
                      becomes due if such nonpayment results in or  would permit
                      an acceleration of  such  indebtedness,  or  Lessee  shall
                      default  in  the performance of any other term, agreement,
                      or  condition  contained  in  any  agreement or instrument
                      under  or   by  which  any  such  obligation  is  created,
                      evidenced  or secured, if the effect of such default is to
                      cause or permit such obligation to become due prior to its
                      stated maturity; or

           (iv)       any event  of  default  or  termination  event,  howsoever
                      described, occurs under the Other Agreements; or

(f)  Approvals: any consent, authorization,  license, certificate or approval of
     or registration  with or declaration to any Government Entity in connection
     with this Agreement (including, without limitation): -

           (i)        any  authorization  required  by  Lessee  to  obtain   and
                      transfer freely Dollars (or any other  relevant  currency)
                      out of any relevant country; or

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

           (iii)      the registration of the Aircraft; or

           (iv)       any airline  license or air transport  license  including,
                      without  limitation,  authority  to operate  the  Aircraft
                      under FAR Part 121 and a Certificate of Public Convenience
                      and  Necessity  issued under  Section 41102 of Title 49 of
                      the United States Code;

           is modified in a manner unacceptable to Lessor or is withheld,  or is
           revoked, suspended,  canceled, withdrawn,  terminated or not renewed,
           or otherwise ceases to be in full force; or

(g)        Bankruptcy, etc.:

           (i)        Lessee or any Subsidiary consents to the appointment of  a
                      custodian, receiver, trustee or liquidator  of  itself  or
                      all or any material part of  Lessee's property or Lessee's
                      consolidated property, or  Lessee or any Subsidiary admits
                      in writing its inability to, or is unable to, or does not,
                      pay  its  debts  generally  as  they  come due, or makes a
                      general assignment for the benefit of creditors, or Lessee
                      or any Subsidiary files a voluntary petition in bankruptcy
                      or  a  voluntary  petition  seeking  reorganization  in  a
                      proceeding under any bankruptcy or insolvency Laws (as now
                      or  hereafter  in  effect)  or  an  answer  admitting  the
                      material allegations of a petition filed against Lessee or
                      any  Subsidiary in  any  such proceeding, or Lessee or any
                      Subsidiary by voluntary petition,  answer or consent seeks
                      relief under  the  provisions  of  any  other  bankruptcy,
                      insolvency  or   other  similar  Law  providing  for   the
                      reorganization or winding-up of corporations, or  provides
                      for an agreement,  composition,  extension  or  adjustment
                      with its creditors,  or any  corporate  action (including,
                      without limitation, any board of directors or  shareholder
                      action)  is    taken   by  Lessee  or  any  Subsidiary  in
                      furtherance of any of  the  foregoing,  whether or not the
                      same is fully effected or accomplished; or

           (ii)       an  order,  judgment  or decree  is  entered  by any court
                      appointing,  without  the  consent of Lessee or any of its
                      Subsidiaries, a custodian, receiver, trustee or liquidator
                      of Lessee  or any  Subsidiary,  or of all or any  material
                      part  of  Lessee's   property  or  Lessee's   consolidated
                      property is sequestered,  and any such order,  judgment or
                      decree of appointment or sequestration  remains in effect,
                      undismissed,  unstayed or unvacated for a period of * days
                      after  the date of entry  thereof  or at any time an order
                      for relief is granted; or

           (iii)      an involuntary petition against Lessee or  any  Subsidiary
                      in a proceeding under the United States Federal Bankruptcy
                      Laws or other insolvency Laws  (as  now  or  hereafter  in
                      effect) is filed and is not  withdrawn or dismissed within
                      * days  thereafter  or  at any time an order for relief is
                      granted in such proceeding, or if, under the provisions of
                      any  Law  providing  for  reorganization  or winding-up of
                      corporations which may apply to Lessee or any  Subsidiary,
                      any court of competent jurisdiction  assumes  jurisdiction
                      over, or custody or  control  of, Lessee or any Subsidiary
                      or  of  all  or any material part of Lessee's property, or
                      Lessee's  consolidated  property  and  such  jurisdiction,
                      custody  or control  remains  in  effect,  unrelinquished,
                      unstayed or unterminated for a period of 30 days or at any
                      time an order for relief is granted in such proceeding; or

(h)        Unlawful:  it  becomes  unlawful  for  Lessee  to  perform any of its
           obligations under this Agreement or this Agreement becomes wholly  or
           partly invalid or unenforceable; or

(i)        Suspension of Business: Lessee or any of its Subsidiaries suspends or
           ceases  or  threatens  to  suspend  or  cease  to  carry  on all or a
           substantial part of its business; or

(j)        Disposal:  Lessee or any of its  Subsidiaries  disposes,  conveys  or
           transfers  or  threatens  to dispose,  convey or transfer of all or a
           material part of its assets,  liquidates or dissolves or consolidates
           or  merges  with any  other  Person  whether  by one or a  series  of
           transactions,  related  or  not,  other  than  for the  purpose  of a
           reorganization  of the  terms of which  have  received  the  previous
           consent in writing of Lessor; or

(k)        Rights  and  Remedies:  the  existence,  validity,  enforceability or
           priority of the rights of Lessor as owner and the rights of Lessor as
           lessor in respect of the Aircraft are challenged  by  Lessee  or  any
           other person claiming by or through Lessee; or

(l)        Delivery:  Lessee  fails  to timely comply with its obligations under
           Clause 4 to accept delivery of the Aircraft; or

(m)        Ownership,  Security  Interests and Related Matters:  Lessee fails to
           timely comply with its obligations under Clause 8.7; or

(n)        Transfer:  Lessee makes or permits any assignment or transfer of this
           Agreement, or any interest herein, or of the right  to  possession of
           the Aircraft, the Airframe, or any Engine; or

(o)        Redelivery:  Lessee  fails  to  return  the Aircraft to Lessor on the
           Expiry Date in accordance with Clause 12.

(p)        Adverse Change:  any  event  or series of events occurs which, in the
           reasonable opinion of Lessor might have a material adverse effect  on
           the financial condition or operations of Lessee and its  Subsidiaries
           or on the ability of Lessee to comply with its obligations under this
           Agreement; or

(q)       Letter of Credit:

                  (i)      the  issuer of the Letter of Credit (if any) fails to
                           make  any  payment  under  that Letter of Credit when
                           due; or

                  (ii)     any  such  Letter  of Credit is not in full force or,
                           for any reason ceases to constitute the legal,  valid
                           and binding obligation of the issuer; or

                  (iii)    any of the events  listed in paragraph  (f)(i) above,
                           with respect to the  performance by the issuer of its
                           obligations  under any Letter of Credit, or paragraph
                           (g) above applies to such issuer (references in those
                           sub-paragraphs  to Lessee  being  deemed to be to the
                           issuer); or

                  (iv)     where applicable, any Letter of Credit is not renewed
                           within the time required by Section 5.15;

and each  reference  in this  paragraph  (q) to "the  issuer"  shall  include  a
reference to any confirming bank for the Letter of Credit.

13.2       Rights: If an Event of Default occurs,  Lessor may at its option (and
           without  prejudice to any of its other rights under this  Agreement),
           at any time  thereafter  (without notice to Lessee except as required
           under applicable Law):-

(a)        by notice to Lessee and with  immediate  effect on  dispatch  of such
           notice  terminate the letting of the Aircraft (but without  prejudice
           to the  continuing  obligations  of  Lessee  under  this  Agreement),
           whereupon  all rights of Lessee  under this  Agreement  shall  cease;
           and/or

(b)        proceed by appropriate court action or actions to enforce performance
           of this Agreement,  including, without limitation, the payment of all
           Rent and all  other  amounts  payable  to  Lessor  or any  Indemnitee
           pursuant to the terms hereof; and/or

(c)        proceed by appropriate court action or actions to recover damages for
           the breach of this Agreement which shall include, without limitation:
           -

           (i)        all  Rent  and  other  amounts which are or become due and
                      payable  hereunder  prior  to  the  date  Lessor  recovers
                      possession of the Aircraft;

           (ii)       at Lessor's election, either one of the amounts determined
                      pursuant to Clause  13.2(e) or Clause 13.2(f) below or any
                      lost  profits  suffered  by  Lessor  as a  consequence  of
                      Lessor's  inability  to place the  Aircraft  with  another
                      lessee on financial  terms that are as favorable to Lessor
                      as the terms of this Agreement;

           (iii)      all  costs  associated  with  Lessor's   exercise  of  its
                      remedies  hereunder,   including,   but  not  limited  to,
                      repossession  costs,  legal fees,  Aircraft storage costs,
                      Aircraft  re-lease  or sale  costs and  Lessor's  internal
                      costs and expenses  (including  the cost of personnel time
                      calculated  based  upon  the  compensation   paid  to  the
                      individuals  involved  on an  annual  basis  and a general
                      Lessor overhead allocation);

           (iv)       any  loss,  premium,  penalty  or  expense  which  may  be
                      incurred in repaying  funds raised to finance the Aircraft
                      or in unwinding any financial instrument relating in whole
                      or in part to Lessor's financing of the Aircraft;

           (v)        any  loss,  cost, expense or liability sustained by Lessor
                      due  to  Lessee's failure to redeliver the Aircraft in the
                      condition required by this Agreement; and

           (vi)       any  other  losses   (including  lost  profits),   damage,
                      expense,  cost or liability which Lessor suffers or incurs
                      as a result of the Event of Default and/or  termination of
                      this  Agreement,  including an amount  sufficient to fully
                      compensate  Lessor  for any loss of or damage  to  Lessors
                      residual  interest  in the  Aircraft  caused  by  Lessee's
                      default; and/or

(d)        either: -

           (i)        enter  upon  the  premises  where  all  or any part of the
                      Aircraft is located and take immediate possession of  and,
                      at  Lessor's  sole  option,  remove  the  same (and/or any
                      engine which is not an Engine but which  is  installed  on
                      the Airframe, subject to the rights of the  owner,  lessor
                      or secured party thereof) or cause it to be redelivered to
                      Lessor  at  a  location in the United States identified by
                      Lessor (or such other location as Lessor may require) (the
                      "Return Location"), by summary proceedings  or  otherwise,
                      all without liability  accruing to Lessor for or by reason
                      of  such  entry or  taking  of  possession whether for the
                      restoration of damage to property, or otherwise, caused by
                      such entry  or  taking,  except damages  caused  by  gross
                      negligence  or  willful  misconduct;  and Lessor is hereby
                      irrevocably, by way of security for  Lessee's  obligations
                      under  this  Agreement,  appointed  attorney for Lessee in
                      causing the redelivery  or  in  directing  the  pilots  of
                      Lessee or other pilots to fly the Aircraft to that airport
                      and will have all the powers and authorizations  necessary
                      for taking that action; or

           (ii)       by serving notice require Lessee to redeliver the Aircraft
                      to Lessor at a point within the  continental United States
                      designated by Lessor; and/or

(e)        sell at private or public  sale,  as Lessor may  determine,  or hold,
           use,  operate or lease to others the  Aircraft  as Lessor in its sole
           discretion may determine, all free and clear of any rights of Lessee;
           and/or

(f)        whether  or  not  Lessor shall have exercised, or shall thereafter at
           any time exercise,  any  of its rights under paragraph (a), paragraph
           (b), paragraph (c),  paragraph (d),  or paragraph (e)  of this Clause
           13.2, Lessor, by * days written notice to Lessee specifying a payment
           date, may demand that Lessee pay to Lessor, and Lessee shall  pay  to
           Lessor, on the payment date specified in such notice,  as  liquidated
           damages for loss of bargain and not as a penalty (in lieu of the Rent
           due for the period commencing after the date specified for payment in
           such notice), any unpaid Rent for  the  Aircraft  and  other  amounts
           owing  under  this Agreement (prorated in the case of Rent on a daily
           basis) to  and  including  the payment date specified in such notice,
           plus  the  amount, if any,  by  which  the  aggregate  Rent  for  the
           remainder  of  the Term (determined without reference to any right of
           Lessor to terminate the leasing of the Aircraft,  whether or not such
           right is exercised), discounted periodically  (equal  to  installment
           frequency)  to  present  worth at the interest rate of * percent (*%)
           per annum, exceeds the fair market rental value  (determined pursuant
           to the Appraisal Procedure) of the Aircraft for the  remainder of the
           Term, after discounting such fair market  rental  value  periodically
           (equal  to  installment frequency) to present worth as of the payment
           date specified in such  notice at the interest rate of * percent (*%)
           per annum; and/or

(g)        In  the  event  that  Lessor, pursuant to Clause 13.2(e) above, shall
           have relet  the  Aircraft under a lease which extends at least to the
           date upon which the Term  for the Aircraft would have expired but for
           Lessee's default, Lessor, in lieu  of  exercising  its  rights  under
           Clause 13.2(f) above  with  respect to the Aircraft, may, if it shall
           so elect, demand that Lessee pay Lessor, and Lessee shall pay Lessor,
           as liquidated damages for loss  of  bargain  and not as a penalty (in
           lieu of the Rent for  the  Aircraft  due after the time of reletting)
           any unpaid Rent for the Aircraft due up  to the date of reletting and
           any  other  amounts  owing  under this Agreement, plus the amount, if
           any, by which  the aggregate  Rent  for  the  Aircraft,  which  would
           otherwise have become due  over the remainder of the Term (determined
           without reference to any right of Lessor to terminate  the leasing of
           the Aircraft, whether or not such  right  is  exercised),  discounted
           periodically  (equal to installment frequency) to present worth as of
           the date of  reletting  at  the  interest  rate of * percent (*%) per
           annum, exceeds the aggregate basic  rental  payments  to  become  due
           under the reletting from the date of such reletting to  the date upon
           which the Term for the Aircraft would  have  expired but for Lessee's
           default, discounted periodically (equal to installment frequency)  to
           present worth as of the date of the reletting at the interest rate of
           * percent (*%) per annum; and/or

(h)        in  lieu  of the remedies set forth in paragraphs (a), (c), (d), (e),
           (f), and (g) of this Clause 13.2,  by * days written notice to Lessee
           specifying a payment date, Lessor  may  demand  that  Lessee  pay  to
           Lessor, and Lessee shall pay to Lessor on the payment date  specified
           in such notice as liquidated damages for loss of bargain and not as a
           penalty (in lieu of the Rent due for the period commencing  after the
           date specified for payment in such notice), any unpaid Rent  for  the
           Aircraft and other  amounts payable under this Agreement (prorated in
           the case of Rent on a daily basis) to and including  the payment date
           specified in such notice, plus an amount equaling the aggregate  Rent
           for  the  remainder  of  the  Term, discounted periodically (equal to
           installment frequency) to present worth at the interest rate of * per
           cent (*%) per annum;

(i)         draw  upon the  Deposit  (including  the  Letter of  Credit)  or the
            Supplemental  Rent  furnished  under this  Agreement  or the Related
            Agreements (as those times are defined in such agreements) and apply
            such amounts to amounts owing to Lessor hereunder.

           Lessee, for itself and for its successors and assigns,  hereby agrees
           that,  to the extent now or hereafter  permitted by  applicable  Law,
           notwithstanding  any  provision  of the  Federal  Bankruptcy  Code as
           amended  from time to time,  the title of Lessor to the  Aircraft and
           any right of Lessor to take  possession of the Aircraft in compliance
           with  the  provisions  of this  Agreement,  in each  case,  upon  the
           occurrence  and  continuance  of an Event of  Default,  shall  not be
           affected by the provisions of the Federal Bankruptcy Code, as amended
           from time to time.

           In addition to the foregoing,  Lessee shall be liable for any and all
           unpaid Rent and other amounts payable under this Agreement  during or
           after the exercise of any of the  aforementioned  remedies,  together
           with  interest on such unpaid  amounts at the Interest Rate set forth
           in Letter Agreement No. 1, and until  satisfaction of all of Lessee's
           obligations to Lessor  hereunder and (on an After-Tax  Basis) for all
           reasonable  legal  fees  and  other  reasonable  costs  and  expenses
           incurred  by  Lessor  by  reason  of the  occurrence  of any Event of
           Default or the exercise of Lessor's  remedies  with respect  thereto,
           including  all costs and  expenses  incurred in  connection  with the
           return  of the  Aircraft  in  accordance  with the terms of Clause 12
           hereof  or  in  placing  the  Aircraft  in  the  condition  and  with
           airworthiness certification as required by such Clause.

           In effecting any  repossession,  Lessor and its  representatives  and
           agents,  to the extent permitted by Law, shall: (i) have the right to
           enter upon any premises  where it  reasonably  believes the Aircraft,
           the Airframe, an Engine or Part to be located; (ii) not be liable, in
           conversion or otherwise,  for the taking of any personal  property of
           Lessee  which is in or attached to the  Aircraft,  the  Airframe,  an
           Engine or Part which is repossessed;  provided,  however, that Lessor
           shall  return  to  Lessee  all  personal  property  of  Lessee or its
           passengers  which was on the  Aircraft  at the time  Lessor  re-takes
           possession of the Aircraft;  (iii) not be liable or  responsible,  in
           any manner,  for any inadvertent  damage or injury to any of Lessee's
           property in repossessing and holding the Aircraft,  the Airframe,  an
           Engine  or Part,  except  for that  caused by or in  connection  with
           Lessor's  gross  negligence or willful  acts;  (iv) have the right to
           maintain possession of and dispose of the Aircraft,  the Airframe, an
           Engine or Part on any  premises  owned by  Lessee  or under  Lessee's
           control;  and (v) have the right to obtain a key to any  premises  at
           which the Aircraft,  the  Airframe,  an Engine or Part may be located
           from the landlord or owner thereof.

           If reasonably required by Lessor,  Lessee, at its sole expense, shall
           assemble  and make the  Aircraft,  the  Airframe,  an  Engine or Part
           available at a place  designated by Lessor in accordance  with Clause
           12 hereof.  Lessee  hereby agrees that, in the event of the return to
           or repossession by Lessor of the Aircraft, the Airframe, an Engine or
           Part,  any rights in any  warranty  (express or  implied)  previously
           assigned to Lessee or otherwise held by Lessee shall without  further
           act,  notice or writing  be  assigned  or  reassigned  to Lessor,  if
           assignable.  Lessee shall be liable to Lessor on an  After-Tax  Basis
           for all reasonable expenses,  disbursements,  costs and fees incurred
           in (i)  repossessing,  storing,  preserving,  shipping,  maintaining,
           repairing and refurbishing the Aircraft,  the Airframe,  an Engine or
           Part to the condition required by Clause 12 hereof and (ii) preparing
           the  Aircraft,  the  Airframe,  an  Engine or Part for sale or lease,
           advertising  the sale or  lease of the  Aircraft,  the  Airframe,  an
           Engine or Part and selling or releasing the  Aircraft,  the Airframe,
           an Engine or Part. Lessor is hereby authorized and instructed, at its
           option,  to  make  reasonable  expenditures  which  Lessor  considers
           advisable to repair and restore the Aircraft, the Airframe, an Engine
           or Part  to the  condition  required  by  Clause  12  hereof,  all at
           Lessee's sole expense.

           At any public sale of the Aircraft,  the Airframe,  an Engine or Part
           pursuant  to this  Clause,  Lessor  may bid  for  and  purchase  such
           property and Lessee  agrees that the amounts paid  therefor  shall be
           used in the computation contemplated herein.

           With the exception  that the remedy in Clause  13.2(g) can be elected
           only if the remedy in Clause 13.2(f) is not elected and the remedy in
           Clause 13.2(h) can be elected only in lieu of all other remedies save
           the remedies in Clauses 13.2(b) and 13.2(i), no remedy referred to in
           this  Clause 13 is  intended  to be  exclusive,  but,  to the  extent
           permissible   hereunder  or  under  applicable  Law,  each  shall  be
           cumulative  and in addition to any other remedy  referred to above or
           otherwise  available to Lessor at Law or in equity;  and the exercise
           or  beginning  of  exercise  by  Lessor  of any  one or  more of such
           remedies  shall not preclude the  simultaneous  or later  exercise by
           Lessor of any or all of such other remedies;  provided, however, that
           nothing  in this  Clause 13 shall be  construed  to permit  Lessor to
           obtain a duplicate recovery of any element of damages to which Lessor
           is entitled. No express or implied waiver by Lessor of any Default or
           Event of Default shall in any way be, or be construed to be, a waiver
           of any future or subsequent Default.

13.3       Deregistration:  If an Event of  Default  occurs,  Lessor may sell or
           otherwise  deal with the Aircraft  free and clear of any leasehold or
           other interest of Lessee as if this Agreement had never been made and
           Lessee  will at the  request of Lessor  take all steps  necessary  to
           effect (if applicable)  deregistration of the Aircraft and its export
           from the country  where the  Aircraft is for the time being  situated
           and  any  other  steps   necessary  to  enable  the  Aircraft  to  be
           redelivered  to Lessor in accordance  with this  Agreement  including
           without  limitation  execution and filing of a  certificate  or other
           instrument of lease  termination  with the Air Authority and;  Lessee
           hereby  irrevocably and by way of security for its obligations  under
           this  Agreement  appoints  (which  appointment  is  coupled  with  an
           interest)   Lessor  as  its  attorney  to  execute  and  deliver  any
           documentation  and to do any act or thing required in connection with
           the foregoing.

14.        ASSIGNMENT

14.1       Lessee's Assignment: LESSEE WILL NOT ASSIGN, TRANSFER (VOLUNTARILY OR
           INVOLUNTARILY  BY OPERATION OF LAW OR  OTHERWISE) OR CREATE OR PERMIT
           TO EXIST ANY  SECURITY  INTEREST  OVER,  ANY OF ITS RIGHTS UNDER THIS
           AGREEMENT.

14.2       Lessor's Assignment:  Lessor may assign or transfer all or any of its
           rights under this  Agreement and in the  Aircraft.  In the case of an
           assignment  other than by way of  security,  Lessor  will be released
           from  and  will  have no  further  obligation  under  this  Agreement
           following the  assignment of all its rights under this  Agreement and
           the  assumption  by the  assignee  or  transferee  of all of Lessor's
           obligations   under   this   Agreement.   Notwithstanding   any  such
           assignment,  Lessor  will  remain  entitled  to the  benefit  of each
           indemnity and the liability insurances effected under this Agreement.
           Lessee  will  comply  with all  reasonable  requests  of Lessor,  its
           successors and assigns in respect of any such assignment. Lessor will
           promptly notify Lessee of any assignment.

14.3       Transfer:  If Lessor  desires to effect any assignment or transfer of
           its rights and  obligations  under this  Agreement,  Lessee agrees to
           cooperate and take all such steps as Lessor may reasonably request to
           give the  transferee the benefit of this Agreement and to acknowledge
           the release of Lessor from its  obligations  hereunder as of the time
           of such assignment or transfer.

15.        ILLEGALITY

           If it is or becomes  unlawful in any  jurisdiction for Lessor to give
           effect to any of its obligations as contemplated by this Agreement or
           to continue this Agreement, Lessor may by notice in writing to Lessee
           terminate the leasing of the Aircraft under this Agreement and Lessee
           will  forthwith  redeliver the Aircraft to Lessor in accordance  with
           Clause 12. Without  prejudice to the foregoing Lessor will consult in
           good  faith  with  Lessee  as to any  steps  which  may be  taken  to
           restructure  the transaction to avoid that  unlawfulness  but will be
           under no obligation to take any such steps.

16.        MISCELLANEOUS

16.1       Waivers,  Remedies  Cumulative:  The  rights  of  Lessor  under  this
           Agreement:-

           (i)        may be exercised as often as necessary;

           (ii)       are  cumulative  and not exclusive of its rights under any
                      Law; and

           (iii)      may be waived only in writing and specifically.

           Delay  in  exercising  or  non-exercise  of any such  right  will not
           constitute a waiver of that right.

16.2       Delegation:  Lessor may  delegate to any person or persons all or any
           of the trusts,  powers or discretions  vested in it by these presents
           and any such  delegation  may be made upon such terms and  conditions
           and subject to such regulations  (including power to sub-delegate) as
           Lessor in its absolute discretion thinks fit.

16.3       Certificates:  Save where expressly  provided in this Agreement,  any
           certificate or  determination by Lessor as to any rate of interest or
           as to any other amount  payable  under this  Agreement  will,  in the
           absence of manifest error, be conclusive and binding on Lessee.

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

16.5       Currency:  Lessee  acknowledges  that the specification of Dollars in
           this  Agreement  is of the  essence  and  that  Dollars  shall be the
           currency of account in any and all events. Lessee waives any right it
           may have in any  jurisdiction  to pay any amount under this Agreement
           in a currency other than Dollars.

16.6       Set-off:  Lessor may set off any  matured  obligation  owed by Lessee
           under  this  Agreement,  the  Related  Agreements  or under any other
           agreement  between Lessor (or any affiliate or associate of Lessor or
           a trustee-lessor acting for Lessor as beneficiary) and Lessee against
           any  obligation  (whether or not  matured)  owed by Lessor to Lessee,
           regardless  of the place of payment or currency.  If the  obligations
           are in different currencies,  Lessor may convert either obligation at
           the market  rate of exchange  available  in New York or at its option
           London  for  the  purpose  of  the  set-off.   If  an  obligation  is
           unascertained or unliquidated, Lessor may in good faith estimate that
           obligation  and set off in  respect of the  estimate,  subject to the
           relevant  party  accounting  to the  other  when  the  obligation  is
           ascertained  or  liquidated.  Lessor  will not be  obliged to pay any
           amounts to Lessee under this  Agreement so long as any sums which are
           then due from Lessee under this Agreement,  the Related Agreements or
           under  any  other  agreement  between  Lessor  (or any  affiliate  or
           associate  of  Lessor  or  a  trustee-lessor  acting  for  Lessor  as
           beneficiary)  and Lessee  remain  unpaid and any such  amounts  which
           would otherwise be due will fall due only if and when Lessee has paid
           all such sums except to the extent  Lessor  otherwise  agrees or sets
           off such amounts against such payment pursuant to the foregoing.

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

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

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

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

16.9       Expenses: Whether or not the Aircraft is delivered to Lessee pursuant
           to this Agreement, Lessee is to  pay  to Lessor on an After-Tax Basis
           on demand:-

           (a)        all costs  associated with  perfecting  Lessor's rights in
                      the  Aircraft  and/or  this  Agreement  in  the  State  of
                      Registration, the Habitual Base of the Aircraft (and other
                      states  as   appropriate   given  the   operation  of  the
                      Aircraft), including (but not limited to) the provision of
                      legal opinions, tax advice, stamp duties, translations and
                      registrations, whether required by Lessor or Lessee.

           (b)        all   expenses   (including   legal,   professional,   and
                      out-of-pocket  expenses)  incurred  or  payable  by Lessor
                      related  to any  amendment  to or  extension  of or  other
                      documentation  in connection  with, or the granting of any
                      waiver or consent under this Agreement requested by Lessee
                      or the  monitoring  of  compliance  by  Lessee  with  this
                      Agreement; and

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

           All expenses payable pursuant to this Clause 16.9 will be paid in the
           currency in which they are incurred by Lessor.

16.10      Time of  Essence:  The  time  stipulated  in this  Agreement  for all
           payments  payable by Lessee to Lessor and the  prompt,  punctual  and
           performance of Lessee's other obligations under this Agreement are of
           the essence of this Agreement.

16.11      Notices:  All  notices  under,  or in connection with, this Agreement
           will,  unless  otherwise  stated,  be  given  in  writing  by letter,
           facsimile or SITA.  Any such notice is deemed effectively to be given
           as follows:-

           (i)        if by letter, on the earlier of the date when delivered or
                      the *th day after dispatch;

           (ii)       if  by  facsimile  or  SITA,  when  transmitted  and  full
                      transmission has been separately  notified by telephone by
                      the transmitting party.

           The address,  telex numbers, SITA, facsimile and telephone numbers of
           Lessee, Lessor and Owner are as follows:-

           Lessee:    Address:        12015 East 46th Avenue, Suite 200
                                      Denver, Colorado 80239
                                      United States of America
                      Attn:           General Counsel
                      SITA:           DENGAF9
                      Facsimile:      (303) 371-7007
                      Telephone:       (303) 371-7400

           Lessor:    Address:        Aviation Financial Services, Inc.
                                      c/o GE Capital Aviation Services, Inc.
                                      201 High Ridge Road
                                      Stamford, CT  06927-4900
                      Attn:           Contracts - Leader North America
                      Facsimile:      (203) 961-5965
                      Telephone:      (203) 357-4585

16.12      Governing Law and Jurisdiction:

(a)        THIS AGREEMENT IN ALL RESPECTS SHALL BE GOVERNED BY AND CONSTRUED  IN
           ACCORDANCE  WITH  THE GOVERNING LAW (WITHOUT REFERENCE TO CONFLICT OF
           LAWS PRINCIPLES);

(b)        Pursuant to and in  accordance  with  Section  5-1402 of the New York
           General Obligations Law, Lessee and Lessor each agree that the United
           States  District Court for the Southern  District of New York and any
           New York state court sitting in the City of New York, New York are to
           have nonexclusive  jurisdiction to settle any disputes arising out of
           or relating to this  Agreement and each party submits  itself and its
           property to the  nonexclusive  jurisdiction  of the foregoing  courts
           with respect to such disputes;

(c)        Without prejudice to any other mode of service,

           (i)        (A) Lessee  appoints Corporation Service Company, 80 State
                      Street,  6th  Floor,  Albany,  New York  12207-2543 as its
                      agent for service of process relating to  any  proceedings
                      before  the  New  York  courts  in  connection  with  this
                      Agreement and agrees to maintain the process agent in  New
                      York notified to Lessor and (B)  Lessor  appoints  General
                      Electric Capital Corporation, a New York corporation,  260
                      High Ridge Road, Stamford, Connecticut 06927 as  its agent
                      for service  of process relating to any proceedings before
                      the New York courts in  connection with this Agreement and
                      agrees to maintain the process agent in New York  notified
                      to Lessee;

           (ii)       Each of Lessor and Lessee agrees that failure by a process
                      agent to notify the other party of the  process  shall not
                      invalidate the proceedings concerned;

           (iii)      Each of Lessor  and  Lessee  consents  to the  service  of
                      process  relating  to  any  such  proceedings  by  prepaid
                      mailing  of a copy of the  process  to the  other  party's
                      agent at the address identified in paragraph (i)(A) or (i)
                      (B),  respectively,  or by  prepaid  mailing  by air mail,
                      certified or  registered  mail of a copy of the process to
                      Lessee or Lessor,  respectively,  at the address set forth
                      in Clause 16.11;

(d)        Lessee: -

           (i)        waives  to  the  fullest  extent   permitted  by  Law  any
                      objection  which lessee may now or  hereafter  have to the
                      COURTS  REFERRED TO IN CLAUSE 16.12(b) ABOVE on grounds of
                      inconvenient forum or otherwise as regards  proceedings in
                      connection with this Agreement;

           (ii)       waives  to  the  fullest  extent   permitted  by  Law  any
                      objection  which lessee may now or  hereafter  have to the
                      laying of venue of any suit, action or proceeding  arising
                      out of or relating to this agreement brought in the courts
                      REFERRED TO IN CLAUSE 16.12(b);

           (iii)      agrees that a judgment  or order of any court  REFERRED TO
                      IN CLAUSE  16.12(b) in connection  with this  Agreement is
                      conclusive  and binding on it and may be enforced  against
                      it in the courts of any other jurisdiction;

(e)        Nothing  in this  Clause  16.12  limits  the right of Lessor to bring
           proceedings against Lessee in connection with this Agreement: -

           (i)        in any other court of competent jurisdiction; or

           (ii)       concurrently in more than one jurisdiction;

(f)        Lessee irrevocably and unconditionally: -

           (i)        agrees that if Lessor brings legal proceedings  against it
                      or its assets in  relation to this  Agreement  no immunity
                      from  such  legal  proceedings  (which  will be  deemed to
                      include  without  limitation,  suit,  attachment  prior to
                      judgment,  other  attachment,  the  obtaining of judgment,
                      execution or other  enforcement)  will be claimed by or on
                      behalf of itself or with respect to its assets;

           (ii)       waives any such right of immunity which it or  its  assets
                      now has or may in the future acquire;

           (iii)      consents  generally in respect of any such  proceedings to
                      the  giving of any  relief or the issue of any  process in
                      connection  with  such  proceedings   including,   without
                      limitation,  the making,  enforcement or execution against
                      any  property  whatsoever  (irrespective  of  its  use  or
                      intended  use) of any order or judgment  which may be made
                      or given in such proceedings.

16.13      Sole and Entire  Agreement:  This  Agreement and the other  Operative
           Documents to which each is a party are the sole and entire  agreement
           between Lessor and Lessee in relation to the leasing of the Aircraft,
           and supersede all previous agreements in relation to that leasing.

16.14      Indemnitees:  All rights  expressed to be granted to each  Indemnitee
           under  this  Agreement  (other  than  Lessor)  are given to Lessor on
           behalf of that Indemnitee.

16.15      Counterparts:   This  Agreement  may  be  executed  in  two  or  more
           counterparts,  each of which shall be deemed an original,  but all of
           which together shall constitute one and the same  instrument.  To the
           extent,  if any, that this  Agreement  constitutes  chattel paper (as
           such term is defined in the Uniform  Commercial  Code as in effect in
           any applicable  jurisdiction) no Security  Interest in this Agreement
           may be created  through the transfer or possession of any counterpart
           other than the counterpart  that has been marked  "Counterpart No. 1"
           on the cover page thereof.

16.16      Language:  All  notices to be given under this  Agreement  will be in
           English. All documents delivered to Lessor pursuant to this Agreement
           will be in English,  or if not in English,  will be  accompanied by a
           certified English translation.  If there is any inconsistency between
           the English  version of this  Agreement  and any version in any other
           language, the English version will prevail.

16.17      No Brokers:  Lessee  hereby  represents  and warrants that it has not
           paid,  agreed to pay or caused to be paid  directly or  indirectly in
           any form, any commission,  percentage,  contingent fee,  brokerage or
           other  similar   payments  of  any  kind,  in  connection   with  the
           establishment  or  operation  of this  Agreement,  to any employee of
           Lessor or to any  person or  entity in the State of  Registration  or
           elsewhere,  except to Excluded  Persons,  as herein  defined.  Lessor
           hereby represents and warrants that it has not paid, agreed to pay or
           caused to be paid directly or indirectly in any form, any commission,
           percentage,  contingent fee,  brokerage or other similar  payments of
           any kind, in connection with the  establishment  or operation of this
           Agreement,  to any  employee  of Lessee or to any person or entity in
           the State of Registration or elsewhere,  except to Excluded  Persons,
           as  herein  defined.  For the  purposes  hereof,  the term  "Excluded
           Persons"  shall mean (x) in the case of Lessor,  any of its officers,
           directors,  employees,  attorneys  or  other  professional  advisors,
           whether located in the State of Registration or elsewhere, and (y) in
           the  case  of  Lessee,  any of its  officers,  directors,  employees,
           attorneys  or other  professional  advisors,  whether  located in the
           State of  Registration  or elsewhere.  Each party agrees to indemnify
           and hold the other  harmless  from and  against  any and all  claims,
           suits,  damages,  costs and expenses  (including,  but not limited to
           reasonable  attorneys'  fees) asserted by any agent,  broker or other
           third  party  for  any  commission  or  compensation  of  any  nature
           whatsoever  based upon this  Agreement or the Operative  Documents to
           which  Lessor and Lessee are a party or the  Aircraft,  if such claim
           damage, cost or expense arises out of any action or alleged action by
           the indemnifying party, its employees or agents.

<PAGE>

17.        DISCLAIMERS AND WAIVERS

17.1       Exclusion:  THE AIRCRAFT IS TO BE LEASED AND DELIVERED  HEREUNDER "AS
           IS,  WHERE IS" AND  LESSEE  AGREES  AND  ACKNOWLEDGES  THAT,  SAVE AS
           EXPRESSLY STATED IN THIS AGREEMENT,  LESSOR WILL HAVE NO LIABILITY IN
           RELATION  TO,  AND LESSOR HAS NOT AND WILL NOT BE DEEMED TO HAVE MADE
           OR GIVEN  (WHETHER  BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT,
           OR HAVING  ACQUIRED  OR  FAILED TO  ACQUIRE  ANY  STATUS  UNDER OR IN
           RELATION  TO  THIS  AGREEMENT  OR   OTHERWISE),   ANY  WARRANTIES  OR
           REPRESENTATIONS,  EXPRESS OR IMPLIED,  WITH RESPECT TO, THE AIRCRAFT,
           INCLUDING BUT NOT LIMITED TO: -

(a)        THE    TITLE,    DESCRIPTION,    AIRWORTHINESS,    COMPLIANCE    WITH
           SPECIFICATIONS,  OPERATION,  MERCHANTABILITY,  FREEDOM FROM CLAIMS OF
           INFRINGEMENT OR THE LIKE,  FITNESS FOR ANY PARTICULAR USE OR PURPOSE,
           VALUE,  DURABILITY,  DATE PROCESSING,  CONDITION, OR DESIGN, OR AS TO
           THE QUALITY OF THE MATERIAL OR WORKMANSHIP,  THE ABSENCE OF LATENT OR
           OTHER  DEFECTS,  WHETHER  OR NOT  DISCOVERABLE,  OR AS TO  ANY  OTHER
           REPRESENTATION OR WARRANTY WHATSOEVER,  EXPRESS OR IMPLIED (INCLUDING
           ANY IMPLIED  WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR DEALING
           OR USAGE OF TRADE) WITH  RESPECT TO THE  AIRCRAFT,  ANY ENGINE OR ANY
           PART; OR

(b)        ANY OBLIGATION,  LIABILITY,  RIGHT, CLAIM OR REMEDY IN CONTRACT OR IN
           TORT  OUT  OF  ANY  NEGLIGENCE  OR  STRICT  LIABILITY  OF  LESSOR  OR
           OTHERWISE; FOR: -

           (i)        ANY  LIABILITY,  LOSS OR DAMAGE  CAUSED OR  ALLEGED  TO BE
                      CAUSED  DIRECTLY  OR  INDIRECTLY  BY THE  AIRCRAFT  OR ANY
                      ENGINE  OR BY ANY  INADEQUACY  THEREOF  OR  DEFICIENCY  OR
                      DEFECT THEREIN OR BY ANY OTHER  CIRCUMSTANCE IN CONNECTION
                      THEREWITH;

           (ii)       THE USE OPERATION, OR PERFORMANCE OF THE AIRCRAFT  OR  ANY
                      RISKS RELATING THERETO;

           (iii)      ANY  INTERRUPTION  OF  SERVICE,  LOSS   OF   BUSINESS   OR
                      ANTICIPATED PROFITS OR CONSEQUENTIAL DAMAGES;

           (iv)       THE DELIVERY,  OPERATION,  SERVICING, MAINTENANCE, REPAIR,
                      IMPROVEMENT OR REPLACEMENT OF THE  AIRCRAFT, ANY ENGINE OR
                      ANY PART; OR

           (v)        ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

17.2       Waiver:  LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR,  ALL
           ITS RIGHTS IN RESPECT OF ANY WARRANTY OR  REPRESENTATION,  EXPRESS OR
           IMPLIED,  ON THE  PART  OF  LESSOR  AND  ALL  CLAIMS  AGAINST  LESSOR
           HOWSOEVER  AND  WHENEVER  ARISING AT ANY TIME IN RESPECT OF OR OUT OF
           THE POSSESSION,  OPERATION OR PERFORMANCE OF THE AIRCRAFT, ANY ENGINE
           OR ANY PART OR THIS AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS EXCEPT
           TO THE EXTENT ARISING UNDER CLAUSE 2.4.

17.3       Disclaimer of Consequential Damages:  LESSEE AGREES THAT IT SHALL NOT
           BE  ENTITLED TO RECOVER,  AND HEREBY  DISCLAIMS  AND WAIVES ANY RIGHT
           THAT IT MAY  OTHERWISE  HAVE TO RECOVER,  CONSEQUENTIAL  DAMAGES AS A
           RESULT  OF ANY  BREACH  OR  ALLEGED  BREACH  BY  LESSOR OF ANY OF THE
           AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR CONTAINED IN THIS
           AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS.

17.4       Confirmation:   LESSEE  CONFIRMS  THAT  IT  IS  FULLY  AWARE  OF  THE
           PROVISIONS  OF THIS  CLAUSE  AND  ACKNOWLEDGES  THAT  RENT AND  OTHER
           AMOUNTS HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.

18.        SECTION 1110

           Lessee acknowledges that Lessor would not have entered into the Lease
           unless it had  available to it the benefits of a lessor under Section
           1110 of Title 11 of the  U.S.C.  Lessee  covenants  and  agrees  with
           Lessor  that to better  ensure  the  availability  of such  benefits,
           Lessee shall  support any motion,  petition or  application  filed by
           Lessor with any  bankruptcy  court  having  jurisdiction  over Lessee
           whereby  Lessor seeks  recovery of possession  of the Aircraft  under
           said  Section  1110 and shall not in any way  oppose  such  action by
           Lessor unless Lessee shall have  complied  with the  requirements  of
           said  Section  1110 to be  fulfilled  in order to  entitle  Lessee to
           continued use and possession of the Aircraft hereunder.  In the event
           said  Section  1110 is  amended,  or if it is  repealed  and  another
           statute is enacted in lieu thereof,  Lessor and Lessee agree to amend
           the Lease and take such other action not inconsistent  with the Lease
           as Lessor  reasonably  deems  necessary so as to afford to Lessor the
           rights and benefits as such amended or  substituted  statute  confers
           upon owners and lessors of aircraft similarly situated to Lessor.

19.         USURY LAWS:  The parties intend to  contract  in  strict  compliance
            with the usury Laws of the States of New York and Colorado  and,  to
            the extent applicable, the United States of America. Notwithstanding
            anything to the contrary in the Operative Documents, Lessee will not
            be  obligated   to   pay  any  interest  in excess  of  the  maximum
            non-usurious interest rate, as in effect from time  to  time,  which
            may by applicable Law be charged, contracted for, reserved, received
            or collected by Lessor in connection with the  Operative  Documents.
            During  any  period  of  time  in  which the then-applicable highest
            lawful rate is lower than the rate  specified  in  Clauses  5.11  or
            13.2, interest will accrue and be payable  at  such  highest  lawful
            rate; however, if at later times such highest lawful rate is greater
            than the rate specified in Clauses  5.11 or 13.2,  then  Lessee will
            pay interest at the highest lawful rate until the  aggregate  amount
            of interest paid by Lessee equals the amount of interest that  would
            have been payable in accordance with the interest rate specified  in
            Clauses 5.11 or 13.2.

20.         MODIFICATION OR REVISION:

            Neither  this  Agreement  nor  any  term of  this  Agreement  may be
            modified, rescinded, changed waived, discharged or terminated except
            by a writing  signed by the party to be  charged.  Lessor and Lessee
            acknowledge  their  agreement to the  provision of this Clause 20 by
            their initials below: -

           LESSOR: __________               LESSEE: ____________

<PAGE>

21.        IN WITNESS whereof the parties hereto have executed this Agreement on
           the date shown at the beginning of this Agreement.

           WITNESS                  SIGNED on behalf of
                                    AVIATION FINANCIAL SERVICES INC.

                                    By:              ___________________________

                                    Name:            ___________________________

                                    Title:           ___________________________

           WITNESS                  SIGNED on behalf of FRONTIER AIRLINES, INC.

                                    By:              ___________________________

                                    Name:            ___________________________

                                    Title:           ___________________________

<PAGE>

                                   SCHEDULE 1

                                     PART 1

                             DESCRIPTION OF AIRCRAFT

           AIRCRAFT

           MANUFACTURER:                    Boeing

           MODEL:                           737-36E

           SERIAL NUMBER:                   25263

           ENGINES

           ENGINE TYPE:                     CFM-56-3B2

           SERIAL NOS:                      SN 726226 and
                                            SN 727257

                         Part A Description of Aircraft

On the Delivery Date each Aircraft shall comply with the following conditions:

1.      The  Aircraft  will  have  accomplished  all  outstanding  airworthiness
        directives by  terminating  action,  if required,  and mandatory  orders
        affecting  that model of Aircraft  issued by the Air  Authority  and the
        DGAC  which,  if the  Aircraft  was  registered  with either of such air
        authorities,  would  have to be  complied  with  within * days after the
        Delivery Date.

2.      The  Aircraft  will have in  existence  a valid  Export  Certificate  of
        Airworthiness  with respect to the Aircraft issued by the DGAC and shall
        have all systems  operational  and shall be eligible for 14 C.F.R.  Part
        121 operations.

3.      The Aircraft shall be in 148Y (tourist/load class seats).

4.      The Aircraft shall be fully serviceable with no carried forward  defects
        and shall be clean by airline standards.

5.      Airframe:          Ex a block MPD 'C7-SI' check  in accordance  with the
                           Manufactures maintenance planning document, including
                           100%  compliance  with  the  CPCP  program  and aging
                           aircraft program.

        Engines:           Minimum  expected  life  of *  hours  and  *  cycles,
                           verified  by power  assurance  runs.  Plus  Boroscope
                           inspections  to establish  the internal  condition of
                           the engine.  The engines will be able to achieve full
                           take off power at  22,000  thrust  rating of  minimum
                           OATL of 34 degrees Celsius.

        Components:        Minimum  of * hours,  * cycles on hard  time  limited
                           items  and * months or full life if Full life is less
                           than * months on calendar  limited items and shall be
                           supported by appropriate certification  documentation
                           such as JAR form 1 or FAA form 8130-1,  where the FAA
                           approval  agency is a JAA  listed  company:  for this
                           purpose  "Hard Time  Component"  means any  component
                           which has a limited  on-wing life in accordance  with
                           Manufactures  Maintenance Planning Document and which
                           can have  life  fully  restored  through  appropriate
                           maintenance.

                           The  installed  components  as a group  will  have an
                           average  of total  flight  time since new of not more
                           than that of the Airframe; and

        APU:               Serviceable and  capable of operating under full load
                           without limitation

        Livery Painting:   Freshly painted white.

        Demonstration

        Flight:            At  delivery  Lessor  will  provide  a  demonstration
                           flight not exceeding two hours in duration.

        Detail             Specification:   Aircraft   shall   comply  with  the
                           aircraft detail  specification No D6-76300-87  except
                           for systems  which have been  modified to comply with
                           JAR ops requirements and shall have TCAS and VHF 8.33
                           spacing installed.

        MTOW:              138,000 LBS

6.      FUSELAGE, WINDOWS AND DOORS

         The aircraft will be ex a D Check as specified in 5 above.The  fuselage
         will be free of major  dents  and  abrasions,  and  loose or  pulled or
         missing rivets. All repairs will be permanent Class 1 repairs and where
         possible  flush as  defined  by the  Manufacturer's  structural  repair
         manual or have specific Manufacturer approval accepted by the FAA.

7.      WINGS AND EMPENNAGE

        (a)      Leading edges will be free from damage.

        (b)      Unpainted surfaces will be polished during the D Check;

        (c)      Control  surfaces  will be cleaned and  polished  or painted as
                 per Previous operator's policy during the "D" Check; and

        (d)      Wings will be free of fuel leaks.

8.      INTERIOR

        (a)      Ceilings, sidewalls and bulkhead panels will be serviceable.

        (b)      Carpets  and  seat  covers  will be in good condition, and meet
                 JAR/FAR fire resistance regulations;

        (c)      Seats  will  be  serviceable,  in  good  condition  having been
                 removed, inspected and repaired.

        (d)      Emergency equipment having a calendar life will  have a minimum
                 of * year or *% of its total  approved life, whichever is less,
                 remaining; and

        (e)      All signs and decals shall be clean, secure and legible.

9.      COCKPIT

        (a)      Fairing  panels  shall  be  substantially  free  of  stains and
                 cracks,  will be clean  secure and repainted as necessary;

        (b)      Floor coverings will be clean;

        (c)      Seat covers will be in serviceable , clean and free of stains.

        (d)      Seats  will  be  serviceable,  in  good  condition  and will be
                 repainted as necessary; and

        (e)      All signs and decals shall be clean, secure and legible.

10.     CARGO COMPARTMENTS

        (a)      Panels will be serviceable; and

        (b)      Nets will be in servicable.

<PAGE>

                                     PART 2

                               AIRCRAFT DOCUMENTS

Part A

A.       Certificates

A001     Certificate of Airworthiness
A002     Current Aircraft Registration
A003     C of A for Export (if applicable)
A004     Noise Limitation Certificate (AFM page)
A005     Radio Station License
A007     Aircraft deregistration confirmation
A008     Burn Certificates - Cabin Interiors - as follows:

Certification  of compliance with the fire blocking  requirements as outlined in
JAR/FAR  Part 25  including:
- Seat  cushions*
- Back rest  cushions*
- Dress covers*
- Carpets
- Curtains
- Interior  Surfaces (if  refurbished)
* Including "in combination" burn certification

B.       Aircraft Maintenance Status Summaries

B001     Certified  current  Time  in  Service (Hours & Cycles) and  maintenance
         status
B002     Certified  status  of  Airworthiness  Directives  including  method  of
         compliance
B003     Certified status of Service Bulletin Status
B004     Certified status of SSI
B005     Certified status of CPCP (if applicable)
B006     Certified inventory of Hard Time Components (Fitted listing)
B007     Certified inventory of OC/CM Components (Fitted listing)
B008     Certified status of all non-SB and Major  Modifications/STC's including
         acceptable State of Manufacture Certification
B009     Certified status of Check/Inspection History & Current Status of Checks
B010     List of  Deferred  Maintenance  Items B011 List of Out of Phase Checks,
         Special Requirements,  Time Limited Repairs (if any).
B012     Aircraft Accident & Incident Report.
B013     Structural repairs and damage (including Dent & Buckle Chart).

C.       Aircraft Maintenance Records

C001     Technical Logs (Minimum of 2 years or as required by the FAA)
C002     A Checks
         Last complete  cycle of A Checks (or  equivalent)
C003     C Checks
         Last Complete cycle of C Checks  (or  equivalent)
C004     All Major  Checks
C005     CPCP Tasks (if applicable)
C006     Periodic  Tasks
C007     Dirty Finger Print  Certification  - AD's
C008     Dirty Finger Print Certification - SB's
C009     Dirty Finger Print Certification - All other modification
C010     Last Weight Report including Schedule
C011     Last Test Flight Report
C012     Certified ETOPS compliance report (if applicable)
C013     Dirty  Finger  Print  certification - All Structural repairs/structural
         damage
C014     Details  of  State  of  Manufacture  certification  basis -  A  non-SRM
         Structural repairs
C015     Aircraft Log Book(s) if applicable

D.       Configuration Status

D001     Approved and certified LOPA
D002     Galley Drawings/Component OHM
D003     Emergency Equipment Drawing/Listing
D004     Loose Equipment Inventory
D005     Inventory Listing of Avonic installed Units.

E.       Aircraft Historical Records

E001     C of A (Export) from State of Manufacture
E002     Manufacturer's AD Report
E003     Manufacturer's Inspection Report, Initial Equipment list
E004     Manufacturer's repair/alteration report
E005     Manufacturer's SB Report
E006     Service Difficulty Reports (if any)
E007     Aircraft Historical Log
E008     Last Flight Data Recorder Read-Out & Corrections
E009     Weighing report

F.       Engine Records

F001     Certified Statement of Status of Each Engine
F002     AD Compliance Report and Compliance Documents
F003     Manufacturer's Modifications & SB Status
F004     In-house Modifications (if applicable)
F005     Certified LLP Listing
F006     Certified listing of installed units
F007     Manufacturer Delivery Document
F008     Complete copies of all historical engine/module Shop Visit Reports
F009     State of Manufacture LLP Traceability
F010     Conditioning Monitoring Report
F011     Engine Log Book/Master Records of Installation/Removals
F012     Last Borescope Report, including video if available
F013     Test Cell Run Report
F014     Last On-Wing Ground Run
F015     Certified Statement that Engines are not involved in an Accident
F016     Approved Release to Service Certification for installed rotables
F017     Approved ETOPS compliance report (if applicable)

G.       APU

G001     Certified Statement on Status of APU (if applicable)
G002     Certified SB Compliance Report/AD Status Report
G003     Approved Release to Service Certification for installed units
G004     APU Log Book/Master Record of Installation/Removals
G005     Complete copies of all APU Shop Visit Reports & Reason for Removal
G006     Statement of APU Hours to Aircraft Flying Hours
G007     LLP Status and Full Traceability to birth
G008     APU Borescope Report
G009     Last On-Wing/Health Check Data sheets (if applicable)
G010     Last Test Cell Run
G011     Approved ETOPS compliance report

H.       Component Records

H001     Approved Release to Service Certification for Hard Time Components
H002     Approved Release to Service Certification for OC/CM Components

I.       Landing Gears

I001     Approved Release to Service Certification for major  assemblies on each
         Gear
I002     Approved LLP Listings for each Gear (with FULL Traceability to Birth)
I003     Last Shop Visit Report (OH)

J.       Manuals

All  Manufacturer's  Manuals  delivered with the Aircraft  updated to the latest
revision standard as may be reasonably requested by Purchaser

Microfilm:
J006     WDM
J007     IPC
J008     Maintenance Manual
J009     Schematics
J010     Hook Up Listing

K.       Miscellaneous

K006     Maintenance Programme Specifications (Operator's)
K007     Reference   Material   for  Interpretation  of  Status   Summaries,  or
         cross-reference for Part Numbers

<PAGE>

                                   SCHEDULE 2

                       CERTIFICATE OF TECHNICAL ACCEPTANCE

This Certificate of Technical Acceptance is delivered, on the date set out below
by Frontier  Airlines,  Inc.  ("Lessee"),  to AVIATION  FINANCIAL  SERVICES INC.
("Lessor"),  pursuant to the  Aircraft  Lease  Agreement  dated as of the 7th of
January, 2000 between Lessor and Lessee (the "Agreement"). The capitalized terms
used in this  Certificate  shall  have the  meaning  given to such  terms in the
Agreement.

1.         DETAILS OF ACCEPTANCE

           Lessee  hereby  confirms  to Lessor that Lessee has at [ ] o'clock on
           this  [ ] day  of [ ],  2000,  at [ ],  accepted  the  following,  in
           accordance with the provisions of the Agreement:

(a)        Boeing Model 737-36E airframe, Manufacturer's Serial No. 25263;

(b)         CFM-56-3B2 Engines: -

           Engine Manufacturer's Serial Nos.

           1)  [______]

           2)  [______]

           (Each of which shall have more than 750 rated  takeoff  horsepower or
           the equivalent of such horsepower);

(c)        Fuel on Board Status:     [               ] (lbs.) (gals.)

(d)        Loose Equipment  Check  List: as per list signed by Lessor and Lessee
           and attached hereto; and

(e)        Aircraft  Documents:  as  per  list  signed  by Lessor and Lessee and
           attached hereto.

<PAGE>

2.         HOURS AND CYCLES DATA (as of Delivery Date)

(a)        Airframe:

           Number of Hours since last block "D" Check (Heaviest Check):
           ______ hours

           "C" Check (or Equivalent):

                  Interval:   ________________________

                  Time Since:  _______________________

(b)        Landing Gear Overhaul:
           ---------------------

           Number of Cycles Since Last Overhaul:

                  Left Gear __________________________ cycles

                  Right Gear _________________________ cycles

                  Nose Gear _________________________ cycles

                  Center Gear ________________________ cycles

           Interval: Left Gear _________________________

                  Right Gear _________________________

                  Nose Gear _________________________

                  Center Gear ________________________

(c)        Engines:
           -------

           Number of Hours Since Last Heavy Shop Visit:

                  S/N            :______ hours
                      -----------

                  S/N            :______ hours
                      -----------

           Number of Hours Since Last Hot Section Refurbishment:

                  S/N            :______ hours
                      -----------

                  S/N            :______ hours
                      -----------

<PAGE>

           Number of Hours Since Last Cold Section Refurbishment:

                  S/N            :______ hours
                      -----------

                  S/N            :______ hours
                      -----------

           Hot Section Inspection:

                  Interval:  ___________________________

                  Time Since (S/N               ):  __________________________
                                  --------------

                  Time Since (S/N               ):  __________________________
                                  --------------

           Time Remaining to First Restriction:

           Engine S/N:                       _
                           ------------------

                  Hours:   __________       Restriction:      __________

                  Cycles:  __________       Restriction:      __________

           Engine S/N:                       _
                           ------------------

                  Hours:   __________       Restriction:      __________

                  Cycles:  __________       Restriction:      __________

           Average Cycles in Life Limited Parts (see attached Schedule):________

(d)        Auxiliary Power Unit:
           --------------------

           Number of APU Hours Since Last Heavy Shop Visit:

                  __________ hours  Date accomplished __________

           Hot Section Inspection:

                  Interval:         ________________________

                  Time Since:       ________________________

(e)        Time Controlled Components:
           --------------------------

 (f)       Interior Equipment:
           ------------------

           Number of Passenger Seats and Configuration:_______________ _________

           Number of Galleys and Location:  _________         __________

           Number of Lavatories and Location: _________  __________

           LOPA - Attached                  __________        __________

           List of Loose Equipment on Board:

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

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

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

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

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

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

(g)        Avionics:       Description                 Model          Part No.
           --------        -----------                 -----          --------

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

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

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

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

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

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

<PAGE>

3.         ACCEPTANCE:

           The undersigned hereby confirms that the Aircraft, Engines, Parts and
           Aircraft  Documents are acceptable to it, satisfy all of the Delivery
           Condition  Requirements  relating to the  technical  condition of the
           Aircraft and are in the condition  for delivery to and  acceptance by
           Lessee as required  under the  Agreement,  except as described on the
           EXCEPTIONS LIST attached hereto.  LESSEE'S  EXECUTION AND DELIVERY OF
           THIS  CERTIFICATE   SIGNIFIES   LESSEE'S   ABSOLUTE  AND  IRREVOCABLE
           TECHNICAL  ACCEPTANCE OF THE AIRCRAFT FOR ALL PURPOSES  HEREOF AND OF
           THE AGREEMENT.

           IN   WITNESS   WHEREOF,   Lessee   has,   by  its   duly   authorized
           representative,  executed this Certificate on the date in paragraph 1
           above.

           LESSEE: FRONTIER AIRLINES, INC.

           By:    _________________________

           Title: _________________________

<PAGE>

                                                                      ATTACHMENT

                                 EXCEPTIONS LIST

         The items set forth below  represent  non-conformities  to the Delivery
Condition  Requirements  as of the  Delivery  Date,  the  corrective  action (or
payment to Lessee in lieu  thereof),  if any, to be taken by Lessor and the date
of accomplishment. LESSEE ACKNOWLEDGES AND AGREES THAT LESSOR'S UNDERTAKINGS SET
FORTH HEREIN ARE IN FURTHERANCE  OF AND SUBJECT TO THE AIRCRAFT LEASE  AGREEMENT
DATED AS OF JANUARY 7, 2000 BETWEEN LESSOR AND LESSEE (THE "LEASE"), THAT LESSOR
MAKES  NO  REPRESENTATIONS  OR  WARRANTIES  OF ANY  KIND,  EXPRESS  OR  IMPLIED,
HEREUNDER AND THAT LESSORS UNDERTAKINGS ARE SUBJECT TO EACH AND EVERY DISCLAIMER
OF LESSOR SET FORTH IN THE LEASE INCLUDING,  WITHOUT LIMITATION, THOSE SET FORTH
IN CLAUSE 17 THEREOF.

LESSOR                                               LESSEE

By:      _________________________          By:___________________________

Title:   _________________________          Title:__________________________

         --------------------------------------
1.       ______________________________________

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

2.       ______________________________________

         ======================================
         --------------------------------------  -------------      ----------

3.       ______________________________________

         ======================================
         --------------------------------------  -------------      ----------

                                   SCHEDULE 3

                        OPERATING CONDITION AT REDELIVERY

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

1.         GENERAL CONDITION

           The Aircraft will:-

(a)        be in the same configuration as on the Delivery Date or as reasonably
           requested by Lessor;

(b)        be clean by commercial airline standards;

(c)        have  installed the full  complement of engines and other  equipment,
           parts,  furnishings and  accessories as is normally  installed in the
           Aircraft and the loose  equipment as was installed in the Aircraft at
           the time of Delivery,  and be in a condition  suitable for  immediate
           operation in commercial service;

(d)        have  in  existence  a  valid  certificate  of  airworthiness  (or if
           required by Lessor, a valid export certificate of airworthiness) with
           respect  to the  Aircraft  issued  by  the  Air  Authority  and be in
           compliance without waiver with all current FAR Part 121 requirements;

(e)        comply with the manufacturer's original specifications or as modified
           by Lessee with the  approval  of Lessor,  and as required to meet the
           regulations of the Air Authority at the Expiry Date;

(f)        have undergone, immediately prior to redelivery, a block `C' Check so
           that all  inspections  falling due within the next following * Flight
           Hours,  * Cycles  or the next  following  * months  of  operation  in
           accordance with Lessee's Maintenance Program, have been accomplished;

(g)        have had accomplished all outstanding (i.e. at or prior to the Expiry
           Date)   mandatory    inspection   and   modification    requirements,
           airworthiness  directives and similar requirements  applicable to the
           Aircraft, any Engine or Part having a compliance date during the Term
           or within * days after the Expiry Date and which are  required by the
           Air Authority,  and/or mandated by any  manufacturer of the Aircraft,
           any  Engine  or  Part,  for  this  purpose,  compliance  shall  be by
           terminating   action   if:  the  latest   date   permitted   by  such
           Airworthiness  Directive for compliance by  terminating  action falls
           within * days after the Expiry Date;

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

(i)        have its  fuselage,  engine  cowlings,  and  vertical  fin and rudder
           freshly painted in an all white livery and the paint on the wings and
           the  horizontal  stabilizer  surfaces  shall  be  clean  and in  good
           condition,  free from  cracks,  peeling,  blistering  and erosion and
           shall be uniform in color and free from areas of local touch up;

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

(k)        shall  have  no open, deferred, continued, carryover or placarded log
           book items; and

(l)        meet  the  requirements  of  FAR  Part 36, Appendix C,  Stage 3 noise
           compliance as then in effect without waiver or restriction.

2.         COMPONENTS

(a)        Each Flight  Hour and Cycle  limited  component  (other than the APU)
           shall have not less than * Flight  Hours and * Cycles  (whichever  is
           the more  stringent  test)  of life  remaining  to the next  expected
           removal, in accordance with Lessee's Maintenance Program and shall be
           supported by  documentation  indicating  Time Since New, Cycles Since
           New,  Time Since  Overhaul  and Cycles  Since  Overhaul  and shall be
           accompanied by appropriate certification  documentation acceptable to
           the Air Authority from the last overhaul or zero time shop visit such
           as JAR form 1 or FAA form 8130-1;

(b)        Each calendar-limited  component including safety equipment will have
           not less than * months life remaining to the next  scheduled  removal
           in  accordance  with  Lessee's   Maintenance  Program  and  shall  be
           supported by  documentation  indicating  Time Since New, Cycles Since
           New,  Time  Since  Overhaul,  Cycles  Since  Overhaul  and  shall  be
           accompanied by appropriate certification  documentation acceptable to
           the Air Authority from the last overhaul or zero time shop visit such
           as JAR form 1 or FAA form 8130-1;

(c)        Each  life-limited  component  will  be  supported  by  certification
           documentation necessary to demonstrate  traceability  of  utilization
           since new (i.e. back-to-birth traceability);

(d)        Each  "on-condition"  and  "condition monitored"  component  will  be
           serviceable;

(e)        The APU will be serviceable and capable of operating under full  load
           without limitation; and

(f)        The  installed  components  as a group  will have an average of total
           flight time since new of not more than that of the Airframe.

<PAGE>

3.         ENGINES

           Each Engine will be  installed on the Aircraft and if not the engines
           installed  on  the  Delivery   Date  will  be   accompanied   by  all
           documentation  Lessor may require to evidence  that title  thereto is
           properly vested in Owner and will:-

(a)        have not less than * Engine  Flight Hours or * Cycles  (whichever  is
           the more restrictive factor) remaining to next scheduled life limited
           part replacement and have an expected  on-wing  remaining life of not
           less than * Engine  Flight Hours or * Cycles  (whichever  is the more
           restrictive  factor).  The expected life remaining will be determined
           by the  inspection  and checks  accomplished  by Lessor in accordance
           with this Agreement;

(b)        not be "on watch".  (For  purposes of the  Agreement "on watch" shall
           mean any  maintenance  condition that would require an Engine removal
           and/or  reinspection  or  airworthiness  directive  action that would
           require an Engine  removal  within * flight hours and * Cycles of the
           Expiry Date); and

(c)        be  in  a condition which can operate at maximum rated take off power
           at sea level at a temperature of 34oC.

4.         FUSELAGE, WINDOWS AND DOORS

(a)        The fuselage will be free of major dents and abrasions, and any dents
           and abrasions that require a repetitive  inspection or future repair,
           temporary  repairs,  and loose or pulled or  missing  rivets  and all
           structural repairs shall be in accordance with the manufacturer's and
           Air Authority's approved data for permanent repair;

(b)        Windows will be free of delamination, blemishes,  crazing and will be
           properly sealed; and

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

5.         WINGS AND EMPENNAGE

(a)        Leading edges will be free from damage;

(b)        Unpainted control surfaces will be waxed and polished;

(c)        Unpainted cowlings and fairings will be polished; and

(d)        Wings will be free of fuel leaks.

6.         INTERIOR

(a)        Ceilings, sidewalls  and  bulkhead  panels  will be clean and free of
           cracks and stains;

(b)        Carpets and seat covers will be in good condition, clean and free  of
           stains and meet FAR fire resistance regulations;

(c)        Seats  will  be  serviceable,  in  good  condition  and  repainted as
           necessary; and

(d)        Emergency  equipment  having a calendar life will have a minimum of *
           year or *% of its total approved life, whichever is less, remaining.

7.         COCKPIT

(a)        Fairing  panels  shall  be  free  of stains and cracks, will be clean
           secure and repainted as necessary;

(b)        Floor coverings will be clean and effectively sealed;

(c)        Seat covers  will be in good  condition, clean and free of stains and
           will conform to FAR fire resistance regulation; and

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

8.         CARGO COMPARTMENTS

(a)        Panels will be in good condition; and

(b)        Nets will be in good condition.

9.         LANDING GEAR

           The  landing  gear and wheel  wells will be clean,  free of leaks and
           repaired  as  necessary.  Wheels and  brakes  shall be in a half life
           condition or better.

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

(b)        Each  wheel  and  brake assembly shall be in a half life condition or
           better.

10.        CORROSION

(a)        The Aircraft shall be in compliance with the Manufacturer's corrosion
           prevention   and  control   program  (CPCP)   requirements.  All CPCP
           inspections  which  would normally  be  accomplished while  access is
           provided  during  structural inspection  in  accordance with Lessee's
           Maintenance Program during the Term shall have been accomplished.;

(b)        The entire  fuselage will be  substantially  free from  corrosion and
           will be  adequately  treated  and an  approved  corrosion  prevention
           program will be in operation; and

(c)        Fuel  tanks  will be free from contamination and corrosion and a tank
           treatment program will be in operation.

<PAGE>

                                   SCHEDULE 4

                             INSURANCE REQUIREMENTS

           The Insurances required to be maintained are as follows:-

(a)        HULL ALL RISKS of Loss or Damage whilst flying and on the ground with
           respect to the  Aircraft  on an "agreed  value  basis" for the Agreed
           Value and with a deductible not exceeding the  Deductible  Amount set
           forth in Letter  Agreement  No.  1, or such  other  amount  agreed by
           Lessor from time to time;

(b)        HULL WAR AND ALLIED  PERILS,  being such risks excluded from the Hull
           All Risks  Policy to the fullest  extent  available  from the leading
           international    insurance   markets   including   confiscation   and
           requisition  by the  State  of  Registration  for the  Agreed  Value,
           however,  when the Aircraft is being  operated  solely in or over the
           United States of America  and/or  Canada,  coverage may be limited to
           such  perils  as are  customarily  insured  by  comparable  airlines,
           operating similar equipment in similar circumstances;

(c)        ALL RISKS (INCLUDING WAR AND ALLIED RISK except when on the ground or
           in transit other than by air)  property  insurance on all Engines and
           Parts when not  installed on the Aircraft on an "agreed  value" basis
           for their  full  replacement  value  and  including  engine  test and
           running risks;

(d)        AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER,  BAGGAGE, CARGO AND
           MAIL AND AIRLINE  GENERAL  THIRD  PARTY  (INCLUDING  PRODUCTS)  LEGAL
           LIABILITY for a Combined Single Limit (Bodily Injury/Property Damage)
           of an amount not less than the  Minimum  Liability  Coverage  for the
           time  being  any one  occurrence  (but in  respect  of  products  and
           personal  injury  liability this limit may be an aggregate  limit for
           any and all losses occurring during the currency of the policy).  War
           and Allied Risks are also to be covered under the Policy in line with
           prudent market practice for comparable  airlines,  operating  similar
           equipment in similar circumstances;

(e)        All  required  hull and spares insurance (as specified above), so far
           as it relates to the Aircraft will: -

           (i)        name Lessor and its  respective  successors and assigns as
                      additional   assureds  for  their  respective  rights  and
                      interests,   warranted,   each  as  to  itself  only,   no
                      operational interest;

           (ii)       provide that any loss will be settled  jointly with Lessor
                      and Lessee and will be payable in Dollars to Lessor except
                      where the loss does not  exceed  the  Damage  Notification
                      Threshold, and Lessor has not notified the insurers to the
                      contrary,  in which case the loss will be settled with and
                      paid to Lessee;

           (iii)      if  separate  Hull  "all risks" and "war risks" insurances
                      are arranged, include a 50/50 provision in accordance with
                      market practice (AVS. 103 is the current market language);

           (iv)       confirm  that the insurers are not entitled to replace the
                      Aircraft in the event of an insured Event of Loss;

           (v)        confirm  that  the  insurers  will  not  obtain  a   valid
                      discharge of  the  obligations  under  the  Insurances  by
                      payment  to the broker, notwithstanding market practice to
                      the contrary;

(f)        All required liability insurances (specified above) will:-

           (i)        include Lessor, GECASI, GECASL, Viva, and their respective
                      successors and assigns and their respective  shareholders,
                      subsidiaries,  directors,  officers, agents, employees and
                      indemnitees  as additional  insureds for their  respective
                      rights and interests,  warranted,  each as to itself only,
                      no  operational  interest;  provided,  however,  that Viva
                      shall be named as an  additional  assured  solely  for the
                      period  commencing  on the Delivery Date and ending on the
                      earlier  to occur of (i) * years  following  the  Delivery
                      Date and (ii) the completion of the next heavy maintenance
                      visit;

           (ii)       include a Severability  of Interest  Clause which provides
                      that the  insurance,  except  for the limit of  liability,
                      will operate to give each assured the same  protection  as
                      if there was a separate policy issued to each assured;

           (iii)      contain a provision  confirming that the policy is primary
                      without  right of  contribution  and the  liability of the
                      insurers  will not be affected by any other  insurance  of
                      which  Lessor or Lessee  have the  benefit so as to reduce
                      the amount payable to the  additional  insureds under such
                      policies;

(g)        All Insurances will:-

           (i)        be in accordance with normal industry practice of  persons
                      operating similar aircraft in similar circumstances;

           (ii)       provide  cover  denominated  in  Dollars  and  any   other
                      currencies which Lessor may reasonably require in relation
                      to liability insurance;

           (iii)      operate  on  a worldwide basis subject to such limitations
                      and exclusions as Lessor may agree;

           (iv)       acknowledge the insurer is aware  (and has seen a copy) of
                      this Agreement and that the Aircraft is owned by Lessor;

           (v)        provide  that, in relation to the interests of each of the
                      additional assureds the Insurances will not be invalidated
                      by any act or  omission  by  Lessee,  or any other  person
                      other  than  the  respective  additional  assured  seeking
                      protection  and shall insure the  interests of each of the
                      additional  assureds regardless of any breach or violation
                      by Lessee,  or any other person other than the  respective
                      additional  assured  seeking  protection  of any warranty,
                      declaration or condition, contained in such Insurances;

           (vi)       provide that the insurers will hold harmless and waive any
                      rights  of  recourse   and/or   subrogation   against  the
                      additional assureds,  including GECASI and GECASL or to be
                      subrogated to any rights of Lessor against Lessee;

           (vii)      provide  that  the   additional   assureds  will  have  no
                      obligation  or  responsibility  for  the  payment  of  any
                      premiums due (but reserve the right to pay the same should
                      any of them elect so to do) and that the insurers will not
                      exercise any right of set-off or  counter-claim in respect
                      of any premium due against the respective interests of the
                      additional   assureds  other  than  outstanding   premiums
                      relating to the  Aircraft,  any Engine or Part the subject
                      of the relevant claim;

           (viii)     provide that the  Insurances  will continue  unaltered for
                      the benefit of the additional assureds for at least * days
                      after written  notice by  registered  mail or telex of any
                      cancellation,  change,  event of non-payment of premium or
                      installment thereof has been sent to Lessor, except in the
                      case of war risks for which * days (or such lesser  period
                      as is or may be  customarily  available  in respect of war
                      risks or allied  perils) will be given,  or in the case of
                      war between the 5 great powers or nuclear  peril for which
                      termination is automatic;

           (ix)       if  reinsurance  is  a  requirement of this Agreement such
                      reinsurance will (i) be  on the same terms as the original
                      insurances   and  will  include  the  provisions  of  this
                      Schedule, (ii) provide that notwithstanding any bankruptcy
                      insolvency,   liquidation,    dissolution    or    similar
                      proceedings  of   or  affecting  the  reinsured  that  the
                      reinsurers' liability  will  be  to  make such payments as
                      would  have  fallen  due  under  the  relevant  policy  of
                      reinsurance if the  reinsured had (immediately before such
                      bankruptcy,  insolvency,   liquidation,   dissolution   or
                      similar proceedings) discharged its  obligations  in  full
                      under the original insurance  policies in respect of which
                      the then relevant policy of reinsurance has been effected;
                      and  (iii) contain a "cut-through" clause in the following
                      form    (or   otherwise,  satisfactory  to  Lessor):  "The
                      Reinsurers and the Reinsured hereby mutually agree that in
                      the event of any  claim arising under the  reinsurances in
                      respect of a total loss or other claim where  as  provided
                      by the Aircraft Lease Agreement  dated  March 25, 1997 and
                      made between Lessor and Lessee such claim is to be paid to
                      the  person  named  as  sole  loss payee under the primary
                      insurances, the Reinsurers will in lieu of payment to  the
                      Reinsured, its successors in interest and  assigns  pay to
                      the person named  as  sole  loss  payee  under the primary
                      insurances effected by the Reinsured that portion  of  any
                      loss due for  which  the  Reinsurers  would  otherwise  be
                      liable to pay the Reinsured (subject to proof of loss), it
                      being understood and agreed that any such payment  by  the
                      Reinsurers will (to the  extent  of  such  payment)  fully
                      discharge  and  release  the  Reinsurers  from any and all
                      further liability  in connection  therewith";  subject  to
                      such  provisions  not contravening any law of the State of
                      Incorporation;

           (x)        contain  a provision entitling Lessor or any insured party
                      to initiate a claim  under any policy in the event of the
                      refusal or failure of Lessee to do so; and

           (xi)       accept  and  insure  the  indemnity  provisions  of   this
                      Agreement to the  extent  of  the  risks  covered  by  the
                      policies.

<PAGE>

                                   SCHEDULE 5

                             [Intentionally Omitted]

<PAGE>

                                   SCHEDULE 6

                             LEASE SUPPLEMENT NO. __

         LEASE SUPPLEMENT NO. ___, dated                , 2000, between Aviation
 Financial Services Inc., a corporation organized under the laws of Delaware and
a wholly owned subsidiary of General Electric Capital Corporation (Lessor"), and
Frontier  Airlines,  Inc. a corporation organized under the laws of the State of
Colorado (Lessee").

         Lessor and Lessee have  previously  entered into that certain  Aircraft
Lease  Agreement  dated  as of  January  7,  2000  (herein  referred  to as  the
"Agreement" and the defined terms therein being  hereinafter  used with the same
meaning).  The  Agreement  provides for the  execution and delivery from time to
time of a Lease  Supplement  substantially in the form hereof for the purpose of
leasing the aircraft  described  below under the Agreement as and when delivered
by Lessor to Lessee in accordance with the terms thereof.

         The Agreement and this Lease Supplement relate to the Aircraft, Engines
and Parts as more precisely  described  below. A counterpart of the Agreement is
attached  hereto  and this Lease  Supplement  and the  Agreement  shall form one
document.

         In  consideration  of  the  premises  and  other  good  and  sufficient
consideration, Lessor and Lessee hereby agree as follows: -

1.         Lessor  hereby  delivers and leases to Lessee under the Agreement and
           Lessee hereby accepts,  acknowledges receipt of possession and leases
           from Lessor under the  Agreement,  that certain  Boeing Model 737-300
           commercial   jet  Aircraft,   and  the  two  (2)  CFM   International
           CFM-56-3-B2  Engines  (each of which  Engines  has 750 or more  rated
           takeoff horsepower or the equivalent of such horsepower) described in
           Schedule 1 hereto,  together with the Aircraft Documents described in
           the Agreement (the "Delivered Aircraft").

2.         The Delivery Date of the Delivered Aircraft is the date of this Lease
           Supplement set forth in the opening paragraph hereof.

3.         The  Term  for  the Delivered Aircraft shall commence on the Delivery
           Date and shall end on the Expiry Date.

4.         The amount of Rent for the Delivered Aircraft is set forth in  Letter
           Agreement No. 1 to the Agreement.

5.         Lessee hereby confirms to Lessor that (i) the Delivered Aircraft  and
           each delivered Engine have been duly marked in  accordance  with  the
           terms of Clause 8.7(d) of the Agreement, (ii) the Aircraft is insured
           as required by the Agreement,(iii) the representations and warranties
           of Lessee referred  to  in  Clause 2  of  the  Agreement  are  hereby
           repeated with effect as of the date first above written,  (iv) having
           inspected  the  Delivered  Aircraft,  Lessee  acknowledges  that  the
           Delivered  Aircraft  satisfies  all  conditions required for Lessee's
           acceptance of delivery as set forth in the Agreement, except as noted
           in the Exceptions List  attached  to  the  Certificate  of  Technical
           Acceptance,  and  (v)  the  execution  and  delivery  of  this  Lease
           Supplement signifies absolute and irrevocable acceptance by Lessee of
           the Delivered Aircraft for all purposes hereof and of the Agreement.

6.         All  of  the  terms  and  provisions  of  the  Agreement  are  hereby
           incorporated by reference in this Lease Supplement to the same extent
           as if fully set forth herein.

7.         This Lease  Supplement may be executed in any number of counterparts,
           each of such  counterparts, shall for all purposes be deemed to be an
           original; and all such counterparts shall together constitute but one
           and the same Lease Supplement.

         IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. __ to be duly executed as of the day and year first above written.

LESSOR,                                              LESSEE,

AVIATION FINANCIAL SERVICES INC.    FRONTIER AIRLINES, INC.

By:_____________________________            By:_________________________

Name:__________________________             Name:______________________

Title:____________________________          Title:________________________

<PAGE>

                                   SCHEDULE 1

                                       TO

                              LEASE SUPPLEMENT NO.

                                       One

                                 Boeing 737-300

                                    Airframe

                                Registration Mark

                                     N_____

   Manufacturer's

           Serial No.               Total Time*               Total Cycles*
           ----------               ----------                ------------

           25263                   _________                 _________

                        Installed CFM International, Inc.

                                     Engines

Model No.         Serial No.         Total Time*       Total Cycles*
---------         ----------         ----------        ------------

CFM-56-3-B2        [______]         ____________       ____________

CFM-56-3-B2        [______]         _____________      ____________

         Each of the  above-described  Aircraft  Engines  is 750 or  more  rated
takeoff horsepower or its equivalent.

*        The total time and total  cycles  referred to above are as of Time, , .
         Such times and cycles are within  hours and cycles of the actual  hours
         and cycles at the time of this Lease Supplement.

<PAGE>

                                   SCHEDULE 7

                                     FORM OF

                          LEASE TERMINATION CERTIFICATE

The  undersigned  hereby certify that the Aircraft Lease  Agreement  dated as of
January 7, 2000 between the undersigned  Lessor and undersigned  Lessee,  and as
further  described in the  Appendix  attached  hereto,  has  terminated  and the
aircraft and aircraft engines covered thereby are no longer subject to the terms
thereof.  This certificate may be executed in one or more  counterparts  each of
which when taken together shall constitute one and the same instrument.

         DATED this __________ day of ____________________, __________

LESSOR                                               LESSEE

AVIATION FINANCIAL SERVICES INC.            FRONTIER AIRLINES, INC.

By:________________________________         By:___________________________

Title:_______________________________       Title:_________________________

<PAGE>

                                    APPENDIX

FAA Recording Date                                            FAA Conveyance No.

<PAGE>

                                   SCHEDULE 8

                          FORM OF AIRCRAFT USAGE REPORT

                  FOR PERIOD BEGINNING ON __________, 2000____
                       AND ENDING ON ___________, 2000____

The undersigned  Officer of Frontier Airlines,  Inc. ("Lessee") hereby certifies
as follows:

1. This report is submitted to Aviation Financial Services Inc. ("Lessor") under
that  certain  Aircraft  Lease  Agreement  dated as of January 7, 2000,  between
Lessor and Lessee (the "Lease"),  and  capitalized  terms used and not otherwise
defined herein have the meanings ascribed to them in the Lease.

2.       The Aircraft covered by this report is:

                           Aircraft:                          Boeing 737-36E
                           Serial No:                         25263
                           U.S. Reg. No.:                     N_____

3. During the period  covered by this report,  the Airframe which is the subject
of the Lease was operated for the following number of Flight Hours and Cycles as
such terms are defined in the Lease:

                  _________ Flight Hours             __________ Cycles

4. During the period  covered by this  report,  the  CFM-56-B2  Engines  Bearing
respective serial numbers  __________ and ____________  which are the subject of
the Lease,  where each operated for the following  number of Engine Flight Hours
and Cycles, as defined in the Lease:

                                  Engine Flight Hours              Cycles

         SN ________                _______________           _________________
         SN ________                _______________           _________________

This Aircraft Usage Report is dated __________________, 200_,

                                        FRONTIER AIRLINES, INC.

                                        By:________________________________

                                        Title:_____________________________AIRBUS A318/A319 PURCHASE AGREEMENT

                           Dated as of March 10, 2000

                                     between

                                 AVSA, S.A.R.L.,
                                     Seller

                                       and

                             FRONTIER AIRLINES, INC.
                                      Buyer

<PAGE>

                                 C O N T E N T S

         CLAUSES                    TITLE

          0                         DEFINITIONS

          1                         SALE AND PURCHASE

          2                         SPECIFICATION

          3                         PRICE

          4                         PRICE REVISION

          5                         PAYMENT TERMS

          6                         INSPECTION

          7                         CERTIFICATION

          8                         TECHNICAL ACCEPTANCE

          9                         DELIVERY

         10                         EXCUSABLE DELAY AND TOTAL LOSS

         11                         INEXCUSABLE DELAY

         12                         WARRANTIES AND SERVICE LIFE POLICY

         13                         PATENT AND COPYRIGHT INDEMNITY

         14                         TECHNICAL DATA AND DOCUMENTATION

         15                         FIELD ASSISTANCE

         16                         TRAINING AND TRAINING AIDS

         17                         EQUIPMENT SUPPLIER PRODUCT SUPPORT

         18                         BUYER FURNISHED EQUIPMENT AND DATA

         19                         INDEMNITIES AND INSURANCE

         20                         ASSIGNMENTS AND TRANSFERS

         21                         TERMINATION EVENTS

         22                         MISCELLANEOUS PROVISIONS

         23                         CERTAIN REPRESENTATIONS OF THE PARTIES

                                 C O N T E N T S

EXHIBITS

EXHIBIT A-1                         A318 STANDARD SPECIFICATION

APPENDIX 1 TO                       SCNs

EXHIBIT A-1

EXHIBIT A-2                         A319 STANDARD SPECIFICATION

APPENDIX 1 TO                       SCNs

EXHIBIT A-2

EXHIBIT B                           SCN FORM

EXHIBIT C                           SELLER SERVICE LIFE POLICY

EXHIBIT D                           CERTIFICATE OF ACCEPTANCE

EXHIBIT E                           BILL OF SALE

EXHIBIT F                           TECHNICAL DATA AND DOCUMENTATION

APPENDIX 1 TO                       LICENSE FOR USE OF THE PERFORMANCE
                                    ENGINEER'S EXHIBIT F PROGRAM

APPENDIX 2 TO                       LICENSE FOR USE OF CD-ROM

EXHIBIT F

EXHIBIT G                           SELLER PRICE REVISION FORMULA

EXHIBIT H                           PROPULSION SYSTEMS PRICE REVISION FORMULA

EXHIBIT I                           CONFIDENTIALITY TERMS

<PAGE>

                        P U R C H A S E     A G R E E M E N T

This agreement is made this 10th day of March 2000

between

                  AVSA,  a  societe  a  responsabilite   limitee  organized  and
                  existing under the laws of the Republic of France,  having its
                  registered office located at

                  2, rond-point Maurice Bellonte

                  31700 BLAGNAC
                  FRANCE

                  (hereinafter referred to as the "Seller")

and

                  Frontier  Airlines, Inc., a corporation organized and existing
                  under the laws  of  the  State  of  Colorado, United States of
                  America, having its principal corporate offices located at

                  12015 East 46th Avenue,  Suite 200
                  Denver, CO   80239-3116

                  (hereinafter referred to as the "Buyer")

         WHEREAS the Buyer  wishes to purchase and the Seller is willing to sell
         up to  twenty-nine  (29) Airbus  Industrie  A318-100 and A319-100 model
         aircraft, on the terms and conditions herein provided; and

         WHEREAS  the  Seller is a sales subsidiary of Airbus Industrie, G.I.E.,
         and will purchase the Aircraft from Airbus Industrie, G.I.E.,for resale
         to the Buyer,

NOW THEREFORE IT IS AGREED AS FOLLOWS:

<PAGE>

0 -      DEFINITIONS

         For all  purposes  of this  agreement,  except as  otherwise  expressly
         provided or unless the context otherwise requires,  the following terms
         will have the following meanings:

         A318  Aircraft  - any or all of the A318  Firm  Aircraft,  A318  Option
         Aircraft  and  Additional  Option  Aircraft  that the  Buyer  orders as
         A318-100 aircraft.

         A319  Aircraft  - any or all of the A319  Firm  Aircraft,  A319  Option
         Aircraft  and  Additional  Option  Aircraft  that the  Buyer  orders as
         A319-100 aircraft.

         A318 Firm Aircraft - any or all of the five (5) firm A318-100  aircraft
         for which the delivery  schedule is set forth in Clause 9.1.1 hereof to
         be sold by the  Seller  and  purchased  by the Buyer  pursuant  to this
         Agreement,   together  with  all  components,   equipment,   parts  and
         accessories  installed in or on such  aircraft and the A318  Propulsion
         Systems installed thereon upon delivery.

         A318 Option Aircraft - any or all of the five (5) A318-100  aircraft on
         option  order for which the  delivery  schedule  is set forth in Clause
         9.1.1 hereof,  and which may be sold by the Seller and purchased by the
         Buyer  pursuant  to  this  Agreement,  together  with  all  components,
         equipment,  parts and accessories  installed in or on such aircraft and
         the A318 Propulsion Systems installed thereon upon delivery.

         A318  Propulsion  Systems  - the  two  (2)  Pratt  &  Whitney  PW  6124
         powerplants installed on an A318 Aircraft at delivery, each composed of
         the  powerplant  (as such  term is  defined  in  Chapters  70-80 of ATA
         Specification   100  (Revision  21),  but  limited  to  the  equipment,
         components,  parts and accessories  included in the  powerplant,  as so
         defined) that have been sold to the Manufacturer by Pratt & Whitney.

         A318 Specification - the A318 Standard  Specification as amended by the
         SCNs set forth in  Appendix 1 to  Exhibit  A-1 hereto as may be further
         amended or modified in accordance with this Agreement.

         A318 Standard  Specification - the A318 standard specification document
         number P.000.01000,  Issue A, dated November 25, 1998, published by the
         Manufacturer, which includes an MTOW of 145,505 pounds, a copy of which
         is annexed as Exhibit A-1 hereto.

         A319 Firm Aircraft - any or all of the six (6) firm  A319-100  aircraft
         for which the delivery  schedule is set forth in Clause 9.1.1 hereof to
         be sold by the  Seller  and  purchased  by the Buyer  pursuant  to this
         Agreement,   together  with  all  components,   equipment,   parts  and
         accessories  installed in or on such  aircraft and the A319  Propulsion
         Systems installed thereon upon delivery.

         A319 Option Aircraft - any or all of the four (4) A319-100  aircraft on
         option  order for which the  delivery  schedule  is set forth in Clause
         9.1.1 hereof,  and which may be sold by the Seller and purchased by the
         Buyer  pursuant  to  this  Agreement,  together  with  all  components,
         equipment,  parts and accessories  installed in or on such aircraft and
         the A319 Propulsion Systems installed thereon upon delivery.

         A319  Propulsion  Systems  -  the  two  (2)  CFM  56-5B5/P  powerplants
         installed  on an  A319  Aircraft  at  delivery,  each  composed  of the
         powerplant   (as  such  term  is  defined  in  Chapters  70-80  of  ATA
         Specification   100  (Revision  21),  but  limited  to  the  equipment,
         components,  parts and accessories  included in the  powerplant,  as so
         defined) that have been sold to the Manufacturer by CFM International.

         A319 Specification - the A319 Standard  Specification as amended by the
         SCNs set forth in  Appendix 1 to  Exhibit  A-2 hereto as may be further
         amended or modified in accordance with this Agreement.

         A319 Standard  Specification - the A319 standard specification document
         number J.000.01000,  Issue 4, dated January 30, 1998,  published by the
         Manufacturer, which includes an MTOW of 154,324 pounds, a copy of which
         is annexed as Exhibit A-2 hereto.

         Additional Option Aircraft - up to nine (9) A318-100 and A319-100 model
         aircraft  other  than Firm  Aircraft  and Option  Aircraft  that may be
         purchased  by the  Seller  and  sold  to the  Buyer  pursuant  to  this
         Agreement,   together  with  all  components,   equipment,   parts  and
         accessories installed in or on such aircraft and the Propulsion Systems
         installed thereon upon delivery.

         Affiliate - with  respect to any person or entity,  any other person or
         entity  directly  or  indirectly  controlling,  controlled  by or under
         common  control with such person or entity,  not  including  any of the
         Associated Contractors.

         Agreement - this Airbus  A318/A319  Purchase  Agreement,  including all
         Exhibits and Appendixes  attached hereto, as the same may be amended or
         modified and in effect from time to time.

         Aircraft - any or all of the Firm Aircraft or Option Aircraft that have
         been converted to a firm order.

         Airframe - any Aircraft, excluding the Propulsion Systems therefor.

         ASCO - Airbus  Service  Company,  Inc.,  a  corporation  organized  and
         existing  under the laws of  Delaware,  having  its  registered  office
         located at 198 Van Buren Street,  Suite 300, Herndon,  VA 20170, or any
         successor thereto.

         Associated  Contractors  -  collectively,  the members and, for certain
         purposes,  subcontractors  of the Manufacturer from time to time, which
         members presently are:

         (1)      AEROSPATIALE  MATRA  S.A.  ("Aerospatiale"),  whose  principal
                  office is at
                  37, Boulevard de Montmorency
                  75016 Paris
                  France

          (2)     BRITISH AEROSPACE (OPERATIONS) LTD,  whose principal office is
                  at
                  Warwick House
                  PO Box 87
                  Farnborough Aerospace Centre
                  Farnborough
                  Hants GU14 6YU
                  England

         (3)      CONSTRUCCIONES AERONAUTICAS,S.A., whose principal office is at
                  404 Avenida de Aragon
                  28022 Madrid
                  Spain

         (4)      DAIMLERCHRYSLER AEROSPACE AIRBUS,GmbH("DASA"), whose principal
                  office is at
                  Kreetslag 10
                  Postfach 95 01 09
                  21111 Hamburg
                  Germany

         ATA Specification  100 - the specification  issued by the Air Transport
         Association of America relating to manufacturers' technical data.

         ATA Specification  101 - the specification  issued by the Air Transport
         Association of America relating to ground equipment technical data.

         ATA Specification  102 - the specification  issued by the Air Transport
         Association of America relating to software programs.

         ATA Specification  200 - the specification  issued by the Air Transport
         Association of America relating to integrated data processing.

         ATA Specification  300 - the specification  issued by the Air Transport
         Association  of  America  relating  to the  packaging  of  spare  parts
         shipments.

         ATA Specification 2000 - the specification  issued by the Air Transport
         Association  of  America  relating  to an  industry-wide  communication
         system  linking   suppliers  and  users  for  the  purposes  of  spares
         provisioning,   purchasing,   order   administration,   invoicing   and
         information or data exchange.

         ATA Specification 2100 - the specification  issued by the Air Transport
         Association of America  relating to the standards for the  presentation
         of technical information prepared as digital media (magnetic tape or CD
         ROM).

         Aviation  Authority  -when used with respect to any  jurisdiction,  the
         government  entity  that,  under  the  laws of such  jurisdiction,  has
         control  over civil  aviation  or the  registration,  airworthiness  or
         operation of civil aircraft in such jurisdiction.

         Balance of the Final  Contract  Price - means the amount payable by the
         Buyer  to the  Seller  on the  Delivery  Date  for  an  Aircraft  after
         deducting from the Final Contract Price for such Aircraft the amount of
         all  Predelivery  Payments  received  by the  Seller  from the Buyer in
         respect  of such  Aircraft  on or  before  the  Delivery  Date for such
         Aircraft.

         Base Price - for any Aircraft,  Airframe or Propulsion Systems, as more
         completely defined in Clause 3.1 of this Agreement.

         Buyer Furnished  Equipment  (BFE) - for any Aircraft,  all the items of
         equipment  that will be  furnished  by the Buyer and  installed  in the
         Aircraft by the Seller, as defined in the Specification.

         Buyer  Termination  Event  -  as  defined  in  Clause  21.1.1  of  this
         Agreement.

         Certificate  of  Airworthiness  for Export - an export  certificate  of
         airworthiness   issued  by  the  Aviation  Authority  of  the  Delivery
         Location.

         Customer  Originated  Changes  (COC) -  Buyer-originated  data that are
         introduced  into Seller's  Technical  Data and  Documentation,  as more
         completely set forth in Clause 14.4.3 of this Agreement.

         Delivery - the transfer of title to the Aircraft from the Seller to the
         Buyer, in accordance with Clause 9.

         Delivery Date - the date on which Delivery will occur.

         Delivery  Location - the  facilities  of the Seller at the  location of
         final  assembly of the Aircraft,  which is currently at DASA's works in
         Hamburg, Germany, for the A318 and A319 model aircraft.

         Deposit - Each of the deposit  amounts  described in Clause 5.3 of this
         Agreement.

         DGAC - the Direction  Generale de l'Aviation  Civile of France,  or any
         successor thereto.

         Excusable  Delay - delay in  delivery or failure to deliver an Aircraft
         due to causes specified in Clause 10.1 of this Agreement.

         FAA - the  U.S.  Federal  Aviation  Administration,  or  any  successor
         thereto.

         Final Contract Price - as defined in Clause 3.2 of this Agreement.

         Firm  Aircraft - any or all of the eleven (11) A318 Firm  Aircraft  and
         A319 Firm Aircraft.

         Free Carrier  (FCA) - defined in the April 1990 edition of  publication
         No. 460, published by the International Chamber of Commerce.

         In-house Warranty - as referred to in Clause 12.1.7 of this Agreement.

         In-house  Warranty Labor Rate - as defined in Clause  12.1.7(v) of this
         Agreement.

         Interface Problem - as defined in Clause 12.4.1 of this Agreement.

         JAA - Joint Aviation Authorities or any successor thereto.

         LBA - Luftfahrt-Bundesamt of Germany or any successor thereto.

         LIBOR - the London  Interbank  Offered  Rate for each  stated  interest
         period,  the rate  determined  on the  basis of the  offered  rates for
         deposits in US dollars, which appear on the Reuters Screen LIBO Page as
         of 11:00 a.m., London time, on the day that is two (2) days (other than
         a Saturday,  Sunday or a day that is a legal  holiday or a day on which
         banking  institutions  are authorized to close in the City of New York,
         New York, London, England, or Paris, France) before the first day of an
         interest  period.  If at least two (2) such offered rates appear on the
         Reuters Screen LIBO Page, the rate for that interest period will be the
         arithmetic  mean of such  offered  rates  rounded to the nearest  basis
         point (0.5 rounds to 1). If only one (1) offered rate appears, the rate
         for  that  interest  period  will be  "LIBOR"  as  quoted  by  National
         Westminster  Bank,  plc.  "Reuters  Screen LIBO Page" means the display
         designated  as page "LIBO" on the Reuters  Monitor  Money Rates Service
         (or any successor to such page or service).

         Manufacturer - Airbus Industrie,  a  "Groupement  d'Interet Economique"
         established  under "Ordonnance" No. 67-821 dated September 23, 1967, of
         the Republic of France.

         Option  Aircraft - any or all of the nine (9) A318 Option  Aircraft and
         A319 Option Aircraft.

         Predelivery  Payment  - any of the  payments  made in  accordance  with
         Clause  5.2.3  or 5.2.4 of this  Agreement,  which,  in the case of the
         first such payment, will include the Deposit.

         Predelivery  Payment  Reference  Price - as defined in Clause  5.2.2 of
         this Agreement.

         Propulsion Systems - the A318 Propulsion Systems and/or A319 Propulsion
         Systems, as applicable.

         Propulsion  Systems Price Revision Formula - the price revision formula
         for A319 Propulsion Systems, set forth in Exhibit H hereto.

         Ready  for  Delivery  - the  state  of an  Aircraft  when  it  (i)  has
         successfully  completed the Technical Acceptance Process (as defined in
         Clause 8.1.1 of the Agreement) and (ii) has been issued the Certificate
         of Airworthiness for Export.

         Reference Price - as set forth in Clause 3.1.2 of the Agreement.

         Scheduled Delivery Month - as defined in Clause 9.1.1 of the Agreement.

         Seller Price Revision Formula - the price revision formula set forth in
         Exhibit G hereto.

         Seller  Termination  Event  - as  defined  in  Clause  21.1.3  of  this
         Agreement.

         Service Life Policy - as referred to in Clause 12.2 of this Agreement.

         Specification - the A318 Specification  and/or the A319  Specification,
         as applicable.

         Specification Change Notice (SCN) - an agreement in writing between the
         Seller and the Buyer amending the Specification pursuant to Clause 2.

         Supplier - any supplier of Supplier Parts.

         Supplier Parts - any component,  equipment, accessory or part installed
         in an Aircraft  at the time of  Delivery  thereof,  not  including  the
         Propulsion Systems or Buyer Furnished Equipment, for which there exists
         a Supplier Product Support Agreement.

         Supplier Product Support Agreement -an agreement between the Seller and
         each Supplier of Seller Furnished Equipment listed in the Specification
         containing enforceable and transferable  warranties (and in the case of
         landing gear suppliers,  service life policies for selected  structural
         landing gear elements).

         Technical  Data and  Documentation  - the  documents,  manuals and data
         listed and described in Exhibit F hereto.

         Training Conference - as defined in Clause 16.4.1 of this Agreement.

         Warranted Part - as defined in Clause 12.1.1 of this Agreement.

         Warranty Claim - as defined in Clause 12.1.6(v) of this Agreement.

         Working Day - with respect to any action to be taken  hereunder,  a day
         other than a Saturday,  Sunday or other day  designated as a holiday in
         the jurisdiction in which such action is required to be taken.

         The terms "herein," "hereof" and "hereunder" and other words of similar
         import refer to this  Agreement,  and not a particular  Clause thereof.
         The  definition  of a singular  in this Clause will apply to plurals of
         the same words.

         Technical  and trade items not otherwise  defined  herein will have the
         meanings  assigned  to  them  as  generally  accepted  in the  aircraft
         manufacturing industry.

<PAGE>

1 -               SALE AND PURCHASE
                  -----------------

                  The  Seller  will cause to be  manufactured  and will sell and
                  deliver,  and the Buyer  will buy and take  delivery  of,  the
                  Aircraft at the  Delivery  Location,  subject to the terms and
                  conditions in this Agreement.

<PAGE>

2 -               SPECIFICATION
                  -------------

2.1               Specification Documents

2.1.1             The Aircraft  will be  manufactured  in  accordance  with,  as
                  applicable,  the A318 Specification or the A319 Specification.
                  The  Specifications  may be further modified from time to time
                  pursuant to the provisions of this Clause 2.

2.1.2             Specification Change Notice

                  Each Specification may be amended by written agreement between
                  the parties in an SCN. Each SCN will be  substantially  in the
                  form set out in  Exhibit  B hereto  and will set out in detail
                  the particular  change to be made to the Specification and the
                  effect, if any, of such change on design, performance, weight,
                  time  of   delivery   of  the   Aircraft,   and  text  of  the
                  Specification.  An SCN may  result in an  upward  or  downward
                  adjustment of the Base Price.

2.1.3             In the  event  that a duly  authorized  representative  of the
                  Buyer makes a written  request that the Seller  proceed with a
                  proposed change, the Seller will consider such request. If the
                  Seller  believes that the cost of studying the proposed change
                  will be significant, the Seller will provide the Buyer with an
                  estimate of such cost but will not proceed without the Buyer's
                  written approval * if the change is subsequently  incorporated
                  into the  Aircraft,  the cost of design and other work will be
                  included in the pricing of such change.

2.1.4             Development Changes

                  Each  Specification  may also be amended by the Seller without
                  the  Buyer's  consent  when  changes  are  made  to the  basic
                  specification for A318 or A319 model aircraft generally, which
                  do not  adversely  affect price,  time of delivery,  weight or
                  performance   of   the   Aircraft,    interchangeability    or
                  replaceability  requirements  under the  Specification.  These
                  changes are hereinafter defined as "Development  Changes." The
                  Seller  will  notify  the  Buyer  on a  regular  basis  of all
                  Development  Changes and furnish to the Buyer  without  charge
                  revised pages for the amended Specification.

2.2               Propulsion Systems

                  The  A318  Aircraft  will be  equipped  with  A318  Propulsion
                  Systems  and the A319  Aircraft  will be  equipped  with  A319
                  Propulsion Systems.

2.3               Customization Milestones Chart

                  Within a reasonable  period after  signature of the Agreement,
                  the  Seller  will  provide  the  Buyer  with  a  Customization
                  Milestones  Chart.  The  Customization  Milestones  Chart will
                  state the lead times before Delivery needed to reach agreement
                  on items requested by the Buyer from the specification changes
                  catalogs made available to the Seller.

<PAGE>

3 -               PRICE
                  -----

3.1               Base Price of the Aircraft

3.1.1             A318 Aircraft

                  The Base Price of each A318 Aircraft is the sum of

                  (i)      the Base Price of the A318 Aircraft as defined in the
                           A318   Standard   Specification    (excluding   Buyer
                           Furnished Equipment and SCNs), at delivery conditions
                           prevailing in January 1999, which is:

                           US $ *

                           (US dollars--* ), and

                  (ii)     the Base  Price of any and all SCNs  mutually  agreed
                           upon prior to the signature of this Agreement and set
                           forth  in  Appendix  1  to  Exhibit  A-1  hereto,  at
                           delivery conditions prevailing in January 1999, which
                           is:

                           US $ *

                           (US dollars--* ).

3.1.2             A319 Aircraft

3.1.2.1           The Base Price of each A319 Aircraft is the sum of:

                  (i)      the Base Price of the Airframe of the A319 Aircraft,
                           and

                  (ii)     the Base Price of the A319 Propulsion Systems.

3.1.2.2           Base Price of the Airframe

                  The Base Price of the Airframe of the A319 Aircraft is the sum
                  of

                  (i)      the Base  Price of the  Airframe,  as  defined in the
                           A319   Standard   Specification    (excluding   Buyer
                           Furnished Equipment and SCNs), at delivery conditions
                           prevailing in January 1999, which is:

                           US $ *

                           (US dollars--* ), and

                  (ii)     the Base  Price of any and all SCNs  mutually  agreed
                           upon prior to the signature of this Agreement and set
                           forth  in  Appendix  1  to  Exhibit  A-2  hereto,  at
                           delivery conditions prevailing in January 1999, which
                           is:

                           US $ *

                           (US dollars--* ).

3.1.2.3           Base Price of the A319 Propulsion Systems

3.1.2.3.1         The Base Price of the A319  Propulsion  Systems,  at  delivery
                  conditions prevailing in January 1999, is:

                  US $ *

                  (US dollars--* ).

                  Said Base Price has been  calculated  in  accordance  with the
                  Propulsion  Systems Price Revision  Formula from the Reference
                  Price  published by * of US $ * (US  dollars-- * ) at economic
                  conditions prevailing in July 1996.

3.1.2.3.2         Validity of A319 Propulsion Systems Prices

                  It is understood that the prices and Propulsion  Systems Price
                  Revision  Formula cited above for the A319 Propulsion  Systems
                  and related  equipment are based on information  received from
                  CFM  International and remain subject to any modification that
                  might   be   communicated   by   CFM   International   to  the
                  Manufacturer, the Seller and/or the Buyer.

3.2               Final Contract Price

3.2.1             The  Final  Contract Price of an A318 Aircraft will be the sum
                  of:

                  (i)      the  Base  Price of the A318 Aircraft, as adjusted to
                           the Delivery Date of such Aircraft in accordance with
                           the Seller Price Revision Formula;

                  (ii)     the price (as of delivery  conditions  prevailing  in
                           January 1999) of any SCNs for A318  Aircraft  entered
                           into after the date of execution  of this  Agreement,
                           as adjusted to the Delivery Date in  accordance  with
                           the Seller Price Revision Formula; and

(iii)                      any  other  amount  that is  expressly  stated  to be
                           included  in the  Final  Contract  Price  of an  A318
                           Aircraft  pursuant  to any other  provisions  of this
                           Agreement and/or any other written  agreement between
                           the  Buyer  and  the  Seller  relating  to  the  A318
                           Aircraft.

3.2.2             The Final Contract Price of an A319 Aircraft will be the sum o

                  (i)      the Base Price of the Airframe constituting a part of
                           such  Aircraft,  as adjusted to the Delivery  Date of
                           such  Aircraft in  accordance  with the Seller  Price
                           Revision Formula;

                  (ii)     the price (as of delivery  conditions  prevailing  in
                           January 1999) of any SCNs for A319  Aircraft  entered
                           into after the date of execution  of this  Agreement,
                           as adjusted to the Delivery Date in  accordance  with
                           the Seller Price Revision Formula;

                  (iii)    the Reference  Price of the installed A319 Propulsion
                           Systems  constituting  a part  of such  Aircraft,  as
                           adjusted to the Delivery Date in accordance  with the
                           Propulsion Systems Price Revision Formula; and

                  (iv)     any  other  amount  that is  expressly  stated  to be
                           included  in the  Final  Contract  Price  of an  A319
                           Aircraft  pursuant  to any other  provisions  of this
                           Agreement and/or any other written  agreement between
                           the  Buyer  and  the  Seller  relating  to  the  A319
                           Aircraft.

3.3               Taxes, Duties and Imposts

3.3.1             The  Seller  will bear and pay the amount of any and all taxes
                  (excluding taxes on the income of  the Buyer), duties, imposts
                  or similar charges of  any  nature  whatsoever  that  are  (i)
                  imposed  upon the Buyer, (ii) imposed upon the Seller  with an
                  obligation  on  the  Buyer  to  withhold or collect the amount
                  thereof  from  the Seller or (iii) imposed upon the Buyer with
                  an obligation on the Seller to withhold or collect such amount
                  from  the  Buyer,  and  that a re levied, assessed, charged or
                  collected   for   or  in   connection  with  the  fabrication,
                  manufacture, modification, assembly, sale, delivery, use of or
                  payment under  this Agreement  for  any  Aircraft,  component,
                  accessory, equipment or part delivered or furnished hereunder,
                  provided such taxes, duties, imposts or  similar  charges have
                  been  levied,  assessed,  charged  or  collected  under   laws
                  promulgated and  enforceable under the laws of the country  of
                  the Delivery Location *.

3.3.2             The  Buyer  will bear  and pay the amount of any and all taxes
                  (excluding taxes on the income of the Seller), duties, imposts
                  or similar charges of  any  nature  whatsoever  that  are  (i)
                  imposed  upon  the Seller, (ii) imposed upon the Buyer with an
                  obligation  on  the  Seller  to withhold or collect the amount
                  thereof  from  the Buyer or (iii) imposed upon the Seller with
                  an obligation for the Buyer to withhold or collect such amount
                  from  the  Seller,  and  that are levied, assessed, charged or
                  collected  for  or  in  connection  with    the   fabrication,
                  manufacture,  modification, assembly, sale, delivery or use of
                  or payment under this Agreement  for  any Aircraft, component,
                  accessory, equipment or part delivered or furnished hereunder,
                  provided  such  taxes, duties, imposts or similar charges have
                  been  levied,   assessed,  charged  or  collected  under  laws
                  promulgated  and  enforceable  in  countries  other  than  the
                  country of the Delivery Location *.

3.3.3             If a claim is made against either party (the "Indemnitee")  by
                  any  governmental  authority  for  taxes,  duties,  imposts or
                  similar charges of any nature for  which  liability  has  been
                  assumed  by  the  other  party  under  this  Clause  3.3  (the
                  "Indemnitor"), the Indemnitee will  promptly  give  notice  of
                  such claim  to  the  Indemnitor  and  the  Indemnitor  (unless
                  otherwise requested by the Indemnitee) will assume the defense
                  or settlement of such  claim,  as  the  Indemnitor  will  deem
                  prudent.  Notwithstanding the  foregoing,  if  the  Indemnitor
                  will request that the claim be  contested, the Indemnitee will
                  contest (or will permit the Indemnitor, if so desired  by  the
                  Indemnitee, to contest) the  claim  in  good  faith;  provided
                  that, (i) the Indemnitee will be required to contest any claim
                  beyond the level of administrative proceedings only if  timely
                  requested by the Indemnitor, and (ii) the Indemnitee will keep
                  the Indemnitor informed as to  the progress of any litigation.
                  The Indemnitee  will  not  be  required  to  take  any  action
                  pursuant to this Clause 3.3.3 unless (A) the  Indemnitor  will
                  have agreed to pay all costs and  expenses that the Indemnitee
                  may incur in connection with contesting such claim (including,
                  without  limitation,  reasonable legal and accounting fees and
                  disbursements, bonding fees,  penalties and interest); and (B)
                  the action to be taken will not result in any sale, forfeiture
                  or loss of, or the creation of any Lien on,  the  Aircraft  or
                  any interest therein, or if, in the opinion of the Indemnitor,
                  there  is  a reasonable risk thereof, the Indemnitor will have
                  provided to the  Indemnitee  a  bond  in  form  and  substance
                  reasonably  satisfactory  to the Indemnitee to protect against
                  such risk.  The provisions of this Clause 3.3 will survive the
                  expiration or earlier termination of this Agreement.

3.3.4             The Seller will  arrange for the  exportation  of the Aircraft
                  from the  country of the  Delivery  Location  and will pay any
                  customs  duties,  taxes  and  fees  required  to be paid  with
                  respect to such exportation of the Aircraft *.

3.3.5             The Buyer will  arrange for the  importation  of the  Aircraft
                  into any  country  or  jurisdiction  and will pay any  customs
                  duties,  taxes and fees  required  to be paid with  respect to
                  such importation of the Aircraft.

<PAGE>

4 -               PRICE REVISION
                  --------------

4.1               Seller Price Revision Formula

                  The Base Prices of the A318 Aircraft, the Airframe of the A319
                  Aircraft,  and of  SCNs  are  subject  to  revision  up to and
                  including the Delivery  Date,  in  accordance  with the Seller
                  Price Revision Formula.

4.2               Propulsion Systems Price Revision Formula

                  The  Reference  Price of the  Propulsion  Systems for the A319
                  Aircraft will be revised to the Delivery Date corresponding to
                  the Aircraft on which these Propulsion  Systems are installed,
                  in  accordance  with the  Propulsion  Systems  Price  Revision
                  Formula.

<PAGE>

5 -               PAYMENT TERMS
                  -------------

5.1               The Buyer will pay the  Predelivery  Payments,  the Balance of
                  the Final Contract Price and any other amount due hereunder in
                  immediately available funds in United States dollars to Credit
                  Lyonnais,  New York Branch, for transfer by Credit Lyonnais to
                  the  Seller's  account  with Credit  Lyonnais at 1,  Esplanade
                  Compans Caffarelli,  31000 Toulouse,  France, or to such other
                  account as may be designated by the Seller.

5.2               Predelivery Payments

5.2.1             Predelivery  Payments  will be paid by the Buyer to the Seller
                  for each Aircraft and will, in the  aggregate,  amount to * of
                  the  Predelivery  Payment  Reference  Price  of  the  Aircraft
                  defined below in Clause 5.2.2.

5.2.2             The  Buyer  will  pay  Predelivery  Payments  to  the   Seller
                  calculated on the Predelivery Payment  Reference Price of each
                  Aircraft.  The Predelivery Payment Reference Price is  defined
                  as:

                  A =               Pb (1 + 0.04N)

                  where

                  A                 = the  Predelivery  Payment  Reference Price
                                    for  Aircraft  to be  delivered  in calendar
                                    year T.

                  Pb =              the Base Price of the Aircraft as defined in
                                    Clause 3 above.

                  N  =              (T - 1999).

                  T  =              the   year   of   delivery   of the relevant
                                    Aircraft.

<PAGE>

5.2.3             Predelivery  Payments w ill be paid according to the following
                  schedules.

5.2.3.1           The schedule of Predelivery Payments for Firm Aircraft is as
                  follows:

                                                         Percentage of Aircraft
                                                         Predelivery Payment

         Payment Date                                    Reference Price

         *                                                       *

         TOTAL PAYMENT PRIOR TO DELIVERY                         *

<PAGE>

5.2.3.2  The schedule of Predelivery Payments for Option Aircraft is as follows:

                                                        Percentage of Aircraft
                                                        Predelivery Payment

         Payment Date                                   Reference Price

         *                                                     *

         TOTAL PAYMENT PRIOR TO DELIVERY                      15%

5.2.4             SCN Predelivery Payments

                  The Seller will be entitled  to request  Predelivery  Payments
                  for each SCN executed after signature of this Agreement.

                  (i)      For each SCN  executed  before the first day of the *
                           month before the Scheduled  Delivery Month, the Buyer
                           will make a Predelivery Payment equal to * of the SCN
                           price.  This Predelivery  Payment will be paid on the
                           first  day of the *  before  the  Scheduled  Delivery
                           Month.

                  (ii)     For each SCN  executed  after  the first day of * and
                           before  the first day of the * before  the  Scheduled
                           Delivery Month, this Predelivery  Payment will amount
                           to * of the SCN  price,  and for  each  SCN  executed
                           after the first day of the * and before the first day
                           of the * month before the  Scheduled  Delivery  Month
                           this payment will amount to * of the SCN price. These
                           payments will be paid on the first day of the * month
                           before the Scheduled Delivery Month.

5.3      Deposit

                  The Seller  acknowledges that it has already received from the
                  Buyer the sum of US$ * (US  dollars-- * ), which  represents a
                  deposit of US$ * (US  dollars-- * ) for each Firm Aircraft and
                  of US $* (US  dollars--  * ) for  each  Option  Aircraft.  The
                  deposit paid with respect to each particular  Aircraft will be
                  credited  without  interest  against  the  first   Predelivery
                  Payment for such Aircraft.

5.4               Payment of Balance of the Final Contract Price

                  Concurrently  with the  delivery of each  Aircraft,  the Buyer
                  will pay to the Seller the Balance of the Final Contract Price
                  for such Aircraft.  The Seller's receipt of the full amount of
                  all  Predelivery  Payments  and of the  Balance  of the  Final
                  Contract Price,  including any amounts due under Clause 5.5 or
                  5.6, will be a condition  precedent to the Seller's obligation
                  to deliver such Aircraft.

5.5               Payment of Other Amounts

5.5.1             Unless otherwise  expressly  provided for herein, any payments
                  due  hereunder  or in respect of an  Aircraft  in  addition to
                  those referred to in Clauses 5.2 and 5.4 above will be paid by
                  the Buyer  concurrently with the delivery of the corresponding
                  Aircraft  or, if the  Seller  elects to invoice  such  amounts
                  after  delivery of such  Aircraft,  within one (1) month after
                  the invoice date.

5.5.2             The Seller will give the Buyer written notice  of  any  amount
                  (whether  under  this  Agreement  or under any other agreement
                  between the Buyer and the Seller and  whether  at  the  stated
                  maturity of such amount, by acceleration or otherwise) that is
                  due and payable by the Buyer or its Affiliates and is not paid
                  in full in immediately available funds on the date due. *  the
                  Seller will have the right to debit and apply, in whole or  in
                  part,  the  unused  amount of any credit made available by the
                  Seller to the Buyer against such unpaid amount.   The Seller's
                  rights  under this Clause  5.5.2  are in addition to any other
                  rights the Seller may have at contract or at law  and  do  not
                  contravene its rights under Clause 21 herein.

5.6               Overdue Payments

5.6.1             If one or more Predelivery Payments in respect of any Aircraft
                  is or are  received  after  the due date  specified  in Clause
                  5.2.3,  such  that the  aggregate  number  of days of delay in
                  respect of such Aircraft  reaches thirty (30), then the Seller
                  will have the right to set back the Scheduled  Delivery  Month
                  for such  Aircraft  by a period  of one (1)  month  for  every
                  thirty (30) days of such delay.

                  Furthermore,  if such delays in payment exceed sixty (60) days
                  in the aggregate  for any  Aircraft,  in addition to any other
                  rights the Seller  may have under  Clause 21, the Seller  will
                  have  no  obligation  to  deliver  such  Aircraft  within  the
                  Scheduled Delivery Month as modified pursuant to the preceding
                  paragraph.  Upon  receipt  of the  full  amount  of  all  late
                  Predelivery Payments,  together with interest due under Clause
                  5.6,  provided  that the Seller has not exercised its right of
                  termination  under Clause 21, the Seller will inform the Buyer
                  of  a  new  Scheduled   Delivery   Month  for  such  Aircraft,
                  consistent  with Seller's  other  commitments  and  production
                  capabilities.

                  The Seller's rights under this Clause 5.6.1 are in addition to
                  any other rights and remedies available to the Seller.

5.6.2             If any payment due the Seller is not received by the Seller on
                  the date or dates agreed on  between the Buyer and the Seller,
                  the Seller will have the right to  claim  from  the Buyer  and
                  the  Buyer  will promptly pay to the Seller on receipt of such
                  claim interest at the rate of one  and one-half percent (1.5%)
                  per  month  on  the  amount  of  such  overdue  payment, to be
                  calculated from and including the due date of such payment  to
                  (but  excluding)  the  date  such  payment  is received by the
                  Seller.  The Seller's right to receive such interest  will  be
                  in addition to any other rights of the Seller hereunder or  at
                  law.

5.7               Refund of Predelivery Payments

                  The Buyer will have no right to any  refund of any  Deposit or
                  Predelivery Payment received by the Seller *.

5.8               Proprietary Interest

                  Notwithstanding  any  provision  of law to the  contrary,  the
                  Buyer  will  not,  by  virtue of  anything  contained  in this
                  Agreement  (including,  without  limitation,  any  Predelivery
                  Payments  hereunder,  or any designation or  identification by
                  the Seller of a  particular  Aircraft  as an Aircraft to which
                  any of the  provisions of this Agreement  refers)  acquire any
                  proprietary,  insurable or other  interest  whatsoever  in any
                  Aircraft before Delivery of and payment for such Aircraft,  as
                  provided in this Agreement.

5.9               Payment in Full

                  The  Buyer's   obligation  to  make  payments  to  the  Seller
                  hereunder  will  not be  affected  by and  will be  determined
                  without  regard  to  any  setoff,  counterclaim,   recoupment,
                  defense  or other  right that the Buyer may have  against  the
                  Seller or any other  person.  The Buyer will make all payments
                  to the  Seller  under  this  Agreement  without  deduction  or
                  withholding  on account of, and free from,  any and all taxes,
                  duties,  imposts  or  similar  charges  for which the Buyer is
                  responsible  pursuant to Clause  3.3.2(iii) of this Agreement,
                  except that if the Buyer is  compelled by law to make any such
                  deduction or  withholding  the Buyer will pay such  additional
                  amounts as may be necessary so that the net amount received by
                  the Seller after such deduction or withholding  will equal the
                  amounts  that would have been  received in the absence of such
                  deduction or withholding.  If timely requested by the Buyer in
                  writing,  the Seller will, at the Buyer's  expense,  take such
                  action as the Buyer may reasonably  direct with respect to any
                  claim for taxes, duties,  imposts and similar charges, and any
                  payment  by the  Seller  of such  amounts  will be made  under
                  protest, if, in the Buyer's judgment,  protest is appropriate,
                  and, in the reasonable opinion of the Seller such protest will
                  not involve  significant risk of any sale,  forfeiture or loss
                  of, or creation of any lien on, the  Aircraft or any  interest
                  therein,  or  on  any  other  aircraft   manufactured  by  the
                  Manufacturer  or sold by the Seller.  If payment is made,  the
                  Seller will, at the Buyer's  expense,  take such action as the
                  Buyer may reasonably  direct to recover such payment and will,
                  if requested,  permit the Buyer in the Seller's name to file a
                  claim or  prosecute an action to recover  such  payment.  If a
                  refund is  obtained  by the  Seller of all or any part of such
                  amount,  the Seller  will pay the Buyer the amount of any such
                  refund, plus interest on the refunded taxes, if any.

6 -               INSPECTION

6.1               Inspection Procedures

6.1.1             All  work  to be carried out on the Aircraft and all materials
                  and parts thereof will at all reasonable times during business
                  hours be open to inspection by duly authorized representatives
                  of  the  Buyer  or its designee at the respective works of the
                  Associated Contractors and, if possible, at the works of their
                  respective subcontractors.  These  representatives  will  have
                  access to  such  relevant  technical  data  as are  reasonably
                  necessary for this purpose (except that, if access to any part
                  of the respective works where construction is in  progress  or
                  materials or parts  are  stored  is  restricted  for  security
                  reasons,  the  Associated  Contractors  will  be   allowed   a
                  reasonable  time  to  make  the items available for inspection
                  elsewhere).  The  actual  detailed inspection of the Aircraft,
                  materials  and  parts  thereof  will  take  place  only in the
                  presence of the respective inspection department personnel  of
                  the  Associated   Contractors  or  their  subcontractors.  The
                  procedures for such inspections will be  agreed  on  with  the
                  Buyer before any inspection.

6.1.2             All   inspections,   examinations  and  discussions  with  the
                  Seller's,  the  Associated  Contractors'  or their  respective
                  subcontractors'  engineering  or other  personnel by the Buyer
                  and  its  said  representatives  will be  performed  in such a
                  manner as not to delay or hinder the work to be carried out on
                  the Aircraft or the proper  performance of this Agreement.  In
                  no event will the Buyer or its representatives be permitted to
                  inspect any aircraft other than the Aircraft.

6.2      Representatives

                  For the  purposes  of Clause 6.1 above,  at a mutually  agreed
                  date that will not,  in any event,  be later than  twelve (12)
                  months  before  the  date  on  which  the  first  Aircraft  is
                  scheduled  to be  delivered  to the  Buyer,  the  Seller  will
                  furnish  free-of-charge  adequate  secretarial  assistance and
                  suitable office space,  office  equipment and facilities in or
                  conveniently located with respect to the Delivery Location for
                  the use of not more than four (4) representatives of the Buyer
                  during the  aforementioned  period.  The Seller  will  provide
                  telecommunications  facilities  at  the  Buyer's  cost  to  be
                  invoiced on a monthly basis.

10.

<PAGE>

7 -      CERTIFICATION

7.1               Type Certification

                  The A318  aircraft will be and the A319 aircraft has been type
                  certificated  under JAA procedures for joint  certification in
                  the transport category.  The Seller will obtain or cause to be
                  obtained   the   relevant   type    certificate   (the   "Type
                  Certificate")  to allow the  issuance  of the  Certificate  of
                  Airworthiness for Export.

7.2               Certificate of Airworthiness for Export

                  Subject to the provisions of Clause 7.3, each Aircraft will be
                  delivered to the Buyer with the  Certificate of  Airworthiness
                  for Export  which,  assuming  compliance by the Buyer with all
                  requirements  of the FAA other than those  applicable  only to
                  the  Aircraft,  will entitle the Buyer (or an eligible  person
                  under then applicable law) to obtain at the time of Delivery a
                  Standard  Airworthiness  Certificate  issued pursuant to Title
                  14, Part 21 of the U.S. Code of Federal Regulations.

7.3               Specification  Changes  Before  Delivery:   Export  and Import
                  Requirements

7.3.1             If, any time before the date on which the  Aircraft  is  Ready
                  for  Delivery,  any  law,  rule  or  regulation  is   enacted,
                  promulgated, becomes effective and/or an interpretation of any
                  law, rule  or regulation is issued that requires any change to
                  the   Specification   for   the  purposes  of  obtaining   the
                  Certificate  of  Airworthiness for Export (a "Change in Law"),
                  the Seller will make the required modification and the parties
                  hereto will sign an SCN that specifies the effects, if any, on
                  the  guaranteed  performances,  weights,   interchangeability,
                  Delivery  Date,  price  of  the   Aircraft  and  text  of  the
                  Specification.

7.3.2             The Seller will as far as practicable  (in its sole discretion
                  and without  prejudice to Clause 7.3.3 (ii)) take into account
                  the  information  available to it concerning any proposed law,
                  rule or  regulation  or  interpretation  that  could  become a
                  Change in Law,  in order to  minimize  the costs of changes to
                  the Specification as a result of such proposed law, regulation
                  or  interpretation  becoming  effective  before the applicable
                  Aircraft is Ready for Delivery.

7.3.3             The  cost  of  implementing  the  modifications referred to in
                  Clause 7.3.1 above will be

                  (i)      for the account of the Seller if a Change in Law
                           becomes effective before the date of  this Agreement,
                           and

                  (ii)     shared  equally  by the  Seller  and the  Buyer  if a
                           Change  in Law  becomes  effective  after the date of
                           this Agreement.

7.3.4             Notwithstanding  the provisions of Clauses 7.3.3 (i) and (ii),
                  if a Change in Law relates to the  Propulsion  Systems and, in
                  particular,  to engine accessories,  quick engine change units
                  or thrust  reversers,  the costs  will be borne in  accordance
                  with such  arrangements as may be made separately  between the
                  Buyer and the Propulsion Systems manufacturer; the Seller will
                  have no obligation with respect thereto.

7.4               Specification Changes After Delivery

                  Clause 7.3 will not require the Seller to make any changes  or
                  modifications to, or to make any payments or  take  any  other
                  action with respect to,any Aircraft that is Ready for Delivery
                  before   the compliance date of any law or regulation referred
                  to in Clause 7.3. Any such changes or modifications made to an
                  Aircraft after it is Ready for Delivery will be at the Buyer's
                  expense.

7.5               Seller's Responsibility

                  Except  as set forth in this  Clause 7 and as may be  required
                  under Clause 9.3.1,  the Seller will not be required to obtain
                  any certificate or approval with respect to the Aircraft.

<PAGE>

8 -               TECHNICAL ACCEPTANCE

8.1               Technical Acceptance Process

8.1.1             Prior  to  Delivery,    the   Aircraft    will   undergo   the
                  Manufacturer's approved  technical  acceptance  process,  with
                  such  variations  as  may  be  proposed  by  the  Seller   and
                  reasonably acceptable to the  Buyer (the "Technical Acceptance
                  Process"). Satisfactory completion of the Technical Acceptance
                  Process will demonstrate the satisfactory functioning  of  the
                  Aircraft and will be deemed to demonstrate compliance with the
                  Specification. If the Aircraft fails to complete the Technical
                  Acceptance Process satisfactorily,  the  Seller  will  without
                  hindrance f rom  the  Buyer  be  entitled  to  carry  out  any
                  necessary  changes  and,  as  so on as practicable thereafter,
                  resubmit the Aircraft  in  order  to  complete  the  Technical
                  Acceptance Process.  On any such  resubmission,  the Technical
                  Acceptance Process will include such additional tests  as  are
                  necessary to demonstrate that  the  repairs  or  modifications
                  have  not  adversely  affected  other systems or components of
                  the Aircraft.

8.1.2             The Technical Acceptance Process will

                  (i)      start  on  a date notified by the Seller to the Buyer
                           at least * days in advance,

                  (ii)     take place at the Delivery Location,

                  (iii)    be carried out by the personnel of the Seller, and

                  (iv)     include a technical acceptance flight, which will not
                           exceed  three (3) hours,  unless an extended  time is
                           reasonably  necessary to demonstrate the satisfactory
                           functioning of the Aircraft.

8.2               Buyer's Attendance

8.2.1             The Buyer will be entitled to attend the Technical  Acceptance
                  Process.

8.2.2             If  the  Buyer  elects  to  attend   the  Technical Acceptance
                  Process, the Buyer

                  (i)      will  cooperate  in  complying  with  the  reasonable
                           requirements  of the Seller,  with the  intention  of
                           completing the Technical  Acceptance Process within *
                           Working Days, and

                  (ii)     may have a maximum of four (4) of its representatives
                           (no more than  three (3) of whom will have  access to
                           the cockpit at any one time)  accompany  the Seller's
                           representatives  on a  technical  acceptance  flight,
                           during which the Buyer's  representatives will comply
                           with    the     instructions    of    the    Seller's
                           representatives.

8.2.3             If the  Buyer  does not  attend or fails to  cooperate  in the
                  Technical  Acceptance Process,  the Seller will be entitled to
                  complete the Technical  Acceptance Process without the Buyer's
                  attendance,  and, * the Buyer will be deemed to have  accepted
                  the  Technical  Acceptance  Process  as  satisfactory  in  all
                  respects. *.

                  The Seller will make  available  such data with respect to the
                  Technical  Acceptance  Process  as the  Buyer  may  reasonably
                  request.

8.3               Certificate of Acceptance

                  Upon (i)  successful  completion of the  Technical  Acceptance
                  Process and (ii) issuance of the Certificate of  Airworthiness
                  for Export,  the Buyer will,  on or before the Delivery  Date,
                  sign and deliver to the Seller a certificate  of acceptance in
                  respect  of  the  Aircraft  in  the  form  of  Exhibit  D (the
                  "Certificate of Acceptance") hereto.

8.4               Finality of Acceptance

                  The  Buyer's  acceptance  of delivery  of each  Aircraft  will
                  constitute  waiver by the Buyer of any right it may have under
                  the  Uniform  Commercial  Code as  adopted by the State of New
                  York or  otherwise to revoke such  acceptance  for any reason,
                  whether  known  or  unknown  to  the  Buyer  at  the  time  of
                  acceptance.

8.5               Aircraft Utilization

                  The  Seller  will,  without  payment  or other  liability,  be
                  entitled to use the Aircraft  before  Delivery if necessary to
                  obtain the certificates required under Clause 7. Such use will
                  not, in and of itself,  prejudice  the Buyer's  obligation  to
                  accept Delivery hereunder.

                  *

<PAGE>

9 -               DELIVERY

9.1               Delivery Schedule

9.1.1             Subject to  Clauses  2, 7, 8, 10 and 18, the Seller  will have
                  the  Aircraft  Ready for  Delivery  at the  Delivery  Location
                  within  the  following  months  (each  a  "Scheduled  Delivery
                  Month").  Where no month is specified but only a quarter,  the
                  Seller will notify the Buyer of the Scheduled  Delivery  Month
                  by * months before the beginning of the quarter.

                  Firm Aircraft No.          Aircraft Type       Delivery
                  -----------------          -------------       --------
                          1                  *
                          2                  *
                          3                  *
                          4                  *
                          5                  *
                          6                  *
                          7                  *
                          8                  *
                          9                  *
                          10                 *
                          11                 *

                  Option Aircraft No.       Aircraft Type         Delivery
                  -------------------       -------------         --------
                          1                  *
                          2                  *
                          3                  *
                          4                  *
                          5                  *
                          6                  *
                          7                  *
                          8                  *
                          9                  *

9.1.2             The  Seller  will  give the Buyer at least *.  Thereafter  the
                  Seller  will  promptly  notify the Buyer of any change in such
                  date necessitated by the conditions of manufacture or flight.

9.2               Delivery

9.2.1             The  Buyer  will  send  its  representatives  to the  Delivery
                  Location to take Delivery within seven (7) days after the date
                  notified to it by the Seller in  accordance  with Clause 9.1.2
                  above on which the Aircraft is to be Ready for Delivery.

9.2.2             The  Seller  will  transfer title to the Aircraft to the Buyer
                  free and clear of all liens, claims, charges  or  encumbrances
                  of any kind whatsoever, provided that the Balance of the Final
                  Contract Price has been paid by the Buyer pursuant  to  Clause
                  5.4 and that the Certificate of Acceptance has been signed and
                  delivered to the Seller pursuant  to  Clause  8.3.  The Seller
                  will provide the Buyer with a bill of  sale  in  the  form  of
                  Exhibit  E  hereto  and  such  other  documentation confirming
                  transfer of title and receipt of the Final Contract  Price  as
                  may reasonably be requested by the Buyer.  Title  to, property
                  interest in and risk of loss or damage to the Aircraft will be
                  transferred to the Buyer on Delivery.

9.2.3             In respect of each Aircraft that is (a) Ready for Delivery and
                  (b) has been duly tendered to the Buyer  hereunder, should the
                  Buyer fail to

                  (i)      deliver the signed Certificate of  Acceptance  to the
                           Seller on or before the Delivery Date, or

                  (ii)     pay  the  Balance of the Final Contract Price for the
                           Aircraft to the Seller on the Delivery Date,

                  then the Seller  will  retain  title to the  Aircraft  and the
                  Buyer will indemnify and hold the Seller harmless  against any
                  and all  costs  (including  but not  limited  to any  parking,
                  storage  and  insurance  costs)  associated  with the  Buyer's
                  failure to accept  Delivery.  It is understood that the Seller
                  will be obliged only to exercise  reasonable care with respect
                  to the  Aircraft  following  the  Buyer's  failure  to  accept
                  Delivery  and will have no duty to park,  store or insure  the
                  Aircraft  in a manner  inconsistent  with the  Seller's  other
                  business and industrial constraints or obligations.

9.3               Flyaway

9.3.1             The Seller  will  obtain any  licenses,  permits or  approvals
                  required  for the purpose of exporting  the Aircraft  from the
                  Delivery Location, and the Buyer, at its expense, will provide
                  any reasonably necessary information and assistance.

9.3.2             Subject to Clauses 9.3.1 and 3.3.4 hereof, all expenses of, or
                  connected  with,  the  post-Delivery  flight from the Delivery
                  Location  will be borne by the  Buyer.  The  Buyer  will  make
                  direct  arrangements with the supplying companies for the fuel
                  and oil required for all post-Delivery flights.

<PAGE>

10 -              EXCUSABLE DELAY AND TOTAL LOSS

10.1              Scope of Excusable Delay

                  Neither the Seller nor the  Manufacturer  will be  responsible
                  for or be  deemed to be in  default  on  account  of delays in
                  delivery or failure to deliver or otherwise in the performance
                  of this Agreement or any part hereof due to causes  reasonably
                  beyond the  Seller's,  the  Manufacturer's  or any  Associated
                  Contractor's control ("Excusable Delay"),  including,  but not
                  limited  to:  (i)  acts of God or the  public  enemy,  natural
                  disasters,  fires,  floods,  storms beyond ordinary  strength,
                  explosions   or    earthquakes;    epidemics   or   quarantine
                  restrictions;  serious accidents;  total or constructive total
                  loss; any law,  decision,  regulation,  directive or other act
                  (whether or not having the force of law) of any  government or
                  of the Council of the European  Community or the Commission of
                  the European  Community or of any  national,  Federal,  State,
                  municipal or other governmental department, commission, board,
                  bureau, agency, court or instrumentality, domestic or foreign;
                  governmental  priorities,   regulations  or  orders  affecting
                  allocation of materials,  facilities or a completed  Aircraft;
                  war, civil war or warlike operations,  terrorism, insurrection
                  or riots; failure of transportation; strikes or labor troubles
                  causing cessation, slow down or interruption of work; delay in
                  obtaining any airworthiness or type  certification;  inability
                  after  due  and  timely   diligence   to  procure   materials,
                  accessories,   equipment  or  parts;   general   hindrance  in
                  transportation;  or failure of a subcontractor  or Supplier to
                  furnish  materials,  components,   accessories,  equipment  or
                  parts;  (ii) any delay caused  directly or  indirectly  by the
                  action or inaction  of the Buyer;  and (iii) delay in delivery
                  or  otherwise  in the  performance  of this  Agreement  by the
                  Seller  due in whole or in part to any delay in or  failure of
                  the delivery of, or any other event or  circumstance  relating
                  to,  the  Propulsion  Systems  or Buyer  Furnished  Equipment.
                  Notwithstanding  the  foregoing,  Excusable  Delays  will  not
                  include   any   delay   occasioned   by  the   Seller's,   the
                  Manufacturer's  or  any  Associated   Contractor's   fault  or
                  negligence.

10.2              Consequences of Excusable Delay

                  If an Excusable Delay occurs the Seller will

                  (i)      notify the Buyer of such Excusable Delay * as soon as
                           practicable after becoming aware of the same;

                  (ii)     not be deemed to be in default in the performance  of
                           its  obligations  hereunder  as  a  result   of  such
                           Excusable Delay

                  (iii)    *

                  (iv)     not be responsible for any damages arising from or in
                           connection  with  such  Excusable  Delay  suffered or
                           incurred by the Buyer;

                  (v)      as soon as practicable after the removal of the cause
                           of the delay resume  performance  of its  obligations
                           under this  Agreement and in  particular  will notify
                           the Buyer of the revised Scheduled Delivery Month.

10.3              Termination on Excusable Delay

10.3.1            If the Delivery of any Aircraft is delayed as a result  of  an
                  Excusable  Delay  for a period of more than twelve (12) months
                  after the last day  of  the  Scheduled  Delivery  Month,  then
                  either  party may terminate this Agreement with respect to the
                  affected Aircraft, by giving written notice to the other party
                  within thirty (30) days  after  the  expiration of such twelve
                  (12)month period.  However,  the Buyer will not be entitled to
                  terminate this  Agreement  pursuant  to  this  Clause  if  the
                  Excusable Delay is caused directly or indirectly by the action
                  or inaction of the Buyer.

10.3.2            In the event that the Seller  notifies  the Buyer of a revised
                  Scheduled  Delivery  Month  pursuant  to  Clause  10.2(v),  in
                  respect of a delay in  Delivery  of an  Aircraft  of more than
                  twelve  (12)  months  after  the  last  day of  the  Scheduled
                  Delivery Month, then either party may terminate this Agreement
                  with respect to the  affected  Aircraft.  Termination  will be
                  made by giving written notice to the other party within thirty
                  (30) days after the Buyer's receipt of the notice of a revised
                  Scheduled Delivery Month.

10.3.3            If this Agreement is not terminated under the terms of  Clause
                  10.3.1 or 10.3.2 above,  then  the  Seller will be entitled to
                  reschedule Delivery. In the case of delays described in Clause
                  10.3.1, *.  In the case of delays described in  Clause 10.3.2,
                  the new Scheduled Delivery  Month  will be the month specified
                  in the notice delivered  pursuant to  Clause 10.2.1 (iv).  The
                  Seller will notify the  Buyer  of  the  new Scheduled Delivery
                  Month after the thirty (30) day period  referred  to in Clause
                  10.3.1 or 10.3.2, and this new Scheduled Delivery  Month  will
                  be deemed to be  an  amendment  to  the  applicable  Scheduled
                  Delivery Month in Clause 9.1.1 of the Agreement.

10.4              Total Loss:  Lost, Destroyed or Damaged Aircraft

                  If, before delivery  thereof,  an Aircraft is lost,  destroyed
                  or, in the  reasonable  opinion of the Seller,  damaged beyond
                  economic  repair ("Total  Loss"),  then the Seller will notify
                  the Buyer to this effect as soon as reasonably  possible.  The
                  Seller will include in its notice, or as soon after the notice
                  as possible, a revised Scheduled Delivery Month, which will be
                  the earliest date that an aircraft to replace the Aircraft may
                  be delivered to the Buyer  consistent  with the Seller's other
                  obligations and production capabilities. However, in the event
                  the specified  revised  Scheduled  Delivery Month is more than
                  twelve  (12)  months  after  the  last  day  of  the  original
                  Scheduled  Delivery Month,  then this Agreement will terminate
                  with respect to such  Aircraft  unless the Buyer  notifies the
                  Seller  within  one (1)  month of the date of  receipt  of the
                  Seller's  notice  that it  desires  the  Seller  to  provide a
                  replacement  aircraft  during the month quoted in the Seller's
                  notice, in which case the parties will execute an amendment to
                  this  Agreement  recording  the  variation  in  the  Scheduled
                  Delivery  Month.  The  other  terms  and  conditions  of  this
                  Agreement  applicable  to  such  Aircraft  will  apply  to the
                  replacement aircraft.

                  Notwithstanding  the above,  nothing  herein will  require the
                  Seller to  manufacture  and deliver a replacement  aircraft if
                  manufacture    would   require   the   reactivation   of   the
                  Manufacturer's  production  line for the  model or  series  of
                  aircraft that includes the Aircraft.

10.5              Termination Rights Exclusive

                  In the event that this Agreement is terminated as provided for
                  under the terms of Clauses 10.3 or 10.4, such termination will
                  discharge  all  obligations  and  liabilities  of the  parties
                  hereunder   with  respect  to  such   affected   Aircraft  and
                  undelivered material, services, data or other items applicable
                  thereto and to be furnished  hereunder  and neither party will
                  have any claim against the other for any loss  resulting  from
                  such nondelivery,  *. The Seller will in no circumstances have
                  any liability whatsoever for Excusable Delay other than as set
                  forth in this Clause 10.

10.6              REMEDIES

                  THIS CLAUSE 10 SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF THE
                  BUYER FOR EXCUSABLE  DELAYS OR FAILURE TO DELIVER DUE TO TOTAL
                  LOSS, AND THE BUYER HEREBY WAIVES ALL RIGHTS TO WHICH IT WOULD
                  OTHERWISE BE ENTITLED IN RESPECT THEREOF,  INCLUDING,  WITHOUT
                  LIMITATION, ANY RIGHTS TO INCIDENTAL AND CONSEQUENTIAL DAMAGES
                  OR  SPECIFIC  PERFORMANCE.  THE BUYER WILL NOT BE  ENTITLED TO
                  CLAIM THE REMEDIES  AND RECEIVE THE BENEFITS  PROVIDED IN THIS
                  CLAUSE 10 TO THE EXTENT THE DELAY  REFERRED  TO IN THIS CLAUSE
                  10 IS  CAUSED BY THE  NEGLIGENCE  OR FAULT OF THE BUYER OR ITS
                  REPRESENTATIVES.

<PAGE>

11 -              INEXCUSABLE DELAY

11.1              Liquidated Damages

                  Should  an  Aircraft  not be Ready for  Delivery  to the Buyer
                  within  thirty (30) days after the * last day of the Scheduled
                  Delivery  Month (as such  month  may be  changed  pursuant  to
                  Clauses 2, 7 or 10) (*, the "Delivery Period"), and such delay
                  is not as a result of Excusable Delay or Total Loss, then such
                  delay  will be termed an  "Inexcusable  Delay,"  and the Buyer
                  will  have the  right to claim,  and the  Seller  will pay the
                  Buyer,  liquidated damages of US $ * (US dollars--* ) for each
                  day of Inexcusable Delay,  starting on the first day after the
                  Delivery Period.

                  The amount of  liquidated  damages will in no event exceed the
                  total  of US $ *  (US  dollars--  *) in  respect  of  any  one
                  Aircraft.

                  The  Buyer's  right to  liquidated  damages  in  respect of an
                  Aircraft is  conditional  on the Buyer's  submitting a written
                  claim for liquidated damages to the Seller, as applicable, not
                  later than (i) thirty (30) days after  Delivery or (ii) thirty
                  (30) days after a termination under Clause 11.3 below.

11.2              Renegotiation

                  If as a result  of an  Inexcusable  Delay,  Delivery  does not
                  occur  within six (6) months after the  Delivery  Period,  the
                  Buyer will have the right,  exercisable  by written  notice to
                  the Seller given  between  fifteen (15) days and one (1) month
                  after  the six (6)  months,  to  require  from  the  Seller  a
                  renegotiation of the Scheduled Delivery Month for the affected
                  Aircraft.  Unless  otherwise agreed between the Seller and the
                  Buyer during such  renegotiation,  the said renegotiation will
                  not prejudice the Buyer's right to receive  liquidated damages
                  in   accordance   with   Clause  11.1  during  the  period  of
                  Inexcusable Delay.

11.3              Termination

                  If as a result  of an  Inexcusable  Delay,  Delivery  does not
                  occur within twelve (12) months after the Delivery  Period and
                  the parties have not  renegotiated  the Delivery Date pursuant
                  to  Clause  11.3,  then  both  parties  will  have the  right,
                  exercisable  by  written  notice  to the  other  party,  given
                  between  one (1) and two (2)  months  after  the  twelve  (12)
                  months, to terminate this Agreement in respect of the affected
                  Aircraft.  In the event of termination pursuant to this Clause
                  11.2,  neither  party will have any claim  against  the other,
                  except that the Seller will pay to the Buyer,  any amounts due
                  pursuant to Clause 11.1 and will pay the Buyer an amount equal
                  to the Predelivery Payments received from the Buyer in respect
                  of the affected Aircraft.

11.4              Setoff Payments

                  Notwithstanding anything to the contrary contained herein, the
                  Seller  will  have  the  right  to  apply  any  and  all  sums
                  previously  paid by the Buyer to the Seller with  respect to a
                  terminated  Aircraft to the  payment of any other  amounts the
                  Buyer  owes the  Seller  or any  Affiliate  thereof  under any
                  agreement  between  them,  before  being  required to make any
                  payments under 11.1 or 11.3.

11.5              REMEDIES

                  THIS CLAUSE 11 SETS FORTH THE SOLE AND EXCLUSIVE REMEDY OF THE
                  BUYER FOR DELAYS IN DELIVERY OR FAILURE TO DELIVER ONE OR MORE
                  AIRCRAFT UNDER THIS  AGREEMENT,  OTHER THAN (A) SUCH DELAYS AS
                  ARE COVERED BY CLAUSE 10, AND *, THE BUYER  HEREBY  WAIVES ALL
                  RIGHTS TO WHICH IT WOULD  OTHERWISE  BE  ENTITLED  IN  RESPECT
                  THEREOF, INCLUDING WITHOUT LIMITATION ANY RIGHTS TO INCIDENTAL
                  OR CONSEQUENTIAL  DAMAGES OR SPECIFIC  PERFORMANCE.  THE BUYER
                  WILL NOT BE  ENTITLED  TO CLAIM THE  REMEDIES  AND RECEIVE THE
                  BENEFITS  PROVIDED IN THIS CLAUSE 11 WHERE THE DELAY  REFERRED
                  TO IN THIS CLAUSE 11 IS CAUSED BY THE  NEGLIGENCE  OR FAULT OF
                  THE BUYER OR ITS REPRESENTATIVES.

<PAGE>

12 -              WARRANTIES AND SERVICE LIFE POLICY

                  The Seller  represents and warrants that the  Manufacturer has
                  provided to the Seller the  following  Warranty,  Service Life
                  Policy,  Supplier  Warranties  and Interface  Commitment  with
                  respect to the  Aircraft,  subject  to the terms,  conditions,
                  limitations and restrictions  (including,  but not limited to,
                  the  Exclusivity  of  Warranties  and General  Limitations  of
                  Liability and Duplicate  Remedies  provisions)  as hereinafter
                  set out,  and that the same are in full  force and  effect and
                  have not been amended. The Seller hereby assigns to the Buyer,
                  and the Buyer hereby  accepts,  all of the Seller's rights and
                  obligations  as the "Buyer" under the said  Warranty,  Service
                  Life Policy, Supplier Warranties and Interface Commitment, and
                  the  Seller  subrogates  the  Buyer  to all  such  rights  and
                  obligations  in respect  of the  Aircraft.  The Seller  hereby
                  warrants to the Buyer that (i) it has all requisite  authority
                  to  make  the  foregoing  assignment  to  and  to  effect  the
                  foregoing  subrogation  in  favor  of  the  Buyer,  (ii)  such
                  assignment  and  subrogation  are  effective  to confer on the
                  Buyer  all of the  foregoing  rights  and  obligations  of the
                  Seller, and (iii) the Seller will not enter into any amendment
                  of the  provisions  so  assigned  without  the  prior  written
                  consent of the Buyer.

                  It is  understood  that, in the  provisions  below between the
                  words QUOTE and UNQUOTE,  capitalized  terms have the meanings
                  assigned  thereto in this Agreement,  except that (i) the term
                  "Seller,"   which  means  the   Manufacturer  as  between  the
                  Manufacturer  and the Seller,  also means the  Manufacturer in
                  this  Agreement,  and (ii) the term  "Buyer,"  which means the
                  Seller as between the Manufacturer  and the Seller,  means the
                  Buyer in this Agreement.

QUOTE

12.1              WARRANTY

12.1.1            Nature of Warranty

                  Subject  to the  limitations  and  conditions  as  hereinafter
                  provided,  and except as provided in Clause 12.1.2, the Seller
                  warrants to the Buyer that each  Aircraft  and each  Warranted
                  Part will at the time of delivery to the Buyer:

                  (i)      be free from defects in material,

                  (ii)     be  free  from  defects  in  workmanship,  including,
                           without limitation, processes of manufacture,

                  (iii)    be free from defects in  design (including,   without
                           limitation,  selection of materials) having regard to
                           the state of the art at the date of such design, and

                  (iv)     be free from defects arising  from failure to conform
                           to the  Specification,  except  as to those  portions
                           of the Specification  that are expressly  stated   in
                           the Specification to be estimates  or  approximations
                           or design aims.

                  For the purposes of this Agreement,  the term "Warranted Part"
                  will  mean  any  Seller  proprietary   component,   equipment,
                  accessory  or part that at the time of delivery of an Aircraft
                  (a) is installed on such Aircraft,  (b) is manufactured to the
                  detail design of the Seller or a  subcontractor  of it and (c)
                  bears a part number of the Seller.

12.1.2            Exceptions

                  The  warranties  set forth in Clause  12.1.1 will not apply to
                  Buyer Furnished Equipment,  nor to the Propulsion Systems, nor
                  to any  component,  accessory,  equipment or part purchased by
                  the Buyer that is not a  Warranted  Part,  provided,  however,
                  that:

                  (i)      any defect in the Seller's  workmanship in respect of
                           the  installation  of  such  items  in the  Aircraft,
                           including any failure by the Seller to conform to the
                           installation  instructions  of the  manufacturers  of
                           such items that  invalidates any applicable  warranty
                           from such manufacturers,  will constitute a defect in
                           workmanship  for the  purpose of this Clause 12.1 and
                           be  covered  by the  warranty  set  forth  in  Clause
                           12.1.1(ii), and

                  (ii)     any defect  inherent  in the  Seller's  design of the
                           installation,  in view of the state of the art at the
                           date of such  design,  that  impairs  the use of such
                           items  will  constitute  a defect in  design  for the
                           purposes  of this  Clause  12.1 and be covered by the
                           warranty set forth in Clause 12.1.1(iii).

12.1.3            Warranty Periods

                  The   warranties   described  in  Clauses  12.1.1  and  12.1.2
                  hereinabove  will be  limited  to those  defects  that  become
                  apparent  within  thirty-six (36) months after delivery of the
                  affected Aircraft.

<PAGE>

12.1.4            Limitations of Warranty

12.1.4.1          The Buyer's remedy and the Seller's obligation  and  liability
                  under Clauses 12.1.1 and 12.1.2 hereinabove are limited to, at
                  the  Seller's  expense  and option, the repair, replacement or
                  correction of, or the supply of modification  kits  rectifying
                  the defect to any  defective  Warranted  Part.  Alternatively,
                  the Seller may, at its option and with  the  Buyer's  consent,
                  furnish a credit to the Buyer for the future purchase of goods
                  and services (not including Aircraft) equal to  the  price  at
                  which the Buyer is then entitled to acquire a  replacement for
                  the defective Warranted  Part.  Nothing  herein contained will
                  obligate the Seller  to  correct any failure to conform to the
                  Specification  with  respect   to    components,    equipment,
                  accessories or parts that the parties agree in a writing other
                  than the Certificate of  Acceptance at the time of delivery of
                  the affected Aircraft are acceptable deviations  or  have   no
                  material adverse effect on the use, operation  or  performance
                  of an Aircraft.

12.1.4.2          In the event that the Seller  corrects  a  defect  covered  by
                  Clause 12.1.1(iii) that becomes apparent within the applicable
                  period set forth in Clause 12.1.3, the Seller will also, if so
                  requested by the Buyer in writing, make such correction in any
                  Aircraft that has not already  been delivered  to  the  Buyer.
                  However, the Seller will not be responsible nor deemed  to  be
                  in default on account of any delay in delivery of any Aircraft
                  or otherwise, in respect of performance of this Agreement, due
                  to the Seller's  undertaking  to  make  such  correction  and,
                  rather  than  accept a delay in delivery of any such Aircraft,
                  the Buyer and  the  Seller  may agree to deliver such Aircraft
                  with subsequent correction of the defect by the Buyer  at  the
                  Seller's expense, or the Buyer may elect  to  accept  delivery
                  and thereafter file a Warranty Claim as  though the defect had
                  become apparent immediately after delivery of such Aircraft.

12.1.5            Warranty Claim Requirements

                  The Buyer's  remedy and the Seller's  obligation and liability
                  under this Clause 12.1,  with respect to each claimed  defect,
                  are subject to the following conditions precedent:

                  (i)      the  existence  of a defect covered by the provisions
                           of this Clause 12.1,

                  (ii)     the  Buyer's  having  submitted  to  the Seller proof
                           reasonably   satisfactory   to   the  Seller  of  the
                           existence of a defect covered by  the  provisions  of
                           this Clause 12.1,

                  (iii)    the  defect's  having  become  apparent  within   the
                           applicable warranty period, as set  forth  in  Clause
                           12.1.3,

                  (iv)     the  defect's  not  having  resulted  from any act or
                           omission of the Buyer, including, but not limited to,
                           any  failure to operate  and  maintain  the  affected
                           Aircraft  or part  thereof  in  accordance  with  the
                           standards  or any  matter  set  forth or  covered  in
                           Clause 12.1.10,

                  (v)      the Buyer's  having  returned  as soon as  reasonably
                           practicable   the   Warranted   Part  claimed  to  be
                           defective  to  such  repair   facilities  as  may  be
                           designated  by the  Seller,  except  where  the Buyer
                           elects  to  repair  a  defective  Warranted  Part  in
                           accordance with the provisions of Clause 12.1.7, and

                  (vi)     the  Seller's   having   received  a  Warranty  Claim
                           fulfilling the  conditions of and in accordance  with
                           the provisions of Clause 12.1.6 below.

12.1.6            Warranty Administration

                  The warranties  set forth in Clause 12.1 will be  administered
                  as hereinafter provided:

                  (i)      Claim Determination

                           Warranty  Claim  determination  by the Seller will be
                           reasonably  based on the claim details,  reports from
                           the Seller's  representative,  historical  data logs,
                           inspections,  tests,  findings during repair,  defect
                           analysis   and   other    suitable    documents   and
                           information.

                  (ii)     Transportation Costs

                           Transportation costs associated with the sending of a
                           Warranted   Part  claimed  to  be  defective  to  the
                           facilities  designated by the Seller will be borne by
                           the Buyer. *.

                  (iii)    Return of an Aircraft

                           If an  Aircraft  must  be  returned  to the  Seller's
                           facility or to a repair  facility  designated  by the
                           Seller for  accomplishment  of a warranted  repair or
                           correction, pursuant to a Warranty Claim, *.

                           If the  Seller  desires  to  accomplish  a  warranted
                           repair or  correction  at the Buyer's  facilities  in
                           Denver or  wherever  the  Aircraft is located and the
                           Buyer nevertheless  desires to return the Aircraft to
                           the Seller for such repair or correction,  the Seller
                           will  designate the facility where the repair will be
                           accomplished, and the Buyer will pay the costs of the
                           ferry flights to and from such facility.

                  (iv)     On-Aircraft Work by the Seller

                           If the  work to  accomplish  a repair  or  correction
                           pursuant to a Warranty Claim must be  accomplished by
                           a  Seller   working   party,   the  Seller   will  be
                           responsible for all costs of labor and material *.

                           If such repair or  correction  is not  required to be
                           accomplished by a Seller working party, but the Buyer
                           nevertheless   desires  a  Seller  working  party  to
                           accomplish  the same,  the Seller will be responsible
                           for all costs of labor and material *.

                           If the repair or  correction is performed by a Seller
                           working party, the Seller and the Buyer will agree on
                           a schedule and place for the work to be performed.

                  (v)      Warranty Claim Substantiation

                           For each claim  under this Clause 12.1 the Buyer will
                           give  written  notice to the Seller that  contains at
                           least the data listed below with respect to a part or
                           Aircraft, as applicable ("Warranty Claim"). The Buyer
                           will * give the Seller  such  Warranty  Claim  within
                           sixty (60) days of discovering the defect giving rise
                           to such Warranty Claim, *.

                           (a)      Description of defect and action  taken,  if
                                    any.

                           (b)      Date of incident and/or of removal.

                           (c)      Description of the defective part.

                           (d)      Part number.

                           (e)      Serial number (if applicable).

                           (f)      Position on  Aircraft,  according to Catalog
                                    Sequence  Number  (CSN)  of the  Illustrated
                                    Parts Catalog,  Component Maintenance Manual
                                    or   Structural   Repair   Manual  (as  such
                                    documents  are  defined  in  Clause  14  and
                                    Exhibit F hereto) as applicable.

                           (g)      Total  flying  hours  or  calendar times, as
                                    applicable, at the date of  appearance  of a
                                    defect.

                           (h)      Time  since  last  shop visit at the date of
                                    defect appearance.

                           (i)      Manufacturer's serial number of the Aircraft
                                    and/or its registration number.

                           (j)      Aircraft total flying hours and/or number of
                                    landings at the date of defect appearance.

                           (k)      Claim number.

                           (l)      Date of claim.

                           (m)      Date  of  delivery of an Aircraft or part to
                                    the Buyer.

                           Claims are to be addressed as follows:

                           AIRBUS INDUSTRIE
                           CUSTOMER SERVICE DIVISION SG-C
                           WARRANTY ADMINISTRATION
                           1, ROND-POINT MAURICE BELLONTE
                           B.P. 33
                           F-31707 BLAGNAC
                           FRANCE

                  (vi)     Replacements

                           Replacements  made  pursuant to this Clause 12.1 will
                           be made within the lead time  defined in the Seller's
                           Spare  Parts  Price  Catalog.   Replaced  components,
                           equipment,  accessories  or  parts  will  become  the
                           Seller's  property.  The  Seller  will * to  expedite
                           replacement upon the Buyer's request.

                           Title to and risk of loss of any Aircraft, component,
                           accessory, equipment or part returned by the Buyer to
                           the Seller  will at all times  remain with the Buyer,
                           except that (i) when the Seller has  possession  of a
                           returned Aircraft, component, accessory, equipment or
                           part to which the Buyer has title,  the  Seller  will
                           have such responsibility therefor as is chargeable by
                           law to a bailee for hire,  but the Seller will not be
                           liable for loss of use, and (ii) title to and risk of
                           loss of a returned component, accessory, equipment or
                           part  will  pass to the  Seller  on  shipment  by the
                           Seller  to the  Buyer  of any item  furnished  by the
                           Seller to the Buyer as a replacement  therefor.  Upon
                           the Seller's shipment to the Buyer of any replacement
                           component,  accessory,  equipment or part provided by
                           the Seller pursuant to this Clause 12.1, title to and
                           risk of loss of such component,  accessory, equipment
                           or part will pass to the Buyer.

                  (vii)    Rejection

                           The   Seller   will   provide    reasonable   written
                           substantiation  in case of  rejection  of a  Warranty
                           Claim.   The  Buyer   will  (a)  pay  to  the  Seller
                           reasonable  inspection  and test charges  incurred by
                           the Seller in connection with the  investigation  and
                           processing of a rejected  Warranty  Claim and (b) pay
                           the costs of transportation to the ASCO Spares Center
                           in  Ashburn,  VA,  insurance,  and  any  other  costs
                           associated  with the sending of any Warranted Part or
                           any  other  item,  equipment,  component  or part for
                           which the Seller rejects the Buyer's Warranty Claim.

                  (viii)   Inspection

                           The  Seller  will  have  the  right  to  inspect  the
                           affected  Aircraft and  documents  and other  records
                           relating  thereto in the event of any Warranty  Claim
                           under this Clause 12.1.

12.1.7            In-house Warranty

                  (i)      Authorization

                  The  Buyer is  hereby  authorized  to  perform  the  repair of
                  Warranted  Parts,  subject to the terms of this Clause  12.1.7
                  ("In-house Warranty").  When the estimated cost of an In-house
                  Warranty  repair  exceeds $* (US  dollars-- *), the Buyer will
                  notify the Seller's  representative of its decision to perform
                  any in-house  repairs before such repairs are  commenced.  The
                  Buyer's notice will include  sufficient  detail  regarding the
                  defect, estimated labor hours and material to allow the Seller
                  to ascertain the  reasonableness  of the estimate.  The Seller
                  will use  reasonable  efforts to ensure a prompt  response and
                  will not unreasonably withhold authorization.

                  (ii)     Conditions of Authorization

                  The Buyer will be entitled to the  benefits  under this Clause
                  12.1.7 for repair of Warranted Parts

                           (a)      only  if  adequate  facilities and qualified
                                    personnel are available to the Buyer,

                           (b)      provided that repairs are  to  be  performed
                                    in   accordance  with  the  Seller's written
                                    instructions    set   forth  in   applicable
                                    Technical Data and Documentation, and

                           (c)      only to the extent specified by the  Seller,
                                    or,   in  the   absence  of   the   Seller's
                                    specifying,   to   the   extent   reasonably
                                    necessary   to   correct   the   defect,  in
                                    accordance with the standards set  forth  in
                                    Clause 12.1.10.

                  (iii)    Seller's Rights

                  The Seller will have the right to have any Warranted  Part, or
                  any part removed therefrom,  which is claimed to be defective,
                  returned to the Seller, as set forth in Clause 12.1.6(ii), if,
                  in the  judgment  of the  Seller,  the  nature  of the  defect
                  requires technical investigation.

                  The   Seller   will   further   have  the   right  to  have  a
                  representative present during the disassembly,  inspection and
                  testing of any Warranted Part claimed to be defective, subject
                  to its presence  being  practical and not unduly  delaying the
                  repair.

                  (iv)      n-house Warranty Claim Substantiation

                  Claims for In-house  Warranty  credit will be filed within the
                  time   period  set  forth  in,  and  will   contain  the  same
                  information   required  in,   Warranty   Claims  under  Clause
                  12.1.6(v) and in addition will include:

                           (a)      a  report of technical findings with respect
                                    to the defect,

                           (b)      for parts required to remedy the defect:

                                    - part numbers,

                                    - serial numbers (if applicable),

                                    - description of the parts,

                                    - quantity of parts,

                                    - unit price of parts,

                                    - total price of parts,

                                    - related Seller's or third party's invoices
                                    (if applicable),

                           (c)      detailed number of labor hours,

                           (d)      agreed In-house Warranty Labor Rate (defined
                                     below in Clause 12.1.7(v) (a)), and

                           (e)      total claim value.

                  (v)      Credit

                  The Buyer's sole remedy,  and the Seller's sole obligation and
                  liability,  in respect of In-house Warranty claims,  will be a
                  credit to the  Buyer's  account.  The  credit  to the  Buyer's
                  account  will be equal to the direct  labor cost  expended  in
                  performing  a  repair  and to the  direct  cost  of  materials
                  incorporated  in the repair.  Such costs will be determined as
                  set forth below.

                  (a)      To determine direct labor costs, only manhours  spent
                           on disassembly, inspection, repair,  reassembly,  and
                           final inspection and test (including  flight tests if
                           flight tests  prove  necessary  to  complete a repair
                           under  the  In-house  Warranty) of the Warranted Part
                           alone  will   be   counted.   Manhours  required  for
                           maintenance work concurrently being  carried  out  on
                           the Aircraft or Warranted Part will  not be included.
                           The manhours counted  as  set  forth  above  will  be
                           multiplied by an agreed hourly labor  rate  of  US$ *
                           (US  dollars--*) at economic conditions prevailing in
                           January 1999 (the "In-house Warranty Labor Rate").

                           The  In-house  Warranty  Labor  Rate  is  subject  to
                           adjustment  annually  by  multiplying  by  the  ratio
                           HEn/HEb. For the purposes of this Subclause 12.1.7(v)
                           only,  HEn is equal to the  Labor  Index  defined  in
                           Exhibit  G hereto  for  January  of the year in which
                           manhours  are  spent  and HEb is equal to such  Labor
                           Index for January 1999.

                  (b)      Direct material costs are determined by the prices at
                           which the Buyer acquired such material, excluding any
                           parts and materials used for overhaul  furnished free
                           of charge by the Seller.

                  (vi)     Limitation on Credit

                  The Buyer will in no event be credited for repair costs (labor
                  and material)  for any Warranted  Part to the extent that such
                  costs exceed

                  (a)      sixty-five  percent  (65%)  of  the  Seller's current
                           catalog price for a  replacement  of  such  defective
                           Warranted Part,

                  (b)      repair  costs  (labor and material)  that  would have
                           resulted if  repairs  had  been  carried  out at  the
                           Seller's facilities or

                  (c)      $* (US  dollars--  *),  unless  the  repair  has been
                           previously  approved by the Seller in accordance with
                           Clause 12.1.7(ii).

                  (vii)    Scrapped Material

                  The Buyer may,  with the  agreement of the  Seller's  Resident
                  Customer  Support  Representative,  scrap  any such  defective
                  parts that are beyond  economic  repair and not  required  for
                  technical evaluation.

                  If the Buyer  does not obtain the  agreement  of the  Seller's
                  Resident Customer Support  Representative to scrap a Warranted
                  Part defective  beyond  economic  repair,  then the Buyer will
                  retain such Warranted Part and any defective part removed from
                  a Warranted  Part during  repair for a period of either * days
                  after  the  date  of  completion  of  repair  or * days  after
                  submission of a claim for In-house  Warranty  credit  relating
                  thereto,  whichever is longer.  Such parts will be returned to
                  the Seller within * days of receipt of the Seller's request to
                  that effect.

                  Scrapped  Warranted  Parts  will be  evidenced  by a record of
                  scrapped material certified by an authorized representative of
                  the Buyer, which will be kept in the Buyer's file for at least
                  the duration of the warranty  periods set forth in this Clause
                  12.1.

                  (viii)   DISCLAIMER OF SELLER LIABILITY FOR BUYER'S REPAIR

                  THE SELLER WILL NOT BE LIABLE FOR ANY RIGHT,  CLAIM OR REMEDY,
                  AND THE BUYER WILL  INDEMNIFY THE SELLER AGAINST THE CLAIMS OF
                  ANY  THIRD  PARTIES  OTHER  THAN  THE   MANUFACTURER  AND  THE
                  ASSOCIATED  CONTRACTORS  AND AFFILIATES OF THE FOREGOING,  AND
                  THEIR  RESPECTIVE  OFFICERS,  DIRECTORS,  EMPLOYEES AND AGENTS
                  (EACH AN "EXCLUDED PERSON"),  FOR PERSONAL INJURIES,  DEATH OR
                  PROPERTY LOSSES DUE TO ANY DEFECT, NONCONFORMANCE OF ANY KIND,
                  ARISING OUT OF OR IN  CONNECTION  WITH ANY REPAIR OF WARRANTED
                  PARTS  UNDERTAKEN BY THE BUYER UNDER THIS SUBCLAUSE  12.1.7 OR
                  ANY OTHER ACTIONS UNDERTAKEN BY THE BUYER UNDER THIS SUBCLAUSE
                  12.1.7, WHETHER SUCH CLAIM IS ASSERTED IN CONTRACT OR IN TORT,
                  OR  IS  PREMISED  ON  ALLEGED,  ACTUAL,  IMPUTED  OR  ORDINARY
                  NEGLIGENCE  OR  INTENTIONAL  ACTS OR OMISSIONS OF THE BUYER OR
                  THE SELLER,  PROVIDED  THAT THE FOREGOING  INDEMNITY  WILL NOT
                  APPLY TO THE EXTENT THAT ANY SUCH CLAIM IS CAUSED BY THE GROSS
                  NEGLIGENCE OR WILLFUL MISCONDUCT OF THE SELLER OR ANY EXCLUDED
                  PERSON.

12.1.8            Warranty Transferability

                  The  warranties  provided  for in  this  Clause  12.1  for any
                  Warranted  Part will  accrue to the  benefit of any airline in
                  revenue  service other than the Buyer,  if the Warranted  Part
                  enters into the  possession of any such airline as a result of
                  a pooling  agreement  between such  airline and the Buyer,  in
                  accordance  with the terms and subject to the  limitations and
                  exclusions of the foregoing  warranties and to applicable laws
                  or regulations.

12.1.9            Warranty for Corrected, Replacement or Repaired Warranted Part

                  Whenever any  Warranted  Part that contains a defect for which
                  the Seller is liable  under  Clause  12.1 has been  corrected,
                  repaired or replaced  pursuant to the terms of this Clause 12,
                  the  period of the  Seller's  warranty  with  respect  to such
                  corrected,  repaired or replacement  Warranted Part, whichever
                  may be the case, will be the remaining portion of the original
                  warranty in respect of such corrected, repaired or replacement
                  Warranted  Part. In the event that a defect is attributable to
                  a defective  repair or  replacement  by the Buyer,  a Warranty
                  Claim  with  respect  to such  defect  will not be  allowable,
                  notwithstanding any subsequent  correction or repair, and will
                  immediately  terminate  the  remaining  warranties  under this
                  Clause 12.1 in respect of the affected  Warranted Part, unless
                  such  defective  repair  is  caused  solely by an error in the
                  Seller's written repair instructions.

12.1.10            Good Airline Operation - Normal Wear and Tear

                  The Buyer's  rights  under this Clause 12.1 are subject to the
                  Aircraft and each  component,  equipment,  accessory  and part
                  thereof being maintained, overhauled, repaired and operated in
                  accordance  with  good  commercial   airline   practice,   all
                  technical  documentation and any other instructions  issued by
                  the  Seller,   the  Suppliers  or  the   manufacturer  of  the
                  Propulsion  Systems and all applicable rules,  regulations and
                  directives of the relevant Aviation Authorities.

                  The Seller's  liability under this Clause 12.1 will not extend
                  to normal wear and tear nor to

                  (i)      any Aircraft or  component,  equipment,  accessory or
                           part  thereof  that has  been  repaired,  altered  or
                           modified  after  delivery  by any  party  in a manner
                           other than that approved by the Seller;

                  (ii)     any  Aircraft or  component,  equipment, accessory or
                           part thereof that has  been  operated  in  a  damaged
                           state; or

                  (iii)    any  component,  equipment,  accessory  or part  from
                           which  the  trademark,  trade  name,  part or  serial
                           number  or  other   identification  marks  have  been
                           removed.

                  The foregoing  limitation of the Seller's  liability  will not
                  apply in the cases of Clause 12.1.10(i) and Clause 12.1.10(ii)
                  above if the Buyer submits evidence satisfactory to the Seller
                  that the defect did not arise from nor was  contributed  to by
                  either of said causes.

12.2              SELLER SERVICE LIFE POLICY

12.2.1            Scope and Definitions

                  In addition to the  warranties set forth in Clause 12.1 above,
                  the Seller  further  agrees that should a Failure occur in any
                  Item, then,  subject to the general conditions and limitations
                  set forth in  Clause  12.2.4  below,  the  provisions  of this
                  Clause 12.2 will apply.

                  For  the   purposes  of  this  Clause  12.2,   the   following
                  definitions will apply:

                  (i)      "Item" means any of the Seller components, equipment,
                           accessories or parts listed in Exhibit C hereto which
                           are  installed  on an Aircraft at any time during the
                           period of effectiveness of the Service Life Policy as
                           defined below in Clause 12.2.2.

                  (ii)     "Failure"  means any  breakage  of, or defect  in, an
                           Item that materially impairs the utility or safety of
                           the Item,  provided that (a) any such breakage of, or
                           defect in, any Item did not result from any  breakage
                           or defect in any other  Aircraft part or component or
                           from any other  extrinsic  force and (b) has occurred
                           or  can   reasonably   be  expected  to  occur  on  a
                           repetitive or fleetwide basis.

12.2.2            Periods and Seller's Undertaking

                  Subject to the general conditions and limitations set forth in
                  Clause  12.2.4  below,  the  Seller  agrees  that if a Failure
                  occurs in an Item  before the  Aircraft  in which such Item is
                  installed  has  completed * (*) flight  cycles or within * (*)
                  years  after the  delivery of the  applicable  Aircraft to the
                  Buyer,  whichever  occurs  first,  the Seller will, at its own
                  discretion,  as promptly as  practicable  and for a price that
                  reflects the Seller's  financial  participation as hereinafter
                  provided, either:

                  (i)      design and furnish to the Buyer a correction for such
                           Item  subject  to a  Failure  and  provide  any parts
                           required  for  such  correction   (including   Seller
                           designed   standard  parts  but  excluding   industry
                           standard parts), or,

                  (ii)     replace such Item.

12.2.3            Seller's Participation in the Cost

                  Any part or Item that the Seller is required to furnish to the
                  Buyer under this  Service Life Policy in  connection  with the
                  correction or  replacement of an Item will be furnished to the
                  Buyer at the Seller's  current sales price therefor,  less the
                  Seller's financial participation,  which will be determined in
                  accordance with the following formula:

                           C  (N  -  T)
                           ------------
                  P =           N

                  where

                  P:       financial participation of the Seller,

                  C:       the Seller's then current sales price for the
                           required Item or required Seller designed parts,

                  and,

                  (i)      T:       total number of flight cycles since delivery
                                    that have been accumulated by the particular
                                    Aircraft  in  which  the  Item  subject to a
                                    Failure was originally installed,

                  and,

                           N:       * flight cycles,

                  or,

                  (ii)     T:       total  time  in months since delivery of the
                                    particular  Aircraft  in  which   the   Item
                                    subject  to   a   Failure   was   originally
                                    installed,

                  and,

                           N:       * months,

whichever of the foregoing clauses (i) and (ii) yields the lower ratio of:

                                     N  -  T

                                        N

12.2.4            General Conditions and Limitations

12.2.4.1          Notwithstanding  Clause 12.2.3, the undertakings given in this
                  Clause  12.2  will not be valid  during  the  warranty  period
                  applicable to an Item under Clause 12.1.3.

12.2.4.2          The Buyer's  remedy and the Seller's  obligation and liability
                  under this  Service Life Policy are subject to  compliance  by
                  the Buyer with the following conditions precedent:

                  (i)      The  Buyer   will   maintain   log  books  and  other
                           historical records with respect to each Item adequate
                           to enable the Seller to determine whether the alleged
                           Failure is covered by this  Service  Life Policy and,
                           if so, to define the  portion of the cost to be borne
                           by the Seller in accordance with Clause 12.2.3 above.

                  (ii)     The  Buyer  will  keep  the  Seller  informed  of any
                           significant   incidents   relating  to  an  Aircraft,
                           howsoever occurring or recorded.

                  (iii)    The  conditions  of  Clause  12.1.10  will  have been
                           complied with.

                  (iv)     The  Buyer   will  carry  out   specific   structural
                           inspection programs for monitoring purposes as may be
                           established  from  time to time by the  Seller.  Such
                           programs will be, to the extent possible,  compatible
                           with the Buyer's operational requirements and will be
                           carried out at the Buyer's expense.  Reports relating
                           thereto will be regularly furnished to the Seller.

                  (v)      In the case of any breakage or defect, the Buyer will
                           * to report the same in writing to the Seller  within
                           *, after any  breakage  or defect in an Item  becomes
                           apparent,  whether or not said breakage or defect can
                           reasonably   be   expected  to  occur  in  any  other
                           Aircraft,  and the Buyer  will  inform  the Seller in
                           sufficient  detail  about the  breakage  or defect to
                           enable the Seller to determine  whether said breakage
                           or defect is subject to this Service Life Policy.

12.2.4.3          Except as otherwise  provided in this Clause  12.2,  any claim
                  under  this  Service  Life  Policy  will  be  administered  as
                  provided  in, and will be subject to the terms and  conditions
                  of, Clause 12.1.6.

12.2.4.4          In   the  event  that  the  Seller  has  issued a modification
                  applicable to an Aircraft, the purpose of which is to avoid  a
                  Failure,   the  Seller  may  elect  to  supply  the  necessary
                  modification  kit free  of  charge or under a pro rata formula
                  established by the Seller.  If such a kit is so offered to the
                  Buyer, then, in respect of such Failure and any Failures  that
                  could ensue therefrom, the validity of the Seller's commitment
                  under  this  Clause  12.2  will  be  subject  to  the  Buyer's
                  incorporating  such  modification  in  the  relevant Aircraft,
                  within a reasonable time,  as promulgated by the Seller and in
                  accordance with the Seller's instructions.

12.2.4.5          THIS  SERVICE  LIFE  POLICY IS NEITHER A WARRANTY, PERFORMANCE
                  GUARANTEE, NOR AN AGREEMENT TO MODIFY ANY AIRCRAFT OR AIRFRAME
                  COMPONENTS TO CONFORM TO NEW  DEVELOPMENTS  OCCURRING  IN  THE
                  STATE OF AIRFRAME DESIGN AND MANUFACTURING ART.   THE SELLER'S
                  OBLIGATION UNDER THIS SUBCLAUSE 12.2 IS  TO  MAKE  ONLY  THOSE
                  CORRECTIONS  TO  THE ITEMS OR FURNISH REPLACEMENTS THEREFOR AS
                  PROVIDED IN THIS SUBCLAUSE 12.2. THE BUYER'S SOLE  REMEDY  AND
                  RELIEF FOR THE NONPERFORMANCE OF ANY OBLIGATION  OR  LIABILITY
                  OF THE SELLER ARISING UNDER OR  BY VIRTUE OF THIS SERVICE LIFE
                  POLICY WILL BE IN MONETARY  DAMAGES, LIMITED TO THE AMOUNT THE
                  BUYER  REASONABLY  EXPENDS  IN   PROCURING  A   CORRECTION  OR
                  REPLACEMENT FOR ANY ITEM THAT IS  THE  SUBJECT  OF  A  FAILURE
                  COVERED  BY  THIS  SERVICE  LIFE  POLICY  AND  TO  WHICH  SUCH
                  NONPERFORMANCE  IS  RELATED,  LESS  THE  AMOUNT THAT THE BUYER
                  OTHERWISE WOULD HAVE BEEN REQUIRED TO PAY UNDER THIS SUBCLAUSE
                  12.2  IN  RESPECT  OF  SUCH  CORRECTED  OR  REPLACEMENT  ITEM.
                  WITHOUT  LIMITING  THE EXCLUSIVITY  OF  WARRANTIES AND GENERAL
                  LIMITATIONS OF LIABILITY PROVISIONS  SET  FORTH  IN  SUBCLAUSE
                  12.5, THE BUYER HEREBY  WAIVES,  RELEASES  AND  RENOUNCES  ALL
                  CLAIMS  TO  ANY  FURTHER  DIRECT,  INCIDENTAL OR CONSEQUENTIAL
                  DAMAGES, INCLUDING LOSS  OF  PROFITS  AND  ALL  OTHER  RIGHTS,
                  CLAIMS  AND  REMEDIES,  ARISING  UNDER  OR  BY  VIRTUE OF THIS
                  SERVICE LIFE POLICY.

12.2.5            Transferability

                  Except  as  specifically  provided  for in  Clause  20 of this
                  Agreement,  the Buyer's rights under this Clause 12.2 will not
                  be assigned, sold, leased,  transferred or otherwise alienated
                  by operation of law or otherwise,  without the Seller's  prior
                  written consent.

                  Any unauthorized  assignment,  sale, lease,  transfer or other
                  alienation  of the  Buyer's  rights  under this  Service  Life
                  Policy  will,  as  to  the   particular   Aircraft   involved,
                  immediately void this Service Life Policy in its entirety.

12.3              SUPPLIER WARRANTIES

12.3.1            Seller's Support

                  Prior to  delivery  of the first  Aircraft,  the  Seller  will
                  provide the Buyer with the  warranties,  service life policies
                  and patent  indemnities that the Seller has obtained  pursuant
                  to the Supplier Product Support Agreements.

12.3.2            Supplier's Default

12.3.2.1          In  the event that any Supplier under any warranty obtained by
                  the Seller pursuant to Clause 12.3.1  hereof  defaults  in the
                  performance of any material  obligation  under  such  warranty
                  with respect to a Supplier Part, and the  Buyer submits within
                  a reasonable time to the Seller  reasonable  proof  that  such
                  default has occurred, then  Clause 12.1 of this Agreement will
                  apply to the extent it would have  applied  had  such Supplier
                  Part been  a  Warranted  Part  except  that,  for  obligations
                  covered  under  Clause 12.1, the shorter of (i) the Supplier's
                  warranty  period  indicated  in  the  Supplier Product Support
                  Agreements  manual  and  (ii)  the  Seller's  warranty  period
                  indicated in Clause 12.1.3 of this Agreement will apply.

12.3.2.2          In the event that any Supplier under any Supplier service life
                  policy obtained by the Seller pursuant to Clause 12.3.1 hereof
                  defaults in the  performance of any material  obligation  with
                  respect thereto,  and the Buyer submits within reasonable time
                  to the Seller reasonable proof that such default has occurred,
                  then  Clause 12.2 of this  Agreement  will apply to the extent
                  the same would have  applied  had such  component,  equipment,
                  accessory or part been listed in Exhibit C hereto.

12.3.2.3          At the Seller's request,  the Buyer will assign to the Seller,
                  and the  Seller  will be  subrogated  to,  all of the  Buyer's
                  rights  against the  relevant  Supplier,  with  respect to and
                  arising by reason of such  default and the Buyer will  provide
                  reasonable  assistance  to enable the  Seller to  enforce  the
                  rights so assigned.

12.4              INTERFACE COMMITMENT

12.4.1            Interface Problem

                  If  the  Buyer   experiences  any  technical  problem  in  the
                  operation of an Aircraft or its systems due to a  malfunction,
                  the cause of which, after due and reasonable investigation, is
                  not  readily  identifiable  by the Buyer,  but which the Buyer
                  reasonably   believes  to  be   attributable   to  the  design
                  characteristics  of one or more components of the Aircraft (an
                  "Interface  Problem"),  the Seller  will,  if requested by the
                  Buyer, and without additional charge to the Buyer,  except for
                  transportation  of  the  Seller's  personnel  to  the  Buyer's
                  facilities,    promptly   conduct   or   have   conducted   an
                  investigation  and analysis of such problem to  determine,  if
                  possible,  the cause or causes of the problem and to recommend
                  such corrective action as may be feasible,  provided, however,
                  that  if it is  determined,  after  such  due  and  reasonable
                  investigation, that the Interface Problem was due to or caused
                  by any act or omission of the Buyer in its  performance of its
                  obligations hereunder, the Buyer will pay to the Seller *. The
                  Buyer will furnish to the Seller all data and  information  in
                  the Buyer's  possession  relevant to the Interface Problem and
                  will  cooperate with the Seller in the conduct of the Seller's
                  investigations  and  such  tests  as may be  required.  At the
                  conclusion  of such  investigation  the Seller  will  promptly
                  advise the Buyer in writing of the Seller's  opinion as to the
                  cause or  causes of the  Interface  Problem  and the  Seller's
                  recommendations as to corrective action.

12.4.2            Seller's Responsibility

                  If  the  Seller  determines  that  the  Interface  Problem  is
                  primarily  attributable to the design of a Warranted Part, the
                  Seller will, if requested by the Buyer,  correct the design of
                  such Warranted  Part,  pursuant to the terms and conditions of
                  Clause 12.1.

12.4.3            Supplier's Responsibility

                  If  the  Seller  determines  that  the  Interface  Problem  is
                  primarily attributable to the design of any Supplier Part, the
                  Seller will, if requested by the Buyer,  reasonably assist the
                  Buyer in  processing  any  warranty  claim  the Buyer may have
                  against the manufacturer of such Supplier Part.

12.4.4            Joint Responsibility

                  If  the  Seller  determines  that  the  Interface  Problem  is
                  attributable  partially to the design of a Warranted  Part and
                  partially to the design of any Supplier Part, the Seller will,
                  if  requested by the Buyer,  seek a solution to the  Interface
                  Problem  through  cooperative  efforts  of the  Seller and any
                  Supplier  involved.  The Seller will promptly advise the Buyer
                  of any corrective  action  proposed by the Seller and any such
                  Supplier.  Such  proposal  will be  consistent  with  any then
                  existing  obligations of the Seller  hereunder and of any such
                  Supplier  to  the  Buyer.  Such  corrective   action,   unless
                  reasonably   rejected  by  the  Buyer,  will  constitute  full
                  satisfaction  of any claim the Buyer may have  against  either
                  the Seller or any such Supplier with respect to such Interface
                  Problem.

12.4.5            General

12.4.5.1          All  requests  under this Clause 12.4 will be directed both to
                  the Seller and the affected Suppliers.

12.4.5.2          Except as  specifically  set forth in this Clause  12.4,  this
                  Clause  12.4 will not be deemed  to impose on the  Seller  any
                  obligations   not  expressly  set  forth   elsewhere  in  this
                  Agreement.

12.4.5.3          All  reports,   recommendations,   data  and  other  documents
                  furnished  by the Seller to the Buyer  pursuant to this Clause
                  12.4 will be deemed to be delivered  under this  Agreement and
                  will be subject to the terms,  covenants  and  conditions  set
                  forth in this Clause 12 and in Clause 22.5.

12.5              EXCLUSIVITY OF WARRANTIES

                  THIS CLAUSE 12 (INCLUDING  ITS  SUBPROVISIONS)  SETS FORTH THE
                  EXCLUSIVE  WARRANTIES,  EXCLUSIVE  LIABILITIES  AND  EXCLUSIVE
                  OBLIGATIONS  OF  THE  SELLER,   AND  THE  EXCLUSIVE   REMEDIES
                  AVAILABLE  TO THE  BUYER,  WHETHER  UNDER  THIS  AGREEMENT  OR
                  OTHERWISE,  ARISING  FROM ANY DEFECT OR  NONCONFORMITY  OF ANY
                  KIND IN ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART OR
                  SERVICE DELIVERED UNDER THIS AGREEMENT.

                  THE BUYER  HEREBY  WAIVES,  RELEASES AND  RENOUNCES  ALL OTHER
                  WARRANTIES,  OBLIGATIONS,  GUARANTEES  AND  LIABILITIES OF THE
                  SELLER AND ALL OTHER RIGHTS,  CLAIMS AND REMEDIES OF THE BUYER
                  AGAINST THE SELLER,  WHETHER  EXPRESS OR IMPLIED BY  CONTRACT,
                  TORT,  OR  STATUTORY  LAW OR  OTHERWISE,  WITH  RESPECT TO ANY
                  NONCONFORMITY   OR  DEFECT  OF  ANY  KIND  IN  ANY   AIRCRAFT,
                  COMPONENT,  EQUIPMENT,  ACCESSORY,  PART OR SERVICE  DELIVERED
                  UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO:

(1)      ANY IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY  GENERAL
         OR PARTICULAR PURPOSE;

(2)      ANY  IMPLIED  OR  EXPRESS  WARRANTY ARISING FROM COURSE OF PERFORMANCE,
         COURSE OF DEALING OR USAGE OF TRADE;

(3)      ANY  RIGHT,  CLAIM  OR  REMEDY  FOR BREACH OF CONTRACT RELATING TO OR A
         RISING OUT OF THIS CLAUSE 12;

(4)      ANY   RIGHT,  CLAIM  OR REMEDY FOR TORT, UNDER ANY THEORY OF LIABILITY,
         HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO, ACTIONS  AND/OR  CLAIMS
         FOR NEGLIGENCE,  GROSS NEGLIGENCE, INTENTIONAL ACTS, WILLFUL DISREGARD,
         IMPLIED WARRANTY, PRODUCT LIABILITY, STRICT  LIABILITY  OR  FAILURE  TO
         WARN;

(5)      ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM COMMERCIAL CODE OR
         ANY OTHER STATE OR FEDERAL STATUTE;

(6)      ANY RIGHT, CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS  OR  STANDARDS
         IMPOSED  BY  ANY  INTERNATIONAL,  NATIONAL,  STATE  OR LOCAL STATUTE OR
         AGENCY;

(7)      ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:

(a)      LOSS  OF  USE  OR  REPLACEMENT  OF  ANY AIRCRAFT, COMPONENT, EQUIPMENT,
         ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;

(b)      LOSS OF, OR DAMAGE OF ANY KIND TO,  ANY AIRCRAFT, COMPONENT, EQUIPMENT,
         ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;

(c)      LOSS OF PROFITS AND/OR REVENUES;

(d)      ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.

                  THE  WARRANTIES  AND  SERVICE  LIFE  POLICY  PROVIDED  BY THIS
                  AGREEMENT WILL NOT BE EXTENDED,  ALTERED OR VARIED EXCEPT BY A
                  WRITTEN  INSTRUMENT SIGNED BY THE SELLER AND THE BUYER. IN THE
                  EVENT  THAT ANY  PROVISION  OF THIS  CLAUSE 12 SHOULD  FOR ANY
                  REASON  BE HELD  UNLAWFUL,  OR  OTHERWISE  UNENFORCEABLE,  THE
                  REMAINDER  OF THIS  CLAUSE 12 WILL  REMAIN  IN FULL  FORCE AND
                  EFFECT.

12.6              DUPLICATE REMEDIES

                  The remedies  provided to the Buyer under this Clause 12 as to
                  any defect in respect of the  Aircraft or any part thereof are
                  mutually  exclusive  and not  cumulative.  The  Buyer  will be
                  entitled to the remedy that  provides  the maximum  benefit to
                  it,  as  the  Buyer  may  elect,  pursuant  to the  terms  and
                  conditions  of this Clause 12 for any such  particular  defect
                  for  which   remedies  are  provided  under  this  Clause  12;
                  provided,  however,  that the Buyer  will not be  entitled  to
                  elect  a  remedy  under  one  part  of  this  Clause  12  that
                  constitutes  a duplication  of any remedy  elected by it under
                  any other part hereof for the same defect.  The Buyer's rights
                  and remedies herein for the  nonperformance of any obligations
                  or liabilities  of the Seller  arising under these  warranties
                  will be in  monetary  damages  limited to the amount the Buyer
                  expends in  procuring  a  correction  or  replacement  for any
                  covered part subject to a defect or nonperformance  covered by
                  this  Clause  12,  and the  Buyer  will not have any  right to
                  require specific performance by the Seller.

                  Nothing  contained  in  the  foregoing  Clause  12.5  will  be
                  interpreted  to deprive  the Buyer of its right to enforce the
                  rights and remedies set forth in this Clause 12.

UNQUOTE

                  In  consideration  of the  assignment  and  subrogation by the
                  Seller  under this  Clause 12 in favor of the Buyer in respect
                  of  the  Seller's   rights  against  and  obligations  to  the
                  Manufacturer  under the  provisions  quoted  above,  the Buyer
                  hereby accepts such  assignment and  subrogation and agrees to
                  be  bound  by all of the  terms,  conditions  and  limitations
                  therein contained, specifically including, without limitation,
                  the  Exclusivity  of  Warranties  and General  Limitations  of
                  Liability provisions and Duplicate Remedies provisions.

                  THIS CLAUSE 12 (INCLUDING  ITS  SUBPROVISIONS)  SETS FORTH THE
                  EXCLUSIVE  WARRANTIES,  EXCLUSIVE  LIABILITIES  AND  EXCLUSIVE
                  OBLIGATIONS  OF  THE  SELLER,   AND  THE  EXCLUSIVE   REMEDIES
                  AVAILABLE  TO THE  BUYER,  WHETHER  UNDER  THIS  AGREEMENT  OR
                  OTHERWISE,  ARISING  FROM ANY DEFECT OR  NONCONFORMITY  OF ANY
                  KIND IN ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY, PART OR
                  SERVICE DELIVERED UNDER THIS AGREEMENT.

                  THE BUYER  HEREBY  WAIVES,  RELEASES AND  RENOUNCES  ALL OTHER
                  WARRANTIES,  OBLIGATIONS,  GUARANTEES  AND  LIABILITIES OF THE
                  SELLER AND ALL OTHER RIGHTS,  CLAIMS AND REMEDIES OF THE BUYER
                  AGAINST THE SELLER,  WHETHER  EXPRESS OR IMPLIED BY  CONTRACT,
                  TORT,  OR  STATUTORY  LAW OR  OTHERWISE,  WITH  RESPECT TO ANY
                  NONCONFORMITY   OR  DEFECT  OF  ANY  KIND  IN  ANY   AIRCRAFT,
                  COMPONENT,  EQUIPMENT,  ACCESSORY,  PART OR SERVICE  DELIVERED
                  UNDER THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO:

(1)      ANY  IMPLIED WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY GENERAL
         OR PARTICULAR PURPOSE;

(2)      ANY  IMPLIED  OR  EXPRESS  WARRANTY ARISING FROM COURSE OF PERFORMANCE,
         COURSE OF DEALING OR USAGE OF TRADE;

(3)      ANY  RIGHT, CLAIM OR REMEDY  FOR  BREACH  OF  CONTRACT  RELATING  TO OR
         ARISING OUT OF THIS CLAUSE 12;

(4)      ANY RIGHT,  CLAIM  OR REMEDY  FOR TORT,  UNDER ANY THEORY OF LIABILITY,
         HOWEVER ALLEGED, INCLUDING, BUT NOT LIMITED TO, ACTIONS  AND/OR  CLAIMS
         FOR NEGLIGENCE, GROSS NEGLIGENCE, INTENTIONAL ACTS, WILLFUL  DISREGARD,
         IMPLIED  WARRANTY, PRODUCT  LIABILITY, STRICT LIABILITY OR  FAILURE  TO
         WARN;

(5)      ANY RIGHT, CLAIM OR REMEDY ARISING UNDER THE UNIFORM COMMERCIAL CODE OR
         ANY OTHER STATE OR FEDERAL STATUTE;

(6)      ANY  RIGHT,  CLAIM OR REMEDY ARISING UNDER ANY REGULATIONS OR STANDARDS
         IMPOSED BY ANY INTERNATIONAL,  NATIONAL,  STATE  OR  LOCAL  STATUTE  OR
         AGENCY;

(7)      ANY RIGHT, CLAIM OR REMEDY TO RECOVER OR BE COMPENSATED FOR:

        (a)      LOSS OF USE OR REPLACEMENT OF ANY AIRCRAFT,COMPONENT,EQUIPMENT,
                 ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;

        (b)      LOSS OF, OR DAMAGE OF ANY KIND TO, ANY AIRCRAFT, COMPONENT,
                 EQUIPMENT, ACCESSORY OR PART PROVIDED UNDER THIS AGREEMENT;

        (c)      LOSS OF PROFITS AND/OR REVENUES;

        (d)      ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGE.

                  THE  WARRANTIES  AND  SERVICE  LIFE  POLICY  PROVIDED  BY THIS
                  AGREEMENT WILL NOT BE EXTENDED,  ALTERED OR VARIED EXCEPT BY A
                  WRITTEN  INSTRUMENT SIGNED BY THE SELLER AND THE BUYER. IN THE
                  EVENT  THAT ANY  PROVISION  OF THIS  CLAUSE 12 SHOULD  FOR ANY
                  REASON  BE HELD  UNLAWFUL,  OR  OTHERWISE  UNENFORCEABLE,  THE
                  REMAINDER  OF THIS  CLAUSE 12 WILL  REMAIN  IN FULL  FORCE AND
                  EFFECT.

                  The remedies  provided to the Buyer under this Clause 12 as to
                  any defect in respect of the  Aircraft or any part thereof are
                  mutually  exclusive  and not  cumulative.  The  Buyer  will be
                  entitled to the remedy that  provides  the maximum  benefit to
                  it,  as  the  Buyer  may  elect,  pursuant  to the  terms  and
                  conditions  of this Clause 12 for any such  particular  defect
                  for  which   remedies  are  provided  under  this  Clause  12;
                  provided,  however,  that the Buyer  will not be  entitled  to
                  elect  a  remedy  under  one  part  of  this  Clause  12  that
                  constitutes  a duplication  of any remedy  elected by it under
                  any other part hereof for the same defect.  The Buyer's rights
                  and remedies herein for the  nonperformance of any obligations
                  or liabilities  of the Seller  arising under these  warranties
                  will be in  monetary  damages  limited to the amount the Buyer
                  expends in  procuring  a  correction  or  replacement  for any
                  covered part subject to a defect or nonperformance  covered by
                  this  Clause  12,  and the  Buyer  will not have any  right to
                  require specific performance by the Seller.

                  Nothing  contained  in  the  foregoing  Clause  12.6  will  be
                  interpreted  to deprive  the Buyer of its right to enforce the
                  rights and remedies set forth in this Clause 12.

12.7              NEGOTIATED AGREEMENT

                  The Buyer specifically acknowledges that

                  (i)      this Agreement, and in particular this Clause 12, has
                           been the subject of discussion and negotiation and is
                           fully understood  by the Buyer;

                  (ii)     the  price  of the  Aircraft  and  the  other  mutual
                           agreements  of the Buyer set forth in this  Agreement
                           were arrived at in consideration  of, inter alia, the
                           provisions of this Clause 12, specifically  including
                           the  Exclusivity  of  Warranties  set forth in Clause
                           12.5.

<PAGE>

13 -              PATENT AND COPYRIGHT INDEMNITY
                  ------------------------------

                  The Seller  represents and warrants that the  Manufacturer has
                  provided to the Seller the following  indemnity against patent
                  and  copyright  infringements  with  respect to the  Aircraft,
                  subject to the terms, conditions, limitations and restrictions
                  (including,  but not limited to, the Exclusivity of Warranties
                  and Duplicate Remedies provisions) as hereinafter set out, and
                  that the same are in full  force and  effect and have not been
                  amended. The Seller hereby assigns to the Buyer, and the Buyer
                  hereby accepts,  all of the Seller's rights and obligations as
                  the  "Buyer"  under  the said  indemnity  against  patent  and
                  copyright  infringements,  and the Seller subrogates the Buyer
                  to all such rights and obligations in respect of the Aircraft.
                  The Seller  hereby  warrants  to the Buyer that (i) it has all
                  requisite  authority to make the foregoing  assignment  and to
                  effect the foregoing  subrogation in favor of the Buyer,  (ii)
                  such assignment and subrogation are effective to confer on the
                  Buyer  all of the  foregoing  rights  and  obligations  of the
                  Seller, and (iii) the Seller will not enter into any amendment
                  of the  provisions  so  assigned  without  the  prior  written
                  consent of the Buyer.

                  It is  understood  that, in the  provisions  below between the
                  words QUOTE and UNQUOTE,  capitalized  terms have the meanings
                  assigned  thereto in this Agreement,  except that (i) the term
                  "Seller,"   which  means  the   Manufacturer  as  between  the
                  Manufacturer  and the Seller,  also means the  Manufacturer in
                  this  Agreement,  and (ii) the term  "Buyer,"  which means the
                  Seller as between the Manufacturer  and the Seller,  means the
                  Buyer in this Agreement.

QUOTE

13.1              Indemnity

13.1.1            Subject to the  provisions of Clause  13.2.3,  the Seller will
                  indemnify  the Buyer and its officers,  directors,  agents and
                  employees  from and against any  damages,  costs and  expenses
                  including legal costs  (excluding  damages,  costs,  expenses,
                  loss  of  profits  and  other  liabilities  in  respect  of or
                  resulting  from loss of use of the Aircraft)  resulting from a
                  claim  that the  Airframe  or any part or  software  installed
                  therein at Delivery infringes

                  (i)      any British, French, German, Spanish or U.S.  patent;
                           and

                  (ii)     any patent issued under the laws of any other country
                           in which the Buyer may lawfully operate the Aircraft,
                           provided  that  from  the  time  of  design  of  such
                           Airframe or any part or software installed therein at
                           Delivery and until infringement  claims are resolved,
                           the country of the patent and the flag country of the
                           Aircraft are both parties to

                        (1)      the  Chicago  Convention on International Civil
                                 Aviation of December 7, 1944 and are each fully
                                 entitled to all benefits of Article 27 thereof,
                                 or,

                        (2)      the International Convention for the Protection
                                 of Industrial  Property of March 20, 1883  (the
                                 "Paris Convention"); and

                  (iii)    in  respect of  computer  software  installed  on the
                           Aircraft,  any copyright,  provided that the Seller's
                           obligation   to   indemnify   will  be   limited   to
                           infringements  in  countries  which,  at the  time of
                           infringement,  are  members  of The  Berne  Union and
                           recognize  computer  software  as a "work"  under the
                           Berne Convention.

13.1.2            Clause 13.1.1 will not apply to

                  (i)      Buyer Furnished Equipment;

                  (ii)     the Propulsion Systems;

                  (iii)    parts supplied pursuant to a Supplier Product Support
                           Agreement; or

                  (iv)     software not created by the Seller.

13.1.3            In the event that the Buyer, due to circumstances contemplated
                  in Clause 13.1.1 is prevented from using the Aircraft (whether
                  by a valid judgment of a court of competent jurisdiction or by
                  a settlement arrived at among the claimant, the Seller and the
                  Buyer), the Seller will at its expense either

                  (i)      procure for the Buyer the right to use  the  affected
                           Airframe, part or software free of charge; or

                  (ii)     replace the infringing  part or  software  as soon as
                           possible with a noninfringing substitute.

13.2              Administration of Patent and Copyright Indemnity Claims

13.2.1            If the Buyer  receives a written claim or a suit is threatened
                  or begun  against  the Buyer for  infringement  of a patent or
                  copyright referred to in Clause 13.1, the Buyer will

                  (i)      forthwith  notify  the  Seller,  giving   particulars
                           thereof;

                  (ii)     furnish to the Seller all data,  papers  and  records
                           within the Buyer's control or possession  relating to
                           such patent or claim;

                  (iii)    refrain from admitting  any  liability  or making any
                           payment, or assuming any expenses, damages,  costs or
                           royalties,or otherwise acting in a manner prejudicial
                           to the defense or denial of the  suit  or  claim,  it
                           being agreed that nothing in this Clause  13.2.1(iii)
                           will prevent  the Buyer from paying the sums that may
                           be required to obtain the release of  the   Aircraft,
                           provided  that  paymentis  accompanied by a denial of
                           liability and is made without prejudice;

                  (iv)     fully cooperate with, and render * assistance to, the
                           Seller  as  may be pertinent to the defense or denial
                           of the suit or claim;

                  (v)      *  mitigate damages and/or  to reduce  the  amount of
                           royalties  that may be payable, and to minimize costs
                           and expenses.

13.2.2            The  Seller  will be  entitled  either  in its own  name or on
                  behalf of the Buyer to conduct  negotiations with the party or
                  parties  alleging  infringement and may assume and conduct the
                  defense or settlement of any suit or claim in the manner that,
                  in the Seller's opinion, it deems proper.

13.2.3            The Seller's  liability  hereunder  will be conditional on the
                  strict  and timely  compliance  by the Buyer with the terms of
                  this  Clause  and is in lieu  of any  other  liability  to the
                  Buyer,  whether  express or  implied,  which the Seller  might
                  incur  at law as a  result  of any  infringement  or  claim of
                  infringement of any patent or copyright.

UNQUOTE

                  In  consideration  of the  assignment  and  subrogation by the
                  Seller  under this  Clause 13 in favor of the Buyer in respect
                  of  the  Seller's   rights  against  and  obligations  to  the
                  Manufacturer  under the  provisions  quoted  above,  the Buyer
                  hereby accepts such  assignment and  subrogation and agrees to
                  be  bound  by all of the  terms,  conditions  and  limitations
                  therein contained (specifically including, without limitation,
                  the waiver, release and renunciation provision).

                  THE INDEMNITY  PROVIDED IN THIS CLAUSE 13 AND THE  OBLIGATIONS
                  AND  LIABILITIES  OF  THE  SELLER  UNDER  THIS  CLAUSE  13 ARE
                  EXCLUSIVE  AND IN  SUBSTITUTION  FOR,  AND  THE  BUYER  HEREBY
                  WAIVES,   RELEASES  AND  RENOUNCES   ALL  OTHER   INDEMNITIES,
                  WARRANTIES,  OBLIGATIONS,  GUARANTEES  AND  LIABILITIES ON THE
                  PART OF THE SELLER AND  RIGHTS,  CLAIMS  AND  REMEDIES  OF THE
                  BUYER AGAINST THE SELLER,  EXPRESS OR IMPLIED,  ARISING BY LAW
                  OR OTHERWISE  (INCLUDING  WITHOUT  LIMITATION ANY  OBLIGATION,
                  LIABILITY, RIGHT, CLAIM OR REMEDY ARISING FROM OR WITH RESPECT
                  TO LOSS OF USE OR  REVENUE  OR  CONSEQUENTIAL  DAMAGES),  WITH
                  RESPECT TO ANY ACTUAL OR ALLEGED  PATENT  INFRINGEMENT  OR THE
                  LIKE BY ANY AIRFRAME,  PART OR SOFTWARE  INSTALLED  THEREIN AT
                  DELIVERY,  OR THE USE OR SALE THEREOF,  PROVIDED  THAT, IN THE
                  EVENT  THAT ANY OF THE  AFORESAID  PROVISIONS  SHOULD  FOR ANY
                  REASON  BE  HELD  UNLAWFUL  OR  OTHERWISE   INEFFECTIVE,   THE
                  REMAINDER OF THIS CLAUSE WILL REMAIN IN FULL FORCE AND EFFECT.
                  THIS INDEMNITY AGAINST PATENT AND COPYRIGHT INFRINGEMENTS WILL
                  NOT  BE  EXTENDED,  ALTERED  OR  VARIED  EXCEPT  BY A  WRITTEN
                  INSTRUMENT SIGNED BY THE SELLER AND THE BUYER.

<PAGE>

14 -              TECHNICAL DATA AND DOCUMENTATION

14.1              General

                  This Clause covers the terms and  conditions for the supply of
                  Technical  Data  and  Documentation.  The  Technical  Data and
                  Documentation  will be supplied in the English  language using
                  aeronautical terminology in common use.

14.2              Scope

                  Range, form, type, format,  ATA/non-ATA  compliance,  revision
                  and  quantity  of the  Technical  Data and  Documentation  are
                  covered in Exhibit F hereto.

14.3              Delivery

                  The  Technical  Data  and   Documentation   and  corresponding
                  revisions  to be  supplied  by the Seller  will be sent to one
                  address only as advised by the Buyer.

                  Technical Data and  Documentation  and their revisions will be
                  delivered  Free Carrier  (FCA)  Toulouse,  France  and/or Free
                  Carrier (FCA) Hamburg, Germany, as determined by the Seller.

                  The delivery  schedule of the Technical Data and Documentation
                  will be phased as mutually  agreed to correspond with Aircraft
                  deliveries.  The Buyer  agrees to  provide  forty  (40)  days'
                  notice when requesting a change to the delivery schedule.

                  Subject  to  the  Seller's   performance  of  its  obligations
                  pursuant  to Clause  7.3.5,  the  Buyer  will  coordinate  and
                  satisfy  local  Aviation  Authorities  needs for the Technical
                  Data and Documentation.

                  Technical  Data  and  Documentation  will  correspond  to  the
                  Specification  as defined  six (6) months  before  delivery of
                  each  Aircraft.   If  the  full   Specification  will  not  be
                  introduced into a scheduled revision of the Technical Data and
                  Documentation  before  delivery  of  any  Aircraft,  temporary
                  revisions for outstanding  Specification items will be issued.
                  Such   temporary   revisions   will  remain  in  effect  until
                  incorporation  of the full  Specification  into the  Technical
                  Data and Documentation for such Aircraft.  Full  incorporation
                  will be  effected  by no later  than  eight (8)  months  after
                  delivery  of such  Aircraft.  The Seller will supply a list of
                  the differences  between the  Specification  and the Technical
                  Data and Documentation at delivery of each Aircraft.

14.4              Revision Service

14.4.1            General

                  Unless otherwise specifically stated, revision service will be
                  offered  free  of  charge  *  .  Mandatory   changes  will  be
                  incorporated  into the Technical Data and  Documentation at no
                  charge for as long as * Aircraft is in service with the Buyer.

14.4.2            Service Bulletins (SB)

                  On the Buyer's request,  Service Bulletin  information will be
                  incorporated into the Technical Data and Documentation for the
                  Aircraft  after  formal  notification  by  the  Buyer  of  its
                  intention  to  accomplish a Service  Bulletin.  The Buyer will
                  make this request  within * after the Seller  issues a Service
                  Bulletin.  For Technical  Data and  Documentation  relating to
                  maintenance,  the  split  effectivity  for  the  corresponding
                  Service  Bulletin  will  remain  in such  Technical  Data  and
                  Documentation  until the Buyer notifies the Seller that it has
                  accomplished the Service Bulletin on all applicable  Aircraft.
                  For  Technical  Data  and  Documentation  relating  to  flight
                  operations, only the pre- or post-Service Bulletin status will
                  be shown in the Technical Data and Documentation.  This clause
                  will  remain  in  effect  so long as the  Buyer  has  revision
                  service.

This Clause applies only to the following Technical Data and Documentation: *

14.4.3            Customer Originated Changes

14.4.3.1          Customer  Originated  Changes  (COC) data may be  incorporated
                  into   the   following    customized    Technical   Data   and
                  Documentation:

                  - Aircraft Maintenance Manual
                  - Illustrated Parts Catalog
                  - Trouble Shooting Manual
                  - Wiring Manual (Schematics, Wirings, Lists)

                  COC data will be  established  by the Buyer  according  to the
                  "Guidelines  for Customer  Originated  Changes"  issued by the
                  Seller.

                  The COC data will be labeled "COC" to show that they are Buyer
                  originated.  The Seller will endeavor to incorporate  COC data
                  into the customized  Technical Data and  Documentation  within
                  two (2)  revisions  following  the  receipt  of  complete  and
                  accurate data for processing.

                  COC data will be  incorporated  by the Seller in all  affected
                  customized Technical Data and Documentation,  unless the Buyer
                  specifies   in   writing   into  which   Technical   Data  and
                  Documentation   the  COC  data  will  be   incorporated.   The
                  customized Technical Data and Documentation into which the COC
                  data  are   incorporated   will   only   show   the   Aircraft
                  configuration   that   reflects  the  COC  data  and  not  the
                  configuration before incorporation of the COC data.

14.4.3.2          The  Buyer will  ensure  that  any such COC data have received
                  prior agreement from its local Aviation Authorities.

14.4.3.3          The  Buyer   hereby   acknowledges   and   accepts   that  the
                  incorporation   of  any  COC  into  the  Technical   Data  and
                  Documentation  issued by the Seller  will be  entirely  at the
                  Buyer's  risk.  Accordingly,  the  Seller  will  be  under  no
                  liability  whatsoever in respect of either the contents of any
                  COC, including any omissions or inaccuracies  therein,  or the
                  effect  that  the  incorporation  of such  COC may have on the
                  Technical Data and Documentation.

                  The  Seller  will  not be  required  to  check  any  COC  data
                  submitted for incorporation as aforesaid.

                  Further,   the  Buyer  acknowledges  full  liability  for  the
                  effects, including all related costs, that any COC may have on
                  all subsequent Service Bulletins and modifications.

14.4.3.4          In the event that the Seller is required under any judgment or
                  settlement to indemnify any third party for  injury,  loss  or
                  damage   incurred   directly  or  indirectly  as  a  result of
                  incorporation  of   any   COC  into  the  Technical  Data  and
                  Documentation  issued  by  the  Seller,  the  Buyer  agrees to
                  reimburse the Seller for all payments or settlements  made  in
                  respect of such  injury, loss or damage including any expenses
                  (including reasonable legal fees) incurred by  the  Seller  in
                  defending such claims, *.

                  The  Seller's  liability  will in no event be  affected by any
                  communication,  whether  written or oral,  that the Seller may
                  make to the Buyer with respect to such documentation.

14.4.3.5          The Seller's  costs with respect to the  incorporation  of any
                  COC will be invoiced to the Buyer under  conditions  specified
                  in ASCO's Customer  Services  Catalog in effect at the time of
                  the Buyer's request for incorporation.

14.5              Supplier Equipment

                  Information  relating to Supplier  equipment that is installed
                  on the Aircraft by the Seller will be included  free of charge
                  in the basic issue of the Technical Data and  Documentation to
                  the extent  necessary  for the  understanding  of the  systems
                  concerned.

                  The Buyer will  supply or cause to be  supplied  to the Seller
                  the data related to Buyer Furnished Equipment and to any other
                  equipment  not  covered  in the  Seller's  Standard  Furnished
                  Equipment  definition  at least * months  before the scheduled
                  delivery of the customized  Technical Data and  Documentation.
                  The Buyer will supply these data in English.

                  The  Seller  will  introduce  into  the  basic  issue  of  the
                  Technical  Data and  Documentation  the data  related to Buyer
                  Furnished Equipment. Costs for shipping these data will be the
                  Buyer's responsibility.

14.6              Aircraft Identification Technical Data and Documentation

                  For the customized  Technical Data and Documentation the Buyer
                  agrees to the allocation of Fleet Serial Numbers (FSNs) in the
                  form of a block of numbers  selected  in the range from 001 to
                  999.

                  The sequence  will be  interrupted  only if two (2)  different
                  Propulsion Systems or different Aircraft models are selected.

                  The Buyer will  indicate to the Seller the FSNs  allocated  to
                  the Aircraft  within * days after execution of this Agreement.
                  The allocation of FSNs to Manufacturer's Serial Numbers (MSNs)
                  will  not  constitute  any  proprietary,  insurable  or  other
                  interest of the Buyer in any Aircraft  before  delivery of and
                  payment for Aircraft as provided in this Agreement.

                  The affected customized Technical Data and Documentation are:

                  - Aircraft Maintenance Manual
                  - Illustrated Parts Catalog
                  - Trouble Shooting Manual
                  - Wiring Manual (Schematics, Wirings, Lists)

14.7              Performance Engineer's Programs

                  Complementary to the standard Operational Manuals,  covered in
                  Exhibit  F  hereto,  the  Seller  will  provide  to the  Buyer
                  Performance   Engineer's   Programs   (PEPs)   under   license
                  conditions defined in Exhibit F hereto.

14.8              CD-ROM

                  Certain  Technical  Data and  Documentation  are  provided  on
                  CD-ROM under license conditions defined in Exhibit F hereto.

                  The  affected   Technical  Data  and   Documentation  are  the
                  following:

                  - Trouble Shooting Manual
                  - Aircraft Maintenance Manual
                  - Illustrated Parts Catalog

                  From time to time,  the Seller may extend this list to include
                  other  Technical Data and  Documentation  and related  license
                  conditions specified by the Seller.

14.9              Warranty Disclaimer

                  The   Seller   represents   that   the   Technical   Data  and
                  Documentation are prepared in accordance with the state of the
                  art  at  the  date  of  their  conception.  Should  any of the
                  Technical  Data  and  Documentation  prepared  by  the  Seller
                  contain error or omission, the sole and exclusive liability of
                  the Seller will be to take all reasonable and proper steps to,
                  at its option,  correct or replace any such Technical Data and
                  Documentation. Notwithstanding the above, no warranties of any
                  kind are given for the Customer  Originated  Changes addressed
                  in Clause  14.4.3.  The  provisions of Clauses 12.5,  12.6 and
                  12.7 will apply to all Technical Data and Documentation.

14.10             Proprietary Rights

14.10.1           All proprietary  rights,  including but not limited to patent,
                  design  and   copyrights,   relating  to  Technical  Data  and
                  Documentation  will remain with the Seller. All Technical Data
                  and  Documentation  are  supplied to the Buyer for the Buyer's
                  sole use.

                  These  proprietary  rights will also apply to any  translation
                  into a  language  or  languages  or media  that may have  been
                  performed or caused to be performed by the Buyer.

14.10.2           Whenever  this  Agreement  provides for  manufacturing  by the
                  Buyer,  the consent  given by the Seller will not be construed
                  as express or implicit approval of the manufactured  products.
                  The supply of the Technical Data and Documentation will not be
                  construed  as any  further  right  for the  Buyer to design or
                  manufacture any Aircraft or part thereof or spare part.

<PAGE>

15 -              FIELD ASSISTANCE

15.1              Seller's Service

                  The Seller  will  provide or cause to be provided at no charge
                  to the Buyer the services  described in this Clause 15, at the
                  Buyer's main base or at other locations to be mutually agreed.

15.1.1            The Seller will provide a Resident  Customer  Support  Manager
                  starting  at or  about  delivery  of the  first  Aircraft  and
                  continuing for as long *.

15.1.2            The  Seller  will  also  provide  the  services  of a team  of
                  Customer  Support   Representatives   acting  in  an  advisory
                  capacity  at  the  Buyer's  main  base  starting  at or  about
                  delivery of the first  Aircraft  for a total of *  man-months.
                  The actual number of Customer Support Representatives assigned
                  to the Buyer at any one time will be mutually agreed, but will
                  not be fewer than one (1) or more than three (3) persons.

15.1.3            The  Seller  has  set  up a  global technical services network
                  available for the nonexclusive use of  operators  of  aircraft
                  manufactured by the Manufacturer. The  Buyer  will  have  free
                  access to this global network at any time in the course of its
                  operation of the Aircraft.  In particular, the Buyer will have
                  access  to   the  regional  Customer  Support  Representatives
                  closest to the Buyer's main base after the end of  the  period
                  referred  to  above  in  Clause 15.1.1,  or  to  cover for the
                  temporary absence of the Customer Support Representative(s). A
                  list  of  the  contacts  for  the  global  technical  services
                  network,    including   the    regional    Customer    Support
                  Representatives, will be provided to the Buyer.

15.2              Customer Support Director

                  The Seller  will  provide  the  services  of one (1)  Customer
                  Support Director based in Herndon, Virginia, to liaise between
                  the  Manufacturer  and the Buyer on  product  support  matters
                  after  signature  of this  Agreement  for as long as the Buyer
                  operates at least one (1) Aircraft.

15.3              Buyer's Service

15.3.1            For  as  long  as  the  Customer   Support   Representative(s)
                  specified in Clause 15.1.1 above remain(s) with the Buyer, the
                  Buyer will  furnish  without  charge  secretarial  assistance,
                  suitable office space,  office  equipment and facilities in or
                  conveniently near the Buyer's maintenance facilities *.

15.3.2            In  accordance  with  the  Buyer's regulations, the Buyer will
                  provide at no charge to the Seller

                  (i)      airline  tickets * confirmed and  guaranteed  between
                           the locations  mentioned  above in Subclause 15.1 and
                           the international  airport nearest Toulouse,  France,
                           that  is on the  Buyer's  network  for  the  Customer
                           Support Representative(s) mentioned in Clauses 15.1.1
                           and 15.1.2; and

                  (ii)     when  said  Customer  Support  Representative(s)  are
                           assigned away from the locations  mentioned  above in
                           Clause 15.1 at the Buyer's request, transportation on
                           a space-available  coach class basis between the said
                           locations and the place of assignment.

15.3.3            The  parties  will give each  other all  necessary  reasonable
                  assistance with general  administrative  functions specific to
                  their  respective  countries and  procurement of the documents
                  necessary to live and work there.

15.4              Representatives' Status

                  In  providing  the  above  technical  service,   the  Seller's
                  employees,  including Customer Support  Representative(s)  and
                  the Customer Support  Director,  are deemed to be acting in an
                  advisory  capacity  only and at no time will they be deemed to
                  be acting,  either  directly  or  indirectly,  as the  Buyer's
                  employees or agents.

15.5              Temporary Assignment of Customer Support Representative
                  -------------------------------------------------------

                  The Buyer agrees that,  subject to Clause  15.1.2,  the Seller
                  will  have the right to  transfer  or  recall  any  individual
                  Customer Support Representative(s) on a temporary or permanent
                  basis.

<PAGE>

16 -              TRAINING AND TRAINING AIDS
                  --------------------------

16.1.             General

                  This Clause covers the terms and  conditions for the supply of
                  training  and  training  aids  for the  Buyer's  personnel  to
                  support the Aircraft operation.

16.2.             Scope

16.2.1            The range and  quantities  of training and training aids to be
                  provided  free of charge under this  Agreement  are covered in
                  Appendix  A  to  this  Clause  16.  The  Seller  will  arrange
                  availability of such training and training aids in relation to
                  the delivery of the Aircraft.

16.2.2            The  contractual  training  courses,  defined in Appendix A to
                  this  Clause  16,  will be  provided  up to one (1) year after
                  delivery of the last Aircraft.

16.2.3            In the event  that the Buyer  should  use none or only part of
                  the training or training aids to be provided  pursuant to this
                  Clause,  no  compensation  or  credit  of  any  sort  will  be
                  provided.

16.3.             Training Organization / Location

16.3.1            The  Seller  will  provide the training at the Airbus Training
                  Center in Miami, or * at of one  of  its  affiliated  training
                  centers.

16.3.2            In  the  event  of  the   nonavailability   of  facilities  or
                  scheduling   imperatives   making   training   by  the  Seller
                  impractical,   the  Seller  will  make  arrangements  for  the
                  provision to the Buyer of such training support elsewhere, *.

16.3.3            Upon the Buyer's  request the Seller may also provide  certain
                  training at one of the Buyer's bases, if and when  practicable
                  for the  Seller,  under  terms and  conditions  to be mutually
                  agreed upon. In this event,  all additional  charges listed in
                  Clause 16.6.2 will be borne by the Buyer.

16.4              Training Courses

16.4.1            Training  courses,  as well as the minimum and maximum numbers
                  of trainees per course provided for the Buyer's personnel, are
                  defined in the Seller's applicable Training Course Catalog and
                  will be  scheduled  as mutually  agreed upon during a training
                  conference  (the  "Training  Conference")  to be held at least
                  twelve (12) months prior to delivery of the first Aircraft.

16.4.2            The  following  terms will apply when training is performed by
                  the Seller :

                  (i)        Training  courses  will  be the  Seller's  standard
                             courses  as  described  in  the  Seller's   current
                             Training  Course   Catalog.   The  Seller  will  be
                             responsible   for  all  training   course  syllabi,
                             training aids and training equipment  necessary for
                             the organization of the training courses

                  (ii)       The training curricula and the  training  equipment
                             may not  be  fully  customized.  However,  academic
                             curricula  may  be  modified  to  include  the most
                             significant aspects of the  Specification  (to  the
                             exclusion of Buyer Furnished Equipment) as known at
                             the latest  six (6) months prior to the date of the
                             first training course planned for the Buyer.    The
                             equipment   used   for   training   of  flight  and
                             maintenance personnel will not be fully customized;
                             however, this equipment will be configured in order
                             to   obtain   the   relevant  Aviation  Authority's
                             approval  and  to  support  the  Seller's  teaching
                             programs.

                  (iii)      Training  data  and  documentation   necessary  for
                             training  detailed  in Appendix A to this Clause 16
                             will be  free-of-charge  and will  not be  revised.
                             Training data and documentation will be marked "FOR
                             TRAINING ONLY" and as such will be supplied for the
                             sole and express purpose of training.

                  (iv)       Upon the  request  of the Buyer,  the  Seller  will
                             collect and pack for  consolidated  shipment to the
                             Buyer's    facility,    all   training   data   and
                             documentation  of the  Buyer's  trainees  attending
                             training  at the Airbus  Training  Center in Miami,
                             Florida.  This training data and documentation will
                             be  delivered  Free  Carrier  (FCA)  Miami.  It  is
                             understood  that  title  to and risk of loss of the
                             training  data and  documentation  will pass to the
                             Buyer upon delivery.

16.4.3            In the event  the Buyer  decides  to  cancel or  reschedule  a
                  training  course,  a  minimum  advance  notice  of sixty  (60)
                  calendar  days will be  required.  Any later  cancellation  or
                  change,  when courses cannot be allocated to other  customers,
                  will be deducted from the training  allowances  defined herein
                  or will be charged to the Buyer, as applicable.

16.4.4            In fulfillment of its obligation to provide training  courses,
                  when the Seller performs the training courses, the Seller will
                  deliver to the trainees a certificate of completion at the end
                  of any such training course. The Seller's certificate does not
                  represent  authority or qualification by any official Aviation
                  Authorities but may be presented to such officials in order to
                  obtain relevant formal qualification.

                  In the event that training is provided by a training  provider
                  selected  by the Seller,  the Seller will cause such  training
                  provider to deliver a certificate  of completion at the end of
                  any such training course.  Such certificate will not represent
                  authority   or   qualification   by  any   official   Aviation
                  Authorities but may be presented to such officials in order to
                  obtain relevant formal qualification.

16.5              Prerequisites

16.5.1            Training  will be conducted  in English and all training  aids
                  and materials are written in English using common aeronautical
                  terminology. Trainees must have the prerequisite jet transport
                  category  experience  as defined in  Appendix B to this Clause
                  16.

                  It is clearly  understood that the Seller's  training  courses
                  are "Transition  Training Courses" and not "Ab Initio Training
                  Courses."

                  Furthermore,  the Buyer will be responsible  for the selection
                  of the  trainees  and for any  liability  with  respect to the
                  entry knowledge level of the trainees.

16.5.2            The Buyer will provide the Seller with an  attendance  list of
                  the trainees for each course with the validated  qualification
                  of each  trainee.  The Seller  reserves the right to check the
                  trainees'  proficiency and previous  professional  experience.
                  The Seller will in no case warrant or otherwise be held liable
                  for any  trainee's  performance  as a result  of any  training
                  services provided.

16.5.3            Upon the  Buyer's  request,  the  Seller may be  consulted  to
                  direct the above mentioned trainee(s) through a relevant entry
                  level training  program,  which will be at the Buyer's charge,
                  and,  if  necessary,  to  coordinate  with  competent  outside
                  organizations for this purpose. Such consultation will be held
                  during the Training Conference.

                  In the event the Seller should  determine that a trainee lacks
                  the  required  entry  level,  such  trainee  will,   following
                  consultation with the Buyer, be withdrawn from the program and
                  will then be considered to be at the Buyer's disposal.

16.6.             Logistics

16.6.1            Trainees

16.6.1.1          When training is done at the Airbus  Training Center in Miami,
                  Florida,  the Seller will provide a free-of-charge  rental car
                  for  all of the  Buyer's  trainees  at  the  beginning  of the
                  training  course  on the  basis  of one  rental  car per  four
                  maintenance,  operations and cabin attendant  trainees and one
                  rental car per flight crew.

                  The  Seller  will  provide   rental  cars  from  a  nationally
                  recognized  vendor of its choosing with unlimited  mileage and
                  buy-back of collision  damage waiver (CDW), and the Buyer will
                  pay for gas,  and  fines,  if any.  However,  the  Buyer  will
                  indemnify  and hold the Seller  harmless  from and against all
                  liabilities,  claims,  damages,  costs  and  expenses  for any
                  injury to or death of any of the Buyer's  trainees  occasioned
                  during the course of such transportation.

16.6.1.2          When  training  is  done  at the  Airbus  Training  Center  in
                  Blagnac,  France,  or Beijing,  China, the Seller will provide
                  free local  transportation  by bus for the Buyer's trainees to
                  and from designated pick up points and the training center.

16.6.1.3          Living  expenses  for  the Buyer's trainees are to be borne by
                  the Buyer.

16.6.2            Training at External Location

16.6.2.1          Seller's Instructors

                  In  the  event  that,  at the  Buyer's  request,  training  is
                  provided by the Seller's  instructors  at any  location  other
                  than the Seller's training  centers,  the Buyer will reimburse
                  the  Seller  for all the  expenses,  defined  below in Clauses
                  16.6.2.2,  16.6.2.3,  16.6.2.4  and  16.6.2.5  related  to the
                  assignment of such  instructors  and their  performance of the
                  duties as aforesaid.

16.6.2.2          Living Expenses for the Seller's Instructors

                  Such  expenses,   covering  the  entire  period  from  day  of
                  secondment to day of return to the Seller's base, will include
                  but  will  not  be   limited  to   lodging,   food  and  local
                  transportation  to and  from  the  place  of  lodging  and the
                  training course location.  The Buyer will reimburse the Seller
                  for  such   expenses   on  the   basis  of  a  per  diem  rate
                  corresponding  to the current per diem rate used by the Seller
                  for its personnel.

16.6.2.3          Air Travel

                  The  Buyer  will  reimburse  the  Seller  for the costs of the
                  Seller's  * the  Buyer's  designated  training  site  and  the
                  Seller's training center.

16.6.2.4          Instructor's Material

                  The Buyer will  reimburse  the Seller for the cost of shipping
                  the instructor's material needed to conduct such courses.

16.6.2.5          Buyer's Indemnity

                  The Buyer will be solely  liable for any and all  cancellation
                  or delay in the  performance  of the  training  outside of the
                  Seller's training centers  associated with the  transportation
                  services  described  above  and  will  indemnify  and hold the
                  Seller harmless from such delay and any  consequences  arising
                  therefrom.

16.6.2.6          Training Equipment Availability

                  Training  equipment  necessary for course  performance  at any
                  course  location other than the Seller's  training  centers or
                  the facilities of the training provider selected by the Seller
                  will be provided by the Buyer in accordance  with the Seller's
                  specifications.

16.7              Flight Operations Training

16.7.1            Flight Crew Training Course

16.7.1.1          The Seller  will  perform a flight  crew  transition  training
                  course  program for the Buyer's  flight  crews,  each of which
                  will consist of one captain (1) and one (1) first officer,  as
                  defined in Appendix A to this Clause 16. The  training  manual
                  used will be the Seller's Flight Crew Operating Manual.

16.7.1.2          The Buyer will use its  delivered  Aircraft  for any  required
                  Aircraft in-flight training. This training will not exceed one
                  (1)  session  of one and a half (1.5)  hours per  pilot.  When
                  Aircraft  in-flight  crew  training is  performed  in Blagnac,
                  France,   the  Seller   will   provide   free-of-charge   line
                  maintenance,   including   servicing,   preflight  checks  and
                  changing of minor components,  subject to conditions agreed in
                  the present Agreement.

16.7.1.3          The Buyer will provide mutually agreed spare parts as required
                  to support said Aircraft  in-flight  training and will provide
                  insurance in line with Clause 16.12.

16.7.1.4          In  all  cases, the Buyer will bear all expenses such as fuel,
                  oil and landing fees.

16.7.2.           Flight Crew Line Initial Operating Experience

16.7.2.1          In order to assist the Buyer with initial operating experience
                  after delivery of the first Aircraft,  the Seller will provide
                  to the Buyer pilot  instructor(s)  as defined in Appendix A to
                  this Clause 16.

16.7.2.2          The Buyer will reimburse the expenses for each such instructor
                  in accordance with Clause 16.6.2. Additional pilot instructors
                  can be provided at the Buyer's  expense and upon conditions to
                  be mutually agreed upon.

16.7.3            Cabin Attendants' Familiarization Course

                  The Seller will  provide  cabin  attendants'  course(s) to the
                  Buyer's  cabin  attendants,  as defined in  Appendix A to this
                  Clause 16.

                  The cabin attendants'  course, when incorporating the features
                  of the  Aircraft,  can be given at the  earliest two (2) weeks
                  before the delivery date of the first Aircraft.

16.7.4            Performance / Operations Course

                  The Seller will  provide  performance/operations  training for
                  the Buyer's  personnel as defined in Appendix A to this Clause
                  16.

                  The  available  courses are listed in the Seller's  applicable
                  Training Course Catalog.

16.8              Maintenance Training

16.8.1            The Seller will provide  maintenance  training for the Buyer's
                  ground personnel as defined in Appendix A to this Clause 16.

                  The  available  courses are listed in the Seller's  applicable
                  Training Course Catalog.

16.8.2            On-the-Job Training

                  Upon the  Buyer's  request,  the  Seller may be  consulted  to
                  identify competent outside organizations to provide on-the-job
                  training, which will be at the Buyer's charge.

16.8.3            Line Maintenance Initial Operating Experience Training

                  In order to assist the Buyer  during the entry into service of
                  the Aircraft, the Seller will provide to the Buyer maintenance
                  instructor(s)  at the Buyer's base as defined in Appendix A to
                  this Clause 16.

16.8.3.1          This line maintenance  initial operating  experience  training
                  will cover  training in handling  and  servicing  of Aircraft,
                  flight crew and maintenance coordination,  use of paper and/or
                  electronic  documentation,  and/or any other  activities which
                  may be deemed necessary after delivery of the first Aircraft.

16.8.3.2          The Seller will pay the expenses for said instructor(s).
                  Additional  maintenance  instructors  can  be  provided at the
                  Buyer's expense.

16.9              Supplier and  Engine Manufacturer Training

                  A  copy  of  the  Supplier  Training  Catalogue,  listing  the
                  suppliers that provide training, will be supplied to the Buyer
                  on request.

16.10             Training  Aids  and  Materials  for   the   Buyer's   Training
                  Organization

16.10.1           The Seller will provide to the Buyer the Airbus Computer Based
                  Training (CBT) System,  training aids and material, as used in
                  the Seller's  training  centers,  free of charge as defined in
                  Appendix A to this Clause 16.

                  The Airbus CBT System,  training aids and material supplied to
                  the Buyer will be similar to those used in the  Manufacturer's
                  training centers for the training  provided for the Buyer. The
                  Seller has no obligation to cause the  Manufacturer  to revise
                  the Airbus CBT System.

16.10.2           Delivery

16.10.2.1         The Seller  will  deliver to the Buyer the Airbus CBT  System,
                  training  aids and  materials as defined in Appendix A to this
                  Clause 16, at a date to be mutually agreed during the Training
                  Conference.

16.10.2.2         Those items  supplied to the Buyer  pursuant to Clause 16.10.1
                  above will be delivered FCA Toulouse,  Blagnac Airport.  Title
                  to and risk of loss of said  items will pass to the Buyer upon
                  delivery.

16.10.2.3         All costs  related to  transportation  and  insurance  of said
                  items from the FCA point to the Buyer's  facilities will be at
                  the Buyer's expense.

16.10.3           Installation

16.10.3.1         Upon the Buyer's request, the Seller may assist the Buyer with
                  the  initial  installation  of the  Airbus  CBT  System at the
                  Buyer's  facility  following  notification in writing that the
                  various    components,    which   are   in   accordance   with
                  specifications  defined in the Airbus CBT  Technical  Catalog,
                  are  ready  for  installation  and  available  at the  Buyer's
                  facility.

16.10.3.2         The Buyer will provide any and all the  necessary  hardware on
                  which the Airbus CBT System will be installed  and Seller will
                  not be responsible  for any  incompatibility  of such hardware
                  with the Airbus CBT System.

16.10.3.3         The  Airbus  CBT  System  will  be  installed  by the  Buyer's
                  personnel who have completed the Airbus CBT training,  and the
                  Seller will be held  harmless from any damage to person and/or
                  to  property  caused  by or in  any  way  connected  with  the
                  handling  and/or  installation of the Airbus CBT System by the
                  Buyer's personnel.

16.10.3.4         The Buyer will  reimburse  the  expenses  in  accordance  with
                  Clause  16.6.2,  for the  Seller's  personnel  required at the
                  Buyer's facility to conduct Airbus CBT Training and/or provide
                  installation assistance.

16.10.4           License

16.10.4.1         The  Seller  will  grant the Buyer a license to use the Airbus
                  CBT System, as defined in Appendix C to this Clause 16.

16.10.4.2         Supply of additional sets of courseware  supports,  as well as
                  any  extension  to the  license for such  courseware,  will be
                  subject to terms and conditions to be mutually agreed.

16.10.5           The Seller will not be  responsible  and hereby  disclaims any
                  and all  liabilities  resulting from or in connection with the
                  use by the Buyer of the  training  aids and  materials  at the
                  Buyer's facilities.

16.11             Proprietary Rights

                  The  Seller's  training  data and  documentation,  Airbus  CBT
                  System,  training  aids and  material are  proprietary  to the
                  Manufacturer  and its  suppliers  and the Buyer  agrees not to
                  disclose the content of the  courseware or any  information or
                  documentation  provided  by the Seller in relation to training
                  in whole or in part,  to any  third  party  without  the prior
                  written consent of the Seller.

16.12             Indemnification and Insurance

                  Indemnification  provisions  additional  to  those  in  Clause
                  16.6.2.5 and insurance requirements are as set forth in Clause
                  19.

<PAGE>

                                                         APPENDIX A TO CLAUSE 16

                               TRAINING ALLOWANCE

1.                FLIGHT OPERATIONS TRAINING

1.1               Flight Crew Training

                  The  Seller  will  provide   flight  crew  training   (regular
                  transition or CCQ as  applicable)  free of charge for * of the
                  Buyer's flight crews. *.

1.2               Flight Crew Line Initial Operating Experience

                  The Seller will provide to the Buyer pilot  instructor(s)  for
                  one (1)  pilot  instructor  month to assist  with  flight-crew
                  initial operating experience.

                  The  maximum  number of pilot  instructors  present at any one
                  time will be limited to two (2) pilot instructors.

1.3               Cabin Attendants' Familiarization Course

                  The  Seller  will  provide  to  the  Buyer  cabin  attendants'
                  training  free of charge for  twenty-four  (24) of the Buyer's
                  cabin attendants.

1.4               Performance/Operations Course(s)

                  The Seller will provide to the Buyer two hundred (200) trainee
                  days of performance/operations training free of charge for the
                  Buyer's personnel.

                  The  above   trainee   days  will  be  used   solely  for  the
                  performance/operations  training  courses  as  defined  in the
                  Seller's applicable Training Course Catalog.

                                                         APPENDIX A TO CLAUSE 16

2.                MAINTENANCE TRAINING

2.1               Maintenance Training Courses

                  The  Seller  will  provide  to the  Buyer  *  trainee  days of
                  maintenance training free of charge for the Buyer's personnel.

                  These  trainee  days will be used  solely for the  Maintenance
                  training  courses  as  defined  in  the  Seller's   applicable
                  Training Course  Catalog.  The number of Engine Run-up courses
                  will be limited to one (1) course for three (3)  trainees  per
                  Aircraft.

2.2               Line Maintenance Initial Operating Experience Training

                  The Seller will provide to the Buyer maintenance instructor(s)
                  at the Buyer's base free of charge for a period of * weeks.

3.                TRAINEE DAYS ACCOUNTING

                  Trainee days are counted as follows:

                  -  For instruction at the Seller's training  centers,  one (1)
                     day of  instruction  for one  (1)  trainee  equals  one (1)
                     trainee day, and the number of trainees at the beginning of
                     the  course  will be  counted  as the  number  of  trainees
                     considered to have taken the course.

                  -  For instruction  outside of the Seller's  training centers,
                     one (1) day of  secondment  of one  (1)  Seller  instructor
                     equals the actual  number of trainees  attending the course
                     or a minimum of twelve (12) trainee days.

4.                TRAINING AIDS AND CBT SYSTEM FOR BUYER'S TRAINING ORGANIZATION

4.1               The Seller will provide the Buyer with the following  training
                  aids:

                  -  *  sets  of  cockpit color paper panel drawings (scale 1/1)
                     and one (1) reproducible CD ROM

                  -  * set of cockpit color paper panel drawings (scale1/2)  and
                     one (1) reproducible CD ROM

4.2               The  Seller  will  provide  to the Buyer one (1)  "Airbus  CBT
                  System," defined in Clause 2.1.3 of Appendix C hereto, related
                  to the  Aircraft.  The Seller will also provide free of charge
                  updates to  courseware  in Clause 4.2 below when  developed by
                  the Manufacturer, for five (5) years after initial delivery of
                  the courseware.

                  The Airbus CBT System supplied to the Buyer will consist of

                  -  one (1) Airbus CBT installation/utilization guide

                  -  one (1) set of CD-ROM with run time software related to the
                     delivered courseware.

                  For Flight Operations Training

                  The A320  Family  flight crew  Airbus CBT  courseware  will be
                  delivered  with  - one  (1)  set  of CD ROM  with  Airbus  CBT
                  courseware files, including ADOPT/ACOPI tools - one (1) set of
                  Training  Interface  for  Performance  and Weight and  Balance
                  (TIPWB)

                  For Maintenance Training

                  The A320  Family  maintenance  Airbus CBT  courseware  will be
                  delivered  with  - one  (1)  set  of CD ROM  with  Airbus  CBT
                  courseware  files  - one  (1)  set of  training  documentation
                  master,  whenever  applicable - one (1) set of menu listings -
                  six (6) sets of videodisks, whenever applicable

                                                         APPENDIX B TO CLAUSE 16

                        MINIMUM RECOMMENDED QUALIFICATION

                      IN RELATION TO TRAINING REQUIREMENTS

                          (Regular Transition Courses)

The  prerequisites  listed  below  are  the  minimum  recommended   requirements
specified  for Airbus  training.  If the  appropriate  regulatory  agency or the
specific   airline   policy  of  the  trainee   demand   greater  or  additional
requirements, they will apply as prerequisites.

-                 CAPTAIN prerequisites
                  ---------------------

                  .  Fluency in English

                  . 1500 hours minimum  flying  experience as pilot . 1000 hours
                  experience on FAR/JAR 25 aircraft

                  . 200 hours experience as airline, corporate pilot or military
                  pilot . Must have flown  transport  type  aircraft,  as flying
                  pilot, within the last 12 months.

-                 FIRST OFFICER prerequisites
                  ---------------------------

                  .  Fluency in English

                  . 500 hours minimum  flying  experience as pilot of fixed wing
                  aircraft . 300 hours  experience  on FAR/JAR 25 aircraft . 200
                  hours flying  experience as airline pilot or a corporate pilot
                  or military  pilot . Must have flown  transport type aircraft,
                  as flying pilot, within the last 12 months.

                  For both CAPTAIN and FIRST  OFFICER,  if one or several of the
                  above criteria are not met, the trainee must follow

                  (i)      an adapted course (example: if not fluent in English,
                           an adapted course with a translator), or

                  (ii)     an Entry Level Training  ELT) program before entering
                           the regular or the adapted course.

                  Such course(s), if required, will be at the Buyer's expense.

-        MAINTENANCE PERSONNEL prerequisites

                  .  Fluency in English

                  .  Experience  on first or  second  generation  jet  transport
                     category   aircraft.   Knowledge   of  digital  techniques,
                     including ARINC 429, for electrics / avionics specialists.

If this criterion is not met the trainee must follow a Basic Digital Course.

<PAGE>

                                                         APPENDIX C TO CLAUSE 16

                LICENSE FOR USE OF AIRBUS COMPUTER BASED TRAINING

1.       GRANT

         The  Seller  grants  the Buyer  the  right,  pursuant  to the terms and
         conditions  herein,  to use the Airbus CBT System for the term (defined
         in Clause 4 below) of this license (the "License").

2.       DEFINITIONS

2.1      For  the  purpose  of  this  Appendix C  to  Clause 16,  the  following
         definitions will apply :

2.1.1    "Airbus CBT Courseware" means the programmed  instructions that provide
         flight crew and maintenance training.

2.1.2    "Airbus CBT Software" means the system software that permits the use of
         the Airbus CBT Courseware.

2.1.3    "Airbus  CBT  System"  means the combination of the Airbus CBT Software
         and the Airbus CBT Courseware.

2.1.4    "Student/Instructor Mode"  means  the  mode that allows the user to run
         the Airbus CBT Courseware.

2.1.5    "Airbus CBT Training" means the training enabling the Buyer to load and
         use the Airbus CBT System.

2.2      For the purpose of clarification,  it is hereby stated that all related
         hardware  required  for the  operation  of the Airbus CBT System is not
         part of the  Airbus  CBT  System  and will be  procured  under the sole
         responsibility of the Buyer.

3.       COPIES

3.1      The Buyer will be permitted to copy the Airbus CBT Software for back-up
         and  archiving  purposes  and for  loading of the  Airbus CBT  Software
         exclusively on the Buyer's workstations.  In such cases, the Buyer will
         advise  the  Seller in writing  stating  the number and  purpose of any
         copies made. Any other copying is strictly prohibited.

3.2      The Buyer agrees to reproduce  the  copyright and other notices as they
         appear on or within the  original  media on any  copies  that the Buyer
         makes of the Airbus CBT Software.

4.       TERM

         The rights  under this License will be granted to the Buyer for as long
         as the  Buyer  operates  the  aircraft  model to which the  Airbus  CBT
         Software  and the Airbus CBT  courseware  apply.  When the Buyer  stops
         operating  said  Aircraft  model,  the Buyer will return the Airbus CBT
         System and any  copies  thereof to the  Seller,  accompanied  by a note
         certifying that the Buyer has returned all existing copies.

5.       PERSONAL ON-SITE LICENSE

5.1      The above  described  License is  personal  to the Buyer for use of the
         Airbus  CBT  System   within  the  Buyer's   premises   only,   and  is
         nontransferable and nonexclusive.

5.2      The Buyer may not (i)  distribute  or  sublicense  any  portion  of the
         Airbus CBT  System,  (ii) modify or prepare  derivative  works from the
         Airbus CBT Software, (iii) publicly display visual output of the Airbus
         CBT Software,  or (iv) transmit the Airbus CBT Software  electronically
         by any means.

6.       CONDITIONS OF USE

6.1      Use of the Airbus CBT Software

         For  the  student  delivery  mode,  the  Buyer  will use the Airbus CBT
         Software for the exclusive purpose of

         (i)      including  students  on  the roster for one or several courses
                  syllabi in order to follow students' progression,

         (ii)     rearranging   course   syllabi  or  creating  new  ones  using
                  available  courseware  modules,  it being  understood that the
                  Seller  disclaims any  responsibility  regarding any course(s)
                  that may be modified or rearranged by the Buyer.

6.2      Use of the Airbus CBT Courseware

         The Buyer will use the Airbus CBT Courseware for the exclusive  purpose
         of performing  training  instructions  for its personnel,  or for third
         party personnel contracted to perform work on the Aircraft on behalf of
         the Buyer.  Such training will be performed at the Buyer's  facility or
         at a  subcontractor's  facility provided it is conducted by the Buyer's
         personnel.

7.       PROPRIETARY RIGHTS AND NONDISCLOSURE

         The Airbus CBT Software and Airbus CBT  Courseware,  the copyrights and
         any and all other author rights, intellectual, commercial or industrial
         proprietary  rights of whatever  nature in the Airbus CBT  Software and
         Airbus  CBT  Courseware  are and will  remain  with the  Seller  or its
         suppliers,  as the case may be. The Airbus CBT  Software and Airbus CBT
         Courseware and their contents are designated as confidential. The Buyer
         will not take any commercial advantage by copy or presentation to third
         parties of the Airbus CBT Software,  the documentation,  the Airbus CBT
         Courseware, and/or any rearrangement, modification or copy thereof.

         The Buyer  acknowledges the  Manufacturer's  proprietary  rights in the
         Airbus  CBT  System  and  undertakes  not to  disclose  the  Airbus CBT
         Software or Airbus CBT Courseware or parts thereof or their contents to
         any third  party  without  the prior  written  consent  of the  Seller.
         Insofar  as it is  necessary  to  disclose  aspects  of the  Airbus CBT
         Software  and Airbus CBT  Courseware  to the  Buyer's  personnel,  such
         disclosure  is permitted  only for the purpose for which the Airbus CBT
         Software and Airbus CBT  Courseware are supplied to the Buyer under the
         License.

8.       LIMITED WARRANTY

8.1      The  Seller  warrants  that  the  Airbus  CBT  System  is  prepared  in
         accordance  with the  state  of the art at the date of its  conception.
         Should the Airbus CBT System be found to contain any  nonconformity  or
         defect,  the Buyer will notify the Seller promptly thereof and the sole
         and  exclusive  liability  of the Seller  under this  Clause 8.1 of the
         Airbus CBT License will be to correct the same at its own expense.

 8.2     WAIVER, RELEASE AND RENUNCIATION

         THE WARRANTIES,  OBLIGATIONS AND LIABILITIES OF THE SELLER AND REMEDIES
         OF  THE  BUYER  SET  FORTH  IN  THIS  LICENSE  ARE   EXCLUSIVE  AND  IN
         SUBSTITUTION FOR, AND THE BUYER HEREBY WAIVES,  RELEASES AND RENOUNCES,
         ALL OTHER  WARRANTIES,  OBLIGATIONS  AND  LIABILITIES OF THE SELLER AND
         RIGHTS, CLAIMS AND REMEDIES OF THE BUYER  AGAINST  THE  SELLER, EXPRESS
         OR  IMPLIED,  ARISING  BY  LAW  OR  OTHERWISE   WITH   RESPECT  TO  ANY
         NONCONFORMITY  OR DEFECT  IN  AIRBUS  CBT  SYSTEM  DELIVERED UNDER THIS
         LICENSE INCLUDING BUT NOT LIMITED TO:

(A)      ANY WARRANTY AGAINST HIDDEN DEFECTS;

(B)      ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS;

(C)      ANY  IMPLIED  WARRANTY  ARISING  FROM  COURSE OF PERFORMANCE, COURSE OF
         DEALING OR USAGE OF TRADE;

(D)      ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY, WHETHER  CONTRACTUAL
         OR IN TORT AND WHETHER OR NOT ARISING  FROM  THE  SELLER'S  NEGLIGENCE,
         ACTUAL OR IMPUTED; AND

(E)      ANY OBLIGATION,  LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OR   DAMAGE
         TO ANY AIRCRAFT, COMPONENT, EQUIPMENT, ACCESSORY OR PART THEREOF.

         THE SELLER WILL HAVE NO OBLIGATION OR LIABILITY, HOWSOEVER ARISING, FOR
         LOSS OF USE, REVENUE OR PROFIT OR FOR ANY OTHER DIRECT,  INCIDENTAL, OR
         CONSEQUENTIAL  DAMAGES WITH RESPECT TO ANY  NONCONFORMITY  OR DEFECT IN
         THE AIRBUS CBT SYSTEM DELIVERED UNDER THIS LICENSE.

         Nothing  contained in the foregoing  Clause 8.2 will be  interpreted to
         deprive the Buyer of its right to enforce the rights and  remedies  set
         forth in this License.

<PAGE>

17 -              EQUIPMENT SUPPLIER PRODUCT SUPPORT
                  ----------------------------------

17.1              Equipment Supplier Product Support Agreements

17.1.1            The  Seller  has  obtained Supplier Product Support Agreements
                  transferable to the Buyer from Suppliers of  Seller  Furnished
                  Equipment listed in the Specification.

17.1.2            These   agreements  are  based  on  the  "World  Airlines  and
                  Suppliers Guide" and include Supplier commitments contained in
                  the Supplier  Product  Support  Agreements,  which include the
                  following:

                  (i)      Technical  data  and  manuals  required  to  operate,
                           maintain, service and  overhaul  the  Supplier  items
                           will  (a)  be  prepared  in   accordance   with   the
                           applicable  provisions  of ATA  Specification 100 and
                           101 in accordance with Clause 14  of  this Agreement,
                           (b) include revision service, and (c) be published in
                           the English language.   The  Seller  recommends  that
                           software data, supplied in the form of an appendix to
                           the  Component  Maintenance  Manual,  be  provided in
                           compliance with ATA Specification 102 up to  level  3
                           to protect Supplier's proprietary interests.

                  (ii)     Warranties  and  guarantees,   including   Suppliers'
                           standard warranties,  and in the case of Suppliers of
                           landing  gear,  service  life  policies  for selected
                           landing gear structures.

                  (iii)    Training to ensure efficient  operation,  maintenance
                           and overhaul of the Suppliers'  items for the Buyer's
                           instructors, shop and line service personnel.

                  (iv)     Spares data in compliance with ATA  Specification 200
                           or 2000, initial provisioning recommendations, spares
                           and   logistics   service,   including   routine  and
                           emergency deliveries.

                  (v)      Technical   service   to  assist   the   Buyer   with
                           maintenance,    overhaul,   repair,   operation   and
                           inspection  of  Supplier  items  as well as  required
                           tooling and spares provisioning.

17.2              Supplier Compliance

                  The Seller  will  monitor  Supplier  compliance  with  support
                  commitments defined in the Supplier Product Support Agreements
                  and will take action together with the Buyer if necessary.

17.3              Supplier Part Repair Stations

17.3.1            The   Manufacturer   has   developed   with  the  Suppliers  a
                  comprehensive  network of repair stations in North America for
                  those Supplier Parts originating from outside this territory.

                  As a  result,  most  Supplier  Parts are  repairable  in North
                  America,  and corresponding  repair stations are listed in the
                  AOG and Repair Guide, which is issued and regularly updated by
                  the Manufacturer.

                  The Seller  undertakes that the Supplier Parts that have to be
                  forwarded  for repair  outside North America will be sent back
                  to the Buyer with proper tagging as required by the FAA.

17.3.2            The Seller  will  support  the Buyer in cases where the agreed
                  repair turn time of an approved  repair  station is not met by
                  causing  free-of-charge loans or exchanges as specified in the
                  relevant Supplier Product Support  Agreements to be offered to
                  the Buyer.

<PAGE>

18 -              BUYER FURNISHED EQUIPMENT
                  -------------------------

18.1              Administration

18.1.1            Without   additional   charge  and  in  accordance   with  the
                  Specification,  the  Seller  will  cause the  Manufacturer  to
                  provide for the installation of the BFE, provided that the BFE
                  is referred to in the Airbus BFE Catalog of Approved Suppliers
                  by Products valid at the time the BFE is ordered.

                  The Seller will cause the  Manufacturer to advise the Buyer of
                  the dates by and location to which,  in the planned release of
                  engineering  for the  Aircraft,  the  Manufacturer  requires a
                  written detailed engineering definition. This description will
                  include the  description  of the dimensions and weight of BFE,
                  the information  related to its  certification and information
                  necessary  for the  installation  and operation  thereof.  The
                  Buyer will furnish such detailed  description  and information
                  by the dates specified. Thereafter, no information, dimensions
                  or weights will be revised unless authorized by an SCN.

                  The  Seller  will  also  provide  the Buyer in due time with a
                  schedule of dates and shipping  addresses  for delivery of BFE
                  and (when  requested  by the Seller)  additional  spare BFE to
                  permit installation of the BFE in the Aircraft and delivery of
                  the Aircraft in  accordance  with the delivery  schedule.  The
                  Buyer  will  provide  the BFE by such  dates in a  serviceable
                  condition,  to allow  performance  of any  assembly,  test, or
                  acceptance process in accordance with the industrial schedule.

                  The  Buyer  will  also   provide,   when   requested   by  the
                  Manufacturer,  at  Aerospatiale  works  and/or at DASA  works,
                  adequate field service,  including  support from BFE suppliers
                  to act in a technical  advisory  capacity to the Seller in the
                  installation, calibration and possible repair of any BFE.

18.1.2            The BFE will be imported  into  France or into  Germany by the
                  Buyer under a suspensive customs system ("Regime de l'entrepot
                  industriel pour fabrication  coordonnee" or  "Zollverschluss")
                  without  application  of any  French or German  tax or customs
                  duty,  and will be Delivered  Duty Unpaid (DDU) (as defined in
                  the April 1990 edition of  publication  No. 460,  published by
                  the International Chamber of Commerce), to

                  AEROSPATIALE MATRA S.A.
                  316 Route de Bayonne
                  31300 TOULOUSE
                  FRANCE

                  or

                  DAIMLER CHRYSLER AEROSPACE AIRBUS GmbH
                  Division Hamburger Flugzeugbau
                  Kreetslag 10
                  21129 HAMBURG
                  FEDERAL REPUBLIC OF GERMANY

                  as provided in Clause 18.1.1.

18.1.3            If the Buyer requests the Seller to  supply  directly  certain
                  items that are considered BFE  according to the Specification,
                  and if such request is notified to the Seller  in  due time in
                  order not to affect the delivery date  of  the  Aircraft,  the
                  Seller may agree to order such items  subject to the execution
                  of  an    SCN  reflecting  the  effect  on  price,  escalation
                  adjustment, and any other conditions of the Agreement. In such
                  a case the Seller  will  be  entitled  to  the  payment  of  a
                  reasonable  handling  charge  and  will  bear  no liability in
                  respect of delay and  product  support  commitments  for  such
                  items.

18.2              Requirements

                  The Buyer is  responsible  for, at its  expense,  and warrants
                  that BFE will (i) be  manufactured  by a  qualified  supplier,
                  (ii) meet the  requirements  of the applicable  Specification,
                  (iii)  comply with  applicable  requirements  incorporated  by
                  reference  to the  Type  Certificate  and  listed  in the Type
                  Certificate  Data Sheet,  and (iv) be approved by the Aviation
                  Authorities  delivering the Certificate of  Airworthiness  for
                  Export and by the Buyer's Aviation  Authority for installation
                  and  use on the  Aircraft  at the  time  of  Delivery  of such
                  Aircraft.  The Seller  will be  entitled to refuse any item of
                  BFE  that  is  incompatible   with  the   Specification,   the
                  engineering  definition  mentioned in the second  paragraph of
                  Clause 18.1.1 or the certification requirements.

18.3              Buyer's Obligation and Seller's Remedies

18.3.1            Any delay or failure in

                  (i)      furnishing  the  BFE  in serviceable condition at the
                           requested delivery date,

                  (ii)     complying  with  the  warranty in  Clause  18.2 or in
                           providing  the  descriptive  information  or  service
                           representatives mentioned in Clause 18.1.1, or

                  (iii)    in obtaining any required approval for such equipment
                           under  the  above  mentioned   Aviation   Authorities
                           regulations may delay the  performance  of any act to
                           be  performed by the  Seller,  and  cause  the  Final
                           Contract Price of the  Aircraft  to  be  adjusted  in
                           accordance  with  the  updated   delivery   schedule,
                           including, in particular, the costs the Seller incurs
                           that   are  attributable  to  the  delay  or  failure
                           described above, such as storage,   taxes,  insurance
                           and costs of out-of sequence installation.

18.3.2            In addition to the consequences outlined in Clause  18.3.1, in
                  the event of a delay or failure described in Clause 18.3.1,

                  (i)      the Seller  may, after  consultation  with the Buyer,
                           select, purchase and install equipment similar to the
                           BFE at issue, in which event the Final Contract Price
                           of the affected Aircraft will also  be  increased  by
                           the purchase price of such equipment, plus reasonable
                           costs  and  expenses  incurred  by  the  Seller  for
                           handling    charges,    transportation,    insurance,
                           packaging and, if required  and not already  provided
                           for in the price of  the Aircraft, for adjustment and
                           calibration; or

                  (ii)     if the BFE is  delayed more  than  thirty  (30)  days
                           beyond, or unapproved  within thirty (30) days of the
                           date pursuant to Clause  18.1.1,  then the Seller may
                           deliver or the Buyer may  elect to have the  Aircraft
                           delivered without the installation of such equipment,
                           notwithstanding the terms of Clause 7.2 insofar as it
                           may otherwise have applied,whereon the Seller will be
                           relieved of all obligations to install such equipment

18.4              Title and Risk of Loss

                  Title to and risk of loss of BFE will at all times remain with
                  the  Buyer,  except  that  risk  of loss  (limited  to cost of
                  replacement  of said BFE and excluding in  particular  loss of
                  use) will be with the  Seller for as long as the BFE is in the
                  care, custody and control of the Seller.

<PAGE>

19-               Indemnities and Insurance

19.1              Seller's Indemnities

                  The Seller will be solely  liable for and will  indemnify  and
                  will  hold the  Buyer,  its  directors,  officers,  agents  or
                  employees,  harmless against all losses,  liabilities,  costs,
                  expenses and  damages,  including  court costs and  reasonable
                  attorneys' fees ("Losses"), arising from

                  (i)      claims for injuries  to, or deaths of, the  Seller's,
                           Manufacturer's   or   any   Associated   Contractor's
                           respective directors,  officers, agents or employees,
                           or  loss  or  damage  to   property  of  the  Seller,
                           Manufacturer  or any  Associated  Contractor or their
                           respective employees when such losses occur during or
                           are  incidental  to (a) the  Buyer's  exercise of its
                           inspection  rights under Clause 7, (b) the  Technical
                           Acceptance  Process  described  in  Clause 8, (c) the
                           provision of Field  Assistance  pursuant to Clause 15
                           or (d) the  provision of training  pursuant to Clause
                           16, and

                  (ii)     claims for injuries to or deaths of third parties, or
                           loss of property of third parties,  occurring during,
                           or  incidental  to (a) the  Buyer's  exercise  of its
                           inspection  rights  pursuant  to  Clause 7 or (b) the
                           Technical Acceptance Process described in Clause 8,

                  provided  that  such  Losses  do not  result  from  the  gross
                  negligence or willful  misconduct of the Buyer, its directors,
                  officers, agents or employees.

19.2              Buyer's Indemnities

                  The Buyer  will be solely  liable for and will  indemnify  and
                  will hold the Seller, the Manufacturer, each of the Associated
                  Contractors and their respective subcontractors, Affiliates of
                  the Seller, the Seller's  representatives,  and the respective
                  assignees,  directors, officers, agents, and employees of each
                  of the foregoing, harmless against all Losses arising from

                  (i)      claims  for  injuries  to or  deaths  of the  Buyer's
                           directors,  officers, agents or employees, or loss or
                           damage to  property  of the  Buyer or its  employees,
                           when such losses  occur during or are  incidental  to
                           (a) the  Buyer's  exercise of its  inspection  rights
                           under Clause 7; (b) the Technical  Acceptance Process
                           described  in  Clause 8, (c) the  provision  of Field
                           Assistance   pursuant   to  Clause  15,  or  (d)  the
                           provision of training pursuant to Clause 16; and

                  (ii)     claims for injuries to or deaths of third parties, or
                           loss of property of third parties,  where such losses
                           occur during or  incidental  to (a) the  provision of
                           Field  Services  under  Clause 15 or (b) arise out of
                           the provision of training pursuant to Clause 16,

                  provided  that  such  Losses  do not  result  from  the  gross
                  negligence or willful misconduct of the Seller.

19.3              Notice and Defense of Claims

                  (i)      If  any  claim  is  made or suit is brought against a
                           party  or  entity  entitled  to indemnification under
                           this Clause 19 (the  "Indemnitee")  for  damages  for
                           which  liability  has been assumed by the other party
                           under   this   Clause  19,  (the  "Indemnitor"),  the
                           Indemnitee  will  promptly   give   notice   to   the
                           Indemnitor  and  the  Indemnitor  (unless   otherwise
                           requested by the Indemnitee) will assume and  conduct
                           the defense, or settlement,  of  such  suit,  as  the
                           Indemnitor will deem prudent.  Notice of the claim or
                           suit will be accompanied by all information pertinent
                           to the matter  as  is  reasonably  available  to  the
                           Indemnitee  and  will be followed by such cooperation
                           by the Indemnitee as the Indemnitor  or  its  counsel
                           may  reasonably   request  at   the  expense  of  the
                           Indemnitor.

                  (ii)     In the event that the Indemnitor  fails or refuses to
                           assume the  defense of any claim or lawsuit  notified
                           to it under this Clause 19, the Indemnitee  will have
                           the right to proceed  with the defense or  settlement
                           of the claim or lawsuit as it deems  prudent and will
                           have a claim  over  against  the  Indemnitor  for any
                           judgments,  settlements, costs or expenses, including
                           reasonable  attorneys' fees.  Further, in such event,
                           the  Indemnitor  will be  deemed to have  waived  any
                           objection or defense to the Indemnitee's  claim based
                           on the reasonableness of any settlement.

19.4              Insurance

                  (i)      Each  party  will  maintain  adequate   insurance  to
                           support  its  undertakings  under this Clause 19, and
                           will  bear any  deductible  amounts  set forth in the
                           applicable  policies.  With respect to Clause 19.1(i)
                           and  19.2(i),  the  Buyer  and the  Seller  will each
                           provide a certificate  of insurance,  if requested by
                           the other  party,  prepared  by an  insurance  broker
                           licensed   and  skilled  in  the  field  of  aviation
                           insurance,  in English and containing  such specifics
                           as the requesting party may reasonably demand.

                  (ii)     With  respect  to  the  Buyer's undertaking in Clause
                           19.2(ii), the Buyer will

                           (a)      cause  the  Seller,   its  Affiliates,   the
                                    Manufacturer,   each   of   the   Associated
                                    Contractors     and     their     respective
                                    subcontractors,   Seller's  representatives,
                                    and  the  respective  assignees,   officers,
                                    directors,   agents  and  employees  of  the
                                    foregoing,   to  be  named   as   additional
                                    insureds   under   the   Buyer's   liability
                                    policies;

                           (b)      obtain  and cause the  carriers  of its hull
                                    all  risks  and hull war  risk  policies  to
                                    waive all rights of subrogation  against the
                                    Seller,  its Affiliates,  the  Manufacturer,
                                    each of the Associated Contractors, Seller's
                                    representatives     and    the    respective
                                    assignees,  officers,  directors, agents and
                                    employees of the foregoing; and

                           (c)      not less than seven (7) Working  Days before
                                    the  commencement of training to be provided
                                    under  Clause  16,  furnish  to  the  Seller
                                    certificates of insurance,  in English, from
                                    a licensed  insurance  broker skilled in the
                                    field of aviation insurance, certifying that

(1)      the  requirements  of  the  foregoing Clauses 19.4 (ii)(a) and (b) have
         been met;

(2)      the limits and insurance periods of each applicable policy;

(3)      the  applicable  policies  are primary and noncontributory to any other
         insurance maintained by the Seller;

(4)      the applicable policies contain a cross-liability provision; and

(5)      the  insurance  coverage  will not become  ineffective,   canceled,  or
         materially decreased or changed except on seven(7)Working  Days' notice
         to the Seller.

<PAGE>

20 -              ASSIGNMENTS AND TRANSFERS
                  -------------------------

20.1              Successors and Assigns

                  Subject to the  provisions  of this Clause 20, this  Agreement
                  will  inure  to  the  benefit  of  and  be  binding  upon  the
                  successors and assigns of the parties  hereto.  This Agreement
                  may not be  assigned  in  whole  or in part  by  either  party
                  without  the prior  written  consent of the  other,  except as
                  specifically provided herein.

20.2              Assignments and Transfers by the  Seller
                  ----------------------------------------

20.2.1            Seller Designations

                  The  Seller  may at  any  time,  with  notice  to  the  Buyer,
                  designate the Manufacturer, ASCO, any Associated Contractor or
                  any Affiliate of the Seller,  or any particular  facilities or
                  particular personnel of each, to be responsible for, and/or to
                  provide the goods and  services  to be  provided or  performed
                  under this  Agreement.  No such  designation  will release the
                  Seller from any of its obligations hereunder.

20.2.2            Seller Assignments

                  The Seller may at any time assign any of its rights to receive
                  money,  and any of its duties to effect  sale and  delivery of
                  the  Aircraft,  or  any  of its  responsibilities,  duties  or
                  obligations to perform any other obligations hereunder, to the
                  Manufacturer,  any of the Associated Contractors,  ASCO or any
                  Affiliate  of the Seller,  the  Manufacturer,  the  Associated
                  Contractors  or ASCO.  No such  assignment  will  release  the
                  Seller from any of its obligations hereunder.

20.2.3            Transfer of Rights and Obligations upon Reorganization

                  If at any time until the date upon  which all the  obligations
                  and  liabilities  of the Seller under this Agreement have been
                  discharged,   the  legal  structure,  the  membership  or  the
                  business of the Seller is reorganized or the legal form of the
                  Seller is  changed  and as a  consequence  thereof  the Seller
                  wishes the Buyer to accept the  substitution  of the Seller by
                  another  entity within the  restructured  Airbus group (or the
                  Seller in its new legal form) ("Newco") as contemplated below,
                  the Seller will promptly notify the Buyer of its wish.

                  In such event,  the Seller may request the Buyer to enter into
                  a novation  agreement  and/or other agreement  having the same
                  effect whereby the Seller's rights and obligations  under this
                  Agreement are novated or transferred  in favor of Newco.  Upon
                  receipt of such request,  the Buyer will enter into a novation
                  agreement and/or other  appropriate  agreement,  provided that
                  the Buyer's  rights and  obligations  under this Agreement are
                  not  materially  adversely  affected by such  novation  and/or
                  other agreement. *.

                  Until   any   such   novation   agreement/other    appropriate
                  documentation has come into effect, this Agreement will remain
                  in full force and effect,  and each party will act  diligently
                  and in good faith to implement the novation  agreement  and/or
                  other  appropriate  documentation as soon as practicable after
                  Newco has come into existence.

20.3              Assignments by the Buyer

20.3.1            Assignment on Sale, Merger or Consolidation

                  *

20.3.2            Assignment to Affiliate

                  The Buyer may assign its rights and obligations hereunder with
                  respect  to one or  more  Aircraft  to any of its  Affiliates,
                  provided  that (i) such  Affiliate  has executed an assumption
                  agreement,  in form and substance  satisfactory to the Seller,
                  agreeing to assume all of the Buyer's  obligations  under this
                  Agreement,  and (ii) the Buyer remains obligated to the Seller
                  under this  Agreement as though the  assignment  had not taken
                  place.

20.3.3            Assignments for Financing Purposes

                  (i)      At or following delivery,  the Buyer will be entitled
                           to assign its rights and  obligations  under  Clauses
                           12,  13 and 17 hereof to any  provider  of  financing
                           with respect to one or more  Aircraft,  to the extent
                           that  such  Clauses  apply to the  Aircraft  that are
                           being   financed,   as   security   for  the  Buyer's
                           obligations with respect to such financing,  provided
                           that  such  assignment  does  not,  in  the  Seller's
                           reasonable  judgment,  adversely  affect the Seller's
                           rights hereunder.

                  (ii)     The Buyer  will be  entitled  to assign its rights to
                           take title to one or more  Aircraft at delivery,  and
                           its rights and  obligations  under Clauses 12, 13, 17
                           and this Clause 20, to the extent such Clauses  apply
                           to the Aircraft being delivered,  to a trust or other
                           special  purpose  entity,  in each case in connection
                           with the financing of one or more Aircraft,  provided
                           that  the  assignment   does  not,  in  the  Seller's
                           reasonable  judgment,  adversely  affect the Seller's
                           rights hereunder.

20.3.4            Post-Delivery Sale or Lease

                  The Seller agrees that, upon the  post-delivery  sale or lease
                  of an  Aircraft  (including  a sale  or  lease  for  financing
                  purposes) all of the Buyer's rights and obligations  remaining
                  at the time of such sale or lease under Clauses 12, 13, and 17
                  of this  Agreement  and this Clause 20.3.4 with respect to the
                  affected  Aircraft will inure to the benefit of the transferee
                  upon  delivery  to the  Seller of notice of such sale or lease
                  and written agreement by the transferee, in form and substance
                  satisfactory to the Seller, to be bound by the terms thereof.

20.3.5            Seller's Cooperation with Financing

                  The Seller agrees to cooperate  with the Buyer's  financing of
                  the Aircraft by providing written consents, legal opinions and
                  such other documents as the Buyer or its lender may reasonably
                  request.

21 -              TERMINATION FOR CERTAIN EVENTS
                  ------------------------------

21.1              Buyer Termination Events

21.1.1            Each of the  following  will  constitute a "Buyer  Termination
                  Event"  under  this   Agreement  and   immediately   upon  the
                  occurrence of a Buyer Termination Event, the Buyer will notify
                  the Seller of such occurrence in writing as provided in Clause
                  22.2 hereof, provided,  however, that any failure by the Buyer
                  to notify the Seller will not  prejudice  the Seller's  rights
                  hereunder:

                  (1)      The  Buyer  or any of its  Affiliates  commences  any
                           case,  proceeding or other action with respect to the
                           Buyer or any of its  Affiliates  in any  jurisdiction
                           relating to bankruptcy,  insolvency,  reorganization,
                           relief  from  creditors,   arrangement,   winding-up,
                           liquidation, dissolution or other relief with respect
                           to its debts (a "Buyer Insolvency Proceeding") or any
                           other party commences a Buyer  Insolvency  Proceeding
                           against the Buyer or any of its  Affiliates  and such
                           Insolvency  Proceeding remains unstayed,  undismissed
                           or undischarged for * days.

                  (2)      An action is commenced  seeking the  appointment of a
                           receiver,   trustee,   custodian  or  other   similar
                           official for the Buyer or any of its  Affiliates  for
                           all or  substantially  all of its  assets,  and  such
                           action remains unstayed,  undismissed or undischarged
                           for * days,  or the  Buyer  or any of its  Affiliates
                           makes a general  assignment  for the  benefit  of its
                           creditors.

                  (3)      An action is  commenced  against  the Buyer or any of
                           its  Affiliates  seeking  issuance  of a  warrant  of
                           attachment,  execution,  distraint or similar process
                           against  all or any  substantial  part of its assets,
                           and such  action  remains  unstayed,  undismissed  or
                           undischarged for * days.

                  (4)      The Buyer or any of its Affiliates becomes  insolvent
                           or  fails  generally  to pay its debts as they become
                           due.

                  (5)      The Board of Directors (or other governing  corporate
                           body) of the Buyer directs or authorizes  the Buyer's
                           management to commence  negotiations with one or more
                           of its  significant  creditors with a view to general
                           readjustment  or  rescheduling of all or any material
                           part of its indebtedness which it would otherwise not
                           be able to pay as it falls due.

                  (6)      The Buyer or any permitted  assignee or transferee of
                           the Buyer  fails to make any  payment  of a  deposit,
                           Predelivery  Payment,  Final Contract Price or amount
                           due for Initial  Provisioning when such payment comes
                           due.

                  (7)      The Buyer or any of its Affiliates  fails to make any
                           other payment when due under this  Agreement or under
                           any other  agreement  between the Buyer or any of its
                           Affiliates  and the  Seller or any of its  Affiliates
                           within * of  receiving  notice  from Seller that such
                           payment is due.

                  (8)      The Buyer  defaults in its  obligations  under Clause
                           9.2 of this Agreement to take delivery of an Aircraft
                           which  is  Ready  for  Delivery  and  has  been  duly
                           tendered to the Buyer,  which  failure will be deemed
                           to be a rejection of the Aircraft without warrant.

                  (9)      The Buyer  defaults in the  observance or performance
                           of any material  covenant,  undertaking or obligation
                           contained  in this  Agreement  or any other  material
                           agreement  between  the Buyer and the Seller  and, if
                           such  breach or default  is  capable of being  cured,
                           such  breach  or  default  is not  cured  within  any
                           specified  cure  period,  or if  no  cure  period  is
                           specified,  within  * of  receiving  notice  of  such
                           breach or default.

21.1.2            In  the  event  of any Buyer Termination Event the Seller will
                  have  the  right  to elect one or more of the remedies in this
                  Clause    21.1.2.  The  Seller's  remedies  will  specifically
                  include,  without  limitation,  the right by written notice to
                  the   Buyer,   effective   immediately,  to  (i)  suspend  its
                  performance   under   this  Agreement   and  under  any  other
                  agreements between the Buyer and the  Seller;  (ii)  terminate
                  this Agreement or any other  agreement  between  the Buyer and
                  the Seller with respect to any or all  Aircraft  or  aircraft,
                  equipment,  services,  data  and  other  items  undelivered or
                  unfurnished on the effective date of such  termination;  (iii)
                  reschedule the Delivery Date of any and all Aircraft remaining
                  to be delivered under this Agreement as of  the  date  of  the
                  occurrence of the Buyer  Termination  Event;  (iv)  reschedule
                  delivery  of  any  and  all aircraft remaining to be delivered
                  under any other agreement between the Buyer and the  Seller as
                  of the date of the occurrence of the Buyer Termination  Event;
                  and (v) in the event of termination of this Agreement, retain,
                  as damages for breach and not as a penalty, an amount equal to
                  (a) all Predelivery Payments previously received by the Seller
                  from the Buyer under this Agreement in respect of the Aircraft
                  terminated, (b) any other advance payments to the  Seller made
                  theretofore  under  this  Agreement  or  any  other  agreement
                  between the  Buyer  or any of its Affiliates and the Seller or
                  any of its Affiliates  in  respect of the Aircraft terminated,
                  and (c) any other amounts agreed to between the Buyer  and the
                  Seller pursuant to this Agreement in respect of  the  Aircraft
                  terminated.

                  The  Seller  will  have the  right to elect one or more of the
                  foregoing  remedies,  and  exercise of any one or more of such
                  remedies  will not be deemed a waiver  of any other  remedy or
                  remedies provided herein or under applicable law.

21.2              Seller Termination Events

                  *.

21.3              Insecurity Events

21.3.1            Each of the following will  constitute an  "Insecurity  Event"
                  and any remedies therefor provided in this Clause 21.3 will be
                  without  prejudice to and will be in addition to, and not as a
                  substitute  for any rights  the Seller may have,  at law or as
                  set forth in Clause 21.1 hereof, to terminate this Agreement:

                  (1)      With  respect  to  any  credit  or  lease   financing
                           facility  or  similar  agreement,  including  but not
                           limited to any  agreement  signed  subsequent  to the
                           date hereof, for the lease or use of aircraft, either
                           (i) the commitment to lend,  finance or lease, as the
                           case may be, is  terminated  (other than by the Buyer
                           or for reasons  unrelated to the financial  condition
                           or  performance  of the  Buyer)  or (ii) a  financial
                           covenant  thereunder  is breached  and such breach is
                           not waived or cured within *.

                  (2)      The Buyer or any of its Affiliates  fails to make any
                           payments  as they become due to or for the benefit of
                           the Propulsion Systems manufacturer or an A320 family
                           operating lessor, under their respective  agreements,
                           provided that the applicable cure period, if any, has
                           expired.

                  (3)      The  Buyer  is  involuntarily   removed  from  active
                           membership   and   participation   in   any   airline
                           clearinghouse   (or  any  substitute  or  replacement
                           arrangement),  or the Buyer is placed on a cash basis
                           by  such   clearinghouse   (or  such   substitute  or
                           replacement arrangement),  in either case as a result
                           of  the  Buyer's  failure  to  meet  financial  tests
                           mandated by such clearinghouse or to make payments to
                           or for the benefit of such clearinghouse when due.

                  (4)      The Buyer defaults in (i) the payment of principal or
                           interest  under one or more  agreements  for borrowed
                           money and/or (ii) the payment of rent or  indemnities
                           under  one or  more  lease  agreements  that,  in the
                           aggregate,   have  a  principal   amount  of  $*  (US
                           dollars--  *) or  more  (determined  in the  case  of
                           borrowed money by the amount  outstanding and, in the
                           case  of  a  lease,  by  the  present  value  of  the
                           remaining  rent payable  thereunder  discounted  at *
                           when the same becomes due, if such nonpayment  either
                           allows  or  results  in  the   acceleration  of  such
                           indebtedness.

                  (5)      At the end of each calendar month, the Buyer fails to
                           have a minimum of $* (US  dollars--  *) of  liquidity
                           resources   represented   by  the  aggregate  of  the
                           following:  (a) any unencumbered  cash balances,  (b)
                           any  trade  receivables  created  by the Buyer in the
                           ordinary   course   of   business   that   have  been
                           outstanding  for  fewer  than *  days  and  that  are
                           current,  due and  payable  within * days and against
                           which no  provisions  have been made by the Buyer and
                           (c) any unused lines of credit available to the Buyer
                           from reputable financial institutions on which, under
                           the terms of the  applicable  credit  agreement,  the
                           Buyer is then eligible to draw.

21.3.2            Within * of the occurrence of an Insecurity  Event,  the Buyer
                  will  notify the Seller of such  occurrence  in writing and by
                  courier or facsimile  (in either case in  accordance  with the
                  notice provisions of this Agreement),  provided however,  that
                  any  failure  by the  Buyer  to  notify  the  Seller  will not
                  prejudice the Seller's rights hereunder.

21.3.3            Upon receipt of notice from the Buyer under Clause 21.3.2,  or
                  on becoming aware by any other means of the occurrence  of  an
                  Insecurity Event, the  Seller  will  be  entitled  to  request
                  assurance  from  the  Buyer  of  the  Buyer's  ability to duly
                  perform each of the Buyer's obligations under  this  Agreement
                  and any other agreement between the Buyer and the  Seller  (or
                  any  of  their  respective  Affiliates)  ("Assurance").   Such
                  Assurance will be evidenced in writing  and  will  consist  of
                  either (i) evidence that the event or circumstance giving rise
                  to  the  Insecurity Event has been cured or eliminated or (ii)
                  assurance  substantially   identical   to   that  constituting
                  "adequate assurance of due performance" within the meaning  of
                  Article 2-609 of the Uniform Commercial Code as in  effect  in
                  the state of New York on the date of this Agreement.

21.3.4            In the event that the Buyer does not provide Assurance to  the
                  Seller within * of the request therefor  by  the  Seller,  the
                  Seller will have the right, at its option, to exercise any one
                  or more of the remedies in this Clause  21.3.4.   The Seller's
                  remedies will specifically include,  without  limitation,  the
                  right by written notice to the Buyer,  effective  immediately,
                  to (i)  suspend its performance under this Agreement and under
                  any  other  agreements  between the Buyer and the Seller; (ii)
                  terminate this Agreement or any other  agreement  between  the
                  Buyer and the Seller with respect  to  any  or all Aircraft or
                  aircraft,   equipment,   services,   data   and   other  items
                  undelivered or unfurnished  on  the  effective  date  of  such
                  termination; (iii) reschedule the Delivery Date of any and all
                  Aircraft  remaining to be delivered under this Agreement as of
                  the date of the  occurrence  of  the  Insecurity  Event;  (iv)
                  reschedule delivery of any and all aircraft  remaining  to  be
                  delivered under any other agreement between the  Buyer and the
                  Seller as of the date of  the  occurrence  of  the  Insecurity
                  Event;  and  (v) in the event of termination of this Agreement
                  retain, as  damages for breach and not as a penalty, an amount
                  equal to (a)  all  Predelivery Payments previously received by
                  the Seller from the Buyer under this Agreement in  respect  of
                  the Aircraft terminated, (b) any other advance payments to the
                  Seller made theretofore under  this  Agreement  or  any  other
                  agreement between the Buyer or  any  of its Affiliates and the
                  Seller of any of its Affiliates in  respect  of  the  Aircraft
                  terminated, and (c)  any  other  amounts agreed to between the
                  Buyer and the Seller pursuant to this Agreement in  respect of
                  the Aircraft terminated.

                  The  Seller  will  have the  right to elect one or more of the
                  foregoing  remedies,  and  exercise of any one or more of such
                  remedies  will not be deemed a waiver  of any other  remedy or
                  remedies provided herein or under applicable law.

21.4              Information Covenants

                  The Buyer hereby  covenants and agrees that,  from the date of
                  this Agreement  until no further  Aircraft are to be delivered
                  hereunder,  the Buyer will furnish or cause to be furnished to
                  the Seller the following:

                  (a)      Annual Financial Statements.  As  soon  as  available
                           and in any event within 120 days  after  the close of
                           each  fiscal year of the Buyer, (i) a copy of the SEC
                           Form 10-K filed by the Buyer with the Securities  and
                           Exchange  Commission  or  any  successor thereto (the
                           "SEC") for such fiscal year, or, if no such Form 10-K
                           was filed by the Buyer for such a  fiscal  year,  the
                           consolidated  balance  sheet  of  the  Buyer  and its
                           Subsidiaries, as at the end of such fiscal  year  and
                           the related consolidated statements of operations, of
                           common stockholders' equity  (deficit)  and  of  cash
                           flows for such fiscal year, setting forth comparative
                           consolidated figures as of the end  of  and  for  the
                           preceding fiscal year, and examined by (x)  any  "Big
                           Five" accounting  firm  or  (y)  any  other  firm  of
                           independent public accountants of recognized standing
                           selected  by  the  Buyer and reasonably acceptable to
                           the Seller, whose opinion will not be qualified as to
                           the scope of audit or as to the status of  the  Buyer
                           as  a  going  concern, and (ii) a certificate of such
                           accounting  firm   stating  that  its  audit  of  the
                           business  of  the  Buyer  was conducted in accordance
                           with generally accepted auditing standards.

                  (b)      Quarterly Financial Statements.  As soon as available
                           and  in  any  event within 45 days after the close of
                           each of the first three quarterly accounting  periods
                           in each fiscal year of the Buyer, a copy of  the  SEC
                           Form 10-Q filed by the Buyer with the  SEC  for  such
                           quarterly period, or, if no such Form 10-Q was  filed
                           by the Buyer  with  respect  to  any  such  quarterly
                           period, the consolidated balance sheet of  the  Buyer
                           and its Subsidiaries, as at the end of such quarterly
                           period and the  related  consolidated  statements  of
                           operations  for  such  quarterly  period  and for the
                           elapsed portion of the fiscal  year  ended  with  the
                           last  day  of  such quarterly period and in each case
                           setting forth comparative consolidated figures as  of
                           the end of and for the related periods in  the  prior
                           fiscal year, all of which will  be  certified  by  an
                           Authorized  Officer  of the Buyer, subject to changes
                           resulting  from  audit  and  normal  year-end   audit
                           adjustments.

                  (c)      Other   Information.   Promptly   upon   transmission
                           thereof,  copies  of any  filings  and  registrations
                           with,  and reports to, the SEC by the Buyer or any of
                           its  Subsidiaries,  and, with reasonable  promptness,
                           such other  information  or documents  (financial  or
                           otherwise) as the Seller may reasonably  request from
                           time to time.

                  For the purposes of this  Subclause  21.4,  (x) an "Authorized
                  Officer" of the Buyer will mean the Chief  Executive  Officer,
                  the Chief  Financial  Officer or any Vice  President and above
                  who reports  directly  or  indirectly  to the Chief  Financial
                  Officer and (y)  "Subsidiaries"  will mean,  as of any date of
                  determination,  those  companies  owned  by  the  Buyer  whose
                  financial  results  the Buyer is  required  to  include in its
                  statements of consolidated operations and consolidated balance
                  sheets.

21.5              Nothing contained in this Clause 21 will be deemed to waive or
                  limit the rights and remedies  available  to the parties under
                  the Uniform Commercial Code  as in effect in the State of  New
                  York  as  of the effective date of this Agreement (the "UCC"),
                  including,  but  not  limited  to,  those  rights and remedies
                  described in Article 2, Section 609 of the UCC.

21.6              NOTWITHSTANDING  ANY  PROVISIONS  OF THIS CLAUSE 21, OR OF ANY
                  OTHER  PROVISION  OF THIS  AGREEMENT,  INCLUDING  CLAUSE 11.5,
                  NEITHER   THE  BUYER  NOR  THE  SELLER   WILL  BE  LIABLE  FOR
                  INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES ARISING
                  OUT OF OR IN CONNECTION  WITH THIS AGREEMENT OR THE RIGHTS AND
                  OBLIGATIONS ARISING HEREUNDER.

<PAGE>

22 -              MISCELLANEOUS PROVISIONS
                  ------------------------

22.1              Data Retrieval

                  On the Seller's reasonable request, the Buyer will provide the
                  Seller with all the necessary data, as customarily compiled by
                  the Buyer and pertaining to the operation of the Aircraft,  to
                  assist  the  Seller  in making an  efficient  and  coordinated
                  survey of all reliability,  maintenance,  operational and cost
                  data with a view to  improving  the safety,  availability  and
                  operational costs of the Aircraft.

22.2              Notices

                  All notices and requests required or authorized hereunder will
                  be  given  in  writing  either  by  personal   delivery  to  a
                  responsible  officer of the party to whom the same is given or
                  by  commercial  courier,  certified  air mail (return  receipt
                  requested) or facsimile at the addresses and numbers set forth
                  below.  The date on which  any such  notice or  request  is so
                  personally delivered, or if such notice or request is given by
                  commercial courier,  certified air mail or facsimile, the date
                  on which sent, will be deemed to be the effective date of such
                  notice or request.

                  The Seller will be addressed at:

                  2, rond-point Maurice Bellonte

                  31700 BLAGNAC  FRANCE
                  Attention:  Director - Contracts
                  Telephone: 33 05 61 30 40 12
                  Telecopy:   33 05 61 30 40 11

                  The Buyer will be addressed at:

                  12015 East 46th Avenue, Suite 200
                  Denver, CO   80239-3116
                  Attention: Vice President Administration and General Counsel
                  Telephone:  303-371-7400, Ext. 1004
                  Fax:  303-371-9669

                  From time to time,  the party  receiving the notice or request
                  may designate another address or another person.

22.3              Waiver

                  The failure of either  party to enforce at any time any of the
                  provisions  of this  Agreement,  to exercise  any right herein
                  provided  or to require at any time  performance  by the other
                  party  of any  of  the  provisions  hereof  will  in no way be
                  construed to be a present or future waiver of such  provisions
                  nor in any way to affect the validity of this Agreement or any
                  part  hereof  or the right of the other  party  thereafter  to
                  enforce each and every such  provision.  The express waiver by
                  either party of any  provision,  condition or  requirement  of
                  this  Agreement  will not  constitute  a waiver of any  future
                  obligation  to  comply  with  such  provision,   condition  or
                  requirement.

22.4              INTERPRETATION AND LAW

                  THIS  AGREEMENT  WILL BE  GOVERNED  BY AND  CONSTRUED  AND THE
                  PERFORMANCE  THEREOF WILL BE DETERMINED IN ACCORDANCE WITH THE
                  LAWS OF THE STATE OF NEW YORK,  WITHOUT  GIVING  EFFECT TO ITS
                  CONFLICTS  OF  LAWS   PROVISIONS  THAT  WOULD  RESULT  IN  THE
                  APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

                  Each  of the  Seller  and the  Buyer  (i)  hereby  irrevocably
                  submits itself to the nonexclusive  jurisdiction of the courts
                  of the  state of New  York,  New York  County,  of the  United
                  States  District Court for the Southern  District of New York,
                  for the  purposes  of any  suit,  action  or other  proceeding
                  arising out of this  Agreement,  the subject  matter hereof or
                  any of the  transactions  contemplated  hereby  brought by any
                  party or parties  hereto,  and (ii) hereby waives,  and agrees
                  not to assert, by way of motion, as a defense or otherwise, in
                  any such suit,  action or proceeding,  to the extent permitted
                  by  applicable  law,  any defense  based on sovereign or other
                  immunity  or that the suit ,  action  or  proceeding  which is
                  referred to in clause (i) above is brought in an  inconvenient
                  forum,  that the venue of such suit,  action or  proceeding is
                  improper,  or that this Agreement or the subject matter hereof
                  or any of the  transactions  contemplated  hereby  may  not be
                  enforced in or by these courts.  The Seller hereby  designates
                  and appoints CT Corporation, New York City offices, to receive
                  for and on its behalf  service  of  process in any  proceeding
                  with  respect  to  any  matter  as  to  which  it  submits  to
                  jurisdiction  as set forth above, it being agreed that service
                  on CT Corporation will constitute valid service on the Seller.
                  The Buyer hereby  generally  consents to service of process by
                  registered mail, return receipt requested,  at its address for
                  notice under this Agreement.

                  THE  PARTIES   HEREBY  ALSO  AGREE  THAT  THE  UNITED  NATIONS
                  CONVENTION  ON CONTRACTS FOR THE  INTERNATIONAL  SALE OF GOODS
                  WILL NOT APPLY TO THIS TRANSACTION.

22.5              Confidentiality and Disclosure

22.5.1            Subject  to  any  legal  or   governmental   requirements   of
                  disclosure,  the parties  (which for this purpose will include
                  their  employees  and  agents)  will  maintain  the  terms and
                  conditions  of this  Agreement  and any reports or other data,
                  including  Technical Data and Documentation (the "Confidential
                  Material"), furnished hereunder strictly confidential.

22.5.2            Without limiting the generality of the foregoing, the  Buyer *
                  limit the disclosure  of  the  Confidential  Material  to  the
                  extent legally permissible in any filing required to  be  made
                  by the Buyer with any governmental agency and will  make  such
                  applications as will be reasonably necessary to implement  the
                  foregoing.  With respect to any public disclosure  or  filing,
                  the  Buyer  agrees  to  submit to  the  Seller  a  copy of the
                  document proposed to be filed  or  disclosed.  The Buyer  will
                  give the Seller a reasonable period of time in which to review
                  the said document, and will consult with the Seller before the
                  making of any such public disclosure or filing.

22.5.3            The Buyer may disclose the Technical Data and Documentation to
                  parties providing  maintenance of the Aircraft,  provided that
                  the Buyer  causes any such  maintenance  provider to execute a
                  confidentiality  agreement  containing,  at a  minimum,  terms
                  substantially  the same in scope  and  effect  as the terms in
                  Exhibit I hereto.

22.5.4            Notwithstanding any other provision of this  Clause 22.5,  the
                  Buyer will be permitted to  disclose the Confidential Material
                  without the Seller's consent

                  (i)      to its professional advisors,

                  (ii)     *

                  (iii)    *

                  (iv)     where  necessary,  and o nly to the extent necessary,
                           for the Buyer to prosecute, or defend  itself  in,  a
                           legal action to which the Buyer may become  a  party,
                           and

                  (v)      to the extent that such Confidential Information:

                           (a)   becomes generally available to the public other
                                 than  as  a  result  of  a  violation  of  this
                                 Agreement;

                           (b)   was   available   to   the    Buyer   on      a
                                 non-confidential basis prior to its  disclosure
                                 hereunder;

                           (c)   becomes  available  on a non-confidential basis
                                 from a third party source  under  circumstances
                                 reasonably believed by the Buyer not to violate
                                 this or any other confidentiality agreement.

22.5.5            The  provisions  of   this   Clause  22.5  will  survive   any
                  termination of this Agreement.

22.6              Severability

                  In the event that any provision of this  Agreement  should for
                  any reason be held to be without effect, the remainder of this
                  Agreement will remain in full force and effect.  To the extent
                  permitted by  applicable  law, each party hereto hereby waives
                  any  provision  of law which  renders  any  provision  of this
                  Agreement prohibited or unenforceable in any respect.

22.7              Alterations to Contract

                  This   Agreement,   including  its  Exhibits  and  Appendixes,
                  contains the entire agreement between the parties with respect
                  to the subject  matter hereof and thereof and  supersedes  any
                  previous   understanding,   commitments   or   representations
                  whatsoever,  whether oral or written.  This Agreement will not
                  be varied  except by an  instrument  in  writing  of even date
                  herewith or subsequent  hereto  executed by both parties or by
                  their fully authorized representatives.

22.8              Inconsistencies

                  In the event of any  inconsistency  between  the terms of this
                  Agreement   and  the  terms   contained   in  either  (i)  the
                  Specification annexed in Exhibit A-1 or Exhibit A-2 hereto, or
                  (ii) any other Exhibit hereto,  in each such case the terms of
                  this   Agreement   will   prevail   over  the   terms  of  the
                  Specification or any other Exhibit hereto.  For the purpose of
                  this  Clause  22.8,  the term  Agreement  will not include the
                  Specification or any other Exhibit hereto.

22.9              Language

                  All correspondence, documents and any other written matters in
                  connection with this Agreement will be in English.

22.10             Headings

                  All  headings  in  this  Agreement  are  for   convenience  of
                  reference only and do not constitute a part of this Agreement.

22.11             Counterparts

                  This  Agreement  may be  executed  by the  parties  hereto  in
                  separate  counterparts,  each of which  when so  executed  and
                  delivered will be an original,  but all such counterparts will
                  together constitute but one and the same instrument.

<PAGE>

23.               CERTAIN REPRESENTATIONS OF THE PARTIES

23.1.             Buyer's Representations

                  The Buyer represents and warrants to the Seller:

                  (i)      the Buyer is a corporation  organized and existing in
                           good standing under the laws of the State of Colorado
                           and has the  corporate  power and  authority to enter
                           into  and   perform   its   obligations   under  this
                           Agreement;

                  (ii)     neither the  execution  and  delivery by the Buyer of
                           this  Agreement,  nor the  consummation of any of the
                           transactions by the Buyer contemplated  thereby,  nor
                           the  performance  by the  Buyer  of  the  obligations
                           hereunder,  constitutes  a breach of any agreement to
                           which the Buyer is a party or by which its assets are
                           bound;

                  (iii)    this Agreement has been duly authorized, executed and
                           delivered  by the Buyer and  constitutes  the  legal,
                           valid and binding obligation of the Buyer enforceable
                           against the Buyer in accordance with its terms.

23.2              Seller's Representations

                  The Seller represents and warrants to the Buyer:

                  (i)      the  Seller  is a societe  a  responsabilite  limitee
                           organized  and  existing in good  standing  under the
                           laws of the Republic of France and has the  corporate
                           power and  authority  to enter into and  perform  its
                           obligations under the Agreement;

                  (ii)     neither the  execution  and delivery by the Seller of
                           this  Agreement,  nor the  consummation of any of the
                           transactions by the Seller contemplated  thereby, nor
                           the  performance  by the  Seller  of the  obligations
                           hereunder,  constitutes  a breach of any agreement to
                           which the  Seller  is a party or by which its  assets
                           are bound;

                  (iii)    this Agreement has been duly authorized, executed and
                           delivered  by the Seller and  constitutes  the legal,
                           valid   and   binding   obligation   of  the   Seller
                           enforceable against the Seller in accordance with its
                           terms.

<PAGE>

IN WITNESS  WHEREOF,  these  presents  were  entered into as of the day and year
first above written.

                           AVSA, S.A.R.L.

                           By: ________________________

                           Title:

                           FRONTIER AIRLINES, INC.

                           By: __________________________

                           Title:

                                                                     EXHIBIT A-1

The A318 Standard Specification is contained in a separate folder.

                                                       APPENDIX 1 TO EXHIBIT A-1

SCNs for the A318 Aircraft.

 Reference Subject                                                       Price
                                                                       US$ 1/99

 CN25.11.208 Second Observer                                           $*
 CN31.14.103 Overhead Panel toggle switch re-orientation               $*
 CN32.40.103 Brake Cooling Fans                                        $*
 CN34.41.200 Weather radar with predictive windshear                   $*
             (forward looking)
 CN35.11.201 Crew Oxygen Cylinder115 cubic feet                        $*
 GN25.33.051 Install G5 full-width galley                              $*
 GN25.43.450 Delete Lavatory LF                                        $*
 GN25.43.200 Install Lavatory LD                                       $*
 GN25.43.220 Install Lavatory LE                                       $*

                                                                        $*

                                                                     EXHIBIT A-2

The A319 Standard Specification is contained in a separate folder.

                                                       APPENDIX 1 TO EXHIBIT A-2

SCNs for the A319 Aircraft.

Reference Subject                                                        Price
                                                                       US$ 1/99

CN25.11.208 Second Observer                                             $*
CN31.14.103 Overhead Panel toggle switch re-orientation                 $*
CN32.40.103 Brake Cooling Fans                                          $*
CN34.41.200 Weather radar with predictive windshear                     $*
            (forward looking)
CN35.11.201 Crew Oxygen Cylinder115 cubic feet                          $*
GN25.33.051 Install G5 full-width galley                                $*
GN25.43.450 Delete Lavatory LF                                          $*
GN25.43.220 Install Lavatory LE                                         $*

                                                                        $*

                                                                       EXHIBIT B

                          AVSA                              SCN No.
               SPECIFICATION CHANGE NOTICE                  Issue
                          (SCN)                             Dated
                                                            Page No.

TITLE

DESCRIPTION

EFFECT ON WEIGHT
----------------
Manufacturer's Weight Empty Change:

Operational Weight Empty Change:

Allowable Payload Change:

REMARKS/REFERENCES

Response to RFC

SPECIFICATION CHANGED BY THIS SCN

THIS SCN REQUIRES PRIOR OR CONCURRENT ACCEPTANCE OF THE FOLLOWING SCN(s)
------------------------------------------------------------------------

PRICE PER AIRCRAFT

US DOLLARS:

AT DELIVERY CONDITIONS:

This change will be effective on        Aircraft No.             and  subsequent
provided approval is received by                .

BUYER APPROVAL                                        SELLER APPROVAL
--------------                                        ---------------

By:                                                   By:

Title: (Authorized Finance Department Officer)        Date:

By:

Title:  (Authorized maintenance or flight operations officer)

Date:

                          AVSA                              SCN No.
               SPECIFICATION CHANGE NOTICE                  Issue
                          (SCN)                             Dated
                                                            Page No.

SCOPE OF CHANGE  (FOR INFORMATION ONLY)

                                                                       EXHIBIT C

                           SELLER SERVICE LIFE POLICY

1.            The  Items  of primary and auxiliary structure described hereunder
              are covered by the Service Life Policy described in Subclause 12.2
              of the Agreement.

2.            WINGS - CENTER AND OUTER WING BOX
              ---------------------------------

2.1           Spars

2.2           Ribs Inside the Wing Box

2.3           Upper and Lower Panels of the Wing Box
              --------------------------------------

2.4           Fittings

2.4.1         Attachment fittings for the flap structure

2.4.2         Attachment fittings for the engine pylons

2.4.3         Attachment fittings for the main landing gear

2.4.4         Attachment fittings for the center wing box

2.5           Auxiliary Support Structure

2.5.1         For the slats:
              -------------

2.5.1.1       Ribs supporting the track rollers on wing box structure

2.5.1.2       Ribs supporting the actuators on wing box structure

2.5.2         For the ailerons:
              ----------------

2.5.2.1       Hinge brackets and ribs on wing box rear spar or shroud box

2.5.2.2       Actuator fittings on wing box rear spar or shroud box

2.5.3         For airbrakes, spoilers, lift dumpers:
              -------------------------------------

2.5.3.1       Hinge brackets and ribs on wing box rear spar or shroud box

2.5.3.2       Actuator fittings on wing box rear spar or shroud box

3.            FUSELAGE

3.1           Fuselage Structure

3.1.1         Fore and aft bulkheads

3.1.2         Pressurized  floors  and  bulkheads  surrounding the main and nose
              gear wheel well and center wing box

3.1.3         Skins  with  doublers,  stringers  and  frames  from  the  forward
              pressure bulkheads to the frame  supporting the rear attachment of
              horizontal stabilizer

3.1.4         Window and windscreen attachment structure but excluding
              transparencies

3.1.5         Passenger and cargo doors internal structure

3.1.6         Sills excluding scuff plates and upper beams surrounding passenger
              and cargo door apertures

3.1.7         Cockpit floor structure and passenger cabin floor beams  excluding
              floor panels and seat rails

3.1.8         Keel beam structure

3.2           Fittings

3.2.1         Landing gear attachment fittings

3.2.2         Support  structure  and  attachment  fittings for the vertical and
              horizontal stabilizers

4.            STABILIZERS

4.1           Horizontal Stabilizer Main Structural Box

4.1.1         Spars

4.1.2         Ribs

4.1.3         Upper and lower skins and stringers

4.1.4         Attachment fittings to fuselage and trim screw actuator

4.1.5         Elevator support structure

4.1.5.1       Hinge bracket

4.1.5.2       Servocontrol attachment brackets

4.2           Vertical Stabilizer Main Structural Box

4.2.1         Spars

4.2.2         Ribs

4.2.3         Skins and stringers

4.2.4         Attachment fittings to fuselage

4.2.5         Rudder support structure

4.2.5.1       Hinge brackets

4.2.5.2       Servocontrol attachment brackets

5.            Bearing and roller assemblies,  bearing surfaces, bushings, bolts,
              rivets,  access and  inspection  doors,  including  manhole doors,
              latching  mechanisms,  all system components,  commercial interior
              parts,  insulation and related installation and connecting devices
              are excluded from this Seller Service Life Policy.

                                                                       EXHIBIT D

                            CERTIFICATE OF ACCEPTANCE

                                for A318 Aircraft

In accordance with the terms of that certain A318/A319  Purchase Agreement dated
as of March 10, 2000,  between Frontier Airlines,  Inc.,  ("FRONTIER") and AVSA,
S.A.R.L.  ("AVSA") (the "Purchase Agreement"),  the Technical Acceptance Process
relating to the Airbus A318 aircraft,  Manufacturer's Serial Number: _____, U.S.
Registration  Number:  ______  with  two (2)  Pratt  &  Whitney  PW 6124  series
propulsion  systems  installed  thereon,  serial nos.  ______  (position #1) and
_______ (position #2) (the "A318 Aircraft"),  has taken place at _______________
on the ____ day of _____________, ____.

In view of said  Technical  Acceptance  Process  having  been  carried  out with
satisfactory  results,  FRONTIER  hereby  approves the A318 Aircraft as being in
conformity with the provisions of the Purchase Agreement.

Said  acceptance  does not affect the rights of  FRONTIER  under the  warranties
relating to the A318 Aircraft set forth in the Purchase Agreement.

FRONTIER specifically recognizes that it has waived any right it may have at law
or otherwise to revoke this acceptance of the A318 Aircraft.

                           RECEIPT AND ACCEPTANCE OF THE ABOVE-DESCRIBED A318
                           AIRCRAFT ACKNOWLEDGED

                           FRONTIER AIRLINES, INC.

                           By: __________________________

                           Its: __________________________

<PAGE>

                            CERTIFICATE OF ACCEPTANCE

                                for A319 Aircraft

In accordance with the terms of that certain A318/A319  Purchase Agreement dated
as of March 10, 2000,  between Frontier Airlines,  Inc.,  ("FRONTIER") and AVSA,
S.A.R.L.  ("AVSA") (the "Purchase Agreement"),  the Technical Acceptance Process
relating to the Airbus A319 aircraft,  Manufacturer's Serial Number: _____, U.S.
Registration  Number:  ______  with two (2) CFM  International  56-5B5\P  series
propulsion  systems  installed  thereon,  serial nos.  ______  (position #1) and
_______ (position #2) (the "A319 Aircraft"),  has taken place at _______________
on the ____ day of _____________, ____.

In view of said  Technical  Acceptance  Process  having  been  carried  out with
satisfactory  results,  FRONTIER  hereby  approves the A319 Aircraft as being in
conformity with the provisions of the Purchase Agreement.

Said  acceptance  does not affect the rights of  FRONTIER  under the  warranties
relating to the A319 Aircraft set forth in the Purchase Agreement.

FRONTIER specifically recognizes that it has waived any right it may have at law
or otherwise to revoke this acceptance of the A319 Aircraft.

                           ECEIPT AND ACCEPTANCE OF THE ABOVE-DESCRIBED A319
                           AIRCRAFT ACKNOWLEDGED

                           FRONTIER AIRLINES, INC.

                           By: __________________________

                           Its: __________________________

                                                                       EXHIBIT E

                                  BILL OF SALE

                                for A318 Aircraft

Know all persons by these  presents that AVSA,  S.A.R.L.  ("AVSA"),  a societe a
responsabilite  limitee organized and existing under the laws of the Republic of
France,whose address is 2 rond-point Maurice Bellonte, 31700 Blagnac, FRANCE, is
the owner of the title to the following airframe (the "Airframe"),  the attached
engines as specified (the  "Engines")  and all  appliances,  components,  parts,
instruments,  accessories,  furnishings,  modules  and  other  equipment  of any
nature,  excluding Buyer Furnished Equipment,  incorporated  therein,  installed
thereon or attached thereto on the date hereof (the "Parts"):

MANUFACTURER OF AIRFRAME:           MANUFACTURER OF ENGINES:
------------------------            -----------------------

AIRBUS INDUSTRIE G.I.E.             PRATT & WHITNEY

MODEL:   A318-100                   MODEL:   PW 6124
-----                               -----

MANUFACTURER'S                      SERIAL NUMBERS:
--------------                      --------------

SERIAL NUMBER:     [        ]       LH :     [        ]
-------------
                                    RH :     [        ]
REGISTRATION NO:  [        ]
---------------

The  Airframe,  Engines  and Parts are  hereafter  together  referred  to as the
aircraft (the "Aircraft").

AVSA does this ___ day of _______________  sell, transfer and deliver all of its
above  described  rights,  title and interest to the  Aircraft to the  following
company and its successors and assigns forever, said Aircraft to be the property
thereof:

                       -----------------------------------
                                  (the "Buyer")

AVSA hereby  warrants to the Buyer,  its successors and assigns that AVSA has on
the date hereof good and lawful right to sell, deliver and transfer title to the
Aircraft to the Buyer and that there is hereby conveyed to the Buyer on the date
hereof good, legal and valid title to the Aircraft, free and clear of all liens,
claims,  charges,  encumbrances  and rights of others  and that the Seller  will
warrant and defend such title forever against all claims and demands whatsoever.

THIS BILL OF SALE WILL BE GOVERNED BY AND CONSTRUED AND THE PERFORMANCE  THEREOF
WILL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING  EFFECT TO ITS  CONFLICTS  OF LAWS  PROVISIONS  THAT WOULD  RESULT IN THE
APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by
its duly authorized representative this ______ day of [ ]

AVSA, S.A.R.L.

By:

Title:

Signature:

<PAGE>

                                  BILL OF SALE

                                for A319 Aircraft

Know all persons by these  presents that AVSA,  S.A.R.L.  ("AVSA"),  a societe a
responsabilite  limitee organized and existing under the laws of the Republic of
France,whose address is 2 rond-point Maurice Bellonte, 31700 Blagnac, FRANCE, is
the owner of the title to the following airframe (the "Airframe"),  the attached
engines as specified (the  "Engines")  and all  appliances,  components,  parts,
instruments,  accessories,  furnishings,  modules  and  other  equipment  of any
nature,  excluding Buyer Furnished Equipment,  incorporated  therein,  installed
thereon or attached thereto on the date hereof (the "Parts"):

MANUFACTURER OF AIRFRAME:           MANUFACTURER OF ENGINES:
------------------------            -----------------------

AIRBUS INDUSTRIE G.I.E.             CFM INTERNATIONAL

MODEL:   A319-100                   MODEL:   CFM 56-5B5\P
-----                               -----

MANUFACTURER'S                      SERIAL NUMBERS:
--------------                      --------------
SERIAL NUMBER:    [        ]        LH :     [        ]
-------------
                                    RH :     [        ]
REGISTRATION NO:  [        ]
---------------

The  Airframe,  Engines  and Parts are  hereafter  together  referred  to as the
aircraft (the "Aircraft").

AVSA does this ___ day of _______________  sell, transfer and deliver all of its
above  described  rights,  title and interest to the  Aircraft to the  following
company and its successors and assigns forever, said Aircraft to be the property
thereof:

                       -----------------------------------
                                  (the "Buyer")

AVSA hereby  warrants to the Buyer,  its successors and assigns that AVSA has on
the date hereof good and lawful right to sell, deliver and transfer title to the
Aircraft to the Buyer and that there is hereby conveyed to the Buyer on the date
hereof good, legal and valid title to the Aircraft, free and clear of all liens,
claims,  charges,  encumbrances  and rights of others  and that the Seller  will
warrant and defend such title forever against all claims and demands whatsoever.

THIS BILL OF SALE WILL BE GOVERNED BY AND CONSTRUED AND THE PERFORMANCE  THEREOF
WILL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING  EFFECT TO ITS  CONFLICTS  OF LAWS  PROVISIONS  THAT WOULD  RESULT IN THE
APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by
its duly authorized representative this ______ day of [ ]

AVSA, S.A.R.L.

By:

Title:

Signature:

                                                                       EXHIBIT F

                        TECHNICAL DATA AND DOCUMENTATION

                                     GENERAL

         This Exhibit F lists the form,  type,  quantity and delivery  dates for
         the  Technical  Data and  Documentation  to be  provided  to the  Buyer
         pursuant to Clause 14 of the Agreement.

         The Technical Data and  Documentation  are published in accordance with
         ATA  Specification  100  revision  23,  with the  exception  of certain
         Component  Maintenance  Manuals,   which  may  be  written  to  an  ATA
         Specification 100 revision other than revision 23.

         The  designation  "C"  after  the  title  of  a  Technical  Publication
         indicates that such Technical Publication may be customized.

<PAGE>

                                                                       EXHIBIT F

1.       ENGINEERING DOCUMENTS

1.1      Installation and Assembly Drawings (IAD)--C

         The IAD will be  delivered  according  to the Buyer's  standard for the
         major Assembly and Installation drawings, including detail drawings.

1.2      Drawing Number Index (DNI)--C

         The DNI lists applicable  drawings of the Aircraft  delivered under the
         Agreement.

1.3      Process and Material Specification (PMS)

         The PMS contains  data  related to  manufacturing  processes,  material
         identification  and treatments used in the construction and assembly of
         the Aircraft.

1.4      Standards Manual (SM)

         The SM contains data about Seller approved standards and includes cross
         reference lists. The SM will include US  standards/equivalents  for all
         hardware clamps, O-rings, bearings,  fasteners,  sealants, adhesive and
         compounds, raw materials, processes and procedures.

2.       MAINTENANCE AND ASSOCIATED MANUALS

2.1      APU Build-up Manual (ABM)

         The ABM follows the format adopted for the Power Plant Build-up Manual.

2.2      Aircraft Maintenance Manual (AMM)--C

         The component  location  section of the AMM will show those  components
         detailed in the AMM maintenance procedures. The troubleshooting part is
         covered in Subparagraph 2.21 below.

         *Aircraft  Maintenance  Manual  Chapter 05 Time  Limits  (Service  Life
         Limits) and Maintenance Checks are only delivered in hard copies.

<PAGE>

                                                                       EXHIBIT F

2.3      Aircraft Schematics Manual (ASM)--C

         The ASM is part of the Wiring Manual. Supplied as a separate manual for
         schematics.

2.4      Aircraft Wiring Manual (AWM)--C

         The AWM is part of the Wiring Manual. Supplied as a separate manual for
         wirings.

2.5      Aircraft Wiring Lists (AWL)--C

         The AWL is part of the Wiring Manual.  Supplied as a separate  document
         for lists.  The AWL includes wire  terminations,  connector,  terminal,
         strip locations, wire routings, and clamping diagrams.

2.6      Consumable Material List (CML)

         The CML details the  characteristics  and gives procurement  sources of
         consumable materials such as grease, oil, etc.

2.7      Duct Repair Manual (DRM)

         The DRM contains all the data  necessary  to locate,  identify,  repair
         and/or  replace  sub-assemblies  of metallic  ducts.  It also  includes
         details of tests necessary after repair.

2.8      Fuel Pipe Repair Manual (FPRM)

         The FPRM provides workshop repair procedures and data for specific fuel
         pipes,  after removal from any aircraft of the Manufacturer of the type
         of the Aircraft.

2.9      Illustrated Parts Catalog (IPC)--C

         The IPC identifies and illustrates all line replaceable parts and units
         of the aircraft, excluding the power plant parts.

2.10     Illustrated Parts Catalog (power plant) (PPIPC)--C

         The PPIPC covers line  replaceable  parts and units of the power plant,
         provided by the Propulsion Systems manufacturer.

2.11     Illustrated Tool and Equipment Manual (TEM)

         The TEM provides  information  on Ground  Equipment and Tools listed in
         the Seller's Aircraft Maintenance Manual.

2.12     Maintenance Facility Planning (MFP)

         The  MFP  provides  information  that  will  assist  airline  personnel
         concerned  with  long term  planning  of ramp or  terminal  operations,
         Aircraft  maintenance  on the  ramp  and in the  hangar,  overhaul  and
         testing of structure and system components.

2.13     Maintenance Planning Document (MPD)

         The  MPD  provides  maintenance  data  necessary  to plan  and  conduct
         Aircraft maintenance checks and inspections.

2.14     Power Plant Build-up Manual (PPBM)

         The PPBM provides  instructions  for the installation of a quick engine
         change kit on a bare engine.

2.15     Support Equipment Summary (SES)

         The  SES  lists  support  equipment  recommended  by  the  Seller,  the
         Propulsion Systems manufacturer and Vendors.

2.16     Time  Limits  and  Maintenance  Checks/Service  Limits  and Maintenance
         Checks  (TLMC\SLMC)

         The  TLMC\SLMC   document  provides  the   Manufacturer's   recommended
         scheduled time limits for inspections and maintenance checks.

2.17     Tool\Equipment Drawings (TED)

         TEDs will be supplied in the form of aperture cards for the Seller and,
         when available, Vendor maintenance tools.

<PAGE>

2.18     Tool and Equipment Drawing Index (TEI)

         The TEI is an alpha-numeric listing of the TED's.

2.19     Tool and Equipment Bulletin (TEB)

         The  TEB  provides  advance  information  related  to  tools  and  test
         equipment development.

2.20     Trouble Shooting Manual (TSM)--C

         The TSM complements the CFDS and provides  trouble-shooting data in the
         following three levels:

         Level 1 -         Aimed  at  line  use.  Fault  isolation  guidance for
                           systems or parts of systems monitored mainly by CFDS.
                           Also guidance for systems not monitored by CFDS.

         Level 2 -         Aimed  at  hangar  use.  Fault isolation guidance for
                           non-CFDS  monitored systems in the form of functional
                           block diagrams, charts and tables.

         Level 3 -         Aimed  at  engineering   use.  List  of CFDS messages
                           and  decoding of  troubleshooting  data  (decoding of
                           coded  messages  provided  by the  CFDS).  Level 3 is
                           supplied on floppy disk.

3.       MISCELLANEOUS DOCUMENTATION

3.1      Airplane Characteristics for Airport Planning (AC)

         The AC will be in general accordance with Specification NAS 3601.

3.2      Aircraft Recovery Manual (ARM)

         The ARM provides the  following  planning  information:  preparing  and
         moving a disabled aircraft that may be obstructing airport traffic.

3.3      Cargo Loading System Manual (CLS)

         The CLS details handling procedures for the Cargo Loading System.

3.4      Crash Crew Chart (CCC)

         The  CCC  provides  information   concerning  access  to  the  Aircraft
         interior, location of safety equipment, hazardous liquids, etc.

3.5      Guidelines for Customer Originated Changes (GCOC)

         The  GCOC  provides  production  and  presentation  rules  for the data
         covering Buyer originated changes on the Aircraft to be incorporated by
         the Seller in the  Technical  Data and  Documentation  as per Subclause
         14.11 of the Agreement.

3.6      List of Radioactive and Hazardous Elements (LRE)

         The LRE provides  information  on  components  and  materials for which
         specific precautions have to be taken.

3.7      List of Applicable Publications (LAP)--C

         The LAP will record the Seller's  various  Airframe  Technical Data and
         Documentation indicating the last valid revision number and issue date.

3.8      Livestock Transportation Manual (LTM)

         The LTM details the facilities,  equipment and procedures necessary for
         live animal  transportation in aircraft of the Manufacturer of the type
         of the Aircraft.

3.9      Service Bulletins (SB)--C

         The  Buyer  will  receive  all  Service  Bulletins  applicable  to  the
         Aircraft.

3.10     Service Bulletin Index (SBI)

         The SBI is a listing of all Service Bulletins issued in ATA 100 chapter
         sequence.

         The  SBI  provides   details  of  SB  number,   SB  title,   associated
         modification number, issue status, Vendor SB number (if applicable) and
         affected fleet.

3.11     Service Information Letters (SIL)

         SILs give  information of a general nature and also about minor changes
         or inspections the Buyer may wish to apply under the Buyer's authority.

<PAGE>

3.12     Transportability Manual (TM)

         The TM gives  cargo  hold  dimensions  for  currently  available  cargo
         Aircraft,   transportation   information  and  requirements  for  large
         Aircraft  components.  Component  dimensions,  weights  and shelf  life
         limitations are also given.

3.13     Supplier Product Support Agreements (SPSA)

         The SPSA is a collection of product  support  conditions  negotiated by
         the Manufacturer with the suppliers of Aircraft equipment.

3.14     Vendor Information Manual (VIM)

         The VIM provides Vendor contact information.

3.15     Vendor Information Manual (GSE) (VIM/GSE)

         The  VIM/GSE  gives  contact  names and  addresses  of  Ground  Support
         Equipment (GSE) vendors and their product support organizations.

4.       OPERATIONAL MANUALS

4.1      Abnormal\Emergency Check List\Quick Reference Handbook  (CL\QRH)--C

         The CL is an extract  from the FCOM  presented  as a booklet  for quick
         in-flight use.

4.2      FAA Approved Flight Manual (FM)--C

         The AFM provides Aircraft performance  operating  limitations and other
         flight data  required by the  relevant  Airworthiness  Authorities  for
         certification. It includes the Configuration Deviation List (CDL).

4.3      Flight Crew Operating Manual (FCOM)--C

         The FCOM provides Aircraft and systems descriptions,  normal,  abnormal
         and emergency procedures as well as operational performance.

<PAGE>

4.4      Master Minimum Equipment List (MMEL)

         The MMEL defines the components and the related conditions under which,
         when the  components  are  defective,  the  Aircraft may be cleared for
         flight.  In addition,  the MMEL provides the necessary  information  to
         establish the Buyer's own Minimum Equipment List (MEL).

4.5      Performance Engineering Program (PEP)

         The PEP consists of a Low Speed  Performance data base and a High Speed
         Performance  data base together  with their  respective  programs.  The
         Performance  Engineering  Program  may be used by the  Buyer  under the
         license conditions set forth in Appendix A to this Exhibit F.

         The Low Speed Performance  programs consist of the Take-off and Landing
         Chart computation program (TLC) which permits the computation of:

         - regulatory take-off and landing performance,

         -  noncertified  take-off  performance  accounting  for runway data and
         weather,  together with the Tabulation and Interpolation program (TAB),
         issued  with  the  AFM,   which   permits  the  reading,   editing  and
         interpolation of the tables listed in the AFM.

         The High  Speed  Performance  programs  are the In  Flight  Performance
         computation   program  (IFP)  which  permits  computation  of  Aircraft
         performance  for  each  flight  phase  and  the  Aircraft   Performance
         Monitoring  program  (APM) which  permits  analysis of Aircraft  cruise
         performance from data recorded during stabilized flight periods.

4.6      Performance Program Manual (PPM)

         The PPM is the users'  guide for the  Performance  Engineering  Program
         (PEP).

4.7      Weight and Balance Manual (WBM) and

         Weight and Balance Manual Supplements--C

         The corresponding supplements:
         -Delivery Weighing Report,
         -Equipment List,
         will be delivered with each Aircraft.

<PAGE>

5.       OVERHAUL DATA

5.1      Cable Fabrication Manual (CFM)

         The  CFM  contains  all  the  data   necessary  to  locate,   identify,
         manufacture  and test control cables used on the Aircraft.  An appendix
         contains  cable  end  fitting   specification   sheets,   and  detailed
         manufacturing instructions.

5.2      Component Documentation Status (CDS)--C

         The  CDS  lists  Component   Maintenance  Manuals  in  accordance  with
         Subparagraphs 5.4 and 5.5 below.

5.3      Component Evolution List (CEL)

         The CEL is a  noncustomized  document  listing  all  components  on the
         Aircraft and also gives the evolution of each component.

         The information is provided in order of:
         - part number
         - FSCM
         - ATA reference.

5.4      Component Maintenance Manual Manufacturer (CMMM)

         The CMMM  contains  all the data  necessary  to  locate,  identify  and
         maintain Aircraft components manufactured by the Seller.

5.5      Component Maintenance Manual Vendor (CMMV)

         The Seller will ensure that each Vendor of repairable  components  will
         deliver  to  the  Buyer a  Component  Maintenance  Manual  Vendor  with
         revision service.

6.       STRUCTURAL MANUALS

6.1      Nondestructive Testing Manual (NTM)

         The NTM supplies  Airframe data  necessary to carry out  nondestructive
         testing.

<PAGE>

6.2      Structural Repair Manual (SRM)

         The SRM contains descriptive  information for identification and repair
         of the  Airframe  primary  and  secondary  structure  and will  include
         substantial structural analysis.

                                      FORM

AC       APERTURE CARD.  Refers to 35mm film contained on punched aperture cards

CD       CD-ROM.

D        FLOPPY DISK

F        MICROFILM.  Refers to 16mm roll film in 3M type cartridges.

MP       Refers to paper  printed one side,  unpunched  quality will be suitable
         for further reproduction or microfilming.

MT       MAGNETIC TAPE

P1       PRINTED ONE SIDE.  Refers to manuals in paper with print on one side of
         the sheets only.

P2       PRINTED BOTH SIDES.  Refers to manuals with print on both sides of  the
         sheets.

SMF      SILVER MASTER FILM.   Refers  to  thick diazo film suitable for further
         reproduction.

+        Denotes a combined A319/A320/A321 Technical Publication.

*        Denotes  Technical  Data and  Documentation  will be  supplied  in SGML
         format if such format becomes available from the Manufacturer.

                                      TYPE

C        CUSTOMIZED.  Refers to manuals which are customized to specific MSNs.

E        ENVELOPE.  Refers to manuals which are not customized.

P        PRELIMINARY Refers to preliminary data or manuals which may consist of:

         -either one time issue not maintained by revision service, or

         -preliminary  issues  maintained by revision service until final manual
         or data delivery, or

         -supply of best  available  data under final  format  with  progressive
         completion through revision service.

<PAGE>

                                    DELIVERY

Delivery of Technical Data and  Documentation  is expressed either as the number
of days prior to delivery of the first Aircraft or as nil (0), which  designates
the date of delivery of the first Aircraft.

It is agreed  that the number of days  indicated  will be rounded up to the next
regular revision release date.

MANUALS AVAILABLE (headlines)

1 - ENGINEERING DOCUMENTS
2 - MAINTENANCE & ASSOCIATED MANUALS
3 - MISCELLANEOUS PUBLICATIONS
4 - OPERATIONAL MANUALS AND DATA
5 - OVERHAUL DATA
6 - STRUCTURAL MANUALS

<PAGE>

                                                                     EXHIBIT "F"

    MANUALS AVAILABLE (detailed)               Abbr  Form  Type  Qty. Rev Deliv.
                                               ----  ----  ----  ---- --- ------

    1.     ENGINEERING DOCUMENTS

    +*     Installation and Assembly Drawings  IAD         C          AN1  0
           (including detail drawings)

    +      Parts Usage (Effectivity)           PU          E          AN   0

    +      Schedule (Drawing Nomenclature)     S           E          AN   0
    *

    +      Drawing Number Index                DNI         C          AN   0

    +      Process and Material Specification  PMS         E          AN   0
    *

    +      Standards Manual                    SM          E          AN   0

    +      Electrical Load Analysis            ELA         E     2    AN   0

<PAGE>

    2.     MAINTENANCE & ASSOCIATED MANUALS

    +      APU Build-up Manual                 ABM         E          AN   90

    +      Aircraft Maintenance Manual         AMM         C          4    90

    +      Aircraft Schematics Manual          ASM         C          4    90

    +      Aircraft Wiring Manual              AWM         C          4    90

    +      Aircraft Wiring Lists               AWL         C          4    90

    +      Consumable Material List            CML         E          AN   90

    +      Component Location Manual           CLM                    4    90

    +      Duct Repair Manual                  DRM         E          AN   90

    +      Fuel Pipe Repair Manual             FPRM        E          AN   90

    +      Illustrated Parts Catalog           IPC         C          4    90
           (Airframe)

    +      Illustrated Parts Catalog           PIPC        C          4    90
           (Power Plant)2

    +      Illustrated Tool and Equipment      TEM         E          AN   360
    *      Manual

    +      Maintenance Facility Planning       MFP         E          AN   90

    +      Maintenance Planning Document       MPD         E          AN   360
    *

    +      Power Plant Build-up Manual 3       PPBM        E          AN   90

    +      Support Equipment Summary           SES         E          AN   360

    +      Time Limits and Maintenance         TLMC/       C          4    90
           Checks/Service Limits and           SLMC
           Maintenace Checks

    +      Tool and Equipment Drawings         TED         E          AN   360

    +      Tool and Equipment Drawing Index    TEI         E          AN   360
    *

    +      Trouble Shooting Manual             TSM         C          4    90

    +      Aircraft Documentation  Retrieval   ADRES       C          4    90
    *      System

    +      Computer Assisted Aircraft          CAATS       C          4    90
    *      Troubleshooting

    +      Time Limits and Maintenance Checks  TLMC        C          4    90

<PAGE>

    3.     MISCELLANEOUS PUBLICATIONS

    +      Airplane Characteristics for        AC          E          AN   360
    *      Airport Planning

    +      Aircraft Recovery Manual            ARM         E          AN   90

           Crash Crew Chart                    CCC         E          AN   180

    +      Guidelines for Customer Originated  GCOC        E          AN   0
           Changes

    +      List of Radioactive and Hazardous   LRE         E          AN   90
           Elements

    +      List of Applicable Publications     LAP         C          4    90

    +      Livestock Transportation Manual     LTM         E          AN   90

    +      Service Bulletins                   SB          C          AN   0

    +      Service Bulletin Index              SBI         E          AN   90

    +      Service Information Letters         SIL         E          AN   0

    +      Technical Publications Combined     TPCI        C          AN   90
    *      Index

    +      Transportability Manual             TM          E          AN   90

           Supplier Product Support Agreements SPSA        E          AN   360
           (SPSA)

    *      Vendor Information Manual           VIM         E          AN   360

    +      Vendor Information Manual GSE       VIM\        E          AN   360
    *                                          GSE

<PAGE>

    4.     OPERATIONAL MANUALS AND DATA

    +      Check List/Abnormal/Emergency/      CL/QRH      C          AN   90
           Quick Reference Handbook

    +      FAA Approved Flight Manual          AFM         C          AN   0

    +      Flight Crew Operating Manual        FCOM        C          AN   90

    +      Master Minimum Equipment List       MMEL        E          AN   90

    +      Performance Engineering Program     PEP         E          AN   90

    +      Performance Program Manual          PPM         E          AN   90

    +      Weight and Balance Manual           WBM         C          AN   0

<PAGE>

    5.     OVERHAUL DATA

    +      Cable Fabrication Manual            CFM         E          AN   90

    +      Component Documentation Status      CDS         C          AN   180
    *

    +      Component Evolution List4           CEL         E          AN   180

    +      Component Maintenance Manual        CMMM        E          AN   180
    *      Airframe Manufacturer

    +      Component Maintenance Manual Vendor CMMV  P2    E     10   AN   180
    *

<PAGE>

    6.     STRUCTURAL MANUALS

    +      Nondestructive Testing Manual       NTM         E     4         90

    +      Structural Repair Manual            SRM         E     4         90

<PAGE>

                                                         APPENDIX 1 TO EXHIBIT F

             LICENSE FOR USE OF THE PERFORMANCE ENGINEER'S PROGRAMS

1.       Grant

         The Seller grants the Buyer the right to use the Performance Engineer's
         Program  (PEP)  in   machine-readable   form  during  the  term of this
         license on a single computer.

         Use of the PEP in  readable  form will be limited to one (1) copy other
         than the copies  contained in the single  computer and copies  produced
         for checkpoint and restart purposes or additional  copies made with the
         consent of the Seller for a specific need.

2.       Merging

         The  PEP may be used  and  adapted  in  machine-readable  form  for the
         purpose of merging it into other  program  material of the Buyer but on
         termination of this  Agreement;  the PEP will be removed from the other
         program material with which it has been merged.

         The Buyer agrees to reproduce  the  copyright and other notices as they
         appear on or within the original  media on any copies,  which the Buyer
         makes of the PEP.

3.       Personal License

         The above-described license is personal to the Buyer,  non-transferable
         and non-exclusive.

4.       Installation

         It is the Buyer's  responsibility to install the PEP and to perform any
         merging  and  checks.  The  Seller  will  however  assist  the  Buyer's
         operations engineers in the initial phase following the delivery of the
         PEP until such personnel  reach the  familiarization  level required to
         make inputs and correlate outputs.

5.       Proprietary Rights and Nondisclosure

5.1      The PEP and the  copyright  and other  proprietary  rights of  whatever
         nature in the PEP are and will remain with the Seller.  The PEP and its
         contents are designated as confidential.

5.2      The Buyer  undertakes  not to disclose the PEP or parts thereof and its
         contents to any third party  without the prior  written  consent of the
         Seller.  In so far as it is necessary to disclose aspects of the PEP to
         employees,  such disclosure is permitted only for the purpose for which
         the PEP is  supplied  and only to the  employee  who  needs to know the
         same.

6.       Conditions of Use

6.1      The  Seller  does not  warrant  that the PEP will not  contain  errors.
         However,  should the PEP be found to contain  any error  within  thirty
         (30) days of  delivery,  the Buyer  will  notify  the  Seller  promptly
         thereof and the Seller  will take all proper  steps to correct the same
         at its own expense.

6.2      The Buyer will ensure  that the PEP is  correctly  used in  appropriate
         machines as indicated in the Performance Programs Manual (PPM) and that
         staff  are  properly  trained  to use the same,  to trace  and  correct
         running  faults,  to restart  and  recover  after  fault and to operate
         suitable checks for accuracy of input and output.

6.3      It  is  understood  that the PPM is the user's guide of the PEP and the
         Buyer will undertake to use the PEP in accordance with the PPM.

6.4      THE WARRANTIES,  OBLIGATIONS AND LIABILITIES OF THE SELLER AND REMEDIES
         OF  THE  BUYER  SET  FORTH  IN  THIS  LICENCE  ARE   EXCLUSIVE  AND  IN
         SUBSTITUTION  FOR, AND THE BUYER HEREBY WAIVES,  RELEASES AND RENOUNCES
         ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER AND THE
         RIGHTS, CLAIMS OR REMEDIES OF THE BUYER AGAINST THE SELLER,  EXPRESS OR
         IMPLIED,  ARISING  BY  LAW  OR  OTHERWISE,  WITH  RESPECT  TO  ANY  NON
         CONFORMITY OR DEFECT IN THE PEP DELIVERED UNDER THIS LICENCE.

7.       Duration

         The rights  under this  license will be granted to the Buyer as long as
         the Buyer  operates a Seller's  Aircraft model to which the PEP refers.
         When the Buyer stops  operating  said  Aircraft  model,  the Buyer will
         return the PEP and any copies  thereof to the Seller,  accompanied by a
         notice certifying that the Buyer has returned all existing copies.
<PAGE>

                                                         APPENDIX 2 TO EXHIBIT F

                            LICENSE FOR USE OF CD-ROM

1.       Grant

1.1      The Seller grants the Buyer the right to use the Aircraft Documentation
         Retrieval System (ADRES) and/or the Computer  Assisted Aircraft Trouble
         Shooting  (CAATS) on CD-ROM for the term of this License.  Use of ADRES
         and/or  CAATS will be limited to the number of copies  defined  between
         the parties.

         For clarification,  it is hereby stated that the Power Plant IPC is not
         part of the  electronic IPC and is only available on other media (paper
         or film).

1.2      The above grant will be free of charge for as long as the  revisions of
         CAATS and ADRES are free of charge in accordance with Clause 14. At the
         end of such period(s)  license fees will be charged to the Buyer at the
         price stated in the then current Seller's Customer Services Catalog.

2.       Term

         The rights  under the  License  will be granted  from the date of first
         delivery  of ADRES  and/or  CAATS  as long as the  Buyer  operates  the
         Aircraft or until a replacement product will be provided by the Seller,
         whichever  occurs first.  Within thirty (30) days of  termination,  the
         Buyer will  return  ADRES  and/or  CAATS and all copies  thereof to the
         Seller.

3.       Revision Service

         The Seller will provide  revision service for ADRES and/or CAATS during
         the term. The revision  service will be based on the revision  service,
         which  the  Seller  provides  for the  documentation  in  paper or film
         format.

         ADRES and/or CAATS CD-ROM will be revised  concurrently  with the paper
         and film  deliveries.  Temporary  revisions will be provided in digital
         format under the form of 3-1/2 floppy disk. The retrieval  software for
         such  temporary  revisions  will be  embodied  on the  CAATS  and ADRES
         CD-ROM.

4        Personal License

         The License is personal to the Buyer, nontransferable and nonexclusive.
         The Buyer will not permit any third  party to use ADRES  and/or  CAATS,
         nor will it  transfer or  sublicense  ADRES  and/or  CAATS to any third
         party, without prior written consent from the Seller.

5.       Installation

         The Seller will  provide  the list of  hardware  on which ADRES  and/or
         CAATS will be installed.  The Buyer will be  responsible  for procuring
         such hardware and installing ADRES and/or CAATS.

6.       Proprietary Rights

         ADRES and/or CAATS are  proprietary to the Seller and the copyright and
         all other proprietary  rights in ADRES and/or CAATS are and will remain
         the property of the Seller.

7.       Copyright Indemnity

         The Seller will defend and  indemnify  the Buyer against any claim that
         the  normal  use of  ADRES  and/or  CAATS  infringes  the  intellectual
         property rights of any third party, provided that the Buyer

         (i)      immediately notifies the Seller of any such claim;
         (ii)     makes no admission or settlement of any claim;
         (iii)    allows the Seller  to have sole  control  of all  negotiations
                  for its settlement;
         (iv)     gives the  Seller  all  reasonable  assistance  in  connection
                  therewith.

8.       Confidentiality

         ADRES and/or CAATS and their contents are  designated as  confidential.
         The  Buyer  undertakes  not to  disclose  ADRES  and/or  CAATS or parts
         thereof to any third  party  without the prior  written  consent of the
         Seller.  In so far as it is  necessary  to  disclose  aspects  of ADRES
         and/or CAATS to the employees,  such disclosure is permitted solely for
         the purpose for which ADRES and/or CAATS are supplied and only to those
         employees who need to know the same.

9.       Conditions of Use

9.1      The  Buyer  will  not make any copies of ADRES and/or CAATS, except for
         installation purposes.

9.2      The Seller does not warrant  that the  operation  of ADRES and/or CAATS
         will be error free.  In the event of an error  occurring  within thirty
         (30) days of delivery,  the sole and exclusive  liability of the Seller
         will be, at its expense, to correct ADRES and/or CAATS in the following
         revision.

9.3      THE WARRANTIES,  OBLIGATIONS AND LIABILITIES OF THE SELLER AND REMEDIES
         OF  THE  BUYER  SET  FORTH  IN  THIS  LICENCE  ARE   EXCLUSIVE  AND  IN
         SUBSTITUTION  FOR, AND THE BUYER HEREBY WAIVES,  RELEASES AND RENOUNCES
         ALL OTHER WARRANTIES, OBLIGATIONS AND LIABILITIES OF THE SELLER AND THE
         RIGHTS, CLAIMS OR REMEDIES OF THE BUYER AGAINST THE SELLER,  EXPRESS OR
         IMPLIED,  ARISING  BY  LAW  OR  OTHERWISE,  WITH  RESPECT  TO  ANY  NON
         CONFORMITY  OR DEFECT IN THE ADRES  AND/OR CAATS  DELIVERED  UNDER THIS
         LICENCE.

10.      Training

         In  addition  to the user  guide  supplied  with  ADRES  and/or  CAATS,
         training and other assistance may be provided on the Buyer's request at
         conditions to be mutually agreed.

11.      Replacement of Product

         For clarification  purposes it is hereby expressly  stated  that  ADRES
         and/or  CAATS  will   be   offered   for a  limited  time  period,  not
         exceeding  the  term of this  License.  In the event  that  the  Seller
         should  offer  a  replacement  product,  the  conditions for using such
         product will be subject to a separate agreement.

<PAGE>

                                                                       EXHIBIT G

                          SELLER PRICE REVISION FORMULA

l.       BASE PRICE
         ----------

         The Base Price of the A318 Aircraft is as quoted in Clause 3.1.1 of the
         Agreement.  The Base Price of the  Airframe of the A319  Aircraft is as
         quoted in Clause 3.1.2.2 of the Agreement.

2.       BASE PERIOD

         The above Base  Prices have been  established  in  accordance  with the
         averaged  economic  conditions   prevailing  in  December  1997/January
         1998/February 1998 and corresponding to theoretical delivery conditions
         prevailing  in January  1999 as  defined  by ECIb and ICb index  values
         indicated in Paragraph 4 of this Exhibit G.

         These Base  Prices are  subject to  adjustment  for changes in economic
         conditions  as  measured by data  obtained  from the US  Department  of
         Labor,  Bureau  of  Labor  Statistics,   and  in  accordance  with  the
         provisions of Paragraphs 4 and 5 of this Exhibit G.

         ECIb and ICb index  values  indicated  in Paragraph 4 of this Exhibit G
         will not be subject to any revision of these indexes.

3.       REFERENCE INDEXES

         Labor Index:  Published quarterly by the US Department of Labor, Bureau
         of Labor  Statistics,  in "News" (Table 6:  "Employment  Cost Index for
         wages and  salaries  for  private  industry  workers  by  industry  and
         occupational group" (NOT SEASONALLY ADJUSTED), or such other names that
         may be from time to time used for the  publication  title and/or table.
         The  index  is  found  under  aircraft  manufacturing  with a  standard
         industrial  classification code of SIC 3721 and hereinafter is referred
         to as "ECI-SIC-3721W" (Base month and year June 1989 = 100).

         Material Index:  "Industrial  Commodities"  (hereinafter referred to as
         "IC-Index"), published monthly by the US Department of Labor, Bureau of
         Labor  Statistics,  in "PPI Detailed  Report" (Table 6: Producer prices
         indexes and percent  changes for  commodity  groupings  and  individual
         items,  not seasonally  adjusted)  (Base year 1982 = 100) or such other
         names  which may be from time to time  used for the  publication  title
         and/or table.

<PAGE>

4 -      REVISION FORMULA

         Pn       =        (Pb + F) (0.75 ECIn/ECIb + 0.25 ICn/ICb)

         Where

         Pn       =        Revised Base Price of the Airframe.

         Pb       =        Base  Price  of  the  Airframe at economic conditions
                           December  1997/January  1998/February  1998  averaged
                           (January 1999 delivery conditions).

         F        =        (0.005 x N x Pb)  Where   N =  The  calendar  year of
                           delivery of the Aircraft minus 1999.

         ECIn              = The  arithmetic  average  of the  latest  published
                           values available at the date of Aircraft delivery for
                           ECI-SIC-3721W  for the  llth,  l2th and  l3th  months
                           prior to the month of  delivery  of the  Aircraft  (1
                           decimal),  where  the  quarterly  value for the third
                           month  of  a  quarter  (March,  June,  September  and
                           December)  will  be  deemed  to  apply  for  the  two
                           preceding months.

         ECIb     =        ECI-SIC-3721W for December l997/January 1998/February
                           1998 averaged (= 134.7).

         ICn      =        The  arithmetic  average  of   the  latest  published
                           values available at the date of Aircraft delivery for
                           the IC-Index for the llth, l2th and l3th months prior
                           to the month of delivery of the Aircraft (l decimal).

         ICb      =        IC-Index for December 1997/January 1998/February 199
                           averaged (=126.1).

         In determining the Revised Base Price at delivery of the Aircraft, each
         quotient will be calculated to the nearest ten thousandth (4 decimals).
         If the next succeeding place is five (5) or more, the preceding decimal
         place will be raised to the next higher  figure.  The final factor will
         be rounded to the  nearest ten  thousandth  (4  decimals).  After final
         computation,  Pn will be rounded to the next whole  number (0.5 or more
         rounded to l).

<PAGE>

5.       GENERAL PROVISIONS

5.1      Substitution of Indexes

         In the event that:

         (i)      the  US  Department  of  Labor   substantially   revises   the
                  methodology of calculation of any  of  the indexes referred to
                  hereabove, or

         (ii)     the US Department of Labor discontinues, either temporarily or
                  permanently, any of the indexes referred to hereabove, or

         (iii)    the data samples used to calculate any of the indexes referred
                  to hereabove are substantially changed,

         the Seller will select a substitute index.

         Such  substitute  index will  reflect as closely as possible the actual
         variations of the wages or of the material  costs,  as the case may be,
         used in the calculation of the original index.

         As a result of this  selection of a substitute  index,  the Seller will
         make an appropriate adjustment to its price revision formula,  allowing
         to combine the successive  utilization of the original index and of the
         substitute index.

5.2      Final Index Values

         The Revised Base Price at the date of Aircraft  delivery  will be final
         and will not be subject to further  adjustments of any kind and for any
         reason to the  applicable  indexes as published at the date of Aircraft
         delivery.
<PAGE>

                                                                       EXHIBIT H

                    PROPULSION SYSTEMS PRICE REVISION FORMULA

l.       REFERENCE PRICE
         ---------------

         The  Reference  Price  of a set of two (2) CFM  International  56-5B5/P
         engines and additional  equipment is as quoted in Clause 3.1.2.3 of the
         Agreement.

         This  Reference  Price is valid for  Aircraft  delivered  no later than
         December 31, 2007, and is subject to adjustment for changes in economic
         conditions  as  measured by data  obtained  from the US  Department  of
         Labor,  Bureau  of  Labor  Statistics,   and  in  accordance  with  the
         provisions of Paragraphs 4 and 5 of this Exhibit H.

2.       REFERENCE PERIOD - REFERENCE COMPOSITE PRICE INDEX

         The above Reference  Price has been  established in accordance with the
         economic  conditions  prevailing in July 1996 (January 1997 theoretical
         delivery conditions),  as defined,  according to CFM International,  by
         the Reference Composite Price Index of 145.03.

3.       REFERENCE INDEXES

         Labor Index:  "Aircraft Engines and Engine Parts," Standard  Industrial
         Classification  3724--Average hourly earnings  (hereinafter referred to
         as "HE SIC 3724"),  published by the US Department of Labor,  Bureau of
         Labor Statistics,  in "Employment and Earnings,"  (Table B-15:  Average
         hours and earnings of production or  nonsupervisory  workers on private
         nonfarm payrolls by detailed  industry) or such other names that may be
         from time to time used for the publication title and/or table.

         Material Index (I): "Industrial  Commodities"  (hereinafter referred to
         as "IC-Index"), published monthly by the US Department of Labor, Bureau
         of Labor Statistics, in "PPI Detailed Report" (Table 6: Producer prices
         indexes and percent  changes for  commodity  groupings  and  individual
         items,  not seasonally  adjusted)  (Base year 1982 = 100) or such other
         names  that may be from  time to time  used for the  publication  title
         and/or table.

         Material Index (II):  "Metals and Metal  Products" Code l0 (hereinafter
         referred to as "MMP-Index"),  published monthly by the US Department of
         Labor,  Bureau of Labor Statistics,  in "PPI Detailed Report" (Table 6:
         Producer prices indexes and percent changes for commodity groupings and
         individual  items,  not seasonally  adjusted) (Base year 1982 = 100) or
         such other names that may be from time to time used for the publication
         title and/or table.

<PAGE>

         Energy   Index:   "Fuels  and  Related   Products  and  Power"  Code  5
         (hereinafter  referred to as "EP-Index"),  published  monthly by the US
         Department  of Labor,  Bureau  of Labor  Statistics,  in "PPI  Detailed
         Report"  (Table 6:  Producer  prices  indexes and  percent  changes for
         commodity  groupings and individual  items,  not  seasonally  adjusted)
         (Base  year 1982 = 100) or such  other  names  that may be from time to
         time used for the publication title and/or table.

4.       REVISION FORMULA

         Pn       =        Pb x CPIn
                               145.03

         Where

         Pn       =        Revised Reference Price of a set of two (2)engines at
                           delivery of the Aircraft.

         Pb       =        Reference Price as defined above.

         CPIn     =        Composite Price Index for the sixth  month  prior  to
                           the month of delivery of the Aircraft.

                           Said Composite Price Index is composed as follows:

         CPIn =            0.55 (HEn   x 100) + 0.10 ICn + 0.25 MMPn + 0.10 EPn
                                      ---
                                (11.16          )

         Where

         HEn      =        HE SIC 3724 for the sixth month prior to the month of
                           delivery of the Aircraft; the  quotient  HEn/11.16 is
                           rounded  to  the  nearest  third  decimal place.  The
                           product by 0.55 is  rounded  to  the  nearest  second
                           decimal place.

         ICn      =        IC-Index  for  the  sixth month prior to the month of
                           delivery of the Aircraft.

         MMPn     =        MMP-Index for the sixth month prior to the  month  of
                           delivery of th  Aircraft.  The  product  by  0.25  is
                           rounded to the nearest second decimal place.

         EPn      =        EP-Index  for  the sixth  month prior to the month of
                           delivery of the Aircraft.

<PAGE>

         The  Composite  Price Index will be  determined  to the second  decimal
         place.  If the next  succeeding  decimal place is five (5) or more, the
         preceding decimal figure will be raised to the next higher figure.

         The  final  factor  will  be  rounded  to  the  nearest  thousandth  (3
         decimals).

5.       GENERAL PROVISIONS

5.1      The Revised  Reference  Price at delivery of the  Aircraft  will be the
         final  price and will not be  subject  to  further  adjustments  in the
         indexes.

5.2      If no final index value is available for any of the applicable  months,
         the  published  preliminary  figures  will be the  basis on  which  the
         Revised Reference Price will be computed.

5.3      If the US Department of Labor substantially  revises the methodology of
         calculation   of  the  indexes   referred  to  in  this  Exhibit  H  or
         discontinues  any of these  indexes,  AVSA will, in agreement  with CFM
         International,  apply a  substitute  for the  revised  or  discontinued
         index,  such  substitute  index  to lead  in  application  to the  same
         adjustment result,  insofar as possible, as would have been achieved by
         continuing the use of the original index as it may have  fluctuated had
         it not been revised or discontinued.

         Appropriate  revision of the formula  will be made to  accomplish  this
         result.

5.4      Should the above escalation  provisions  become null and void by action
         of the US Government,  the Reference  Price will be adjusted to reflect
         increases in the cost of labor,  material and fuel which have  occurred
         from the period  represented by the applicable  Reference Price Indexes
         to the sixth month prior to the scheduled delivery of the Aircraft.

5.5      The Revised  Reference  Price at  delivery of the  Aircraft in no event
         will be less than the  Reference  Price  defined in Paragraph 1 of this
         Exhibit H.

                                                                       EXHIBIT I

                              CONFIDENTIALITY TERMS

The  minimum  requirements  for  confidentiality  agreements  pertaining  to the
disclosure of any Confidential Material ("Confidentiality  Agreement(s)") are as
follow.

1.   Confidential   Material  is  identified  as  nonpublic,   proprietary   and
confidential,  provided that Confidential  Material will not include information
to the extent that such  information  (i) is already known to the recipient,  or
(ii) is or becomes public knowledge or ceases to remain confidential, other than
as a  result  of a  breach  by  the  recipient  of  its  obligations  under  the
Confidentiality Agreement.

2.  The  Confidentiality  Agreement  will  cover  oral,  electronic  or  written
disclosures  of the  contents of  Confidential  Material,  whether in full or in
summary form.

3. Subject to any legal or governmental disclosure  requirements,  the receiving
party will disclose Confidential Material only to those of its agents, employees
and/or  advisors who have a need to know in order to accomplish  the purpose for
which the  Confidential  Material is given,  and will be used only to accomplish
such purpose.

4. All  originals  and any copy made of  Confidential  Material  will be clearly
marked as confidential and subject to the Confidentiality  Agreement, and copies
that are no longer  needed  for the  purposes  for which they were given will be
returned to the Buyer.

5.  Confidentiality  Agreements,  insofar as they pertain to Technical  Data and
Documentation,  will be for a term of *. With respect to all other  Confidential
Material,  a term of * after  delivery of the last  Aircraft  will be applied to
Confidentiality Agreements.

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