Document:

AIRCRAFT LEASE AGREEMENT

                            Dated as of May 25, 2000

                                     BETWEEN

                             FRONTIER AIRLINES, INC.

                                    as LESSEE

                                       and

                     INTERNATIONAL LEASE FINANCE CORPORATION

                                    as LESSOR

Aircraft Make and Model:                              New Airbus A318-100
Aircraft Manufacturer's Serial Number:                Per Exhibit E
Aircraft Registration Mark:                           Per Exhibit E
Make and Model of Engines:                            PW 6124
Serial Numbers of Engines:                            Per Exhibit E
                               NEW AIRCRAFT NO. 1

<PAGE>

                                TABLE OF CONTENTS

ARTICLE 1       SUMMARY OF TRANSACTION.........................................2
      1.1       Description of Aircraft........................................2
      1.2       Scheduled Delivery Date and Location...........................2
      1.3       Initial Lease Term.............................................2
      1.4       Lease Extension Options........................................2
      1.5       Security Deposit...............................................2
      1.6       Transaction Fee................................................3
      1.7       Rent During Initial Lease Term.................................3
      1.8       Rent During Lease Extension Term...............................3
      1.9       Reserves.......................................................4
      1.10      Country of Aircraft Registration...............................5
      1.11      Maintenance Program............................................5
      1.12      Agreed Value of Aircraft.......................................5
      1.13      LESSOR's Bank Account..........................................5

ARTICLE 2       DEFINITIONS....................................................7
      2.1       General Definitions............................................7
      2.2       Specific Definitions..........................................12

ARTICLE 3       PLACE AND DATE OF DELIVERY....................................14
      3.1       Place of Delivery.............................................14
      3.2       Scheduled Delivery Date.......................................14
      3.3       Delivery subject to Manufacturer Delivery.....................14
      3.4       No LESSOR Liability...........................................14
      3.5       Total Loss of Aircraft prior to Delivery......................14
      3.6       Cancellation for Delay........................................14
      3.7       Delay.........................................................15

ARTICLE 4       LEASE TERM AND EXTENSION OPTION...............................16
      4.1       Initial Lease Term............................................16
      4.2       Lease Extension Options.......................................16
      4.3       "Lease Term" and "Expiration Date"............................16
      4.4       "Termination Date"............................................16

ARTICLE 5       SECURITY DEPOSIT, TRANSACTION FEE, RENT,
                RESERVES AND OTHER PAYMENTS...................................18
      5.1       Security Deposit..............................................18
      5.2       Transaction Fee...............................................19
      5.3       Rent..........................................................19
      5.4       Reserves......................................................21
      5.5       LESSOR's Bank Account.........................................22
      5.6       Default Interest..............................................23
      5.7       No Deductions or Withholdings.................................23
      5.8       Value Added Taxes.............................................23
      5.9       Wire Transfer Disbursement Report.............................24
      5.10      Net Lease.....................................................24
      5.11      LESSOR Performance of LESSEE Obligation.......................25
      5.12      Consideration for Rent and other Amounts......................25

ARTICLE 6       INVOLVEMENT WITH AIRCRAFT MANUFACTURER........................26
      6.1       LESSEE Selection of Aircraft..................................26
      6.2       Participation Agreement.......................................26
      6.3       Procurement of BFE............................................26
      6.4       LESSEE Inspection of Aircraft.................................26
      6.5       Aircraft at Delivery..........................................26
      6.6       Delivery of the Aircraft to LESSEE............................27
      6.7       LESSEE Acceptance of Aircraft.................................27

ARTICLE 7       PRE-DELIVERY, DELIVERY AND POST-DELIVERY DOCUMENTARY
                AND OTHER REQUIREMENTS........................................28
      7.1       Pre-Delivery Requirements.....................................28
      7.2       LESSOR's Pre-Delivery Requirements............................29
      7.3       Delivery Requirements.........................................29
      7.4       Post-Delivery Requirements....................................30

ARTICLE 8       DISCLAIMERS...................................................31
      8.1       "As Is, Where Is".............................................31
      8.2       Waiver of Warranty of Description.............................31
      8.3       LESSEE Waiver.................................................32
      8.4       Conclusive Proof..............................................32
      8.5       No LESSOR Liability for Losses................................32
      8.6       No Liability to Repair or Replace.............................33
      8.7       No Waiver.....................................................33

ARTICLE 9       MANUFACTURERS' AND VENDORS' WARRANTIES........................34
      9.1       Warranties....................................................34
      9.2       Non-Assignable Warranties.....................................34
      9.3       Reassignment..................................................34
      9.4       Warranty Claims...............................................34

ARTICLE 10      OPERATION OF AIRCRAFT.........................................35
      10.1      Costs of Operation............................................35
      10.2      Compliance with Laws..........................................35
      10.3      Training......................................................35
      10.4      No Violation of Insurance Policies............................35
      10.5      Flight Charges................................................35

ARTICLE 11      SUBLEASES.....................................................37
      11.1      No Sublease without LESSOR Consent............................37
      11.2      LESSOR Costs..................................................37
      11.3      Any Approved Sublease.........................................37
      11.4      Assignment of Sublease........................................38
      11.5      Continued Responsibility of LESSEE............................38

ARTICLE 12      MAINTENANCE OF AIRCRAFT.......................................39
      12.1      General Obligation............................................39
      12.2      Specific Obligations..........................................39
      12.3      Replacement of Parts..........................................41
      12.4      Removal of Engines............................................42
      12.5      Pooling of Engines and Parts..................................42
      12.6      Installation of Engines on other aircraft.....................42
      12.7      Engine Thrust Rating..........................................43
      12.8      Modifications.................................................43
      12.9      Performance of Work by Third Parties..........................45
      12.10     Reporting Requirements........................................45
      12.11     Information Regarding Maintenance Program.....................45
      12.12     LESSOR Rights to Inspect Aircraft.............................45

ARTICLE 13      USE OF RESERVES...............................................46
      13.1      Airframe Reserves.............................................46
      13.2      Engine Performance Restoration Reserves.......................46
      13.3      Engine LLP Reserves...........................................47
      13.4      Landing Gear Reserves.........................................47
      13.5      Reimbursement.................................................47
      13.6      Reimbursement Adjustment......................................48
      13.7      Costs in Excess of Reserves...................................48
      13.8      Reimbursement after Termination Date..........................48

ARTICLE 14      TITLE AND REGISTRATION........................................49
      14.1      Title to the Aircraft During Lease Term.......................49
      14.2      Registration of Aircraft......................................49
      14.3      Filing of this Lease..........................................49
      14.4      Evidence of Registration and Filings..........................49

ARTICLE 15      IDENTIFICATION PLATES.........................................50
      15.1      Airframe Identification Plates................................50
      15.2      Engine Identification Plates..................................50

ARTICLE 16      TAXES.........................................................51
      16.1      General Obligation of LESSEE..................................51
      16.2      Exceptions to Indemnity.......................................51
      16.3      After-Tax Basis...............................................52
      16.4      Timing of Payment.............................................52
      16.5      Contests......................................................53
      16.6      Refunds.......................................................53
      16.7      Cooperation in Filing Tax Returns.............................53
      16.8      Survival of Obligations.......................................53

ARTICLE 17      INDEMNITIES...................................................54
      17.1      General Indemnity.............................................54
      17.2      Exceptions to General Indemnities.............................55
      17.3      After-Tax Basis...............................................56
      17.4      Timing of Payment.............................................56
      17.5      Subrogation...................................................56
      17.6      Notice........................................................56
      17.7      Refunds.......................................................56
      17.8      Defense of Claims.............................................56
      17.9      Survival of Obligation........................................57

ARTICLE 18      INSURANCE.....................................................58
      18.1      Categories of Insurance.......................................58
      18.2      Write-back of any Date Recognition Exclusion..................58
      18.3      Insurance for Indemnities.....................................58
      18.4      Insurance required by Manufacturer............................58
      18.5      Renewal.......................................................58
      18.6      Assignment of Rights by LESSOR................................58
      18.7      Other Insurance...............................................59
      18.8      Information...................................................59
      18.9      Currency......................................................59
      18.10     Grounding of Aircraft.........................................59
      18.11     Failure to Insure.............................................59
      18.12     Reinsurance...................................................59
      18.13     Limit on Hull in favor of LESSEE..............................60

ARTICLE 19      LOSS, DAMAGE AND REQUISITION..................................61
      19.1      Definitions...................................................61
      19.2      Notice of Total Loss..........................................62
      19.3      Total Loss of Aircraft or Airframe............................62
      19.4      Surviving Engine(s)...........................................63
      19.5      Total Loss of Engine and not Airframe.........................63
      19.6      Other Loss or Damage..........................................64
      19.7      Copy of Insurance Policy......................................65
      19.8      Government Requisition........................................65
      19.9      LESSOR Retention of Reserves; Return of Security
                Deposit and Prepaid Rent................65

ARTICLE 20      REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE...........67
      20.1      Representations and Warranties................................67
      20.2      Covenants.....................................................68

ARTICLE 21      REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR...........71
      21.1      Representations and Warranties................................71
      21.2      Covenant of Quiet Enjoyment...................................72

ARTICLE 22      FINANCIAL AND RELATED INFORMATION.............................73

ARTICLE 23      RETURN OF AIRCRAFT............................................74
      23.1      Date of Return................................................74
      23.2      Technical Report..............................................74
      23.3      Return Location...............................................74
      23.4      Full Aircraft Documentation Review............................74
      23.5      Aircraft Inspection...........................................74
      23.6      Certificate of Airworthiness Matters..........................75
      23.7      General Condition of Aircraft at Return.......................76
      23.8      Checks Prior to Return........................................79
      23.9      Part Lives....................................................81
      23.10     Export and Deregistration of Aircraft.........................83
      23.11     LESSEE's Continuing Obligations...............................83
      23.12     Airport and Navigation Charges................................84
      23.13     Return Acceptance Certificate.................................84
      23.14     Indemnities and Insurance.....................................85
      23.15     Civil Reserve Air Fleet.......................................85

ARTICLE 24      ASSIGNMENT....................................................87
      24.1      No Assignment by LESSEE.......................................87
      24.2      Sale or Assignment by LESSOR..................................87
      24.3      LESSOR's Lender...............................................87
      24.4      LESSEE Cooperation............................................87
      24.5      Protections...................................................88

ARTICLE 25      DEFAULT OF LESSEE.............................................89
      25.1      LESSEE Notice to LESSOR.......................................89
      25.2      Events of Default.............................................89
      25.3      LESSOR's General Rights.......................................91
      25.4      Deregistration and Export of Aircraft.........................91
      25.5      LESSEE Liability for Damages..................................91
      25.6      Waiver of Default.............................................92
      25.7      Present Value of Payments.....................................92
      25.8      Use of "Termination Date".....................................93
      25.9      LESSEE's Remedies.............................................93
      25.10     Waiver of Consequential Damages...............................93

ARTICLE 26      NOTICES.......................................................94
      26.1      Manner of Sending Notices.....................................94
      26.2      Notice Information............................................94

ARTICLE 27      GOVERNING LAW AND JURISDICTION................................95
      27.1      California Law................................................95
      27.2      Non-Exclusive Jurisdiction in California......................95
      27.3      Service of Process............................................95
      27.4      Prevailing Party in Dispute...................................95
      27.5      Waiver........................................................95

ARTICLE 28      MISCELLANEOUS.................................................96
      28.1      Transportation of Personnel...................................96
      28.2      Press Releases................................................96
      28.3      Power of Attorney.............................................96
      28.4      LESSOR Performance for LESSEE.................................96
      28.5      LESSOR's Payment Obligations..................................96
      28.6      Application of Payments.......................................96
      28.7      Usury Laws....................................................96
      28.8      Delegation by LESSOR..........................................97
      28.9      Confidentiality...............................................97
      28.10     Rights of Parties.............................................97
      28.11     Further Assurances............................................97
      28.12     Use of Word "including".......................................98
      28.13     Headings......................................................98
      28.14     Invalidity of any Provision...................................98
      28.15     Time is of the Essence........................................98
      28.16     Amendments in Writing.........................................98
      28.17     Counterparts..................................................98
      28.18     Delivery of Documents by Fax..................................98
      28.19     Entire Agreement..............................................98
      28.20     Expenses......................................................99

EXHIBIT A       AIRCRAFT DESCRIPTION.........................................101
EXHIBIT B       PARTICIPATION AGREEMENT......................................102
EXHIBIT C       CERTIFICATE OF INSURANCE.....................................112
EXHIBIT D       BROKERS' LETTER OF UNDERTAKING...............................119
EXHIBIT E       ESTOPPEL AND ACCEPTANCE CERTIFICATE..........................121
EXHIBIT F       OPINION OF COUNSEL...........................................123
EXHIBIT G       FORM OF POWER OF ATTORNEY....................................124
EXHIBIT H       ASSIGNMENT OF RIGHTS (AIRFRAME)..............................126
EXHIBIT I       ASSIGNMENT OF RIGHTS (ENGINES)...............................133
EXHIBIT J       RETURN ACCEPTANCE RECEIPT....................................135
EXHIBIT K       MONTHLY REPORT...............................................145
EXHIBIT L       AIRCRAFT DOCUMENTATION.......................................148
EXHIBIT M       TECHNICAL EVALUATION REPORT..................................150

<PAGE>

                            AIRCRAFT LEASE AGREEMENT

     THIS AIRCRAFT LEASE AGREEMENT is made and entered into as of May 25, 2000.

         BETWEEN:

     FRONTIER AIRLINES, INC., a Colorado corporation whose address and principal
place of  business is at 12015 East 46th  Avenue,  Suite 200,  Denver,  Colorado
80239 ("LESSEE") and ------

     INTERNATIONAL  LEASE FINANCE  CORPORATION,  a California  corporation whose
address and  principal  place of  business is at 1999 Avenue of the Stars,  39th
Floor, Los Angeles, California 90067, United States of America ("LESSOR").

     The subject matter of this Lease is one (1) new Airbus A318-100 aircraft as
more  particularly  described on Exhibit A attached hereto.  In consideration of
and subject to the mutual  covenants,  terms and  conditions  contained  in this
Lease, LESSOR hereby agrees to lease to LESSEE and LESSEE hereby agrees to lease
from LESSOR the aircraft and the parties further agree as follows:

<PAGE>

         ARTICLE 1             SUMMARY OF TRANSACTION

         The following is a summary of the lease transaction  between LESSEE and
LESSOR.  It is set forth for the convenience of the parties only and will not be
deemed in any way to amend,  detract  from or simplify the other  provisions  of
this Lease.

1.1             Description of Aircraft

                       One new Airbus  A318-100  aircraft with two (2) installed
                       PW 6124 engines,  all as more  particularly  described on
                       Exhibit A hereto

1.2             Scheduled Delivery Date and Location

                       In the month of February 2003 at Hamburg, Germany

1.3             Initial Lease Term

                       145 months

1.4             Lease Extension Options

                       Six (6) Lease extension options of one (1) year each

1.5             Security Deposit

                       *

1.6             Transaction Fee

                *

1.7             Rent During Initial Lease Term

                *

1.8             Rent During Lease Extension Term

                *

1.9             Reserves

                *

1.10            Country of Aircraft Registration

                       United States

1.11            Maintenance Program

                       LESSEE's Maintenance Program

1.12            Agreed Value of Aircraft

                *

1.13            LESSOR's Bank Account

                 *

<PAGE>

         ARTICLE 2             DEFINITIONS

         Except where the context otherwise  requires,  the following words have
the  following  meanings for all  purposes of this Lease.  The  definitions  are
equally  applicable to the singular and plural forms of the words. Any agreement
defined  below  includes each  amendment,  modification,  supplement  and waiver
thereto in effect from time to time.

2.1             General Definitions.

                "Aircraft"  means the  Aircraft  described  on Exhibit A hereto,
including  the  Airframe,  two (2) Engines,  Parts and  Aircraft  Documentation,
collectively.  As the context  requires,  "Aircraft" may also mean the Airframe,
any  Engine,   any  Part,  the  Aircraft   Documentation  or  any  part  thereof
individually.  For  example,  in the  context  of  return  to  LESSOR  the  term
"Aircraft"  means  the  Airframe,  Engines,  Parts  and  Aircraft  Documentation
collectively,  yet in the context of LESSEE not creating any Security  Interests
other than Permitted Liens on the Aircraft, the term "Aircraft" means any of the
Airframe, any Engine, any Part or the Aircraft Documentation individually.

                "Aircraft  Documentation"  means  all  (a) log  books,  Aircraft
records,  manuals and other documents  provided to LESSEE in connection with the
Aircraft,  (b) documents  listed in Exhibits E and L and (c) any other documents
required  to be  maintained  during  the Lease Term by the  Aviation  Authority,
LESSEE's Maintenance Program and this Lease.

                "Airframe"  means  the  airframe  listed  in  the  Estoppel  and
Acceptance  Certificate  executed at Delivery  together with all Parts  relating
thereto (except Engines or engines).

                "Airframe  Warranty  Assignment"  means the Assignment of Rights
(Airframe)  to be entered into between  LESSOR and LESSEE in the form of Exhibit
H.

                "Airworthiness  Directives"  or "ADs"  means  all  airworthiness
directives (or equivalent) of the FAA and the Aviation  Authority  applicable to
the Aircraft.

                "APU" means the auxiliary power unit of the Aircraft.

<PAGE>

                "Aviation  Authority"  means  the FAA or any  Government  Entity
which under the Laws of U.S.  from time to time has control over civil  aviation
or the  registration,  airworthiness  or  operation  of  aircraft in U.S. If the
Aircraft is registered in a country  other than the U.S.,  "Aviation  Authority"
means the agency which regulates civil aviation in such other country.

                "Aviation  Documents" means any or all of the following which at
any time may be  obtainable  from the Aviation  Authority:  (a) if  required,  a
temporary  certificate of airworthiness from the Aviation Authority allowing the
Aircraft  to be  flown  after  Delivery  to the  State of  Registration,  (b) an
application for  registration of the Aircraft with the appropriate  authority in
the State of Registration,  (c) the certificate of registration for the Aircraft
issued by the State of Registration, (d) a full certificate of airworthiness for
the Aircraft  specifying  transport category  (passenger),  (e) an air transport
license,  (f) an air operator's  certificate,  (g) such  recordation of LESSOR's
title to the  Aircraft  and  interest in this Lease as may be  available  in the
State of Registration and (h) all such other authorizations, approvals, consents
and  certificates  in the State of  Registration  as may be  required  to enable
LESSEE lawfully to operate the Aircraft.

                "AVSA" means AVSA S.A.R.L.,  a societe a responsabilite  limitee
organized and existing under the laws of the Republic of France.

                "Basic  Engine"  means those units and  components of the Engine
which are used to induce and convert  fuel/air  mixture  into  thrust/power;  to
transmit  power to the fan and accessory  drives;  to supplement the function of
other defined systems external to the Engine; and to control and direct the flow
of internal  lubrication,  plus all essential  accessories as supplied by Engine
manufacturer. The nacelle, installed components related to the Aircraft systems,
thrust reversers, QEC and the primary flight nozzle are excluded.

                "BFE"  means  any  equipment  which  is to be  provided  by  the
purchaser   of  the   Aircraft   (whether   actually   provided   by  LESSOR  as
buyer-furnished equipment or Manufacturer as seller-purchased equipment).

                "Business  Day" means a day other  than a Saturday  or Sunday on
which the banks in New York City are open for the transaction of business of the
type required by this Lease.

<PAGE>

                "Certificated  Air  Carrier"  means any Person  (except the U.S.
Government)  that is a "citizen of the United  States of America" (as defined in
Section  40102 of Title 49 of  U.S.C.)  and  holding  a  Certificate  of  Public
Convenience  and Necessity  issued under Section 41102 of Title 49 of U.S.C.  by
the Department of Transportation or any predecessor or successor agency thereto,
or, in the event such  certificates  shall no longer be  applicable,  any Person
(except  the U.S.  Government)  that is a citizen  of the U.S.  (as  defined  in
Section 40102 of Title 49 of the U.S.C.) and legally  engaged in the business of
transporting  for hire  passengers  or cargo by air  predominantly  to,  from or
between points within the U.S., 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.

                "Creditor" means any lessor,  owner, bank, lender,  mortgagee or
other Person which is the owner of or has any interest in an aircraft  engine or
aircraft operated by LESSEE.

                "Creditor  Agreement" means the applicable  agreement  between a
Creditor and LESSEE or between  Creditors  pursuant to which such Creditor owns,
leases or has an interest  in either an aircraft  operated by LESSEE on which an
Engine may be installed  or in an aircraft  engine which may be installed on the
Airframe.

                "Default"  means any event  which,  upon the giving of notice or
the lapse of time would constitute an Event of Default.

                "Delivery"  means the  delivery of the  Aircraft  from LESSOR to
LESSEE pursuant to Article 6.6.

                "Delivery Date" means the date on which Delivery takes place.

                "DGAC" means the French Direction  Generale a l'Aviation  Civile
or any successor thereto.

                "Dollars" and "$" means the lawful currency of the U.S.

                "Engine"  means (a) each of the engines  listed on the  Estoppel
and Acceptance  Certificate;  (b) any replacement  engine acquired by LESSOR and
leased to LESSEE  pursuant to Article 19.5  following a Total Loss of an Engine;
and  (c) all  Parts  installed  in or on any of such  engines  at  Delivery  (or
substituted, renewed or replacement Parts in accordance with this Lease) so long
as title thereto is or remains vested in LESSOR in accordance  with the terms of
Article 12.3.

                "Engine  Warranty  Assignment"  means the  Assignment  of Rights
(Engines) to be entered into between LESSOR and LESSEE in the form of Exhibit I.

                "Estoppel  and  Acceptance   Certificate"   means  that  certain
estoppel and  acceptance  certificate in the form of Exhibit E pursuant to which
LESSEE accepts Delivery of the Aircraft.

<PAGE>

                "Event  of  Default"  means  any of the  events  referred  to in
Article 25.2.

                "FAA"  means  the  Federal   Aviation   Administration   of  the
Department of Transportation or any successor thereto under the Laws of the U.S.

                "FARs" means the U.S. Federal Aviation  Regulations  embodied in
Title 14 of the U.S. Code of Federal Regulations,  as amended from time to time,
or any successor regulations thereto.

                "Geneva  Convention"  means the Convention on the  International
Recognition  of Rights in  Aircraft  signed in Geneva,  Switzerland  on June 19,
1948.

                "Government  Entity"  means  any (a)  national,  state  or local
government, (b) board, commission, department, division, instrumentality, court,
agency or political  subdivision  thereof and (c)  association,  organization or
institution of which any of the entities  listed in (a) or (b) is a member or to
whose jurisdiction any such entity is subject.

                "Landing  Gear" means the installed  main and nose landing gear,
components and their associated actuators, side braces and parts.

                "Law" means any (a) statute, decree,  constitution,  regulation,
order or any directive of any Government  Entity,  (b) treaty,  pact, compact or
other  agreement to which any Government  Entity is a signatory or party and (c)
judicial  or  administrative   interpretation  or  application  of  any  of  the
foregoing.

                "Lease" means this Aircraft Lease  Agreement,  together with all
Exhibits hereto.

                "LESSOR's Lien" means any Security Interest created by LESSOR or
otherwise  arising  solely as a result of any act or  omission  of LESSOR or any
Person claiming by or through LESSOR.

                "LESSOR's Taxes" means any Taxes referred to in Article 16.2.

                "Maintenance  Program"  means  LESSEE's  maintenance  program as
approved by the Aviation  Authority or such other maintenance  program as LESSOR
may, in its reasonable discretion, accept in writing.

<PAGE>

                "Manufacturer" means Airbus Industrie, G.I.E.

                "MPD"  means the  Maintenance  Planning  Document  published  by
Manufacturer   and   applicable   to  the   Aircraft.   With   respect   to  the
hour/cycle/calendar time limitation of Parts and inspections,  references to the
MPD mean the most restrictive limitation set forth therein.

                "Operative   Documents"  means  this  Lease,  the  Participation
Agreement, the Airframe Warranty Assignment, the Engine Warranty Assignment, the
Estoppel and  Acceptance  Certificate  and any Side Letter or other  document or
agreement  entered  into on or after the date hereof  between  LESSEE and LESSOR
relating  to  the  leasing  of  the  Aircraft   hereunder  or  the  transactions
contemplated hereby.

                "Overhaul"  means the full  reconditioning  of the Aircraft,  an
Engine,  APU,  Landing  Gear,  module or Part, as the case may be, in which such
equipment  has been  fully  disassembled;  cleaned;  thoroughly  inspected;  and
returned to the highest  standard  specified  by the  applicable  manufacturer's
manual.

                "Part"  means any part,  component,  appliance,  system  module,
engine  module,  accessory,  material,  instrument,   communications  equipment,
furnishing,  LESSEE-furnished or LESSOR-purchased  equipment,  the APU, or other
item of equipment  (other than  complete  Engines or engines) for the time being
installed  in or attached to the Airframe or any Engine,  or which,  having been
removed from the Airframe or any Engine, remains the property of LESSOR.

                "Participation  Agreement" means the Participation  Agreement to
be entered into by LESSEE,  LESSOR and AVSA and the  Manufacturer in the form of
Exhibit B.

                "Permitted   Lien"  means  (a)  LESSOR's  Liens;   (b)  Security
Interests  arising in the ordinary course of LESSEE's  business for Taxes either
not yet assessed or, if assessed,  not yet due or being  contested in good faith
in accordance  with Article 16.5 or (c)  materialmen's,  mechanics',  workmen's,
repairmen's, employees' liens or similar Security Interests arising by operation
of Law after the Delivery Date in the ordinary  course of LESSEE's  business for
amounts  which are  either not yet due or are being  contested  in good faith by
appropriate proceedings (and for which adequate reserves have been made or, when
required  in  order  to  pursue  such  proceedings,  an  adequate  bond has been
provided)  so long as such  proceedings  do not  involve  any  danger  of  sale,
forfeiture or loss of the Aircraft.

                "Permitted  Sublessee"  has  the  meaning  ascribed  thereto  in
Article 11.1.1.

<PAGE>

                "Permitted Transferee" means any Person who:

               (a)  is a "citizen  of the  United  States" as defined in Section
                    40102 of Title 49 of the U.S.C. with the requisite power and
                    authority  to enter  into  and  carry  out the  transactions
                    contemplated by this Lease;

               (b)  is not,  and is not  affiliated  with,  a  Certificated  Air
                    Carrier;

               (c)  enters  into a binding  agreement  with  LESSEE  pursuant to
                    which it agrees  to be bound by the terms of this  Lease and
                    agrees  to  perform  all  of  the   obligations   of  LESSOR
                    hereunder; and

               (d)  is  either  (i) a U.S.  bank,  insurance  company  or  other
                    financial  institution  with a consolidated  net worth of at
                    least  $25,000,000,  (ii)  a  corporation  which  has  (or a
                    general   partnership   whose  general   partners   have)  a
                    consolidated net worth of at least  $25,000,000 and which is
                    a sophisticated  entity,  experienced in participating as an
                    equity  investor in commercial  aircraft  leases,  (iii) the
                    trustee  or agent of an  aircraft  income or  similar  fund;
                    provided that such trustee or agent has a  consolidated  net
                    worth of at least $25,000,000,  or (iv) such other Person as
                    LESSEE  shall  approve in writing,  such  approval not to be
                    unreasonably withheld or delayed.

                "Person" means any individual, firm, partnership, joint venture,
trust, corporation,  Government Entity, committee,  department, authority or any
body, incorporated or unincorporated,  whether having distinct legal personality
or not.

                "Prime  Rate"  means  the  rate of  interest  from  time to time
announced by Chase  Manhattan Bank in New York as its prime  commercial  lending
rate.

                "Security  Interest" means any encumbrance or security interest,
however and  wherever  created or arising  including  (without  prejudice to the
generality of the foregoing) any right of ownership, security, mortgage, pledge,
charge,   encumbrance,   lease,   lien,   statutory   or  other  right  in  rem,
hypothecation,  title retention,  attachment, levy, claim or right of possession
or detention.

                "State of  Registration"  means U.S.  or such  other  country or
state of registration of the Aircraft as LESSOR may, in its absolute discretion,
approve in writing.

<PAGE>

                "U.S." means the United States of America.

2.2  Specific  Definitions.  The  following  terms are  defined in the  Articles
referenced below:

                                   Terms                           Article

           Agreed Value                                            19.1
           Airframe Reserves                                       5.4.1
           CRAF                                                    23.15.1
           CRAF Program Requisition Period                         23.15.1
           Default Interest                                        5.6
           Delivery Location                                       3.1
           Engine LLP Reserves                                     5.4.1
           Engine Performance Restoration Reserves                 5.4.1
           Expenses                                                17.1
           Expiration Date                                         4.3
           Extension Lease Term                                    4.2.1
           Indemnitees                                             17.1
           Initial Lease Term                                      4.1
           Landing Gear Reserves                                   5.4.1
           Lease Term                                              4.3
           LESSEE Customization Costs                              5.3.1
           LESSOR's Assignee                                       24.2.1
           LESSOR's Bank                                           5.5
           LESSOR's Lender                                         24.3
           Manufacturer's Escalation Rate                          5.3.1
           Modification                                            12.8.1
           Net Total Loss Proceeds                                 19.1
           Outside Delivery Date                                   3.6
           Passenger Service Equipment                             12.8.1
           Rent                                                    5.3.1
           Reserves                                                5.4.1
           Scheduled Delivery Date                                 3.2
           Security Deposit                                        5.1.1
           Taxes                                                   16.1
           Termination Date                                        4.4
           Total Loss                                              19.1
           Total Loss Date                                         19.1
           Total Loss Proceeds                                     19.1
           Transaction Fee                                         5.2

<PAGE>

         ARTICLE 3            PLACE AND DATE OF DELIVERY

3.1  Place  of  Delivery.   LESSOR  will  deliver  the  Aircraft  to  LESSEE  at
Manufacturer's facility at Hamburg, Germany or such other place as may be agreed
in writing between the parties (the "Delivery Location").

3.2  Scheduled  Delivery  Date.  As of the date of this  Lease,  Delivery of the
Aircraft  from  Manufacturer  to  LESSOR is  scheduled  to occur in the month of
February  2003.  LESSOR  will  notify  LESSEE  from time to time and in a timely
manner  but no later  than  ninety  (90) days  prior to the  scheduled  month of
delivery of the  scheduled  week of delivery and no later than ten (10) Business
Days prior to the exact date on which LESSOR expects Delivery to take place (the
"Scheduled Delivery Date").

3.3 Delivery subject to Manufacturer Delivery. Subject to the provisions of this
Article 3, LESSOR and LESSEE expressly acknowledge that Delivery of the Aircraft
to LESSEE is  subject  to and  conditioned  upon  delivery  of the  Aircraft  by
Manufacturer to LESSOR.

3.4 No LESSOR Liability.  LESSOR will not be liable for any loss or expense,  or
any loss of profit,  arising  from any delay or failure  in  Delivery  to LESSEE
unless  such  delay or failure  arises as a direct  consequence  of the  willful
misconduct  of LESSOR or the  breach  by  LESSOR  of its  obligations  under the
purchase agreement with respect to the Aircraft,  and in no event will LESSOR be
liable  for any delay or  failure  which is caused by any breach or delay on the
part of Manufacturer or any BFE supplier.

3.5 Total Loss of Aircraft  prior to  Delivery.  If a Total Loss of the Aircraft
occurs prior to Delivery,  neither party will have any further  liability to the
other  except  that  LESSOR  will  return  to LESSEE  the  Security  Deposit  in
accordance  with Article 5.1.3 and any prepaid Rent,  whereupon this Lease shall
terminate.

<PAGE>

3.6  Cancellation  for  Delay.  Promptly  after  LESSOR  becomes  aware  that in
Manufacturer's opinion a delay will cause Delivery to be delayed beyond February
29, 2004 (the "Outside  Delivery Date"),  LESSOR will notify LESSEE.  By written
notice  given  within  thirty (30) days after the first to occur of (i) LESSEE's
receipt of such LESSOR notice or (ii) the Outside  Delivery  Date,  either party
may by written  notice to the other  party  terminate  this Lease and this Lease
will  terminate  on the date of  receipt  of such  notice.  In the event of such
termination,  neither  party will have any further  liability to the other party
except that LESSOR will return to LESSEE the Security Deposit in accordance with
Article 5.1.3 and any prepaid Rent. If neither party gives notice of termination
within such thirty (30) day  period,  then the period for  termination  shall be
deemed to be extended for an additional  one hundred and eighty (180) days after
the  expiration of such thirty (30) day period.  In the event that neither party
gives a notice of  termination  within  such one  hundred  and eighty  (180) day
period,  the Lease will  automatically  terminate  upon the  expiration  of such
period,  and LESSOR will return to LESSEE the  Security  Deposit and any prepaid
Rent as provided above.

3.7 Delay.  In the event that the Delivery of the Aircraft is delayed beyond the
Scheduled  Delivery Date, then LESSEE and LESSOR will meet to discuss the action
that they will take against Manufacturer or any vendor as a result of such delay
and what  compensation  they desire from the Manufacturer or such vendor. In the
event that LESSOR  receives  compensation  from  Manufacturer as a result of any
delay,  LESSOR after deducting its costs and expenses  resulting from such delay
will  provide  to  LESSEE  the  balance  of  such  compensation   received  from
Manufacturer. In the event that LESSOR receives an abatement or other concession
by Manufacturer in respect of Manufacturer's  Escalation Rate as a result of any
delay, LESSOR will pass through such abatement or concession to LESSEE.

<PAGE>

         ARTICLE 4            LEASE TERM AND EXTENSION OPTION

4.1 Initial Lease Term. The term of leasing of the Aircraft will commence on the
Delivery Date and continue for an initial  lease term of One Hundred  Forty-Five
(145) months (the "Initial Lease Term").

4.2  Lease Extension Options.

4.2.1So  long as no  payment  Default or Event of Default  has  occurred  and is
continuing  hereunder  on  the  date  of  exercise  of  the  option  or  on  the
commencement  date of the lease term with  respect to such  option,  LESSEE will
have six (6)  options  to  extend  the term of the Lease for a period of one (1)
year each (the "Extension Lease Term").

4.2.2 In order to exercise an option,  LESSEE must give written notice to LESSOR
not less than nine (9) months prior to the then-existing Expiration Date of this
Lease.  Any notice given by LESSEE in accordance  herewith will be  irrevocable.
LESSEE may not  exercise  its option to extend the lease of the Aircraft for any
year unless it has also  exercised  its option to extend the lease for all prior
lease years.

4.3 "Lease Term" and "Expiration  Date".  "Lease Term" means the term of leasing
commencing  on  the  Delivery  Date  and  terminating  on the  Expiration  Date.
"Expiration  Date" means the date on which LESSEE is required to  redeliver  the
Aircraft  to LESSOR in the  condition  required by this Lease on the last day of
the Initial Lease Term or Extension Lease Term, if and as applicable.

4.4  "Termination Date".    This Lease may in fact terminate on any of the dates
set forth below:

               (a)  the Expiration Date, provided LESSEE returns the Aircraft to
                    LESSOR on the Expiration  Date in the condition  required by
                    Article 23; or

               (b)  a date earlier than the Expiration Date, if:

                    (i)  there is a Total Loss of the Aircraft prior to Delivery
                         pursuant to Article 3.5;

                    (ii) cancellation  of this Lease occurs  pursuant to Article
                         3.6;

                    (iii)there is a Total Loss of the  Aircraft  and  payment is
                         made to LESSOR in accordance with Article 19.3; or ----

                    (iv) an Event of Default occurs and LESSOR  repossesses  the
                         Aircraft or otherwise terminates this Lease pursuant to
                         Article 25.3.

               (c)    a date later than the Expiration Date, if:

                    (i)  LESSEE  fails to return the  Aircraft in the  condition
                         required  by  this  Lease  on the  Expiration  Date  in
                         accordance with Article 23; or

                    (ii) an Event of Default occurs and LESSOR  repossesses  the
                         Aircraft or otherwise terminates this Lease pursuant to
                         Article 25.3.

         The  "Termination  Date"  is the date on which  this  Lease  terminates
because one of the above has occurred.

<PAGE>

         ARTICLE 5            SECURITY DEPOSIT, TRANSACTION FEE, RENT, RESERVES
                             AND OTHER PAYMENTS

5.1             Security Deposit.

5.1.1           *

5.1.2           The Security  Deposit may be commingled  with  LESSOR's  general
                funds and any interest  earned on such Security  Deposit will be
                for LESSOR's  account.  If the Security Deposit is reduced below
                the required amount by application to meet LESSEE's  unperformed
                obligations under this Lease, LESSEE will replenish the Security
                Deposit within ten (10) days after LESSOR's demand therefor. The
                Security  Deposit will serve as security for the  performance by
                LESSEE  of its  obligations  under  this  Lease  and  any  other
                agreements  between  LESSEE and  LESSOR  relating  to  aircraft,
                engines,  aircraft  equipment or the extension of credit and may
                be applied by LESSOR upon the  occurrence of an Event of Default
                hereunder  or of an event of  default  by LESSEE  under any such
                other agreements.

5.1.3           Upon  termination  of this Lease in accordance  with Article 4.4
                other  than  if  an  Event  of  Default  has   occurred  and  is
                continuing,  LESSOR  will  return  to LESSEE  the  amount of the
                Security  Deposit  then held by LESSOR (so long as no default by
                LESSEE  exists  under any other  agreement  between  LESSEE  and
                LESSOR  relating to aircraft,  engines or aircraft  equipment or
                the extension of credit by LESSOR to LESSEE in which case LESSOR
                will  be  entitled  to set off  amounts  owing  to it),  without
                interest,  less an amount determined to be a reasonable estimate
                of the  costs,  if any,  which  LESSOR  will incur to remedy any
                unperformed  obligations  of LESSEE under this Lease,  including
                the correction of any discrepancies  from the required condition
                of the Aircraft on return of the Aircraft.

5.2             Transaction Fee.

                *

5.3             Rent.

5.3.1           *

                *** All  extension  term rent  amounts are  expressed in January
2000 U.S.  Dollars and subject to  escalation  for the period from and including
the 1st of January 2000 through and  including  the Delivery  Date in accordance
with the Manufacturer's Escalation Rate.

<PAGE>

5.3.2           The first  payment of Rent during the Lease Term will be paid no
                later than the Delivery Date.  Each  subsequent  payment of Rent
                will be due monthly thereafter no later than the same day of the
                month as the Delivery Date of the Aircraft  except that, if such
                day  is  not a  Business  Day,  the  Rent  will  be  due  on the
                immediately  preceding Business Day. If Delivery occurred on the
                29th,  30th or 31st of the month and in any given  month  during
                the Lease Term there is no such corresponding date, Rent will be
                payable on the last Business Day of such month.

5.4             Reserves.

5.4.1           *

5.4.2           The amount of the Engine  Performance  Restoration  Reserves set
                forth in Article  5.4.1 may be  increased by LESSOR in the event
                of an increase in the thrust  rating of an Engine in  accordance
                with Article 12.7.

5.4.3           Such  Reserves  will be paid on or  before  the  10th day of the
                calendar  month next  following  the month in which the Delivery
                Date  occurs  and on or before  the 10th day of each  succeeding
                calendar  month for flying  performed  during the calendar month
                prior to payment.  All Reserves for flying  performed during the
                month in which the  Termination  Date occurs will be paid on the
                Termination Date, unless otherwise agreed by the parties.

5.4.4           No interest will accrue or be paid at any time to LESSEE on such
                Reserves and, subject to LESSOR's  obligations under Article 13,
                LESSOR may commingle the Reserves with LESSOR's general funds.

5.5             LESSOR's  Bank  Account. The  Security Deposit, Transaction Fee,
                Rent,Reserves and any other payment due under this Lease will be
                paid by wire transfer of immediately available U.S. Dollar funds
                to LESSOR's bank account at:

                       *

<PAGE>

or to such other  bank  account  as LESSOR  may from time to time  designate  by
written  notice  ("LESSOR's  Bank").  When it is  stated in this  Lease  that an
installment  of the Security  Deposit,  the monthly Rent,  Reserves or any other
payment is due or must be paid or made by LESSEE by a specific  date,  then such
payment  actually  must be received by LESSOR's  Bank on or before such specific
date, even if, in order for such payment to be received by LESSOR's Bank by such
specific  date,  LESSEE must initiate the wire  transfer  prior to such specific
date.

5.6             Default Interest.

                *

5.7 No  Deductions  or  Withholdings.  All  payments by LESSEE under this Lease,
including  the  Security  Deposit,  Transaction  Fee,  Rent,  Reserves,  Default
Interest,  fees, indemnities or any other item, will be made in full without any
deduction or withholding whether in respect of set-off, counterclaim, duties, or
Taxes (as  defined in Article 16)  imposed in the State of  Registration  or any
jurisdiction  from which such  payments are made except to the extent  otherwise
required by Law, in which event LESSEE will pay any additional  amount such that
the net payment  received by LESSOR after any required  deduction or withholding
equals the amount that LESSOR would have  received 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  Taxes,  LESSOR shall pay to
LESSEE  promptly  after  receipt of LESSEE's  written  request  therefor  (which
request  shall include a  description  in reasonable  detail of the LESSOR Taxes
involved  and the  calculation  of the  amounts to be paid) such  amounts as are
necessary  so that the net  additional  amounts  received  by LESSOR  under this
Article 5.7 do not exceed the  amounts  that  LESSOR  would have  received if no
amounts in respect of LESSOR Taxes had been  required to be withheld or deducted
by LESSEE.

5.8 Value Added Taxes.  The Rent and other amounts  payable by LESSEE under this
Lease are exclusive of any value added tax, turnover tax or similar tax or duty.

<PAGE>

5.9  Wire  Transfer  Disbursement  Report.  At the  time of each  Rent or  other
payment, LESSEE will advise LESSOR in writing of the amount of the payment being
made by LESSEE and the allocation of such payment to the Security Deposit, Rent,
Reserves, Default Interest and other charges. Notwithstanding the allocation set
forth in LESSEE's  report,  in the event an Event of Default has occurred and is
continuing  under this Lease,  LESSOR will have complete  discretion to allocate
LESSEE's payments as LESSOR determines.

5.10  Net Lease.

5.10.1 This Lease is a net lease and  LESSEE's  obligation  to pay Rent and make
other payments in accordance with this Lease will be absolute and  unconditional
under any and all  circumstances  and regardless of other events,  including the
following:

               (a)  any right of set-off,  counterclaim,  recoupment, defense or
                    other right  (including  any right of  reimbursement)  which
                    LESSEE may have  against  LESSOR,  Manufacturer,  the Engine
                    manufacturer  or any other person for any reason,  including
                    any claim LESSEE may have for the foregoing;

               (b)  unavailability  or  interruption  in use of the Aircraft for
                    any  reason,   including  a   requisition   thereof  or  any
                    prohibition  or  interference   with  or  other  restriction
                    against  LESSEE's  use,   operation  or  possession  of  the
                    Aircraft (whether by Law or otherwise), any defect in title,
                    airworthiness,  merchantability,  fitness  for any  purpose,
                    condition, design, specification or operation of any kind or
                    nature of the Aircraft,  the  ineligibility  of the Aircraft
                    for any  particular use or trade or for  registration  under
                    the Laws of any jurisdiction or Total Loss of the Aircraft;

               (c)  insolvency,   bankruptcy,    reorganization,    arrangement,
                    readjustment    of    debt,    dissolution,     liquidation,
                    receivership,  administration  or similar  proceedings by or
                    against   LESSOR,   LESSEE,    Manufacturer,    the   Engine
                    manufacturer or any other Person;

               (d)  invalidity or  unenforceability or lack of due authorization
                    of or other defect in this Lease;

               (e)  failure  or delay on the part of any  party to  perform  its
                    obligations under this Lease; or

<PAGE>

               (f)  any other circumstance which but for this provision would or
                    might  have the  effect of  terminating  or in any other way
                    affecting any obligation of LESSEE hereunder.

5.10.2  Nothing in Article 5.10 will be construed to limit  LESSEE's  rights and
remedies in the event of LESSOR's  breach of its warranty of quiet enjoyment set
forth in Article  21.2 or to limit  LESSEE's  rights and remedies to pursue in a
court of law any claim it may have against LESSOR or any other Person; provided,
however, that LESSEE will have no obligation to pay Rent as aforesaid, except in
respect  of Rent  accrued  at the time,  for the  number of days that  LESSEE is
deprived of the  possession  and use of the Aircraft as the result of the breach
by LESSOR of its warranty of quiet enjoyment obligations set forth Article 21.2.

5.11  LESSOR  Performance  of LESSEE  Obligation.  If  LESSEE  fails to make any
payment due under this Lease to a third party in connection with the Aircraft or
fails to perform any other obligation required under this Lease, LESSOR may (but
is not required to) at its  election  and without  waiver of its rights  perform
such  obligation  and/or pay such amount.  Within five (5)  Business  Days after
written  notice  to  LESSEE of the  amount  paid by LESSOR on behalf of  LESSEE,
LESSEE will repay such amount to LESSOR  together  with Default  Interest.  Such
payment to LESSOR will  constitute  additional  Rent payable by LESSEE to LESSOR
hereunder.  Any  payment,  performance  or  compliance  by  LESSOR  of a  LESSEE
obligation  hereunder will not affect the occurrence or continuance of a Default
or Event of Default, as the case may be.

5.12 Consideration for Rent and other Amounts.  The amount of the Rent and other
payments  contained herein are in consideration of LESSEE's waiver of warranties
and  indemnities  set forth in  Articles 8 and 17,  respectively,  and the other
provisions of this Lease.

<PAGE>

         ARTICLE 6            INVOLVEMENT WITH AIRCRAFT MANUFACTURER

6.1 LESSEE Selection of Aircraft.  LESSEE  ACKNOWLEDGES  THAT THE DESCRIPTION OF
THE  AIRCRAFT  SET FORTH IN THIS LEASE IS BASED  UPON  INFORMATION  SUPPLIED  BY
MANUFACTURER.  LESSEE  COVENANTS TO LESSOR THAT LESSEE HAS USED ITS OWN JUDGMENT
IN SELECTING  THE  AIRCRAFT AND HAS DONE SO BASED ON ITS SIZE,  DESIGN AND TYPE.
LESSEE  ACKNOWLEDGES  THAT LESSOR IS NOT A  MANUFACTURER,  REPAIRER OR SERVICING
AGENT OF THE AIRCRAFT.

6.2 Participation Agreement. LESSEE shall have the right to inspect the Aircraft
during the manufacture process and to attend and observe the acceptance tests of
the Aircraft  pursuant to the terms of a  Participation  Agreement to be entered
into between LESSEE and LESSOR in the form set forth in Exhibit B.

6.3 Procurement of BFE.  LESSEE's and LESSOR's  technical  representatives  will
meet and determine which of LESSEE or LESSOR will provide specific items of BFE.
Such BFE  will  then be  provided  to  Manufacturer  by  LESSEE  or  LESSOR,  as
applicable, within the time frames required by Manufacturer.

6.4 LESSEE  Inspection of Aircraft.  During the course of final  assembly of the
Aircraft,  and at Delivery,  LESSEE may have its own  representative  present to
inspect the Aircraft and to ensure its  conformity  with LESSEE's  needs and the
terms of this Lease.  LESSEE will have ground  inspection and acceptance  flight
rights with respect to the  Aircraft.  If LESSEE's  inspection  reveals that the
Aircraft  does not comply in any material  respect with the terms of this Lease,
LESSOR will promptly cause the Manufacturer to correct any such defects and make
the Aircraft  available for reinspection to LESSEE,  and to conduct such further
demonstration  flights  as  may be  necessary  to  verify  compliance  with  the
requirements  of this  Lease,  including  but not  limited to Exhibit A attached
hereto. LESSEE acknowledges that, as between LESSEE and LESSOR, in accepting the
Aircraft  LESSEE is relying on its own  inspection and knowledge of the Aircraft
in determining whether the Aircraft meets the requirements of this Lease.

6.5 Aircraft at  Delivery.  At  Delivery,  the Aircraft  will be as set forth in
Exhibit A, as such  description may be modified by any change requests agreed to
among LESSEE,  LESSOR and Manufacturer  (which will be reflected in amendment(s)
to this  Lease).  In the event of any  discrepancies,  LESSEE  and  LESSOR  will
cooperate  in good  faith  with one  another  and with  Manufacturer  and Engine
manufacturer,  as  applicable,  in  order to  arrive  at a  mutually  acceptable
resolution of any such discrepancies.

6.6 Delivery of the Aircraft to LESSEE.  Subject to LESSEE having  performed all
of the conditions precedent to Delivery set forth herein,  immediately following
delivery of the Aircraft  from  Manufacturer  to LESSOR,  LESSOR will tender the
Aircraft to LESSEE at the Delivery  Location.  Provided  that the Aircraft is in
the  condition  required by Article  6.5 and  provided  that  LESSOR  shall have
performed all conditions precedent noted in Article 7.2 and 7.3 hereof, upon the
tender of the  Aircraft by LESSOR to LESSEE,  LESSEE will accept the Aircraft by
executing  and  delivering  to LESSOR the Estoppel and  Acceptance  Certificate,
whereupon  Delivery will be deemed to have occurred for all purposes  under this
Lease, including, but not limited to, the commencement of LESSEE's obligation to
pay Rent hereunder.

6.7 LESSEE  Acceptance  of  Aircraft.  If LESSEE  fails to (a)  comply  with the
conditions  contained  in Articles  7.1 and 7.3 so as to allow  Delivery to take
place immediately  following  delivery of the Aircraft by Manufacturer to LESSOR
or (b) take  delivery of the  Aircraft  when  properly  tendered for delivery by
LESSOR in the condition required hereunder, LESSEE will indemnify LESSOR for all
costs and expenses incurred by LESSOR as a result thereof including (but without
limitation)  any  payments  other than the purchase  price which LESSOR  becomes
obliged to make to Manufacturer.

<PAGE>

         ARTICLE 7            PRE-DELIVERY, DELIVERY AND POST-DELIVERY
                             DOCUMENTARY AND OTHER REQUIREMENTS

7.1 Pre-Delivery Requirements. LESSEE will do each of the following prior to the
Scheduled Delivery Date of the Aircraft within the time frames set forth below:

7.1.1 Within one (1) month after execution of this Lease, LESSEE will deliver to
LESSOR each of the following:

               (a)  copies of resolutions of the Board of Directors of LESSEE or
                    other written evidence of appropriate corporate action, duly
                    certifying  and   authorizing  the  lease  of  the  Aircraft
                    hereunder and the  execution,  delivery and  performance  of
                    this Lease,  together with an incumbency  certificate  as to
                    the person or persons  authorized  to  execute  and  deliver
                    documents on behalf of LESSEE hereunder; and

               (b)  an opinion of counsel in the form and  substance  of Exhibit
                    F.

7.1.2 At least fourteen (14) days prior to the Scheduled  Delivery Date,  LESSEE
will have delivered to LESSOR a Certificate of Insurance and Brokers'  Letter of
Undertaking  in the form and substance of Exhibits C and D,  respectively,  from
LESSEE's  insurance brokers  evidencing  insurance of the Aircraft in accordance
with this Lease from the Delivery Date.

7.1.3 At least three (3) Business  Days prior to the  Scheduled  Delivery  Date,
LESSEE will do each of the following:

               (a)  provide  LESSOR with  documents  evidencing  that LESSEE has
                    obtained  any  necessary  permits or  approvals to ferry and
                    import  the  Aircraft  to the U.S.  and that all  applicable
                    customs  duties and sales  taxes in respect of the  Aircraft
                    have been discharged by LESSEE (or arrangements satisfactory
                    to LESSOR  have been made for  obtaining  or paying  for the
                    same);

               (b)  provide  LESSOR  with  a copy  of  LESSEE's  Air  Operator's
                    Certificate;

               (c)  provide LESSOR with a power of attorney  empowering LESSEE's
                    representative, who may be an officer or employee of LESSEE,
                    to accept the Aircraft on behalf of LESSEE;

               d)   provide  LESSOR  with a power  of  attorney  in the  form of
                    Exhibit G; and -

               (e)  provide  LESSOR  with such  other  documents  as LESSOR  may
                    reasonably request.

7.2 LESSOR's Pre-Delivery  Requirements.  LESSEE's obligation to accept delivery
of and lease the Aircraft  hereunder is subject to satisfaction of the following
conditions precedent:

               (a)  LESSOR  shall  tender the  Aircraft  including  the Aircraft
                    Documentation   to  LESSEE  at  the  Delivery   Location  in
                    accordance with Article 6.6;

               (b)  LESSOR  shall be  prepared  to  advise  its FAA  counsel  to
                    register  the Aircraft in the U.S. in the name of LESSOR and
                    the Aircraft shall have a valid Certificate of Airworthiness
                    and shall be in the condition  required in order to meet the
                    operating requirements of FAR Part 121;

               (c)  All  Airworthiness  Directives which are issued prior to the
                    Delivery Date and which require  compliance (either by means
                    of  repetitive  inspections,  modifications  or  terminating
                    action)  prior to  Delivery  or  within  one (1) year  after
                    Delivery will be complied with on a terminating action basis
                    at LESSOR's cost; Airworthiness Directives which do not have
                    a  terminating  action will be  accomplished  at the highest
                    level of inspection or modification possible; and

               (d)  LESSOR  shall  have  executed  and  delivered  to LESSEE the
                    Airframe   Warranty   Assignment  and  the  Engine  Warranty
                    Assignment,  together  with the  consents  of Seller and the
                    Engine manufacturer,  respectively, in the form set forth as
                    Schedule 1 to each agreement,  and a consent of Manufacturer
                    to the Airframe  Warranty  Assignment  in form and substance
                    reasonably satisfactory to LESSEE.

7.3 Delivery  Requirements.  On the Delivery Date of the  Aircraft,  each of the
following will occur:

7.3.1 If not  previously  done,  LESSEE  will pay to LESSOR  the  first  monthly
installment of Rent in accordance with Article 5.3.2;

7.3.2  LESSEE will  execute and deliver to LESSOR the  Estoppel  and  Acceptance
Certificate covering the Aircraft and dated the Delivery Date.

7.3.3 If not  previously  done,  LESSEE and  LESSOR  will sign an  amendment  or
supplement to Exhibit A evidencing all agreed-to changes to the specification of
the Aircraft.

7.3.4 LESSEE will deliver a certificate  signed by an officer of LESSEE  stating
all of the following:

               (a)  the representations  and warranties  contained in Article 20
                    are  true and  accurate  on and as of the  Delivery  Date as
                    though  made on and as of such date  (except  to the  extent
                    that such representations and warranties relate solely to an
                    earlier date); and

               (b)  no Default has  occurred  and is  continuing  or will result
                    from LESSEE's lease of the Aircraft hereunder.

7.3.5 LESSEE's counsel will deliver an opinion  confirming the matters set forth
in the opinion of counsel  described in Article 7.1 and advising that all filing
and other  requirements  described  in the earlier  opinion of counsel have been
met.

7.3.6 If any Creditor Agreement provides or contemplates that such Creditor will
obtain any right,  title or interest  in an Engine  which is  installed  on such
Creditor's  aircraft,  prior to placing the Engine on such  Creditor's  aircraft
LESSEE  will  deliver to LESSOR an  engines  cooperation  agreement  in form and
substance  acceptable  to  LESSOR  which is  executed  by  LESSEE  and  LESSEE's
Creditors (as defined therein).

7.4 Post-Delivery Requirements.

7.4.1 Within seven (7) days after Delivery,  if not previously provided,  LESSEE
will provide  LESSOR with a follow-up  opinion of FAA counsel  advising that the
Aircraft has been registered in the State of Registration and that all necessary
filings have been made with the FAA.

<PAGE>

         ARTICLE 8            DISCLAIMERS

                LESSOR HAS  COMMITTED  TO LESSEE THAT ON THE  DELIVERY  DATE THE
AIRCRAFT  WILL BE IN THE  CONDITION  REQUIRED BY ARTICLE 6. SUCH  COMMITMENT  OR
COVENANT  ON THE PART OF LESSOR  EXPIRES AND THE  DISCLAIMERS  SET FORTH IN THIS
ARTICLE 8 APPLY UPON  LESSEE'S  ACCEPTANCE  OF THE AIRCRAFT AND EXECUTION OF THE
ESTOPPEL AND ACCEPTANCE CERTIFICATE. AFTER SUCH TIME, THEN AS BETWEEN LESSOR AND
LESSEE:

8.1 "As Is,  Where Is".  LESSEE  AGREES THAT IT IS LEASING THE  AIRCRAFT "AS IS,
WHERE IS". LESSEE  UNCONDITIONALLY  ACKNOWLEDGES  AND AGREES THAT NEITHER LESSOR
NOR ANY OF ITS OFFICERS,  DIRECTORS,  EMPLOYEES OR REPRESENTATIVES  HAVE MADE OR
WILL BE DEEMED TO HAVE MADE ANY TERM,  CONDITION,  REPRESENTATION,  WARRANTY  OR
COVENANT  EXPRESS OR IMPLIED  (WHETHER  STATUTORY  OR  OTHERWISE)  AS TO (a) THE
CAPACITY,  AGE,  AIRWORTHINESS,  VALUE, QUALITY,  DURABILITY,  CONFORMITY TO THE
PROVISIONS OF THIS LEASE,  DESCRIPTION,  CONDITION (WHETHER OF THE AIRCRAFT, ANY
ENGINE, ANY PART THEREOF OR THE AIRCRAFT  DOCUMENTATION),  DESIGN,  WORKMANSHIP,
MATERIALS,   MANUFACTURE,    CONSTRUCTION,    OPERATION,   DESCRIPTION,   STATE,
MERCHANTABILITY,   PERFORMANCE,  FITNESS  FOR  ANY  PARTICULAR  USE  OR  PURPOSE
(INCLUDING  THE ABILITY TO OPERATE OR REGISTER  THE AIRCRAFT OR USE THE AIRCRAFT
DOCUMENTATION IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT OR ANY
PART  THEREOF,  OR THE  ABSENCE  OF  LATENT  OR OTHER  DEFECTS,  WHETHER  OR NOT
DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (b)
THE ABSENCE OF ANY  INFRINGEMENT  OF ANY PATENT,  TRADEMARK,  COPYRIGHT OR OTHER
INTELLECTUAL  PROPERTY  RIGHTS,  (c) ANY IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (d) ANY OTHER REPRESENTATION
OR  WARRANTY,  EXPRESS OR  IMPLIED,  WITH  RESPECT TO THE  AIRCRAFT  OR ANY PART
THEREOF,  ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND EXTINGUISHED  EXCEPT AS
EXPRESSLY PROVIDED IN ARTICLE 21 HEREOF.

8.2 Waiver of Warranty of Description.  IN  CONSIDERATION OF (a) LESSEE'S RIGHTS
HEREUNDER TO INSPECT THE AIRCRAFT AND (b) LESSOR'S  ASSIGNMENT  TO LESSEE OF ANY
EXISTING AND ASSIGNABLE  WARRANTIES OF MANUFACTURER AND THE ENGINE MANUFACTURER,
LESSEE  HEREBY  AGREES THAT ITS  ACCEPTANCE  OF THE AIRCRAFT AT DELIVERY AND ITS
EXECUTION  AND DELIVERY OF THE ESTOPPEL AND  ACCEPTANCE  CERTIFICATE  CONSTITUTE
LESSEE'S  WAIVER OF THE  WARRANTY  OF  DESCRIPTION,  ANY CLAIMS  LESSEE MAY HAVE
AGAINST  LESSOR  BASED UPON THE  FAILURE OF THE  AIRCRAFT  TO CONFORM  WITH SUCH
DESCRIPTION  AND ANY AND ALL  RIGHTS  IT MAY HAVE TO THE  REMEDIES  SET FORTH IN
SECTIONS 10508 THROUGH 10522 OF THE CALIFORNIA  COMMERCIAL  CODE. EVEN IF AT ANY
TIME THE FAILURE OF THE  AIRCRAFT TO CONFORM TO SUCH  DESCRIPTION  SUBSTANTIALLY
IMPAIRS THE VALUE AND UTILITY OF THE AIRCRAFT AND EITHER (i) LESSEE ACCEPTED THE
AIRCRAFT BASED ON A REASONABLE  ASSUMPTION THAT THE NONCONFORMITY WOULD BE CURED
AND IT WAS NOT  SEASONABLY  CURED OR (ii) LESSEE  ACCEPTED THE AIRCRAFT  WITHOUT
DISCOVERING  THE  NONCONFORMITY  BUT  LESSEE'S  ACCEPTANCE  OF THE  AIRCRAFT WAS
REASONABLY  INDUCED  EITHER  BY  LESSOR'S  ASSURANCES  OR BY THE  DIFFICULTY  OF
DISCOVERING ANY DEFECT PRIOR TO ACCEPTANCE,  LESSEE AGREES NOT TO LOOK TO LESSOR
FOR DAMAGES OR RELIEF  ARISING OUT OF THE FAILURE OF THE  AIRCRAFT TO CONFORM TO
SUCH DESCRIPTION.

8.3 LESSEE Waiver.  LESSEE hereby waives as between itself and LESSOR and agrees
not to seek to establish or enforce any rights and remedies,  express or implied
(whether  statutory or otherwise) against LESSOR or the Aircraft relating to any
of the  matters  mentioned  in Articles  8.1 or 8.2 and the  leasing  thereof by
LESSOR to LESSEE.

8.4  Conclusive  Proof.  DELIVERY  BY  LESSEE  TO  LESSOR  OF THE  ESTOPPEL  AND
ACCEPTANCE  CERTIFICATE  WILL BE CONCLUSIVE  PROOF AS BETWEEN  LESSOR AND LESSEE
THAT LESSEE'S  TECHNICAL  EXPERTS HAVE EXAMINED AND  INVESTIGATED  THE AIRCRAFT,
INCLUDING  THE ENGINES AND THE  AIRCRAFT  DOCUMENTATION  AND THAT EACH IS IN THE
CONDITION  REQUIRED  HEREUNDER AND WITHOUT DEFECT,  EXCEPT AS  SPECIFICALLY  SET
FORTH  IN SUCH  CERTIFICATE,  (WHETHER  OR NOT  DISCOVERABLE  AT  DELIVERY)  AND
OTHERWISE IN EVERY WAY SATISFACTORY TO LESSEE.

8.5 No LESSOR Liability for Losses. LESSEE agrees that LESSOR will not be liable
to LESSEE, any sublessee or any Person,  whether in contract or tort and however
arising,  for any cost, loss or damage  (consequential or otherwise) arising out
of the condition of the  Aircraft,  whether or not due in whole or in part to an
act or omission or the active or passive negligence of LESSOR.

8.6 No Liability to Repair or Replace. LESSOR will not be liable for any expense
in  repairing  or  replacing  any item of the  Aircraft  or be  liable to supply
another  aircraft or any item in lieu of the Aircraft or any Part thereof if the
same is lost,  confiscated,  damaged,  destroyed or otherwise rendered unfit for
use.

8.7 No Waiver.  Nothing  in this  Article 8 or  elsewhere  in this Lease will be
deemed to be a waiver by LESSEE of any rights it may have against  Manufacturer,
the Engine manufacturer or any other Person.

<PAGE>

         ARTICLE 9            MANUFACTURERS' AND VENDORS' WARRANTIES

9.1  Warranties.  Effective  upon Delivery  LESSOR will assign to LESSEE for the
duration of the Lease Term the benefit of all warranties and  indemnities  given
to LESSOR by Manufacturer and the Engine  manufacturer  pursuant to the Airframe
Warranty Assignment and the Engine Warranty Assignment,  respectively. Effective
on the Delivery Date, all other assignable vendor warranties with respect to the
Aircraft are hereby assigned by LESSOR to LESSEE.

9.2  Non-Assignable  Warranties.  To the extent that any  warranty or  indemnity
given to LESSOR by  Manufacturer  and others with respect to the Aircraft cannot
be  assigned,  LESSEE  will be  entitled  to take such  action to  enforce  such
warranty or indemnity in the name of LESSOR against  Manufacturer and such other
parties as LESSEE sees fit, but subject to LESSEE first  ensuring that LESSOR is
indemnified  and secured to LESSOR's  satisfaction  against all losses,  damage,
costs,  expenses and  liabilities  thereby  incurred or reasonably  likely to be
incurred.

9.3 Reassignment.  On the Termination Date, the benefit of any warranty assigned
by LESSOR to LESSEE will be reassigned  automatically to LESSOR or its designee.
LESSEE's rights under such warranties  (including  LESSEE's claims and rights to
payment thereunder) will revert to LESSOR during any period in which an Event of
Default  is  continuing.  LESSEE  at its own cost and  expense  will do all such
things  and  execute  such  documents  as may be  reasonably  required  for this
purpose.

9.4 Warranty Claims. LESSEE will diligently and promptly pursue any valid claims
it may have against  Manufacturer  and others under such warranties with respect
to the Aircraft and will provide notice of the same to LESSOR.

<PAGE>

         ARTICLE 10           OPERATION OF AIRCRAFT

10.1 Costs of Operation.  LESSEE will pay all costs incurred in the operation of
the Aircraft during the Lease Term, for profit or otherwise, including the costs
of flight crews, cabin personnel, fuel, oil, lubricants, maintenance, insurance,
storage, landing and navigation fees, airport charges, passenger service and any
and all  other  expenses  of any kind or  nature,  directly  or  indirectly,  in
connection  with or related to the use,  movement and operation of the Aircraft.
The  obligations,  covenants  and  liabilities  of LESSEE  under this  paragraph
arising  prior to return of the  Aircraft to LESSOR will  continue in full force
and effect,  notwithstanding  the termination of this Lease or expiration of the
Lease Term.

10.2 Compliance with Laws.  Except as expressly  provided in this Lease,  LESSEE
agrees throughout the Lease Term to maintain operational control of the Aircraft
and use the  Aircraft  in  accordance  with  applicable  Laws  of the  State  of
Registration and of any country,  state,  territory or municipality into or over
which LESSEE may operate.  LESSEE will not employ,  suffer or cause the Aircraft
to be used in any business  which is forbidden by Law or in any manner which may
render it liable to condemnation,  destruction,  seizure, or confiscation by any
authority.  LESSEE will not permit the Aircraft to fly to any airport or country
if so doing would  cause  LESSEE to be in  violation  of any Law  applicable  to
LESSEE or the Aircraft.

10.3  Training.  LESSEE will not use the Aircraft for testing or for training of
flight crew members  other than LESSEE crew members and, from and after the date
on which it  obtains  other  A318  aircraft,  it will not use the  Aircraft  for
training any more than it utilizes  for training the other A318  aircraft in its
fleet.

10.4 No  Violation  of  Insurance  Policies.  LESSEE  will not use or permit the
Aircraft to be used in any manner or for any purpose which is not covered by the
insurance policies LESSEE is required to carry and maintain as set forth in this
Lease.  LESSEE will not carry any goods of any description  excepted or exempted
from such policies or do any other act or permit to be done anything which could
reasonably be expected to invalidate or limit any such insurance policy.

10.5 Flight  Charges.  LESSEE will pay promptly when due all enroute  navigation
charges,  navigation service charges and all other charges payable by LESSEE for
the use of or for services  provided at any  airport,  whether in respect of the
Aircraft or any other  aircraft of LESSEE,  and will  indemnify  and hold LESSOR
harmless in respect of the same.  This indemnity will continue in full force and
effect  notwithstanding  the termination or expiration of the Lease Term for any
reason or the return of the Aircraft.

<PAGE>

         ARTICLE 11           SUBLEASES

11.1 No Sublease  without LESSOR Consent.  LESSEE WILL NOT SUBLEASE OR PART WITH
POSSESSION  OF THE  AIRCRAFT  (EXCEPT  FOR  MAINTENANCE  AND REPAIR) AT ANY TIME
WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (NOT TO BE UNREASONABLY  WITHHELD OR
DELAYED) EXCEPT FOR A SUBLEASE TO A PERMITTED SUBLESSEE  PRE-APPROVED IN ARTICLE
11.1.1 BELOW, AND IN ACCORDANCE WITH SUCH  REQUIREMENTS AS MAY FROM TIME TO TIME
BE AGREED IN WRITING BETWEEN LESSOR AND LESSEE.  The wet leasing of the Aircraft
during the Lease Term (in which LESSEE and its crews retain operational  control
of the Aircraft) will not be considered a sublease of the Aircraft.

11.1.1  LESSEE may sublease the Aircraft  without  LESSOR's  prior consent to an
operator based in the U.S. which is then currently a lessee of LESSOR,  provided
such operator is not then in default under the aircraft lease agreement  between
such  operator and LESSOR  ("Permitted  Sublessee").  Any such  sublease will be
subject to the  provisions  of this  Article 11,  including  the  provisions  of
Article 11.2 below.

11.2 LESSOR Costs. LESSEE will indemnify LESSOR on demand for all reasonable and
actual out-of-pocket expenses (including legal fees) incurred in connection with
LESSOR's  assessment of the subleasing proposal (whether or not LESSOR's consent
to such sublease is ultimately given), review of the sublease  documentation and
implementation of the sublease.

11.3 Any Approved Sublease. Any sublease to a Permitted Sublessee, and any other
sublease  approved  by LESSOR will be for a term no greater  than the  remaining
Lease Term and contain provisions consistent with this Lease protecting LESSOR's
title to the Aircraft,  providing appropriate LESSOR indemnities,  regarding the
maintenance  and repair  standards for the Aircraft,  concerning  the insurances
which will be carried by the sublessee and the circumstances  which constitute a
Total Loss of the Aircraft. Any such sublease will be subject and subordinate to
this Lease. In its sole discretion,  LESSOR may require an opinion of counsel in
connection  with  such  sublease,  including  LESSOR's  right to  repossess  the
Aircraft in the event of an Event of Default  hereunder  or under the  sublease.
LESSEE  will not amend  the terms of any  approved  sublease  without  the prior
written   consent  of  LESSOR,   which  will  not  be   unreasonably   withheld.
Notwithstanding  the  foregoing,  LESSOR agrees that even if an Event of Default
has  occurred and is  continuing  hereunder,  so long as the approved  sublessee
fully performs all of the obligations of LESSEE hereunder and agrees to do so on
a going  forward  basis  and  there is no risk to  LESSOR  of an  impairment  to
LESSOR's unencumbered title to the Aircraft, LESSOR will not interfere with such
sublessee's quiet use and enjoyment of the Aircraft.

11.4 Assignment of Sublease. Any approved sublease will be assigned to LESSOR as
security. LESSEE will deliver the original counterpart of the sublease to LESSOR
and make any filings necessary to protect LESSOR's security interest.

11.5 Continued  Responsibility of LESSEE. LESSEE will continue to be responsible
for  performance  of its  obligations  under  this  Lease  during  any period of
sublease.

<PAGE>

         ARTICLE 12           MAINTENANCE OF AIRCRAFT

12.1 General Obligation.

12.1.1 During the Lease Term and until the Aircraft is returned to LESSOR in the
condition  required  by this  Lease,  LESSEE  alone has the  obligation,  at its
expense, to maintain and repair the Aircraft,  Engines, and all of the Parts (a)
in accordance with the Maintenance Program, (b) in accordance with the rules and
regulations of the Aviation  Authority,  (c) in accordance  with  Manufacturer's
type  design,  (d) in  accordance  with any other  regulations  or  requirements
necessary  in order to maintain a valid  Certificate  of  Airworthiness  for the
Aircraft and meet the  requirements  at all times during the Lease Term and upon
return of the  Aircraft  to LESSOR for  issuance  of a Standard  Certificate  of
Airworthiness  for transport  category  aircraft issued by the FAA in accordance
with FAR Part 21 (except  during those  periods when the Aircraft is  undergoing
maintenance  or repairs as required or permitted by this Lease and to the extent
in conflict with the requirements of the Aviation Authority) and (e) in the same
manner and with the same care as used by LESSEE with respect to similar aircraft
and engines operated by LESSEE and without in any way discriminating against the
Aircraft.

12.1.2 No Engine will remain in an  unserviceable  condition for more than three
(3) months.

12.1.3 LESSEE will not enter into any Engine  maintenance  cost per flight hour,
power-by-the-hour  or similar  agreement with Engine  manufacturer  or any other
Engine  maintenance  facility or  organization  without  LESSOR's  prior written
consent, which consent shall not be unreasonably withheld or delayed.

12.2 Specific  Obligations.  Without limiting  Article 12.1,  LESSEE agrees that
such maintenance and repairs will include but will not be limited to each of the
following specific items:

               (a)  performance in accordance  with the  Maintenance  Program of
                    all routine and non-routine maintenance work;

               (b)  incorporation   in  the   Aircraft   of  all   Airworthiness
                    Directives,  all alert  service  bulletins of  Manufacturer,
                    Engine  manufacturer  and other vendors or  manufacturers of
                    Parts incorporated on the Aircraft and any service bulletins
                    which must be performed in order to maintain the  warranties
                    on the Aircraft, Engines, and Parts;

               (c)  incorporation in the Aircraft of all other service bulletins
                    of Manufacturer,  the Engine  manufacturer and other vendors
                    which  LESSEE  schedules  to adopt within the Lease Term for
                    the rest of its A318 aircraft fleet. It is the intent of the
                    parties that the Aircraft will not be discriminated  against
                    in  service  bulletin   compliance   (including   method  of
                    compliance) or other  maintenance  matters compared with the
                    rest of  LESSEE's  A318  aircraft  fleet.  LESSEE  will  not
                    discriminate  against the Engines  with  respect to Overhaul
                    build standards and life-limited part replacements;

               (d)  incorporation in the Maintenance Program for the Aircraft of
                    a corrosion prevention and control program as recommended by
                    Manufacturer,  the  Aviation  Authority  and the FAA and the
                    correction  of any  discrepancies  in  accordance  with  the
                    recommendations  of Manufacturer  and the Structural  Repair
                    Manual.  In addition,  all inspected  areas will be properly
                    treated  with   corrosion   inhibitor  as   recommended   by
                    Manufacturer;

               (e)  maintaining  in English and keeping in an up-to-date  status
                    the records and historical documents set forth in Exhibit L;

               (f)  maintaining   historical   records,   in  English,   for  on
                    condition,  condition-monitored,  hard time and life-limited
                    Parts  (including tags from the manufacturer of such Part or
                    a repair  facility  which  evidence that such Part is new or
                    overhauled and establish authenticity, total time in service
                    and time since overhaul for such Part), the hours and cycles
                    the Aircraft  and Engines  operate and all  maintenance  and
                    repairs performed on the Aircraft; and

               (g)  properly   documenting   all  repairs,   Modifications   and
                    alterations  and the  addition,  removal or  replacement  of
                    equipment,  systems or  components  in  accordance  with the
                    rules  and   regulations  of  the  Aviation   Authority  and
                    reflecting  such  items in the  Aircraft  Documentation.  In
                    addition,  all repairs to the Aircraft will be  accomplished
                    in  accordance  with  either (i)  Manufacturer's  Structural
                    Repair Manual (or  DGAC-approved  Repair Approval Sheets) or
                    (ii)   FAA-approved   data   (such  as  FAA  Form   8110  or
                    equivalent).  All  Modifications  and  alterations  will  be
                    accomplished in accordance with  FAA-approved  data (such as
                    FAA Form 8110 or equivalent).

<PAGE>

12.3 Replacement of Parts.

12.3.1  LESSEE,  at its own cost and expense,  will  promptly  replace all Parts
which may from time to time become worn out, lost,  stolen,  destroyed,  seized,
confiscated, damaged beyond repair or rendered unfit or beyond economical repair
(BER) for use for any reason.  In the ordinary course of  maintenance,  service,
repair,  overhaul or testing,  LESSEE may remove any Part  provided  that LESSEE
replaces such Part as promptly as practicable. All replacement Parts will (a) be
free and clear of all Security Interests (except Permitted Liens) of any kind or
description,  (b) be in airworthy  condition and of at least  equivalent  model,
service bulletin and  modification  status and have a value and utility at least
equal to the Parts replaced,  assuming such replaced Parts were in the condition
and repair  required to be maintained by the terms hereof and (c) have a current
"serviceable  tag" of the  manufacturer or maintenance  facility  providing such
items to LESSEE,  indicating that such Parts are new, serviceable or Overhauled.
So long as a substitution meets the requirements of the Maintenance  Program and
the Aviation Authority,  LESSEE may substitute for any Part a part that does not
meet the  requirements  of the foregoing  sentence if a complying Part cannot be
procured or installed  within the  available  groundtime  of the Aircraft and as
soon as practicable the noncomplying part is removed and replaced by a complying
Part.  With respect to  replacement  modules in an Engine,  LESSEE will use best
reasonable  efforts to ensure  that any  replacement  module  will not have been
previously  operated at a higher thrust rating than the replaced module provided
that in all  circumstances  life-limited  Parts in such replacement  module will
have no less life remaining than the life-limited Parts in the replaced module.

12.3.2  All Parts  removed  from the  Airframe  or any  Engine  will  remain the
property of LESSOR and subject to this Lease no matter where located, until such
time as such Parts have been replaced by Parts (which have been  incorporated or
installed  in or  attached  to the  Airframe  or such  Engine)  which  meet  the
requirements for replacement Parts specified above and title to such replacement
Parts has passed to LESSOR under the Laws of the State of  Registration  and lex
situs. To the extent  permitted by the Laws of the State of Registration and the
lex situs it is the intent of LESSOR and LESSEE  that  without  further  act and
immediately  upon any  replacement  Part  becoming  incorporated,  installed  or
attached  to the  Airframe  or an  Engine  as above  provided,  (a) title to the
removed  Part will  thereupon  vest in  LESSEE,  free and clear of all rights of
LESSOR, (b) title to the replacement Part will thereupon vest in LESSOR free and
clear of all rights of LESSEE (other than LESSEE's  rights under this Lease) and
(c) such  replacement Part will become subject to this Lease and be deemed to be
a Part  hereunder  to the same extent as the Parts  originally  incorporated  or
installed in or attached to the Airframe or such Engine.

12.4 Removal of Engines.

12.4.1  If an Engine is  removed  for  testing,  service,  repair,  maintenance,
Overhaul work,  alterations or  modifications,  title to such Engine will at all
times remain vested in LESSOR.

12.4.2  LESSEE will be entitled to remove any of the Engines  from the  Aircraft
and install  another  engine or engines on the  Aircraft,  provided  that LESSEE
complies with each of the following obligations:

               (a)  the  insurance  requirements  set  forth in  Article  18 and
                    Exhibit C are in place;

               (b)  LESSEE ensures that the identification plates referred to in
                    Article 15 are not removed  from any Engine upon such Engine
                    being detached from the Aircraft; and

               (c)  title  to the  Engine  remains  with  LESSOR  free  from all
                    Security  Interests  (except  Permitted Liens) regardless of
                    the  location  of  the  Engine  or  its   attachment  to  or
                    detachment from the Aircraft.

12.5  Pooling of Engines and Parts.  LESSEE may subject the Engines and Parts to
normal  interchange  or  pooling   agreements  with  responsible   international
scheduled  commercial air carriers customary in the airline industry and entered
into by LESSEE in the ordinary course of its business with respect to its entire
A318 fleet so long as (a) in the case of pooling  of an Engine,  such  Engine is
returned  to LESSEE  within  four (4)  months,  (b) no  transfer of title to the
Engine  occurs,  (c) all other terms of this Lease  continue to be observed with
respect to the  Engines or Parts,  including  but not limited to Articles 8, 10,
12, 14, 15, 16, 17, 18 and 19 and (d) LESSEE  continues to be fully  responsible
to LESSOR for the performance of all of its obligations hereunder.

12.6  Installation  of Engines on other  aircraft.  Any Engine  removed from the
Aircraft may be installed on another  aircraft in LESSEE's  fleet which utilizes
engines of the same type as the Engine only if one of the  situations  described
in this Article 12.6 exists:

12.6.1  LESSEE or LESSOR has title to such other  aircraft free and clear of all
Security Interests (except Permitted Liens).

12.6.2 LESSEE,  LESSOR and all of the Creditors of LESSEE of such aircraft enter
into  an  engines  cooperation   agreement  in  form  and  substance  reasonably
acceptable  to LESSOR in which  each party  agrees to  recognize  one  another's
rights in the engines.  LESSEE will  reimburse  LESSOR and  LESSOR's  Lender for
their reasonable  attorneys' fees and costs in negotiating and finalizing engine
cooperation agreement arrangements with LESSEE and its Creditors.

12.6.3  Such other  aircraft  is subject to a Creditor  Agreement  (but no other
Security  Interests  except  Permitted  Liens)  which by its terms  expressly or
effectively  states that such Creditor and its  successors  and assigns will not
acquire  any right,  title or  interest  in any Engine by reason of such  Engine
being installed on such aircraft. LESSEE hereby agrees that if LESSOR's title to
an Engine is in fact impaired under any such Creditor Agreement, such impairment
will be deemed to be a Total Loss of such Engine and the  provisions  of Article
19.5  will  apply.  To the  extent  another  Creditor  Agreement  contains  such
provisions,  then LESSOR  hereby  agrees for the benefit of the Creditor of such
Creditor  Agreement  that  neither  LESSOR nor its  successors  or assigns  will
acquire or claim any right,  title or interest in any engine in which  LESSEE or
another  Creditor has an interest as a result of such engine being  installed on
the Airframe.

12.7 Engine Thrust Rating. If an Engine is utilized by LESSEE on the Aircraft or
on any other  airframe  (or if the Engine is utilized by any  sublessee  or user
under a pooling  arrangement  in accordance  with this Lease) at a thrust rating
greater  than the thrust  rating set forth in Exhibit A,  LESSEE  will  promptly
notify LESSOR and the Engine Performance  Restoration Reserves amounts set forth
in Article 5.4.1 will be increased in an amount  proportional to the accelerated
rate of deterioration of the Engine resulting from the increased thrust rating.

12.8 Modifications.

12.8.1   *

12.8.2 LESSOR may review LESSEE's proposed designs, plans,  engineering drawings
and  diagrams,  and flight and  maintenance  manual  revisions  for any proposed
Modification.  If requested by LESSOR,  LESSEE will furnish  LESSOR (at LESSEE's
expense) with such documents in final form and any other  documents  required by
Law, as a result of such  Modification.  All  Modifications  incorporated on the
Aircraft will be properly documented in the Aircraft  Documentation and be fully
approved by the Aviation Authority.

12.8.3  Notwithstanding  any other provision of this Lease, no Modification will
be made which has the effect of decreasing  the utility or value of the Aircraft
or invalidating any warranty applicable to the Aircraft.

12.8.4 No Modification  will be made by LESSEE if an Event of Default exists and
is continuing hereunder.

12.8.5 Unless otherwise agreed by LESSOR in writing, all permanent or structural
Modifications   will  forthwith  become  a  part  of  the  Aircraft  and  LESSEE
relinquishes to LESSOR all rights and title thereto.  However, all (i) temporary
and  non-structural  Modifications  and (ii) all Passenger  Service Equipment so
long as such equipment can be removed  without  causing  material  damage to the
Aircraft,  will remain the  property  of LESSEE  and,  at  LESSOR's  request and
LESSEE's  cost,  will be  removed  from  the  Aircraft  prior to  return  of the
Aircraft, with LESSEE restoring the Aircraft to the condition it was in prior to
the  Modification  or installation  of Passenger  Service  Equipment in a manner
cosmetically  acceptable  to  LESSOR.  Notwithstanding  the  foregoing,  no such
removal will be permitted  without LESSOR's  permission during the occurrence of
an Event of Default hereunder and immediately upon the occurrence of an Event of
Default  hereunder,  without the  requirement of any further act or notice,  all
right,  title and interest in such Modifications and Passenger Service Equipment
will immediately vest in LESSOR;  provided however, that in the event of such an
Event of Default,  with respect to any Passenger Service Equipment,  LESSOR will
use  commercially  reasonable  efforts to reach  agreement  with any  vendors or
suppliers  holding title to the Passenger  Service Equipment in order to protect
the mutual interests of LESSOR and such parties.

12.8.6  LESSOR  will  bear no  liability  for the cost of  Modifications  of the
Aircraft whether in the event of grounding or suspensions of  certification,  or
for any other cause.

12.9 Performance of Work by Third Parties.  Whenever maintenance and repair work
on the Aircraft or Engines  will be  regularly  performed by a Person other than
LESSEE, such Person will be an FAA-authorized repair station.

12.10 Reporting Requirements.

12.10.1  Commencing  with a report  furnished ten (10) days after the end of the
calendar month in which Delivery occurs, LESSEE will furnish to LESSOR a Monthly
Report in English in the form attached  hereto as Exhibit K. Each Monthly Report
will be  furnished  within ten (10) days after the end of each  calendar  month,
except  that the  Monthly  Report  pertaining  to the last month (or any portion
thereof) of the Lease Term will be furnished to LESSOR on the Termination Date.

12.10.2 Commencing with the second scheduled "C" check for the Aircraft,  LESSEE
will provide LESSOR with a Technical  Evaluation  Report for the Aircraft in the
form and substance of Exhibit M, as revised.  Such Technical  Evaluation  Report
will be furnished  within three (3) Business Days after the  completion of every
second "C" check performed  during the Lease Term and at other times  reasonably
requested by LESSOR.

12.11 Information Regarding Maintenance Program. LESSEE will provide LESSOR with
a copy of or information  regarding the Maintenance Program for the Aircraft, as
reasonably requested by LESSOR.

12.12 LESSOR Rights to Inspect Aircraft. On reasonable notice, LESSOR and/or its
authorized agents or representatives will have the right to inspect the Aircraft
and Aircraft Documentation. LESSOR agrees that such requests will be coordinated
with  LESSEE  so as to cause  the  minimum  practical  disturbance  to  LESSEE's
operation or its personnel. LESSEE agrees to cooperate with LESSOR in making the
Aircraft  and Aircraft  Documentation  available  to such  authorized  technical
teams.  LESSOR will have no duty to make any such  inspection and will not incur
any liability or obligation  by reason of (and  LESSEE's  indemnity  obligations
pursuant  to  Article  17  will  apply  notwithstanding)  not  making  any  such
inspection or by reason of any reports it receives or any reviews it may make of
the Aircraft records.

<PAGE>

         ARTICLE 13           USE OF RESERVES

13.1 Airframe Reserves.  LESSOR will reimburse LESSEE from the Airframe Reserves
for the  actual  cost of the  structural  inspection  portion  of the  full  and
completed  scheduled  4C/5Y  and  8C/9Y (or then  current  equivalent  check) as
described  in the MPD  and  the  rectification  of any  structural  deficiencies
resulting  from such  inspection,  with  work  performed  for all  other  causes
excluded,  including those causes set forth in Article 13.6.  Subject to Article
16.1 and excluding  exchange fees and handling,  packaging and shipping charges,
reimbursement  will be made up to the  amount in the  Airframe  Reserves  on the
commencement date of the structural check.

13.2 Engine Performance Restoration Reserves.

13.2.1  LESSOR will  reimburse  LESSEE from the Engine  Performance  Restoration
Reserves  for  the  actual  cost  associated  with  performance  restoration  or
permanent  repair of  on-condition  Parts in the Basic Engine  during  completed
Engine shop visits (i.e. heavy maintenance  visits) requiring  off-wing teardown
and/or disassembly, with work performed for all other causes excluded, including
those causes set forth in Article  13.6.  Subject to Article 16.1 and  excluding
exchange fees and handling, packaging and shipping charges, reimbursement for an
Engine  will be made up to the  amount  in the  Engine  Performance  Restoration
Reserves applicable to such Engine at the time of removal of such Engine.

13.2.2  Reimbursement from the Engine Performance  Restoration  Reserves will be
limited  as to each  module of such  Engine  in  accordance  with the  following
percentages of the remaining total amount in the Engine Performance  Restoration
Reserves for such Engine:

                X*%  Fan & Accessory Gearbox
                X*% High Pressure Compressor Module
                X*%  High Pressure Turbine Module
                X*%  Low Pressure Turbine Module

<PAGE>

*Prior to  Delivery,  LESSOR  will  obtain the  recommended  percentage  figures
(totaling 100%) from the Engine  manufacturer that relate to the Pratt & Whitney
6124 engine when such figures become  available.  Upon written notice to LESSEE,
such  recommended  percentage  figures provided by Engine  manufacturer  will be
deemed to be the reimbursement percentages for purposes of this Lease.

13.2.3 LESSEE will not enter into any Engine  maintenance  cost per flight hour,
power-by-the-hour  or similar  agreement with Engine  manufacturer  or any other
Engine  maintenance  facility or  organization  without  LESSOR's  consent which
consent shall not be unreasonably withheld or delayed.

13.3  Engine LLP  Reserves.  LESSOR  will  reimburse  LESSEE from the Engine LLP
Reserves  for an Engine  for the actual  out-of-pocket  materials  cost  without
overhead, mark-up or profit factor associated with on or off-wing replacement of
life-limited  Parts in such  Engine,  with work  performed  for all other causes
excluded,  including those causes set forth in Article 13.6.  Subject to Article
16.1 and excluding  exchange fees and handling,  packaging and shipping charges,
reimbursement for replacement of life-limited Parts in an Engine will be made up
to the amount in the Engine LLP Reserves  applicable  to such Engine at the time
of replacement of such life-limited Part.

13.4 Landing Gear Reserves.  LESSOR will reimburse  LESSEE from the Landing Gear
Reserves  for the actual  cost of an Overhaul  of the  Landing  Gear,  up to the
amount remaining in the Landing Gear Reserves, with work performed for all other
causes excluded, including those causes set forth in Article 13.6.

13.5  Reimbursement.  LESSEE will be entitled to reimbursement from the Reserves
after the work is completed  and the  Airframe,  Engine or Landing Gear has left
the repair agency, by submitting  invoices and proper  documentation  within six
(6) months after completion of the work. For the Airframe,  proper documentation
includes a list of all routine  and  non-routine  work cards with  corresponding
references  to the MPD and an  itemized  labor  and  materials  report.  For the
Engine,  proper  documentation  includes a description of the reason for removal
(if removed),  a shop teardown  report,  a shop findings  report if an Engine is
removed  (or  an  equivalent  report  if an  Engine  is  not  removed),  a  full
description of the workscope and complete disk records for the Engine both prior
to and after the repair. Both the invoice supplied by the Engine repair facility
and that  submitted  by LESSEE to LESSOR  with  respect to an Engine  will state
whether or not credits were provided due to life remaining on any removed Engine
Parts and the amount of any such credits will be itemized. For the Landing Gear,
proper  documentation  includes the total calendar time, hours and cycles on the
Landing  Gear  both  prior to and  after the  Overhaul,  a copy of the  complete
Overhaul  report which includes a life limited  component list and a description
of all work performed on the Landing Gear assembly.

<PAGE>

13.6  Reimbursement  Adjustment.  By way of example,  among the exclusions  from
reimbursement  are those items  resulting from repairs  covered by LESSEE's or a
third  party's  insurance,  (deductibles  being for the  account  of  LESSEE) or
warranties or required as a result of an Airworthiness Directive, manufacturer's
service  bulletin,  faulty  maintenance or  installation,  improper  operations,
misuse,  neglect,  accident,  incident,  ingestion,  or other accidental  cause.
Reimbursement  from the Reserves will not be available for the APU, quick engine
change (QEC) Parts, thrust reversers, or any of their associated components. All
invoices  subject to  reimbursement  from LESSOR will be reduced (by  adjustment
between  LESSEE and LESSOR  retroactively  if necessary)  by the actual  amounts
received  by LESSEE on account of such work from  responsible  third  parties or
other  sources,   such  as  insurance   proceeds,   manufacturer's   warranties,
guarantees, concessions and credits (including, with respect to Engines, credits
due to life remaining on any removed Engine Parts).

13.7 Costs in Excess of Reserves.  LESSEE will be responsible for payment of all
costs in excess of the amounts  reimbursed  hereunder.  If on any  occasion  the
balance in the  Airframe  Reserves,  Engine  Performance  Restoration  Reserves,
Engine LLP Reserves or Landing Gear Reserves for a particular  Engine or Landing
Gear (at the time of the structural  check,  in the case of the Airframe,  or at
the  time  of  removal,  in the  case  of an  Engine  or the  Landing  Gear)  is
insufficient  to satisfy a claim for  reimbursement  in respect of the Airframe,
such Engine or the Landing Gear, as applicable, the shortfall may not be carried
forward or made the subject of any further claim for reimbursement.

13.8 Reimbursement after Termination Date. LESSEE may not submit any invoice for
reimbursement from the Reserves after the Termination Date unless on or prior to
such date LESSEE has notified  LESSOR in writing that such  outstanding  invoice
will be submitted after the Termination Date and the anticipated  amount of such
invoice.  So long as LESSEE has provided such notice to LESSOR,  LESSEE may then
submit  such  outstanding  invoice at any time  within six (6) months  after the
Termination Date. In the event of the Total Loss of the Aircraft,  fifty percent
(50%) of the unreimbursed Reserves held by LESSOR will be retained by LESSOR and
the remaining  portion of the Reserves will be paid to LESSEE in accordance with
Article 19.9.

<PAGE>

         ARTICLE 14           TITLE AND REGISTRATION

14.1 Title to the Aircraft During Lease Term.  Title to the Aircraft will be and
remain  vested in  LESSOR.  LESSOR and  LESSEE  intend  this Lease to be a "true
lease".  LESSEE will have no right,  title or interest in the Aircraft except as
provided in this Lease.

14.2 Registration of Aircraft. LESSOR at its sole cost and expense will register
and maintain  registration of the Aircraft in the name of LESSOR at the register
of aircraft in the State of Registration.  LESSEE will cooperate with LESSOR and
will from time to time take all other steps then required by Law  (including the
Geneva Convention if applicable) or as LESSOR may reasonably  request to protect
and perfect  LESSOR's  interest in the  Aircraft  and this Lease in the State of
Registration or in any other  jurisdictions  in or over which LESSEE may operate
the Aircraft.

14.3 Filing of this Lease. To the extent permitted by Law and in accordance with
the  requirements  of the Law from  time to time,  LESSEE  at its sole  cost and
expense  will  cause  this  Lease to be kept,  filed,  recorded  and  refiled or
rerecorded in the State of  Registration  and in any other offices  necessary to
protect LESSOR's rights hereunder as reasonably requested by LESSOR.

14.4 Evidence of Registration and Filings. As LESSOR may reasonably request from
time to time,  LESSEE  will  furnish  to LESSOR an  opinion  of counsel or other
evidence  reasonably  satisfactory  to LESSOR of the  registrations  and filings
required hereunder.

<PAGE>

         ARTICLE 15           IDENTIFICATION PLATES

                LESSOR will affix and LESSEE  will at all times  maintain on the
Airframe and each Engine the  identification  plates  containing  the  following
legends or any other legend reasonably requested by LESSOR in writing:

15.1           Airframe Identification Plates.
               Location:             One to be affixed to the Aircraft structure
                                     above the  forward  entry door  adjacent to
                                     and  not  less   prominent   than  that  of
                                     Manufacturer's  data plate and another in a
                                     prominent place on the flight deck.

               Size:                 No smaller than 4" x 6".

               Legend:               "THIS AIRCRAFT IS OWNED BY INTERNATIONAL
                                     LEASE FINANCE CORPORATION.

                                     MANUFACTURER'S SERIAL NO:    [TBD]

                                     OWNER'S ADDRESS:

                                     INTERNATIONAL   LEASE  FINANCE  CORPORATION
                                     1999  Avenue of the  Stars,  39th Floor Los
                                     Angeles,  California 90067 United States of
                                     America

                                     Fax:     (310) 788-1990"

15.2            Engine Identification Plates.

               Location:             The legend on the plate must be no less
                                     prominent than the Engine data plate
                                     and must be visible.

               Size:                 No smaller than 2" x 6".

                                     "THIS ENGINE IS OWNED BY INTERNATIONAL
                                     LEASE FINANCE CORPORATION, LOS ANGELES,
                                     CALIFORNIA, USA."

         ARTICLE 16           TAXES

16.1 General  Obligation of LESSEE.  Except as set forth in Article 16.2, LESSEE
agrees to pay promptly when due, and to indemnify and hold harmless  LESSOR on a
full  indemnity  basis from,  all license and  registration  fees and all taxes,
fees, levies, imposts, duties, charges, deductions or withholdings of any nature
(including without limitation any value added, franchise, transfer, sales, gross
receipts, use, business,  excise,  turnover,  personal property,  stamp or other
tax)  together  with any  assessments,  penalties,  fines,  additions  to tax or
interest  thereon,  however or wherever  imposed  (whether  imposed upon LESSEE,
LESSOR,  on all or part of the  Aircraft,  the  Engines  or  otherwise),  by any
Government Entity or taxing authority in the U.S.  (including without limitation
the  City  or  County  of  Los  Angeles),  or  any  foreign  country  or by  any
international taxing authority,  upon or with respect to, based upon or measured
by any of the following (collectively, "Taxes"):

               (a)  the Aircraft, Engines or any Parts;

               (b)  the  use,  operation  or  maintenance  of  the  Aircraft  or
                    carriage of passengers or freight during the Lease Term;

               (c)  this Lease,  the  payments due  hereunder  and the terms and
                    conditions hereof; and

               (d)  the  ownership,   financing,  delivery,  import  or  export,
                    return,  sale,  payment  of  Total  Loss  Proceeds  or other
                    disposition of the Aircraft.

16.2  Exceptions to Indemnity.  The indemnity  provided for in Article 16.1 does
not extend to any of the following Taxes  (hereinafter  referred to as "LESSOR's
Taxes"):

               (a)  Taxes imposed by the U.S. or by any state within the U.S. on
                    the net income, profits or gains, gross receipts, capital or
                    net worth of LESSOR;

               (b)  Taxes  attributable  to the period,  or an event  occurring,
                    prior to Delivery or after  return of the Aircraft to LESSOR
                    in accordance with this Lease;

               (c)  Taxes  attributable  to LESSOR's gross  negligence,  willful
                    misconduct or breach of this Lease;

               (d)  Taxes which LESSEE is contesting in good faith in accordance
                    with Article 16.5;

               (e)  Taxes  imposed by any country other than the U.S. on the net
                    income,  gross receipts,  capital or net worth of LESSOR but
                    only to the  extent  that (i) such Taxes were not in any way
                    connected  with,  due  to or  arising  out  of  this  Lease,
                    LESSEE's business operations or office locations in any such
                    country or LESSEE's  use and  operation  of the Aircraft and
                    (ii)  such  Taxes  would  be  otherwise  payable  by  LESSOR
                    notwithstanding this Lease,  LESSEE's business operations or
                    office  locations  in any such  country or LESSEE's  use and
                    operation of the Aircraft;

               (f)  excess  Taxes  imposed as a result of LESSOR's  voluntary or
                    involuntary  transfer or other  disposition of the Aircraft,
                    Engines  or any Parts or this Lease  (except a  transfer  or
                    sale resulting directly from LESSEE's Default) provided that
                    LESSEE remains  responsible for payment of any Taxes and the
                    specific  amount  of such  Taxes  that it  would  have  been
                    required to indemnify for had such  voluntary or involuntary
                    transfer not occurred;

               (g)  Taxes consisting of any interest,  penalties or additions to
                    tax imposed on LESSOR as a result, in whole or in part, of a
                    failure  of  LESSOR  to file  any Tax  return  properly  and
                    timely,  unless such failure  shall be caused by the failure
                    of LESSEE to fulfill any obligations of LESSEE under Section
                    16.7 with respect to such Tax return; or

               (h)  Taxes  resulting  from,  or that would not have been imposed
                    but for,  any  LESSOR's  Lien  arising as a result of claims
                    against, or acts or omissions of, or otherwise  attributable
                    to, LESSOR or any related party.

<PAGE>

16.3 After-Tax Basis. The amount which LESSEE is required to pay with respect to
any Taxes  indemnified  against  under  Article 16.1 is an amount  sufficient to
restore LESSOR on an after-tax basis to the same position LESSOR would have been
in had such Taxes not been incurred.  If LESSOR determines in good faith that it
has  realized a Tax  benefit (by way of  deduction,  credit or  otherwise)  as a
result of any payment for which  LESSEE is liable  under  Section 5.7 or 16.1 of
this  Lease,  and  such  benefit  was  not  previously  taken  into  account  in
calculating  the amount of such payment on an after-tax basis in accordance with
the  immediately  preceding  sentence of this Article  16.3,  LESSOR will pay to
LESSEE an amount that is  reasonably  sufficient  to ensure that LESSOR is in no
better an after-tax position than it would have been in if the event giving rise
to LESSEE's liability for payment had not occurred.

16.4 Timing of Payment. Any amount payable to LESSOR pursuant to this Article 16
will be paid  within ten (10) days after  receipt of a written  demand  therefor
from LESSOR  accompanied by a written statement  describing in reasonable detail
the  basis for such  indemnity  and the  computation  of the  amount so  payable
provided,  however,  that such  amount  need not be paid by LESSEE  prior to the
earlier of (a) the date any Tax is payable to the appropriate  Government Entity
or taxing  authority or (b) in the case of amounts which are being  contested by
LESSEE in good  faith or by  LESSOR  pursuant  to  Article  16.5,  the date such
contest is finally resolved.

16.5  Contests.  If claim is made against LESSOR for Taxes with respect to which
LESSEE is liable  for a payment  or  indemnity  under this  Lease,  LESSOR  will
promptly give LESSEE  notice in writing of such claim  provided,  however,  that
LESSOR's  failure to give  notice  will not  relieve  LESSEE of its  obligations
hereunder unless such failure  materially  impairs or precludes LESSEE's ability
to contest  the claim.  So long as (a) a contest of such Taxes does not  involve
any  material  risk of the  sale,  forfeiture  or loss  of the  Aircraft  or any
interest therein, (b) if LESSOR so requests,  LESSEE has provided LESSOR with an
opinion of independent tax counsel that a reasonable basis exists for contesting
such  claim and (c)  adequate  reserves  have  been  made for such  Taxes or, if
required,  an adequate  bond has been  posted,  then LESSOR at LESSEE's  written
request will in good faith, with due diligence and at LESSEE's expense,  contest
(or permit  LESSEE to contest  in the name of LESSEE or  LESSOR)  the  validity,
applicability or amount of such Taxes.

16.6 Refunds. Upon receipt by LESSOR of a refund of all or any part of any Taxes
(including  any  deductions  or  withholdings  referred to in Article 5.7) which
LESSEE has paid, LESSOR will promptly pay to LESSEE the net amount of such Taxes
refunded.

16.7  Cooperation  in Filing Tax Returns.  LESSEE and LESSOR will cooperate with
one another in providing information which may be reasonably required to fulfill
each party's tax filing  requirements and any audit information  request arising
from such filing.

16.8 Survival of Obligations.  The indemnity obligations and other agreements of
LESSEE as set forth in this Article 16 will survive the Termination Date.

<PAGE>

         ARTICLE 17           INDEMNITIES

17.1 General  Indemnity.  Except as set forth in Article 17.2 and Article 28.20,
LESSEE agrees to indemnify and hold harmless LESSOR and its officers, directors,
employees,   agents  and   shareholders   (individually   an  "Indemnitee"   and
collectively "Indemnitees") from any and all liabilities,  obligations,  losses,
damages,  penalties,  claims, actions, suits, costs,  disbursements and expenses
(including  legal fees,  costs and related  expenses)  of every kind and nature,
whether  or  not  any  of  the  transactions  contemplated  by  this  Lease  are
consummated  (collectively  "Expenses"),  which are imposed  on,  incurred by or
asserted  against any  Indemnitee and which are in any way relating to, based on
or arising out of any of the following:

               (a)  this Lease or any transactions contemplated hereby;

               (b)  the operation,  possession,  use, non-use, control, leasing,
                    subleasing,   maintenance,   storage,   overhaul,   testing,
                    inspections or acceptance flights at return of the Aircraft,
                    any Engine, or any Part during the Lease Term by LESSEE, any
                    sublessee or any other Person, whether or not the same is in
                    compliance with the terms of this Lease,  including  without
                    limitation  claims  for  death,  personal  injury,  property
                    damage, other loss or harm to any Person and claims relating
                    to any  Laws,  including  without  limitation  environmental
                    control, noise and pollution laws, rules or regulations;

               (c)  the manufacture,  design, acceptance,  rejection,  delivery,
                    return,  sale  after an Event of  Default,  import,  export,
                    condition,  repair,  modification,   servicing,  rebuilding,
                    enforcement  of  warranties  whether in LESSOR's or LESSEE's
                    name,  customer and product support provided by Manufacturer
                    and    other    vendors,    airworthiness,     registration,
                    reregistration,   performance,  sublease,   merchantability,
                    fitness  for  use,   substitution   or  replacement  of  the
                    Aircraft,  Engine,  or any Part  under  this  Lease or other
                    transfer of use or possession of the  Aircraft,  Engine,  or
                    any  Part,   including   under  a  pooling  or   interchange
                    arrangement,  including without  limitation latent and other
                    defects,  whether or not discoverable and patent,  trademark
                    or copyright infringement;

               (d)  any  non-compliance by LESSEE with any term of this Lease or
                    the falsity or inaccuracy of any  representation or warranty
                    of LESSEE set forth herein;

               (e)  the   prevention   or  attempt  to   prevent   the   arrest,
                    confiscation,  seizure,  taking  in  execution,  impounding,
                    forfeiture or detention of the Aircraft,  or in securing the
                    release of the Aircraft; or

               (f)  as a consequence  of any Default in payment by LESSEE of any
                    sum to be paid by LESSEE  when due under  this  Lease or any
                    other Default by LESSEE in the due and punctual  performance
                    of its obligations under this Lease.

The  foregoing  indemnity by LESSEE is intended to include and cover any Expense
to which an Indemnitee may be subject (in contract,  tort,  strict  liability or
under any other theory)  regardless of the negligence,  active or passive or any
other type, of such Indemnitee, so long as such Expense does not fall within any
of the exceptions listed in Article 17.2.

17.2 Exceptions to General  Indemnities.  The indemnity  provided for in Article
17.1 will not extend to Expenses of any Indemnitee to the extent  resulting from
or arising out of any of the following:

               (a)  Expenses  which LESSEE and LESSOR  mutually agree or, absent
                    mutual agreement, are judicially determined to have resulted
                    from the willful misconduct of such Indemnitee;

               (b)  Expenses  which LESSEE and LESSOR  mutually agree or, absent
                    mutual   agreement,   are   judicially   determined   to  be
                    attributable to incidents, accidents or occurrences prior to
                    the Delivery  Date,  but only where both the act or omission
                    which gave rise to the incident,  accident or occurrence and
                    the incident,  accident or occurrence  itself occurred prior
                    to the Delivery Date;

               (c)  Expenses  which LESSEE and LESSOR  mutually agree or, absent
                    mutual   agreement,   are   judicially   determined   to  be
                    attributable  to  acts  or  events  which  occur  after  the
                    Termination Date and return of the Aircraft to LESSOR in the
                    condition required  hereunder,  but in any such case only to
                    the extent not attributable to acts or omissions of LESSEE;

               (d)  Expenses  representing Taxes, it being acknowledged that the
                    terms of Article 16 apply exclusively to LESSEE's  indemnity
                    obligations with respect to Taxes;

               (e)  Expenses  due to the  breach by LESSOR  of its  covenant  of
                    quiet enjoyment pursuant to Article 21.2;

               (f)  Expenses related to LESSOR Taxes or a LESSOR's Lien; or

               (g)  Expenses that LESSOR has expressly  agreed to pay under this
                    Lease.

17.3  After-Tax  Basis.  The amount  which  LESSEE  will be required to pay with
respect to any Expense  indemnified against under Article 17.1 will be an amount
sufficient  to  restore  the  Indemnitee,  on an  after-tax  basis,  to the same
position such Indemnitee would have been in had such Expense not been incurred.

17.4 Timing of Payment.  It is the intent of the  parties  that each  Indemnitee
will have the right to indemnification for Expenses hereunder as soon as a claim
is made and as soon as an  Expense  is  incurred,  whether  or not such claim is
meritorious and whether or not liability is established  (but subject to Article
17.8).  LESSEE will pay an Indemnitee  for Expenses  pursuant to this Article 17
within  ten (10) days  after  receipt  of a written  demand  therefor  from such
Indemnitee  accompanied by a written  statement  describing in reasonable detail
the basis for such indemnity and reasonable proof of such Expenses incurred.

17.5  Subrogation.  Upon the payment in full of any  indemnity  pursuant to this
Article 17 by LESSEE,  LESSEE will be subrogated to any right of the  Indemnitee
in respect of the matter against which such indemnity has been made.

17.6 Notice.  Each  Indemnitee and LESSEE will give prompt written notice one to
the other of any  liability of which such party has  knowledge  for which LESSEE
is, or may be, liable under Article 17.1 provided, however, that failure to give
such  notice  will not  terminate  any of the rights of  Indemnitees  under this
Article 17 except to the extent that LESSEE has been  materially  prejudiced  by
the failure to provide such notice.

17.7  Refunds.  If any  Indemnitee  obtains a recovery of all or any part of any
amount which LESSEE has paid to such  Indemnitee,  such Indemnitee will promptly
pay to LESSEE the net amount recovered by such Indemnitee.

17.8  Defense  of  Claims.  Unless  an  Event of  Default  has  occurred  and is
continuing,  LESSEE and its  insurers  will have the right (in each such case at
LESSEE's sole expense) to investigate  or,  provided that LESSEE or its insurers
have not reserved the right to dispute  liability  with respect to any insurance
policies  pursuant to which  coverage is sought,  defend or compromise any claim
covered by insurance  for which  indemnification  is sought  pursuant to Article
17.1 and each Indemnitee will cooperate with LESSEE or its insurers with respect
thereto. If LESSEE or its insurers are retaining attorneys to handle such claim,
such counsel must be reasonably  satisfactory  to the  Indemnitees.  If not, the
Indemnitees  will have the right to retain  counsel of their  choice at LESSEE's
expense.

17.9  Survival  of  Obligation.  Notwithstanding  anything  in this Lease to the
contrary,  the provisions of this Article 17 will survive the  Termination  Date
and  continue in full force and effect  notwithstanding  any breach by LESSOR or
LESSEE of the terms of this Lease,  the termination of the lease of the Aircraft
to LESSEE under this Lease or the repudiation by LESSOR or LESSEE of this Lease.

<PAGE>

         ARTICLE 18           INSURANCE

18.1  Categories  of  Insurance.   Throughout  the  Lease  Term  and  until  the
Termination  Date LESSEE will,  at its own expense,  effect and maintain in full
force and effect the types of  insurance  and  amounts of  insurance  (including
deductibles)  described in Exhibit C through such brokers and with such insurers
as may be approved by LESSOR, such approval not to be unreasonably  withheld, in
London or New York or such other  insurance  markets as mutually  agreed upon by
the parties.

18.2 Write-back of any Date Recognition Exclusion.  In the event any of LESSEE's
insurances  (either the primary  insurance or the reinsurance)  contain any date
recognition  exclusion  clause or similar  clause  excluding from such insurance
coverage  damage to any property  (including the Aircraft) or death or injury to
any person on account of  accidents,  incidents  or  occurrences  caused by date
recognition or other Year 2000-related problems,  LESSEE at its cost will obtain
for the benefit of itself and LESSOR the  broadest  write-back  available in the
U.S. insurance market with respect to such exclusion.

18.3 Insurance for Indemnities.  The insurance  referred to in Article 18.1 will
in each case  include  and  insure  (to the  extent of the risks  covered by the
policies) the  indemnity  provisions of Article 17 and LESSEE will maintain such
insurance  of the  indemnities  for a  minimum  of two (2) years  following  the
Termination Date.

18.4  Insurance  required by  Manufacturer.  During the Lease Term,  LESSEE will
carry the  insurance  required  by  Manufacturer  in  connection  with  LESSOR's
assignment of Manufacturer's warranties and product support to LESSEE.

18.5  Renewal.  Not less than five (5) Business  Days before the  expiration  or
termination date of any insurance required hereunder, LESSEE will provide LESSOR
with fax confirmation from LESSEE's insurance brokers that renewed  certificates
of  insurance  evidencing  the  renewal or  replacement  of such  insurance  and
complying  with  Exhibit C will be issued on the  termination  date of the prior
certificate.  Within seven (7) days after such renewal,  LESSEE will furnish its
brokers' certificates of insurance to LESSOR.

18.6 Assignment of Rights by LESSOR.  If LESSOR assigns all or any of its rights
under  this  Lease as  permitted  by this  Lease or  otherwise  disposes  of any
interest in the Aircraft to any other Person as permitted by this Lease,  LESSEE
will,  upon request,  procure that such Person  hereunder be added as loss payee
and/or additional  assured in the policies effected hereunder and enjoy the same
rights  and  insurance  enjoyed  by LESSOR  under  such  policies.  LESSOR  will
nevertheless  continue to be covered by LESSEE's third party liability insurance
policies.

18.7 Other  Insurance.  LESSOR may from time to time by notice to LESSEE require
LESSEE at LESSEE's  expense to effect such other insurance or such variations to
the terms of the  existing  insurance  as may then be  customary  in the airline
industry for aircraft of the same type as the Aircraft and at the time  commonly
available in the insurance market.

18.8  Information.  LESSEE will provide LESSOR with any  information  reasonably
requested by LESSOR from time to time  concerning the insurance  maintained with
respect to the Aircraft or in  connection  with any claim being made or proposed
to be made thereunder.

18.9 Currency.  All proceeds of insurance pursuant to this Lease will be payable
in Dollars except as may be otherwise agreed by LESSOR.

18.10  Grounding  of  Aircraft.  If at any  time any of the  insurance  required
pursuant  to this Lease will cease to be in full force and  effect,  LESSEE will
forthwith ground the Aircraft and keep the Aircraft  grounded until such time as
such insurance is in full force and effect again.

18.11  Failure to Insure.  If at any time LESSEE fails to maintain  insurance in
compliance with this Article 18, LESSOR will be entitled but not bound to do any
of the following  (without prejudice to any other rights which it may have under
this Lease by reason of such failure):

               (a)  to pay any premiums  due or to effect or maintain  insurance
                    consistent with the terms of this Lease or otherwise  remedy
                    such failure in such manner as LESSOR considers  appropriate
                    (and LESSEE will upon  demand  reimburse  LESSOR in full for
                    any amount so expended in that connection); or

               (b)  at any time while such failure is continuing, to require the
                    Aircraft  to remain at any  airport or (as the case may be),
                    if allowed by  applicable  Law  proceed to and remain at any
                    airport within the  continental  U.S.  designated by LESSOR,
                    until  such  failure  is  remedied  to  LESSOR's  reasonable
                    satisfaction.

18.12  Reinsurance.  Any  reinsurance  will be maintained  with  reinsurers  and
brokers reasonably  acceptable to LESSOR.  Such reinsurance will contain each of
the  following  terms  and will in all  other  respects  (including  amount)  be
reasonably satisfactory to LESSOR:

               (a)  the same terms as the original insurance;

               (b)  a cut-through and assignment clause reasonably  satisfactory
                    to LESSOR; and

               (c)  payment  will be made  notwithstanding  (i) any  bankruptcy,
                    insolvency,   liquidation  or  dissolution  of  any  of  the
                    original  insurers  and/or (ii) that the  original  insurers
                    have made no payment under the original insurance policies.

18.13 Limit on Hull in favor of LESSEE.  LESSEE may carry hull all risks or hull
war and allied perils on the Aircraft in excess of the Agreed Value (such Agreed
Value being  payable to LESSOR) only to the extent such excess  insurance  which
would be  payable  to LESSEE in the event of a Total  Loss does not  exceed  ten
percent  (10%) of the Agreed  Value and only to the extent that such  additional
insurance will not prejudice the insurances  required  herein or the recovery by
LESSOR thereunder.  LESSEE agrees that it will not create or permit to exist any
liens or encumbrances over the insurances,  or its interest  therein,  except as
constituted by this Lease.

<PAGE>

         ARTICLE 19           LOSS, DAMAGE AND REQUISITION

                Throughout the Lease Term and until the Termination Date, LESSEE
will bear all risk of loss, theft, damage and destruction to the Aircraft.

19.1            Definitions.    In this Article 19 and throughout this Lease:

                "Agreed Value" *

                "Net Total Loss Proceeds" means the Total Loss Proceeds actually
received  by  LESSOR   following  a  Total  Loss,   less  any  legal  and  other
out-of-pocket  expenses,  taxes or duties  incurred by LESSOR in connection with
the collection of such proceeds.

                "Total  Loss"  means any of the  following  in  relation  to the
Aircraft, Airframe or any Engine, and "Total Loss Date" means the date set forth
in parenthesis after each Total Loss:

               (a)  destruction,   damage  beyond   repair  or  being   rendered
                    permanently  unfit for normal  use for any reason  (the date
                    such event  occurs  or, if not known,  the date on which the
                    Aircraft, Airframe or Engine was last heard of);

               (b)  actual or  constructive  total loss (including any damage to
                    the Aircraft which results in an insurance settlement on the
                    basis of a total loss) (the earlier of the date on which the
                    loss  occurs or thirty (30) days after the date of notice to
                    LESSEE's brokers or insurers claiming such total loss);

               (c)  requisition  of  title,  confiscation,   forfeiture  or  any
                    compulsory  acquisition  or other similar event (the date on
                    which the same takes effect);

               (d)  sequestration,  detention,  seizure or any similar event for
                    more than sixty (60) consecutive days or one-hundred  eighty
                    (180)  consecutive  days if the  Aircraft  is located in the
                    U.S.  for such  entire  period  (the  earlier of the date on
                    which  insurers make payment on the basis of a total loss or
                    the date of expiration of such period);

               (e)  requisition  for use for more than one hundred  eighty (180)
                    consecutive  days,  except as set forth in Article 19.8 (the
                    earlier of the date on which the  insurers  make  payment on
                    the basis of a total loss or the date of  expiration of such
                    period); or

               (f)  in the case of an  Engine,  the event  described  in Article
                    12.6.3 (the date on which the same takes effect).

                "Total Loss Proceeds" means the proceeds of any insurance or any
compensation or similar payment arising in respect of a Total Loss.

19.2 Notice of Total Loss.  LESSEE will notify LESSOR in writing  within two (2)
Business Days after a Total Loss Date of the Aircraft, Airframe or any Engine.

19.3 Total Loss of Aircraft or  Airframe.  If the Total Loss of the  Aircraft or
Airframe occurs during the Lease Term, the following will occur:

19.3.1 After the Total Loss Date and until receipt by LESSOR of the Agreed Value
and all other  amounts  then due under this Lease,  LESSEE will  continue to pay
Rent and the parties will perform,  to the extent  possible,  all of their other
obligations under this Lease.

19.3.2 On the date which is the earlier of the following dates:

               (a)  the date on which the Total Loss Proceeds of the Aircraft or
                    the Airframe are paid by LESSEE's insurance  underwriters or
                    brokers and

               (b)  the date which  falls  forty-five  (45) days after the Total
                    Loss Date,

                LESSEE will pay to LESSOR an amount equal to the sum of:

               (a)  the Agreed Value and

               (b)  all other amounts then due under this Lease,

less an amount equal to the Net Total Loss  Proceeds  received by LESSOR by such
date.

19.3.3  LESSOR will apply the Net Total Loss  Proceeds and any amounts  received
from LESSEE pursuant to Article 19.3.2 as follows:

               (a)  first, in discharge of any unpaid Rent and any other amounts
                    accrued and unpaid up to the date of LESSOR's receipt of the
                    Agreed Value;

               (b)  second, in discharge of the Agreed Value; and

               (c)  third, payment of the balance, if any, to LESSEE.

19.3.4 Upon receipt by LESSOR of all monies  payable by LESSEE in Article  19.3,
this Lease will terminate except for LESSEE's  obligations  under Articles 10.5,
16 and 17 which survive the Termination Date.

FOR  AVOIDANCE OF DOUBT,  THE AGREED  VALUE OF THE  AIRCRAFT  WILL BE PAYABLE TO
LESSOR  PURSUANT TO THIS ARTICLE  19.3 WHEN A TOTAL LOSS OF THE AIRFRAME  OCCURS
EVEN IF THERE HAS NOT BEEN A TOTAL LOSS OF AN ENGINE OR ENGINES.

19.4 Surviving  Engine(s).  If a Total Loss of the Airframe occurs and there has
not been a Total Loss of an Engine or  Engines,  then,  provided  no Default has
occurred and is  continuing,  at the request of LESSEE  (subject to agreement of
relevant  insurers)  and on receipt of all  monies  due under  Article  19.3 and
payment by LESSEE of all airport,  navigation and other charges on the Aircraft,
LESSOR  will  transfer  all its  right,  title  and  interest  in the  surviving
Engine(s) to LESSEE,  but without any  responsibility,  condition or warranty on
the part of LESSOR other than as to freedom from any LESSOR's Lien.

19.5 Total Loss of Engine and not Airframe.

19.5.1 Upon a Total Loss of any Engine not  installed on the Airframe or a Total
Loss of an Engine  installed on the  Airframe not  involving a Total Loss of the
Airframe, LESSEE will replace such Engine as soon as reasonably possible by duly
conveying to LESSOR  title to another  engine (a) free and clear of all Security
Interests (except Permitted Liens) of any kind or description,  (b) in airworthy
condition and of the same or improved model,  service  bulletin and modification
status  and  having a value  and  utility  at least  equal to the  Engine  which
sustained  the  Total  Loss,  (c) not older (by  reference  to serial  number or
manufacture  date)  than  the  older  of the two  Engines  (on  the  date of the
replacement)  delivered  by LESSOR to LESSEE with the  Aircraft on the  Delivery
Date,  and (d) in the same or better  operating  condition  as the Engine  which
sustained a Total Loss,  including  time in service,  hours and cycles since new
and hours and cycles available to the next inspection,  Overhaul or scheduled or
anticipated  removal;  provided that with respect to replacement modules in such
other engine,  LESSEE will use best reasonable efforts to ensure that such other
engine will not have been previously operated at a higher thrust rating than the
Engine  which  sustained  the  Total  Loss  and  provided  further  that  in all
circumstances  life-limited  Parts in such replacement  engine will have no less
life remaining  than the  life-limited  Parts in the Engine which  sustained the
Total Loss. Such replacement  engine will be an Engine as defined herein and the
Engine which  sustained  such Total Loss will cease to be an Engine;  whereupon,
subject to  agreement  of relevant  insurers,  LESSOR will  transfer  all of its
right, title and interest in and to the Engine which sustained the Total Loss to
LESSEE,  but without any  responsibility,  condition  or warranty on the part of
LESSOR other than as to title and freedom from any LESSOR's Lien.

19.5.2  LESSEE  agrees  at its own  expense  to take such  action as LESSOR  may
reasonably  request  in order  that  any such  replacement  Engine  becomes  the
property of LESSOR and is leased  hereunder  on the same terms as the  destroyed
Engine.  LESSEE's obligation to pay Rent will continue in full force and effect,
but an amount  equal to the Net Total  Loss  Proceeds  received  by LESSOR  with
respect to such  destroyed  Engine  will,  subject to  LESSOR's  right to deduct
therefrom  any amounts then due and payable by LESSEE under this Lease,  be paid
to LESSEE.

19.6 Other Loss or Damage.

19.6.1  If the  Aircraft  or  any  Part  thereof  suffers  loss  or  damage  not
constituting a Total Loss of the Aircraft or the Airframe or any Engine, all the
obligations of LESSEE under this Lease (including payment of Rent) will continue
in full force.

<PAGE>

19.6.2          *

19.6.3 To the extent  insurance  proceeds  received by LESSEE  directly from its
insurers do not cover the cost of such repair work on the Aircraft or Engine and
LESSOR has received  additional  insurance  proceeds from LESSEE's insurers with
respect to such repair work,  LESSOR will  (subject to LESSOR's  right to deduct
therefrom  any  amounts  then due and  payable  by LESSEE  under  this Lease and
submission  by LESSEE of  reasonable  documentation  in support  of such  excess
repair costs) pay to LESSEE  insurance  proceeds  received by LESSOR as and when
such repair work is performed on the Aircraft.

19.7 Copy of Insurance  Policy.  Promptly after the occurrence of a partial loss
or Total Loss of the  Aircraft or an Engine,  at the request of LESSOR (and then
only in the event  reasonably  required by LESSOR in connection  with  insurance
policies pursuant to which coverage is sought) LESSEE will provide LESSOR with a
copy of the relevant portions of LESSEE's  insurance policy.  LESSEE's insurance
policy will be confidential  between LESSOR and LESSEE and will not be disclosed
by LESSOR to third parties other than LESSOR's  professional advisors and except
as necessary in respect of proceedings relating to such insurance claim.

19.8  Government  Requisition.  If  the  Aircraft,  Airframe  or any  Engine  is
requisitioned  for use by any  Government  Entity,  LESSEE will promptly  notify
LESSOR of such requisition.  All of LESSEE's obligations hereunder will continue
as if such  requisition  had not  occurred.  So long as no Event of Default  has
occurred and is continuing,  all payments received by LESSOR or LESSEE from such
Government  Entity will be paid over to or  retained  by LESSEE.  If an Event of
Default has  occurred  and is  continuing,  all  payments  received by LESSEE or
LESSOR  from  such  Government  Entity  may be used by  LESSOR  to  satisfy  any
obligations owing by LESSEE.

19.9 LESSOR Retention of Reserves; Return of Security Deposit and Prepaid Rent .
For  avoidance of doubt,  the parties agree that (a)  notwithstanding  the Total
Loss of the Airframe  and/or Engines LESSOR will retain an amount equal to fifty
percent (50%) of all Reserves paid by LESSEE and not payable to LESSEE  pursuant
to Article 13.5,  and (b) in the event of the Total Loss of the Airframe  and/or
Engines  upon  receipt by LESSOR of all monies  payable by LESSEE in  accordance
with Article  19.1.3,  and subject to Article 5.1.3,  LESSOR will (i) return the
Security Deposit and any prepaid Rent to LESSEE and (ii) pay to LESSEE an amount
equal to fifty percent (50%) of the Reserves then held by LESSOR.

<PAGE>

         ARTICLE 20          REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE

20.1  Representations  and  Warranties.   LESSEE  represents  and  warrants  the
following  to LESSOR  as of the date of  execution  of this  Lease and as of the
Delivery Date:

20.1.1  Corporate  Status.  LESSEE is a corporation duly  incorporated,  validly
existing and in good  standing  under the Laws of the State of Colorado.  It has
the  corporate  power  and  authority  to carry  on its  business  as  presently
conducted and to perform its obligations hereunder.

20.1.2 Governmental Approvals. No authorization,  approval,  consent, license or
order of,  or  registration  with,  or the  giving  of  notice  to the  Aviation
Authority   or  any  other   Government   Entity  is  required   for  the  valid
authorization,  execution,  delivery  and  performance  by LESSEE of this Lease,
except as will have been duly effected as of the Delivery Date.

20.1.3 Binding.  LESSEE's Board of Directors has authorized LESSEE to enter into
this Lease and the other  Operative  Documents  and to perform  its  obligations
hereunder and thereunder. This Lease and the other Operative Documents that have
been  executed  and  delivered  by LESSEE as of the date of this Lease been duly
executed  and  delivered  by  LESSEE  and  represent  the  valid,   binding  and
enforceable  obligations  of LESSEE except as  enforceability  may be limited by
bankruptcy,  insolvency,   reorganization  or  other  similar  Laws  of  general
application   affecting  the  enforcement  of  creditors'  rights  and  by  such
principles of equity as a court having jurisdiction may impose. When executed by
LESSEE  at  Delivery,  the  same  will  apply  to the  Estoppel  and  Acceptance
Certificate and the other Operative Documents.

20.1.4 No Breach.  The execution and delivery of the  Operative  Documents  that
have been  executed and  delivered  by LESSEE as of the date of this Lease,  the
consummation  by LESSEE of the  transactions  contemplated  under the  Operative
Documents and compliance by LESSEE with the terms and provisions  thereof do not
and will not contravene any Law applicable to LESSEE,  or result in any material
breach of or constitute any material  default under or result in the creation of
any Security  Interest upon any property of LESSEE,  pursuant to any  indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement,  corporate  charter,  by-law or other material agreement or
instrument  to which LESSEE is a party or by which LESSEE or its  properties  or
assets may be bound or affected.  When executed by LESSEE at Delivery,  the same
will apply to the Estoppel and Acceptance  Certificate  and the other  Operative
Documents.

20.1.5  Filings.  Except for any filing or recording  that may be required under
the U.S.  Federal  Aviation  Administration  and  except for the filing of UCC-1
financing  statements  with the Secretary of State of the State of Colorado,  no
filing or recording of any  instrument or document  (including the filing of any
financial statement) is necessary under the Laws of the State of Registration in
order  for this  Lease to  constitute  a valid  and  perfected  lease of  record
relating to the Aircraft.

20.1.6  Licenses.  LESSEE  holds all  licenses,  certificates  and permits  from
applicable  Government  Entities  in the U.S.  necessary  for the conduct of its
business as a Certificated Air Carrier and performance of its obligations  under
this Lease.

20.1.7 No Suits. There are no suits,  arbitrations or other proceedings  pending
or threatened  before any court or  administrative  agency  against or affecting
LESSEE which, if adversely  determined,  would have a material adverse effect on
the  business,  assets or condition  (financial  or  otherwise) of LESSEE or its
ability to perform under this Lease, except as described in the filings provided
to LESSOR pursuant to Article 22.

20.1.8 Tax Returns.  All necessary  returns have been delivered by LESSEE to all
relevant  taxation  authorities in the  jurisdiction  of its  incorporation  and
LESSEE is not in default in the payment of any taxes due and payable.

20.1.9 No Material Adverse Effect.  LESSEE is not in default under any agreement
to which it is a party or by which it may be bound which default if left uncured
would have a material adverse effect on its business, assets or condition.

20.1.10 No Default under this Lease.  At the time of execution of this Lease, no
Default has occurred and is continuing and the financial  statements provided to
LESSOR pursuant to Article 22 fairly present the financial condition of LESSEE.

20.2  Covenants.  LESSEE  covenants  to  LESSOR  that it will  comply  with  the
following throughout the entire Lease Term:

20.2.1 Licensing.  LESSEE will hold all licenses,  certificates and permits from
applicable  Government  Entities  in the U.S.  necessary  for the conduct of its
business as a Certificated Air Carrier and performance of its obligations  under
this Lease.  LESSEE will advise LESSOR  promptly in the event any such licenses,
certificates or permits are cancelled, terminated, revoked or not renewed.

20.2.2 Information about Suits.  LESSEE will promptly give to LESSOR a notice in
writing of any suit, arbitration or proceeding before any court,  administrative
agency or Government  Entity which, if adversely  determined,  would  materially
adversely  affect  LESSEE's  financial  condition,  affairs,  operations  or its
ability to perform under this Lease provided, however, that compliance by LESSEE
with the  requirements  of Article 22 hereof will be deemed  compliance with the
provisions of this Article 20.2.2.

20.2.3  Restrictions on Mergers.  LESSEE will not consolidate with or merge into
any other corporation or other Person, and will not convey,  transfer,  lease or
otherwise  dispose of all or substantially  all of its assets to any corporation
or other Person, unless:

               (i)  such transaction  shall not have any material adverse effect
                    on the rights of LESSOR  under or in respect of the Lease or
                    the Aircraft;

               (ii) the Person  formed by or  surviving  such  consolidation  or
                    merger or the Person which acquires by conveyance, transfer,
                    lease or other  disposition all or substantially all of such
                    property  and  other  assets:  (A)  shall  be a  corporation
                    organized  and  existing  under the laws of the U. S. or any
                    State thereof or the District of Columbia;  (B)  immediately
                    after giving effect to such transaction, shall have acquired
                    or  succeeded to all or  substantially  all of the assets of
                    LESSEE  (if  such  assets  are  being   transferred)  as  an
                    entirety, and shall have a tangible net worth (determined in
                    accordance with GAAP) of not less than LESSEE's tangible net
                    worth (determined in accordance with GAAP) immediately prior
                    to such  transaction;  (C) shall be a "citizen of the United
                    States" of America as defined in Section  40102(a)(15)(c) of
                    Title 49 of the U.S.C. and a Certificated  Air Carrier;  and
                    (D)  shall   executed   and   deliver  to  LESSOR  (1)  such
                    recordations and filings with any Government Entity and such
                    other   documents  as  shall  be  reasonably   necessary  or
                    advisable in  connection  with such  consolidation,  merger,
                    sale, lease, transfer or other disposition (2) an agreement,
                    in form and  substance  reasonably  satisfactory  to LESSOR,
                    assuming all of LESSEE's obligations under the Lease and the
                    other Operative  Documents without amendment thereto and (3)
                    an officer's certificate to the effect that the requirements
                    of this Section have been satisfied; and

               (iii)no Event of Default  shall have  occurred and be  continuing
                    or shall occur as a result thereof.

20.2.4 Restriction on Relinquishment of Possession. LESSEE will not, without the
prior  consent of LESSOR,  deliver,  transfer or  relinquish  possession  of the
Aircraft except in accordance with Articles 11 and 12.

20.2.5 No  Security  Interests.  LESSEE will not create or agree to or permit to
arise any Security  Interest (other than Permitted  Liens) on or with respect to
the Aircraft,  title thereto or any interest therein.  LESSEE will forthwith, at
its own expense,  take all action as may be reasonably necessary to discharge or
remove any such Security Interest if it exists at any time.

20.2.6  Representations to Other Parties.  LESSEE will not represent or hold out
LESSOR as carrying  goods or  passengers  on the Aircraft or as being in any way
connected or associated with any operation of the Aircraft.

<PAGE>

         ARTICLE 21          REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR

21.1  Representations  and  Warranties.   LESSOR  represents  and  warrants  the
following  to  LESSEE  as of the date of  execution  of the  Lease and as of the
Delivery Date and ALL OTHER  WARRANTIES,  EXPRESS OR IMPLIED HAVE BEEN WAIVED IN
ACCORDANCE WITH ARTICLE 8:

21.1.1  Corporate  Status.  LESSOR is a corporation duly  incorporated,  validly
existing and in good standing under the Laws of the State of California.  It has
the  corporate  power  and  authority  to carry  on its  business  as  presently
conducted and to perform its obligations hereunder.

21.1.2 Governmental Approvals. No authorization,  approval,  consent, license or
order of, or registration  with, or the giving of notice to any U.S.  Government
Entity  is  required  for  the  valid  authorization,  execution,  delivery  and
performance by LESSOR of this Lease.

21.1.3 Binding. This Lease and the other Operative Documents that have been have
been  executed  and  delivered  by LESSEE as of the date of this Lease have been
duly  authorized,  executed  and  delivered by LESSOR and  represent  the valid,
enforceable and binding  obligations of LESSOR except as  enforceability  may be
limited by  bankruptcy,  insolvency,  reorganization  or other  similar  Laws of
general  application  affecting the enforcement of creditors' rights and by such
principles of equity as a court having jurisdiction may impose. When executed by
LESSOR at Delivery, the same will apply to the other Operative Documents.

21.1.4 No Breach.  The execution and delivery of the  Operative  Documents  that
have been  executed and  delivered  by LESSOR as of the date of this Lease,  the
consummation by LESSOR of the transactions  contemplated  therein and compliance
by LESSOR with the terms and  provisions  thereof do not and will not contravene
any Law applicable to LESSOR,  or result in any material breach of or constitute
any material default under any indenture,  mortgage,  chattel mortgage,  deed of
trust,  conditional  sales contract,  bank loan or credit  agreement,  corporate
charter,  by-law or other material  agreement or instrument to which LESSOR is a
party or by which LESSOR or its  properties  or assets may be bound or affected.
When executed by LESSOR at Delivery,  the same will apply to the other Operative
Documents.

21.1.5 Title to Aircraft.  On the Delivery  Date LESSOR will have good and valid
title to the Aircraft.

21.1.6 Citizen of the United  States.  LESSOR is a "citizen of the United States
of America" (as defined in Section 40102 of Title 49 of U.S.C.).

21.2  Covenant of Quiet  Enjoyment.  So long as no Event of Default has occurred
and is continuing hereunder, LESSOR covenants that neither LESSOR nor any person
lawfully  claiming  through LESSOR will interfere with LESSEE's quiet,  peaceful
use and enjoyment of the Aircraft during the Lease Term.

<PAGE>

         ARTICLE 22           FINANCIAL AND RELATED INFORMATION

         LESSEE agrees to furnish each of the following to LESSOR:

                (a) within  forty-five  (45) days  after the end of each  fiscal
                quarter   of  LESSEE,   three  (3)   copies  of  the   unaudited
                consolidated financial statements (including a balance sheet and
                profit  and  loss  statement)   prepared  for  such  quarter  in
                accordance with generally accepted accounting  principles in the
                U.S.;

                (b) within ninety (90) days after the end of each fiscal year of
                LESSEE, three (3) copies of the audited  consolidated  financial
                statements  (including  a  balance  sheet  and  profit  and loss
                statement)  prepared  as of the  close  of such  fiscal  year in
                accordance with generally accepted accounting  principles in the
                U.S.;

                (c) promptly after distribution, three (3) copies of all reports
                and financial  statements  which LESSEE sends or makes available
                to its stockholders or creditors generally;

                (d)  Technical  Evaluation  Reports  in  conjunction  with every
                second "C" check for the Aircraft and at other times  reasonably
                requested by LESSOR in accordance  with Article  12.10.2 hereof;
                and

                (e) from time to time,  such  other  reasonable  information  as
                LESSOR or LESSOR's Lender may reasonably  request concerning the
                location,  condition,  use and  operation of the Aircraft or the
                financial condition of LESSEE.

<PAGE>

         ARTICLE 23           RETURN OF AIRCRAFT

23.1 Date of Return. LESSEE is obligated to return the Aircraft,  Engines, Parts
and Aircraft Documentation to LESSOR on the Expiration Date, unless a Total Loss
of the  Aircraft  occurred  prior to the  Expiration  Date and  this  Lease  was
terminated  early in  accordance  with  Article  19.3.  If LESSEE is in  Default
hereunder  by failing to return the  Aircraft  on the  Expiration  Date or if an
Event of Default occurs prior to the Expiration Date and LESSOR  repossesses the
Aircraft,  the return requirements set forth in this Article 23 nonetheless must
be met on the date the Aircraft is actually returned to LESSOR or repossessed by
LESSOR.

23.2 Technical  Report.  Six (6) months prior to the Expiration  Date (and in an
updated  form at return of the  Aircraft),  LESSEE  will  provide  LESSOR with a
Technical  Evaluation Report in the form and substance of Exhibit M, as revised,
and, in addition  upon  LESSOR's  request,  will make  copies  available  of (a)
drawings of the interior  configuration  of the Aircraft  both as it then exists
and as it will exist at return, (b) an Airworthiness  Directive status list, (c)
a service  bulletin  incorporation  list,  (d) rotable  tracked,  hard-time  and
life-limited  component listings,  (e) a list of LESSEE-initiated  modifications
and  alterations,  (f) interior  material  burn  certificates,  (g) the Aircraft
Maintenance Program, (h) the complete workscope for the checks,  inspections and
other work to be performed prior to return,  (i) a list of all no-charge service
bulletin  kits with  respect to the  Aircraft  which were ordered by LESSEE from
Manufacturer  or the Engine  manufacturer,  (j) current Engine disk sheets and a
description  of the last shop visit for each Engine and (k) any other data which
is reasonably requested by LESSOR.

23.3 Return Location.  LESSEE at its expense will return the Aircraft,  Engines,
Parts and Aircraft Documentation to LESSOR at Denver, Colorado, or to such other
airport on  LESSEE's  route  system as may be  mutually  agreed to by LESSEE and
LESSOR.

23.4 Full Aircraft  Documentation Review. For the period commencing at least ten
(10) Business Days prior to the proposed  redelivery  date and continuing  until
the date on which the Aircraft is returned to LESSOR in the  condition  required
by this  Lease,  LESSEE  will  provide  for the  review  of  LESSOR  and/or  its
representative all of the Aircraft records and historical documents described in
Exhibit L in one central room at the Aircraft return location.

23.5 Aircraft Inspection.

23.5.1 During the maintenance checks performed immediately prior to the proposed
redelivery  and  at the  actual  return  of  the  Aircraft,  LESSOR  and/or  its
representatives  will have an opportunity  to conduct a full systems  functional
and  operational  inspection  of the  Aircraft  (and other  types of  reasonable
inspections  based upon the Aircraft type, age, use and other known factors with
respect to the  Aircraft) and a full  inspection  of the Aircraft  Documentation
(including records and manuals),  all to LESSOR's reasonable  satisfaction.  Any
deficiencies  from the Aircraft return condition  requirements set forth in this
Article  23 will be  corrected  by  LESSEE at its cost  prior to the  acceptance
flight described in Article 23.5.2.

23.5.2 Immediately prior to the proposed redelivery of the Aircraft, LESSEE will
carry out for LESSOR  and/or  LESSOR's  representatives  an Aircraft  acceptance
flight in accordance with Manufacturer's  standard flight operation check flight
procedures or, if agreed to in writing by LESSOR,  in accordance with an airline
acceptance flight procedure,  either of which will be for two (2) hours, or such
longer duration as is necessary to perform such check flight procedures.  Flight
costs  and  fuel  will  be  furnished  by and  at the  expense  of  LESSEE.  Any
deficiencies  from the Aircraft return condition  requirements set forth in this
Article  23 will be  corrected  by  LESSEE  at its cost  prior to  return of the
Aircraft.

23.5.3 To the extent that the ground  inspection  and  acceptance  flight extend
beyond  the  Expiration  Date,  the  Lease  Term  will be  deemed  to have  been
automatically  extended  and the  obligations  of  LESSEE  hereunder  (including
Article  23.11.3)  will  continue on a  day-to-day  basis until the  Aircraft is
accepted  by  LESSOR  as  being  in  the  condition  required  hereunder,  which
acceptance  shall be evidenced by LESSOR  executing and delivering to LESSEE the
Return Acceptance Receipt in the form of Exhibit J.

23.6 Certificate of Airworthiness Matters.

23.6.1 The Aircraft will possess a current  Certificate of Airworthiness  issued
by the Aviation Authority  (although this Certificate of Airworthiness may later
be  substituted  by the Export  Certificate  of  Airworthiness  or equivalent if
requested by LESSOR pursuant to Article 23.10). In addition, even if LESSEE must
perform  engineering,  maintenance  and repair work on the  Aircraft  beyond the
requirements  of Article 12, the  Aircraft  at return  must be in the  condition
required  in order to meet the  requirements  for  issuance  of a U.S.  Standard
Certificate of Airworthiness  for transport  category aircraft issued by the FAA
in  accordance  with  FAR  Part 21 and,  in  addition,  to  meet  the  operating
requirements of FAR Part 121.

23.6.2 If the Aircraft is registered in a country other than the U.S. at time of
return,  LESSEE  at its cost  will  demonstrate  that  the  Aircraft  meets  the
requirements for issuance of the U.S. Standard  Certificate of Airworthiness for
transport  category aircraft specified in Article 23.6.1 by delivering to LESSOR
at its option either an actual U.S.  Standard  Certificate of Airworthiness  (if
the Aircraft is to be registered  in the U.S.) or a letter  acceptable to LESSOR
signed by an FAA Designated Airworthiness Representative (DAR) or another Person
acceptable  to LESSOR  stating  that the DAR or such  Person has  inspected  the
Aircraft  and  Aircraft  Documentation  (including  records and manuals) and has
found that the Aircraft meets the requirements  for issuance of a U.S.  Standard
Certificate of Airworthiness for transport  category aircraft in accordance with
FAR Part 21 and, in addition, meets the operating requirements of FAR Part 121.

23.6.3 If the Aircraft is to be  registered  in a country other than in the U.S.
after  return  from  LESSEE,  LESSOR  may  in  its  sole  discretion  waive  the
requirements  of Article  23.6.1 and instead  require that LESSEE at its expense
(to the extent  such  expense is no greater  than that which  LESSEE  would have
incurred  pursuant to Article  23.6.1,  with any  additional  expenses being for
LESSOR's  account) put the Aircraft in a condition to meet the  requirements for
issuance of a Certificate of Airworthiness of the Aviation Authority of the next
country  of  register,  provided  that if  solely  as a result  of such work the
Aircraft is returned  after the scheduled  redelivery  date,  LESSEE will not be
liable for  payment of Rent in  respect  of the  period  following  the date the
Aircraft would have been returned  following  completion of the  requirements of
this Article 23, but for the provisions of this Article 23.6.3.

23.7 General Condition of Aircraft at Return.

23.7.1 The Aircraft,  Engines,  and Parts will have been maintained and repaired
in accordance  with the  Maintenance  Program,  the rules and regulations of the
Aviation Authority and this Lease.

23.7.2  Aircraft  Documentation  (including  records and manuals) will have been
maintained in an up-to-date status, in accordance with the rules and regulations
of the Aviation  Authority and the FAA and this Lease and in a form necessary in
order to meet the  requirements  of Article  23.6.1.  The records and historical
documents set forth in Exhibit L will be in English.

23.7.3  The  Aircraft  will be in the same  working  order and  condition  as at
Delivery  (subject to the other  provisions of this Article 23,  reasonable wear
and tear from normal flight operations  excepted),  with all pilot discrepancies
and deferred maintenance items cleared on a terminating action basis.

23.7.4  The  Aircraft  will be  airworthy  (conform  to type  design and be in a
condition  for safe  operation),  with all Aircraft  equipment,  components  and
systems  operating  in  accordance  with their  intended  use and within  limits
approved by Manufacturer, Aviation Authority and FAA.

23.7.5 The Aircraft interior  (including cabin and windows) and exterior will be
clean in accordance  with U.S.  commercial  airline  standards and  cosmetically
acceptable to LESSOR in its reasonable discretion, with all compartments free of
foreign objects, dirt, grease, fluids, stains, grime, cracks, tears and rips and
ready to be placed into immediate commercial airline operations.

23.7.6 No  special  or unique  Manufacturer,  Engine  manufacturer  or  Aviation
Authority inspection or check requirements which are specific to the Aircraft or
Engines (as opposed to all  aircraft or engines of their  types) will exist with
respect to the Airframe, Engines and Aircraft equipment, components and systems.

23.7.7 All repairs, modifications and alterations to the Aircraft will have been
accomplished  in accordance  with either (i)  Manufacturer's  Structural  Repair
Manual (or  DGAC-approved  Repair  Approval  Sheets)  for the  Aircraft  or (ii)
FAA-approved data (such as FAA Form 8110 or equivalent).

23.7.8 The Aircraft will be returned with  LESSOR's  Engines  installed and with
the same equipment as at Delivery, subject only to those replacements, additions
and Modifications permitted under this Lease.

23.7.9 All  Airworthiness  Directives which are issued during the Lease Term and
require compliance (either by means of repetitive inspections,  modifications or
terminating  action) prior to return of the Aircraft to LESSOR or within one (1)
year after the Termination  Date will have been complied with on the Aircraft on
a terminating action basis at LESSEE's cost.  Airworthiness  Directives which do
not have a  terminating  action will be  accomplished  at the  highest  level of
inspection or modification  possible.  If, after using  commercially  reasonable
efforts, LESSEE is unable to acquire the material, parts or components necessary
to  accomplish  such  Airworthiness  Directive,  LESSEE  will pay to LESSOR upon
return of the Aircraft the  estimated  cost of  terminating  such  Airworthiness
Directive.  If the estimated  cost cannot be mutually  agreed upon by LESSEE and
LESSOR,  LESSEE  and  LESSOR  will each  obtain  an  estimate  from a  reputable
FAA-approved  maintenance facility  (unaffiliated with LESSEE or LESSOR) and the
estimated cost will be the average of the two estimates.

23.7.10  The  Aircraft  will  be in  compliance  with  Manufacturer's  Corrosion
Prevention  and  Control  Program  (CPCP)   specified  for  the  model  type  by
Manufacturer.

23.7.11  If  any  waivers,   deviations,   dispensations,   alternate  means  of
compliance,  extensions or carry-overs  with respect to maintenance or operating
requirements,  repairs or  Airworthiness  Directives are granted by the Aviation
Authority or permitted by the Maintenance  Program,  LESSEE at its sole cost and
expense will  nonetheless  perform such  maintenance or operating  requirements,
repairs  or   Airworthiness   Directives   as  if  such   waivers,   deviations,
dispensations,  alternate means of compliance,  or extensions or carry-overs did
not exist, unless such waivers,  deviations,  dispensations,  alternate means of
compliance,  extensions  or  carry-overs  are  applicable  to all  similar  A318
aircraft registered with the FAA.

23.7.12 The Aircraft  will be free from any Security  Interest  except  LESSOR's
Liens and no  circumstance  will have so arisen whereby the Aircraft is or could
become  subject to any Security  Interest or right of detention or sale in favor
of the Aviation Authority, any airport authority, or any other authority.

23.7.13 All no-charge vendor and  Manufacturer's  service bulletin kits received
by  LESSEE  for the  Aircraft  but not  installed  thereon  will be on board the
Aircraft as cargo.  At LESSOR's  request,  any other service  bulletin kit which
LESSEE  paid for will also be  delivered  to LESSOR on board the  Aircraft,  but
LESSOR will reimburse  LESSEE for its actual  out-of-pocket  costs for such kit,
unless  LESSEE  purchased  such kit as part of its  implementation  of a service
bulletin on its fleet of aircraft of the same type as the  Aircraft  but had not
yet installed such kit on the Aircraft, in which case such kit will be furnished
free of charge to LESSOR.

23.7.14  The  Aircraft  will be  free of any  leaks  and  any  damage  resulting
therefrom.  All  repairs  will  have  been  performed  on a  permanent  basis in
accordance with the applicable manufacturer's instructions.

<PAGE>

23.7.15 The Aircraft fluid  reservoirs  (including  oil,  oxygen,  hydraulic and
water) will be serviced to full and the waste tank serviced in  accordance  with
Manufacturer's instructions. Fuel tanks will be at least as full as at Delivery.

23.8  Checks  Prior to Return.  Immediately  prior to return of the  Aircraft to
LESSOR, LESSEE at its expense will do each of the following:

23.8.1 Have performed,  by LESSEE or any other FAA-approved repair station,  the
next due full and  complete  zonal,  systems  and  structural  check ("C" or its
equivalent),  the corresponding lower checks ("A" and "B" or equivalent) and any
other maintenance and inspections tasks, all in accordance with the then-current
MPD,  sufficient  to clear the Aircraft for operation  until the  next-scheduled
full and complete zonal, systems and structural check under the then-current MPD
(which in any event will not be less than fifteen (15) months). LESSEE will also
weigh the Aircraft.  Any  discrepancies  revealed during such inspection will be
corrected in accordance  with  Manufacturer's  maintenance and repair manuals or
FAA-approved  data.  LESSEE  agrees to perform  during such check any other work
reasonably  required by LESSOR (and not otherwise required under this Lease) and
LESSOR will reimburse LESSEE for such work at LESSEE's preferred customer rates.

23.8.2 Perform an internal and external corrosion  inspection where any evidence
of  corrosion  exists and  correct  any  discrepancies  in  accordance  with the
recommendations  of Manufacturer and the Structural  Repair Manual. In addition,
all inspected areas will be properly treated with corrosion  inhibitor if and as
recommended by Manufacturer.

<PAGE>

23.8.3 Remove  LESSEE's  exterior  markings,  including all exterior  paint,  by
stripping (or, at LESSOR's option,  pneumatically  scuff/sanding) the paint from
the fuselage, empennage, wings and Engine cowlings, and clean, reseal, refinish,
prepare  (including  application of alodine or another corrosion  inhibitor) and
prime the surfaces to be painted,  all in  accordance  with  Manufacturer's  and
paint  manufacturer's  recommendations.  LESSEE will then repaint the  fuselage,
empennage,  wings and Engine cowlings in the colors and logo specified by LESSOR
provided,  however,  that if such colors and logo are substantially more complex
than those of LESSEE,  at  LESSOR's  discretion,  LESSOR  will either (i) pay to
LESSEE an amount equal to the  incremental  cost of  repainting  the Aircraft in
such complex  colors and logo over and above the cost of repainting the Aircraft
in  LESSEE's  colors and logo at such time or (ii)  permit  LESSEE to return the
Aircraft  repainted  white and to pay LESSOR an amount equal to the  incremental
cost of painting the colors and logo required by LESSOR's next  operator,  up to
an  amount  equal to the  amount  that  would  have been  required  to paint the
Aircraft in LESSEE's livery. Such painting will be accomplished in such a manner
as to result in a  uniformly  smooth  and  cosmetically  acceptable  aerodynamic
surface.  All external  placards,  signs and markings will be properly attached,
free from damage, clean and legible.

23.8.4 Clean the exterior and interior of the Aircraft.

23.8.5 If  reasonably  required  by LESSOR,  repaint the flight deck and replace
placards of the Aircraft.

23.8.6 In  accordance  with Article  23.7.7,  permanently  repair  damage to the
Aircraft that exceeds Manufacturer's limits and replace any non-flush structural
patch  repairs  installed  on  the  Aircraft  with  flush-type   repairs  unless
Manufacturer does not recommend a flush-type repair.

23.8.7 With LESSOR or its representatives  present,  perform a full and complete
hot and cold  section  videotape  borescope  on each  Engine and its  modules in
accordance with the Engine manufacturer's maintenance manual.

23.8.8 If the Engine  historical and technical  records and/or  condition  trend
monitoring  data of any Engine  (including the APU) indicate an  acceleration in
the rate of deterioration in the performance of an Engine,  LESSEE will correct,
to LESSOR's reasonable satisfaction,  such conditions which are determined to be
causing such accelerated rate of deterioration.

23.8.9 With LESSOR or its  representatives  present,  accomplish a maximum power
assurance run and condition,  acceleration and bleed valve scheduling  checks on
the Engines.  LESSEE will evaluate the Engine  performance and record the Engine
maximum power  assurance test  conditions  and results on the Return  Acceptance
Receipt.

<PAGE>

23.8.10 LESSEE will provide  evidence to LESSOR's  satisfaction  that the Engine
historical and technical  records,  borescope  inspection,  trend monitoring and
other checks specified in Article 23.8.9 do not reveal any condition which would
cause the Engines or any module to be unserviceable,  beyond  serviceable limits
or serviceable with an increased  frequency of inspection or with calendar time,
flight  hour or  flight  cycle  restrictions  under  the  Engine  manufacturer's
maintenance manual. LESSEE will correct any discrepancies in accordance with the
guidelines  set out by the Engine  manufacturer  which may be discovered  during
such inspection.

23.8.11 In the event the Engine  historical  and  technical  records,  borescope
inspection, trend monitoring and other checks specified in Article 23.8.9 result
in a dispute regarding the conformity of an Engine with the requirements of this
Article 23, LESSEE and LESSOR will consult with Engine  manufacturer  and follow
Engine manufacturer's recommendations (including the accomplishment of an Engine
test cell operational  check) with regard to determining if such Engine complies
with  the  requirements  of  this  Article  23  and  the  manner  in  which  any
discrepancies from the requirements of this Article 23 will be rectified.

23.9 Part Lives. At return, the condition of the Aircraft will be as follows:

23.9.1 The Aircraft  will have zero (0) hours  consumed  since the last full and
complete  zonal,   systems  and  structural  check  ("C"  check  or  equivalent)
(excluding hours consumed on the acceptance flight).

23.9.2 Each Engine will meet all of the following:

               (a)  Each Engine will have  operated no more than 4,000 hours and
                    4,000  cycles  since the last full  performance  restoration
                    shop  visit in which  the core  modules  (including  without
                    limitation  the high pressure  compressor  rotor and stator,
                    combustor,   stage  1  nozzle  and  high  pressure   turbine
                    assembly)  were  fully  refurbished  and will  have at least
                    6,000  hours  and  6,000  cycles  remaining  until  its next
                    anticipated  removal  (based upon the Engine  manufacturer's
                    estimated mean time between removals for engines of the same
                    type as the Engines); provided, however, that if at the time
                    of return  Engine  manufacturer's  mature mean time  between
                    removal  rate for engines of the same type as the Engines is
                    greater than 10,000 hours and 10,000 cycles,  then the above
                    referenced  4,000 hour and 4,000 cycle  requirement  will be
                    increased by an amount equal to the  difference  between (i)
                    the  number  of hours and  cycles of such mean time  removal
                    rate and (ii) 10,000 hours and 10,000  cycles (for  example,
                    if at return the  mature  mean time  removal  rate is 14,000
                    hours and 14,000  cycles,  each Engine will have operated no
                    more than 8,000 hours and 8,000  cycles  since its last full
                    performance  restoration  shop  visit and will have at least
                    6,000  hours  and  6,000  cycles  remaining  until  its next
                    anticipated removal).

               (b)  Each Engine will have a remaining  EGT margin  sufficient to
                    permit the operation of such Engine for the hours and cycles
                    set  forth in the  preceding  subparagraph,  based  upon the
                    historical experience of the Engine manufacturer's worldwide
                    fleet;

               (c)  No  life-limited  Part of an Engine  will have more hours or
                    cycles consumed than such Engine's data plate; and

               (d)  Each Part of an Engine which has a hard time limit will have
                    at least  50% of such  Part's  full  allotment  of hours and
                    cycles   remaining  to  operate  until  its  next  scheduled
                    Overhaul. Each Part of an Engine which has a life limit will
                    have at least 50% of such Part's full allotment of hours and
                    cycles remaining to operate until its removal.  However,  if
                    50% of such hard time or life-limited  Part's full allotment
                    of hours and cycles  remaining  is less than 6,000 hours and
                    6,000 cycles,  then such hard time or life-limited Part will
                    be  returned  with at least  6,000  hours and  6,000  cycles
                    remaining.

23.9.3 The APU will not have  operated  more than five  hundred  (500) APU hours
since the last hot section refurbishment.

23.9.4  The  Landing  Gear will have at least  fifty  percent  (50%) of the full
allotment of hours/cycles/calendar  time (whichever is the more limiting factor)
pursuant to the MPD remaining until the next Overhaul or scheduled removal.

23.9.5 Each Part of the  Aircraft  which has a hard time  (hour/cycle)  limit to
Overhaul  pursuant  to the MPD  will  have at  least  50% of  such  Part's  full
allotment  of hours and cycles  remaining  to operate  until its next  scheduled
Overhaul  pursuant  to the MPD.  However,  if 50% of such hard time  Part's full
allotment  of hours and  cycles  remaining  is less than  4,000  hours and 4,000
cycles,  then such hard time Part will be returned with at least 4,000 hours and
4,000 cycles remaining to operate until its next scheduled  Overhaul pursuant to
the MPD.

23.9.6 Each  life-limited  Part of the  Aircraft  will have at least 50% of such
Part's full  allotment of hours and cycles  remaining to operate  until  removal
pursuant to the MPD. However,  if 50% of such life-limited Part's full allotment
of hours and cycles  remaining is less than 6,000 hours and 6,000  cycles,  then
such  life-limited  Part will be  returned  with at least  6,000 hours and 6,000
cycles remaining to operate pursuant to the MPD.

23.9.7 Each Part which has a calendar limit will have  sufficient  calendar time
remaining to operate until the next "C" check pursuant to the  then-current  MPD
after return of the Aircraft to LESSOR (which in any event will be not less than
fifteen (15)  months).  If a Part has a total  approved life pursuant to the MPD
less than such "C" check interval,  then such Part will be returned with 100% of
its total approved life remaining.

23.9.8 No Part of the Aircraft or Engine  (excluding  life-limited  Parts on the
Engine,  which are covered by Article 23.9.2(c)) will have total hours and total
cycles time since new greater than one hundred ten percent (110%) of that of the
Airframe  and,  with  respect  to all Parts as a group,  the Parts  will have an
average total time since new no greater than that of the Airframe.

23.9.9 The  Aircraft  Landing Gear tires and brakes will be new or have zero (0)
hours/cycles out of Overhaul (except for the acceptance flight).

23.10 Export and  Deregistration  of Aircraft.  At LESSOR's request by notice at
least fifteen (15) days prior to the  Expiration  Date,  LESSEE at its cost will
(a) provide an Export  Certificate of  Airworthiness  or its equivalent from the
State of  Registration  for the country  designated  by LESSOR,  (b) assist with
deregistration  of the  Aircraft  from the  register of aircraft in the State of
Registration,  (c)  assist  with  arranging  for  prompt  confirmation  of  such
deregistration  to be sent by the registry in the State of  Registration  to the
next country of registration and (d) perform any other acts reasonably  required
by LESSOR in  connection  with such  deregistration.  If any Aircraft work which
LESSEE is not otherwise required to perform hereunder, including engineering, is
required in order to obtain such Export  Certificate  of  Airworthiness,  LESSEE
will,  to the extent  reasonably  possible,  perform  such work and LESSOR  will
reimburse LESSEE for such work at LESSEE's preferred customer rates.

23.11 LESSEE's Continuing Obligations.  In the event that LESSEE does not return
the Aircraft to LESSOR on the Expiration  Date and in the condition  required by
this  Article 23 for any reason  (whether  or not the reason is within  LESSEE's
control):

<PAGE>

23.11.1 the  obligations  of LESSEE under this Lease will continue in full force
and effect on a day-to-day basis until such return.  This will not be considered
a waiver of LESSEE's Event of Default or any right of LESSOR hereunder.

23.11.2  Until  such  return,  the Agreed  Value will be an amount  equal to the
Agreed  Value on the day the  Aircraft  should  have  been  returned  to  LESSOR
pursuant to this Lease.

23.11.3 LESSEE will fully indemnify  LESSOR on demand for all losses  (including
damages in accordance with Article 25.5(b)), liabilities,  actions, proceedings,
costs and  expenses  thereby  suffered or  incurred by LESSOR and, in  addition,
until  such time as the  Aircraft  is  redelivered  to  LESSOR  and put into the
condition  required by this Article 23,  instead of paying the Rent specified in
Article  5.3,  LESSEE  will pay twice  the  amount of Rent for each day from the
scheduled  Expiration Date until the Termination  Date (the monthly Rent payable
under Article  5.3.1 will be prorated  based on the actual number of days in the
applicable  month).  Payment will be made upon presentation of LESSOR's invoice.
Notwithstanding  the  foregoing,  in the event that the Aircraft is removed from
service by LESSEE and placed in a maintenance  facility for the  performance  of
work required to put the Aircraft into the condition required by this Article 23
and as a result of delays in the  performance  of such work the  Aircraft is not
returned on the Expiration  Date, for a period of up to seven (7) days following
the Expiration Date, LESSEE shall only be responsible for normal Rent. After the
7th day of such period, if LESSEE has not returned the Aircraft to LESSOR in the
condition required by this Lease, LESSEE shall be responsible for twice the Rent
for the period after such 7 day period in accordance with the provisions of this
Article 23.11.3 until the actual Termination Date.

23.11.4  LESSOR may elect,  in its sole and absolute  discretion,  to accept the
return of the Aircraft prior to the Aircraft being put in the condition required
by this Article 23 and  thereafter  have any such  non-conformance  corrected at
such time as LESSOR may deem  appropriate (but within ninety (90) days following
the return of the Aircraft) and at commercial  rates  then-charged by the Person
selected by LESSOR to perform such correction.  Any direct expenses  incurred by
LESSOR for such correction will become  additional Rent payable by LESSEE within
fifteen (15) days following the  submission of a written  statement by LESSOR to
LESSEE,  identifying  the items  corrected and setting forth the expense of such
corrections in reasonable detail.  LESSEE's  obligation to pay such supplemental
Rent will survive the Termination Date.

23.12 Airport and Navigation  Charges.  LESSEE will ensure that at return of the
Aircraft any and all airport,  navigation  and other  charges which give rise or
would if  unpaid  give rise to any lien,  right of  detention,  right of sale or
other  Security  Interest in relation to the  Aircraft,  Engine or any Part have
been paid and discharged in full and will at LESSOR's  request produce  evidence
thereof satisfactory to LESSOR.

23.13 Return Acceptance  Certificate.  Upon return of the Aircraft in accordance
with the terms of this Lease,  LESSEE will promptly  prepare and execute two (2)
Return Acceptance Certificates in the form and substance of Exhibit J and LESSOR
will countersign and return one such Return Acceptance Certificate to LESSEE. In
addition, LESSEE and LESSOR will execute a Lease Termination for filing with the
FAA evidencing termination of this Lease.

23.14 Indemnities and Insurance.  The indemnities and insurance requirements set
forth  in  Articles  17 and 18,  respectively,  will  apply to  Indemnitees  and
LESSOR's  representatives  during return of the  Aircraft,  including the ground
inspection  and  acceptance  flight.  With  respect  to the  acceptance  flight,
LESSOR's representatives will receive the same protections as LESSOR on LESSEE's
Aviation and Airline General Third Party Liability Insurance.

23.15 Civil Reserve Air Fleet.

23.15.1  LESSEE may transfer  possession of the Aircraft to the United States of
America or any  instrumentality  or agency  thereof as part of the Civil Reserve
Air  Fleet  Program   authorized   under  10   U.S.C.ss.9511  et  seq.  (or  any
substantially  similar  program)  ("CRAF  Program") for a period which  includes
(collectively,  the "CRAF Program Requisition  Period") (a) the entire period of
requisition  under the CRAF Program and (b) an  additional  six (6) months after
the expiration of the  requisition  under the CRAF Program.  If the CRAF Program
Requisition  Period extends  beyond the Expiration  Date provided by this Lease,
then the  Lease  will be deemed to  continue  until the end of the CRAF  Program
Requisition  Period at a monthly rental rate equal to the monthly rental rate in
effect at the end of the Lease Term and the Expiration Date will be deemed to be
the end of the CRAF Program Requisition Period. If the Aircraft is requisitioned
under the CRAF Program for a period which  extends  beyond the Lease Term,  then
LESSEE will provide  LESSOR with written  notice of the proposed  redelivery  at
least six (6) months  prior to such  redelivery  date and LESSEE must return the
Aircraft  in the  condition  required by Article 23 on the  redelivery  date set
forth in such written notice.

<PAGE>

23.15.2  LESSEE  will  promptly  notify  LESSOR in  writing  in the event of the
requisition  for  use  of  the  Aircraft  under  CRAF  activation  by  the  U.S.
Government.  All of LESSEE's  obligations  under this Lease will continue to the
same extent as if such requisition had not occurred.

23.15.3 Any provisions of this Lease to the contrary  notwithstanding,  if there
is a  requisition  for use of the Aircraft  pursuant to the CRAF Program  and/or
CRAF activation,  LESSOR agrees that LESSEE's insurances  described in Exhibit C
may - be supplemented or replaced by insurances provided under Title XIII of the
Act,  and/or U.S.  Government  indemnification  (which Title XIII insurances and
indemnification  will be, as to the  Aircraft,  in an  amount  not less than the
Agreed  Value and,  as to all other  insurances,  in amounts not less than those
established  in  Exhibit  C);  provided,   however,   that  LESSEE  will  remain
responsible for full compliance with all the provisions of this Lease, including
Articles  17 -- and 19, to the  extent  Title XIII  and/or  the U.S.  Government
indemnification do not satisfy LESSEE's obligations under -- this Lease.

23.15.4 If there is a requisition  for use of the Aircraft  pursuant to the CRAF
Program  and/or CRAF  activation,  there will be no limitation on the geographic
area in  which  the  Aircraft  may be  operated  so long  as,  taken as a whole,
LESSEE's insurance, the Title XIII insurance and/or the indemnification provided
by the U.S. Government fully cover (without any geographic  exclusions) LESSEE's
Exhibit C insurance requirements.

23.15.5 If an Event of  Default  occurs  under  this Lease and LESSOR  elects to
pursue its remedies under Article  25.3(e) to terminate this Lease and repossess
the  Aircraft,  LESSOR will so notify the U.S.  Government  by sending a written
communication with a copy to LESSEE as follows:

                       Headquarters Air Mobility Command
                       AMC Contracting Office -- XOKA
                       Scott Air Force Base, Illinois  62225-5007

23.15.6 So long as no Event of  Default  has  occurred  and is  continuing,  all
payments  received by LESSOR or LESSEE from such Government Entity in connection
with the requisition of the Aircraft under the CRAF Program (except  payments on
account of a Total Loss of the  Aircraft)  will be paid over to or  retained  by
LESSEE.  If an Event of Default has  occurred  and is  continuing,  all payments
received by LESSEE or LESSOR from such Government  Entity in connection with the
requisition  of the  Aircraft  under the CRAF  Program  may be used by LESSOR to
satisfy any obligations owing by LESSEE.

<PAGE>

         ARTICLE 24           ASSIGNMENT

24.1 No  Assignment  by LESSEE.  EXCEPT AS EXPRESSLY  PERMITTED BY ARTICLE 11 OR
ARTICLE 20.2.3, NO ASSIGNMENT,  NOVATION, TRANSFER, MORTGAGE OR OTHER CHARGE MAY
BE MADE BY LESSEE OF ANY OF ITS RIGHTS WITH RESPECT TO THE  AIRCRAFT,  ENGINE OR
PART OR THIS LEASE.

24.2 Sale or Assignment by LESSOR.

24.2.1 Subject to LESSEE's rights pursuant to this Lease, LESSOR may at any time
and without LESSEE's consent sell,  assign or transfer its rights,  interest and
obligations  hereunder,  under any other Operative Document,  or with respect to
the Aircraft to a Permitted Transferee; provided, however, that no such transfer
shall  materially  increase  LESSEE's  liabilities or  obligations  hereunder or
materially  adversely  affect LESSEE's rights under this Lease.  For a period of
two (2) years after such sale or assignment  and at LESSEE's  cost,  LESSEE will
continue to name LESSOR as an additional  insured under the Aviation and Airline
General Third Party Liability Insurance specified in Exhibit C.

24.2.2 The term  "LESSOR" as used in this Lease means the lessor of the Aircraft
at the time in  question.  In the event of the sale of the Aircraft and transfer
of LESSOR's rights and obligations  under this Lease to a Permitted  Transferee,
such Permitted  Transferee will become "LESSOR" of the Aircraft under this Lease
and  the  transferring  party  (the  prior  "LESSOR")  will be  relieved  of all
liability  to LESSEE under this Lease for  obligations  arising on and after the
date the  Aircraft is sold.  LESSEE will  acknowledge  and accept the  Permitted
Transferee  as the new  "LESSOR"  under this  Lease and will look  solely to the
Permitted Transferee for the performance of all LESSOR obligations and covenants
under this Lease arising on and after the Aircraft sale date.

24.3 LESSOR's Lender.  Subject to LESSEE's rights pursuant to this Lease, LESSOR
may at any time and without LESSEE's  consent grant security  interests over the
Aircraft and assign the benefit of this Lease to a lender ("LESSOR's Lender") as
security for LESSOR's obligations to LESSOR's Lender.

24.4 LESSEE  Cooperation.  On request by LESSOR,  LESSEE  will  execute all such
documents  (such as a consent  to a lease  assignment  agreement)  as LESSOR may
reasonably  require to confirm LESSEE's  obligations under this Lease and obtain
LESSEE's  acknowledgment  that LESSOR is not in breach of the Lease. LESSEE will
provide all other reasonable  assistance and cooperation to LESSOR in connection
with any such sale or assignment or the perfection  and  maintenance of any such
security interest, including, at LESSOR's cost, making all necessary filings and
registrations in the State of Registration and providing all opinions of counsel
with respect to matters  reasonably  requested by LESSOR.  LESSOR will reimburse
LESSEE for its reasonable out-of-pocket costs and expenses (including reasonable
legal fees) in reviewing  documents  required by LESSOR and  cooperating  with a
transfer pursuant to this Article 24.

24.5 Protections.

24.5.1  LESSOR will  obtain for the  benefit of LESSEE a written  acknowledgment
from any Permitted  Transferee  or LESSOR's  Lender that, so long as no Event of
Default has occurred and is  continuing  hereunder,  neither such Person nor any
Person  claiming  by,  through  or under such  Person  will not  interfere  with
LESSEE's quiet, peaceful use and enjoyment of the Aircraft.

24.5.2  Wherever  the term  "LESSOR" is used in this Lease in relation to any of
the provisions  relating to disclaimer,  title and  registration,  indemnity and
insurance contained in Articles 8, 14, 17 and 18, respectively,  or with respect
to Article  20.2.6,  the term  "LESSOR"  will be deemed to include any Permitted
Transferee and its lenders, if applicable.  For avoidance of doubt, in the event
of LESSOR's  sale or financing of the  Aircraft,  the  disclaimer  and indemnity
provisions  contained in Articles 8 and 17 will continue to be applicable  after
the sale or assignment to International  Lease Finance  Corporation,  as well as
being applicable to any Permitted Transferee and its lenders.

<PAGE>

         ARTICLE 25           DEFAULT OF LESSEE

25.1 LESSEE  Notice to LESSOR.  LESSEE  will  promptly  notify  LESSOR if LESSEE
becomes aware of the occurrence of any Default.

25.2 Events of Default.  The occurrence of any of the following will  constitute
an Event of Default and material breach of this Lease by LESSEE:

                *

25.3 LESSOR's  General Rights.  Upon the occurrence and continuance of any Event
of Default, LESSOR may do all or any of the following at its option (in addition
to such other rights and remedies  which LESSOR may have by statute or otherwise
but subject to any requirements of applicable Law):

               (a)  terminate this Lease by giving written notice to LESSEE;

               (b)  require  that  LESSEE  immediately  move the  Aircraft to an
                    airport or other location designated by LESSOR;

               (c)  for LESSEE's  account,  do anything  that may  reasonably be
                    required to cure any  default  and  recover  from LESSEE all
                    reasonable costs, including legal fees and expenses incurred
                    in doing so and Default Interest;

               (d)  proceed as appropriate to enforce  performance of this Lease
                    and to recover any damages for the breach hereof,  including
                    the amounts specified in Article 25.5;

               (e)  terminate this Lease by taking possession of the Aircraft or
                    by serving notice requiring LESSEE to return the Aircraft to
                    LESSOR at the location  specified by LESSOR. If LESSOR takes
                    possession  of the  Aircraft,  it may  enter  upon  LESSEE's
                    premises  where the  Aircraft is located  without  liability
                    except  for  the   willful   misconduct   of  LESSOR.   Upon
                    repossession  of the Aircraft,  LESSOR will then be entitled
                    to sell,  lease or  otherwise  deal with the  Aircraft as if
                    this Lease had never been made.  LESSOR  will be entitled to
                    the full benefit of its bargain with LESSEE; or

               (f)  apply all or any  portion of the  Security  Deposit  and any
                    other security deposits held by LESSOR pursuant to any other
                    agreements between LESSOR and LESSEE to any amounts due.

25.4 Deregistration and Export of Aircraft.  If an Event of Default has occurred
and is  continuing,  LESSOR  may take all  steps  necessary  to  deregister  the
Aircraft in and export the Aircraft from the State of Registration.

25.5  LESSEE  Liability  for  Damages.   Upon  the  occurrence  and  during  the
continuance of an Event of Default,  in addition to all other remedies available
at law or in equity, LESSOR has the right to recover from LESSEE and LESSEE will
pay LESSOR within two (2) Business Days after LESSOR's  written  demand,  all of
the following:

               (a)  all  amounts  which are then due and  unpaid  hereunder  and
                    which  become due prior to the earlier of LESSOR's  recovery
                    of  possession of the Aircraft or LESSEE making an effective
                    tender thereof;

               (b)  subject  to  LESSOR's  obligations  at Law to  mitigate  its
                    damages,  any losses  suffered by LESSOR because of LESSOR's
                    inability to place the Aircraft on lease with another lessee
                    or to otherwise  utilize the Aircraft on financial  terms as
                    favorable to LESSOR as the terms hereof or, if LESSOR elects
                    to dispose of the Aircraft, the funds arising from a sale or
                    other  disposition  of the Aircraft are not as profitable to
                    LESSOR as leasing the Aircraft in accordance  with the terms
                    hereof  would  have been (and  LESSOR  will be  entitled  to
                    accelerate  any and all Rent which  would have been due from
                    the  date  of  LESSOR's  recovery  or  repossession  of  the
                    Aircraft through the Expiration Date);

               (c)  all costs associated with LESSOR's  exercise of its remedies
                    hereunder,  including but not limited to repossession costs,
                    legal fees,  Aircraft storage costs and Aircraft re-lease or
                    sale costs;

               (d)  any amount of principal,  interest,  fees or other sums paid
                    or payable on  account of funds  borrowed  in order to carry
                    any unpaid amount;

               (e)  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;

               (f)  direct    expenses    incurred    by   LESSOR   to   correct
                    non-conformance  of the Aircraft  with return  conditions in
                    accordance with Article 23.11.3; and

               (g)  an amount sufficient to fully compensate LESSOR for any loss
                    of or damage to the Aircraft caused by LESSEE's default.

25.6 Waiver of Default. By written notice to LESSEE,  LESSOR may at its election
waive any Default or Event of Default and its consequences and rescind and annul
any prior notice of  termination  of this Lease.  The  respective  rights of the
parties  will then be as they would have been had no Default or Event of Default
occurred and no such notice been given.

25.7 Present Value of Payments. In calculating LESSOR's damages hereunder,  upon
an Event of  Default  all Rent and  other  amounts  which  would  have  been due
hereunder  during the Lease Term if an Event of Default had not occurred will be
calculated on a present value basis using a discounting rate of six percent (6%)
per  annum  discounted  to the  earlier  of the  date on  which  LESSOR  obtains
possession of the Aircraft or LESSEE makes an effective tender thereof.

25.8 Use of  "Termination  Date".  For avoidance of doubt,  it is agreed that if
this Lease  terminates and the Aircraft is repossessed by LESSOR due to an Event
of Default, then, notwithstanding the use of the term "Termination Date" in this
Lease,  the period of the Lease Term and the "Expiration  Date" will be utilized
in calculating the damages to which LESSOR is entitled pursuant to Article 25.5.
For example, it is agreed and understood that LESSOR is entitled to receive from
LESSEE the Rent and the benefit of LESSEE's  insurance  and  maintenance  of the
Aircraft until expiration of the Lease Term.

25.9  LESSEE's  Remedies.  Except  as  otherwise  set  forth  in  the  Operative
Documents,  upon a breach by LESSOR of any of the terms and  conditions  of this
Lease, LESSEE shall have all rights available at law or in equity.

25.10  Waiver of  Consequential  Damages.  LESSEE and LESSOR  each agree that it
shall not be entitled to recover, and hereby disclaims and waives any right that
it may otherwise have to recover, any special, indirect or consequential damages
as a result of any  breach or  alleged  breach by the other  party of any of the
agreements,  representations or warranties  contained in this Lease or the other
Operative Documents;  provided,  however, that nothing herein shall be deemed to
disclaim  or waive any of  LESSOR's  remedies  expressly  set  forth in  Article
25.5(a) through 25.5 (g).

<PAGE>

         ARTICLE 26           NOTICES

26.1 Manner of Sending Notices.  Any notice,  request or information required or
permissible under this Lease will be in writing and in English.  Notices will be
delivered in person or sent by fax, letter (mailed airmail, certified and return
receipt  requested),  or by expedited  delivery  addressed to the parties as set
forth in Article 26.2. In the case of a fax, notice will be deemed received upon
actual receipt (and the date of actual receipt will be deemed to be the date set
forth on the  confirmation  of receipt  produced  by the  sender's  fax  machine
immediately after the fax is sent). In the case of a mailed letter,  notice will
be deemed  received  on the tenth  (10th)  day after  mailing.  In the case of a
notice sent by expedited delivery, notice will be deemed received on the date of
delivery set forth in the records of the Person which accomplished the delivery.
If any notice is sent by more than one of the above listed methods,  notice will
be deemed  received on the earliest  possible date in accordance  with the above
provisions.

26.2            Notice Information.    Notices will be sent:

If                        to LESSOR:  INTERNATIONAL  LEASE  FINANCE  CORPORATION
                          1999  Avenue of the  Stars,  39th  Floor Los  Angeles,
                          California 90067, U.S.A.
                          Attention:       Legal Department
                          Fax:             310-788-1990
                          Telephone:       310-788-1999

If to LESSEE:             FRONTIER AIRLINES, INC.
                          12015 East 46th Avenue
                          Suite 200
                          Denver, CO 80239
                          Attention:       General Counsel
                          Fax:             303- 371-7007
                          Telephone:       303-371-7400

or to such other  places and numbers as either  party  directs in writing to the
other party.

<PAGE>

         ARTICLE 27           GOVERNING LAW AND JURISDICTION

27.1  California  Law. This Lease is being  delivered in the State of California
and will in all  respects be governed by and  construed in  accordance  with the
Laws of the State of California  (notwithstanding the conflict Laws of the State
of California).

27.2 Non-Exclusive Jurisdiction in California. As permitted by Section 410.40 of
the California Code of Civil Procedure, the parties hereby irrevocably submit to
the  non-exclusive  jurisdiction  of the Federal  District Court for the Central
District of California and the State of California  Superior or Municipal  Court
in Los  Angeles,  California.  Nothing  herein will  prevent  either  party from
bringing suit in any other appropriate jurisdiction.

27.3 Service of Process.  The parties  hereby  consent to the service of process
(a) out of any of the courts  referred to above,  (b) in accordance with Section
415.40  of the  California  Code of Civil  Procedure  by  mailing  copies of the
summons  and  complaint  to the  person to be served by air mail,  certified  or
registered  mail to the  address  set forth in Article  26.2,  postage  prepaid,
return  receipt  requested or (c) in accordance  with the Hague  Convention,  if
applicable.

27.4  Prevailing  Party in Dispute.  If any legal action or other  proceeding is
brought in connection  with or arises out of any  provisions in this Lease,  the
prevailing  party will be entitled  to recover  reasonable  attorneys'  fees and
other actual and reasonable  costs incurred in such action or  proceedings.  The
prevailing  party will also,  to the extent  permissible  by Law, be entitled to
receive pre- and post-judgment Default Interest.

27.5 Waiver. LESSEE AND LESSOR HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY. LESSEE
AND LESSOR HEREBY  IRREVOCABLY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR  RELATED TO THIS LEASE  BROUGHT IN ANY OF THE COURTS  REFERRED  TO IN ARTICLE
27.2, AND HEREBY FURTHER  IRREVOCABLY WAIVE ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR  PROCEEDING  BROUGHT  IN ANY SUCH COURT HAS BEEN  BROUGHT IN AN  INCONVENIENT
FORUM.

<PAGE>

         ARTICLE 28           MISCELLANEOUS

28.1 Transportation of Personnel. LESSEE will provide transportation to LESSOR's
personnel  on a  positive  space  basis on the  Aircraft  or any other  aircraft
operated by LESSEE for the purposes of conducting  business  between  LESSEE and
LESSOR.

28.2 Press Releases.  The parties will give copies to one another, in advance if
possible,  of all news, articles and other releases provided to the public media
regarding this Lease or the Aircraft.
28.3  Power of  Attorney.  LESSEE  hereby  irrevocably  appoints  LESSOR  as its
attorney  for the  purpose  of  putting  into  effect  the  intent of this Lease
following and during the continuation of an Event of Default,  including without
limitation,  the return,  repossession,  deregistration  and  exportation of the
Aircraft.  To  evidence  this  appointment,  LESSEE  has  executed  the Power of
Attorney in the form of Exhibit G. LESSEE will take all steps required under the
Laws of the State of Registration to provide such power of attorney to LESSOR.

28.4  LESSOR  Performance  for LESSEE.  The  exercise by LESSOR of its remedy of
performing a LESSEE obligation hereunder is not a waiver of and will not relieve
LESSEE from the  performance of such  obligation at any subsequent  time or from
the performance of any of its other obligations hereunder.

28.5 LESSOR's Payment Obligations.  Any obligation of LESSOR under this Lease to
pay or  release  any  amount to LESSEE is  conditioned  upon and will be delayed
until (a) all amounts  then due and payable by LESSEE to LESSOR under this Lease
or under any other agreement  between LESSOR and LESSEE having been paid in full
and (b) no payment or other  material  Default  having  occurred and  continuing
hereunder at the time such payment or release of payment is payable to LESSEE.

28.6 Application of Payments. Any amounts paid or recovered in respect of LESSEE
liabilities  hereunder  may be applied to Rent,  Default  Interest,  fees or any
other  amount  due  hereunder  in such  proportions,  order and manner as LESSOR
determines.

<PAGE>

28.7 Usury Laws.  The parties intend to contract in strict  compliance  with the
usury Laws of the State of California  and, to the extent  applicable,  the U.S.
Notwithstanding anything to the contrary in the Operative Documents, LESSEE will
not be  obligated  to pay Default  Interest  or other  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 Default Interest
rate,  Default  Interest will accrue and be payable at such highest lawful rate;
however,  if at later times such highest lawful rate is greater than the Default
Interest rate, then LESSEE will pay Default  Interest at the highest lawful rate
until the Default Interest which is paid by LESSEE equals the amount of interest
that would have been payable in  accordance  with the interest rate set forth in
Article 5.6.

28.8  Delegation  by LESSOR.  LESSOR may delegate to any Person(s) all or any of
the  rights,  powers  or  discretion  vested  in it by this  Lease  and any such
delegation  may be made upon such terms and conditions as LESSOR in its absolute
discretion  thinks fit, provided that no such delegation shall relieve LESSOR of
any of its obligations hereunder.

28.9  Confidentiality.  The Operative  Documents and all non-public  information
obtained by either party about the other are confidential and are between LESSOR
and LESSEE only and will not be  disclosed  by a party to third  parties  (other
than (i) to such party's  auditors or professional  advisors,  (ii) to potential
equity  investors or lenders or (iii) as required in connection with any filings
of this Lease in  accordance  with Article 14 or as  otherwise  required by Law)
without the prior written  consent of the other party. If disclosure is required
as a result of applicable Law, LESSEE and LESSOR will cooperate with one another
to obtain  confidential  treatment as to the commercial terms and other material
provisions of this Lease.

28.10 Rights of Parties. The rights of the parties hereunder are cumulative, not
exclusive, may be exercised as often as each party considers appropriate and are
in addition to its rights under general Law. The rights of one party against the
other  party are not  capable of being  waived or  amended  except by an express
waiver  or  amendment  in  writing.  Any  failure  to  exercise  or any delay in
exercising  any of such rights will not operate as a waiver or amendment of that
or any other such right any  defective  or partial  exercise  of any such rights
will not preclude any other or further  exercise of that or any other such right
and no act or course  of  conduct  or  negotiation  on a party's  part or on its
behalf will in any way  preclude  such party from  exercising  any such right or
constitute a suspension or any amendment of any such right.

28.11 Further Assurances.  Each party agrees from time to time to do and perform
such other and  further  acts and  execute  and  deliver  any and all such other
instruments as may be required by Law or reasonably requested by the other party
to  establish,  maintain  or protect the rights and  remedies of the  requesting
party or to carry out and effect the intent and purpose of this Lease.

<PAGE>

28.12 Use of Word  "including".  The term  "including"  is used  herein  without
limitation.

28.13 Headings.  All article and paragraph  headings and captions are purely for
convenience and will not affect the  interpretation of this Lease. Any reference
to a specific  article,  paragraph or section will be interpreted as a reference
to such article, paragraph or section of this Lease.

28.14 Invalidity of any Provision. If any of the provisions of this Lease become
invalid,  illegal or  unenforceable  in any respect under any Law, the validity,
legality and  enforceability of the remaining  provisions will not in any way be
affected or impaired.

28.15 Time is of the Essence.  Time is of the essence in the  performance of all
obligations  of the  parties  under  this  Lease  and,  consequently,  all  time
limitations set forth in the provisions of this Lease will be strictly observed.

28.16 Amendments in Writing. The provisions of this Lease may only be amended or
modified by a writing executed by LESSOR and LESSEE.

28.17  Counterparts.  This  Lease may be  executed  in any  number of  identical
counterparts,  each of which will be deemed to be an original,  and all of which
together  will be deemed to be one and the same  instrument  when each party has
signed and delivered one such counterpart to the other party.

28.18 Delivery of Documents by Fax. Delivery of an executed  counterpart of this
Lease or of any other  documents  in  connection  with this Lease by fax will be
deemed as effective as delivery of an originally executed counterpart. Any party
delivering an executed  counterpart  of this Lease or other document by fax will
also deliver an originally executed counterpart, but the failure of any party to
deliver an originally executed  counterpart of this Lease or such other document
will not  affect  the  validity  or  effectiveness  of this  Lease or such other
document.

28.19 Entire Agreement.  The Operative Documents constitute the entire agreement
between the  parties in  relation  to the  leasing of the  Aircraft by LESSOR to
LESSEE and supersede all previous  proposals,  agreements  and other written and
oral  communications in relation hereto. The parties acknowledge that there have
been no representations, warranties, promises, guarantees or agreements, express
or implied, except as set forth herein.

28.20  Expenses.  Each  party  shall  be  responsible  for its own  expenses  in
connection with the drafting, negotiation,  execution and delivery of this Lease
and the other Operative Documents.

<PAGE>

                                 SIGNATURE PAGE

IN WITNESS  WHEREOF,  LESSEE and LESSOR have caused this Lease to be executed by
their respective officers as of May 25, 2000.

INTERNATIONAL LEASE FINANCE CORPORATION        FRONTIER AIRLINES, INC.

By:                                            By:

Its:                                           Its:

<PAGE>

<TABLE>
<S>     <C>                                              <C>

         EXHIBIT A            AIRCRAFT DESCRIPTION

Aircraft Manufacturer and Model:                          Airbus A318-100

Specification (included within Rent payable under         Airbus A318 Standard Specification Issue A plus the
Article 5.3.1(a)):                                        following:
                                                          1.       Interior Seating Configuration:  114Y-120Y
                                                          2.       Maximum Gross Takeoff Weight: 65 tons (145,505
                                                                   lbs.)
                                                          3.       Engine Manufacturer and Model:  Pratt & Whitney
                                                                   PW 6124

-Manufacturer's Serial Number:                             To be identified in the Estoppel and Acceptance
                                                          Certificate

Registration Mark:                                        N-_____

Engine Serial Numbers:                                    To be identified in the Estoppel and Acceptance
                                                          Certificate

Engine Thrust Rating:                                     23,800 pounds

</TABLE>

<PAGE>

         EXHIBIT B            PARTICIPATION AGREEMENT

This Participation Agreement is made this ______ day of _______________,  ______
(the "Participation Agreement")

BETWEEN

(1)  INTERNATIONAL  LEASE  FINANCE  CORPORATION,  a  corporation  organized  and
     existing  under  the laws of the  State of  California,  United  States  of
     America,  having its principal  corporate offices located at 1999 Avenue of
     the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("ILFC"); and

(2)  FRONTIER AIRLINES, INC., a Colorado corporation whose address and principal
     place of business is at 12015 East 46th Avenue, Suite 200, Denver, Colorado
     80239, U.S.A. ("LESSEE")

RECITALS

(A)  Pursuant to the Airbus A318-100  Purchase  Agreement between ILFC and AVSA,
     S.A.R.L.  ("AVSA")  dated as of January 11, 1999,  as further  amended (the
     "Purchase Agreement") and the General Terms Agreement between ILFC and AVSA
     dated as of November 10, 1988 (the  "G.T.A."),  ILFC has agreed to purchase
     from AVSA certain Airbus  A318-100 model  aircraft,  including the aircraft
     bearing as of today  manufacturer's  serial  number [TBD] and scheduled for
     delivery in the month of February 2003 (the "Aircraft");

(B)  Pursuant to the Product  Support  Agreement  (Exhibit E)  applicable to the
     Purchase  Agreement (the "Support  Agreement"),  AVSA has agreed to provide
     certain product support to ILFC;

(C)  Pursuant to the Aircraft Lease  Agreement  between ILFC and LESSEE dated as
     of May 25,  2000  (the  "Lease  Agreement"),  ILFC has  agreed to lease the
     Aircraft to LESSEE;

(D)  ILFC and LESSEE have agreed to enter into this Participation Agreement:

IT IS NOW HEREBY AGREED AS FOLLOWS:

<PAGE>

1.   Authorization  for LESSEE to Participate.  ILFC hereby authorizes LESSEE to
     participate in the following  activities in connection with the delivery of
     the Aircraft:

     (a)  to inspect,  pursuant to Clause 7.1 of the G.T.A.,  the manufacture of
          the Aircraft and the materials and parts thereto; and

     (b)  to attend and observe the acceptance tests of the Aircraft referred to
          in Clause 8.1 of the G.T.A.; and

     (c)  to  receive,  pursuant  to Clause  15 of the  Support  Agreement,  the
          technical publications set forth in Appendix 3 hereto.

2.   Effectivity of Participation Agreement.  This Participation Agreement shall
     be effective from the date hereof until the earlier of:

     (a)  the  occurrence  of an  Event  of  Default  as  defined  in the  Lease
          Agreement; or

     (b)  the "Termination Date" as defined in the Lease Agreement.

3.   Conditions of Participation.  This Participation  Agreement is made subject
     to the following conditions:

     (a)  LESSEE  hereby  agrees to be bound by and to comply with the following
          provisions of the G.T.A.  and Support  Agreement  (copies of which are
          attached  hereto) as if LESSEE had been named  "Buyer" of the Aircraft
          under such agreements:

          (i)  Clauses 7.2 and 8.5 of the G.T.A. to the extent of (aa) injury to
               or death of any  LESSEE  representative,  (bb)  loss or damage to
               property  of any  LESSEE  representatives  and (cc)  liabilities,
               damages,  losses,  costs and expenses of AVSA,  Manufacturer  and
               their associated  subcontractors,  officers, agents and employees
               arising  out of or  caused  by the  willful  misconduct  or gross
               negligence of LESSEE's representatives, and

          (ii) Clauses 16.9 and 18.5 of the Support Agreement.

     (b)  So long as this  Participation  Agreement is in full force and effect,
          LESSEE  and not  ILFC  will be  responsible  for the  liabilities  and
          obligations set forth in section 3(a) above.

     (c)  For avoidance of doubt, even while this Participation  Agreement is in
          full force and effect,  ILFC will remain  responsible  for  compliance
          with Clauses 7.2 and 8.5 of the G.T.A. to the extent of (aa) injury to
          or death of any ILFC  representative,  (bb) loss or damage to property
          of any ILFC  representative  and (cc)  liabilities,  damages,  losses,
          costs  and  expenses  of  AVSA,   Manufacturer  and  their  associated
          subcontractors,  officers,  agents  and  employees  arising  out of or
          caused  by the  willful  misconduct  or  gross  negligence  of  ILFC's
          representatives.

     (d)  Except with respect to events  occurring  prior to  termination of the
          Participation  Agreement,   upon  termination  of  this  Participation
          Agreement,  ILFC shall  once again be bound by Clauses  7.2 and 8.5 of
          the G.T.A.  and Clauses  16.9 and 18.5 of the Support  Agreement  with
          respect to the Aircraft.

     (e)  Other than with  respect to the  obligations  assumed by LESSEE  under
          this Participation  Agreement as set forth in section 3(a) above, ILFC
          shall remain fully bound by all provisions of the Purchase  Agreement,
          G.T.A. and Support Agreement.

     (f)  Nothing  contained  herein  shall  subject  AVSA to any  liability  or
          additional  obligations  whatsoever to which it would not otherwise be
          subject  under the  Purchase  Agreement,  the G.T.A.  and the  Support
          Agreement  or, except to the extent set forth in sections 3(a) and (b)
          above,  modify in any respect  whatsoever its contractual rights under
          the said agreements.

     (g)  LESSEE  shall  not be  appointed  as  ILFC's  agent  and  shall not be
          permitted  to act on behalf or in place of ILFC  without  the  express
          written  authorization  of ILFC and nothing  contained herein shall be
          construed as to give such authorization.

4.   Notification

     (a)  This  Participation  Agreement  shall be  notified  to AVSA by courier
          service  immediately  after the  execution  hereof.  AVSA shall not be
          deemed to have received  notice of any of the provisions  hereof prior
          to receipt of notice as provided in this  section  4(a) in the form of
          Appendix 1 hereto.

     (b)  On termination of this Participation  Agreement as provided in section
          2 hereof,  ILFC shall  immediately  notify AVSA by courier  service of
          such termination.  AVSA shall not be deemed to have received notice of
          such  termination  prior to  receipt  of  notice as  provided  in this
          section 4(b) in the form of Appendix 2 hereto.

     (c)  All  notices  and   requests   required  or   authorized   under  this
          Participation  Agreement  shall be given in writing either by personal
          delivery  to a  responsible  officer  of the party to whom the same is
          given or by  internationally  recognized courier service or by telefax
          directed as set forth below:

                ILFC shall be addressed at:
                1999 Avenue of the Stars,  39th Floor
                Los  Angeles,  California 90067, U.S.A.
                Attn:                     Senior Vice President-Technical
                Fax:                      310-788-1990
                Telephone:                310-788-1999

                LESSEE shall be addressed at:
                12015 East 46th Avenue Suite 200
                Denver, Colorado 80239, U.S.A.
                Attention:                General Counsel
                Fax:                      303-371-7007
                Telephone:                303-371-7400

                AVSA shall be addressed at:
                2 Rond-Point Maurice Bellonte
                31 700 Blagnac, France
                Attention:                 Director Contracts
                Fax:                       (33) 5.61.30.40.11
                Telephone:                 (33) 5.61.30.40.12

or at such  other  address or to such other  person as the party  receiving  the
notice or request may designate from time to time.

<PAGE>

Such  notice or  request  shall be deemed  to be  effective  in the case of (aa)
personal delivery, on the date upon which personally delivered, (bb) delivery by
courier,  on the date of receipt or (cc)  telefax  transmission,  on the date of
confirmation of successful transmission.

5.   Assignment.  Except as permitted  under Article 24 of the Lease  Agreement,
     the rights and obligations under this Participation  Agreement are personal
     to the parties and shall not be  assigned,  transferred,  sold or otherwise
     disposed of by either of the parties hereto.

6.   Applicable Law and  Jurisdiction.  THIS  PARTICIPATION  AGREEMENT  SHALL BE
     GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW
     YORK  WITHOUT  REGARD TO  PRINCIPLES  OF  CONFLICTS OF LAW, AND THE PARTIES
     AGREE THAT ANY COMPETENT  FEDERAL COURT LOCATED IN NEW YORK, NEW YORK SHALL
     HAVE JURISDICTION OVER ANY DISPUTE ARISING IN CONNECTION HEREWITH.  Nothing
     in this section will prevent either party from making a claim in a court of
     competent jurisdiction in California or, if AVSA is involved, France.

7.   Confidentiality.  Subject  to any  legal or  governmental  requirements  of
     disclosure,   ILFC  and  LESSEE  shall  keep  confidential  the  terms  and
     conditions of this Participation  Agreement and the clauses from the G.T.A.
     and Support  Agreement  provided to LESSEE provided that such materials may
     be disclosed by ILFC and LESSEE to their professional advisors.

         IN  WITNESS  WHEREOF,   the  parties  have  caused  this  Participation
Agreement to be executed on their behalf by their duly authorized officers.

INTERNATIONAL LEASE                       FRONTIER AIRLINES, INC.
FINANCE CORPORATION

By: _______________________               By: _______________________

Its:                                      Its:

<PAGE>

                                                     APPENDIX 1

[DATE]

BY COURIER

AVSA, S.A.R.L.
2, rond-point Maurice Bellonte
31700 BLAGNAC

         Attention:    Director-Contracts

Re:      ILFC/FRONTIER AIRLINES: PARTICIPATION AGREEMENT

Dear Sirs,

         Pursuant to Section 4(a) of the  Participation  Agreement  between ILFC
and FRONTIER  AIRLINES dated  _______________  ___,  ______,  we advise you that
pursuant to the  Participation  Agreement (a copy of which is attached  hereto),
FRONTIER AIRLINES has been authorized by ILFC to participate with respect to the
Aircraft.  This  authorization  shall be  effective on  acknowledgement  of this
letter by you.

<PAGE>

We confirm for your benefit the provisions of Sections 3(c), 3(d), 3(e) and 3(f)
contained therein.

Yours faithfully,

for and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION

CC:      FRONTIER AIRLINES

AVSA,  S.A.R.L.  confirms  receipt  of this  notice  and  agrees to the terms of
Section 3 of the Participation Agreement.

         By: ________________
         Its:
         Date:

<PAGE>

                                                     APPENDIX 2

[DATE]

BY COURIER

AVSA, S.A.R.L.
2, rond-point Maurice Bellonte

31700 BLAGNAC

         Attention:    Director-Contracts

Re:      ILFC/FRONTIER AIRLINES: PARTICIPATION AGREEMENT

Dear Sirs,

         Pursuant to Section 4(b) of the  Participation  Agreement  between ILFC
and FRONTIER AIRLINES dated  _______________ ___, ______, we advise you that the
authorization   provided  therein  for  FRONTIER  AIRLINES  is  terminated  with
immediate effect.

Yours faithfully,

for and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION

CC:      FRONTIER AIRLINES

<PAGE>

                                                     APPENDIX 3

1.       TECHNICAL PUBLICATIONS

         (See attached sheets)

<PAGE>

                                                     APPENDIX 4

[Copies of Clauses 7.2 and 8.5 of the General  Terms  Agreement and Clauses 16.9
and 18.5 of the Support Agreement]

<PAGE>

         EXHIBIT C            CERTIFICATE OF INSURANCE

[Refer to Aircraft Lease  Agreement  dated as of May 25, 2000 between LESSEE and
LESSOR  (the  "Lease").  If  applicable,  insurance  certificates  from both the
insurers and reinsurers will be provided. If there is a LESSOR's Lender, include
references to it where appropriate after references to LESSOR.]

To:      INTERNATIONAL LEASE FINANCE CORPORATION ("LESSOR")
         1999 Avenue of the Stars, 39th Floor
         Los Angeles, California 90067
         United States

Re:       FRONTIER AIRLINES, INC.
          ("LESSEE")

         Airbus A318-100
         Manufacturer's Serial No.:         [TBD]
         Registration Mark:                 N-_____ (the "Aircraft")
                                                           --------

         The  following   security  has  subscribed  to  the  insurance   and/or
reinsurance policies:

         [LIST COMPANIES & PERCENTAGES]

         THIS IS TO CERTIFY THAT, as Insurance  Brokers,  we have effected Fleet
Insurance  in respect of aircraft  owned or operated  by LESSEE  (including  the
Aircraft) as specified below.

                             AIRCRAFT HULL ALL RISKS

COVERING:

         *

DEDUCTIBLES:

         *

GEOGRAPHICAL COVERAGE:

         Worldwide.

               AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY

COVERING:

         *

GEOGRAPHICAL LIMITS:

         Worldwide.

                           HULL WAR AND ALLIED PERILS

COVERING:

         *

DEDUCTIBLE:

         *

GEOGRAPHICAL LIMITS:

         Worldwide.

                       AIRCRAFT SPARES ALL RISKS INSURANCE

COVERING:

         *

         and covering:

                With respect to an Engine, an agreed value of US$___________ or,
with LESSOR's written concurrence, replacement cost;

                With respect to Parts, replacement cost.

DEDUCTIBLE:

         *

GEOGRAPHICAL COVERAGE:

         Worldwide.

<PAGE>

                       INSURANCE REQUIRED BY MANUFACTURER

         LESSEE will carry the insurance  required by Manufacturer in connection
with LESSOR's  assignment of  Manufacturer's  warranties and product  support to
LESSEE.

                              CONTRACTUAL INDEMNITY

         LESSEE has insurance  coverage for the indemnities  agreed to by LESSEE
pursuant  to  Article  17 of the Lease to the extent  provided  in the  relevant
policies.

                        PERIOD OF COVERAGE (ALL POLICIES)

         From Delivery Date of Aircraft to [EXPIRATION DATE]

         It is further  certified  that LESSOR has an interest in respect of the
Aircraft under the Lease.  Accordingly,  with respect to losses occurring during
the period from the  Effective  Date until the expiry of the  Insurance or until
the expiry or agreed termination of the Lease or until the obligations under the
Lease are terminated by any action of the Insured or LESSOR and in consideration
of the  Additional  Premium it is confirmed  that the Insurance  afforded by the
Policy is in full force and effect and it is further  agreed that the  following
provisions are specifically endorsed to the Policy.

1.   UNDER  THE HULL (ALL  RISKS AND HULL WAR AND  ALLIED  RISKS)  AND  AIRCRAFT
     SPARES INSURANCES
               *

                (d)  Insurers  have no right to replace the  Aircraft on a Total
Loss (arranged, constructive or otherwise).

                (e) Insurers recognize that LESSEE and LESSOR have agreed that a
         Total  Loss  of the  Airframe  will  constitute  a  Total  Loss  of the
         Aircraft.

                (f) In the event of Total Loss of the Aircraft,  Insurers  agree
         to pay LESSOR all  amounts up to the Agreed  Value  based  solely  upon
         LESSOR's  (not  LESSEE's)   execution  of  the   appropriate   form  of
         release/discharge  document.  LESSOR may sign any  required  release in
         lieu of the  Insured in the event of a Total Loss,  Constructive  Total
         Loss or Arranged Total Loss.

                (g) "Cut-through clause":  Insurers confirm that in the event of
         any claim arising under the hull  insurances,  the  Reinsurers  will in
         lieu of  payment  of the  Insurers,  its  successors  in  interest  and
         assigns,  pay to the person named as sole loss payee under the original
         insurances that portion of any loss due for which the Reinsurers  would
         otherwise be liable to pay the Insurers  (subject to proof of loss), it
         being  understood  and agreed that any such  payment by any  Reinsurers
         will  fully  discharge  and  release  such  Reinsurer  from any and all
         further liability in connection therewith and provide for payment to be
         made  notwithstanding  (i) any bankruptcy,  insolvency,  liquidation or
         dissolution  of the Insurers  and (ii) that the  Insurers  have made no
         payment under the original insurance policies.

                (h) Insurers confirm that under the insurance  policies,  if the
         Insured  installs  an engine  owned by a third  party on the  Aircraft,
         either  (i) the hull  insurance  will  automatically  increase  to such
         higher  amount  as is  necessary  in order  to  satisfy  both  LESSOR's
         requirement  to receive the Agreed  Value in the event of a Total Loss,
         Constructive  Total Loss or Arranged Total Loss and the amount required
         by the third party engine owner, or (ii) separate additional  insurance
         on  such  engine  will  attach  in  order  to  satisfy  separately  the
         requirements of the Insured to such third party engine owner.

         2.     UNDER THE LEGAL LIABILITY INSURANCE

                (a) Subject to the provisions of this Endorsement, the Insurance
         will  operate in all  respects as if a separate  Policy had been issued
         covering  each party insured  hereunder,  but this  provision  will not
         operate to include any claim  arising  howsoever  in respect of loss or
         damage to the Aircraft  insured  under the Hull or Spares  Insurance of
         the  Insured.  Notwithstanding  the  foregoing  the total  liability of
         Insurers in respect of any and all Insureds  will not exceed the limits
         of liability stated in the Policy.

                (b) The Insurance provided hereunder will be primary and without
         right of  contribution  from any other insurance which may be available
         to LESSOR.

         3.     UNDER ALL INSURANCES

                (a) LESSOR,  its  successors  and assigns,  and (with respect to
         Aviation and Airline General Third Party Liability only) its directors,
         officers and employees for their respective  rights and interests,  are
         included as Additional Insureds.

                (b) The cover  afforded  to LESSOR by the  Policy in  accordance
         with this  Endorsement  will not be  invalidated by any act or omission
         (including misrepresentation and non-disclosure) of any other person or
         party which  results in a breach of any term,  condition or warranty of
         the Policy  provided  that  LESSOR has not  caused,  contributed  to or
         knowingly condoned the said act or omission.

                (c) LESSOR will have no responsibility  for premium and insurers
         will waive any right of set-off or  counterclaim  against LESSOR except
         in respect of outstanding premium in respect of the Aircraft,  provided
         that Insurer may only set-off for premiums  against the proceeds of the
         hull  insurance for  outstanding  premiums in connection  with hull all
         risks and hull war and allied perils insurance.

                (d) Upon payment of any loss or claim to or on behalf of LESSOR,
         Insurers will to the extent and in respect of such payment be thereupon
         subrogated  to all legal  and  equitable  rights of LESSOR  indemnified
         hereby (but not against LESSOR). Insurers will not exercise such rights
         without  the  consent  of those  indemnified,  such  consent  not to be
         unreasonably  withheld.  At the expense of Insurers  LESSOR will do all
         things  reasonably  necessary to assist the  Insurers to exercise  said
         rights.

                (e) Except in  respect  of any  provision  for  Cancellation  or
         Automatic  Termination  specified  in the  Policy  or  any  endorsement
         thereof,  cover provided by this  Endorsement  may only be cancelled or
         materially  altered in a manner  adverse to LESSOR by the giving of not
         less than thirty (30) days notice in writing to LESSOR.  Notice will be
         deemed to commence  from the date such notice is given by the Insurers.
         Such notice will NOT,  however,  be given at normal  expiry date of the
         Policy or any endorsement.

         4.     EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS
         CERTIFICATE

                (a)    LESSOR IS COVERED BY THE POLICY  SUBJECT  TO  ALL  TERMS,
         CONDITIONS,     LIMITATIONS,  WARRANTIES,  EXCLUSIONS  AND CANCELLATION
         PROVISIONS THEREOF.

                (b) THE POLICY WILL NOT BE VARIED BY ANY PROVISIONS CONTAINED IN
         THE LEASE WHICH PURPORT TO SERVE AS AN  ENDORSEMENT OR AMENDMENT TO THE
         POLICY.

         SUBJECT (save as  specifically  stated in this  Certificate)  to policy
terms, conditions, limitations and exclusions.

                                                Yours faithfully,
                                                [BROKERS]

<PAGE>

         EXHIBIT D            BROKERS' LETTER OF UNDERTAKING

To:             INTERNATIONAL LEASE FINANCE CORPORATION
                1999 Avenue of the Stars, 39th Floor
                Los Angeles, California 90067
                United States

Date:                                                             Our Ref:

Re:       FRONTIER AIRLINES, INC.
          ("LESSEE")

          Airbus A318-100
          Manufacturer's Serial No.:         [TBD]
          Registration Mark:                 N-_____ (the "Aircraft")
                                                           --------

Dear Sirs:

         We confirm that insurance has been effected for the account of [LESSEE]
(the "Operator")  covering all aircraft owned or operated by them, including the
above-referenced  aircraft (the "Aircraft").  [Also confirm, if applicable,  the
amount of any hull all risks or hull war and allied perils on the Aircraft which
LESSEE is carrying in excess of the Agreed Value (which excess  insurance  would
be payable to LESSEE). Such excess insurance may not exceed ten percent (10%) of
the Agreed Value.]

         Pursuant  to   instructions   received   from  the   Operator   and  in
consideration of your approving the arrangement of the Operator's "Fleet Policy"
(under which the above-referenced  Aircraft is insured) through the intermediary
of ourselves  as Brokers in  connection  with the  insurance  (the  "Insurance")
mentioned  in our  Certificate  of  Insurance  (Reference  No. [ ] dated [ ] and
attached hereto), we undertake as follows:

         1. In  relation  to the Hull and War  Risks  Insurance  to hold to your
order the insurance  Slips or Contracts and any Policies  which may be issued or
any policies  substituted  (with your consent) therefor (but only insofar as the
same  relate to the  Aircraft  only) and the  benefit  of the Hull and War Risks
Insurance  thereunder,  but  subject to our  requirements  to operate  the Fleet
Policy insofar as it relates to any other aircraft insured thereunder.

         2.     To advise you of any of the following:

                (a) If any insurer  cancels or gives notice of  cancellation  of
         any of the  Insurance at least thirty (30) days (or such lesser  period
         as may be available in the case of War and Allied  Perils)  before such
         cancellation is to take effect in respect of the Aircraft.

                (b)  Of  any  act  or  omission  or  of  any  event   (including
         non-payment  of premium) of which we have knowledge or are notified and
         which might invalidate or render  unenforceable in whole or in part any
         of the Insurance, insofar as the same relate to the Aircraft.

                (c) If we do not receive instructions to renew all or any of the
         Insurance at least thirty (30) days prior to their expiration.

                (d) If any of the  Insurance  are not  renewed on the same terms
         (save as to premium and period of cover and as you might otherwise have
         notified  us to be  acceptable  to you)  seven (7) days prior to expiry
         thereof.

         The above undertakings are given subject to our continuing  appointment
for the time being as Insurance Brokers to the Operator.

         We also undertake to advise you if we cease to be Insurance  Brokers to
the Operator.

                                                Yours faithfully,

<PAGE>

         EXHIBIT E            ESTOPPEL AND ACCEPTANCE CERTIFICATE

FRONTIER AIRLINES,  INC. ("LESSEE"),  a corporation  organized under the laws of
Colorado does hereby agree as follows:

         1. LESSEE and INTERNATIONAL LEASE FINANCE CORPORATION,  as LESSOR, have
entered into an Aircraft Lease Agreement  dated as of May 25, 2000  (hereinafter
referred to as the  "Lease").  Words used herein  with  capital  letters and not
otherwise defined will have the meanings set forth in the Lease.

         2.     LESSEE has this ____ day of __________, ____ (Time: __________ )
at ____________________ received from LESSOR possession of:

                (a) One (1)  Airbus  A318-100  aircraft  bearing  Manufacturer's
         serial  number  [TBD] and  United  States  registration  mark  N-_____,
         together  with two (2) PW 6124 engines  bearing  manufacturer's  serial
         numbers ______ and ______ (each of which has 750 or more rated take-off
         horsepower), all in airworthy condition.

                (b)  All  Aircraft   Documentation,   including  the  usual  and
         customary manuals,  logbooks, flight records and historical information
         regarding the Aircraft, Engines, and Parts.

         3.     All  of  the  foregoing has been delivered on the date set forth
above pursuant to the terms and provisions of the Lease.

         4.     The amount of fuel on board at Delivery is ________ (circle one)
pounds/kilos (________ gallons).

         5. The Aircraft, Engines, Parts and Aircraft Documentation as described
in the Lease have been fully examined by LESSEE and,  except as set forth in the
attached  Discrepancies  List,  have been  received  and accepted by LESSEE in a
condition fully  satisfactory to LESSEE and in full conformity with the Lease in
every respect.

         6. The Lease is in full force and  effect,  LESSOR has fully,  duly and
timely  performed all of its obligations of every kind or nature  thereunder and
LESSEE has no claims,  offsets,  deductions,  set-off or defenses of any kind or
nature in connection with the Lease.

         7. LESSEE has obtained all required permits,  authorizations,  licenses
and fees of the State of Registration or any Government Entity thereof necessary
in order for LESSEE to operate  the  Aircraft as  permitted  by the terms of the
Lease.

Dated on the date set forth above

FRONTIER AIRLINES, INC.

By:

Title:

<PAGE>

         EXHIBIT F            OPINION OF COUNSEL

                                 [SEE ATTACHED]

<PAGE>

         EXHIBIT G            FORM OF POWER OF ATTORNEY

FRONTIER AIRLINES,  INC. ("Frontier") hereby irrevocably appoints  INTERNATIONAL
LEASE FINANCE CORPORATION  ("ILFC") of 1999 Avenue of the Stars, 39th Floor, Los
Angeles, California 90067, U.S.A. as Frontier's true and lawful attorney so that
ILFC may take any of the following  actions in the name of and for Frontier with
respect to the Airbus A318-100  aircraft  bearing  manufacturer's  serial number
[TBD] (the "Aircraft")  leased by ILFC to Frontier pursuant to an Aircraft Lease
Agreement dated as of May 25, 2000 (the "Lease"):

         1.  Pursuant to the Lease,  Frontier has  procured  and is  maintaining
insurances for the Aircraft. ILFC has been named sole loss payee on the all risk
hull and war risk  insurances for the Aircraft.  In the event of a total loss or
constructive  total loss of the Aircraft,  ILFC is entitled to receive insurance
proceeds in an amount  equal to:  28,000,000.  ILFC may take all action and sign
all  documents  otherwise  required  to  be  performed  by  Frontier,  including
execution  on behalf of Frontier  of an  appropriate  form of  discharge/release
document, in order for ILFC to collect such insurance proceeds.

         2. In the exercise of the rights of ILFC under the Lease to recover the
Aircraft from Frontier and United States after  termination  of the Lease due to
an Event of Default under the Lease or for  termination  of the Lease due to any
other  reason,  ILFC may take all action  otherwise  required to be performed by
Frontier  before the  authorities  and courts in United States in order to cause
the  Aircraft to be  repossessed  by ILFC,  deregistered  from the U.S.  Federal
Aviation Administration and exported from the United States.

         3. In the exercise of the rights  mentioned in paragraphs 1 and 2, ILFC
may make any declarations or statements and sign any public or private documents
which may be considered necessary or appropriate.

         4. ILFC may delegate the powers conferred  hereby, in whole or in part,
to any  individual(s),  including  but not limited to employees of ILFC or legal
counsel in United States.

<PAGE>

         ILFC is empowered to determine in its sole  discretion when to exercise
the powers  conferred upon ILFC pursuant to this Power of Attorney.  Any person,
agency or company relying upon this Power of Attorney need not and will not make
any  determination  or  require  any court  judgment  as to  whether an Event of
Default has occurred  under the Lease or whether the Lease has been  terminated.
Frontier  hereby  waives  any  claims  against  (a)  any  person  acting  on the
instructions  given by ILFC or its  designee  pursuant to this Power of Attorney
and (b) any person designated by ILFC or an officer of ILFC to give instructions
pursuant to this Power of Attorney.  Frontier  also agrees to indemnify and hold
harmless any person, agency or company which may act in reliance upon this Power
of Attorney and pursuant to instructions given by ILFC or its designee.

         This Power of  Attorney  is  irrevocable  until the  Aircraft  has been
returned  to the  possession  of ILFC,  deregistered  and  exported  from United
States.

     FRONTIER  AIRLINES  has made  and  delivered  this  Power  of  Attorney  on
_________ in ____________.

FRONTIER AIRLINES

By:

Title:

<PAGE>

         EXHIBIT H            ASSIGNMENT OF RIGHTS (AIRFRAME)

This  Assignment  of  Warranty  and  Support  Rights is made this  ______ day of
_______________, ______ (the "Assignment Agreement")

BETWEEN

(1)  INTERNATIONAL  LEASE  FINANCE  CORPORATION,  a  corporation  organized  and
     existing  under  the laws of the  State of  California,  United  States  of
     America,  having its principal  corporate offices located at 1999 Avenue of
     the Stars, 39th Floor, Los Angeles, California 90067, U.S.A. ("ILFC"); and

(2)  FRONTIER AIRLINES,  INC. a Colorado corporation whose address and principal
     place of business is at 12015 East 46th Avenue, Suite 200, Denver, Colorado
     80239, U.S.A. ("LESSEE")

1.   Preamble.  In  connection  with the lease by ILFC to  LESSEE of one  Airbus
     A318-100   aircraft  bearing   manufacturer's   serial  number  [TBD]  (the
     "Aircraft"), reference is made to the following documents:

          (a)  the Airbus  A318-100  Purchase  Agreement  between ILFC and AVSA,
               S.A.R.L.  ("AVSA")  dated as of  January  11,  1999,  as  further
               amended (the  "Purchase  Agreement"),  under which ILFC agreed to
               purchase the Aircraft;

          (b)  the General  Terms  Agreement  between  ILFC and AVSA dated as of
               November 10, 1988 (the "G.T.A.");

          (c)  the Product  Support  Agreement  ("Exhibit E")  applicable to the
               Purchase Agreement (the "Support Agreement");

          (d)  the Aircraft Lease Agreement  between ILFC and LESSEE dated as of
               May __, 2000 (the "Lease Agreement");

          (e)  the  Participation  Agreement between ILFC and LESSEE dated as of
               ____________ ___, ______ (the "Participation Agreement").

2.   Assignment.  Pursuant to the Lease Agreement,  ILFC will lease the Aircraft
     to LESSEE,  including  in such Lease  Agreement a  commitment  to assign to
     LESSEE certain  warranty and other rights related to the Aircraft under the
     Purchase Agreement, the G.T.A. and the Support Agreement.  With effect from
     the actual delivery date of the Aircraft by AVSA to ILFC in respect of (a),
     (b) and (d) below,  and with  effect from the date hereof in respect of (c)
     below,  ILFC  therefore  hereby  assigns to LESSEE and LESSEE  accepts  the
     assignment on the terms and  conditions  specified  herein of the following
     rights  (the  "Rights")  under  the  provisions  indicated  (the  "Assigned
     Provisions") with respect to the Aircraft:

          (a)  the  benefit of the rights  with  respect to the  Aircraft  under
               Clause 12 (Warranties and Service Life Policy) of the G.T.A.;

          (b)  the rights with respect to the  Aircraft  under Clause 13 (Patent
               Indemnity) of the G.T.A.;

          (c)  the  rights  with  respect  to the  Aircraft  under  the  Support
               Agreement;

          (d)  the benefit of the remaining part of support allowances set forth
               in paragraph 1(d) of the Participation Agreement.

3.   Conditions of Assignment.  This Assignment Agreement is made subject to the
     following conditions:

          (a)  LESSEE  hereby  agrees  to be  bound  by and to  comply  with all
               applicable  terms,  conditions and  limitations of Clause 12.5 of
               the G.T.A.  and Clauses  16.9 and 18.5 of the  Support  Agreement
               (copies  of  which  are  attached  hereto)  with  respect  to the
               exercise of any of the Rights and to be bound by the covenants of
               the Buyer in the  Assigned  Provisions  to the same  extent as if
               LESSEE had been named "Buyer" of the Aircraft  under the Purchase
               Agreement.

          (b)  Nothing  contained  herein shall subject AVSA to any liability or
               additional obligations whatsoever to which it would not otherwise
               be subject  under the  Purchase  Agreement,  the  G.T.A.  and the
               Support  Agreement  or, except to the extent set forth in section
               3(c) below,  modify in any  respect  whatsoever  its  contractual
               rights under the said agreements.

          (c)  So long as this Assignment Agreement is in full force and effect,
               LESSEE  and not ILFC  will be  responsible  for  compliance  with
               Clause  12.5 of the  G.T.A.  and  Clauses  16.9  and  18.5 of the
               Support  Agreement,  in each case with  respect to the  Aircraft.
               Upon  termination of this Assignment  Agreement,  ILFC shall once
               again be bound by such  clauses  with  respect  to the rights and
               benefits  described  in  section  2  above  received  by  ILFC in
               connection with the Aircraft.

          (d)  Other  than with  respect  to the  obligations  assumed by LESSEE
               under this  Assignment  Agreement  as set forth in  section  3(a)
               above,  ILFC shall  remain fully bound by all  provisions  of the
               Purchase Agreement, G.T.A. and Support Agreement.

4.   Reassignment.  Upon  termination  of the Lease  Agreement  between ILFC and
     LESSEE,  and provided that LESSEE and ILFC shall have  furnished  AVSA with
     written  notice  thereof,  upon receipt of such notice by AVSA,  the rights
     contained herein shall automatically be reassigned to ILFC.

5.   Assignment  by LESSEE.  Except as permitted  under  Article 24 of the Lease
     Agreement, the rights of ILFC and LESSEE under this Assignment Agreement in
     respect of the Purchase  Agreement,  the G.T.A.  and the Support  Agreement
     shall not be further assigned by the parties hereto.

6.   Notification

          (a)  It shall be a condition  precedent to this  Assignment  Agreement
               that this Assignment  Agreement  shall, at the expense of LESSEE,
               be notified to AVSA within 2 weeks of the date hereof pursuant to
               Article 1690 of the French Civil Code.

          (b)  All  notices  and  requests  required  or  authorized  under this
               Assignment Agreement shall be given in writing either by personal
               delivery to a  responsible  officer of the party to whom the same
               is given or by  internationally  recognized courier service or by
               telefax directed as set forth below:

                ILFC shall be addressed at:

                          1999  Avenue of the  Stars,  39th  Floor
                          Los  Angeles, California 90067, U.S.A.
                          Attention:       Senior Vice President-Technical
                          Fax:             310-788-1990
                          Telephone:       310-788-1999

               LESSEE shall be addressed at:
                      12015 East 46th Avenue Suite 200 Denver,  Colorado  80239,
                      U.S.A.
                      Attention:           General Counsel
                      Fax:                 303-371-7007
                      Telephone:           303-371-7400

             AVSA shall be addressed at:
                          2 Rond-Point Maurice Bellonte
                          31 700 Blagnac, France
                          Attention:       Director Contracts
                          Fax:             (33) 5.61.30.40.11
                          Telephone:       (33) 5.61.30.40.12

or at such  other  address or to such other  person as the party  receiving  the
notice or request may designate from time to time.

                Such notice or request  shall be deemed to be  effective  in the
         case of (aa)  personal  delivery,  on the date  upon  which  personally
         delivered,  (bb)  delivery by  courier,  on the date of receipt or (cc)
         telefax  transmission,  on  the  date  of  confirmation  of  successful
         transmission.

7.   Consent  of AVSA.  It shall be a  condition  precedent  to this  Assignment
     Agreement that AVSA execute the Consent contained in Schedule 1 hereto.

8.   Applicable  Law  and  Jurisdiction.  THIS  ASSIGNMENT  AGREEMENT  SHALL  BE
     GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW
     YORK  WITHOUT  REGARD TO  PRINCIPLES  OF  CONFLICTS OF LAW, AND THE PARTIES
     AGREE THAT ANY COMPETENT  FEDERAL COURT LOCATED IN NEW YORK, NEW YORK SHALL
     HAVE JURISDICTION OVER ANY DISPUTE ARISING IN CONNECTION HEREWITH.  Nothing
     in this section will prevent either party from making a claim in a court of
     competent jurisdiction in California or, if AVSA is involved, France.

9.   Confidentiality.  Subject  to any  legal or  governmental  requirements  of
     disclosure,   ILFC  and  LESSEE  shall  keep  confidential  the  terms  and
     conditions of this Assignment Agreement and the clauses from the G.T.A. and
     Support Agreement provided to

LESSEE  provided  that ILFC and  LESSEE may  disclose  such  materials  to their
professional advisors.

         IN WITNESS WHEREOF,  the parties have caused this Assignment  Agreement
to be executed on their behalf by their duly authorized officers.

INTERNATIONAL LEASE FINANCE CORPORATION             FRONTIER AIRLINES, INC.

By:                                                 By:

Its:                                                Its:

<PAGE>

                                                     SCHEDULE 1

[DATE]

Re: ILFC/FRONTIER AIRLINES ("LESSEE"): ASSIGNMENT OF WARRANTY AND SUPPORT RIGHTS

Dear Sirs,

1.   Reference is made to the  Assignment  of Warranty and Support  Rights dated
     ____________   ___,  ______  between  ILFC  and  LESSEE  (the   "Assignment
     Agreement")  concerning the assignment of certain warranty rights under the
     Purchase Agreement and the G.T.A. and certain customer support rights under
     the Support Agreement with respect to the Aircraft.

2.   All terms defined herein bear the meaning ascribed hereto in the Assignment
     Agreement.

3.   AVSA hereby  consents  to the  assignment  and  reassignment  contained  in
     Clauses 2 and 4 respectively  of the Assignment  Agreement on the terms and
     conditions therein, subject to the following conditions:

     (a)  AVSA  shall  have  received  formal  notification  of  the  Assignment
          Agreement;

     (b)  AVSA shall not be subject by reason of the Assignment Agreement to any
          liability or additional  obligations  whatsoever to which it would not
          otherwise be subject under the Purchase Agreement,  the G.T.A. and the
          Support Agreement or modify in any respect  whatsoever its contractual
          rights under the said agreements;

     (c)  So long as the  Assignment  Agreement  is in full  force  and  effect,
          LESSEE and not ILFC will be  responsible  for  compliance  with Clause
          12.5 of the G.T.A. and Clauses 16.9 and 18.5 of the Support Agreement,
          in each case with respect to the  Aircraft.  Upon  termination  of the
          Assignment  Agreement,  ILFC shall once again be bound by such clauses
          with respect to the rights and benefits  described in section 2 of the
          Assignment Agreement received by ILFC in connection with the Aircraft.

     (d)  LESSEE hereby agrees to be bound by and to comply with all  applicable
          terms,  conditions and  limitations  of Clause 12.5 of the G.T.A.  and
          Clauses  16.9 and 18.5 of the Support  Agreement  with  respect to the
          exercise of any of the Rights and to be bound by the  covenants of the
          Buyer in the Assigned  Provisions  to the same extent as if LESSEE had
          been named "Buyer" of the Aircraft under the Purchase Agreement.

     (e)  Other than with respect to the obligations assumed by LESSEE under the
          Assignment  Agreement as set forth in section  3(a) above,  ILFC shall
          remain fully bound by all provisions of the Purchase Agreement, G.T.A.
          and Support Agreement.

4.   This Consent shall be governed by and construed in accordance with the laws
     of the  State  of New  York  and any  dispute  arising  hereunder  shall be
     referred to the federal  court  located in New York,  New York.  Nothing in
     this  clause  will  prevent  any  party  from  making a claim in a court of
     competent jurisdiction in California or France.

For and on behalf of AVSA, S.A.R.L.

By:

Title:

Date:

Signed in acknowledgement for                      Signed in acknowledgement for
and on behalf of                                   and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION            FRONTIER AIRLINES, INC.

By:                                                By:

Its:                                               Its:

<PAGE>

         EXHIBIT I            ASSIGNMENT OF RIGHTS (ENGINES)

                            ASSIGNMENT OF WARRANTIES

[DATE]

         In consideration of FRONTIER  AIRLINES,  INC.  ("LESSEE")  leasing from
INTERNATIONAL LEASE FINANCE CORPORATION  ("ILFC") one (1) A318-100 aircraft with
two Pratt & Whitney  6124  engines  installed  thereon,  it is hereby  agreed as
follows:

         1. ILFC hereby assigns and transfers to LESSEE all of ILFC's respective
rights and  interest in and to and in and under the Engine  Sales  Warranty  and
Service Policy benefits (the "Engine  Warranties") of the Consolidated  JT8D-200
Series/PW2000 Series/PW4000 Series Propulsion System/Engine Support Proposal for
International  Lease  Finance  Corporation  Dated  May 11,  1988  (the  "Support
Agreement")  between  United  Technologies  Corporation,  Pratt & Whitney  Group
("P&W") and International Lease Finance Corporation  ("ILFC") during the term of
the lease to LESSEE so long as LESSEE is not in default thereunder.

         2. P&W hereby  consents to the assignment and transfer to LESSEE of all
of the rights and  interest of ILFC in, to and under the Engine  Warranties  and
P&W agrees that until it shall have  received  written  notice that LESSEE is in
default under such lease from ILFC, it will allow LESSEE on an exclusive  basis,
to  exercise in its own name all rights and  interest  that ILFC would have been
entitled to  pursuant to the Engine  Warranties,  it being  further  agreed that
LESSEE  accepts  all of the  limitations  and  liabilities  pertaining  to  said
Warranties as stated in the Support Agreement.

         3. Each party  agrees  that at any time from  time-to-time,  on written
request of any other party hereto and at the expense of the party so requesting,
that it will  promptly  and duly  execute  and  deliver  any and all  reasonable
documentation  required to accomplish  the assignment and transfer of the rights
and interest referred to above.

         4. This  Agreement  shall be binding  upon and inure to the  benefit of
each of the parties  hereto and their  respective  successors and assigns to the
extent permitted by the Support Agreement and hereunder.

         5. This Agreement shall be governed by and construed in accordance with
 the laws of the State of California.

         6. This Agreement may be executed in any number of  counterparts,  each
of which when  executed  and  delivered  is an  original  but all of which taken
together  constitute on and the same  instrument  and any party may execute this
Agreement by signing any counterpart.

IN WITNESS  WHEREOF,  the authorized  representative  of the parties hereto have
executed this Agreement as of the day and year first above written.

For and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION

For and on behalf of FRONTIER AIRLINES, INC.

Its:

For and on behalf of
UNITED TECHNOLOGIES CORPORATION, PRATT & WHITNEY GROUP

L.E. Pawlich
Manager, Business Support

<PAGE>

         EXHIBIT J            RETURN ACCEPTANCE RECEIPT

Date:    _________________ ___, ____

     1.   FRONTIER  AIRLINES,  INC. as LESSEE,  and INTERNATIONAL  LEASE FINANCE
          CORPORATION,  as LESSOR, have entered into an Aircraft Lease Agreement
          dated as of May 25, 2000 (the "Lease"). Words used herein with capital
          letters and not otherwise  defined will have the meanings set forth in
          the Lease.

     2.   LESSOR has this ____ day of  __________,  ____ (Time:  __________)  at
          ____________________ received from LESSEE possession of:

                (a) One (1)  Airbus  A318-100  Aircraft  bearing  Manufacturer's
         serial  number  [TBD],  together  with two (2) PW 6124 Engines  bearing
         manufacturer's serial numbers ______ and ______, and all Parts attached
         thereto and thereon in an airworthy condition and

                (b)  All  Aircraft   Documentation,   including  the  usual  and
         customary manuals,  logbooks, flight records and historical information
         regarding the Aircraft,  Engines,  and Parts, as listed in the Document
         Receipt attached hereto.

     3.   The Airframe,  Engines,  and Parts had the following  hours/cycles  at
          return:

                (a)    Airframe:

                       Total hours: ________        Total Landings: ___________

                       Date last "C" check performed: _________________

                              ______ hours/ ______ cycles since last "C" check

                       Date last "D" check performed: _________________

                              ______ hours/ ______ cycles since last "D" check

<PAGE>
<TABLE>

<S>                           <C>                <C>                 <C>               <C>

                (b)    Engines:

        Position              Serial No.         Total Hours         Total Cycles       Hrs/Cycles since
                                                                                         last shop visit

                                                                           Time Remaining to Next
                                                                         Life Limited Part Removal
      Part Name                                                        Hours                 Cycle
                               MSN

                               MSN

                (c)    APU:    MSN __________

                       Total hours:    __________

                       ______ hours/ ______ cycles since last Overhaul

                       ______ hours/ ______ cycles remaining on APU life-limited Parts

                (d)    Landing Gears:

Position                  Serial No.      Total Hrs/Cycles     Hrs/Cycles since          Date of last
                                                                 last Overhaul              Overhaul

Nose

Right Main

Left Main
</TABLE>

                (e)  Fuel on board at return:  ______ (circle one)  pounds/kilos
                     (______ gallons)

     4.   Other technical  information regarding the Aircraft and its components
          are  correctly set forth on the  Technical  Evaluation  Report (in the
          form of Exhibit M) attached hereto. -

     5.   With  reference to Article 13.8 of the Lease  regarding  reimbursement
          from the Reserves after return of the Aircraft:

               _____        There  are no  claims  for  reimbursement  from the
                             Reserves  which  will be  submitted  after the date
                             hereof.

                    or

               _____        Claims for reimbursement  from the Reserves will be
                             submitted after the date hereof for the following:

                      Type of Work Estimated Invoice Amount

     6.   The above specified  aircraft,  engines and  documentation  are hereby
          accepted by LESSOR subject to correction by LESSEE (or  procurement by
          LESSEE  at  LESSEE's  cost)  as soon  as  reasonably  possible  of the
          discrepancies specified in Attachment 2 hereto.

     7.   Subject to the  following  paragraph,  the leasing of the  Aircraft by
          LESSOR to LESSEE  pursuant to the Lease is hereby  terminated  without
          prejudice  to  LESSEE's   continuing   obligations   under  the  Lease
          including,  without limitation,  paragraph 6 above, paragraph 8 below,
          and Articles 10.5, 16 and 17.

     8.   LESSEE  represents  and warrants that during the term of the Lease all
          maintenance  and repairs to the Airframe and Engines were performed in
          accordance  with  the  requirements  contained  in the  Lease.  LESSEE
          further  confirms that all of its obligations  under the Lease whether
          accruing prior to the date hereof.LEASE

                                       FOR

                            FRONTIER CENTER ONE, LLC,
                      a Colorado limited liability company

                                  (as Landlord)

                                       and

                            FRONTIER AIRLINES, INC.,
                             a Colorado corporation

                                   (as Tenant)

<PAGE>

                                      LEASE

         This  Lease is made as of the day of , 2000,  by and  between  Frontier
Center One, LLC, a Colorado limited liability company  ("Landlord") and Frontier
Airlines, Inc., a Colorado corporation, ("Tenant").

                               W I T N E S S E T H

     1. Basic Provisions. In addition to other terms which are defined elsewhere
in this Lease or any Exhibits, the terms defined in the following subsections of
this Section 1 shall have the meaning set forth in such subsection whenever used
in this Lease.

         1.1......Building:  Approximately  * rentable  square  foot,  one story
building to be  constructed by Landlord  commonly known as Frontier  Center One,
with a street address of 7001 Tower Road, Denver, CO 80249.

         1.2......Premises:  Approximately  *  rentable  square  feet  of  space
located in the Building, including all improvements therein or to be provided by
Landlord under the terms of this Lease, commonly known as Suite 101, as outlined
on Exhibit A attached  hereto,  and  approximately * square feet of space in the
Building  services court depicted on Exhibit A-1 attached hereto and made a part
hereof,  (the "Ground  Satellite Area" described in Section 49 hereof) and a day
care play area (the "DC Play  Area"),  if  requested  by Tenant and  approved by
Landlord in accordance with Exhibit C hereof.  In addition to Tenant's rights to
use and  occupy  the  Premises  as  hereinafter  specified,  Tenant  shall  have
non-exclusive  rights to the Common  Areas (as  defined in Section 2.4 below) as
hereinafter  specified,  but shall not have any  rights to the roof  (except  as
expressly  granted in Section 49 hereof),  exterior walls or utility raceways of
the Building or to any other buildings in the Building Complex.

         1.3......Building Complex: The Premises, the Building, the Common Areas
(as defined below), the land upon which they are located,  which land is legally
described  on  Exhibit B  attached  hereto  and made a part  hereof  (the  "Real
Property").

         1.4......Parking:  *  unreserved  vehicle  parking  spaces  for  each *
rentable square feet of the Premises, excluding the Ground Satellite Area and DC
Play Area from such calculation.

         1.5......Term:  * years and * months ("Primary Lease Term")  commencing
October 1, 2000 ("Commencement Date").

         1.6......Estimated Delivery  Date:  October 1, 2000.   [This  is  a non
binding estimate of the date on which the Premises will be Ready for Delivery as
defined below.]

         1.7......Base Rent:

         .........(a)  For the  Primary  Lease Term and  commencing  on the Rent
Commencement  Date,  as defined in Section 4.1 below,  Base Rent for the first *
rentable square feet of the Premises  excluding the Ground Satellite Area and DC
Play Area shall be:

<PAGE>

                           Lease Year Per Square Foot

                            1                   $ *
                            2                   $ *
                            3                   $ *
                            4                   $ *
                            5                   $ *
                            6                   $ *
                            7                   $ *
                            8                   $ *
                            9                   $ *
                           10                   $ *
                           11                   $ *
                           12                   $ *

                  (b) In addition,  with respect to the rentable  square feet of
the Building leased by Tenant  exceeding * rentable  square feet,  excluding the
Ground Satellite Area and DC Play Area, which are part of the Premises as of the
Commencement  Date, * rentable  square feet, the Base Rent for the Primary Lease
Term shall be as follows:

                           Lease Year Per Square Foot

                             1                   $ *
                             2                   $ *
                             3                   $ *
                             4                   $ *
                             5                   $ *
                             6                   $ *
                             7                   $ *
                             8                   $ *
                             9                   $ *
                            10                   $ *
                            11                   $ *
                            12                   $ *

                  (c) In  addition,  Tenant shall pay Base Rent in the amount of
$* per month, for the Primary Lease Term for the Ground Satellite Area described
in Section 49 hereof.

         1.8 Rentable Area:  Approximately  * rentable  square feet which is all
rentable  space  available  for  lease in the  Building  ("Rentable  Area of the
Building") and  approximately * rentable square feet which is the rentable space
located  within the  Building  comprising  the  Premises,  excluding  the Ground
Satellite  Area and DC Play  Area,  ("Rentable  Area of the  Premises").  Unless
otherwise  provided  herein,  any square footage set forth in this Lease or that
may have been used in calculating the Rent and/or Common Area Operating Expenses
is an  approximation  which Landlord and Tenant agree is reasonable and the Base
Rent and Tenant's Share based thereon are not subject to revision whether or not
the actual square footage is more or less.  Notwithstanding  the  foregoing,  if
there is: (i) alteration to the Premises or the Building after the  Commencement
Date; or (ii) any change in the designated  Rentable Area of the Premises and/or
the Building after the Commencement Date, then Landlord shall have the exclusive
discretion to recalculate Tenant's Share by substituting the revised approximate
Rentable Area of the Premises and/or the Building in the  calculation  described
above.  Any change in the  approximate  Rentable Area of the Premises and/or the
Building   recalculated  by  Landlord  shall  be  effective,   for  purposes  of
calculating  Tenant's Share as of the first day of the next calendar month after
Landlord  provides to Tenant written notice of such change.  Landlord and Tenant
agree that the Rentable  Area of the Premises  shall be determined in accordance
with Paragraph 3 of the Work Agreement,  Exhibit C hereto, and the Base Rent and
Tenant's Share of Operating Expenses shall be calculated at that time.  Rentable
Area shall be calculated in  accordance  with the Standard  Method for Measuring
Floor Area in Office  Buildings  published by The  Building  Owners and Managers
Association  International  and  approved  by the  American  National  Standards
Institute, Inc., on June 7, 1996.

         1.9 Tenant's Share of Operating  Expenses:  A percentage  determined by
dividing the Rentable Area of the Premises by the Rentable Area of the Building.
Tenant shall commence paying Tenant's share of Operating  Expenses on January 1,
2001.  Landlord and Tenant acknowledge that Tenant has been granted the right to
more  parking  spaces  than  other  tenants  will  be  granted.   Therefore,  in
calculating Tenant's Share of Operating Expenses,  Tenant shall pay * percent of
all costs  associated  with the  maintenance,  repair or  replacement of parking
areas for each  percent of  Tenant's  Share of other  Operating  Expenses.  (For
example,  if Tenant's  Share is *%,  Tenant's share for parking areas is * x * =
*.)

         1.10 Security Deposit:   Initially  $*  and  thereafter   decreasing in
accordance with Section 5.3 herein.

         1.11 Permitted  Use: (i) General  office;  (ii)  telephone  reservation
center; (iii) classroom training;  (iv) flight simulator training;  (v) dispatch
center;  (vi)  cafeteria  only  for  employees;  (vii)  exercise  area  only for
employees;  and  (viii)  day care  center  and for no other  purpose;  provided,
however,  at no time during the Primary  Lease Term as it may be  extended,  may
more than * of the Rentable  Area of the Premises at any time,  be used for uses
(vi) through (viii) above.

         1.12 Applicable Laws:  Applicable zoning, municipal, county, state  and
federal laws, ordinances and regulations  and  any covenants or restrictions  of
record (collectively, "Applicable Laws").

         1.13 Business Day: Monday through Friday, legal holidays (days on which
the U.S. Post Office is closed) excepted.

         2.   Premises, Parking and Common Areas.

         2.1  Grant.  In  consideration  of the  Rent  and the  other  covenants
described in the Lease,  Landlord  hereby  leases to Tenant,  and Tenant  hereby
leases from  Landlord,  the Premises,  for the Term, at the Rent and upon all of
the terms, covenants and conditions set forth in this Lease. Tenant accepts this
Lease and the Premises upon the covenants and conditions set forth in this Lease
and subject to: (a) any encumbrances,  covenants,  conditions,  restrictions and
other matters of record as of the  Commencement  Date of the Lease;  and (b) the
Applicable Laws.  Landlord hereby  represents,  covenants and warrants to Tenant
that,  as of the  Commencement  Date it will have fee  simple  title to the Real
Property of which the Premises is a part and as of the  Commencement  Date,  the
Premises  will not be  subject to leases and  tenancies  other than this  Lease.
Furthermore,  between the date of this Lease and the Commencement Date, Landlord
agrees not to record (or voluntarily permit recording) against the Real Property
any document which would prohibit Tenant's Permitted Use.

         2.2 Landlord  Delivery.  Landlord  shall deliver the Premises to Tenant
"Ready for Delivery" as hereafter  defined  within the time frames  described in
Section 3.2 herein.  Ready for  Delivery as used herein shall mean the date that
Tenant may enter the Premises to perform  Tenant's Work (as defined in Exhibit C
hereto) including,  sufficient access to the Premises for construction vehicles.
The  certificate of the architect (or other  representative  of the Landlord) in
charge of supervising the completion of the Premises shall control  conclusively
the date upon  which the  Premises  are  Ready  for  Delivery.  On and after the
Delivery Date, Tenant and its authorized agents, contractors, subcontractors and
employees  shall be  entitled to enter the  Premises  at Tenant's  sole risk and
expense to complete  Tenant's  Work.  From the  Delivery  Date,  estimated to be
October 1, 2000,  the  provisions  of this Lease other than with  respect to the
payment of Base Rent and Tenant's  Share of Operating  Expenses  shall apply and
Tenant  shall pay for all  utilities  used by Tenant,  its agents,  contractors,
subcontractors  or employees.  Prior to entry,  Tenant shall provide to Landlord
evidence of insurance  to be provided by Tenant  pursuant to the  provisions  of
Section 9 of this Lease. Tenant acknowledges that on the Delivery Date, Landlord
will be completing  Landlord's Work (as defined in Exhibit C hereto) and Tenant,
its agents,  employees  and  contractors  shall not  interfere,  delay or hinder
Landlord,   its  agents,   contractors  or  subcontractors  in  construction  of
Landlord's  Work in  accordance  with the  provisions of this Lease and any such
delay shall be Tenant Delay as described in the Work Agreement. Tenant shall not
use the Premises for storage of  inventory  or otherwise  commence  operation of
business  until such time as Tenant has  received  and  delivered  to Landlord a
Certificate of Occupancy  (temporary or final) or an equivalent  sign-off issued
by the appropriate governmental authority permitting use of the Premises for the
Permitted Use under the Lease.

         2.3  Acceptance  of Premises.  Landlord  has advised  Tenant to satisfy
itself with respect to the condition of the Premises including,  but not limited
to, the electrical and fire sprinkler systems, security,  environmental aspects,
and  compliance  with  the  Americans  with  Disabilities  Act  ("ADA")  and the
Applicable  Laws and the  present and future  suitability  of the  Premises  for
Tenant's   intended  use.   Notwithstanding   the  foregoing,   and  subject  to
reimbursement  as set forth in Section 4.2 below,  Landlord will be  responsible
for  compliance  of the  Common  Areas of the  Building  with  Applicable  Laws;
provided,  however, Landlord shall have no obligation for non-compliance if such
non-compliance  is a  result  of  Tenant's  Permitted  Use or  occupancy  of the
Premises. The Landlord's Work (as the term is used in Exhibit C hereto), without
any interior  finish work will comply with the  requirements of the ADA required
for a commercial facility with no day care facility and excluding  noncompliance
due  to  inconsistencies   with  building  codes  or  interpretations   thereof.
Compliance with the ADA as to the Tenant's Work shall be the sole responsibility
of  Tenant  and  Tenant's  Work will  comply  with the  requirements  of the ADA
required for Tenant's  Permitted  Use,  including  the day care center if Tenant
elects to operate one.  Landlord's  Work and Tenant's Work shall be completed in
accordance  with  Exhibit C attached  hereto and made a part  hereof  (the "Work
Agreement").  Except as set forth  expressly  herein and in the Work  Agreement,
Landlord  shall have no obligation  for  completion of any  improvements  to the
Premises and Tenant  shall  accept the Premises in its "AS IS"  condition on the
Lease  Commencement  Date.  Subject to Total  Delay (as  defined in Section  3.2
hereof),  Landlord's Work will be substantially completed (excluding landscaping
and parking lot  striping  that may not be able to be  performed  due to time of
year or weather constraints) by the Rent Commencement Date.

         2.4 Common Areas.  The term "Common  Areas" is defined as all areas and
facilities  outside the Premises  and  excluding  Rentable  Area of the Building
leased to other  tenants and within the exterior  boundary  line of the Building
Complex and interior  utility raceways within the Premises that are provided and
designated by the Landlord from time to time for the general  non-exclusive  use
of  Landlord,  Tenant  and  other  tenants  of the  Building  Complex  and their
respective employees, suppliers, shippers, customers,  contractors and invitees,
including  parking areas,  loading and unloading areas,  trash areas,  roadways,
sidewalks,  walkways,  parkways, driveways and landscaped areas. Landlord hereby
grants to  Tenant,  for the  benefit  of Tenant  and its  employees,  suppliers,
shippers, contractors, customers and invitees, during the Term of this Lease the
non-exclusive  right to use,  in common with  others  entitled to such use,  the
Common Areas as they exist from time to time, subject to any rights, powers, and
privileges reserved by Landlord under the terms hereof or under the terms of any
rules and regulations or restrictions governing the use of the Building Complex.
Under no  circumstances  shall the right therein granted to use the Common Areas
be  deemed  to  include  the  right  to  store  any  property,   temporarily  or
permanently,  in the Common Areas.  Any such storage shall be permitted  only by
the prior written  consent of Landlord or  Landlord's  designated  agent,  which
consent may be revoked at any time. In the event that any  unauthorized  storage
shall occur, then Landlord shall have the right,  without notice, in addition to
such other  rights and  remedies  that it may have,  to remove the  property and
charge the cost to Tenant,  which cost shall be immediately  payable upon demand
by Landlord. Landlord or such other person(s) as Landlord may appoint shall have
the  exclusive  control and  management  of the Common  Areas and shall have the
right,  from time to time, to establish,  modify,  amend and enforce  reasonable
rules and regulations  with respect  thereto subject to any limitations  thereon
specifically set forth herein. Landlord shall have the right, in Landlord's sole
discretion,  from  time  to  time:  (i) to make  changes  to the  Common  Areas,
including,  without limitation,  changes in the location, size, shape and number
of driveways,  entrances,  parking spaces,  parking areas, loading and unloading
areas,  ingress,  egress,  direction of traffic,  landscaped areas, walkways and
utility  raceways so long as access to the Premises  remains  available and such
modifications  do not  contravene  any  specific  requirement  contained in this
Lease;  (ii) to  close  temporarily  any of the  Common  Areas  for  maintenance
purposes so long as reasonable access to the Premises remains  available;  (iii)
to designate  other land outside the boundaries of the Building  Complex to be a
part of the Common Areas;  (iv) to add additional  buildings and improvements to
the Common Areas; (v) to use the Common Areas while engaged in making additional
improvements,  repairs or  alterations to the Building  Complex,  or any portion
thereof  as long as access to the  Premises  remains  available;  (vi) to do and
perform  such other acts and make such other  changes in, to or with  respect to
the Common Areas and Building  Complex as Landlord may, in the exercise of sound
business  judgment deem to be appropriate so long as such acts or  modifications
do not contravene any specific requirement  contained in the Lease and access to
the Premises  remains  available;  and (vii) use the Common Areas for  marketing
purposes.

         2.5 Parking.  Tenant shall be entitled to use the number of  unreserved
parking  spaces  specified in Section 1.4 (which number of spaces may be reduced
if Tenant elects to place a day care center in the Premises and must install the
DC Play Area to comply with  Applicable Laws related to such day care center) on
a first  come,  first  served  basis  on  those  portions  of the  Common  Areas
designated from time to time by Landlord for parking.  Tenant shall not use more
parking spaces than said number. Said parking spaces shall be used in compliance
with the Parking License attached as Exhibit G hereto and made a part hereof for
parking by vehicles no larger than full-size passengerautomobiles, sport utility
vehicles,  passenger  vans, or pick-up  trucks,  herein called  "Permitted  Size
Vehicles."  Vehicles  other than  Permitted  Size  Vehicles  shall be parked and
loaded or unloaded as directed by Landlord in the Rules and  Regulations  issued
by Landlord. Tenant shall not permit or allow any vehicles that belong to or are
controlled  by Tenant or Tenant's  employees,  suppliers,  shippers,  customers,
contractors  or invitees to be loaded,  unloaded,  or parked in areas other than
those  designated by Landlord for such  activities.  If Tenant permits or allows
use of the prohibited areas, then Landlord shall have the right, without notice,
in addition to such other rights and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost to Tenant,  or if applicable,  the
owner of the vehicle  where  Tenant has not  permitted or allowed the use of the
prohibited  area,  which  cost  shall be  immediately  payable  upon  demand  by
Landlord,  if Tenant shall be  responsible  for such costs pursuant to the terms
hereof.

         3.   Term.

         3.1  Term.  The Commencement Date,  Expiration Date  and  Primary Lease
Term of this Lease are as specified in Section 1.5.

         3.2  Delay in Possession.

                  (a) If for any reason  Landlord  cannot deliver  possession of
the Premises to Tenant in accordance with the terms of Section 2.2 hereof by the
Estimated  Delivery  Date,  Landlord  shall  not be  subject  to  any  liability
therefor,  nor shall such  failure  affect the  validity of this  Lease,  or the
obligations of Tenant  hereunder,  or extend the Term hereof;  but in such case,
Tenant shall not, except as otherwise  provided herein, be obligated to pay Base
Rent,  utility  costs or Tenant's  Share of Operating  Expenses,  or perform any
other obligation of Tenant under the terms of this Lease until Landlord delivers
the  Premises  to Tenant in the  condition  described  in  Section  2.2.  If the
Premises  are not  Ready  for  Delivery  by the  Commencement  Date set forth in
Section 1.5 hereof, and such delay is due to other than Tenant Delay (as defined
in Exhibit C hereto)  and  except  for force  majeure  events,  Tenant  shall be
entitled to * day of occupancy  of the Premises  without the payment of the Base
Rent for each day after * days (the "*-Day Period") from the  Commencement  Date
as set forth in Section 1.5 that the Premises are not Ready for Delivery. Tenant
Delay and delay due to force majeure  events may be called "Total Delay" herein.
Such *-Day  Period  shall be extended  one day for each day of Total Delay until
the Premises  are Ready for  Delivery.  The term "force  majeure" as used herein
shall mean delay due to causes  outside of Landlord's  control that could not be
avoided  by the  exercise  of due care,  including,  without  limitation,  labor
disputes,  fire,  flood,  earthquake  or  civil  disturbance,  unusual  delay in
transportation,  adverse weather conditions,  or casualties. If the Premises are
not Ready  for  Delivery  * days  after  the  Commencement  Date as set forth in
Section 1.5 hereof, and such delay is due to other than Total Delay Tenant shall
be entitled to * days of occupancy of the Premises  without  payment of the Base
Rent for each day after * days from the  Commencement  Date set forth in Section
1.5 that the  Premises  are not Ready for  Delivery.  Such * day period shall be
extended  one day for each day of Total Delay until the  Premises  are Ready for
Delivery.  If  the  Premises  are  not  Ready  for  Delivery  * days  after  the
Commencement  Date as set forth in Section 1.5 hereof,  and such delay is due to
other than Total Delay, Tenant shall have the right to terminate this Lease upon
written notice to Landlord given within * calendar days after such * day period.
If Tenant exercises its right to terminate hereunder, effective on the date such
notice is  received  by  Landlord,  this Lease  shall be null and void and of no
further  force and  effect.  If Tenant  fails to  timely  exercise  its right to
terminate,  this  Lease  shall  continue  in full force and effect and the Lease
Commencement  Date shall be the date that the Premises  are Ready for  Delivery.
The delay of the  Commencement  Date, the Rent credit and the right to terminate
the Lease as set forth herein shall be in full satisfaction of any claims Tenant
might otherwise have as a result of such delay;  provided,  however,  except for
Total Delay, if and only if after the *-Day Period, Landlord is fully capable of
performing  Landlord's  Work and  fails to  proceed  with  Landlord's  Work with
reasonable  diligence,  in addition to the Rent credit described above, Landlord
will be  liable  to Tenant in the  total  amount  of  Tenant's  actual  damages,
excluding any consequential damages, resulting from the delay in delivery of the
Premises in Ready for  Delivery  condition  arising  from  delays  which are not
Tenant Delay but are delays over which  Landlord does have control and for which
Landlord fails to proceed with reasonable  diligence.  Likewise, in the event of
Tenant Delay  exceeding * days,  Tenant shall be liable to Landlord in the total
amount of  Landlord's  actual  damages,  excluding  any  consequential  damages,
arising out of Tenant Delay in excess of * days.

                  (b)  If  in  accordance  with  the  foregoing  provision,  the
Commencement  Date would occur on other than the first day of a calendar  month,
the Commencement  Date shall be delayed until the first day of the next calendar
month and the  Primary  Lease Term shall be measured  from such date;  provided,
however, during any period of delayed commencement, all terms and provisions set
forth in this Lease  including,  but not limited to Tenant's  obligation  to pay
Base Rent and all other  charges  under the Lease shall  commence  measured from
such earlier  date.  In order to place in writing the exact  Commencement  Date,
Rent  Commencement  Date and expiration date of the Lease,  the Rentable Area of
the Premises and Building, the parties agree to execute a supplemental agreement
to become a part hereof in the form attached hereto as Exhibit E.

         3.3 Lease Year.  "Lease Year" as used in this Lease shall be defined as
each  twelve  month  period  beginning  with the Rent  Commencement  Date or any
anniversary thereof and ending on the immediately preceding day one year later.

         4.   Rent.

         4.1 Base Rent. Tenant shall pay Base Rent and other rent or charges, as
the same may be adjusted  from time to time,  to Landlord in lawful money of the
United  States,  without offset or deduction on or before the day on which it is
due under the terms of this  Lease.  Subject  to the terms of Section  3.2,  the
first  payment of Base Rent shall be due no later than * calendar  months  after
the Commencement Date (the "Rent  Commencement  Date").  Base Rent and all other
Rent and  charges for the period  during the Term hereof  which is for less than
one full month  shall be  prorated  based upon the actual  number of days of the
month involved. Payment of Base Rent and other charges shall be made to Landlord
at its address stated herein or to such other persons or at such other addresses
as Landlord may from time to time designate in writing to Tenant.

         4.2 Operating Expenses. Subject to the terms of Section 3.2, commencing
no later than * calendar months after the Commencement Date, Tenant shall pay to
Landlord  during the Term hereof,  in addition to the Base Rent,  Tenant's Share
(as specified in Section 1.8) of all Operating Expenses, as hereinafter defined,
during each  calendar  year of the Term of this Lease,  in  accordance  with the
following provisions:

                  (a)  "Operating  Expenses"  are defined,  for purposes of this
Lease, as all costs incurred by Landlord relating to the ownership and operation
of the Building Complex including, but not limited to, the following:

                    (i) The operation,  repair and maintenance,  in neat, clean,
               good order and condition of the Common Areas,  including  parking
               areas,  loading  and  unloading  areas,  trash  areas,  roadways,
               sidewalks,  walkways,  parkways,  driveways,   landscaped  areas,
               striping,  bumpers,  irrigation  systems,  Common  Area  lighting
               facilities,  fences and gates,  elevators,  roofs,  and  exterior
               walls,  including  paint;  exterior  signs,  awnings,  any tenant
               directories, and fire detection and sprinkler systems.

                    (ii)  The  cost  of  water,  sewer,  gas,   electricity  and
               telephone to service the Common Areas,  or Premises to the extent
               not separately metered.

                    (iii)  Snow,  ice  and  trash  removal   service,   property
               management   and   security   services   and  the  costs  of  any
               environmental  inspections and the heating,  air conditioning and
               ventilating maintenance contract.

                    (iv) The costs of capital  improvements,  structural repairs
               and  replacements  in or to the  Building  in order to conform to
               changes  subsequent to the  Commencement  Date in any  Applicable
               Laws,   ordinances,   rules,   regulations   or   orders  of  any
               governmental or quasi-governmental  authority having jurisdiction
               over the building  (the  "Required  Capital  Improvements");  the
               costs  of  any  capital  improvements,   structural  repairs  and
               replacements  designed primarily to reduce any Operating Expenses
               (the "Cost Savings Improvements").  The expenditures for Required
               Capital  Improvements  and  Cost  Savings  Improvements  shall be
               amortized at a market rate of return over the useful life of such
               item   as   determined   by   Landlord's   accountants.   Capital
               Improvements  shall not  include  the  initial  costs of Building
               expansions for purposes of determining Operating Expenses.

                    (v)  Real  Property  Taxes  to be paid by  Landlord  for the
               Building and the Common Areas under Section 11 hereof.

                    (vi) The cost of the  premiums  for the  insurance  policies
               maintained by Landlord under Section 9 hereof.

                    (vii) Any deductible  portion of an insured loss  concerning
               the Building or the Common Areas.

                    (viii) Any other  services to be  provided by Landlord  that
               are stated elsewhere in this Lease to be an Operating Expense.

                    (ix) The cost of  maintenance,  repair or replacement of the
               fire protection system.

                  (b)      Operating Expenses shall not include:

                    (i) any repairs to, or  replacements of the Building roof or
               structural  elements (including  foundations,  structural columns
               and  beams  and load  bearing  walls) to the  extent  covered  by
               warranty;

                    (ii) any  latent  defect of  Landlord's  Work  (Tenant  must
               notify   Landlord  of  such   defects   within  90  days  of  the
               Commencement Date);

                    (iii) any items (including but not limited to costs incurred
               by Landlord  for repair of damage to the  Building) to the extent
               Landlord receives reimbursement from insurance proceeds or from a
               third party  however any  deductible  portion of any insured loss
               may be included in operating expenses;

                    (iv) interest or principal  payments or any other  financing
               costs of any mortgage or any indebtedness of Landlord,  except as
               expressly included in Section 4.2(a) above.

                    (v) Depreciation,  amortization, or interest payments except
               as specifically included in Operating Expenses;

                    (vi)  Landlord's  general  corporate  overhead  and  general
               administrative expenses including but not limited to, salaries of
               officers  and  executives  of Landlord  except to the extent they
               provide direct service to the Building Complex;

                    (vii) advertising and promotional  expenditures and costs of
               signs in or on the Building identifying the owner of the Building
               or its manager;

                    (viii) costs arising from Landlord's charitable or political
               contributions;

                    (ix) costs, fees,  penalties and other expenses arising from
               the presence,  remediation or removal of any Hazardous Substances
               on or from the  Building  or Real  Property,  not  caused  by the
               actions of Tenant;

                    (x) any item to the extent  that  Tenant's  payment  thereof
               would result in Landlord  receiving  more than 100% of Landlord's
               actual expenditure;

                    (xi) legal and accounting fees for preparation of Landlord's
               business  documents  including the preparation of any and all tax
               returns; and

                    (xii) repairs or restoration necessitated by condemnation to
               the extent  reimbursed  by the award  granted  by the  condemning
               authority.

                  (c) The inclusion of the improvements, facilities and services
set forth in Section  4.2(a)  shall not be deemed to impose an  obligation  upon
Landlord to either have said  improvements  or  facilities  or to provide  those
services unless Landlord has agreed  elsewhere in this Lease to provide the same
or some of them.

                  (d) Tenant's  Share of Operating  Expenses shall be payable by
Tenant within * days after a reasonably detailed statement of actual expenses is
presented to Tenant by Landlord. At Landlord's option, however, an amount may be
reasonably estimated by Landlord, from time to time, of Tenant's Share of annual
Operating  Expenses  and the same shall be payable  monthly,  as Landlord  shall
designate,  during  each  calendar  year on the same day as the Base Rent is due
hereunder.  If during any  particular  calendar  year,  there is a change in the
information  on which  Landlord  based the  estimate  upon which  Tenant is then
making its estimated  Operating Expense payments so that such estimate furnished
to Tenant is no longer  accurate,  Landlord  shall be  permitted  to revise such
estimate,  from  time to time,  by  notifying  Tenant  and  there  shall be such
adjustments made in the monthly amount of Tenant's Share on the first day of the
month following the serving of such statement to Tenant.  Landlord shall deliver
to Tenant after the  expiration  of each  calendar  year a  reasonably  detailed
statement  showing  Tenant's  Share of the actual  Operating  Expenses  incurred
during the preceding year. If Tenant's payments under this Section 4.2(c) during
said  preceding  calendar  year  exceed  Tenant's  Share  as  indicated  on said
statement,  Tenant  shall be  credited  the amount of such  overpayment  against
Tenant's  Share of Operating  Expenses next  becoming due. If Tenant's  payments
under this Section  4.2(c)  during said  preceding  year were less than Tenant's
Share as indicated on said statement, Tenant shall pay to Landlord the amount of
the  deficiency  within * days  after  delivery  by  Landlord  to Tenant of said
statement. Landlord's failure to deliver to Tenant a statement of Tenant's Share
within * days after the end of the  applicable  calendar  year shall not relieve
Tenant of the  obligation  to pay sums  otherwise  due, but Landlord  shall make
reasonable efforts to cause such statement to be delivered to Tenant within such
period and shall deliver such statement to Tenant no later than * days after the
end of the applicable  calendar year.  Tenant's obligation to pay Tenant's Share
of  Operating  Expenses  which accrue  during the Term hereof shall  survive the
expiration or termination of the Lease.

                  (e) If  Tenant  shall  dispute  the  amount  of an  adjustment
submitted by  Landlord's  accountants  or the proposed  estimate on the basis of
which  Tenant's  Rent is to be adjusted as  provided  in  subsection  (d) above,
Tenant shall give Landlord  written notice of such objection within * days after
Landlord's  accountants or Landlord advise Tenant of such adjustment or proposed
increase or  decrease.  If Tenant does not give  Landlord  such  written  notice
within such time,  Tenant  shall have waived its right to dispute the amounts so
determined.  If Tenant timely objects, Tenant shall have the right to engage its
own certified public  accountants  ("Tenant's  Accountants")  for the purpose of
verifying the accuracy of the statement  complained of or the  reasonableness of
the estimated increase or decrease.  If Tenant's  Accountants  determine that an
error has been made,  Landlord's  accountants  and  Tenant's  Accountants  shall
endeavor to agree upon the matter,  failing  which the parties  shall settle the
dispute by  judicial  action or in such other  manner as they  agree.  All costs
incurred by Tenant in obtaining its own accountants  shall be paid for by Tenant
unless  Tenant's  Accountants  disclose  an error,  acknowledged  by  Landlord's
accountants (or found to have occurred in a judicial action),  of more than * in
the  computation  of the total amount of Operating  Expenses as set forth in the
statement  submitted by Landlord's  accountants  which is  challenged,  in which
event Landlord  shall pay the  reasonable  costs incurred by Tenant in obtaining
such audit (but  excluding  any such costs billed on a  contingency  fee basis).
Notwithstanding  the  pendency of any  dispute  over any  particular  statement,
Tenant  shall  continue  to pay  Landlord  the  amount of the  adjusted  monthly
installments of Rent determined by Landlord's  accountants  until the adjustment
has been determined to be incorrect as aforesaid. If it shall be determined that
any portion of the Operating  Expenses  were not properly  chargeable to Tenant,
then Landlord shall promptly credit or in or after the final Lease Year,  refund
the  appropriate sum to Tenant.  Delay by Landlord or Landlord's  accountants in
submitting  any  statement  contemplated  herein for any calendar year shall not
affect the  provisions  of this Section 4 or  constitute a waiver of  Landlord's
rights as set forth herein for said  calendar  year or any  subsequent  calendar
years during the Primary Lease Term and any extensions thereof.

         4.3 Rent. The Base Rent,  Tenant's  Share of Operating  Expense and all
other  amounts  due to be paid to  Landlord  under this Lease may be referred to
herein collectively as "Rent".

         4.4  Additional  Consideration.  As  Additional  Consideration  for the
Tenant's  entering the Lease for the  Premises,  Landlord will pay to Tenant the
amount of $* each calendar quarter commencing * and continuing each * thereafter
up to a total of $*; provided that on the date of each payment: (i) the Lease is
in full  force and  effect at the time of each  payment;  (ii)  Tenant has taken
possession  of the Premises and has commenced  payment of Rent;  (iii) Tenant is
not in monetary  default or material  non-monetary  default under the Lease; and
(iv) Tenant has not  assigned  the Lease or sublet any  interest in the Lease or
the  Premises  other  than to  Affiliates  of Tenant  (as  defined  below).  The
Additional  Consideration  is  personal to Tenant and may not be assigned to any
third party, nor shall it be for the benefit of any party other than Tenant.  An
"Affiliate"  as used  herein  shall  mean a company  that  controls  the  Tenant
corporation,  or is  controlled  by the Tenant  corporation  or is under  common
control with the Tenant corporation.

         5.   Security Deposit.

         5.1 The  later of the date the  Premises  are  Ready  for  Delivery  or
October 1, 2000,  Tenant shall  deposit with  Landlord the Security  Deposit set
forth in Section 1.9 as security for Tenant's  faithful  performance of Tenant's
obligations  under this Lease.  The  Security  Deposit must be delivered on such
date in good funds or by Letter of Credit as described in Section 5.2 below.  If
Tenant  provides  good  funds,  Tenant  shall  have the right at a later date to
deliver a Letter of Credit  complying with the requirements of Section 5.2 below
and after  acceptance  of such Letter of Credit,  Landlord  will return the good
funds  Security  Deposit.  If  Tenant  fails to pay Base  Rent or other  rent or
charges due hereunder, or otherwise is in default under this Lease, Landlord may
use, apply or retain all or any portion of said Security Deposit for the payment
of any amount due  Landlord  or to  reimburse  or  compensate  Landlord  for any
liability,  cost,  expense,  loss or damage  (including  attorneys'  fees) which
Landlord may suffer or incur by reason thereof.  If Landlord uses or applies all
or any  portion  of said  Security  Deposit,  Tenant  shall  within * days after
written  request  therefore  deposit monies with Landlord  sufficient to restore
said  Security  Deposit to the full amount  required  by this Lease.  If paid in
cash,  Landlord  shall  keep the  Security  Deposit  separate  from its  general
accounts in an interest  bearing account of Landlord's  choice with the interest
thereon payable to the Tenant at the expiration of the Lease;  provided  however
Landlord  shall be entitled to the interest on the Security  Deposit if Landlord
is  entitled  to the  Security  Deposit  pursuant  to the  terms of this  Lease.
Landlord shall,  within * days after the expiration of the Term hereof and after
Tenant has vacated the Premises,  return to Tenant (or, at Landlord's option, to
the last assignee,  if any, of Tenant's  interest  herein),  that portion of the
Security  Deposit,  and interest  thereon,  not used or applied by Landlord.  At
Landlord's  election,  Landlord may elect to have the  Security  Deposit held by
Landlord's  manager in a separate  security  deposit,  trust,  trustee or escrow
account  established  and  maintained  by such  manager  with respect to certain
security  deposits of tenants within the Building  Complex.  Unless Tenant is so
notified, (i) Landlord will hold the Security Deposit and be responsible for its
return;  and (ii) Tenant may request  return of the  Security  Deposit by giving
Landlord  written  notice in accordance  with the  provisions  of the Lease.  If
Landlord's  manager  holds the  Security  Deposit,  Landlord's  manager  will be
required  to agree  that in the event of a  dispute  over the  ownership  of the
Security Deposit,  the manager will not wrongfully withhold Landlord's true name
and  current  mailing  address  from  Tenant.  Landlord  may  deliver  the funds
deposited  herein by Tenant  to the  purchaser  of  Landlord's  interest  in the
Premises in the event such interest be sold,  and  thereupon,  Landlord shall be
discharged from further liability with respect to such deposit. If the claims of
Landlord exceed said deposit, Tenant shall remain liable for the balance of such
claims.

         5.2  Notwithstanding  anything to the contrary set forth in Section 5.1
above,  Tenant  has  requested  permission  to  provide  Landlord  with a clean,
unconditional,  irrevocable  letter  of  credit  on a form  and  from a  lending
institution  acceptable to Landlord in its reasonable discretion (the "Letter of
Credit") instead of a good funds Security  Deposit.  If Tenant elects to deliver
the Letter of Credit  instead of the good funds  Security  Deposit,  the initial
Letter of Credit shall be in an amount as then  required by the terms of Section
5.3. It is further understood and agreed, that no later than * days prior to the
expiration date of the initial Letter of Credit or renewal Letter of Credit,  as
the case may be, Tenant shall  present  Landlord with good funds or an extension
or renewal of the initial Letter of Credit or a substitute  Letter of Credit, in
the same  form from a  lending  institution  subject  to  Landlord's  reasonable
approval,  in the amount described herein, that shall be effective no later than
upon the  expiration of the initial  Letter of Credit and continue in effect for
at least a one-year period.  Any failure of Tenant to provide Landlord with good
funds or the extensions or renewals or substitute  Letter of Credit, as required
hereunder,  shall be deemed a default  by  Tenant  under the Lease and  Landlord
shall have the right  prior to  expiration  thereof,  to  present  any Letter of
Credit then in its possession for payment,  with the amounts received thereunder
to be held as the Security Deposit hereunder.

         5.3  Notwithstanding  the foregoing,  provided Tenant is not in default
under the  Lease,  the  Security  Deposit  shall be reduced by $* for the second
Lease Year and by $* for each succeeding  Lease Year until the Security  Deposit
has been  reduced to $*. No  earlier  than * days nor later than * days prior to
the end of the fifth Lease Year,  Tenant shall provide Landlord with a certified
statement of Tenant's net worth. If such statement  certifies Tenant's net worth
to be $* or greater, Tenant shall not be required to maintain a Security Deposit
for the remainder of the Term. If such statement certifies Tenant's net worth to
be less  than  $*,  Tenant  shall  maintain  a  Security  Deposit  of $* for the
remainder of the Term of the Lease, as it may be extended.

         6.   Use.

         6.1  Permitted Use.

                  (a)  Tenant  shall use and occupy  the  Premises  only for the
Permitted Use set forth in Section 1.11 and for no other  purpose.  Tenant shall
not use or permit the use of the Premises in a manner that is unlawful,  creates
waste,  odor,  or a nuisance,  or that disturbs  owners and/or  occupants of, or
causes damage to the Premises, Building or neighboring premises or properties.

                  (b) Landlord  hereby  agrees to not  unreasonably  withhold or
delay its  consent  to any  written  request by Tenant,  Tenant's  assignees  or
subtenants, and by prospective assignees and subtenants of Tenant, its assignees
and  subtenants,  for a  modification  of said Permitted Use so long as the same
will not impair the structural  integrity of the improvements on the Premises or
in the  Building or the  mechanical  or  electrical  systems  therein,  does not
conflict with uses by other tenants, is not significantly more burdensome to the
Premises  or the  Building  and  the  improvements  thereon,  and  is  otherwise
permissible  pursuant to  Applicable  Laws and  pursuant  to this  Section 6. If
Landlord elects to withhold such consent,  Landlord shall within * business days
after such  request  give a written  notification  of same,  which  notice shall
include an explanation of Landlord's reasonable objections to the change in use.

         7.   Hazardous Substances.

         7.1 Consent.  Tenant shall not cause or permit any Hazardous Substances
to be used, stored,  generated or disposed of on, in or about the Premises,  the
Building,  or the Building Complex by Tenant,  or any of its agents,  employees,
representatives, contractors, suppliers, customers, subtenants, concessionaires,
licensees  unless Tenant shall have received  Landlord's  prior written consent,
which  Landlord  may  withhold  or at any time  revoke  in its sole  discretion.
Landlord  warrants that to the best of Landlord's actual current knowledge as of
the date hereof,  there are no Hazardous Substances located in the Premises that
violate Hazardous Substance laws by their presence. Further, between the date of
this Lease and the Lease  Commencement  Date,  Landlord  agrees that it will not
knowingly  authorize  its  contractor  to install  into the  Premises  Hazardous
Substances that violate Hazardous Substance laws by their presence.

         7.2 Use.  Notwithstanding  the  foregoing,  Tenant may  store,  use and
dispose of de minimis amounts of office and cleaning  products which may contain
small and/or  unregulated  amounts of such  Hazardous  Substances  in the normal
course of Tenant's Permitted Use of the Premises, and Tenant covenants to comply
with all applicable laws, rules, regulations and ordinances governing same.

         7.3  Indemnification.  Tenant shall indemnify and defend Landlord,  and
hold Landlord  harmless,  from and against any and all claims,  damages,  fines,
judgments,  penalties,  costs, expenses,  liabilities, or losses relating to any
violation by Tenant of any Environmental Law (as hereinafter defined) or of this
Section 7 (including,  without limitation,  a decrease in value of the Premises,
damages caused by loss or  restriction of rentable or usable space,  and any and
all sums paid for settlement of claims,  attorneys'  fees,  consultant fees, and
expert fees) incurred by or asserted  against  Landlord  arising during or after
the Term of this  Lease  as a result  thereof.  This  indemnification  includes,
without  limitation,  any and all costs incurred because of any investigation of
the site or any cleanup,  removal,  testing or restoration mandated or conducted
by or on behalf of any federal, state, or local agency or political subdivision.
Without limitation of the foregoing, if Tenant causes or permits the presence of
any Hazardous Substance in the Premises,  the Building,  or the Building Complex
that results in any  contamination,  Tenant shall promptly,  at is sole expense,
take any and all necessary or  appropriate  actions to return the Premises,  the
Building  and the  Building  Complex  to the  condition  existing  prior  to the
presence of any such Hazardous  Substance.  Tenant shall first obtain Landlord's
written  approval  for the remedial  action  which is being  proposed by Tenant,
which approval shall not be unreasonably withheld.

         7.4 Hazardous  Substance.  Hazardous Substance means any substance that
is regulated by any local government,  the State of Colorado,  the United States
government, or any agency, authority and/or instrumentality thereof and includes
any and all  materials  or  substances  that are defined as  "hazardous  waste",
"extremely  hazardous  waste",  or  a  "hazardous  substance"  pursuant  to  any
Environmental  Law.  Hazardous  Substance  includes  but  is not  restricted  to
petroleum  and  petroleum  byproducts,  asbestos,  explosives,   polychlorinated
biphenyls ("PCBs") and infectious waste.

         7.5 Environmental Laws. Environmental Laws means all federal, state and
local laws, including statutes,  regulations, and requirements,  relating to the
discharge  of air  pollutants,  water  pollutants  or  process  waste  water  or
otherwise relating to the environment or Hazardous  Substances,  including,  but
not limited to, the Federal Clean Water Act, the Federal  Resource  Conservation
and Recovery Act of 1976, the Federal Comprehensive Environmental Responsibility
Cleanup and Liability Act of 1980,  regulations of the Environmental  Protection
Agency,  regulations of the Nuclear  Regulatory  Agency,  and regulations of any
state department of natural resources or state environmental  protection agency,
as amended or  supplemented  from time to time,  now or at any time hereafter in
effect.

         8.   Maintenance,  Repairs,  Utility Installations,  Trade Fixtures and
Alterations.

         8.1  By Tenant.

                  (a) Subject to the  provisions  of Sections  8.2,  10, and 15,
Tenant  shall,  at Tenant's  sole cost and  expense  and at all times,  keep the
Premises and every part thereof in good order,  condition and repair (whether or
not such portion of the Premises requiring repair, or the means of repairing the
same,  are  reasonably or readily  accessible to Tenant,  and whether or not the
need for such  repairs  occurs as a result of Tenant's  use,  any prior use, the
elements  or the  age of  such  portion  of the  Premises),  including,  without
limiting  the  generality  of  the   foregoing,   all  equipment  or  facilities
specifically  serving the  Premises  and located  within the  Premises,  such as
plumbing  (excluding  main utility lines serving more space than the  Premises),
electrical lighting facilities, boilers, fired or unfired pressure vessels, fire
hose  connections if within the Premises,  fixtures,  interior  walls,  interior
surfaces of exterior walls, ceilings,  floors,  windows, doors, plate glass, and
skylights,  and subject to Section 8.1 (b) below heating,  air  conditioning and
ventilating  systems,  but excluding any items which are the  responsibility  of
Landlord pursuant to Section 8.2 below.  Tenant, in keeping the Premises in good
order,  condition  and  repair,  shall  exercise  and perform  good  maintenance
practices  including,  without limitation,  providing janitorial services to the
Premises  substantially  equivalent  to those  attached  hereto  as  Exhibit  I.
Tenant's obligations shall include  restorations,  replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair.

                  (b) Subject to  reimbursement  under the provisions of Section
4,  Landlord  shall  procure a contract  for  maintenance  of the  heating,  air
conditioning and ventilating systems for the Building Complex.

                  (c) If Tenant fails to perform Tenant's obligations under this
Section 8.1,  Landlord may enter upon the Premises  after * days' prior  written
notice to Tenant  (except in the case of an  emergency,  in which case no notice
shall be required),  perform such  obligations on Tenant's  behalf,  and put the
Premises in good order,  condition and repair in which event  Landlord  shall be
entitled  to charge  Tenant  with  Landlord's  cost plus * due from  Tenant upon
presentation of a bill therefor.

                  (d)  Notwithstanding   the  foregoing,   Tenant  may  contract
directly  with  Landlord to perform  Tenant's  obligations  set forth under this
Section 8.1 which contract shall set forth the terms and conditions  under which
the Landlord or its manager will perform Tenant's obligations. The terms of such
performance  shall be fully included in and governed by the contract between the
parties and shall not effect  Landlord or Tenant's  rights or obligations  under
this Lease.

         8.2 By Landlord.  Subject to the  provisions  of Sections  2.2, 4.2, 6,
8.1,  9, 10,  11 and 15,  and  except  for  damage  caused by any  negligent  or
intentional  act or omission  of Tenant,  its agents,  employees,  suppliers  or
invitees, in which event Tenant shall repair the damage, Landlord, shall keep in
good order,  condition and repair the  foundations,  exterior walls,  structural
condition of interior  bearing  walls,  exterior  roof,  fire  sprinkler  and/or
standpipe  and hose (if  located in the Common  Areas) or other  automatic  fire
extinguishing  systems  including fire alarm and/or smoke detention  systems and
equipment, fire hydrants, the sewer line, utility main lines in the Common Areas
and any main  utility  lines  which are located in the  Premises  but serve more
space  than  the  Premises,   parking  lots,  walkways,   parkways,   driveways,
landscaping,  fences, signs and utility systems serving the Common Areas and all
parts of the Common Areas as well as providing the services for which there is a
Common Area  Operating  Expense  pursuant to Section 4.2.  Landlord shall not be
obligated to paint the interior surfaces of exterior walls nor shall Landlord be
obligated to maintain,  repair or replace  windows,  doors or plate glass of the
Premises. Tenant shall have no right to make repairs to the Building or Building
Complex at Landlord's expense.

         8.3  Utility Installations, Trade Fixtures, Alterations.

                  (a)   Definitions,   Consent   Required.   The  term  "Utility
Installations"  is used in this Lease to refer to all air lines,  power  panels,
electrical  distribution,  security,  fire  protection  systems,  communications
systems, lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing,  and fencing in, on, or about the Premises.  The term "Trade Fixtures"
shall mean Tenant's  machinery and equipment  which can be removed without doing
material  damage  to  the  Premises.  The  term  "Alterations"  shall  mean  any
modification of the  improvements on the Premises which are provided by Landlord
under  the  terms of this  Lease,  other  than  Utility  Installations  or Trade
Fixtures. "Tenant-Owned Alterations and/or Utility Installations" are defined as
Alterations  and/or Utility  Installations made by Tenant that are not yet owned
by Landlord  pursuant to Section  8.4(a).  Tenant shall not make nor cause to be
made any  Alterations  or  Utility  Installations  in,  on,  under or about  the
Premises without  Landlord's prior written consent.  Tenant may,  however,  make
non-structural  Utility Installations to the interior of the Premises (excluding
the roof)  without  Landlord's  consent but upon notice to Landlord,  so long as
they are not visible from the outside of the Premises,  are not a water fixture,
do not involve puncturing, relocating or removing the roof or any existing walls
or changing or interfering with the fire sprinkler or fire detection  systems or
the heating,  air  conditioning  and ventilating  systems,  and the cost thereof
during the Term of this Lease as extended does not exceed * per  occurrence or a
cumulative total of *; after which Tenant must seek Landlord's  consent for such
Alterations  and/or  Utility  Installations.  Under no  circumstances  is Tenant
allowed to add water fixtures to the Premises.

                  (b) Consent.  Any  Alterations or Utility  Installations  that
Tenant shall desire to make and which require the consent of the Landlord  shall
be presented to Landlord in written form with detailed plans. All consents given
by  Landlord,  whether by virtue of  Section  8.3(a) or by  subsequent  specific
consent,  shall be deemed  conditioned upon: (i) Tenant acquiring all applicable
permits required by governmental  authorities;  (ii) the furnishing of copies of
such  permits  together  with a copy of the  plans  and  specifications  for the
Alteration or Utility Installation to Landlord prior to commencement of the work
thereon;  and (iii) the compliance by Tenant with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility  Installations by
Tenant  during  the  Term  of  this  Lease  shall  be  completed  in a good  and
workmanlike manner,  with good and sufficient  materials of at least the quality
of the original  installations  in the Premises,  and be in compliance  with all
Applicable Requirements,  and be performed by qualified and licensed workers who
have provided Landlord with evidence of insurance  required by Landlord.  Tenant
shall promptly upon completion  thereof furnish Landlord with as-built plans and
specifications  therefor.  Landlord  may,  (but  without  obligation  to do  so)
condition its consent to any requested  Alteration or Utility  Installation that
costs * or more upon Tenant  providing  Landlord with a lien and completion bond
in an amount equal to * times the estimated  cost of such  Alteration or Utility
Installation.

                  (c) Lien  Protection.  Excluding  lien  claims  arising out of
Landlord's  Work,  Tenant  shall pay when due all claims for labor or  materials
furnished  to or for Tenant at or for use on the  Premises,  which claims are or
may be secured by any mechanic's or  materialmen's  lien against the Premises or
any interest  therein.  Tenant shall give  Landlord not less than * days' notice
prior to the  commencement  of any work in,  on,  or  about  the  Premises,  and
Landlord shall have the right to post notices of non-responsibility in or on the
Premises  as  provided  by law.  If Tenant  shall,  in good  faith,  contest the
validity  of any such lien,  claim or demand,  then  Tenant  shall,  at its sole
expense,  defend and protect itself,  Landlord and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof against the Landlord or the Premises. If Landlord
shall require,  Tenant shall furnish to Landlord a surety bond  satisfactory  to
Landlord in an amount  equal to * the amount of such  contested  lien,  claim or
demand, indemnifying Landlord against liability for the same, as required by law
for the holding of the  Premises  free from the effect of such lien or claim or,
in the alternative,  if approved by Landlord's  lender,  if necessary,  a surety
bond  which  complies  with the then  applicable  requirements  of the  Colorado
statutes governing mechanic's liens. In addition, Landlord may require Tenant to
pay  Landlord's  attorneys'  fees and costs in  participating  in such action if
Landlord  shall  decide it is to its best  interest  to do so, if Tenant has not
caused the Premises to be released from the lien in the manner  required by then
applicable Colorado statutes governing mechanic's liens.

         8.4  Ownership, Removal, Surrender, and Restoration.

                  (a)  Ownership.  Subject to Landlord's  right to require their
removal and to cause Tenant to become the owner thereof as hereinafter  provided
in this Section 8.4, all Tenant-Owned Alterations and Utility Installations made
to the  Premises by Tenant  shall be the  property  of and owned by Tenant,  but
considered a part of the Premises.  Landlord may, at any time and at its option,
elect in a writing  delivered to Tenant to be the owner of all or any  specified
part of the Tenant-Owned Alterations and Utility Installations. Unless otherwise
instructed per Section 8.4(b) hereof,  all Tenant-Owned  Alterations and Utility
Installations  shall,  at the  expiration or earlier  termination of this Lease,
become the property of Landlord and remain upon the Premises and be  surrendered
with the Premises by Tenant.

                  (b) Removal. Unless otherwise agreed in writing,  Landlord may
require that any or all  Tenant-Owned  Alterations or Utility  Installations  be
removed by the expiration or earlier termination of this Lease,  notwithstanding
that their  installation  may have been  consented to by Landlord.  Landlord may
require  the  removal  at  any  time  of all or  any  part  of any  Tenant-Owned
Alterations  or Utility  Installations  made  without  the  required  consent of
Landlord. Tenant shall be obligated to repair all damage caused by such removal.
If Tenant  desires  Landlord  to decide at the time Tenant  requests  Landlord's
consent to a Tenant-Owned  Alteration or Utility  whether or not Tenant shall be
obligated to remove same upon  expiration or  termination  of the Lease,  Tenant
shall  specifically  request in writing  that  Landlord  make such  decision and
Landlord will promptly respond to Tenant with its decision.

                  (c) Surrender/Restoration. Tenant shall surrender the Premises
by the end of the last day of the Lease Term or any  earlier  termination  date,
clean and free of debris and in good  operating  order,  condition  and state of
repair,  ordinary  wear and tear  excepted.  Ordinary  wear and tear  shall  not
include  any damage or  deterioration  that would  have been  prevented  by good
maintenance  practice or by Tenant  performing all of its obligations under this
Lease.  Except as  otherwise  agreed  or  specified  herein,  the  Premises,  as
surrendered,  shall  include  the  Alterations  and Utility  Installations.  The
obligation  of Tenant shall  include the repair of any damage  occasioned by the
installation,  maintenance or removal of Tenant's Trade  Fixtures,  furnishings,
equipment,  and  Tenant-Owned  Alterations  and Utility  Installations,  and the
removal,  replacement,  or  remediation  of any soil,  material or ground  water
contaminated by Tenant, all as may then be required by Applicable  Requirements.
Tenant's Trade Fixtures shall remain the property of Tenant and shall be removed
by Tenant  subject to its obligation to repair and restore the Premises per this
Lease. Any Trade Fixtures, Tenant-Owned Alterations and/or Utility Installations
not removed upon the expiration of this Lease shall be deemed  abandoned and may
be disposed of by  Landlord,  as Landlord  may  determine  appropriate,  without
further  notice to Tenant.  Tenant shall pay  Landlord all expenses  incurred in
connection with such items including, but not limited to, the costs of repairing
any damage to the Premises caused by removal of such items.  Tenant's obligation
hereunder shall survive the expiration or other termination of the Lease.

         9.   Insurance; Indemnity.

         9.1 Payment of Premiums.  The cost of the  premiums  for the  insurance
policies  maintained  by  Landlord  under this  Section 9 shall be an  Operating
Expense pursuant to Section 4.2 hereof.  Premiums for policy periods  commencing
prior to, or  extending  beyond,  the Term of this Lease  shall be  prorated  to
coincide with the corresponding Commencement Date or Expiration Date.

         9.2  Liability Insurance.

                  (a) Carried by Tenant.  Tenant  shall obtain and keep in force
during the Term of this Lease a Commercial General Liability policy of insurance
protecting Tenant,  Landlord and any Lender(s) whose names have been provided to
Tenant in writing (as  additional  insureds)  against  claims for bodily injury,
personal injury and property damage based upon,  involving or arising out of the
ownership,  use,  occupancy  or  maintenance  of  the  Premises  and  all  areas
appurtenant  thereto.  Such insurance shall be on an occurrence  basis providing
single  limit  coverage  in an  amount  not less than * per  occurrence  with an
"Additional  Insured-Managers or Landlords of Premises" endorsement.  The policy
shall not contain any  intra-insured  exclusions as between  insured  persons or
organizations, but shall include coverage for liability assumed under this Lease
as an "insured contract" for the performance of Tenant's  indemnity  obligations
under this  Lease.  The limits of said  insurance  required  by this Lease or as
carried by Tenant shall not, however,  limit the liability of Tenant nor relieve
Tenant of any obligation hereunder.  All insurance to be carried by Tenant shall
be  primary  to and not  contributory  with any  similar  insurance  carried  by
Landlord,  whose  insurance  shall  be  considered  excess  insurance  only.  In
addition,  Tenant shall maintain workers' compensation  insurance as is required
by state law.

                  (b) Carried By Landlord.  Subject to reimbursement of premiums
as described in Section 9.1,  Landlord shall also maintain  liability  insurance
described in Section  9.2(a) above in such amounts,  from such  companies and on
such terms and  conditions as Landlord deems  appropriate  from time to time, in
addition  to and not in lieu of, the  insurance  required  to be  maintained  by
Tenant. Tenant shall not be named as an additional insured therein.

         9.3  Property  Insurance.  Subject  to  reimbursement  of  premiums  as
described in Section 9.1,  Landlord shall maintain  property damage insurance on
such  portions  of the  Building  and the  Common  Areas from time to time which
Landlord  has the  obligation  to maintain  and repair  under this Lease,  above
foundation  walls,  insuring  against  loss or damage by fire or other  casualty
covered  by a  so-called  "special  form"  policy,  in such  amounts,  and  from
companies and on such terms and  conditions as Landlord deems  appropriate  from
time to time. Tenant-Owned Alterations and Utility Installations, Trade Fixtures
and Tenant's  personal  property shall be insured by Tenant  pursuant to Section
9.4.  Landlord may also obtain and keep in force during the Term of this Lease a
policy or policies in the name of  Landlord,  with loss  payable to Landlord and
any Lender(s), insuring the loss of the full rental and other charges payable by
all  tenants  of the  Building  to  Landlord  for one year  (including  all Real
Property Taxes, insurance costs, all Operating Expenses and any scheduled rental
increases).  Tenant  shall pay for any increase in the premiums for the property
insurance of the Building and for the Common Areas if said increase is caused by
Tenant's acts, omissions, use or occupancy of the Premises.

         9.4 Tenant's Property Insurance. Subject to the requirements of Section
9.5,  Tenant at its cost shall either by separate policy or, by endorsement to a
policy already carried,  maintain insurance coverage on all of Tenant's personal
property,  Trade Fixtures and Tenant-Owned Alterations and Utility Installations
in, on, or about the Premises similar in coverage to that carried by Landlord as
the Insuring Party under Section 9.3. Such insurance  shall be full  replacement
cost coverage.  The proceeds from any such insurance shall be used by Tenant for
the  replacement of personal  property and the restoration of Trade Fixtures and
Tenant-Owned Alterations and Utility Installations.  Upon request from Landlord,
Tenant shall provide  Landlord with written  evidence that such  insurance is in
force.  Insurance  required  of  Tenant  hereunder  shall be in  companies  duly
licensed to transact  business in the state where the Premises are located,  and
maintaining during the policy term a "General  Policyholders Rating" of at least
B+, V, or such other rating as may be required by a Lender,  as set forth in the
most current issue of "Best's Insurance Guide." Tenant shall not do or permit to
be done anything which shall  invalidate the insurance  policies  referred to in
this Section 9. Tenant shall cause to be delivered to Landlord, within seven (7)
days after the  Delivery  Date  evidence  of the  existence  and amounts of, the
insurance  required  under  Section  9.2(a)  and 9.4.  No such  policy  shall be
cancelable  or subject to  modification  except  after  thirty  (30) days' prior
written  notice to Landlord.  Tenant shall at least ten (10) Business Days prior
to the expiration of such policies,  furnish  Landlord with evidence of renewals
or "insurance  binders"  evidencing renewal thereof,  or Landlord may order such
insurance  and charge the cost thereof to Tenant,  which amount shall be payable
by Tenant to Landlord upon demand.

         9.5 Waiver.  Tenant and  Landlord  each hereby  release and relieve the
other  (but not their  contractors),  and waive  their  entire  right to recover
damages  (whether in contract or in tort) against the other,  for loss or damage
to their property or for any business interruption arising out of or incident to
the  perils  to the  extent  such loss or damage  or  business  interruption  is
coverable  by a standard  or special  form  policy  regardless  of whether  such
insurance is carried or not, or if so carried,  payable to or protects  Landlord
or Tenant or both.  The  effect of such  releases  and  waivers  of the right to
recover  damages  shall not be  limited by the  amount of  insurance  carried or
required, or by any deductibles applicable thereto. Landlord and Tenant agree to
have their  respective  insurance  companies  issuing  property damage insurance
waive any right to subrogation  that such companies may have against Landlord or
Tenant, as the case may be, so long as the insurance is not invalidated thereby.

         9.6  Indemnity.

                  (a)  Subject  to Section  9.5 above and except for  Landlord's
willful  misconduct,  or that of Landlord's  agents or  employees,  Tenant shall
indemnify,  protect,  defend and hold  harmless the  Premises,  Landlord and its
agents,  employees,  Landlord's  master or ground lessor  members,  partners and
Lenders,  from and  against any and all claims,  loss of rents  and/or  damages,
costs, liens, judgments, penalties, loss of permits, attorneys' and consultants'
fees,  expenses and/or liabilities  arising out of, involving,  or in connection
with, the occupancy of the Premises by Tenant, the conduct of Tenant's business,
any act, omission or neglect of Tenant,  its agents,  contractors,  employees or
invitees,  and out of any  Default or breach by Tenant in the  performance  in a
timely  manner of any  obligation  on Tenant's  part to be performed  under this
Lease.  The  foregoing  shall  include,  but not be limited  to, the  defense or
pursuit of any claim or any action or proceeding  involved therein,  and whether
or not (in the case of claims made against Landlord) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Landlord by reason
of any of the foregoing  matters,  Tenant upon notice from Landlord shall defend
the same at  Tenant's  expense by counsel  selected  by Tenant  and/or  Tenant's
insurer, which counsel is reasonably satisfactory to Landlord and Landlord shall
cooperate  with Tenant in such  defense.  Landlord  need not have first paid any
such claim in order to be so  indemnified.  The provisions of this Section shall
survive the expiration or termination of this Lease.

                  (b) Subject to Section  9.5 above and  Section 9.7 below,  and
except  for  Tenant's,  its  agents  or  employees  negligence,  Landlord  shall
indemnify  and save Tenant,  its agents and  employees  harmless of and from all
liabilities,  losses,  damages,  costs or expenses,  including  attorneys  fees,
fines,  penalties,  judgments  or  obligations  that the Tenant  may  sustain on
account of bodily  injuries to third parties  lawfully on the Common Areas where
the injuries  are caused by the wilful  misconduct  of  Landlord,  its agents or
employees.  The  provisions  of this Section  shall  survive the  expiration  or
termination of this Lease.

         9.7 Exemption of Landlord from Liability.  Landlord shall not be liable
for injury or damage to the  goods,  wares,  merchandise  or other  property  of
Tenant,  Tenant's  employees,  contractors,  invitees,  customers,  or any other
person in or about the Premises,  excluding  bodily injury claims,  whether such
damage or injury is caused by or results  from fire,  steam,  electricity,  gas,
water or rain or from the  breakage,  leakage,  obstruction  or other defects of
pipes,  fire  sprinklers,  wires,  appliances,  plumbing,  air  conditioning  or
lighting  fixtures,  or from any other cause,  excluding  bodily injury  claims,
whether said injury or damage results from conditions  arising upon the Premises
or upon other  portions of the Building of which the  Premises are a part,  from
other sources or places,  and  regardless of whether the cause of such damage or
injury or the means of repairing the same is accessible or not.  Landlord  shall
not be liable  for any  damages  arising  from any act or  neglect  of any other
tenant of Landlord nor from the failure by Landlord to enforce the provisions of
any other lease in the Building. Notwithstanding Landlord's negligence or breach
of this Lease,  Landlord  shall under no  circumstances  be liable for injury to
Tenant's  business  or for any loss of income or  profit  therefrom,  or for any
consequential  damages  of  Tenant.  Notwithstanding  anything  to the  contrary
contained herein,  Landlord's liability under this Lease shall be limited to its
interest in the Building.

         10.  Casualty and Restoration of Premises.

         10.1  Damage  Before the  Commencement  Date.  If the  Premises  or the
Building  shall be damaged by fire or other casualty after the Delivery Date but
before the Landlord has substantially completed Landlord's Work, the Lease shall
not be terminated and Landlord shall cause the same to be repaired to the extent
of  Landlord's  Work set forth in  Exhibit C hereof  and  Tenant  shall,  at its
expense, replace or fully repair Tenant's Work.

         10.2 Total  Damage.  If, after the date of  substantial  completion  of
Landlord's  Work,  the Premises or the  Building  shall be so damaged by fire or
other  casualty  so as to render the  Premises  wholly  unuseable  by Tenant (in
Landlord's  reasonable  discretion)  and if such damage shall be so great that a
competent  architect,  in good  standing,  selected by Landlord shall certify in
writing to Landlord and Tenant within * days of said casualty that the Premises,
with the exercise of reasonable diligence,  cannot be repaired to the extent the
Premises  are  useable by Tenant for  general  office use and the repairs to the
Building,  to the extent of Landlord's Work, have been  substantially  completed
within * days from the date of the casualty (subject to delays beyond Landlord's
reasonable control),  then this Lease shall cease and terminate from the date of
occurrence of such damage and Tenant shall,  within * days after notice thereof,
surrender to Landlord the Premises and all interest  therein under this Lease or
otherwise  and  Landlord  may reenter and take  possession  of the  Premises and
remove Tenant therefrom. Tenant shall pay Rent, duly apportioned, up to the time
of such termination of this Lease so long as Tenant  surrendered the Premises to
Landlord  within  said * days;  failing  which  Tenant  shall  pay Rent from the
expiration  of said * day  period  until  the  date  of  Tenant's  vacation  and
surrender  of the  Premises.  If,  however,  the damage  shall be such that said
architect  shall certify  within said * day period that the Premises can be made
tenantable  within  said * day  period  (subject  to  delays  beyond  Landlord's
reasonable control), then, except as hereinafter provided, Landlord shall repair
the damage so done with all  reasonable  speed (to the extent of the  Landlord's
Work set forth in Exhibit C hereof).

         10.3 Partial  Damage.  If, after the date of substantial  completion of
Landlord's  Work,  the  Premises  shall  be  slightly  damaged  by fire or other
casualty,  but not so as to render  the same  wholly  unuseable  by  Tenant  (in
Landlord's  reasonable  discretion)or  to require a repair period in excess of *
days (subject to delays beyond Landlord's  reasonable control),  then, Landlord,
after receiving  notice in writing of the occurrence of the casualty,  except as
hereafter  provided,  shall  cause the same to be  repaired to the extent of the
damage so done (to the  extent  of the  Landlord's  Work set forth in  Exhibit C
hereof) with  reasonable  promptness.  If the estimated  repair period exceeds *
days  (subject  to  delays  beyond  Landlord's  reasonable  control),  then  the
provisions  of Section  10.2  shall  control  notwithstanding  the fact that the
Premises are not wholly unuseable.

         10.4  Building  Damage.  In case the  Building  throughout  shall be so
injured or damaged after the date of substantial  completion of Landlord's Work,
whether by fire or otherwise  (though said  Premises may not be affected,  or if
affected),  that can be repaired  within said * days  (subject to delays  beyond
Landlord's reasonable control),  that, within * days after the happening of such
injury, Landlord shall decide not to reconstruct or rebuild said Building, then,
notwithstanding  anything  contained  herein  to the  contrary,  upon  notice in
writing to that effect  given by Landlord to Tenant  within said * days,  Tenant
shall within * days after notice  thereof,  surrender  the Premises to Landlord,
pay the Rent,  properly  apportioned up to the time of such  termination of this
Lease so long as Tenant  surrenders the Premises to Landlord within said * days;
failing  which  Tenant shall pay Rent from the  expiration  of said * day period
until the date of Tenant's  vacation and surrender of the  Premises.  This Lease
shall  terminate  from the date of delivery  of said  written  notice,  and both
parties  hereto  shall  be  freed  and  discharged  of all  further  obligations
hereunder.

         10.5 Rent  Abatement.  Provided  that the  casualty is not the fault of
Tenant, Tenant's agents,  servants, or employees,  Tenant's Rent (Base Rent plus
Tenants  Share of  Operating  Expenses)  shall  abate  during any such period of
Landlord's  repair or  restoration,  in the same proportion that the part of the
Premises rendered unuseable to the Tenant (in Landlord's reasonable  discretion)
bears to the whole.

         10.6  Tenant's  Obligation.  In the event the Lease is not  terminated,
Tenant shall, at its expense, replace or fully repair Tenant's personal property
and Tenant's Work, Alterations and Utilities installed by Tenant in the Premises
existing  on the date of the  occurrence  of the  casualty.  Tenant  shall fully
cooperate with Landlord in removing  Tenant's  personal  property and any debris
from the Premises to facilitate making of repairs.

         10.7 Late Term Damage. Notwithstanding anything set forth herein to the
contrary,  if at any time the Premises are damaged by fire or other  casualty in
excess of * of the floor area and there is less than one (1) year  remaining  on
the then  current  Term of the Lease  (including  any Options to Extend that had
been  exercised in accordance  with Section 50 below),  then either  Landlord or
Tenant  shall have the right to  terminate  this  Lease.  If either  Landlord or
Tenant elect to terminate  the Lease  pursuant to this  Section  10.7,  it shall
advise the other party in writing within * days of said casualty of its election
to terminate and within  fourteen (14) days after notice  thereof,  Tenant shall
surrender  the Premises to Landlord,  pay the Rent properly  apportioned  to the
date of the  casualty  so long as Tenant  surrenders  the  Premises  to Landlord
within said fourteen (14) days period;  failing which Tenant shall pay rent from
the  expiration  of said * day period  until the date of Tenant's  vacation  and
surrender of the Premises.  If Landlord  terminates the Lease in accordance with
this  Section,  but  Tenant has an Option to Extend the Term of the Lease at the
end of the  then-current  Term in accordance with Section 50 below (which Option
has not yet been  exercised  nor waived in accordance  with Section 50),  Tenant
shall have the right to give notice to  Landlord  that Tenant is willing to (and
by such notice does) exercise its Option,  in which event the Lease shall not be
terminated  under this  Section and this Lease shall  continue in full force and
effect (unless  otherwise  terminated in accordance  with other Sections of this
Article 10) and Landlord and Tenant shall repair the Premises as may be required
by this Article 10.

         11.  Real Property Taxes.

         11.1 Payment of Taxes.  Landlord shall pay the Real Property  Taxes, as
defined in Section  11.2,  applicable  to the  Building  Complex,  and except as
otherwise  provided in Section  11.3,  any such amounts shall be included in the
calculation of Common Area Operating  Expenses in accordance with the provisions
of Section 4.2.

         11.2 Real  Property  Tax  Definition.  As used  herein,  the term "Real
Property  Taxes"  shall  include  any  form of real  estate  tax or  assessment,
general,  special,  ordinary or extraordinary,  and any license fee,  commercial
rental tax,  improvement  bond or bonds,  levy or tax (other  than  inheritance,
personal  income or estate  taxes)  imposed  upon the  Building  Complex  by any
authority having the direct or indirect power to tax,  including any city, state
or federal  government,  or any school,  agricultural,  sanitary,  fire, street,
drainage,  or other improvement  district  thereof,  levied against any legal or
equitable  interest of Landlord in the Building  Complex or any portion thereof,
Landlord's right to rent or other income therefrom,  and/or Landlord's  business
of leasing the Premises  (other than  Landlord's  income  taxes,  excess  profit
taxes, estate tax, inheritance tax or similar taxes on Landlord's business). The
term "Real Property Taxes" shall also include any tax, fee, levy,  assessment or
charge,  or any  increase  therein,  imposed by reason of events  occurring,  or
changes  in  Applicable  Law  taking  effect,  during  the  Term of this  Lease,
including but not limited to a change in the  ownership of the Building  Complex
or  in  the  improvements   thereon,   the  execution  of  this  Lease,  or  any
modification,  amendment or transfer thereof, and whether or not contemplated by
the Landlord or Tenant.  In  calculating  Real  Property  Taxes for any calendar
year,  the Real Property Taxes for any real estate tax year shall be included in
the  calculation  of Real  Property  Taxes for such calendar year based upon the
number of days which such calendar year and tax year have in common.

         11.3 Additional Improvements. Operating Expenses shall not include Real
Property Taxes specified in the tax assessor's  records and work sheets as being
caused by  additional  improvements  placed upon the  Building  Complex by other
tenants or by  Landlord  for the  exclusive  enjoyment  of such  other  tenants.
Notwithstanding  Section 11.1 hereof,  Tenant shall, however, pay to Landlord at
the time  Operating  Expenses are payable under Section 4.2, the entirety of any
increase in Real  Property  Taxes if assessed  solely by reason of  Alterations,
Trade Fixtures or Utility Installations placed upon the Premises by Tenant or at
Tenant's request.

         11.4 Tenant's  Taxes.  Tenant shall pay prior to delinquency  all taxes
assessed   against  and  levied  upon   Tenant-Owned   Alterations  and  Utility
Installations,  Trade Fixtures, furnishings, equipment and all personal property
of  Tenant  contained  in the  Premises  or stored  within  the  Building.  When
possible,   Tenant  shall  cause  its   Tenant-Owned   Alterations  and  Utility
Installations,  Trade  Fixtures,  furnishings,  equipment and all other personal
property  to be  assessed  and  billed  separately  from  the real  property  of
Landlord.  If any of Tenant's  said property  shall be assessed with  Landlord's
real  property,  Tenant shall pay Landlord  the taxes  attributable  to Tenant's
property  within * days after receipt of a written  statement  setting forth the
taxes applicable to Tenant's property. In addition,  Tenant shall pay all taxes,
including,  without  limitation,  workers'  compensation,   general  license  or
franchise taxes and rent taxes, if any, which may be required for the conduct of
Tenant's business.

         12.  Utilities.Tenant shall pay directly for all utilities and services
supplied to the Premises,  including but not limited to electricity,  telephone,
security,  gas and  cleaning of the Premises as described in Section 8.1 herein,
together  with any taxes  thereon.  If any such  utilities  or services  are not
separately metered to the Premises or separately billed to the Premises,  Tenant
shall pay to Landlord a reasonable  proportion  to be  determined by Landlord of
all such charges  jointly metered or billed with other premises in the Building,
in the  manner  and within the time  periods  set forth in  Section  4.2(c).  In
addition,  Tenant shall reimburse  Landlord for the reasonable costs incurred by
Landlord in  providing  services  which are shared by more than one tenant after
ordinary business hours, including, without limitation, the costs for materials,
additional  wear and tear on  equipment,  utility  charges and labor  (including
fringe  benefits and  overhead  costs).  Computation  for  Landlord's  costs for
providing  such  services  will be made by  Landlord's  engineer  or  Landlord's
representative, based on such engineer's survey of Tenant's excess usage.

         13.  Assignment and Subletting.

         13.1  Landlord's  Consent.  Tenant shall neither sublet any part of the
Premises  nor assign  this Lease or any  interest  herein  without  the  written
consent of Landlord first being obtained, which consent, as to any subletting of
less than * of the Premises,  will not be unreasonably  withheld  provided that:
(i) Tenant has complied with the applicable provisions of Section 13.3 below and
Landlord  has  declined to exercise  its rights  thereunder;  (ii) the  proposed
subtenant or assignee is engaged in a business and the Premises  will be used in
a manner  which is in keeping  with the then  standards of the Building and does
not conflict with any exclusive  use rights  granted to any other tenant;  (iii)
the proposed  subtenant or assignee has reasonable  financial  worth in light of
the  responsibilities  involved and Tenant  shall have  provided  Landlord  with
reasonable evidence thereof;  (iv) Tenant is not in monetary default or material
non-monetary  default  hereunder  at the  time it  makes  its  request  for such
consent;  (v) the  proposed  subtenant  or  assignee  is not a  governmental  or
quasi-governmental  agency;  (vi) the  proposed  subtenant  or assignee is not a
tenant  under,  or is not  currently  negotiating,  a lease with Landlord in any
Building  owned by  Landlord  in the Denver  metropolitan  area  (including  the
Building);  or (vii) the rent under such sublease or assignment is not less than
the rent to be paid by  Tenant  for such  space  under the Lease and is not less
than *% of the rental rate then being  offered by Landlord for similar  space in
the Building.  Notwithstanding anything contained herein to the contrary, Tenant
acknowledges  that if the  use of the  Premises  by any  proposed  subtenant  or
assignee would require  compliance by Landlord and the Building with any current
or future laws to a greater  extent  than that  required  prior to the  proposed
occupancy  by such  subtenant  or assignee,  Landlord,  at its sole option,  may
refuse to grant such consent,  unless, as an express condition  thereof,  Tenant
and/or  such  assignee  or  subtenant  bears  the  entire  cost of such  greater
compliance.  Subject  to  Section  13.7  below,  a  sale  by  Tenant  of  all or
substantially  all of its assets or all or  substantially  all of its stock,  if
Tenant  is a  publicly  traded  corporation;  a merger of  Tenant  with  another
corporation;  the transfer of * or more of the stock in a corporate tenant whose
stock  is not  publicly  traded;  or  transfer  of * or more  of the  beneficial
ownership  interests  in a  tenant  shall  constitute  an  assignment  hereunder
requiring Landlord's prior written consent.

         13.2 Terms and  Conditions.  If this Lease is  assigned,  Landlord  may
collect the rent from the  assignee  and apply the net amount  collected  to the
Rent herein  reserved.  If the Premises or any part hereof is sublet or occupied
by anybody  other than Tenant (other than an  assignee),  Landlord may,  after a
default by Tenant, collect the rent from the subtenant or occupant and apply the
net  amount  collected  to  the  Rent  herein  reserved.   No  such  assignment,
subletting,  occupancy,  or  collection  shall be  deemed an  acceptance  of the
assignee,  subtenant,  or occupant  as the tenant  hereof or a release of Tenant
from further  performance  by Tenant of  covenants on the part of Tenant  herein
contained.  Consent by Landlord to any one  assignment or sublease  shall not in
anyway be  construed  as  relieving  Tenant from  obtaining  Landlord's  express
written  consent to any further  assignment  or  sublease.  Notwithstanding  the
consent of Landlord to any sublease or assignment,  Tenant shall not be relieved
from its primary obligations hereunder to Landlord,  including,  but not limited
to the  payment  of all Base  Rent and  Tenant's  Share of  Operating  Expenses.
Landlord's  consent to any  requested  sublease  or  assignment  shall not waive
Landlord's  right to refuse to consent to any other such request or to terminate
this Lease if such  request is made,  all as  provided  herein.  If  Landlord or
Tenant  collects  any rental or other  amounts  from an assignee or subtenant in
excess of the Base Rent and the  Tenant's  Share of  Operating  Expenses for any
monthly  period,  Landlord shall be entitled to * of such excess after deducting
actual  payments  by Tenant for  brokerage  commissions  and tenant  improvement
costs,  and Tenant shall pay to Landlord on a monthly basis,  as and when Tenant
receives the same, all such excess amounts received by Tenant.

         13.3  Landlord's  Rights.  Notwithstanding  anything  contained in this
Article 13 to the contrary,  in the event Tenant requests  Landlord's consent to
sublet all or a portion of the Premises or to assign its interest in this Lease,
Landlord  shall have the right to: (i) consent to such sublease or assignment in
its sole  discretion  (except if covered by Section 13.1 above);  (ii) refuse to
grant such  consent such in  Landlord's  sole  discretion  (except if covered by
Section 13.1 above);  or (iii) refuse to grant such consent and  terminate  this
Lease as to the portion of the  Premises  with respect to which such consent was
requested;  provided,  however,  if Landlord  refuses to grant such  consent and
elects to terminate this Lease as to such portion of the Premises,  Tenant shall
have the right within * days after notice of Landlord's exercise of its right to
terminate to withdraw Tenant's request for such consent and remain in possession
of the Premises under the terms and conditions hereof. In the event the Lease is
terminated as set forth herein,  such  termination  shall be effective as of the
date set forth in a written notice from Landlord to Tenant,  which date shall in
no event be more than * days following such notice.

         13.4  Tenant  Notice.  Tenant  agrees  that in the event it  desires to
sublease  all or any portion of the  Premises or assign this Lease to any party,
in whole or in part,  Tenant  shall  notify  Landlord in writing not less than *
days prior to the date Tenant  desires to sublease  such portion of the Premises
or assign this Lease  ("Tenant's  Notice").  Tenant's Notice shall set forth the
description  of the portion of the  Premises to be so sublet or assigned and the
terms and  conditions  on which Tenant  desires to sublet the Premises or assign
this Lease.  Landlord  shall have * days  following  receipt of Tenant's  Notice
within which to exercise Landlord's rights pursuant to Sections 13.1 and/or 13.3
above. If Landlord consents to such sublease or assignment and if for any reason
Tenant is unable to sublet said portion of the Premises or assign the applicable
portion of its interest in this Lease on the terms and  conditions  contained in
Tenant's Notice within * days following its original notice to Landlord,  Tenant
agrees to re-offer the Premises to Landlord in  accordance  with the  provisions
hereof prior to leasing or assigning the same to any third party.

         13.5  Documents.  All  documents  utilized  by Tenant to  evidence  any
subletting  or assignment  to which  Landlord has consented  shall be subject to
prior  approval by Landlord or its  counsel.  Tenant  shall pay on demand all of
Landlord's costs and expenses, including reasonable attorneys' fees, incurred in
determining  whether or not to consent to any  requested  sublease or assignment
and in reviewing and approving such documentation.

         13.6 Bankruptcy.  Landlord and Tenant  understand that  notwithstanding
certain  provisions  to the contrary  contained  herein,  a trustee or debtor in
possession  under the  Bankruptcy  Code of the United  States  may have  certain
rights to assume or assign this Lease. If a trustee in bankruptcy is entitled to
assume control over Tenant's  rights under this Lease and assigns such rights to
any third  party,  the Base Rent to be paid  hereunder  by such  party  shall be
increased to the then current Base Rent (if greater than then being paid for the
Premises) which Landlord would charge for comparable space in the Building as of
the date of such third party's  occupancy of the  Premises.  Landlord and Tenant
further  understand  that in any event Landlord is entitled under the Bankruptcy
Code to Adequate  Assurance of future performance of the terms and provisions of
this Lease.  For  purposes of any such  assumption  or  assignment,  the parties
hereto  agree  that the term  "Adequate  Assurance"  shall  include at lease the
following:

                  (a) In order to assure  Landlord  that the  proposed  assignee
will have the  resources  with  which to pay the Rent  called  for  herein,  any
proposed assignee must have demonstrated to Landlord's  satisfaction a net worth
(as  defined  in  accordance  with  generally  accepted  accounting   principles
consistently  applied)  at least as great as the net worth of Tenant on the date
this Lease became effective increased by *, compounded  annually,  for each year
from the Lease  Commencement  Date through the date of the proposed  assignment.
The financial  condition  and resources of Tenant were a material  inducement to
Landlord in entering into this Lease.

                  (b) Any proposed  assignee of this Lease must assume and agree
to be personally bound by the terms, provisions, and covenants of this Lease.

         13.7 Permitted  Transfers.  Notwithstanding  anything set forth in this
Article 13 to the  contrary,  Tenant shall have the right to make the  following
types of assignments or subleases on the following conditions without Landlord's
prior written consent: (i) to any corporation into which Tenant may be merged or
consolidated or which purchases all or substantially  all of the stock or assets
of Tenant; provided that the entity resulting from such merger, consolidation or
purchase  has a net  worth at least  equivalent  to that of  Tenant  immediately
preceding  such  merger,  consolidation  or  purchase  and Tenant  has  provided
Landlord with evidence thereof; (ii) to a subsidiary of Tenant,  provided Tenant
owns a  controlling  interest  in  such  subsidiary;  or  (iii)  to  any  parent
corporation of Tenant or a sister corporation of Tenant wholly owned by the same
parent  corporation  as Tenant;  provided that in the event (i),  (ii), or (iii)
above  that (a) the  assignee  or  subtenant  shall  assume  and be bound by all
obligations  of Tenant for the payment of all amounts of Rent and other  charges
under the Lease and the performance of all covenants required by Tenant pursuant
to the Lease;  and such  assignee or  subtenant  has executed a document to that
effect  which has been  transmitted  to the  Landlord;  (b) Tenant  continues to
remain liable on its obligations set forth in the Lease; (c) at the time of such
assignment or sublease there shall not be an existing Event of Default under the
Lease; (d) the Premises shall continue to be used for the Permitted Use; and (e)
within * days after the effective date of such assignment or subletting,  Tenant
provides  Landlord  with a copy  of the  assignment  or  sublease  document  and
substantiation  that such assignment or sublease meets the criteria set forth in
this  subparagraph.  Landlord  has the  right in its  discretion  to  require  a
Security  Deposit  from such  assignee  or  subtenant  of the greater of (x) the
Security  Deposit amount then required of Tenant or (y) * if a transfer  meeting
the  requirements  of (i) above does not result in an entity with a net worth of
at least *.

         14.  Default; Remedies.

         14.1 Default. A "Default" or "Event of Default" by Tenant is defined as
a  failure  by Tenant to  observe,  comply  with or  perform  any of the  terms,
covenants,  conditions  or rules  applicable  to Tenant under this Lease,  which
failure shall remain uncured for any  applicable  cure periods  allowed  herein.
Each one of the following shall be an Event of Default:

                  (a) The  vacating of the  Premises  without the  intention  to
reoccupy same, or the abandonment of the Premises; provided, however, Tenant may
vacate the Premises in whole or in part provided the Tenant:  (i) gives Landlord
* days prior written notice of its intent to vacate;  and (ii) complies with all
other terms of the Lease,  including  payment of all Rent and any other monetary
sums required to be paid hereunder.

                  (b) Except as expressly  otherwise provided in this Lease, the
failure by Tenant to make any payment of Base Rent,  Tenant's Share of Operating
Expenses,  or any other monetary payment required to be made by Tenant hereunder
as and when due;  provided,  however,  the  Tenant  may cure an Event of Default
under this provision  within * calendar days after Landlord gives written notice
thereof to Tenant.  Tenant  shall not be entitled to more than two such  written
notices  within  any *  consecutive  months.  The  failure  by Tenant to provide
Landlord with  reasonable  evidence of insurance or surety bond  required  under
this Lease, or the failure of Tenant to fulfill any obligation  under this Lease
which endangers or threatens life or property.

                  (c) Except as expressly  otherwise provided in this Lease, the
failure by Tenant to provide Landlord with reasonable  written evidence (in duly
executed  original form, if applicable) of (i) the rescission of an unauthorized
assignment  or subletting  per Section 13; (ii) a Tenancy  Statement per Section
17; (iii) the subordination or  non-subordination  of this Lease per Section 31;
(iv) the execution of any document  requested under Section 41  (easements);  or
(v) any other documentation or information which Landlord may reasonably require
of Tenant under the terms of this Lease,  where any such failure continues for a
period of * days following written notice thereof by or on behalf of Landlord to
Tenant.

                  (d) A Default by Tenant as to the terms, covenants, conditions
or  provisions  of this Lease,  or of the rules  adopted under Section 39 hereof
that are to be observed,  complied with or performed by Tenant, other than those
described  in  Subparagraphs  14.1(a),  (b) or (c)  above,  where  such  Default
continues for a period of * days after written notice thereof by or on behalf of
Landlord to Tenant; provided, however, that if the nature of Tenant's Default is
such that more than * days are reasonably  required for its cure,  then it shall
not be deemed to be a breach of this  Lease by Tenant if Tenant  commences  such
cure within said * day period and thereafter  diligently prosecutes such cure to
completion.

                  (e) The  occurrence  of any of the following  events:  (i) the
making by Tenant of any general  arrangement  or  assignment  for the benefit of
creditors;  (ii) Tenant's becoming a "debtor" as defined in 11 U.S. Code Section
101 or any successor  statute thereto  (unless,  in the case of a petition filed
against Tenant, the same is dismissed within * days); (iii) the appointment of a
trustee or receiver to take possession of  substantially  all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease,  where possession
is not restored to Tenant  within * days; or (iv) the  attachment,  execution or
other judicial  seizure of  substantially  all of Tenant's assets located at the
Premises  or of  Tenant's  interest  in this  Lease,  where such  seizure is not
discharged within * days; provided,  however, in the event that any provision of
this  subparagraph  14.1(e) is contrary to any  applicable  law, such  provision
shall be of no force or  effect,  and  shall  not  affect  the  validity  of the
remaining provisions.

                  (f) The discovery by Landlord that any financial statement  of
Tenant, given to Landlord by Tenant, was materially false.

         14.2     Remedies.

                  (a) If any one or more Events of Default shall occur and shall
remain uncured by Tenant during the applicable cure periods set forth in Section
14.1 above or as otherwise specified in this Lease, then Landlord shall have the
right at Landlord's election, then or at any time thereafter either:

(1)(a) Without demand or notice,  to reenter and take possession of the Premises
or any part thereof and repossess  the same as of  Landlord's  former estate and
expel Tenant and those  claiming  possession  through or under Tenant and remove
the  effects of both or either,  without  being  deemed  guilty of any manner of
trespass and without  prejudice to any remedies for arrears of Rent or preceding
breach of covenants or conditions. Should Landlord elect to reenter, as provided
in this subparagraph  (1), or should Landlord take possession  pursuant to legal
proceedings  or pursuant to any notice  provided for by law,  Landlord may, from
time to time,  without  terminating  this Lease,  relet the Premises or any part
thereof,  either alone or in conjunction  with other portions of the Building of
which the  Premises  are a part,  in  Landlord's  or  Tenant's  name but for the
account of Tenant, for such term or terms (which may be greater or less than the
period which would  otherwise have  constituted  the balance of the Term of this
Lease) and on such  conditions  and upon such  other  terms  (which may  include
concessions of free Rent and alteration and repair of the Premises) as Landlord,
in its absolute  discretion,  may determine and Landlord may collect and receive
the Rents  therefor.  Landlord  shall in no way be responsible or liable for any
failure  to relet the  Premises,  or any part  thereof,  or for any  failure  to
collect any Rent due upon such reletting;  provided, however, Landlord shall use
reasonable  efforts to relet the Premises.  No such reentry or taking possession
of the Premises by Landlord shall be construed as an election on Landlord's part
to terminate  this Lease unless a written  notice of such  intention be given to
Tenant. No notice from Landlord hereunder or under a forcible entry and detainer
statute or similar law shall  constitute  an  election by Landlord to  terminate
this Lease  unless such notice  specifically  so states.  Landlord  reserves the
right  following  any such  reentry  and/or  reletting  to exercise its right to
terminate  this Lease by giving Tenant such written  notice,  in which event the
Lease will terminate as specified in said notice.

(1)(b) If Landlord elects to take possession of the Premises as provided in this
subparagraph (1) without terminating the Lease, Tenant shall pay to Landlord (i)
the Base Rent and Tenant's Share of Operating Expenses, and other sums as herein
provided,  which  would  be  payable  hereunder  if  such  repossession  had not
occurred,  less (ii) the net proceeds,  if any, of any reletting of the Premises
after  deducting all of  Landlord's  expenses  incurred in connection  with such
reletting,  including, but without limitation, all repossession costs, brokerage
commissions, legal expenses, reasonable attorney's fees , expenses of employees,
alteration,  remodeling,  and repair costs and expenses of preparation  for such
reletting.  If, in  connection  with any  reletting,  the new lease term extends
beyond the existing Term, or the premises covered thereby include other premises
not part of the Premises,  a fair  apportionment  of the Rent received from such
reletting  and the  expenses  incurred  in  connection  therewith,  as  provided
aforesaid,  will be made in  determining  the net  proceeds  received  from such
reletting. In addition, in determining the net proceeds from such reletting, any
Rent  concessions  will be  apportioned  over the term of the new lease.  Tenant
shall pay such amounts to Landlord monthly on the days on which the Rent and all
other amounts owing hereunder would have been payable if possession had not been
retaken and  Landlord  shall be entitled to receive the same from Tenant on each
such day; or

(2)(a) To give Tenant written notice of intention to terminate this Lease on the
date of such given  notice or on any later date  specified  therein  and, on the
date  specified in such notice,  Tenant's  right to  possession  of the Premises
shall cease and the Lease shall  thereupon be terminated,  except as to Tenant's
liability  hereunder as hereinafter  provided,  as if the expiration of the term
fixed in such notice were the end of the Term herein originally  demised. In the
event this Lease is terminated  pursuant to the provisions of this  subparagraph
(2),  Tenant shall  remain  liable to Landlord for damages in an amount equal to
the Base Rent and  Tenant's  Share of  Operating  Expenses  and other sums which
would have been owing by Tenant  hereunder  for the balance of the Term had this
Lease not been terminated less the net proceeds, if any, of any reletting of the
Premises  by  Landlord  subsequent  to such  termination,  after  deducting  all
Landlord's  expenses in connection with such reletting,  including,  but without
limitation, the expenses enumerated above. Landlord shall be entitled to collect
such damages from Tenant monthly on the days on which the Base Rent and Tenant's
Share of Operating  Expenses and other amounts would have been payable hereunder
if this Lease had not been  terminated and Landlord shall be entitled to receive
the same from Tenant on each such day. Alternatively, at the option of Landlord,
in the event this Lease is  terminated,  Landlord  shall be  entitled to recover
forthwith against Tenant as damages for loss of the bargain and not as a penalty
an amount equal to the present value (calculated using the Treasury Rate for the
period remaining) of the worth at the time of termination of the excess, if any,
of the amount of Rent  reserved in this Lease for the balance of the Term hereof
over the then  Reasonable  Rental Value of the Premises for the same period plus
all amounts  incurred by Landlord in order to obtain  possession of the Premises
and relet the same,  including  reasonable  attorneys' fees, reletting expenses,
alterations and repair costs,  brokerage commissions and all other like amounts.
It is agreed that the " Reasonable  Rental  Value" shall be the amount of rental
which Landlord can obtain as Rent for the remaining balance of the Term.

                  (b) Suit or suits  for the  recovery  of the  Rents  and other
amounts and damages set forth hereinabove may be brought by Landlord,  from time
to time, at Landlord's  election,  and nothing herein shall be deemed to require
Landlord  to await the date  whereon  this Lease or the Term  hereof  would have
expired had there been no such default by Tenant or no such termination,  as the
case  may be.  Each  right  and  remedy  provided  for in this  Lease  shall  be
cumulative and shall be in addition to every other right or remedy  provided for
in this Lease or now or hereafter  existing at law or in equity or by statute or
otherwise,  including,  but not  limited  to,  suits for  injunctive  relief and
specific  performance.  The exercise or beginning of the exercise by Landlord of
any one or more of the rights or remedies  provided  for in this Lease or now or
hereafter  existing  at law or in equity or by  statute or  otherwise  shall not
preclude  the  simultaneous  or later  exercise  by Landlord of any or all other
rights or remedies  provided for in this Lease or now or  hereafter  existing at
law or in equity or by statute or otherwise.  All such rights and remedies shall
be considered  cumulative and  non-exclusive.  All costs incurred by Landlord in
connection  with collecting any Rent or other amount and damages owing by Tenant
pursuant to the  provisions  of this Lease,  or to enforce any provision of this
Lease, shall also be recoverable by Landlord from Tenant.  Further, if an action
is brought  pursuant to the terms and  provisions of the Lease,  the  prevailing
party in such action  shall be entitled to recover  from the other party any and
all reasonable  attorneys' fees incurred by such prevailing  party in connection
with such action.

                  (c)  No  failure  by   Landlord  to  insist  upon  the  strict
performance of any agreement,  term, covenant or condition hereof or to exercise
any right or remedy  consequent upon a Default thereof and no acceptance of full
or partial Rent during the  continuance  of any such Default shall  constitute a
waiver of any such Default or of such agreement,  term, covenant,  or condition.
No agreement,  term,  covenant,  or condition hereof to be performed or complied
with by Tenant and no Default  thereof  shall be waived,  altered,  or modified,
except by written  instrument  executed  by  Landlord.  No waiver of any Default
shall affect or alter this Lease but each and every agreement,  term,  covenant,
and condition hereof shall continue in full force and effect with respect to any
other  then  existing  or  subsequent  Default  thereof.   Notwithstanding   any
termination of this Lease, the same shall continue in force and effect as to any
provisions  which  specifically  by their  terms  provide  that such  provisions
survive the  termination of this Lease and require  observance or performance by
Landlord or Tenant subsequent to such termination.

                  (d)  Nothing  contained  in this  Section  14  shall  limit or
prejudice the right of Landlord to prove and obtain as liquidated damages in any
bankruptcy, insolvency, receivership,  reorganization, or dissolution proceeding
an amount equal to the maximum  allowed by any statute or rule of law  governing
such a proceeding  and in effect at the time when such damages are to be proved,
whether  or not such  amount be  greater,  equal  to,  or less than the  amounts
recoverable,  either as damages  or Rent,  referred  to in any of the  preceding
provisions of this Section.  Notwithstanding  anything contained in this Section
to the contrary, any such proceeding or action involving bankruptcy, insolvency,
reorganization,  arrangement,  assignment  for  the  benefit  of  creditors,  or
appointment of a receiver or trustee, as set forth above, shall be considered to
be an Event of Default  only when such  proceeding,  action,  or remedy shall be
taken or brought by or against the then  holder of the  leasehold  estate  under
this Lease.

                  (e) Pursue  any other  remedy now or  hereafter  available  to
Landlord under the laws or judicial  decisions of the state wherein the Premises
are located.

                  (f) The  expiration  or  termination  of this Lease and/or the
termination  of  Tenant's  right to  possession  shall not  relieve  Tenant from
liability under any indemnity  provisions of this Lease as to matters  occurring
or accruing  during the Term hereof or by reason of  Tenant's  occupancy  of the
Premises.

         14.3  Inducement  Recapture  in  Event of  Default.  Any  agreement  by
Landlord for free or abated Rent or other charges applicable to the Premises, or
for the  giving  or  paying by  Landlord  to or for  Tenant of any cash or other
bonus,  inducement or consideration  for Tenant's  entering into this Lease, but
excluding  Tenant's  right to occupy  the  Premises  without  payment of Rent as
described in Section 3.2 herein, and excluding any equity Tenant may have in the
Landlord entity, if any, all of which concessions are hereinafter referred to as
"Inducement  Provisions"  shall be deemed  conditioned  upon  Tenant's  full and
faithful performance of all of the terms, covenants and conditions of this Lease
to be performed or observed by Tenant  during the Term hereof as the same may be
extended.  Upon the occurrence of a Default (as defined in Section 14.1) of this
Lease by Tenant, not cured within an applicable cure period, any such Inducement
Provision  shall  automatically  be deemed  deleted  from  this  Lease and of no
further  force or effect,  and any Rent,  other  charge,  bonus,  inducement  or
consideration  theretofore  abated,  given  or paid by  Landlord  under  such an
Inducement Provision shall be immediately due and payable by Tenant to Landlord,
and  recoverable  by  Landlord,   as  Additional  Rent  due  under  this  Lease,
notwithstanding any subsequent cure of said Default by Tenant. The acceptance by
Landlord of Rent or the cure of the Default  which  initiated  the  operation of
this Section 14.3 shall not be deemed a waiver by Landlord of the  provisions of
this  Section 14.3 unless  specifically  so stated in writing by Landlord at the
time of such  acceptance.  Notwithstanding  the foregoing,  for the first full *
Lease  Years of the Lease  Term,  Tenant  shall be  obligated  to repay any such
charge, bonus,  inducement or consideration  theretofore abated given or paid by
Landlord.  During the * Lease Year,  Tenant must repay  one-half of such charge,
bonus  inducement  or  consideration.  During Lease Years * through *,  Tenant's
obligation to repay such charge,  bonus,  inducement or  consideration  shall be
further reduced by * of the full amount of any such charge,  bonus inducement or
consideration  each  Lease  Year until  such time as  Tenant's  obligations  are
reduced to zero.

         14.4 Late  Charges.  Tenant  hereby  acknowledges  that late payment by
Tenant to Landlord of Rent and other sums due hereunder  will cause  Landlord to
incur costs not  contemplated  by this Lease,  the exact amount of which will be
extremely  difficult to ascertain.  Such costs include,  but are not limited to,
processing  and accounting  charges,  and late charges which may be imposed upon
Landlord by the terms of any ground  lease,  mortgage or deed of trust  covering
the Premises. Accordingly, if any installment of Base Rent and Tenant's Share of
Operating  Expenses  or other  sum due from  Tenant  shall  not be  received  by
Landlord or  Landlord's  designee  within * days after such amount shall be due,
then, without any requirement for notice to Tenant, Tenant shall pay to Landlord
a late charge equal to * of such overdue  amount.  The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs Landlord
will incur by reason of late payment by Tenant.  Acceptance  of such late charge
by  Landlord  shall in no event  constitute  a waiver of Tenant's  Default  with
respect to such overdue amount,  nor prevent Landlord from exercising any of the
other rights and remedies granted hereunder.  In the event that a late charge is
payable  hereunder,  whether or not collected for * consecutive  installments of
Base Rent and Tenant's Share of Operating Expenses, then notwithstanding Section
4.1 or any other provision of this Lease to the contrary, Base Rent and Tenant's
Share of Operating Expenses shall, at Landlord's option,  become due and payable
quarterly in advance.

         14.5  Default by Landlord.  Landlord  shall not be deemed in default of
this Lease unless Landlord fails within a reasonable time and with due diligence
to proceed  promptly  to perform  an  obligation  required  to be  performed  by
Landlord. For purposes of this Section 14.5, a reasonable time shall in no event
be less than * days after receipt by Landlord,  and by any Lender(s)  whose name
and address shall have been furnished to Tenant in writing for such purpose,  of
written  notice  specifying  wherein  such  obligation  of Landlord has not been
performed;  provided,  however,  that if the nature of Landlord's  obligation is
such that more than * days after such  notice are  reasonably  required  for its
performance,  then Landlord  shall not be in breach of this Lease if performance
is  commenced  within  such * day period and  thereafter  diligently  pursued to
completion.  In the  event  of  Landlord's  default,  and  after  expiration  of
Landlord's  right to cure such default,  Tenant will be entitled to exercise any
right or  remedy  available  to  Tenant  at law or in  equity  by reason of such
default,  except to the extent  expressly waived or limited by the terms of this
Lease and provided that Tenant gave Landlord  written  notice of the  obligation
required to be performed by Landlord under the Lease.

15.  Condemnation.  If the  Premises or any portion  thereof are taken under the
power of eminent  domain or sold under the threat of the  exercise of said power
(all of which are herein called  "condemnation"),  this Lease shall terminate as
to the part so taken as of the date  the  condemning  authority  takes  title or
possession  whichever  first  occurs.  If more than * of the  floor  area of the
Premises  or more than * of the  portion  of the  Common  Areas  designated  for
parking  is taken  by  condemnation,  Tenant  may,  at  Tenant's  option,  to be
exercised  in writing  within * days  after  Landlord  shall  have given  Tenant
written  notice of such taking (or in the absence of such notice,  within * days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning  authority takes such  possession.  If Tenant does
not terminate  this Lease in  accordance  with the  foregoing,  this Lease shall
remain in full force and effect as to the  portion  of the  Premises  remaining,
except that the Base Rent and  Tenant's  Share of  Operating  Expenses  shall be
reduced in the same  proportion as the rentable floor area of the Premises taken
bears to the total  Rentable  Area of the  Premises.  No  reduction of Base Rent
shall occur if the  condemnation  does not apply to any portion of the Premises.
In the event a portion of the Common  Area  designated  for  parking is taken by
condemnation,  Landlord  will retain the ratio of Tenant's  parking based on the
square  feet  remaining  of the  Premises  to the ratio of parking  spaces  made
available for other tenants in the Building.  Any award for the taking of all or
any part of the Premises  under the power of eminent  domain or any payment made
under  threat of the  exercise of such power shall be the  property of Landlord,
whether such award shall be made as compensation  for diminution of value of the
leasehold  or for the  taking of the fee,  or as  severance  damages;  provided,
however,  that Tenant shall be entitled to any compensation,  separately awarded
to Tenant for Tenant's relocation  expenses,  taking of Tenant's chattels and/or
loss of Tenant's Trade Fixtures in the condemnation.

16.  Brokers.  Tenant and Landlord each  represent and warrant to the other that
(i) it has had no dealings  with any person,  firm,  broker or finder other than
Coldwell  Banker  Commercial,  Moore and Company who acted as Tenant's  agent in
connection  with the  negotiation of this Lease and/or the  consummation  of the
transaction  contemplated  hereby;  and (ii) no broker or other person,  firm or
entity other than said named Broker(s) is entitled to any commission or finder's
fee in  connection  with said  transaction.  Landlord  shall  pay a real  estate
commission to such Broker pursuant to a separate written agreement between them.
Tenant and Landlord do each hereby agree to indemnify,  protect, defend and hold
the other harmless from and against  liability for compensation or charges which
may be claimed by any such  unnamed  broker,  finder or other  similar  party by
reason of any  dealings  or actions of the  indemnifying  Party,  including  any
costs,  expenses,  and/or  attorneys'  fees  reasonably  incurred  with  respect
thereto.

         17.  Statements.

         17.1 Estoppel. Each party shall within * days after written notice from
the other party  execute,  acknowledge,  and deliver to the  requesting  party a
statement in writing  certifying that this Lease is unmodified and in full force
and effect (or, if there have been modifications, that the same is in full force
and effect as modified and stating the  modifications),  that there have been no
defaults  thereunder  by Landlord  or Tenant  (or, if there have been  defaults,
setting forth the nature thereof),  the date to which the Rent and other charges
have been paid in advance,  if any, and such other information as the requesting
party may request.  It is intended that any such statement delivered pursuant to
this  Section  may be relied  upon by any  prospective  purchaser  of all or any
portion of Landlord's  interest  herein or any holder of any mortgage or deed of
trust  encumbering  the  Building  Complex.  Tenant's  failure to  deliver  such
statement  within such time shall be conclusive  upon Tenant that: (i) the Lease
has not been  canceled or  terminated  and is in full force and effect,  without
modification except as may be represented by Landlord; (ii) there are no uncured
defaults in Landlord's performance (iii) not more than one month's Base Rent and
Tenant's Share of Operating Expenses has been paid in advance; and (iv) that the
current  amounts of the Base Rent are as represented by Landlord;  and (v) there
have been no subleases or assignments of the Leases.  Further, with * days after
Landlord's  request,  Tenant will supply  Landlord a  corporate  or  partnership
resolution,  as the case may be,  or a  certificate  executed  by the  Corporate
secretary of Tenant  certifying  that the party signing said statement of Tenant
is properly authorized to do so.

         17.2 Financial Statement. If Landlord desires to finance, refinance, or
sell the Premises or the Building  Complex,  or any part  thereof,  Tenant shall
deliver  to any  potential  lender or  purchaser  designated  by  Landlord  such
financial statements of Tenant and such Guarantors as may be reasonably required
by such lender or  purchaser,  including  but not limited to Tenant's  financial
statements for the past three (3) years. All such financial  statements shall be
received by Landlord  and such lender or purchaser  in  confidence  and shall be
used only for the purposes herein set forth.

         18.  Landlord's Liability. The term  Landlord"  as  used  herein  shall
mean the owner or owners at the time  in  question  of  the  fee  title  to  the
Premises.  In the event of a transfer  of  Landlord's  title or  interest in the
Premises or in this Lease during the Term hereof,  Landlord shall deliver to the
transferee or assignee (in cash or by credit) any unused  Security  Deposit held
by Landlord at the time of such  transfer or  assignment.  Upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid,  and notification
of Tenant  thereof,  the prior  Landlord shall be relieved of all liability with
respect to the obligations  and/or  covenants under this Lease  thereafter to be
performed by the Landlord.  Subject to the  foregoing,  the  obligations  and/or
covenants in this Lease to be  performed  by the Landlord  shall be binding only
upon  the  Landlord  as  hereinabove  defined.  Notwithstanding  the  foregoing,
Landlord (or Landlord's  transferee or assignee)  shall be liable for the actual
costs  incurred  by Tenant  in  obtaining  a  transfer  of the  letter of credit
referenced in Section 5.1 hereof,  if any, upon the transfer of Landlord's title
or  interest in the  Premises up to a maximum  amount of * of the then letter of
credit amount, if any held by Landlord as a Security Deposit.

         19.  Severability.  The invalidity of any provision of this  Lease,  as
determined  by a court of  competent  jurisdiction,  shall in no way  affect the
validity of any other provision hereof.

         20.  Interest on Past-Due Obligations.Any monetary payment due Landlord
hereunder,  other than late charges,  not received by Landlord within * days for
the  first  two lat  payments  (and * days  after  the  first  two of such  late
payments)  following the date on which it was due,  shall bear interest from the
date due at an annual of interest equal to the lesser of (i) the Prime Rate plus
* (* after  the  first  two of such late  payments);  or (ii) the  highest  rate
permitted by applicable  usury law,  until paid. For purposes  hereof,  the term
"Prime Rate" shall mean the rate  published  by The Western  Edition of The Wall
Street  Journal under "Money  Rates".  If, for any reason,  the Prime Rate is no
longer  published  in The Wall Street  Journal  then the  Landlord  shall select
another financial publication and reasonably announced rate as the Prime Rate.

         21.  Time of Essence.   Time  is  of  the  essence  with respect to the
performance of all  obligations to be performed or observed by the parties under
this Lease.

         22.  Rent.   All  monetary obligations  of Tenant to Landlord under the
terms of this Lease are deemed to be Rent.

         23.  No Prior or Other Agreements.  This Lease contains all  agreements
between the parties with respect to any matter  mentioned  herein,  and no other
prior or contemporaneous agreement or understanding shall be effective.

         24.  Notices.

         24.1 Notice  Requirements.  All notices  required or  permitted by this
Lease  shall  be in  writing  and may be  delivered  in  person  (by  hand or by
messenger or courier  service) or may be sent by certified or registered mail or
U.S.  Postal Service  Express Mail,  with postage  prepaid,  and shall be deemed
sufficiently  given if served in a manner  specified  in this  Section  24.  The
addresses  noted below shall be that party's  address for delivery or mailing of
notice  purposes.  Either  party may by  written  notice to the other  specify a
different  address  for  notice  purposes,  except  that  upon  Tenant's  taking
possession of the Premises,  the Premises shall constitute  Tenant's address for
the purpose of mailing or  delivering  notices to Tenant.  A copy of all notices
required or permitted to be given to Landlord  hereunder  shall be  concurrently
transmitted to such party or parties at such addresses as Landlord may from time
to time hereafter designate by written notice to Tenant.

If to Landlord:            Shea Homes Lim. Partnership
                           300 W. Plaza Drive
                           Highlands Ranch, CO  80126
                           Attn:  Mr. David Goldberg

with a copy to:            L.C. Fulenwider, Inc.
                           1125 17th Street, Ste. 2500
                           Denver, CO  80202
                           Attn.:  Mr. William K. Prather

with a copy to:            The Krovitz Law Firm, P.C.
                           5290 DTC Parkway, Suite 150
                           Englewood, CO  80111-2764
                           Attn:  R. G. (Shelley) Krovitz, Esq.

If to Tenant (prior to     Frontier Airlines, Inc.
the Delivery Date):        12015 E. 46th Ave., #200
                           Denver, CO  80239-3116
                           Attn.:  General Counsel

If to Tenant (after the    The Premises
Delivery Date):

With a copy to:            Randall G. Alt, Esq.
                           Otten, Johnson, Robinson, Neff & Ragonetti, P.C.
                           950 17th Street, Suite 1600
                           Denver, CO  80202

                           and

                           Douglas R. Wright, Esq.
                           Faegre & Benson LLP
                           370 17th Street, Suite 2500
                           Denver, CO  80202

         24.2 Date of Notice.  Any notice sent by registered or certified  mail,
return receipt  requested,  shall be deemed given and received * hours after the
same is addressed as required  herein and mailed with postage  prepaid.  Notices
delivered by United  States  Express Mail or overnight  courier that  guarantees
next day delivery  shall be deemed given and received * hours after  delivery of
the same to the United States Postal  Service or courier.  If notice is received
on a Saturday or a Sunday or a legal holiday, it shall be deemed received on the
next business day.

         25.  Waivers. No waiver by Landlord of the Default of any term,covenan
or  condition  hereof  by Tenant  shall be  deemed a waiver  of any  other  form
covenant or condition hereof or of any subsequent  Default by Tenant of the same
or any other  term,  covenant  or  condition  hereof.  Landlord's  consent to or
approval of any such act shall not be deemed to render unnecessary the obtaining
of Landlord's  consent to or approval of any subsequent or similar act by Tenant
or be  construed  as the  basis of an  estoppel  to  enforce  the  provision  or
provisions  of this Lease  requiring  such  consent.  Regardless  of  Landlord's
knowledge of a Default at the time of accepting  Rent, the acceptance of Rent by
Landlord  shall not be a waiver of any  Default  by  Landlord  of any  provision
hereof.  Any  payment  given  Landlord  by Tenant may be accepted by Landlord on
account  of moneys or  damages  due  Landlord,  notwithstanding  any  qualifying
statements or  conditions  made by Tenant in  connection  therewith,  which such
statements  and/or  conditions shall be of no force or effect  whatsoever unless
specifically  agreed to in writing by  Landlord at or before the time of deposit
of such payment.

         26. Recording.  Tenant  shall  not  record  this  Lease or a memorandum
hereof.  In the event that Tenant violates this  provision,  this Lease shall be
null, void and of no further force and effect, at Landlord's option, except that
Tenant shall be liable to Landlord as liquidated  damages,  in the amount of the
remaining Rent to be paid hereunder.

         27.  Holdover. Tenant has no right to retain possession of the Premises
or any part thereof beyond the expiration or earlier  termination of this Lease.
In the event that Tenant  holds over in  violation  of this  Section 27 with the
consent of  Landlord,  then the Base Rent payable from and after the time of the
expiration or earlier  termination  of this Lease shall be increased to * of the
Base Rent applicable during the month  immediately  preceding such expiration or
earlier termination. Nothing contained herein shall be construed as a consent by
Landlord to any holding over by Tenant.

         28.  Cumulative Remedies.   No  remedy  or  election hereunder shall be
deemed  exclusive but shall,  wherever  possible,  be cumulative  with all other
remedies at law or in equity.

         29.  Covenants  and  Conditions.   All  provisions  of this Lease to be
observed  or  performed  by either  Landlord  or Tenant are both  covenants  and
conditions.

         30.  Binding Effect:  Choice of Law.  This Lease shall be  binding upon
the  parties,  their  personal  representatives,  successors  and assigns and be
governed  by the laws of the  State of  Colorado.  Any  litigation  between  the
parties hereto  concerning  this Lease shall be initiated in the county in which
the Premises are located.

         31.  Subordination; Attornment; Non-Disturbance.

         31.1  Subordination.   This  Lease,  at  Landlord's  option,  shall  be
subordinate  to:  (i) any  mortgage,  deed of  trust  or  ground  lease  (now or
hereafter  placed upon the  Building,  or any portion  thereof),  including  any
amendment,  modification,  or restatement of any of such documents; (ii) any and
all advances  made under any mortgage or deed of trust;  and (iii) all renewals,
modifications,   consolidations,   replacements,  and  extensions  of  any  such
mortgage,  deed of trust or ground lease. Tenant agrees that with respect to any
of the foregoing  documents,  no documentation,  other than this Lease, shall be
required to evidence such subordination.

         31.2 Superior. If any Mortgagee shall elect to have this Lease superior
to the lien of the applicable mortgage, deed of trust or ground lease, and shall
give written notice thereof to Tenant,  this Lease shall be deemed prior to such
mortgage,  deed of trust or ground  lease,  whether this Lease is dated prior or
subsequent  to the date of said  mortgage,  deed of trust or ground lease or the
date of recording thereof.

         31.3  Documentation.  In confirmation of such subordination or superior
position,  as the case may be, Tenant agrees to execute such documents as may be
required by Landlord or any  Mortgagee  to  evidence  the  subordination  of its
interest  herein to any of the documents  described  above,  or to evidence that
this Lease is prior to the lien of any  mortgage  or deed of trust or any ground
lease,  as the case may be, and failing to do so within  fifteen  (15)  Business
Days after  written  demand,  Tenant shall be in default under the Lease without
the necessity of further  notice.  Tenant's  subordination  and  attornment to a
future mortgage,  deed of trust or other  encumbrance on the Building and/or the
Real Property,  shall be contingent upon Tenant's  receipt from such lender of a
non-disturbance  agreement  prepared on the lender's  standard  form;  provided,
however,  receipt of such  non-disturbance  agreement shall be conditioned  upon
Tenant not being in default  under this Lease.  Such  non-disturbance  agreement
will provide in substance  that so long as Tenant fully complies with the terms,
covenants  and  conditions  of this Lease,  the party  succeeding  to Landlord's
interest will recognize this Lease.

         31.4 Attornment. Tenant hereby agrees to attorn to all successor owners
of the  Building,  whether or not such  ownership  is  acquired as a result of a
sale, through foreclosure of a deed of trust or mortgage, or otherwise.

         32.  Attorneys' Fees.  If  any  party brings an action or proceeding to
enforce the terms hereof or declare rights  hereunder,  the Prevailing Party (as
hereafter defined) in any such proceeding,  action, or appear thereon,  shall be
entitled to  reasonable  attorneys'  fees.  Such fees may be awarded in the same
suit or recovered in a separate  suit,  whether or not such action or proceeding
is pursued or decision or judgment.  The term "Prevailing  Party" shall include,
without  limitation,  a party who  substantially  obtains or defeats  the relief
sought, as the case may be, whether by compromise,  settlement,  judgment or the
abandonment by the other party of its claim or defense. The attorneys' fee award
shall not be computed in accordance  with any court fee  schedule,  but shall be
such as to fully reimburse all attorneys' fees reasonably incurred.

         33.  Right of Entry. Landlord  and  Landlord's  agents  shall  have the
right to enter  the  Premises  at any  time,  in the case of an  emergency,  and
otherwise at reasonable  times during normal  business hours for (i) the purpose
of showing the same to prospective  purchasers,  lenders,  or tenants,  and (ii)
making such alterations,  repairs,  improvements or additions to the Premises or
to the Building,  as Landlord may reasonably  deem  necessary;  provided that in
doing so, Landlord shall not unreasonably disturb or interfere with Tenant's use
of the Premises beyond what may be reasonably necessary under the circumstances.
Landlord may at any time place on or about the Premises or Building any ordinary
"For Sale" signs and Landlord may at any time during the last * days of the Term
hereof place on or about the Premises any ordinary "For Lease"  signs.  All such
activities  of  Landlord  shall be without  abatement  of Rent or  liability  to
Tenant; provided,  however, subject to Section 9.5 herein and excluding Tenant's
personal  property,  Trade  Fixtures,  and  Tenant-Owed  Alterations and Utility
Installations in, on or about the Premises,  Landlord shall repair damage to the
Premises caused by Landlord exercising its rights under (ii) above.

         34.  Auctions.  Tenant shall not  conduct,  nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises without first
having obtained  Landlord's prior written consent.  Notwithstanding  anything to
the  contrary in this Lease,  Landlord  shall not be  obligated  to exercise any
standard of reasonableness in determining whether to grant such consent.

         35.  Signage.  Tenant shall not place any sign upon the exterior of the
Premises  or the  Building,  except  in  conformance  with the  Landlord's  sign
criteria attached hereto as Exhibit D, and made a part hereof.  The installation
of any sign on the Premises by or for Tenant shall be subject to the  provisions
of Section 7 (Maintenance,  Repairs,  Utility Installations,  Trade Fixtures and
Alterations).  Unless otherwise  expressly agreed herein,  Landlord reserves all
rights  to the  use of the  roof  of the  Building,  and the  right  to  install
advertising signs on the Building, excluding the roof, which do not unreasonably
interfere  with the  conduct of Tenant's  business  and  further  provided  such
signage does not advertise a scheduled  passenger  airline  (provided,  however,
such  exclusion  shall  not  apply if any  such  competitor  is a tenant  in the
Building  Complex).  Landlord  shall  be  entitled  to all  revenues  from  such
advertising  signs,  if any.  Notwithstanding  the  foregoing,  Tenant  shall be
entitled to exterior  signage on the Building  provided that the size,  location
and design shall be subject to Landlord's  prior written approval which approval
will not be  unreasonably  withheld.  Tenant's right to the exterior  signage is
personal to the Tenant  corporation,  is not  assignable and may not be used for
any other name than Tenant's  corporate  name unless the Tenant changes its name
by  corporate  action,  but such  action  shall  not  include  a name  change by
assignment  or  sublease as  described  in Section 13 above.  All such  exterior
signage  rights  shall be of no  further  force and  effect if the named  Tenant
corporation  is not occupying at least * square feet of space in the Building at
any time during the Lease Term as it may be  extended.  Tenant  shall obtain all
approvals  necessary for all signage including,  approval pursuant to the Denver
International   Business  Center  protective   covenants  and  all  governmental
entities, at its cost and expense and such signage shall comply with all codes.

         36.  Termination;  Merger.  Unless  specifically   stated  otherwise in
writing by Landlord,  the voluntary or other  surrender of this Lease by Tenant,
the mutual  termination  or  cancellation  hereof,  or a  termination  hereof by
Landlord for Default by Tenant,  shall  automatically  terminate any sublease or
lesser estate in the Premises;  provided,  however, Landlord shall, in the event
of any such surrender,  termination or cancellation, have the option to continue
any one or all of any existing  subtenancies.  Landlord's  failure within * days
following  any such event to make a written  election to the contrary by written
notice to the holder of any such lesser interest,  shall  constitute  Landlord's
election to have such event constitute the termination of such interest.

         37.  Guarantor.   [Intentionally Deleted]

         38.  Quiet  Possession.   Upon  payment  by  Tenant of the Rent for the
Premises and the performance of all of the covenants,  conditions and provisions
on Tenant's  part to be observed and  performed  under this Lease and subject to
the provisions of this Lease, Tenant shall not be disturbed in its possession of
the Premises for the entire Term hereof by Landlord or any other person lawfully
claiming through or under Landlord.

         39.  Rules and  Regulations.  Tenant  agrees that it will abide by, and
keep and  observe  all rules and  regulations  ("Rules  and  Regulations)  which
Landlord  may make  from  time to time for the  management,  safety,  care,  and
cleanliness  of the  grounds,  the parking  and  unloading  of vehicles  and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and their  invitees.  The current Rules and  Regulations
are attached hereto as Exhibit F and made a part hereof. Any modification to the
current Rules and  Regulations  shall be effective  only upon delivery of a copy
thereof to Tenant at the  Premises.  Landlord  shall use  reasonable  efforts to
secure  compliance  by all tenants with the Rules and  Regulations  from time to
time in effect,  but shall not be  responsible to Tenant or any other person for
failure of any person to comply with such Rules and Regulations. Notwithstanding
the  foregoing,  the terms and  conditions  set forth in the body of this  Lease
shall control over any inconsistent Rules and Regulations.

         40.  Security.  Tenant  hereby  acknowledges  that the Rent  payable to
Landlord  hereunder does not include the cost of guard service or other security
measures, and that Landlord shall have no obligation whatsoever to provide same.
Tenant assumes all  responsibility  for the protection of the Premises,  Tenant,
its agents  and  invitees  and their  property  from the acts of third  parties.
Notwithstanding  the  foregoing,  Landlord  may elect to provide a concierge  or
security guard for more  efficient  operation of the Building  Complex,  and the
cost thereof shall be included as a Common Area Operating  Expense.  Landlord is
not obligated to provide such security services at any time or for any length of
time. Tenant expressly  acknowledges that Landlord has not represented to Tenant
that the Building  Complex is secure and Landlord shall not be  responsible  for
the quality of any  security  services  which may be provided  hereunder  or for
damage or injury to Tenant,  its  agents,  employees,  invitees or others or its
betterments  contained  in  the  Building  Complex  or the  Premises  due to the
failure, action or inaction of such persons providing the security services.

         41.  Reservations.  Landlord  reserves the right, from time to time, to
grant, without the consent or joinder of Tenant, such easements,  rights of way,
utility  raceways,  and dedications that Landlord deems necessary,  and to cause
the  recordation  of parcel maps and  restrictions,  so long as such  easements,
rights of way,  utility  raceways,  dedications,  maps and  restrictions  do not
unreasonably  interfere with the use of the Premises by Tenant. Tenant agrees to
sign any  documents  reasonably  requested  by Landlord to  effectuate  any such
easement rights, dedication, maps or restrictions.

         42.  Authority.  If either party hereto is a  corporation,  trust,   or
general or limited  partnership,  each individual executing this Lease on behalf
of such entity  represents  and warrants  that he or she is duly  authorized  to
execute and deliver this Lease on its behalf. If Tenant is a corporation,  trust
or  partnership,  Tenant shall within * days after written  request by Landlord,
deliver to Landlord evidence satisfactory to Landlord of such authority.

         43.  Conflict.  Any conflict between the  printed  provisions  of  this
Lease and any typewritten or handwritten  provisions  shall be controlled by the
typewritten or handwritten provisions.

         44.  Offer.  Preparation of this Lease by either Landlord or Tenant  or
Landlord's  agent or Tenant's agent and submission of same to Tenant or Landlord
shall not be deemed an offer to lease.  This Lease is not intended to be binding
until executed and delivered by all parties hereto.

         45.  Amendments.  This  Lease may be  modified  only in writing, signed
by the parties in interest at the time of the  modification.  The parties  shall
amend this Lease from time to time to reflect any  adjustments  that are made to
the Base Rent or other rent  payable  under this  Lease.  As long as they do not
materially or unreasonably change Tenant's obligations hereunder,  Tenant agrees
to make  such  reasonable  non-monetary  modifications  to this  Lease as may be
reasonably required by an institutional insurance company or pension plan lender
in connection with the obtaining of normal  financing or refinancing of the Real
Property of which the Premises are a part.

         46.  Multiple  Parties.  Except as otherwise expressly provided herein,
if more than one person or entity is named herein as either  Landlord or Tenant,
the  obligations  of such  multiple  parties  shall  be the  joint  and  several
responsibility  of all  persons or  entities  named  herein as such  Landlord or
Tenant.

         47.  Building Name. As of the date hereof,  the name of the Building is
and shall continue to be "Frontier Center One".  Notwithstanding  the foregoing,
if at any time during the Lease Term,  as it may be  extended,  the named Tenant
Corporation  is  occupying  less  than *  rentable  square  feet of space in the
Building  under the name "Frontier  Airlines,"  this Paragraph 47 shall be of no
further  force and effect and  Landlord  shall be free to rename the Building in
its sole discretion.

         48.  Confidentiality. All information contained in this Lease Agreement
is hereby deemed  confidential  and shall not be divulged to anyone  without the
express written consent of Landlord except as otherwise  specified in Section 17
of this Lease  Agreement to their  professional  consultants  and advisors,  the
Broker  identified in Section 16 or as otherwise  required by judicial action or
governmental law, rules and regulations.

         49.  Satellite. Landlord hereby grants Tenant a nonexclusive  right  to
install one ground  satellite  dish in the Ground  Satellite  Area (the  "Ground
Satellite")  and (ii) other  reasonable  telecommunications  equipment  of which
Landlord has received prior written notice and has exercised Landlord's right to
approve the  height,  weight,  load  factor,  design,  placement  and  screening
thereof,  and has given Landlord's prior written consent thereto, on the roof of
the Building (the "Roof Satellite")  during the Term of this Lease in accordance
with the following provisions:

         49.1 The Ground Satellite dish and all equipment  associated  therewith
shall be  installed in the Ground  Satellite  Area which shall be located as set
forth on Exhibit A-1 and shall be secured by Tenant.  The  requirements  for the
Ground  Satellite Area enclosure shall be subject to Landlord's  approval at the
time  Landlord  approves  the  plans  and  specifications  for the  Premises  as
described in Exhibit C hereto.  Landlord shall not unreasonably withhold consent
of the design of Tenant's Ground Satellite Area enclosure.  The Tenant must keep
the Ground Satellite Area in a clean and orderly  condition at its sole cost and
expense.  The Roof  Satellite  and other  equipment  required  for same shall be
mounted on a self-mounting/supporting pedestal that does not require penetration
of the roof  membrane  and one  antenna  of two (2) inch  diameter  that may not
extend  higher  than  sixteen  (16) feet from the  primary  roof  surface in one
location over the dispatch  center to be located near the center of the Premises
and the  remainder  not to exceed eight (8) feet from the primary roof  surface.
All  satellite  dishes  shall be  connected  to the  Premises  through  lines in
appropriate  utility  raceways  in  the  Building  (the  dishes,  pedestals  and
connecting equipment are hereinafter referred to as the "Equipment").  Equipment
in the  Building  (but not the  Ground  Satellite  Area and not in a part of the
Premises) shall be in locations designated by Landlord;  it being understood and
agreed that the exact  location may be  designated by Landlord and is subject to
change from time to time by Landlord, at Landlord's cost and expense;  provided,
however, that such changed location shall permit satellite reception.

         49.2 Tenant  shall be  responsible  at its sole cost for  construction,
installation,  relocation and maintenance of the Equipment;  provided,  however,
that Landlord shall install any necessary conduit from the Ground Satellite Area
through the  appropriate  utility  raceways in the  Building to the  Premises at
Tenant's sole cost and expense and the connecting  Equipment  shall be installed
in the  conduit  by Tenant at  Tenant's  sole cost and  expense.  The  Allowance
described on Exhibit C hereto may be used to pay for the Equipment  installation
costs.  All  installations  shall be subject to the requirements set forth under
Section 9 of the Lease. Tenant agrees not to install the Equipment without first
submitting plans and  specifications  and obtaining the written approval thereof
by Landlord,  such approval or consent not being unreasonably  withheld.  Tenant
agrees not to make any  subsequent  alterations in or additions to the Equipment
without in each instance  obtaining the prior written consent of Landlord,  such
approval or consent not being unreasonably withheld. Tenant at its expense shall
obtain all necessary  governmental  permits and  certificates  required for such
construction,   installation,  authorization  and  use,  as  well  as  approvals
necessary under any declaration of covenants or any maintenance  and/or easement
agreements  affecting  the Real  Property or the  Building  Complex,  including,
without limitation,  required consent of the architectural  control committee of
the  Denver  International  Business  Center.  All  construction,  installation,
alterations,  repair and  maintenance  work shall be performed in a manner which
will not unreasonably  interfere with, delay, or impose any additional  expenses
upon Landlord in the  maintenance  or operation of the Building  Complex or upon
other tenants' use of their premises.

         49.3 Tenant shall maintain the Equipment and keep it in good repair and
keep the  Ground  Satellite  Area and the roof free from all  trash,  debris and
waste resulting from the use thereof by Tenant.  Tenant shall pay or cause to be
paid all costs for work done by Tenant or caused to be done by Tenant related to
the  Equipment  of a character  which will or may result in liens on  Landlord's
interest therein,  in accordance with the provisions of the Lease. The Equipment
shall  be   operated   in   strict   compliance   with  all   governmental   and
quasi-governmental  laws, codes, rules or regulations.  Tenant shall have access
to the rooftop  Equipment;  provided,  however,  that Tenant shall give Landlord
reasonable  prior notice of the need for access and such access shall be subject
to such reasonable rules as Landlord may adopt,  including,  but not limited to,
the  requirement  that an agent of Landlord  accompany  persons during such roof
access.

         49.4  Tenant  hereby  agrees to  indemnify,  defend  and save  Landlord
harmless of and from all liability,  loss, damage, costs or expenses,  including
reasonable  attorneys' fees, on account of any claims of any nature  whatsoever,
including  work  performed,  materials  or  supplies  furnished,  damage  to the
property or injury to persons  caused by  negligence  or  misconduct  of Tenant,
Tenant's agents,  servants,  or employees or any other persons entering upon the
roof under  express or implied  invitation of Tenant or where such injury is the
result of the  violation of the  provisions  of this Lease by any such person or
caused  by the  construction,  installation,  alteration,  repair  or use of the
Equipment.

         49.5 Tenant shall have the right to install the Equipment in the Ground
Satellite Area and/or roof throughout the Term; provided,  however, the terms of
the Option granted in Section 50 hereof may include a requirement  for Tenant to
pay for such rights if applicable pursuant to the terms of such Section 50. Upon
the  expiration  or other  termination  of the Term of this Lease,  Tenant shall
remove its Equipment and all other  improvements or alterations  related thereto
and restore the  Building,  the roof and Ground  Satellite  Area to its original
condition, to the extent of any damages or changes caused by the installation or
use of the  Equipment.  In the event  Tenant fails to vacate the roof space on a
timely basis as required,  Tenant shall be responsible to Landlord for all costs
and expenses  incurred by Landlord as a result of such failure,  including,  but
not  limited  to,  any  amounts  required  to be paid to  third  parties,  which
obligation shall survive the termination of the Lease.

         49.6 Tenant  acknowledges  that the Equipment shall be of such type and
frequencies,  and  operated  in a manner that will not cause  interference  with
other  tenants'  business  in  the  Building  Complex,  including  operation  of
transmitting and receiving devices.  Landlord will advise other tenants or users
desiring  receiving and transmitting  equipment who must obtain Landlord's prior
approval that their use is subject to that of Tenant's Equipment then installed;
provided,  however,  Tenant will make  reasonable  efforts to accommodate  other
users  receiving  and  transmitting  satellite  needs  about  which  it has been
notified in writing. Landlord and Tenant agree that Landlord shall arbitrate any
disputes  between Tenant and other tenants  concerning  alleged  interference by
operation of the Equipment, whether claimed to be caused by Tenant or such other
tenants, and Tenant shall be bound by Landlord's determination in such disputes.
If Tenant's installation or operation of the Equipment results in an increase in
Landlord's insurance on the Building Complex at any time during the Term of this
Lease,  Tenant shall be responsible  for the payment of such increased  premiums
attributable to Tenant's installation or operation,  as reasonably determined by
Landlord.  Tenant  shall pay such  amount  upon  receipt of billing  therefor by
Landlord  together with the insurance  documentation  relied upon by Landlord in
making such determination.  Tenant shall not install or operate the Equipment in
a manner that results in cancellation or termination of Landlord's insurance.

         49.7 Tenant shall neither hold nor attempt to hold Landlord  liable for
an injury or damage either proximate or remote,  occurring  through or caused by
fire, water, steam or other repairs, alterations,  injury, accident or any other
cause to the Equipment,  or to other  personal  property of Tenant kept with the
Equipment  or in other  parts of the Real  Property,  whether  by  reason of the
negligence  or default of Landlord or any occupants of the Building or any other
person or  otherwise  and the keeping or storing of all property of Tenant shall
be the sole risk of Tenant.

         50.  Option to Extend.

         As  additional  consideration  for the  covenants of Tenant  hereunder,
Landlord  hereby grants unto Tenant an option (the  "Option") to extend the term
of this Lease for * years each (the "First" or "Second Option Term"). The Option
shall apply to all space then under the Lease at the time the respective  Option
Term would commence and shall be on the following terms and conditions:

         50.1  Written  notice of Tenant's  interest in  exercising  each Option
shall be given to Landlord not earlier than * months and not later than * months
prior to the  expiration  of the Primary  Lease Term or First Option Term as the
case may be ("Tenant's Notice").  Not later than * days after receiving Tenant's
Notice, Landlord shall give to Tenant notice of the terms, conditions and rental
rate  applicable   during  the  respective   Option  Term,  in  accordance  with
subparagraph E below ("Landlord's Notice")

         50.2 Tenant shall have * days following  Tenant's receipt of Landlord's
Notice within which to exercise the Option by delivering  written notice of such
exercise to Landlord  under the terms,  conditions  and rental rate set forth in
Landlord's Notice. If Tenant gives such Notice and provided the other conditions
to  the  extension  have  been  satisfied,  the  Term  of  the  Lease  shall  be
automatically  extended for the respective Option Term without requiring further
action by the parties; provided, however, the parties shall execute an amendment
to the Lease to confirm the terms of the extension.

         50.3 Unless  Landlord is timely  notified by Tenant in accordance  with
subparagraphs A and B above, the respective Option shall terminate and the Lease
shall expire in accordance  with its terms, at the end of the Primary Lease Term
or First Option Term, as the case may be.

         50.4 Tenant's Option to extend shall continue only if as of the date of
Tenant's Notice or as of the date of commencement of the respective Option Term,
Tenant:  (i) shall not be in default  under the Lease at the time of exercise of
the option or at the time of the commencement of the respective Option Terms; or
(ii) Tenant  shall not have sublet more than * of the  Premises nor assigned its
interest  in the  Lease  other  than an  assignment  to an  Affiliate  of Tenant
consented  to under  the  terms of  Section  13  hereof  (which  shall  not be a
violation hereof) nor vacated the Premises.

         50.5 The  Option  granted  hereunder  shall be upon the same  terms and
conditions  of this  Lease,  except  for the  rental to be paid by  Tenant,  and
except, after the Second Option Term, there shall be no further option to extend
the Lease. The Base Rent applicable  during each Option Term shall be comparable
to that for comparable space in a comparable  building complex as of the date of
Landlord's  Notice  but in no event  shall  the rate be less  than the Base Rent
which  Tenant is paying  immediately  prior to  commencement  of the  respective
Option Term.

         50.6 After  exercise of the Option as to the Second Option Term,  there
shall be no  further  rights on the part of  Tenant  to  extend  the Term of the
Lease.

         50.7 In order to have the right to the Second Option Term, Tenant shall
be required to have exercised the Option as to the First Option Term.

The parties hereto have executed this Lease to be effective on the date and year
first above written.

LANDLORD:                                            TENANT:

FRONTIER CENTER ONE LLC,                    FRONTIER AIRLINES, INC.,
a Colorado limited liability company        a Colorado corporation

By:
SHEA FRONTIER CENTER, LLC,
a California limited liability company,    By:     _____________________________
its Manager                                Its:    _____________________________

By:   J.F. Shea Co., Inc., a Nevada
      corporation, its Manager             ATTEST:

By:  ________________________________      By:      ____________________________
        Assistant Secretary                Title:  _____________________________

By:  ________________________________
        Assistant Secretary

<PAGE>

                                    EXHIBITS

                        Exhibit A - Depiction of Premises
                        Exhibit A-1 - Ground Satellite Area
                        Exhibit B        -    The Building Complex
                        Exhibit C        -    Work Agreement
                        Exhibit D        -    Sign Criteria
                        Exhibit E        -    Commencement Certificate
                        Exhibit F        -    Rules and Regulations
                        Exhibit G        -    Parking License
                        Exhibit G-1      -    Parking Map
                        Exhibit H        -    [Intentionally Deleted]
                        Exhibit I        -    Janitorial Requirements

<PAGE>

                                    EXHIBIT A

                              DEPICTION OF PREMISES

<PAGE>

                                   EXHIBIT A-1

                              GROUND SATELLITE AREA

<PAGE>

                                    EXHIBIT B

                              THE BUILDING COMPLEX

A PARCEL OF LAND  LOCATED IN THE  NORTHEAST  QUARTER  OF  SECTION 4,  TOWNSHIP 3
SOUTH, RANGE 66 WEST OF THE 6TH PRINCIPAL  MERIDIAN,  CITY AND COUNTY OF DENVER,
STATE OF COLORADO, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

COMMENCING  AT THE  NORTHEAST  CORNER OF SAID SECTION 4, WHENCE THE EAST QUARTER
CORNER  THEREOF BEARS SOUTH 00 DEGREES 48 MINUTES 54 SECONDS WEST, A DISTANCE OF
2629.96 FEET; THENCE SOUTH 00 DEGREES 48 MINUTES 54 SECONDS WEST, ALONG THE EAST
LINE OF THE  NORTHEAST  QUARTER OF SAID  SECTION 4, A DISTANCE  OF 932.42  FEET;
THENCE NORTH 89 DEGREES 11 MINUTES 06 SECONDS  WEST, A DISTANCE OF 70.00 FEET TO
A POINT  ON THE  WEST  RIGHT-OF-WAY  LINE OF  TOWER  ROAD,  BEING  THE  POINT OF
BEGINNING;  THENCE SOUTH 00 DEGREES 48 MINUTES 54 SECONDS WEST,  ALONG SAID WEST
RIGHT-OF-WAY LINE, A DISTANCE OF 382.56 FEET; THENCE NORTH 89 DEGREES 48 MINUTES
51 SECONDS  WEST, A DISTANCE OF 315.05 FEET;  THENCE SOUTH 00 DEGREES 00 MINUTES
00 SECONDS  WEST, A DISTANCE OF 142.76 FEET;  THENCE NORTH 90 DEGREES 00 MINUTES
00 SECONDS  WEST, A DISTANCE OF 188.36 FEET;  THENCE NORTH 00 DEGREES 49 MINUTES
56 SECONDS EAST, A DISTANCE OF 30.50 FEET; THENCE NORTH 90 DEGREES 00 MINUTES 00
SECONDS  WEST,  A DISTANCE OF 51.79 FEET;  THENCE NORTH 00 DEGREES 49 MINUTES 56
SECONDS  EAST,  A DISTANCE  OF 237.73 FEET TO A POINT OF CURVE;  THENCE  ALONG A
CURVE TO THE LEFT HAVING A DELTA OF 25 DEGREES 16 MINUTES 23  SECONDS,  A RADIUS
OF 538.00  FEET AND AN ARC  LENGTH OF 237.31  FEET;  THENCE  NORTH 65 DEGREES 33
MINUTES 34 SECONDS  EAST,  A DISTANCE OF 63.38 FEET;  THENCE SOUTH 89 DEGREES 56
MINUTES 19 SECONDS EAST, A DISTANCE OF 547.19 FEET TO THE POINT OF BEGINNING.

To be known as:            Lot 3, Block 1
                           Denver International Business Center Filing No. 8
                           City and County of Denver
                           State of Colorado

<PAGE>

                                    EXHIBIT C

                                 WORK AGREEMENT

Re:      Tenant:           Frontier Airlines, Inc., a Colorado corporation
         Premises:         Approximately  *  rentable square feet of floor space
                           known as Suite 101 (the "Premises")

         Concurrently  herewith,  you as Tenant and the  undersigned as Landlord
have executed a Lease (the "Lease") covering the Premises (the provisions of the
Lease are  hereby  incorporated  by  reference  as if fully  set forth  herein).
Landlord has agreed to complete the base building items  described on Schedule 1
to this Exhibit C. All such base building  items to be completed by Landlord are
referred to herein as  "Landlord's  Work." All work that is  necessary to permit
Tenant to commence its business in the Premises , including, without limitation,
the  Tenant  Improvements  set forth on  Schedule 1 to this  Exhibit  C,  except
Landlord's Work including  installation of trade fixtures and furnishings  shall
be completed by Tenant  ("Tenant Work") at Tenant's cost and expense (other than
the Tenant Finish Allowance  described below). In consideration of the execution
of the Lease, Landlord and Tenant mutually agree as set forth below:
         A.       Landlord's Work.

1.         Landlord  shall  complete  Landlord's  Work in  accordance  with  the
           working drawings  prepared by The Neenan Company dated April 11, 2000
           (the "Approved Plan").

2.

3.                2.       Landlord's contractor shall perform  Landlord's  Work
           substantially in accordance with the Approved Plan at Landlord's cost
           and  expense.   Other  than  Landlord's  Work, Landlord shall have no
           obligation for completion or remodeling of the Premises.
4.

         B.       Tenant's Work.

                  1.  Tenant may  contract  with any  architect/designer  of its
choice.  Services  requested  by Tenant in  connection  with  design and drawing
preparation  shall be at  Tenant's  sole  cost and  expense.  Landlord  makes no
representation or guarantee with respect to fees,  services,  schedules or other
items  to  be  provided  by  the  architect/designer  and  shall  in no  way  be
responsible    for   such    architect/designer's    work   product.    Tenant's
architect/designer  shall prepare plans and  specifications for Tenant's Work to
be  completed in the Premises  (the "Plans and  Specifications").  All Plans and
Specifications  shall be subject to review and approval by Landlord,  Landlord's
architect and Landlord's  engineer prior to  commencement  of Tenant's Work. All
costs of  preparation,  review and  approval,  including  review and approval by
Landlord,  Landlord's architect,  and/or Landlord's engineer,  shall be borne by
Landlord.  Landlord shall, within * Business Days after receipt of the Plans and
Specifications  by Landlord  for its review and  approval,  submit to Tenant the
Plans and Specifications  with the required  approvals noted thereon,  or submit
comments  to  Tenant  setting  forth  changes  to  be  made  in  the  Plans  and
Specifications. If changes are required by Landlord, Tenant shall have the Plans
and  Specifications  modified and  resubmitted to Landlord for approval and such
process  shall  be  repeated  until  Landlord,   Landlord's  architect,   and/or
Landlord's  engineer have approved the Plans and Specifications for the Premises
(hereinafter referred to as "Approved Plans and Specifications"). Changes to the
Approved Plans and Specifications shall be made only upon prior written approval
of Landlord and shall be at Tenant's sole cost and expense.

                  2. Tenant shall contract  directly for the Tenant's Work to be
completed in accordance  with the Approved  Plans and  Specifications.  Tenant's
contractor  shall bill Tenant and Tenant shall be solely  responsible for paying
all  costs  for  Tenant's   Work  as  set  forth  on  the  Approved   Plans  and
Specifications. Tenant and Tenant's contractor will be required to adhere to the
requirements  set  forth in  Schedule  2  attached  hereto  in  connection  with
performance  of  Tenant's  Work and the  contract  between  Tenant and  Tenant's
contractor  shall  incorporate all of the provisions of Schedule 2. All Tenant's
Work shall (i) be  performed  pursuant  to written  contracts  with  workmen and
mechanics,  which  shall  be  acceptable  to  Landlord;  (ii)  comply  with  all
reasonable  restrictions and requirements as Landlord may impose with respect to
Tenant's Work; (iii) conform to the standards of the Building  Complex;  (iv) be
done  in  a  safe  and  lawful  manner  in  compliance  with  applicable   laws,
governmental  regulations,  and  requirements;  and  (v)  be  done  so as not to
interfere with Landlord's  completion of Landlord's Work in the Building Complex
and the Premises. Tenant shall cause such contractor to take all steps necessary
to cooperate in the  coordination  of the  performance of Tenant's Work with the
work of Landlord or  Landlord's  contractors  in the Premises or in the Building
Complex,  including,  without  limitation,   exchanging  information  about  and
coordinating their respective schedules,  attending  coordination  meetings, and
cooperating in allowing and obtaining  access to and availability of portions of
the  site  for  performance  of  Tenant's  Work  and  the  work  of  such  other
contractors.  Tenant may contract with Landlord's contractor to perform Tenant's
Work which contract must also meet the terms and  conditions of this  paragraph.
Notwithstanding  the  foregoing,  Landlord's  contractor  will  be  required  to
cooperate and coordinate to the extent possible with Tenant's contractor,  so as
not to cause any unreasonable delays in Tenant's Work,  provided,  however,  the
parties agree that because of the penalties to Landlord set forth in Section 3.2
of the Lease, if a conflict arises,  Landlord's contractor's schedule shall have
priority.

                  3.  Landlord  has  agreed to pay that  portion of the costs of
Tenant's  Work up to a maximum of $* per  rentable  square foot of the  Premises
(the "Tenant Work Allowance"). The cost of Tenant's Work payable from the Tenant
Work Allowance shall include all costs  attributable to design and  construction
of the Tenant's Work including but not limited to,  services,  fees and expenses
of the Tenant's architect and Tenant's engineers;  costs of permits and licenses
required  for  completion  of the  Tenant's  Work;  labor,  materials,  fees and
expenses of Tenant's contractor in completing the Tenant's Work. Landlord agrees
to provide up to an additional $* per rentable  square foot of the Premises,  in
addition to the Tenant Work Allowance, such amount to be applied toward costs of
Tenant's Work (the "Additional  Allowance").  Such Additional Allowance shall be
payable to Landlord by Tenant as Additional Rent in addition to the Base Rent in
an amount  calculated by amortizing  the  Additional  Allowance over the Primary
Lease Term at * per annum.  If for any reason at any time during the Lease Term,
Tenant is in default, which default is not cured with an applicable cure period,
or in the  event  the  Lease  Term is  terminated  for any  reason  prior to the
expiration of the Lease Term, the Additional  Allowance shall be immediately due
and payable upon the  occurrence of such default.  Tenant's  obligation to repay
Landlord the Additional Allowance shall survive the expiration or termination of
the Lease.  All costs  incurred in the  completion of Tenant's Work in excess of
the Tenant Work Allowance and the Additional Allowance shall be at Tenant's sole
cost and expense and shall be promptly  paid in full by Tenant to Landlord  upon
receipt of billing  therefor.  Any amount of the Tenant Work  Allowance (but not
Additional  Allowance) not utilized for Tenant's Work may be applied to next due
Base Rent under the Lease.

                  4. Tenant's Work  Allowance  (and after it has been  depleted,
the Additional  Allowance if Tenant provides Landlord written notice that Tenant
elects to use the  Additional  Allowance and wishes  Landlord to disburse it for
payments  hereunder  and Landlord and Tenant have  executed an amendment to this
Lease restating the Base Rent to include the Additional Allowance) shall be paid
to Tenant  periodically  as  portions of Tenant's  Work have been  completed  in
accordance with the Approved Plans and Specifications and the provisions hereof:

               a. Before the first application of payment, Tenant shall submit a
          schedule of values to Landlord  allocating the Tenant's Work Allowance
          to various portions of Tenant's Work.

               b.  On or  before  the  5th  day  of  each  month  following  the
          commencement  of the work,  Tenant  shall  submit to the  Landlord  an
          application  for payment on account of Tenant's Work performed  during
          the  payment  period  covered  by the  application  for  payment.  For
          purposes of this Lease,  the payment  period shall be the first day of
          each month and run through the last day of each month. On the last day
          of each  payment  period,  Tenant  shall  determine as of the date the
          percentage  of completion of the work covered by each line item of the
          approved  schedule of values.  Each  monthly  application  for payment
          shall be based upon the  percentage  of  completion  of each such line
          item  of  Tenant's  Work  and  shall  be in the  sum  of  the  amounts
          determined by multiplying the value of Tenant's Work of each line item
          as set forth in the approved  schedule of values by the  percentage of
          completion  determined  as to each  line  item on the last day of each
          payment period less the amounts  previously  paid with respect to such
          line items.

               c. Each  application  for payment  shall be  accompanied  by lien
          waivers and affidavits from Tenant's contractor and its subcontractors
          in a form  reasonably  satisfactory  to Landlord  attributable  to the
          immediately  preceding month's application for payment.  Additionally,
          Tenant's  contractor  shall  deliver an affidavit  to  accompany  each
          application  for payment  setting forth the names and addresses of the
          subcontractors'  materialmen  and  suppliers  and the dollar amount of
          liability which has been  contracted for with each such  subcontractor
          materialman  or  supplier  and the amounts  requested  by each in that
          month's application for payment.

               d. The  Landlord  will review  Tenant's  application  for payment
          within * Business  Days  after  receipt  and will pay Tenant  approved
          amounts  within * days  after  submittal  of a  complete  application.
          Notwithstanding  anything  contained  in this  Lease to the  contrary,
          Landlord  may  decline to make a payment to Tenant of all or a portion
          of any  application  for payment to the extent as may be  necessary to
          protect  Landlord  from loss  because of defective  work;  third party
          claims filed or reasonable evidence indicating probable filing of such
          claims;  failure  of the  Tenant to make  payment  to  contractors  or
          subcontractors  or  for  labor,  materials  or  equipment;  reasonable
          evidence  that the Tenant's  Work cannot be  completed  for the unpaid
          balance of the Tenant Work Allowance.  In the event Landlord withholds
          payment on account of any of the  foregoing  reasons,  Landlord  shall
          provide written notice of such reasons to Tenant. When the grounds for
          withholding of payment are removed, payment shall be made promptly for
          amounts withheld because of such grounds.  The application for payment
          shall  reflect   retainage  of  *  which  Landlord  shall  hold  until
          Landlord's final payment,  described in subparagraph e below. Landlord
          in its  reasonable  discretion  may agree to not  withhold any further
          retainage  when Tenant's Work is * complete  provided that Landlord is
          satisfied with the progress and quality of the Tenant's Work.

               e.  Landlord's  final  payment  to  Tenant of the  Tenant's  Work
          Allowance (and Additional Allowance,  if applicable) and the retainage
          shall not become due until Tenant submits to Landlord (i) an affidavit
          signed by Tenant  that upon  payment of the  remaining  portion of the
          Tenant's Work  Allowance,  all  payrolls,  bills for materials and any
          equipment and other indebtedness connected with the subject portion of
          Tenant's Work for which  Landlord or its property  might in any way be
          responsible,   have  been  paid  or  otherwise  satisfied;   (ii)  the
          certificate by Tenant's architect that the subject portion of Tenant's
          Work  is  complete  in   accordance   with  the  Approved   Plans  and
          Specification;  (iii) a Certificate of Occupancy  (temporary or final)
          or equivalent sign off has been issued by the appropriate governmental
          authority  permitting  use of the Premises for the Permitted Use under
          the  Lease  and a copy of  such  certificate  of  occupancy  has  been
          delivered to Landlord;  (iv) other data establishing the final cost of
          Tenant's  Work,  reasonable  evidence that Tenant has satisfied all of
          its construction obligations such as receipts, releases and waivers of
          liens  arising out of Tenant's  Work to the extent and in such form as
          may be reasonably designated by Landlord.

               5. Tenant and Tenant's  contractor shall indemnify  Landlord from
          any mechanic's or materialman's  lien against  Landlord's  interest in
          the  Building  Complex  or  Premises.  If a lien is  filed,  Tenant or
          Tenant's  contractor  shall,  at Tenant's  option,  remove the lien by
          paying in it full, furnish Landlord a bond sufficient to discharge the
          lien or deposit in an escrow  approved by Landlord *% of the amount of
          such lien and release the lien from the real  property  records of the
          City and County of Denver. In the event Tenant or Tenant's  contractor
          shall fail to remove the lien,  provide a bond or cash escrow,  Tenant
          shall  immediately be in default under the Lease without the necessity
          of further notice from Landlord and Landlord shall be entitled to take
          such  action at law,  in equity or under the Lease as  Landlord  deems
          appropriate  and Tenant shall be responsible  for all monies  Landlord
          may pay in  discharging  any lien  including all costs and  reasonable
          attorneys' fees incurred by Landlord in settling,  defending  against,
          appealing or in any manner dealing with lien.

         C.  Notwithstanding  the provisions of the Lease, the Rent Commencement
Date will not be  delayed  or  extended  by any Tenant  delay,  which  includes,
without limitation,  delay: (i) in the preparation,  finalization or approval of
the  working  drawings  for  Landlord's  Work  caused by  Tenant,  its agents or
employees;  (ii)  caused by  modifications,  revisions  and changes to the final
working drawings due to changes requested by Tenant,  its agents or employees or
objections from Tenant;  (iii) in the delivery or installation of any special or
non-standard  building items specified by Tenant;  or (iv) of any kind or nature
in the completion of Landlord's  Work caused by Tenant,  its agents or employees
("Tenant Delay"). Tenant shall pay all costs arising from Tenant Delay.

         D.  Tenant has designated Ms. Joan Osterman  and/or Mr. Cornelius  Baas
as its sole  representative  with  respect to the matters set forth in this Work
Agreement,  who shall have full authority and responsibility to act on behalf of
the Tenant as required in this Work  Agreement.  Tenant shall have the right, by
written notice to Landlord, to change its designated representatives.

         E.  Landlord  has  designated  Mr.  David  Goldberg  and/or  Mr.   Mark
Throckmorton as its representatives with respect to Landlord's  responsibilities
under this Work Agreement,  who shall have full authority and  responsibility to
act on behalf of the Landlord as required in this Work Agreement. Landlord shall
have  the  right,  by  written  notice  to  Tenant,  to  change  its  designated
representatives.

         F.  Any and all  notices  required  to be given  hereunder  shall be in
writing in accordance  with the terms and provisions of the Lease.  However,  in
all cases  notices  shall  also be given to those  individuals  to be  specified
pursuant to Paragraphs D and E above.

             FRONTIER CENTER ONE LLC,
             a Colorado limited liability company

             By:      SHEA FRONTIER CENTER, LLC,
                      a California limited liability company,
                      its Manager

             By:      J.F. Shea Co., Inc., a Nevada
                      corporation, its Manager

                      By:  ________________________________
                              Assistant Secretary

                      By:  ________________________________
                              Assistant Secretary

                      "Landlord"
AGREED AND ACCEPTED

this       day of                  , 2000.
     -----        -----------------

FRONTIER AIRLINES, INC.,
a Colorado corporation

By:
Title:

ATTEST:

By:
Title:

<PAGE>

                     SCHEDULE 1 TO EXHIBIT C WORK AGREEMENT

<PAGE>
<TABLE>
<S>                 <C>                                               <C>

ITEM                BASE BUILDING                                        TENANT IMPROVEMENTS

Site                a. Site to be paved, striped, and landscaped.        a.   No requirement.

Structure           a. Site cast concrete and structural steel frame.    a.   No requirement.

                    b. Site cast concrete slab on grade.

                    c. Roof deck and roofing.

Core Service Areas  a. Utility service entry provided.                   a.   Distribution by Tenant.

Lobby Improvements  a. No requirement.                                   a.   Dedicated   Tenant's  lobbies  per  Tenant
                                                                              plans.

Toilet Room         a. No requirement.                                   a.   Dedicated   toilet  rooms  to  accommodate
                                                                              Tenant's projected occupancy.

Perimeter Walls     a. Fur   and   insulate    perimeter   walls   as    a.   Gypsum  board,   paint,   wall  coverings,
                       follows:               Walls               R13         base,   and  window  sill   finishes   per
                       minimum                                                building standard.
                       Roof R19 minimum

                    b. Complete exterior finishes  including exterior    b.   Install    building     standard    window
                       window   systems   and   door   systems.   All         coverings;    optional    exercise    room
                       perimeter  window and door glass  shall have a         exterior door.
                       minimum shading coefficient of 0.56.

Interior Columns    a. Structural requirements only.                     a.   Finishes per code and Tenant plan.

Interior Partitions a. No requirement.                                   a.   Construct     interior     gypsum    board
                                                                              partitions  as required by Tenant's  space
                                                                              plan.      Construct     demising     wall
                                                                              con-sisting  of wall  framing  and  gypsum
                                                                              board finishes on Tenant side only.

                    b. No requirement.                                   b.   Finishes per Tenant plan.

Ceilings            a. No requirement.                                   b.   Furnish and install  building  standard 2'
                                                                              x 4'  acoustical  ceiling  grid  and  tile
                                                                              throughout leasable area.

Floor Covering      a. No requirement.                                   a.   Furnish and install all Tenant  areas with
                                                                              building    standard   or   better   floor
                                                                              coverings.  Building  standard  shall be a
                                                                              minimum of $*/Square Yard installed.

Doors, Frames &     a. Furnish and  install  exterior  doors,  frames    a.   Furnish,   install  and  finish   building
Hardware               and hardware  with mutually  acceptable  locks         interior   standard   doors,   frames  and
                       and closers.                                           hardware as  required  by  Tenant's  space
                                                                              plan.

HVAC                a. Furnish and  install  roof top HVAC units with    a.   Furnish  and  install   distribution  duct
                       a maximum  157.5 tons of  cooling.  Landlord's         runs   from   roof  top   HVAC   units  as
                       mechanical  engineer shall design the units in         required.  The supplemental  computer roof
                       conjunction with Tenant's mechanical engineer.         top units shall be provided by Tenant.

                    b. Landlord  will provide gas service  hookup and    b.   Furnish  and install  separate  HVAC units
                       all roof penetrations.                                 for  non-standard  loads (if any).  Tenant
                                                                              will  provide   all   electrical   service
                                                                              hookups  for HVAC units  electrical wiring
                                                                              and conduit).

                                                                         c.   Tenant  pays  cost of all HVAC  electrical
                                                                              and control related roof penetrations.

Plumbing            a. Furnish and install  waste line down center of    a.   Provide  distribution waste and vent lines
                       building per applicable code.                          as required  to  facilitate  tenant  plan.
                                                                              Tenant    shall    be    responsible   for
                                                                              maintaining flow only in  that  portion of
                                                                              the drain  line(s)  that  serves  plumbing
                                                                              fixtures  within  the  boundaries  of  its
                                                                              premises.  All  other  drain lines will be
                                                                              served by Landlord.

                    b. Furnish  and install  water  service to Tenant    b.   Extension of water  service  within Tenant
                       space,  minimum  size 1-1/2" to common  single         space as required.
                       meter  for  entire  building.   Landlord  will
                       provide  a  2"  capped  and  valved   stub  to
                       Tenant's space from riser room.

                                                                         c.   Furnish and install all plumbing  fixtures
                                                                              and  required  connections  per  code  and
                                                                              tenant finish plan.

Fire Protection and a. Furnish and install  complete fire  protection    a.   Relocate   and   add   standard   building
Sprinkler System       system per code for unimproved  base building;         sprinkler   drops  and  heads  for  proper
                       risers,  mains and  branch  lines  with  brass         coverage  as  dictated  by  the   Tenant's
                       upright  sprinkler heads for a wet pipe system         space plan and code.
                       at 1 head per 125 square feet of spacing.

Electrical          a. Furnish   and   install   electrical   service    a.   Power and lighting  distribution  per code
                       including    transformers,     to    dedicated         and Tenant specifications.
                       electrical   room  to  meet  a  minimum   load
                       requirement  of 480  volt,  3-phase,  1125 amp
                       demand load maximum for Tenant.

Fire Extinguishers  a. No requirement.                                   a.   Furnish  and  install  fire  extinguishers
                                                                              and  cabinets as required by space  layout
                                                                              and code.

Satellite Dish      a. Landlord  shall  provide  a  walled  enclosure    a.   Provide and install  including  electrical
                       sufficient   in   size  to   accommodate   the         distribution      and     any     building
                       building  transformers,  building gas metering         modi-fications.
                       system,  electrical  metering system,  and the
                       Tenant satellite dish and back up generators.

Uninterrupted Power a. No requirement.                                   a.   All service provisions by Tenant.
Source and Back Up
Generation
</TABLE>

<PAGE>

                     SCHEDULE 2 TO EXHIBIT C WORK AGREEMENT

                     PROCEDURE AND SCHEDULES FOR COMPLETION

                            OF TENANT WORK BY TENANT

Tenant and Tenant's  Contractor  and the contracts  between  Tenant and Tenant's
Contractors,  to be entered into in connection  with the performance of Tenant's
Work, shall conform to the following rules, regulations, and requirements, which
shall be  incorporated  into such  contracts.  Tenant  shall  ensure that all of
Tenant's  Contractors act in conformity with the provisions set forth herein. In
the event of any  conflict  between  any other terms or  provisions  of Tenant's
contracts and the terms and provisions set forth below, the terms and provisions
set forth below shall control.

         1. Tenant shall start construction of Tenant's Work in the Premises not
later than * days from  issuance  of a  building  permit,  and shall  carry such
construction to completion with all due diligence.

         2. Tenant shall submit to Landlord, in writing, at least *days prior to
the commencement of construction, the following information:

                  A. The names and  addresses  of the  general,  mechanical  and
electrical contractors,  if any, Tenant intends to engage in the construction of
Tenant's  Work and copies of proposed  contracts  executed by Tenant.  (The term
"Contractor" as used hereinafter  shall mean Tenant's general  Contractor or, if
Tenant does not use a general Contractor,  then all Contractors with whom Tenant
contracts directly for Tenant's Work. The term  "Subcontractors"  shall mean and
refer to all  entities  contracting  with the  Contractor  to complete  Tenant's
Work.)

                  B. A proposed  schedule setting forth the commencement date of
construction  of Tenant's  Work and the date of completion  of  construction  of
Tenant's Work,  fixturing work, dates for proposed  interruption of services (if
any required) and the date of projected opening.

                  C. Copies  of  performance and/or labor and material bonds, as
required by Landlord, from the Contractor and Subcontractors.

                  D. Final itemized statement of estimated  construction  costs,
including architectural, engineering and contracting fees.

                  E. Evidence of  insurance  as called for herein.  Tenant shall
secure, pay for and maintain,  or cause its Contractor(s) to secure, pay for and
maintain,  during  the  continuance  of  and  for *  year  after  completion  of
construction and fixturing work within Tenant's  Premises,  all of the insurance
policies  required  and in the  amounts as set forth  herein.  Tenant  shall not
permit, and Tenant's contract shall prohibit its Contractor to commence any work
until all required  insurance has been obtained and certified copies of policies
have been delivered to Landlord.

         3. Insurance:  The  following  insurance requirements shall be complied
with:

                  A.  Minimum  Coverage  -  Prior  to any  Tenant's  Work  being
commenced  by  Tenant's   Contractor  or  Subcontractors,   Tenant  or  Tenant's
Contractor  (as set forth  below),  shall  obtain and  maintain  insurance  with
minimum  coverage and limits to protect  Landlord and Landlord's  managing agent
from the claims hereinafter set forth which may arise or result from performance
of any Tenant's Work, whether such work be done by Tenant's Contractor or by any
of  Subcontractors  or by anyone  directly  or  indirectly  employed by Tenant's
Contractor or Subcontractors or by anyone for whose acts Tenant's  Contractor or
Subcontractors  may be  liable  as set  forth as  follows  (such  limits  may be
provided by an appropriate "umbrella" policy):

         1. Workmen's  Compensation  insurance  at the statutory limits provided
for by the State  of Colorado;

         2. Employer's liability insurance  at  a  limit of not less than $* for
all damages arising from each accident;

         3. Comprehensive general liability insurance covering:  (i)  Operations
Premises liability;  (ii) Completed  operations;  (iii) Product liability;  (iv)
Contractual  liability;  (v) Broad form property damage endorsement and property
damage  caused by  conditions  otherwise  subject to  exclusion  for  explosion,
collapse or underground  damage;  (vi) Fire legal liability,  with the following
insurance limits: Bodily Injury: $* each occurrence; $* general aggregate and $*
products/completed operation aggregate;

         4. Comprehensive  automobile  liability  insurance  covering all owned,
hired or non-owned  vehicles  including the loading and  unloading  thereof with
limits of no less than:  $* combined  single limit each  occurrence;  Automobile
Property Damage: $* each person;

         5. Physical  damage  insurance  covering  the  completed  value  of the
Tenant's Work which shall afford coverage  against "all risks" for physical loss
or damage.

                  B.  Cancellation - All such insurance shall be carried  with a
company or companies reasonably satisfactory to Landlord and Landlord's managing
agent and the  insurance  described  in (3),  (4) and (5) above,  and shall name
Landlord  and  Landlord's  managing  agent and  their  employees  and  agents as
additional insured parties. In addition,  each policy shall provide that it will
not be  canceled  or  altered  except  after * days  advance  written  notice to
Landlord, and the certificate of insurance shall so state.

                  C.  Policy Termination -Tenant's Contractor shall maintain all
insurance  required  hereunder  during the completion of Tenant's Work and for a
period ending * year after the date of completion of all Tenant's Work.

                  D.  Policies -Either Tenant or Tenant's Contractor may provide
the insurance  required  hereunder  except that Tenant's  Contractor  shall at a
minimum provide the insurance described in (1), (2) and (3) of subparagraph 3(a)
above.  Prior to commencement of work by Tenant's  Contractor,  it shall deliver
two (2) copies of the  aforementioned  policies or  evidence  of  policies  such
insurance to Landlord. All policies shall be deemed primary over any other valid
or collectible  insurance carried by Landlord or Landlord's managing agent. Such
policies  must be  approved  by  Landlord  prior to  commencement  of said work.
Without the express written consent of the Landlord, Tenant agrees that it shall
not allow any Contractor or  subcontractor  to commence work within the Building
until such entity has obtained the insurance required above. Landlord shall have
ten (10)  Business  Days to  disapprove  such  policies  or they  will be deemed
approved.

                  E.  Waiver of Subrogation - Tenant and Tenant's Contractor and
Subcontractors shall waive all rights against each other and the subcontractors,
sub-subcontractors,  agents and employees,  each of the other for damages caused
by fire or other perils  available under the normal "All Risk" I.S.0.  insurance
policy on the work itself and the Building.

              4. As provided above, Tenant shall notify Landlord of the names of
the proposed Tenant's Work general,  mechanical and electrical contractors.  All
Contractors  and  Subcontractors  engaged by Tenant shall be bondable,  licensed
contractors,  capable of performing  quality  workmanship and working in harmony
with Landlord's  general  contractor and other  contractors on the job. All work
shall be  coordinated  with the general  project work.  Landlord  shall have the
right to require Tenant's  Contractors to provide payment and performance  bonds
for any or all  Tenant's  Work,  such bonds to be paid for out of Tenant's  Work
Allowance if such funds are available.  Any bond shall be requested and provided
prior to the commencement of Tenant's Work.

              5.  Tenant's  Contractor  and  construction  shall  comply  in all
respects  with  applicable   federal,   state,  county  and/or  local  statutes,
ordinances, regulations, laws and codes. All required building and other permits
in connection  with the  construction  and  completion of Tenant's Work shall be
obtained and paid for by Tenant out of Tenant's Work Allowance if such funds are
available. If either party observes that any Tenant's Work is at variance in any
respect with any applicable codes, ordinances,  laws, rules and regulations,  it
shall promptly notify the other party and Landlord in writing, and any necessary
changes shall be made by Tenant.  If Tenant's  Contractor  performs any Tenant's
Work  that it knows is  contrary  to such  codes,  laws,  ordinances,  rules and
regulations,  and fails to  deliver  such  notice to the  Tenant  and  Landlord,
Tenant's Contractor shall assume full responsibility therefor and shall bear all
costs  attributable  to repair,  replacement or correction.  Tenant and Tenant's
Contractor and its subcontractors shall comply with Federal, State and local tax
laws, social security acts,  unemployment  compensation acts and such other acts
and laws as are applicable to the performance of Tenant's Work.

              6. All  contracts  shall be in writing,  and no work shall be done
except pursuant to such  contracts.  Tenant'scontract  with Tenant's  Contractor
shall be subject to Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed. Any approved contracts shall not be amended or
modified without approval by Landlord,  which consents shall not be unreasonably
withheld or delayed.  The Tenant's contract shall conform with the provisions of
the Lease,  including all  provisions  herein,  and shall  obligate the Tenant's
Contractor to complete Tenant's Work in accordance with the schedule referred to
in Paragraph 2(b) above.

              7. Work which  Landlord  shall have the right to have performed on
behalf of and for the benefit of Tenant shall be limited to work which  Landlord
deems  necessary  to be  done  on an  emergency  basis  and  which  pertains  to
structural  components,  the general  utility  systems for the project,  and the
erection of temporary  barricades  and  temporary  signs,  per standard  project
details and criteria,  during  construction or Tenant's Work which in Landlord's
reasonable opinion is not being performed in compliance with this Schedule 2.

              8. Tenant's Work shall be subject to the inspection and reasonable
approval  of  Landlord,   Landlord's  architect  and  general  Contractor.  Such
inspection  shall  be for  Landlord's  sole  benefit  and  shall  in no event be
construed as any benefit to, nor may Tenant rely  thereon.  All of Tenant's Work
shall be first  quality,  new  materials  and equipment and meet or exceed those
standards or qualities (as judged by Landlord's  architect)  contemplated at the
Building Complex.

              9. Tenant shall apply and pay for all utility meters except  where
metered service is provided by Landlord or public service agency.

              10. The Tenant's contract shall include a statement  requiring the
Contractor and all Subcontractors,  laborers,  and materialmen to execute a lien
waiver for any  interim and final  payments.  A copy of the  executed  waiver or
notice of refusal is to be immediately forwarded to the Landlord.

              11.  Tenant  and  Tenant's  Contractor  shall  indemnify  and hold
harmless  Landlord,  Tenant  and their  respective  representatives,  agents and
employees from and against all claims, damages, losses, and expenses, including,
but not limited to, reasonable  attorney's fees arising out of or resulting from
the  performance  of Tenant's Work or Tenant's  Contractor's  performance of the
Tenant's contract which are: (a) caused in whole or in part by any negligence or
omission  of  Tenant's  Contractor,  any  subcontractor  or anyone  directly  or
indirectly  employed  by any of them or anyone for whose acts any of them may be
liable;  and (b) attributable to bodily injury,  sickness,  disease or death, or
the destruction of tangible personal  property,  including loss of use resulting
from any of the  foregoing  acts and all Tenant's Work  contracts  shall reflect
this  indemnity.  In any and all claims  against the  Landlord,  Tenant or their
respective representatives or any of their agents or employees or by an employee
of  Tenant's  Contractor,  any  subcontractor,  anyone  directly  or  indirectly
employed by any of them, or anyone for whose acts any of them may be liable. The
indemnification  obligation  under this Paragraph 11 shall not be limited in any
way by any limitation on the amount or type of damages, compensation or benefits
payable by or for the Tenant's Contractor or any Subcontractor under the Workers
Compensation Act, disability benefit acts, or other employee benefit acts.

              12. In the event a Subcontractor or materialman files a mechanics'
lien as a result of performing work pursuant to Tenant's  contract then Tenant's
Contractor  shall  indemnify  the Tenant and Landlord  from said lien and shall,
when  requested  by the Tenant  and/or  Landlord,  pay the amount  requested  to
release  the lien or furnish  Tenant and  Landlord  (as  Landlord  or Tenant may
specify)  either a bond sufficient to discharge the lien or deposit in an escrow
approved by Landlord  and Tenant a sum equal to 150% of the amount of such lien.
Subject to any restrictions thereon posed by any mortgagee of Landlord, Tenant's
Contractor  shall have the right and  opportunity,  in cooperation with Landlord
and Tenant,  to contest the validity of any such  mechanics'  lien by such legal
means as are  available,  including the right to prosecute any appeals which may
be permitted by law so long as during the pendency of any contest or appeal, the
Tenant's  Contractor shall  effectively stay or prevent any official or judicial
sale of any of the real property or improvements  comprising the building,  upon
execution or otherwise,  and so long as the Tenant's  Contractor  pays any final
judgment  entered  with  respect  to any such  mechanics'  lien  and  thereafter
procures and records,  within a reasonable time, record satisfaction thereof. In
the  event the  Tenant  and  Landlord  shall be a party to any such  contest  or
appeal,  or any other action resulting from or arising out of the performance of
the  work by  Tenant's  Contractor  (or any of its  subcontractors,  agents,  or
employees),  Tenant's  Contractor  shall be  responsible  for all legal fees and
other costs and  expenses  incurred by Landlord  and Tenant in any such  action.
Landlord  and Tenant  shall have the right to obtain  separate  counsel of their
choice at Tenant's  Contractor's  expense. In the event that Tenant's Contractor
fails to pay the lien or provide a bond or cash escrow,  or  otherwise  fails to
fully satisfy and obtain the release of any lien or claim in accordance with the
provisions  hereof,  Tenant's  Contractor shall be obligated to pay to Tenant or
Landlord,  as the case may be, all monies that the latter may pay in discharging
any such lien  including all costs and  reasonable  attorneys'  fees incurred by
Landlord or Tenant in  settling,  defending  against,  appealing or in any other
manner dealing with any such lien.

              13. All risk of loss to all  property of the  Tenant's  Contractor
and its  subcontractors,  including,  but not  limited to,  tools and  materials
located on the Premises,  shall be the sole and exclusive  responsibility of the
Tenant's  Contractor  and its  subcontractors,  and the  Landlord  shall have no
responsibility therefor.

              14. If Tenant or Tenant's Contractor is adjudicated a bankrupt, or
if Tenant or Tenant's  Contractor makes a general  assignment for the benefit of
its creditors, or if a receiver is appointed on account of Tenant's Contractor's
insolvency,  or if Tenant's  Contractor  persistently  or repeatedly  refuses or
fails,  except in cases  where delay is  justified,  to supply  enough  properly
skilled  workmen or proper  materials  or if  Tenant's  Contractor  persistently
disregards  laws,  ordinances,  rules,  regulations  or  orders  of  any  public
authority having jurisdiction, or otherwise is guilty of a substantial violation
of a provision of Tenant's  contract,  then the Tenant (or Landlord in the event
of Tenant's  bankruptcy,  default,  or  assignment to  creditors)  may,  without
prejudice to any right or remedy and after giving the  Tenant's  Contractor  and
its surety, if any, * business days' written notice, terminate Tenant's contract
with the Contractor and in the event of Contractor's  default take possession of
all materials,  equipment,  tools,  construction equipment and machinery thereon
owned by Tenant's Contractor and shall thereafter finish all Tenant's Work being
constructed  and previously  contracted  for by Tenant's  Contractor by whatever
method it may deem expedient.  In such case,  Tenant's  Contractor  shall not be
entitled to receive any further  payments  from Tenant until  completion  of all
Tenant's Work;  provided,  however,  that the Tenant's actions shall not release
Tenant's  Contractor from any obligations to Tenant arising from its performance
or  nonperformance  under any contracts  prior to the date of such  termination.
Following the completion of such uncompleted Tenant's Work, Tenant shall pay the
Tenant's Contractor an amount equal to the aggregate of the amounts actually due
under Tenant's contract at the time of the termination of the contract, less the
cost to Tenant of completing all the Tenant's Work. Upon termination of Tenant's
contract,  Tenant's  Contractor shall execute and deliver all documents and take
all steps,  including the legal  assignment of Tenant's  Contractor  contractual
rights as the Tenant may require for the purpose of fully  vesting in Tenant the
rights and benefits of the Tenant's  Contractor  under  Tenant's  contract,  and
arising out of it. Tenant shall also pay to the Tenant's  Contractor fair rental
for any equipment retained.

              15. Tenant's  Contractor  shall warrant and agree, at its expense,
and at no expense  whatsoever  to  Landlord  or Tenant to correct or cause to be
corrected  any  defects in the  Tenant's  Work  (including,  but not limited to,
latent  defects or defects due to defective  workmanship  or  materials  whether
supplied,  installed or performed by Tenant's Contractor or any Subcontractor or
supplier) which occur within * year after Tenant's  Contractor has substantially
completed the Tenant's Work,  including  completion of all punchlist  items, (as
evidenced by the Tenant's  acceptance of such Work) or for such longer period as
may be set forth in the Tenant's contract.  Tenant's  Contractor shall require a
similar warranty in all Subcontracts,  and shall deliver to Landlord and Tenant,
together  with  appropriate   assignments,   if  required,   all  warranties  of
subcontractors  and suppliers of materials,  components and equipment  furnished
and installed in connection with such Tenant's Work. Tenant's Contractor further
agrees that all guaranties  and warranties  relating to any Tenant's Work or any
materials  incorporated into the Tenant's Work shall be extended to and given to
both the Landlord and the Tenant, as their respective interests in such Tenant's
Work exist, as more particularly set forth in the Lease between the Landlord and
Tenant.

              16. Landlord shall have no obligation  with  respect  to  Tenant's
Contractor.

              17. Landlord and Landlord's  contractor shall have the right, from
time to time as may be required, to inspect or perform work within the Premises.
Such inspections or work shall not conflict with Tenant's  Contractor's  work in
the Premises unless it is necessary in an emergency situation. Further, Landlord
shall have the right to suspend  Tenant's  Contractor's  work in the Premises if
such work, in the reasonable opinion of Landlord or of Landlord's contractor, is
presenting  or may  present  a danger to life,  safety,  or  property,  or in an
emergency situation.

              18.  Tenant  shall give  Landlord  reasonable  prior notice to all
inspections,  punchouts and other reviews during the course of  construction  so
that  Landlord  may observe  such events.  Further,  Landlord  shall be likewise
informed of all Building Department inspections and requirements for issuance of
the  Certificate  of Occupancy for the Premises.  Landlord's  observation of any
such  events  shall,  in no event be  construed  or  interpreted  as a review or
approval  by  Landlord  of any such work nor shall it  prevent  Landlord,  if it
thereafter  discovers any  deficiency in such Work,  from  requiring  correction
thereof  as  otherwise  provided  herein.  Tenant's  Contractor  shall be solely
responsible  for  obtaining  such  Certificate  of Occupancy and shall submit to
Landlord the original  thereof  prior to Tenant's  occupancy of the Premises for
the purpose of conducting business.

              19.  Provided  the  same  is  performed  in a  reasonable  manner,
Landlord's  architect  or other  agent  shall have the option of  reviewing  all
equipment and materials to be used in the  construction of the Tenant's Work and
all such work prior to Tenant move-in.  Such review shall in no event constitute
approval by Landlord  and shall not  unreasonably  delay  Tenant's  Contractor's
progress.

              20.  Tenant's  Contractor will not store materials or supplies in,
about, or outside the Building Complex (other than within the Premises)  without
the prior approval of the Landlord and Landlord's contractor.

              21.  Tenant's  Contractor  will  provide,  at  all  times,  direct
supervision  of any and all work being  performed  for the Tenant  including the
delivery and hoisting of materials, if necessary.

              22. Tenant's Contractor will cooperate with Landlord to dispose of
refuse  resulting  from  Tenant's  Work.  This may include the use of Landlord's
dumpster and a proration of charges  associated  with such use or at  Landlord's
option and Tenant's sole cost and expense the  placement of Tenant  Contractor's
dumpster at a location specified by Landlord.

              23. If any legal action or arbitration  proceeding is commenced in
order to enforce the provisions of Tenant's  contract or to recover damages as a
result of the alleged breach of the provisions thereof,  the prevailing party in
any such action or proceeding  shall be entitled to recover all reasonable costs
incurred in connection therewith, including reasonable attorneys' fees.

<PAGE>

         EXHIBIT D

                                  SIGN CRITERIA

         These  criteria  have been  established  for the  purpose of assuring a
quality  business  park and for the mutual  benefit of all Tenants.  Conformance
will be strictly enforced,  and any installed  nonconforming or unapproved signs
must be brought in  conformance  at the  expense of the  Tenant.  After  written
notice to Tenant of a violation and * days to cure such violation, ANY SIGN THAT
DOES NOT  CONFORM TO THESE  REGULATIONS  WILL BE  REMOVED  AND  REPLACED  WITH A
CONFORMING SIGN AT TENANT'S EXPENSE.

         It will be the sole  responsibility  of the  Tenant to  conform  to the
terms of this Sign Criteria as follows:

         1.   No later  than * days  prior to the  Delivery  Date,  Tenant  will
              provide, at its sole cost and expense, the Tenant's portion of the
              sign in conformance with the criteria below.

         2.   The sign base complete with the unit number has been  provided  on
              the Building.  The sign base is the property of the Landlord.

         3.   Tenant identification shall be restricted to the Tenant portion of
              the sign.

         4.   The  lettering/logo  and installation of the Tenant portion of the
              sign on the sign base  shall be paid for by Tenant  and remain the
              property of  Landlord.  All letters and other  scripting  shall be
              consistent  in color and style with the  lettering on the base and
              in good taste, in the opinion of Landlord.

         5.   Tenant  shall  submit to Landlord for its approval all copy and/or
              logo prior to installation of the Tenant portion of the sign.

         6.   Upon Lease termination,  Tenant  shall remove  its sign and return
              the Premises to their original condition.

         7.   No audible signs will be allowed;  provided,  however, the parties
              acknowledge   that  the  permitted   signs  may  emit  an  audible
              mechanical hum during  operation.  Landlord will allow  internally
              illuminated lighting with no moving fixtures.

         8.   Except  as  provided  herein,  no  banners,  pennants,   placards,
              freestanding  signs,  or signs affixed to  automobiles or trailers
              are  allowed  on the  Building,  in the  landscaped  areas,  or on
              streets or parking area. The restriction pertaining to automobiles
              or trailers  does not apply to magnetic or painted  identification
              signs placed on company or private  vehicles for use in the normal
              course of business.

         9.   All signs will be reviewed for conformance  with this criteria and
              overall aesthetics and design quality.  Approval or disapproval of
              sign submittals based on aesthetics shall remain the sole right of
              the Landlord.

         10.  Each Tenant  shall submit or cause to be submitted to Landlord for
              approval before fabrication at least * copies of detailed drawings
              indicating  location,  size,  layout,  design  and  color  of  the
              proposed signs, including all lettering and/or graphics.

         11.  All permits for signs and their  installation shall be obtained by
              the Tenant or their  representative  at Tenant's  cost and expense
              and will  comply  with all  appropriate  government  requirements.
              Nothing in this criteria shall imply a waiver of  requirements  by
              the local authorities.

         12.  Tenant   shall   be  responsible  for  the   fulfillment  of   all
              requirements and specifications.

         13.  All signs shall be constructed and installed at Tenant's expense.

<PAGE>

                                    EXHIBIT E

                          Commencement Date Certificate

         COMMENCEMENT DATE CERTIFICATE  ("Certificate") is executed this ___ day
of  __________________,  2000, by Frontier  Center One, LLC, a Colorado  limited
liability  company,   ("Landlord")  and  Frontier  Airlines,  Inc.,  a  Colorado
corporation,  ("Tenant")  with  respect  to and  forming a part of that  certain
Office Suite lease  ("Lease") dated  __________________,  20__, for the premises
commonly known as Suite _________________________________ ("Premises").

WITNESSETH:

         WHEREAS,  the  parties  desire to  reaffirm and/or amend and certify to
certain provisions of the Lease; and

         WHEREAS,  the  parties  desire  that the  matters  set forth  herein be
conclusive and binding on the parties.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1.       The   Lease   Commencement   Date   is   deemed   and   agreed   to  be
         _____________________,   20___,  and  the  Lease  termination  date  is
         _____________________,  20___, unless sooner terminated or extended, as
         provided therein.

2.

3.       Base Rent as set forth in Section 1.7 of the Lease is hereby  confirmed
         to be as follows:
4.

5.       Period                              Monthly Rent
         ------                              ------------
6.                                           $
         ------------------
7.                                           $
         ------------------
8.                                           $
         ------------------
9.                                           $
         ------------------
10.                                          $
         ------------------
11.

12.      Tenant's first installment of Base Rent in the amount of ______________
         Dollars ($__________) for the period of ___________________ (is due on)
         (was paid on) _______________, 20__.
13.

14.      Tenant's Share of Operating Expenses as set forth in Section 1.9 of the
         Lease is hereby confirmed to be _________%.  Tenant's first installment
         of Tenant's  Share of Operating  Expenses in an amount to be determined
         is due on _________________, 20____.

15.

16.      The Rentable Area of the Building  (as  defined in  Section 1.8  of the
         Lease) is agreed to be _________ rentable square feet.
17.

18.      The Rentable Area of the Premises (as defined in  Section  1.8  of  the
         Lease) is agreed to be __________ rentable square feet.
19.

20.      By  execution   hereof,   Tenant   acknowledges  and  agrees  that  all
         improvements or other work required of Landlord has been satisfactorily
         performed  except for latent  defects,  and Tenant  hereby  accepts the
         Premises in full compliance with the terms and conditions of the Lease.

21.

22.      Except as may be amended herein,  all terms and conditions of the Lease
         shall continue in full force and effect and are hereby  republished and
         reaffirmed in their entirety.

23.

24.      This Certificate  shall be  binding  upon and may be relied upon by the
         parties hereto and their respective legal  representatives,  successors
         and assigns.

25.

         IN WITNESS  WHEREOF,  the parties have executed this  Certificate as of
the day and year first above written.

                                     FRONTIER CENTER ONE LLC,
                                     a Colorado limited liability company

                                       By:    SHEA FRONTIER CENTER, LLC,
                                       a California limited liability company,
                                       its Manager

                                       By:   J.F. Shea Co., Inc., a Nevada
                                             corporation, its Manager

                                       By:  ___________________________________
                                                   Assistant Secretary

                                       By:  ___________________________________
                                               Assistant Secretary

                                                    "Landlord"

                                     FRONTIER AIRLINES, INC.,
                                     a Colorado corporation

                                       By:
                                       Title:

                                     ATTEST:

                                       By:
                                       Title:

                                                      "Tenant"

<PAGE>

                                    EXHIBIT F

                              RULES AND REGULATIONS

         The Rules and  Regulations  in this  Exhibit  F have  been  adopted  by
Landlord  for the  safety,  benefit  and  convenience  of all  tenants and other
persons in the Building  Complex.  Landlord  may,  from time to time in its sole
discretion, amend, delete from, or add to the Rules and Regulations and any such
modification shall be effective upon delivery of a copy thereof to Tenant at the
Premises.  Landlord  shall use  reasonable  efforts to secure  compliance by all
tenants  with the  Rules  and  Regulations  then in  effect,  but  shall  not be
responsible  to Tenant for the  failure of any person to comply  with such Rules
and  Regulations  nor shall any such failure relieve Tenant of its obligation to
comply with the Rules and Regulations. In these Rules and Regulations,  the Term
"Tenant"  includes the employees,  agents,  invitees and licensees of Tenant and
others permitted by Tenant to use or occupy the Premises.

1.   Tenant shall not do or permit anything to be done on the Premises, or bring
     or keep anything  therein which shall in any way obstruct or interfere with
     the rights of other  tenants,  or in any way injure or annoy them,  or with
     any insurance policy covering the Building and/or Common Areas thereof. Any
     picketing  of the  Premises  shall take place  only on  publicly  dedicated
     sidewalks and not on the Common Area or in the Premises. 2.

2.

3.   Tenant  shall not sweep or throw,  or permit to be swept or thrown from the
     Premises,  any dirt or other  substance into any of the Common Areas of the
     Building Complex.  Tenant shall not use, keep or permit to be used any foul
     or  noxious  gas or  substance  in the  Premises,  or permit or suffer  the
     Premises to be occupied or used in a manner  offensive or  objectionable to
     Landlord  or other  occupants  of the  property  by reason of noise,  odors
     and/or  vibrations.  Tenant  shall  place all refuse in proper  receptacles
     provided by Landlord (and charged as a Common Area Operating  Expense),  in
     the locations  designated by Landlord for the Building,  and shall keep the
     loading dock area outside the Premises free of all refuse. Tenant shall not
     loiter  on the  Common  Areas to smoke  except in the  Building  designated
     smoking  area.  Tenant  shall,  at its sole cost and  expense,  comply with
     recycling programs for the Building Complex established by Landlord.

4.

5.   Tenant shall not store,  nor cause to be stored,  any material,  substance,
     equipment,  supplies  or  vehicles  outside  or  adjacent  to the  Premises
     described in this Lease.

6.

7.   Tenant  and its  employees  or  vendors  shall  not go upon the roof of the
     Building without prior written consent of Landlord.

8.

9.   No animals,  birds,  reptiles or other pets may be brought in or kept in or
     about the Premises  without  Landlord's  written consent except for animals
     assisting persons with disabilities.

10.

11.  Unless escorted by an adult, children are not allowed on the Premises or in
     the Building Complex.

12.

13.  Canvassing,  soliciting  and  peddling  in the  Building  Complex or on the
     Premises are  prohibited,  and Tenant shall  cooperate to prevent the same.
     Only  persons  approved  in  writing,  from time to time by  Landlord,  may
     solicit  orders for,  sell,  serve or distribute  foods or beverages in the
     Building or Common Areas.  Except with Landlord's prior written consent and
     in  accordance  with  arrangements  approved by Landlord.  Tenant shall not
     permit  cooking  within the Premises,  except for microwave  ovens,  coffee
     makers,  etc., for the use of their employees,  agents or invitees.  Tenant
     shall be  entitled  to install  vending  machines  operated  by third party
     licensees and contract with a caterer who may serve breakfast  and/or lunch
     to Tenant,  its employees,  agents or invitees;  provided such caterer does
     not have its  personal  property or fixtures on the  Premises for more than
     the period reasonably  necessary to serve such meal(s) and such catering is
     operated  in  compliance  with the  requirements  of this Lease  including,
     without limitation, approval of Final Working Drawings showing the location
     of the eating area in which the caterer  will serve meals and  Paragraph 18
     below.  If such  caterer will occupy a portion of the Premises as evidenced
     by its personal  property or fixtures  remaining in the Premises beyond the
     meal it is  serving,  then Tenant  must  comply  with the  requirements  of
     Section 13 of the Lease for subletting a portion of the Premises.

14.  Tenant shall not use or keep on the Premises, any kerosene, gasoline or any
     inflammable,  combustible or explosive fluid, chemical or substance, or use
     any method of heating or air  conditioning  other than that  authorized  in
     writing by Landlord;  provided,  however, Tenant can store small quantities
     of paint thinner and other similar cleaning products in compliance with the
     requirements of all governmental and quasi-governmental  rules, regulations
     and laws applicable thereto and with the provisions of Section 7.

15.

16.  Tenant shall give prompt  notice to Landlord of any accidents to or defects
     in plumbing,  electrical  fixtures,  heating or cooling  apparatus or other
     utilities.

17.

18.  The toilet rooms, toilets,  urinals, wash bowls and other apparatus serving
     the  Premises  shall not be used for any purpose  other than that for which
     they were  constructed,  and no foreign  substance  of any kind  whatsoever
     shall be thrown therein.  All damage and expense  resulting from any misuse
     of the  fixtures  shall be borne by  Tenant  to the  extent  its  servants,
     employees, agents, visitors and licensees shall have caused it.

19.

20.  Tenant  shall  give  Landlord  reasonable  advance  notice of and refer all
     contractors,  contractors'  representatives  and  installation  technicians
     rendering any service to the Premises for Tenant to Landlord for Landlord's
     approval and  supervision  before  performance of any  contractual  service
     relating to the Premises  itself.  This  provision  shall apply to all work
     performed  which  may  effect  the  Building  or in the  Building  Complex,
     including  installation  of  telephones,  telegraph  equipment,  electrical
     devices and attachments and installations of any nature.  Excluded from the
     requirement of advance notice to Landlord shall be repairs and  maintenance
     of any of Tenant's own equipment or Tenant's Trade Fixtures to include, but
     not be limited to phone equipment,  security system, copiers and computers.
     Tenant  shall carry out those  activities  which are  restricted  herein in
     connection  with Tenant's  repair,  maintenance,  approved  alterations and
     improvements  in the Premises only during the times agreed to in advance by
     Landlord and in a manner which will not interfere  with the rights of other
     tenants in the Building Complex.

21.

22.  The sidewalks,  exits, entrances,  driveways and Common Areas in and around
     the Premises  shall not be  obstructed  by Tenant or used by Tenant for any
     purpose other than for ingress to and egress from the Premises.  The exits,
     entrances,  driveways,  Common  Areas,  and roof are not for the use of the
     general  public,  and  Landlord  shall,  in all cases,  retain the right to
     control and prevent  access thereto by all persons whose  presence,  in the
     judgment  of  Landlord,  shall  adversely  affect  the  safety,  character,
     reputation  and interest of the Building  and its tenants,  provided,  that
     nothing  herein  contained  shall be  construed  to prevent  such access to
     persons  with whom  Tenant  normally  deals in the  ordinary  course of its
     business  unless such persons are engaged in illegal  activities.  Landlord
     may  remove,   at  Tenant's   expense,   any  such   obstruction  or  thing
     (unauthorized by Landlord) without notice or obligation to Tenant. 23.

24.  Landlord agrees to furnish Tenant fifteen (15) keys without charge for each
     of the keyed exterior entry doors.  Additional  keys will be furnished at a
     nominal  charge.  Tenant  shall not alter any lock,  nor install any new or
     additional  locks or any bolts on any door of the Premises  without written
     consent of the Landlord.  If Landlord shall give its consent,  Tenant shall
     in each case,  furnish the  Landlord  with a key for any such lock.  Tenant
     acknowledges  that Landlord  retains a master key to all entry doors in the
     Building Complex.

25.

26.  Tenant must,  upon the  termination  of this Lease,  return to Landlord all
     keys either furnished to, or otherwise procured by Tenant; and in the event
     of the loss of any keys so furnished, Tenant shall pay to Landlord the cost
     of replacing  the same or of changing the lock or locks opened by such lost
     key if Landlord shall deem it necessary to make such change.  Landlord will
     not  permit  entrance  to the  Premises  by use of pass key  controlled  by
     Landlord,  to any  person at any time  without  the  permission  of Tenant,
     except employees,  contractors, or service personnel authorized by Landlord
     in accordance with the provisions of Section 33 herein.

27.

28.  Tenant  shall  ensure that the windows and doors of the Premises are closed
     and securely locked before leaving the Premises. Tenant must observe strict
     care and caution  that all water  faucets or other  apparatus  are entirely
     shut off before  Tenant or Tenant's  employees  leave the Premises so as to
     prevent  damage,  and  Tenant  shall be  responsible  for the costs for all
     injuries or damages  sustained by other  tenants or by Landlord as a result
     thereof.

29.

30.  Special  requests by Tenant shall be attended to only upon written approval
     by Landlord or its agent. Employees or agents of Landlord shall not perform
     any work for or do  anything  outside  of their  regular  duties for Tenant
     unless under written approval from the Landlord.

31.

32.  Landlord  will not be  responsible  for  damaged,  lost or stolen  personal
     property,  equipment, money or jewelry from Tenant's Premises or the Common
     Areas  regardless  of whether such loss occurs when area is locked  against
     entry or not.

33.

34.  Tenant, its employees,  agents or invitees shall comply with all directions
     of Landlord as posted in and for the use of the  Building  Complex  parking
     areas.

35.

36.  With regard to the employee  cafeteria or food  service  preparation  area,
     Tenant shall be obligated to comply with, at its sole cost and expense, any
     code,  ordinance,  statute,  law, rule,  regulation,  or requirement of any
     governmental agency having jurisdiction over the Premises or declaration of
     covenants  affecting the Real Property related to Tenant's  preparation and
     service of food from a portion of the  Premises and Tenant shall obtain all
     licenses  related to such  operation.  Tenant  shall  maintain any required
     grease  traps and all  plumbing and  electrical  facilities  related to the
     operation of the Cafeteria in good order, condition and repair. Tenant will
     at all times  maintain  and conduct its  business so that no odors,  fumes,
     vapors,  steam, moisture or condensation shall affect any walls, floors, or
     ceilings in the Building or emanate from the Premises. All refuse cans must
     be kept  inside the  Premises  and shall be kept as  required by the health
     codes.  Tenant shall at all times transport the refuse and garbage from the
     Premises to the refuse area in such manner as may be designated by Landlord
     from  time to time.  Tenant  shall  enter  into and keep in full  force and
     effect  throughout  the  term of this  Lease  a full  service  preventative
     extermination  contract with a licensed pest control  operator  approved in
     advance by  Landlord.  Further,  Tenant  agrees to keep the premises at all
     time free from pests attracted by the cafeteria and shall cause the same to
     be  exterminated  from time to time to the  satisfaction  of the  Landlord.
     Tenant  shall  have no right to apply  for and  obtain a  license  to serve
     liquor or wine from the Premises.

37.

38.  The Premises  shall not be used or  permitted  to be used for  residential,
     lodging or sleeping  purposes,  or for the  storage of personal  effects or
     property not required for business purposes.

39.

40.  No blinds,  drapes or other  window  coverings  shall be  detached  from or
     installed  in the Premises  without the express  prior  written  consent of
     Landlord.  In the event of  violation  of any of the  foregoing  by Tenant,
     Landlord may remove the articles  constituting  the  violation  without any
     liability and Tenant shall reimburse  Landlord for the expense  incurred in
     such  removal  and  replacement  upon demand as  additional  Rent under the
     Lease.

41.

42.  Tenant,  its  employees,  agents and  invitees  shall not bring any weapons
     and/or  explosives  into the  Premises,  Building  or Common  Areas for any
     reason;  provided,  however,  if Tenant  provides a security  guard for the
     Premises,  such guard may carry a firearm so long as such guard has a valid
     license therefor.

43.

44.  No  person  shall  enter  or  remain  within  the  Building  Complex  while
     intoxicated or under the influence of liquor or drugs.  Landlord shall have
     the right to exclude or expel from the Building  Complex any person who, in
     the sole discretion of Landlord, is under the influence of liquor or drugs.

45.

46.  Tenant shall  maintain the air  temperature  in its Premises warm enough to
     prevent the freezing of the plumbing and sprinkler system.

47.

48.  The failure of the  Landlord to seek  redress for  violation  of, or insist
     upon the strict performance of any covenants or conditions of this Lease or
     any of the Rules and  Regulations  set forth above or hereafter  adopted by
     Landlord,  shall not prevent a subsequent  act, which would have originally
     constituted  a  violation  from  having  all the  force  and  effect of any
     original  violation.  The receipt of Landlord  of any rental  payment  with
     knowledge  of the breach of any  covenant  of this Lease or breach of these
     Rules and Regulations shall not be deemed a waiver of such breach.

49.

50.  No act or thing done or omitted to be done by Landlord or Landlord's  agent
     during the term of the Lease which is necessary to enforce  these Rules and
     Regulations shall constitute an eviction by Landlord nor shall it be deemed
     a surrender or acceptance of said Premises, and no agreement to accept such
     surrender shall be valid unless in writing signed by Landlord.  No employee
     of Landlord or Landlord's  agent shall have any power to accept the keys of
     said Premises prior to the  termination of the Lease.  The delivery of keys
     to any employee of Landlord or Landlord's agent shall not be construed as a
     termination of the Lease or a surrender of the Premises.

<PAGE>

                                 PARKING LICENSE

         Landlord hereby grants a license to Tenant for the use by Tenant at the
option of Tenant on an unreserved, unassigned basis of * standard size passenger
vehicle  parking  stalls  (the  "Spaces")  on the  surface  lot  adjacent to the
Building  upon terms of the Lease and this  License.  Tenant's  Spaces  shall be
located in the area of the surface lot marked on the diagram  attached hereto as
Exhibit G-1.  Tenant shall have the right to designate  visitor parking near its
entrances at its discretion.  The right to use such spaces is non-exclusive  and
is in common  with  others on a  first-come,  first-served  basis (the  "Parking
Privileges").  In the event Tenant  elects to construct a day care center in the
Premises  and in the event an outdoor  play area may be  required  or desired in
connection  with the operation of such day care center,  Tenant's Spaces will be
reduced to provide such DC Play Area on the surface parking lot. Tenant shall be
required to obtain  Landlord's  prior written consent to the location of such DC
Play Area.

1.  Tenant's  right to the  Parking  Privileges  shall  commence  on the date of
execution  of the  Lease  and shall  continue  for the Term of the Lease  unless
sooner  terminated or extended,  or unless Tenant is in default not cured within
an  applicable  cure  period  under the  Lease.  The  Parking  Privileges  shall
automatically terminate upon the expiration or earlier termination of the Lease,
the Primary Lease Term and any extensions thereof.

2.

3.  Landlord  shall  have the right at any time to  change  the  arrangement  or
location of or to regulate the use of Spaces without  incurring any liability to
Tenant or its Designated Users as long as the number of Spaces  referenced above
area are available.  Landlord will not require parking off the Building  Complex
except for reasons beyond Landlord's control. Among other things, Landlord shall
be entitled to assign  designated areas of the surface lot for use by particular
persons  or groups of persons  and Tenant  shall  refrain  from  parking in such
Spaces as long as the number of Spaces  referenced  above are available.  Tenant
acknowledges that the Spaces will not be individually designated or reserved for
use by Tenant and that  Tenant  will use the Spaces in the surface lot in common
with all persons to whom or which  Landlord  grants the right to use the surface
lot  except  as  expressly  set  forth  herein  as long as the  number of Spaces
referenced above are available.

4.

5. In addition to the Rules and Regulations  set forth in the Lease,  the use of
the Spaces is subject to the following  rules related to Landlord's  measures to
restrict use of the Building parking facilities by unauthorized persons:

6.

7. a. Landlord will provide Tenant with written notice that Landlord  intends to
establish a system of  restricted  parking and will consult with Tenant prior to
finalizing any such system.

8.

9. b. At Landlord's  written  request,  Landlord may provide Tenant with tags or
stickers for Tenant to  distribute  to specific  individual  employees of Tenant
(the "Designated Users"). Alternatively,  Landlord may designate use of specific
spaces  to  Designated  Users;  but  Tenant  shall  remain  responsible  for all
obligations hereunder.  Within * business days after Landlord's written request,
Tenant  agrees to provide  Landlord with a listing of all vehicles or Designated
Users,  including names of vehicle owners, vehicle models, colors, license plate
numbers, and Tenant shall provide Landlord with a revised listing promptly after
any change to the listing.  Tenant shall  deliver to Tenant's  Designated  Users
parking  decals or other  identification  provided by Landlord which shall be at
all times displayed  prominently on the vehicles of Designated  Users.  Landlord
shall have the right to directly ban any Designated User from further use of any
of the  Spaces  for  violation  of the rules for the use of the  Spaces.  Anyone
parked in the Spaces  without a parking  decal may be towed by Landlord  without
notice and at the vehicle owner's expense.

10.

11. c. Tenant and Designated  Users shall park only in parking spaces and not on
ramps, corridors, approaches, or other areas designated as "no parking" areas.

12.

13. d. Tenant and  Designated  Users shall observe the special hours of opening,
closing and non-use of the surface lot when  closings are necessary for repairs,
cleaning and rehabilitation.

14. e. Tenant and  Designated  Users  shall use the Spaces  only for  automobile
parking to include Permitted Size Vehicles as defined in the Lease.

15.

16. f. Tenant and  Designated  Users shall  observe  all posted  vehicle  height
limitations.

17.

18. g. Tenant and Designated Users shall not allow unauthorized  vehicles to use
the Spaces and, except for emergencies,  shall not repair nor authorize  service
to vehicles parked in the parking structure or in surface parking area.

19.

20. If any portion of the surface lot shall be damaged by fire or other casualty
or shall be taken by right of  eminent  domain  or by  condemnation  or shall be
conveyed in lieu of any such taking, the Parking Privileges shall  automatically
cease and terminate, Tenant thereupon shall surrender to Landlord the Spaces and
all interest  therein,  and Landlord  may  re-enter and take  possession  of the
Spaces. 21.

22. Tenant shall not be permitted to assign the Spaces or any interest herein or
permit the Space or any part thereof to be used by other than  Designated  Users
without the prior written  consent of Landlord,  which consent may be granted or
withheld  in  Landlord's  sole  discretion,  except  as to  Landlord's  approved
subleases in which event consent shall be granted. Tenant shall remain primarily
liable  for  the  performance  of  the  obligations  of  the  Tenant   hereunder
notwithstanding any assignment or occupancy  arrangement  permitted or consented
to by Landlord.

23.

24. Neither  Landlord or its agents shall be liable for any damage,  fire, theft
or loss to  vehicles  or  other  properties  or  persons  while  in the  parking
facilities of the Building, whether caused by theft, collision, moving vehicles,
explosion,  fire, or any other activity or occurrence in such  Building.  Tenant
and/or  its  Designated  Users  assume the risk of such loss or damage and shall
indemnify,  defend and hold  Landlord and its agents  harmless  from any and all
claims  against and damages  incurred by Landlord  arising from  Tenant's or the
Designated Users' use of the parking facilities, including all costs, attorneys'
fees, expenses and liabilities incurred on or about any such claim or action.

25.

26.

<PAGE>

                                   EXHIBIT G-1

                                   PARKING MAP

<PAGE>

                                    EXHIBIT H

                             [INTENTIONALLY DELETED]

<PAGE>

                                    EXHIBIT I

                             JANITORIAL REQUIREMENTS

I.       GENERAL SERVICES

         A.       DAILY SERVICES

                  1.  Clean entry door glass.

                  2.  Sweep with chemically treated dust mop or vacuum all
                      floors.

                  3.  Spot clean composition floors and carpets.

                  4.  Dust desk, chairs and all other office furniture.

                  5.  Clean all ash trays and sand urns.

                  6.  Properly position furniture in offices.

                  7.  Empty all waste baskets and carry trash  to  pick up area.

                  8.  Spot clean door, door frames and counters.

                  9.  Spot clean partition and door glass.

                  10. Spot clean around wall switches.

                  11. Clean and polish drinking fountains.

                  12. Clean elevator and elevator tracks.

                  13. Leave on designated lights.

                  14. Police stairway entries.

II.      OTHER REQUIREMENTS

         A.       WEEKLY SERVICES

                  1.  Dust ledges and window sills.

                  2.  Perform low dusting.

                  3.  Dust the baseboards.

                  4.  Sweep/Vacuum stairways and dust the rails.

                  5.  Remove fingerprints from woodwork, walls and partitions.

         B.       MONTHLY SERVICES

                  1.  Perform high dusting (i.e., Door sashes and tops of
                      partitions).

                  2.  Dust picture frames.

         C.       FLOOR FINISHING SERVICES

                  1.  Clean and refinish all composition floors - Monthly.

III.     RESTROOM SERVICES

         A.       DAILY SERVICES

                  1.  Empty and wipe out all waste paper receptacles.

                  2.  Empty sanitary napkin containers and replace insert.

                  3.  Polish all metal and mirrors.

                  4.  Clean and polish all dispensers.

                  5.  Clean and disinfect wash basins, toilet bowls and urinals.

                  6.  Disinfect underside and tops of toilet seats.

                  7.  Spot clean tile walls and toilet partitions.

                  8.  Spot clean walls around wash basins.

                  9.  Clean floors with a germicidal solutions.

                  10. Refill soap, towel, tissue and seat cover dispensers.

         B.       SEMI-WEEKLY SERVICES

                  1.  Pour  clean water down floor drains to prevent sewer gases
                      from escaping.

         C.       WEEKLY SERVICES

                  1.  Wash  down  ceramic  tile  walls  and  toilet  compartment
                      partitions.

                  2.  Perform high dusting.

         D.       MONTHLY SERVICES

                  1.  Brush down vents.

                  2.  Machine scrub floors.

<PAGE>

                                TABLE OF CONTENTS

1.   Basic Provisions                                             1

2.   Premises, Parking and Common Areas                           3

3.   Term                                                         5

4.   Rent                                                         6

5.   Security Deposit                                             9

6.   Use                                                         11

7.   Hazardous Substances                                        11

8.   Maintenance, Repairs, Utility Installations,
     Trade Fixtures and Alterations                              12

9.   Insurance; Indemnity                                        15

10.  Casualty and Restoration of Premises                        17

11.  Real Property Taxes                                         18

12.  Utilities                                                   19

13.  Assignment and Subletting                                   19

14.  Default; Remedies                                           22

15.  Condemnation                                                26

16.  Brokers                                                     26

17.  Statements                                                  26

18.  Landlord's Liability                                        27

19.  Severability                                                27

20.  Interest on Past-Due Obligations                            27

21.  Time of Essence                                             27

22.  Rent                                                        27

23.  No Prior or Other Agreements                                28

24.  Notices                                                     28

25.  Waivers                                                     29

26.  Recording                                                   29

27.  Holdover                                                    29

28.  Cumulative Remedies                                         29

29.  Covenants and Conditions                                    29

30.  Binding Effect:  Choice of Law                              29

31.  Subordination; Attornment; Non-Disturbance                  29

32.  Attorneys' Fees                                             30

33.  Right of Entry                                              30

34.  Auctions                                                    30

35.  Signage                                                     30

36.  Termination; Merger                                         31

37.  Guarantor                                                   31

38.  Quiet Possession                                            31

39.  Rules and Regulations                                       31

40.  Security                                                    31

41.  Reservations                                                32

42.  Authority                                                   32

43.  Conflict                                                    32

44.  Offer                                                       32

45.  Amendments                                                  32

46.  Multiple Parties                                            32

47.  Building Name                                               32

48.  Confidentiality                                             32

49.  Satellite                                                   32

50.  Option to Extend                                            34

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}]]