Document:

<PAGE>
          CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
       SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
                      A REQUEST FOR CONFIDENTIAL TREATMENT

                                                                    Exhibit 10.4

                            AIRCRAFT LEASE AGREEMENT
                                   (MSN 29048)

                                   DATED AS OF

                                 OCTOBER 1, 1998

                                     BETWEEN

                   FIRST SECURITY BANK, NATIONAL ASSOCIATION,

                                       AS

                                     LESSOR

                                       AND

                   COMPANIA PANAMENA DE AVIACION, S.A. (COPA)

                                       AS

                                     LESSEE

                                  IN RESPECT OF

                        ONE BOEING MODEL 737-71Q AIRCRAFT

                       MANUFACTURER'S SERIAL NUMBER 29048

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                     <C>
1.   INTERPRETATION
     1.1     Definitions.............................................................    1
     1.2     Construction............................................................   17

2.   REPRESENTATIONS AND WARRANTIES
     2.1     Lessee's Representations and Warranties.................................   18
     2.2     Repetition..............................................................   22
     2.3     [Intentionally omitted.]................................................   22
     2.4     FSB's Representations and Warranties....................................   22

3.   CONDITIONS PRECEDENT
     3.1     Conditions Precedent to Lessor's Obligations............................   23
     3.2     Further Conditions Precedent to Lessor's Obligations....................   27
     3.3     Conditions Precedent to Lessor's Obligation to Request Deregistration...   27
     3.4     Waiver..................................................................   28
     3.5     Conditions Precedent to Lessee's Obligations............................   28

4.   DELIVERY
     4.1     Scheduled Delivery Month and Scheduled Delivery Date....................   28
     4.2     Commencement............................................................   28
     4.3     Delayed Delivery........................................................   29
     4.4     Acceptance of Aircraft..................................................   29
     4.5     Delivery................................................................   30
     4.6     Post-Production Modification............................................   30
     4.7     Deregistration..........................................................   30

5.   PAYMENTS
     5.1     Cash Deposit, Deposit Letter of Credit and Supplemental Rent
</TABLE>

                                        i

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<S>                                                                                     <C>
             Letter of Credit........................................................   31
     5.2     Rent....................................................................   32
     5.3     Supplemental Rent.......................................................   33
     5.4     Payments................................................................   34
     5.5     Gross-up................................................................   35
     5.6     Taxes and Other Payments................................................   35
     5.7     Value Added Tax.........................................................   35
     5.8     Information.............................................................   36
     5.9     Taxation of Indemnity Payments..........................................   36
     5.10    Default Interest........................................................   37
     5.11    Contest.................................................................   37
     5.12    Computations............................................................   38
     5.13    Payments Absolute.......................................................   39

6.   MANUFACTURERS' WARRANTIES
     6.1     Benefit of Warranties...................................................   39
     6.2     Parts...................................................................   40
     6.3     Reassignment............................................................   40

7.   LESSOR'S COVENANTS
     7.1     Quiet Enjoyment.........................................................   40
     7.2     End Payment.............................................................   40
     7.3     Manufacturer Credit and Product Support.................................   41
     7.4     Airworthiness Directive Cost Sharing....................................   42

8.   LESSEE'S COVENANTS
     8.1     Duration................................................................   42
     8.2     Further Covenants.......................................................   42
</TABLE>

                                       ii

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<S>                                                                                     <C>
9.   INSURANCE
     9.1     Insurances..............................................................   42
     9.2     Requirements............................................................   43
     9.3     Change..................................................................   43
     9.4     Insurance Covenants.....................................................   43
     9.5     Failure to Insure.......................................................   45
     9.6     Continuing Indemnity....................................................   45
     9.7     Application of Insurance Proceeds.......................................   45
     9.8     Insurance for Lessee's Own Accounts.....................................   46

10.  INDEMNITY
     10.1    General.................................................................   46
     10.2    Duration................................................................   47
     10.3    Exceptions..............................................................   47

11.  EVENTS OF LOSS
     11.1    Pre-delivery............................................................   48
     11.2    Post-delivery...........................................................   48
     11.3    Engines.................................................................   49
     11.4    Requisition.............................................................   49

12.  REDELIVERY OF AIRCRAFT
     12.1    Notification............................................................   50
     12.2    Redelivery..............................................................   50
     12.3    Redelivery Acknowledgment...............................................   50
     12.4    Short Term Storage......................................................   50
     12.5    Expenses................................................................   50
     12.6    Warranty Transfer.......................................................   51
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                                       iii

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<S>                                                                                     <C>
     12.7    Non-Compliance..........................................................   51
     12.8    Export..................................................................   51
     12.9    Late Redelivery.........................................................   51

13.  DEFAULT
     13.1    Events..................................................................   52
     13.2    Rights..................................................................   56
     13.3    Export..................................................................   57
     13.4    Default Payments........................................................   57
     13.5    Survival................................................................   58

14.  ASSIGNMENT, NOVATION
     14.1    Lien....................................................................   58
     14.2    Lease Assignment/Novation...............................................   58

15.  ILLEGALITY......................................................................   59

16.  DISCLAIMERS AND WAIVERS
     16.1    Exclusion and Waiver....................................................   59
     16.2    Certificate of Acceptance...............................................   60

17.  MISCELLANEOUS
     17.1    Waivers, Remedies, Cumulative...........................................   61
     17.2    Delegation/Agency Agreement.............................................   61
     17.3    Certificates............................................................   61
     17.4    Appropriation...........................................................   62
     17.5    Currency Indemnity......................................................   62
     17.6    Set-off.................................................................   62
     17.7    Severability............................................................   63
     17.8    Remedy..................................................................   63
</TABLE>

                                       iv

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<TABLE>
<S>                                                                                     <C>
     17.9    Expenses................................................................   63
     17.10   Time of Essence.........................................................   64
     17.11   Notices.................................................................   64
     17.12   Law and Jurisdiction....................................................   65
     17.13   Sole and Entire Agreement...............................................   66
     17.14   Indemnities.............................................................   66
     17.15   Counterparts............................................................   66
     17.16   Language................................................................   66
     17.17   Modification............................................................   66
     17.18   Owner Trustee...........................................................   67
</TABLE>

SCHEDULE 1 DESCRIPTION OF AIRCRAFT

     Part 1 Description of Aircraft
     Part 2 General Features
     Part 3 Lessee's Options
     Part 4 Lessee's Post Production Modification
     Part 5 Documents
     Part 6 Records

SCHEDULE 2 CERTIFICATE OF ACCEPTANCE

     Part 1 Certificate of Acceptance
     Part 2 Aircraft Delivery Conditions

SCHEDULE 3 LESSEE'S COVENANTS

     Part 1 Information
            1.   General Information
            2.   Technical Information
            3.   Financial Information

     Part 2 Lessee General Covenants
            4.   General
            5.   Third Party

                                        v

<PAGE>

            6.   (Intentionally Left Blank)

     Part 3 Operation and Inspection
            7.   Lawful and Safe Operation
            8.   Protection
            9.   Sub-Leasing
            10.  Inspection

     Part 4 Title, Pooling
            11.  Title
            12.  Title on Equipment Changes
            13.  Pooling of Engines and Parts

     Part 5 Technical Covenants
            14.  Maintenance and Repair
            15.  Removal of Engines and Parts
            16.  Installation of Engines, Landing Gear and Parts
            17.  Non-Installed Engines, Landing Gear and Parts
            18.  Equipment Changes
            19.  Documents and Records

SCHEDULE 4 AIRCRAFT REDELIVERY

SCHEDULE 5 INSURANCE REQUIREMENTS

SCHEDULE 6 FORM OF LEGAL OPINION

SCHEDULE 7 FORM OF REPORT - AIRFRAME AND ENGINE STATUS REPORT

                                       vi

<PAGE>

                            AIRCRAFT LEASE AGREEMENT
                                   (MSN 29048)

This Aircraft Lease Agreement (MSN 29048) is made as of the 1st day of October,
1998 between:

(1) FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity,
except as otherwise expressly provided herein, but solely as Owner Trustee, a
national banking association whose principal place of business is 79 South Main
Street, Salt Lake City, Utah 84111 ("Lessor"); and

(2) COMPANIA PANAMENA DE AVIACION, S.A. (COPA), a company incorporated under the
laws of Panama whose registered office is at Avenida Justo Arosemena y Calle 39,
Panama 1, Republic of Panama ("Lessee");

WHEREAS, Lessor wishes to lease to Lessee and Lessee is willing to lease from
Lessor the Aircraft subject to the terms and conditions of this Agreement upon
completion of the manufacture of the Aircraft by The Boeing Company;

IT IS AGREED as follows:

1.   INTERPRETATION

     1.1  DEFINITIONS

     In this Agreement the following expressions have the following meanings:

<TABLE>
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AFFILIATE                        With respect to a specified person, any other
                                 person directly or indirectly controlling or
                                 controlled by or under direct or indirect
                                 common control with such person. For the
                                 purposes of this definition, "control,"
                                 "controlling" and "controlled" when used with
                                 respect to any specified person means the power
                                 to direct the management and policies of such
                                 person, directly or indirectly, whether through
                                 the ownership of securities having ordinary
                                 voting power for the election of directors, by
                                 contract or otherwise.

AGREED MAINTENANCE PERFORMER     Lessee, Continental Airlines, Inc., a
                                 maintenance performer approved from time to
                                 time by Continental Airlines, Inc. for its own
                                 aircraft, or any other person agreed to from
                                 time to time in writing by Lessor, such
                                 agreement not to be unreasonably withheld.

AGREED MAINTENANCE PROGRAM       The continuous airworthiness Boeing Model
                                 737-700 maintenance program, which shall be
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                                 substantially the same as that used by
                                 Continental Airlines, Inc. for its own Boeing
                                 Model 737-700 aircraft and which shall be
                                 approved by the FAA and the Air Authority for
                                 use by Lessee, encompassing scheduled
                                 maintenance, condition monitored maintenance,
                                 and/or on-condition maintenance of Airframe,
                                 Engines and Parts, including but not limited to
                                 servicing, testing, preventative maintenance,
                                 repairs, structural inspections, system checks,
                                 overhauls, corrosion control, inspections and
                                 treatments.

AGREED VALUE                     As defined in Annex A.

AGREEMENT                        This Aircraft Lease Agreement (MSN 29048),
                                 including all annexes, schedules and exhibits
                                 hereto, as modified, supplemented and amended
                                 from time to time.

AIR AUTHORITY                    During that portion of the Term extending from
                                 the Delivery Date to the Deregistration Date,
                                 the FAA or any successor thereof, and during
                                 that portion of the Term extending from the
                                 Deregistration Date to the Redelivery Date, the
                                 Directorate of Civil Aeronautics of the
                                 Republic of Panama or any successor thereof.

AIRCRAFT                         The aircraft described in Part 1 of Schedule 1,
                                 which includes the Airframe, the Engines, and
                                 (unless the context does not permit) the
                                 Documents and Records, as it may be modified
                                 pursuant to the terms of Clause 4.6.

AIRFRAME                         The Aircraft including Parts, modules, APU,
                                 appliances, components, equipment and
                                 furnishings, but excluding the Engines and
                                 Documents and Records.

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

BASELINE SPECIFICATION           The Baseline Specification referred to in Part
                                 1 of Schedule 1.

BENEFICIARY                      Tombo Aviation Inc., a Delaware corporation.
</TABLE>

                                     PAGE 2

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<TABLE>
<S>                              <C>
BUSINESS DAY                     A day (other than a Saturday or Sunday) on
                                 which banks are open for business in New York,
                                 New York, and, in respect of payments to be
                                 made by Lessee hereunder, Panama.

CASH DEPOSIT                     As defined in Annex A.

C-CHECK                          Scheduled Airframe systems and structural
                                 checks described as a "C" Check in the Agreed
                                 Maintenance Program.

COPA HOLDINGS                    COPA Holdings S.A.

CYCLE                            (i) In relation to the Airframe, one take-off
                                 and landing of the Aircraft, and (ii) in
                                 relation to each Engine, the APU and the
                                 Landing Gear, one take-off and landing of the
                                 airframe (including the Airframe) on which such
                                 Engine, APU or Landing Gear, as the case may
                                 be, is from time to time installed.

DAMAGE NOTIFICATION THRESHOLD    As defined in Annex A.

D-CHECK                          Those items of maintenance characterized by the
                                 Agreed Maintenance Program as a D-Check.

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

DELIVERY DATE                    The date on which the Aircraft is tendered for
                                 delivery by Lessor to Lessee in accordance with
                                 this Agreement.

DELIVERY LOCATION                Manufacturer's facility in Seattle, Washington,
                                 USA or such other airport or location as agreed
                                 upon by Lessor and Lessee.

DEPOSIT LETTER OF CREDIT         The letter of credit in respect of the deposit
                                 referred to in Clause 5.1 and issued pursuant
                                 to Clause 5.1, and any replacement or renewal
                                 of such letter of credit issued in accordance
                                 with the terms of this Agreement.

DEPOSIT LETTER OF CREDIT         As defined in Annex A.
DELIVERY AMOUNT
</TABLE>

                                     PAGE 3

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<TABLE>
<S>                              <C>
DEPOSIT LETTER OF CREDIT         As defined in Annex A.
EXECUTION AMOUNT

DEREGISTRATION DATE              The date the FAA deregisters the Aircraft upon
                                 the request of Lessor following satisfaction of
                                 the conditions precedent set forth in Clause
                                 3.3.

DEREGISTRATION POWER OF          The deregistration power of attorney given by
ATTORNEY                         Lessee to Lessor in form and substance
                                 reasonably satisfactory to Lessor.

DOCUMENTS                        (i) The Aircraft, Engine, and Part manuals,
                                 certificates, and other documentation listed in
                                 Part 5 of Schedule 1 to this Agreement; (ii)
                                 other manuals (including without limitation,
                                 operations, maintenance, repair, overhaul or
                                 parts manuals), data, drawings or other
                                 documents that are required to be maintained
                                 during the Term under the terms of this
                                 Agreement or by the Air Authority, and those
                                 that are provided to Lessee with respect to the
                                 Aircraft, and (iii) any revisions, additions,
                                 renewals, or replacements from time to time
                                 made by Manufacturer and/or Lessee in
                                 accordance with this Agreement and to comply
                                 with applicable laws and documentary
                                 requirements of the FAA under FAR Part 129 or
                                 FAR Part 145, as the case may be.

DOLLARS AND $                    The lawful currency of the USA.

ENGINE                           Whether or not installed on the Aircraft,

                                 (1)  each engine of the manufacture and model
                                      specified in Part 1 of Schedule 1
                                      installed on the Aircraft on the Delivery
                                      Date, such engines being described as to
                                      serial numbers on the certificate of
                                      acceptance to be executed by Lessee upon
                                      delivery of the Aircraft; or

                                 (2)  any engine which has replaced such Engine,
                                      having clear and unencumbered title which
                                      has, or should have, passed to Lessor in
                                      accordance with this Agreement;
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<TABLE>
<S>                              <C>
                                 and in each case including all modules and
                                 Parts from time to time belonging to or
                                 installed in an Engine, but excluding any
                                 properly replaced engine, title to which has,
                                 or should have, passed from Lessor pursuant to
                                 this Agreement.

ENGINE MANUFACTURER              CFM International, Inc.

EQUIPMENT CHANGE                 Any modification or addition to the Aircraft,
                                 excluding structural changes.

EVENT OF DEFAULT                 An event specified in Clause 13.1.

EVENT OF LOSS                    With respect to the Aircraft, the Airframe or
                                 any Engine:

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

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

                                 (3)  the requisition of title, or other
                                      compulsory acquisition, capture, seizure,
                                      deprivation, confiscation or detention for
                                      any reason of the Aircraft, the Airframe
                                      or Engine by any Government Entity
                                      (whether de jure or de facto), but
                                      excluding the events described in clause
                                      (4) below; or

                                 (4)  the hi-jacking, theft, condemnation,
                                      confiscation, seizure or requisition for
                                      use or hire of the Aircraft, the Airframe
                                      or Engine which deprives any person
                                      permitted by this Agreement to have
                                      possession and/or use of the Aircraft, the
                                      Airframe or Engine of its possession
                                      and/or use for more than 120 days or
</TABLE>

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<TABLE>
<S>                              <C>
                                      such shorter period within which insurers
                                      consider an event of loss has taken place
                                      as a result of those events.

EXCUSABLE DELAY                  With respect to the delivery of the Aircraft
                                 from Lessor to Lessee, delay or non-performance
                                 due to or arising out of any delay or failure
                                 in delivery of the Aircraft by the Manufacturer
                                 for any reason whatsoever (other than as a
                                 result of any act or omission of Lessor or any
                                 Person claiming by, through or under Lessor
                                 that is not permitted or otherwise anticipated
                                 by the terms of this Agreement); or any natural
                                 disaster, civil war, insurrection or riot,
                                 fire, flood, explosion, earthquake, accident,
                                 epidemic, quarantine restriction, nuclear or
                                 radioactive contamination, any act of
                                 government, governmental priority, allocation,
                                 regulation or order affecting directly or
                                 indirectly, the Aircraft, any manufacturer, any
                                 maintenance performer or Lessor or any
                                 materials or facilities, strike or labor
                                 dispute causing cessation, slowdown or
                                 interruption of work; inability to procure
                                 equipment, data or materials from manufacturers
                                 or suppliers in a timely manner; damage,
                                 destruction, loss or the necessity for service
                                 or repair; or any other cause to the extent
                                 that such cause is beyond the reasonable
                                 control of Lessor whether above mentioned or
                                 not and whether or not similar to the
                                 foregoing.

EXPIRY DATE                      Subject to Clause 4.6, the day falling sixty
                                 (60) months plus fourteen (14) days after the
                                 Delivery Date or such earlier date on which:

                                 (1)  the Aircraft has been redelivered in
                                      accordance with this Agreement;

                                 (2)  this Agreement has been terminated in
                                      accordance with its terms; or

                                 (3)  Lessor receives the Agreed Value following
                                      an Event of Loss.

FAA                              The Federal Aviation Administration of the USA
                                 and any successor thereof.
</TABLE>

                                     PAGE 6

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<TABLE>
<S>                              <C>
FAR                              The USA Federal Aviation Regulations.

FINAL INSPECTION                 The series of inspections to be conducted by
                                 Lessor or Lessor's representative during the
                                 course of the Redelivery Check and up to
                                 Redelivery of the Aircraft.

FINANCIAL INDEBTEDNESS           As defined in Annex A.

FLIGHT HOUR                      (i) In relation to the Airframe, each hour or
                                 part thereof (rounded to two decimal places)
                                 elapsing from the moment the wheels of the
                                 Aircraft leave the ground on take off until the
                                 wheels of the Aircraft next touch the ground,
                                 and (ii) in relation to each Engine, the APU
                                 and the Landing Gear, each hour or part thereof
                                 (rounded to two decimal places) elapsing from
                                 the moment the wheels of the airframe
                                 (including the Airframe) on which such Engine,
                                 APU or Landing Gear, as the case may be, is
                                 from time to time installed leave the ground on
                                 take off until the wheels of such airframe next
                                 touch the ground.

FSB                              First Security Bank, National Association, not
                                 in its capacity as Owner Trustee, but in its
                                 individual capacity.

GOVERNING LAW                    The laws of the State of New York, USA.

GOVERNMENT ENTITY                (1)  any national government, political
                                      subdivision thereof, or local jurisdiction
                                      therein;

                                 (2)  any instrumentality, board, commission,
                                      court, or agency of any thereof, however
                                      constituted; and

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

HABITUAL BASE                    Panama City, Republic of Panama.
</TABLE>

                                     PAGE 7

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<TABLE>
<S>                              <C>
INDEMNITEES                      Lessor and Beneficiary, including any of their
                                 respective successors and assigns, and any
                                 shareholders, Affiliates, directors, officers,
                                 servants, agents, representatives and employees
                                 thereof, and the Manufacturer.

INSURANCE DEDUCTIBLE AMOUNT      As defined in Annex A.

INSURANCES                       The insurances in respect of the Aircraft as
                                 further described in Clause 9.1.

JURISDICTION OF INCORPORATION    Republic of Panama.

JURISDICTION OF REGISTRATION     During that portion of the Term extending from
                                 the Delivery Date to the Deregistration Date,
                                 the USA, and during that portion of the Term
                                 extending from the Deregistration Date to the
                                 Redelivery Date, the Republic of Panama.

LANDING GEAR                     The nose and main landing gear assemblies of
                                 the Aircraft, excluding any rotable components
                                 such as wheels, tires and brakes, and
                                 consumable items.

LESSEE DOCUMENTS                 This Agreement, the Lessee Assignment, any
                                 other agreement or document signed by Lessee,
                                 relating to this Agreement and delivered on the
                                 Delivery Date, and any other agreement or
                                 document which Lessor and Lessee agree in
                                 writing to be a Lessee Document.

LESSOR LIEN                      (1)  Any Lien whatsoever from time to time
                                      existing created by Lessor, Beneficiary or
                                      any Person claiming by, through or under
                                      Lessor or Beneficiary in connection with
                                      the financing or refinancing of the
                                      Aircraft;

                                 (2)  Any Lien which results from the acts of,
                                      omissions of or claims against Lessor,
                                      Beneficiary, or any Person claiming by,
                                      through or under Lessor or Beneficiary not
                                      related to the transactions contemplated
                                      by or permitted under this Agreement,
                                      including, without limitation,
                                      post-delivery modifications performed on
                                      the Aircraft;
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                                 (3)  Any Lien for or in respect of Lessor
                                      Taxes; or

                                 (4)  Any Lien arising as a result of or in
                                      connection with any voluntary or
                                      involuntary sale, assignment, transfer,
                                      conveyance or other disposition
                                      (collectively, a "Transfer") by the
                                      Lessor, the Beneficiary, any transferee of
                                      the Lessor or the Beneficiary or any
                                      successor or assign of the Lessor or
                                      Beneficiary of the Aircraft, this
                                      Agreement or any part of their respective
                                      right, title and interest in or to the
                                      Aircraft or this Agreement.

LESSOR TAXES                     (1)  Taxes imposed by any federal, state, local
                                      Government Entity, any subdivision or
                                      department thereof or therein or any
                                      international or other taxing authority
                                      whether of the United States or any other
                                      country or political subdivision thereof
                                      (each a "Taxing Authority") against Lessor
                                      or Beneficiary or any Person lawfully
                                      claiming by, through or under Lessor or
                                      Beneficiary or all or any part of the
                                      Aircraft unrelated to (A) the licensing,
                                      location, installation, acceptance,
                                      delivery, registration, recordation of
                                      title, possession, repossession, control,
                                      operation, use, maintenance, repair,
                                      replacement, return, abandonment, storage,
                                      redelivery, leasing, subleasing,
                                      modification, importing or exporting of
                                      the Aircraft or any part thereof, (B) the
                                      rentals, receipts or earnings from any
                                      transactions contemplated by this
                                      Agreement, or (C) any other amount paid or
                                      payable pursuant to this Agreement or any
                                      document related thereto;

                                 (2)  Taxes (i) that are based upon, measured by
                                      or with respect to the gross or net
                                      income, capital, gains, profits, net
                                      worth, franchise or conduct of business
</TABLE>

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<S>                              <C>
                                      of Lessor or Beneficiary or any Person
                                      lawfully claiming by, through or under
                                      Lessor or Beneficiary (including, without
                                      limitation, minimum taxes or alternative
                                      minimum taxes), other than Taxes in the
                                      nature of sales, use, rental, license,
                                      VAT, ad valorem or property Taxes,
                                      ("Income Taxes") and (ii) that are imposed
                                      on Lessor, Beneficiary or any Person
                                      lawfully claiming by, through or under
                                      Lessor or Beneficiary by (A) the United
                                      States federal government, (B) in the case
                                      of Lessor or any Person lawfully claiming
                                      by, through or under Lessor, the state and
                                      local taxing jurisdictions and authorities
                                      in the United States in which the Lessor
                                      maintains its principal office or
                                      principal place of business, (C) in the
                                      case of Beneficiary or any Person lawfully
                                      claiming by, through or under Beneficiary,
                                      the state and local taxing jurisdictions
                                      and authorities in the United States in
                                      which Beneficiary maintains its principal
                                      office or principal place of business, (D)
                                      any other state or local taxing
                                      jurisdiction or authority in the United
                                      States in which Lessor or Beneficiary or
                                      any Person lawfully claiming by, through
                                      or under Lessor or Beneficiary, as the
                                      case may be, would be subject to Income
                                      Tax without regard to the transactions
                                      contemplated by this Agreement, and (E)
                                      any foreign government or any political
                                      subdivision or taxing authority thereof,
                                      any territory or possession of the United
                                      States, or any international authority in
                                      which Lessor or Beneficiary or any Person
                                      lawfully claiming by, through or under
                                      Lessor or Beneficiary, as the case may be,
                                      would be subject to Income Tax without
                                      regard to the transactions contemplated by
                                      this Agreement;
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<S>                              <C>
                                 (3)  Taxes imposed on Lessor or Beneficiary or
                                      any Person lawfully claiming by, through
                                      or under Lessor or Beneficiary to the
                                      extent imposed as a result of (i) the
                                      willful misconduct or gross negligence of
                                      Lessor or Beneficiary or any Person
                                      lawfully claiming by, through or under
                                      Lessor or Beneficiary, (ii) any breach by
                                      Lessor, Beneficiary or any person claiming
                                      by or through Lessor or Beneficiary of any
                                      representations, warranties, covenants or
                                      obligations contained in this Agreement or
                                      any other document or instrument delivered
                                      under or in connection with this Agreement
                                      or the transactions contemplated herein,
                                      (including, without limitation, any breach
                                      by Lessor, Beneficiary or other person
                                      claiming by or through Lessor or
                                      Beneficiary of any covenant of quiet
                                      enjoyment set forth herein or in any
                                      document or instrument delivered pursuant
                                      to or in connection with this Agreement);

                                 (4)  Taxes imposed on Lessor or Beneficiary or
                                      any Person lawfully claiming by, through
                                      or under Lessor or Beneficiary as a result
                                      of a sale, assignment, transfer or other
                                      disposition, whether voluntary or
                                      involuntary, (each a "Transfer"), by
                                      Lessor or Beneficiary or any other Person
                                      other than Lessee, of the Aircraft or any
                                      legal or beneficial interest in the
                                      Aircraft, this Agreement or any portion
                                      hereof or thereof; provided however, that
                                      such Transfer does not result from the
                                      exercise of any remedy provided for in
                                      this Agreement or at law during the
                                      continuance of an Event of Default, in
                                      connection with the termination of this
                                      Agreement or otherwise in connection with
                                      this Agreement; and

                                 (5)  Taxes imposed on Lessor or Beneficiary or
                                      any Person lawfully claiming by,
</TABLE>

                                    PAGE 11

<PAGE>

<TABLE>
<S>                              <C>
                                      through or under Lessor or Beneficiary
                                      with respect to any period commencing or
                                      event occurring (i) prior to the Delivery
                                      of the Aircraft, (ii) after the Redelivery
                                      of the Aircraft in conformity with the
                                      applicable provisions of this Agreement
                                      and (iii) at any time during which Lessee
                                      shall have been deprived of the use or
                                      possession of the Aircraft as a result of
                                      a breach by Lessor or any Person claiming
                                      by, through or under Lessor of Lessee's
                                      rights of quiet and peaceful use and
                                      possession of the Aircraft as set forth in
                                      Clause 7.1 hereof or in any other
                                      instrument or document delivered in
                                      connection with this Agreement or the
                                      transactions contemplated herein.

LETTER(S) OF CREDIT              The Deposit Letter of Credit, the Supplemental
                                 Rent Letter of Credit, or both, as the case may
                                 be.

LIBOR                            The offered rate appearing on page 3750 of the
                                 Telerate screen (or any replacement page) which
                                 displays the British Bankers Association
                                 Interest Settlement Rates for deposits in
                                 Dollars at or about 11:00 a.m. (London time)
                                 for the required period for value on the due
                                 date, or the preceding Business Day if such due
                                 date is not a Business Day.

LIEN                             Any mortgage, pledge, lien, charge, claim,
                                 encumbrance, hypothecation, assignment, right
                                 of set-off, agreement, arrangement, lease or
                                 security interest affecting the title to or any
                                 interest in property.

LIFE LIMITED PART                A part or component on the Aircraft having a
                                 life limit identified in either the Aircraft's
                                 FAA Type Certificate, applicable manufacturers'
                                 documents and manuals, or by Airworthiness
                                 Directive, alternatively referred to as "LLP."

MAJOR CHECKS                     Any C-Check, multiple C-Check or D-check or
                                 equivalent heavy maintenance visit or segment
</TABLE>

                                    PAGE 12

<PAGE>

<TABLE>
<S>                              <C>
                                 thereof as set out in the Agreed Maintenance
                                 Program.

MANUFACTURER                     The Boeing Company.

MINIMUM LIABILITY COVERAGE       As defined in Annex A.

MODIFICATION LIMIT               As defined in Annex A.

NEW OPERATOR CREDIT              As defined in Annex A.

OWNER TRUSTEE                    First Security Bank, National Association, not
                                 in its individual capacity, except as expressly
                                 provided herein, but solely as owner trustee
                                 under the Trust Agreement.

OWNER TRUSTEE DOCUMENTS          This Agreement, the Trust Agreement and the
                                 Purchase Agreement Assignment.

PART                             Whether or not installed on the Aircraft:

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

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

                                 but excluding any such items title to which
                                 has, or should have, passed from Lessor
                                 pursuant to this Agreement.

PAYMENT ACCOUNT                  As defined in Annex A.

PERMITTED LIEN                   (1)  The rights of Lessor and Lessee provided
                                      in this Agreement;

                                 (2)  any Lessor Lien;

                                 (3)  any lien for Taxes of Lessee not yet
                                      assessed or, if assessed, not yet due and
                                      payable, or being contested in good faith
                                      by appropriate proceedings and not
                                      material in the aggregate; and
</TABLE>

                                    PAGE 13

<PAGE>

<TABLE>
<S>                              <C>
                                 (4)  any lien of a repairer, mechanic, carrier,
                                      hangar keeper, airport, air navigation
                                      authority or other similar lien arising in
                                      the ordinary course of business or by
                                      operation of law in respect of obligations
                                      of Lessee or any permitted sublessee which
                                      are not overdue or are being contested in
                                      good faith by appropriate proceedings;

                                 but only if, in the case of both (3) and (4),
                                 (a) adequate reserves have been provided by
                                 Lessee for the payment of such Taxes or
                                 obligations; and (b) such proceedings, or the
                                 continued existence of the lien, do not give
                                 rise to any material risk of the sale,
                                 forfeiture or other loss of the Aircraft or any
                                 interest therein or of criminal liability on
                                 the part of Lessor.

PERSON OR PERSON                 Any individual, firm, partnership, joint
                                 venture, trust, trustee, Government Entity,
                                 organization, association, corporation,
                                 government agencies, committees, departments,
                                 authorities and other bodies, corporate or
                                 incorporate, whether having distinct legal
                                 status or not, or any number of any of the
                                 foregoing.

PURCHASE AGREEMENT               Purchase Agreement No. 1906, dated May 2, 1996,
                                 between Manufacturer and Beneficiary, pursuant
                                 to which Manufacturer has agreed to sell and
                                 Beneficiary has agreed to purchase the
                                 Aircraft.

PURCHASE AGREEMENT ASSIGNMENT    That certain Purchase Agreement Assignment (MSN
                                 29048), dated as of October 1, 1998, between
                                 Beneficiary and Lessor.

RECORDS                          (1)  the Aircraft, Engine, APU, Landing Gear
                                      and Part records, reports, and other
                                      documentation listed in Part 6 of Schedule
                                      1 to this Agreement;

                                 (2)  records relating to the service,
                                      inspection, maintenance, modification,
                                      testing, overhaul and repair of the
                                      Aircraft and all Parts installed therein
                                      or thereon that are required to be
</TABLE>

                                    PAGE 14

<PAGE>

<TABLE>
<S>                              <C>
                                      maintained during the Term under the terms
                                      of this Agreement, by the Air Authority,
                                      by the Agreed Maintenance Program, or
                                      those that are provided to Lessee or
                                      otherwise maintained during the Term with
                                      respect to the Aircraft (including,
                                      without limitation, the Airframe, any
                                      Engine, the APU and Parts), other than
                                      replaced or superseded records that are
                                      permitted to be disposed of by the FAA;
                                      and

                                 (3)  daily or periodic updates, as the case may
                                      be, to comply with applicable law and with
                                      record keeping requirements of the FAA for
                                      FAR Part 129 operation or FAR Part 145
                                      operation, as the case may be.

REDELIVERY                       The return of the Aircraft with all associated
                                 Documents and Records from Lessee to Lessor at
                                 the Redelivery Location, in the condition and
                                 manner required by Clause 12 and the other
                                 provisions of this Agreement.

REDELIVERY CHECK                 The final exit full block "C" check, as defined
                                 in Appendix J of Manufacturer's Maintenance
                                 Planning Document, performed on the Aircraft
                                 prior to Redelivery in accordance with Clause
                                 2.1 of Schedule 4.

REDELIVERY DATE                  The date on which Lessor has accepted
                                 Redelivery of the Aircraft evidenced by
                                 executing an acknowledgment of Redelivery in
                                 accordance with Clause 12.3.

REDELIVERY LOCATION              An airport in the continental USA identified by
                                 Lessor or other location mutually agreed
                                 between Lessor and Lessee.

RENT                             As defined in Annex A.

RENTAL PERIOD                    Each period ascertained in accordance with
                                 Clause 5.2.2.

RENT DATE                        The first day of each Rental Period, except in
                                 the case of the first Rental Period, the
                                 fifteenth (15th) day of such Rental Period.
</TABLE>

                                    PAGE 15

<PAGE>

<TABLE>
<S>                              <C>
SCHEDULED DELIVERY DATE          The date within the Scheduled Delivery Month as
                                 advised by Lessor from time to time in
                                 accordance with Clause 4.

SCHEDULED DELIVERY MONTH         March, 1999.

SHOP VISIT                       In relation to Engines and APU, an engine or
                                 APU removal where engine maintenance entails
                                 separation of mating engine case flanges and/or
                                 the removal of engine modules, requiring
                                 internal repairs or the replacements of a disk,
                                 hub or spool.

SISTER LEASE                     Any aircraft lease agreement between (i)
                                 Lessor, Beneficiary, any Affiliate of
                                 Beneficiary, or any trust in which Beneficiary
                                 or any Affiliate of Beneficiary is the
                                 beneficiary under such trust, and (ii) Lessee
                                 for an aircraft, including the Aircraft Lease
                                 Agreement (MSN 29047) between Lessor and Lessee
                                 dated as of the date hereof in respect of a
                                 Boeing Model 737-71Q aircraft bearing
                                 Manufacturer's serial number 29047.

SUBSIDIARY                       (1)  In relation to any reference to accounts,
                                      any company whose accounts are
                                      consolidated with the accounts of Lessee
                                      in accordance with Panamanian generally
                                      accepted accounting principles; and

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

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

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

SUPPLEMENTAL RENT                All amounts payable under Clause 5.3.
</TABLE>

                                    PAGE 16

<PAGE>

<TABLE>
<S>                              <C>
SUPPLEMENTAL RENT LETTER OF      The letter of credit in respect of Supplemental
CREDIT                           Rent issued pursuant to Clause 5.1, and any
                                 replacement or renewal of such letter of credit
                                 issued in accordance with the terms of this
                                 Agreement.

SUPPLEMENTAL RENT LETTER OF      As defined in Annex A.
CREDIT AMOUNTS

TAX OR TAXES                     All taxes, fees, duties, governmental charges
                                 and assessments, of any nature whatsoever,
                                 including interest, fines additions to tax, and
                                 penalties thereon, imposed by any taxing
                                 authority with respect to the Aircraft, on its
                                 ownership, delivery, possession,
                                 transportation, operation, rental, return to
                                 Lessor, transfer of title, registration, or
                                 otherwise with respect to or in connection with
                                 the transactions contemplated by this
                                 Agreement, including, but not limited to, any
                                 value-added taxes, sales and use taxes,
                                 property taxes and all license and registration
                                 fees; provided, however, that "Taxes" shall not
                                 include Lessor Taxes.

TERM                             The period commencing on the Delivery Date and
                                 ending on the Expiry Date unless otherwise
                                 hereinafter provided.

TRUST AGREEMENT                  That certain Trust Agreement (MSN 29048), dated
                                 as of October 1, 1998, between First Security
                                 Bank, National Association, and Beneficiary.

USA                              United States of America.
</TABLE>

     1.2  CONSTRUCTION

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

               (1)  each of "Lessor" or "Lessee" or any other person includes,
                    without prejudice to the provisions of this Agreement, any
                    successor in title to it or, as the case may be, them and
                    any permitted assignee or transferee;

               (2)  a "person" includes, without limitation, any individual,
                    corporation, company limited liability company, judicial
                    entity, statutory body, partnership, joint venture, trust,
                    estate, unincorporated association,

                                    PAGE 17

<PAGE>

                    group or organization or any political sub-division, court,
                    regulatory body, authority, ministry, bureau, legislative
                    body, department or agency therein or thereof (including,
                    without limitation, the central bank or any taxing or fiscal
                    or other monetary authority or ministry thereof or therein);

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

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

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

               (6)  a Clause or a Schedule is a reference to a clause of or a
                    schedule to this Agreement.

          1.2.2 The headings in this Agreement are to be ignored in construing
               this Agreement.

          1.2.3 In this Agreement references to the "winding up", "dissolution",
               "examination" or "court protection" of a company or corporation,
               or the appointment of a "liquidator", "receiver", "examiner" or
               "administrator" shall be construed so as to include any
               equivalent or analogous proceedings or officer under the law of
               the jurisdiction in which such company or corporation is
               incorporated or established or any jurisdiction in which such
               company or corporation carries on business, including the seeking
               of liquidation, winding-up, reorganization, dissolution,
               administration, examination, arrangement, adjustment, protection
               or relief of debtors.

          1.2.4 Reference to this Agreement includes reference to the Schedules.

2.   REPRESENTATIONS AND WARRANTIES

     2.1  LESSEE'S REPRESENTATIONS AND WARRANTIES

          Lessee represents and warrants to Lessor that:

          (1)  STATUS: Lessee is a company duly incorporated and validly
               existing under the laws of Panama and has the corporate power to
               own its assets and carry on its business as it is being conducted
               and to perform its obligations under this Agreement and each
               other Lessee Document, and Lessee is the holder of all necessary
               air transportation licenses required in connection therewith and

                                     PAGE 18

<PAGE>

               with the use and operation of the Aircraft, and Lessee is duly
               qualified to transact intrastate business and is a foreign
               corporation in good standing in each jurisdiction in which
               failure to be so qualified would have a material adverse effect
               on Lessee's ability to perform its obligations hereunder;

          (2)  POWER AND AUTHORITY: Lessee has the power to enter into and
               perform, and has taken all necessary action to authorize the
               entry into, performance and delivery of, this Agreement and each
               other Lessee Document and the transactions contemplated by this
               Agreement and each other Lessee Document;

          (3)  LEGAL VALIDITY: Assuming the due authorization, execution and
               delivery by all of the other parties thereto, each of this
               Agreement and each other Lessee Document constitutes Lessee's
               legal, valid and binding obligation, enforceable against Lessee
               in accordance with its terms, except as such enforceability may
               be limited by bankruptcy, insolvency, reorganization,
               receivership, moratorium or other similar laws affecting the
               rights of creditors generally and general principles of equity,
               whether considered at a proceeding at law or in equity;

          (4)  NON-CONFLICT: The entry into and performance by Lessee of, and
               the transactions contemplated by, this Agreement and the other
               Lessee Documents do not and will not:

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

               (b)  conflict with the organizational or constitutional documents
                    of Lessee; or

               (c)  conflict with or result in default under any document which
                    is binding upon Lessee or any of its assets nor result in
                    the creation of any Lien over any of its assets other than
                    as otherwise expressly provided herein;

          (5)  AUTHORIZATION: Subject to Clause 2.4(5), all authorizations,
               consents, registrations and notifications (including with respect
               to any Government Entity) required in connection with the entry
               into, performance, validity and enforceability of this Agreement
               and the other Lessee Documents and the transactions contemplated
               by this Agreement and the other Lessee Documents, have been (or
               will have been on or before the Delivery Date) obtained or
               effected and are (or will be upon being obtained or effected) in
               full force and effect and no exchange control or central bank
               authorizations will be required;

                                     PAGE 19

<PAGE>

          (6)  NO IMMUNITY:

               (a)  Lessee is subject to civil commercial law with respect to
                    its obligations under this Agreement and the other Lessee
                    Documents, including without limitation the civil commercial
                    law of Panama;

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

               (c)  to the extent that Lessee or any of its assets becomes
                    entitled at any time to any immunity, based on sovereignty
                    or otherwise, from any legal action, suit or proceeding,
                    from set-off or counterclaim, from the jurisdiction of any
                    competent court, from service of process, from attachment in
                    aid of execution, or from execution prior to judgment, or
                    other legal process in any jurisdiction, Lessee for itself
                    and its assets does hereby irrevocably and unconditionally
                    waive, and agrees not to plead or claim, any such immunity
                    with respect to its obligations, liabilities, or any other
                    matter under or arising out of or in connection with this
                    Agreement and the other Lessee Documents or the subject
                    matter hereof; such agreement shall be irrevocable and not
                    subject to withdrawal in any and all jurisdictions;

          (7)  ACCOUNTS: The audited accounts (or, for any period Lessee's
               accounts are not audited, Lessee's unaudited accounts used by
               Lessee's management) of Lessee and its Subsidiaries most recently
               delivered to Lessor:

               (a)  have been prepared in accordance with Panamanian generally
                    accepted accounting principles and practices consistently
                    applied; and

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

          (8)  ALLOWANCES: Lessee has not claimed and will not claim any capital
               or depreciation deductions or allowances in respect of the
               Aircraft for any purpose (including for tax purposes);

          (9)  NO DEFAULT:

               (a)  no Default has occurred and is continuing or might result
                    from the entry into or performance of this Agreement and the
                    other Lessee Documents; and

               (b)  no other event has occurred and is continuing which
                    constitutes (or with the giving of notice, lapse of time, or
                    the fulfillment of any other applicable condition or any
                    combination of the foregoing, might

                                     PAGE 20

<PAGE>

                    constitute) a material default under any document which is
                    binding on Lessee or any assets of Lessee, including a
                    Sister Lease;

          (10) REGISTRATION:

               (a)  other than registering the Aircraft, filing this Agreement
                    for recordation with the FAA, and filing UCC-1 financing
                    statements in the state of Florida and the District of
                    Columbia for the period from the Delivery Date through the
                    Deregistration Date, and other than registering the Aircraft
                    and filing this Agreement with the Panamanian Directorate of
                    Civil Aeronautics, and recording this Agreement and the bill
                    of sale evidencing Lessor's title to the Aircraft with the
                    Office of the Public Registry of Panama for the period from
                    the Deregistration Date through the end of the Term and
                    Redelivery, it is not necessary or advisable under the laws
                    of the Jurisdiction of Incorporation, the Jurisdiction of
                    Registration or the Habitual Base in order to ensure the
                    validity, effectiveness and enforceability of this Agreement
                    and the other Lessee Documents, or to establish, perfect or
                    protect the property rights of Lessor in the Aircraft or any
                    Engine or Part that this Agreement or any other instrument
                    relating thereto be filed, registered or recorded or that
                    any other action be taken or if any such filings,
                    registrations, recordings or other actions are necessary or
                    advisable, the same have been effected or will have been
                    effected or all steps that can at such time reasonably have
                    been taken to effect same will have been taken on or before
                    the Delivery Date or Deregistration Date, as the case may
                    be; and

               (b)  under the laws of the Jurisdiction of Incorporation, the
                    Jurisdiction of Registration and the Habitual Base, the
                    property rights of Lessor in the Aircraft have been, or on
                    or before the Delivery Date or the Deregistration Date, as
                    the case may be, shall be fully established, perfected and
                    protected, and this Agreement and the other Lessee
                    Documents, other than as provided with respect to Lessee's
                    obligations thereunder in 2.1(12), will have priority in all
                    respects over the claims of all creditors of Lessee;

          (11) LITIGATION: No litigation, arbitration or administrative
               proceedings are pending or to its knowledge threatened against
               Lessee before any court, administrative agency or arbitral
               tribunal which, if adversely determined, would have a material
               adverse effect upon its financial condition or business or its
               ability to perform its obligations under this Agreement;

          (12) PARI PASSU: The obligations of Lessee under this Agreement and
               the other Lessee Documents rank at least pari passu with all
               other present and future unsecured and unsubordinated obligations
               (including contingent obligations) of Lessee, with the exception
               of such obligations as are mandatorily preferred by law,
               including, without limitation, the Governing Law, and not by
               virtue

                                     PAGE 21

<PAGE>

               of any contract, which obligations have been disclosed to and
               itemized for Lessor;

          (13) MATERIAL ADVERSE CHANGE: There has been no material adverse
               change in the financial condition or prospects of Lessee and its
               Subsidiaries since the date to which the accounts most recently
               provided to Lessor on or prior to the date of the execution of
               this Agreement were drawn up;

          (14) TAXES AND OTHER PAYMENTS: Lessee has delivered all necessary
               returns and made all payments, other than Taxes of Lessee not yet
               assessed or, if assessed, not yet due and payable, or being
               contested in good faith by appropriate proceedings and not
               material in the aggregate, due to (i) the tax authorities in the
               Jurisdiction of Incorporation, the Jurisdiction of Registration
               and all applicable states, provinces and municipalities thereof,
               (ii) the Habitual Base and all applicable subdivisions thereof
               and (iii) airport and other aviation authorities, and Lessee is
               not required by law to deduct or withhold any Taxes from any
               payments under this Agreement and the other Lessee Documents;

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

          (16) CURRENT MAINTENANCE PROGRAM: As of the Delivery Date, the Agreed
               Maintenance Program is approved by the Air Authority.

     2.2  REPETITION

          The representations and warranties in Clause 2.1 will survive the
          execution of this Agreement and the other Lessee Documents. The
          representations and warranties contained in Clause 2.1 will be deemed
          to be repeated by Lessee on the Delivery Date and on each Rent Date as
          if made with reference to the facts and circumstances then existing.
          The representation and warranty in Clause 2.1(13) shall be deemed to
          be given or repeated on each Rent Date with respect to the audited
          financial statements of Lessee last furnished pursuant to Schedule 3.

     2.3  [Intentionally omitted.]

     2.4  FSB'S REPRESENTATIONS AND WARRANTIES

          FSB represents and warrants to Lessee that:

          (1)  STATUS: FSB is a national banking association duly organized,
               validly existing and in good standing under the laws of the USA,
               is duly authorized

                                     PAGE 22

<PAGE>

               to do business as a national banking association with banking
               authority to execute and deliver, and to perform its obligations
               under, the Owner Trustee Documents;

          (2)  POWER AND AUTHORITY: FSB has taken, or has caused to be taken,
               all necessary action to authorize the execution and filing by FSB
               in its individual capacity and as Owner Trustee, of each of the
               Owner Trustee Documents, and its performance of its obligations
               thereunder, and Owner Trustee holds such title to the Aircraft as
               was conveyed to it by Manufacturer;

          (3)  LEGAL VALIDITY: The Owner Trustee Documents constitute the legal,
               valid and binding obligation of FSB, in its individual capacity
               and as Owner Trustee, and, assuming the due authorization,
               execution and filing thereof by the other party or parties
               thereto, are enforceable against FSB, in its individual capacity
               and as Owner Trustee, in accordance with the respective terms
               thereof, except as such enforceability may be limited by
               bankruptcy, insolvency, reorganization, receivership, moratorium
               and other similar laws affecting the rights of creditors
               generally and general principles of equity, whether considered in
               a proceeding at law or in equity;

          (4)  NON-CONFLICT: The entry into and performance by FSB, in its
               individual capacity and as Owner Trustee, of, and the
               transactions contemplated by, this Agreement and the other Owner
               Trustee Documents do not and will not:

               (a)  conflict with any federal USA banking or Utah state laws
                    binding on FSB, in its individual capacity or as Owner
                    Trustee; or

               (b)  conflict with the organizational or constitutional documents
                    of FSB; or

               (c)  conflict with any document which is binding upon FSB, or any
                    of its assets; and

          (5)  AUTHORIZATION: Subject to Clause 2.1(5) so far as concerns the
               obligations of Lessor, all authorizations, consents,
               registrations and notifications required in connection with the
               entry into, performance, validity and enforceability of, and the
               transactions contemplated by, this Agreement by Lessor have been
               (or will have been on or before the Delivery Date) obtained or
               effected (as appropriate) and are (or will be upon being obtained
               or effected) in full force and effect.

3.   CONDITIONS PRECEDENT

     3.1  CONDITIONS PRECEDENT TO LESSOR'S OBLIGATIONS

          Lessor's obligation to deliver and lease the Aircraft under this
          Agreement is subject to satisfaction of each of the following
          conditions.

                                     PAGE 23

<PAGE>

          3.1.1 CASH DEPOSIT/DEPOSIT LETTER OF CREDIT: The delivery by Lessee to
               Lessor of the Cash Deposit and the Deposit Letter of Credit
               pursuant to Clause 5.1.

          3.1.2 CERTAIN RECEIPTS AT EXECUTION OF AGREEMENT: Receipt by Lessor
               from Lessee upon execution of this Agreement of the following in
               form and substance (including but not limited to execution,
               notarization and translation where appropriate) satisfactory to
               Lessor:

               (1)  CONSTITUTIONAL DOCUMENTS: A copy of the organizational and
                    constitutional documents of Lessee;

               (2)  RESOLUTIONS, AUTHORITY: A copy of a resolution of the board
                    of directors of Lessee approving the terms of and the
                    transactions contemplated by this Agreement and the other
                    Lessee Documents, resolving that it enter into this
                    Agreement and the other Lessee Documents and related
                    agreements, including without limitation any amendments
                    hereto, and authorizing a specified person or persons to
                    execute this Agreement and the other Lessee Documents on its
                    behalf, together with such other evidence of the authority
                    of such person or persons to execute this Agreement and the
                    other Lessee Documents as Lessor may reasonably request,
                    including but not limited to extracts or certificates from
                    Government Entities or commercial registries;

               (3)  PROCESS AGENT: A letter from the process agent appointed by
                    Lessee in this Agreement accepting that appointment in a
                    form acceptable to Lessor;

               (4)  CERTIFICATE: A certificate of a duly authorized officer of
                    Lessee:

                    (a)  setting out a specimen of each signature referred to in
                         Clause 3.1.2(2); and

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

               (5)  ACCOUNTS: The latest available accounts of Lessee as
                    described in Schedule 3, Part 1, Section 3;

               (6)  OPINIONS: A signed original of the opinion substantially in
                    the form of Schedule 6, or otherwise acceptable to Lessor,
                    and from independent legal counsel acceptable to Lessor in
                    the Jurisdiction of Registration, the Habitual Base and the
                    Jurisdiction of Incorporation and as to matters applicable
                    with respect to, among other things, Lessee's execution and
                    delivery of this Agreement and the other Lessee Documents
                    and the performance by Lessee of its obligations as
                    contemplated hereunder and thereunder; and

                                     PAGE 24

<PAGE>

               (7)  PAYMENTS: The Cash Deposit and the Deposit Letter of Credit,
                    in the required amounts, due upon execution of this
                    Agreement as more fully described in Clause 5.1.

          3.1.3 CERTAIN RECEIPTS AT DELIVERY DATE: Unless otherwise delivered at
               execution of this Agreement, receipt by Lessor from Lessee not
               later than the Delivery Date of the following in form and
               substance (including but not limited to execution, notarization
               and translation where appropriate) satisfactory to Lessor:

               (1)  CONSTITUTIONAL DOCUMENTS: Confirmation that the copy of the
                    organizational and constitutional documents of Lessee
                    already provided by Lessee have not changed, and if so a
                    copy of any changes;

               (2)  RESOLUTIONS, AUTHORITY: A copy of resolutions of the board
                    of directors of Lessee authorizing a specified person or
                    persons to execute any other documentation relating to
                    delivery of the Aircraft to Lessee and the transaction
                    contemplated hereby, together with such other evidence of
                    the authority of such person or persons to execute the same
                    as Lessor may reasonably request, including but not limited
                    to extracts or certificates from Government Entities or
                    commercial registries;

               (3)  [Intentionally omitted.]

               (4)  CERTIFICATE: A certificate of a duly authorized officer of
                    Lessee:

                    (a)  setting out a specimen of each signature referred to in
                         Clause 3.1.3(2); and

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

               (5)  OPINIONS: A signed original of the opinion substantially in
                    the form of Schedule 6, or otherwise acceptable to Lessor,
                    and from independent legal counsel acceptable to Lessor in
                    the Jurisdiction of Registration, the Habitual Base and the
                    Jurisdiction of Incorporation and as to matters applicable
                    to the performance by Lessee of its obligations as
                    contemplated hereunder;

               (6)  APPROVALS: Evidence of the issuance of each approval,
                    license and consent which may be required in relation to, or
                    in connection with, the remittance to Lessor in Dollars of
                    all amounts payable under this Agreement and the other
                    Lessee Documents or the performance by Lessee of any of its
                    obligations hereunder or thereunder (including, without
                    limitation, obtaining from all applicable Panamanian

                                     PAGE 25

<PAGE>

                    aviation and other authorities including the FAA all
                    applicable approvals, licenses, consents and
                    authorizations);

               (7)  EXPORT: Any required consent from the applicable Panamanian
                    aviation and other authorities to the export of the Aircraft
                    from the Habitual Base upon the termination of the leasing
                    of the Aircraft under this Agreement;

               (8)  IMPORT: Evidence that any required import license, and any
                    customs formalities, relating to the import of the Aircraft
                    into the Habitual Base have been obtained or complied with,
                    and that the import of the Aircraft into the Habitual Base
                    is exempt from Taxes;

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

               (10) [Intentionally omitted.]

               (11) PAYMENTS: All sums due to Lessor under this Agreement on or
                    before the Delivery Date including, without limitation, the
                    first payment of Rent and the Cash Deposit;

               (12) LETTERS OF CREDIT: The Deposit Letter of Credit and the
                    Supplemental Rent Letter of Credit, in the required amounts,
                    due upon delivery of the Aircraft as more fully described in
                    Clause 5.1;

               (13) INSURANCES: Certificates of insurance (and reinsurance as
                    applicable), an undertaking from Lessee's insurance broker
                    (and from reinsurers as applicable) and other evidence
                    reasonably satisfactory to Lessor that Lessee has taken the
                    required steps to ensure due compliance with the provisions
                    of this Agreement as to Insurances with effect on and after
                    the Delivery Date, in each case in form and substance
                    complying with the requirements of Clause 9 and Schedule 5
                    hereto;

               (14) REGISTRATION AND FILINGS: Evidence that on the Delivery Date
                    the Aircraft has been validly registered under the laws of
                    the Jurisdiction of Registration and that all filings,
                    registrations, recordings and other actions have been taken
                    which are necessary or advisable to ensure the validity,
                    effectiveness and enforceability of this Agreement and the
                    other Lessee Documents and to protect the property rights of
                    Lessor in the Aircraft, including, but not limited to,
                    filing UCC financing statements executed by Lessee in the
                    state of Florida and the District of Columbia;

                                     PAGE 26

<PAGE>

               (15) MAINTENANCE PROGRAM: Evidence that Lessee's current
                    maintenance program for maintenance of the Aircraft has been
                    approved by the FAA for use by Lessee; and

               (16) GENERAL: Such other documents and information as Lessor may
                    reasonably request.

     3.2  FURTHER CONDITIONS PRECEDENT TO LESSOR'S OBLIGATIONS

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

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

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

     3.3  CONDITIONS PRECEDENT TO LESSOR'S OBLIGATION TO REQUEST DEREGISTRATION

          The obligation of Lessor to request the FAA to deregister the Aircraft
          is subject to satisfaction of each of the following conditions
          precedent:

          3.3.1 POST-PRODUCTION MODIFICATION: Receipt by Lessor of evidence
               satisfactory to Lessor that the post-production modifications
               described in Part 4 of Schedule 1 have been (a) completed, (b)
               paid for, to the extent invoices in respect thereof are then due
               and payable, as provided in Clause 4.6, and (c) approved by the
               FAA;

          3.3.2 REGISTRATION AND RECORDING IN PANAMA: Receipt by Lessor of
               evidence satisfactory to Lessor that as of the Deregistration
               Date the Aircraft has been, or is concurrently being, validly
               registered with the Air Authority and under the laws of the
               Jurisdiction of Registration and that all filings, registrations,
               recordings and other actions have been taken, in Panama and any
               other jurisdiction which are necessary or advisable to ensure the
               validity, effectiveness and enforceability of this Agreement and
               the other lessee Documents and to protect the property rights of
               Lessor in the Aircraft, including, but not limited to, recording
               this Agreement and the bill of sale evidencing Lessor's title to
               the Aircraft with the Office of the Public Registry of Panama;
               and

          3.3.3 DEREGISTRATION POWER OF ATTORNEY: Receipt by Lessor of the
               Deregistration Power of Attorney.

                                     PAGE 27

<PAGE>

     3.4  WAIVER

          The conditions specified in Clauses 3.1 and 3.2 are for the sole
          benefit of Lessor and may be waived or deferred in whole or in part
          and with or without conditions by Lessor in its sole discretion. If
          any of those conditions are not satisfied on the Delivery Date and
          Lessor nonetheless agrees to deliver the Aircraft to Lessee, Lessee
          will ensure that those conditions are fulfilled within 15 days after
          the Delivery Date and Lessor may treat as an Event of Default the
          failure of Lessee to do so.

     3.5  CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS

          The obligations of Lessee to lease the Aircraft on the Delivery Date
          are subject to satisfaction of each of the following conditions
          precedent:

          3.5.1 BENEFICIARY QUIET ENJOYMENT LETTER: The delivery by Beneficiary
               to Lessee of a letter from Beneficiary agreeing to Lessee's right
               to quiet enjoyment of the Aircraft in substantially the same
               manner as in Clause 7.1; and

          3.5.2 WARRANTY ASSIGNMENTS: Assignments by Lessor to Lessee of
               warranties with respect to the Aircraft and the Engines made by
               the Manufacturer and the Engine Manufacturer, respectively, duly
               acknowledged by the Manufacturer and the Engine Manufacturer.

4.   DELIVERY

     4.1  SCHEDULED DELIVERY MONTH AND SCHEDULED DELIVERY DATE

          Lessor has advised Lessee that, as of the date of this Agreement, the
          anticipated month of delivery of the Aircraft to Lessor, either
          directly or indirectly, from Manufacturer (or a Manufacturer group
          company) is the Scheduled Delivery Month. Lessor will notify Lessee
          promptly after Lessor has received notice from Manufacturer of a more
          specific Scheduled Delivery Date (approximately 30 days prior to the
          Scheduled Delivery Month and approximately 7 days prior to the actual
          date of delivery of the Aircraft under the Purchase Agreement), and
          from time to time of any significant anticipated and actual delays in
          delivery as advised by Manufacturer.

     4.2  COMMENCEMENT

          Subject to the terms and conditions of this Agreement, Lessor will
          offer the Aircraft for delivery and Lessee will accept delivery of the
          Aircraft on or about the Scheduled Delivery Date in accordance with
          Schedule 2 of this Agreement at the Delivery Location. Lessor will
          lease the Aircraft to Lessee and Lessee will take the Aircraft on
          lease in accordance with this Agreement for the duration of the Term.

                                     PAGE 28

<PAGE>

     4.3  DELAYED DELIVERY

          If Lessor delays delivery or fails to deliver the Aircraft under this
          Agreement as a result of:

          (1)  any Excusable Delay;

          (2)  notification of any defect or non-conformity pursuant to Clause
               3.5 of Schedule 2, Part 2;

          (3)  any delay associated with Lessor not being able to receive all
               the approvals, consents and acceptances which are necessary for
               Lessor to deliver the Aircraft including those described in
               Clause 3.1.3(13) and making an acceptance flight under Clause 3.3
               of Part 2 of Schedule 2, despite Lessor's reasonable and
               continuous efforts; or

          (4)  any delay caused by any modification required on the Aircraft or
               agreed to in writing by Lessor and Lessee, which results in the
               Lessor not being able to receive all regulatory approvals,
               consents and acceptances which are necessary for Lessor to
               deliver the Aircraft;

          then:

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

               (b)  Lessee will not be entitled to terminate this Agreement or
                    to reject the Aircraft when tendered for delivery by Lessor
                    on the grounds of any such delay unless the Aircraft is not
                    tendered for delivery within 12 months beyond the Scheduled
                    Delivery Month, as such date may be further extended by
                    mutual agreement of the parties, and upon any such
                    termination neither Lessor nor Lessee will have any further
                    obligation to the other under this Agreement other than as
                    expressly set out in this Agreement, except that Lessor will
                    return any Cash Deposit, Deposit Letter of Credit and any
                    other amounts theretofore received by Lessor from Lessee
                    hereunder.

     4.4  ACCEPTANCE OF AIRCRAFT

          If Lessee fails to accept delivery of the Aircraft when tendered for
          delivery by Lessor in accordance with this Agreement, Lessee will
          indemnify Lessor for all actual costs and expenses incurred by Lessor
          as a result of such failure by Lessee, and will also be liable to make
          payment to Lessor of Rent commencing on the date and otherwise as
          provided in Clause 5.2.

                                     PAGE 29

<PAGE>

     4.5  DELIVERY

          Lessor and Lessee expressly acknowledge that delivery of the Aircraft
          to Lessee is subject to and conditioned upon (1) delivery of the
          Aircraft to Lessor, either directly or indirectly, from Manufacturer
          and (2) Lessee having fulfilled all of the conditions precedent to
          delivery set out in Clause 3. Lessee will effect acceptance of the
          Aircraft by execution and delivery to Lessor of the duly completed and
          executed Certificate of Acceptance substantially in the form of Part 1
          of Schedule 2. After delivery of the Aircraft to Lessee, Lessee will
          bear all risk of loss, theft, damage or destruction to the Aircraft
          from any causes whatsoever until the Aircraft is redelivered to Lessor
          (including, for the avoidance of doubt, during the installation or
          completion of any "Post-Production Modifications" listed in Part 4 of
          Schedule 1 after such delivery).

     4.6  POST-PRODUCTION MODIFICATION

          Promptly following delivery of the Aircraft to Lessee hereunder,
          Lessee shall cause to be accomplished the post-production
          modifications described in Part 4 of Schedule 1. Such post-production
          modifications shall be made pursuant to a written agreement and by an
          entity that are reasonably satisfactory to Lessor. The cost of such
          post-production modifications for which Lessor shall be responsible
          shall be a fixed amount set forth in the written agreement which
          amount shall be subject to the Modification Limit. While such
          post-production modifications are being made, all of the terms of this
          Agreement, including Lessee's obligation to pay Rent, shall be and
          remain in full force and effect. Upon completion of such
          post-production modifications and submission of related invoices and
          other documentation reasonably requested by Lessor, Lessor shall
          either pay such invoices directly or, if already paid by Lessee,
          reimburse Lessee for the cost thereof, in either case up to the
          Modification Limit less the net costs of the modifications described
          in Part 3 of Schedule 1.

     4.7  DEREGISTRATION

          Upon satisfaction of all the conditions precedent set forth in Clause
          3.3, Lessor shall request the FAA to deregister the Aircraft. Lessee
          shall be responsible for the prompt payment of all Taxes, fees, costs
          and expenses, including Lessor's reasonable legal fees, relating to
          all actions taken in connection with the deregistration of the
          Aircraft with the FAA and with the registration of the Aircraft with
          the Directorate of Civil Aeronautics of Panama, and the recordation of
          this Agreement and of Lessor's title to the Aircraft with the Office
          of the Public Registry of Panama, up to a maximum amount of $50,000.

                                     PAGE 30

<PAGE>

5.   PAYMENTS

     5.1  CASH DEPOSIT, DEPOSIT LETTER OF CREDIT AND SUPPLEMENTAL RENT LETTER OF
          CREDIT

          5.1.1 Lessee shall deliver to Lessor the Cash Deposit. This Agreement
               shall be cross-collateralized with any Sister Lease, with respect
               to the Cash Deposit and with respect to any such collateral under
               any such Sister Lease.

          5.1.2 Upon execution of this Agreement, Lessee shall provide Lessor
               with the Deposit Letter of Credit in the amount of the Deposit
               Letter of Credit Execution Amount, payable in favor of Lessor,
               issued or confirmed by a first class American or European bank
               reasonably acceptable to Lessor, and drawable in the USA. At any
               time after the Deregistration Date, at Lessee's option, the
               amount of the Deposit Letter of Credit may be increased by the
               amount of the Cash Deposit; the Cash Deposit shall be returned to
               Lessee promptly after any such increase in the amount of the
               Deposit Letter of Credit becomes effective. The Deposit Letter of
               Credit shall be further increased on or prior to the Delivery
               Date by an amount equal to the Deposit Letter of Credit Delivery
               Amount. The Deposit Letter of Credit shall be irrevocable, and
               shall be in form and substance reasonably acceptable to Lessor.

          5.1.3 Lessor may upon the occurrence of an Event of Default which is
               continuing apply all or any portion of the Cash Deposit and/or
               draw down the Deposit Letter of Credit in accordance with its
               terms in whole or in part at any time or times until the later of
               10 Business Days after Redelivery and until all of Lessee's
               obligations under this Agreement have been fulfilled to satisfy
               any liabilities of Lessee to Lessor under this Agreement and
               under any Sister Lease.

          5.1.4 Prior to delivery of the Aircraft hereunder, Lessee shall
               provide Lessor with the Supplemental Rent Letter of Credit in the
               initial amount specified in the definition of Supplemental Rent
               Letter of Credit Amount, payable in favor of Lessor, issued or
               confirmed by a first class American or European bank reasonably
               acceptable to Lessor, and drawable in the USA. The Supplemental
               Rent Letter of Credit shall be increased on the dates and in the
               amounts specified in the definition of Supplemental Rent Letter
               of Credit Amount. The Supplemental Rent Letter of Credit shall be
               irrevocable, and shall be in form and substance reasonably
               acceptable to Lessor.

          5.1.5 If Lessee shall fail to pay Supplemental Rent due and owing
               hereunder on the Expiry Date, or if Lessee shall fail to comply
               with the requirements of Clause 12 and Schedule 4 upon the
               expiration or the earlier termination of the Term as provided
               hereunder, Lessee may draw down the Supplemental Rent Letter of
               Credit in whole or in part to satisfy such obligations of

                                     PAGE 31

<PAGE>

               Lessee hereunder. The Supplemental Rent Letter of Credit may be
               drawn solely for the purposes set forth in this Clause 5.1.5.

          5.1.6 In the event that any amount of the Cash Deposit is applied or
               the Deposit Letter of Credit is drawn down by Lessor, Lessee
               shall within 10 Business Days of receipt of notice of any such
               application of the Cash Deposit or draw down provide for the
               delivery of additional amounts of Cash Deposit and/or an
               additional letter of credit or an amendment to the Deposit Letter
               of Credit complying with the above requirements so as to restore
               the amounts of the Cash Deposit and/or the amount undrawn under
               the Deposit Letter of Credit to the original amount.

          5.1.7 Clauses 4.3(4)(b), 5.1.2, 7.3 and 11.1 set forth the separate
               obligations of Lessor to return to Lessee the Letters of Credit
               and to refund to Lessee amounts in respect of the Cash Deposit in
               certain circumstances.

          5.1.8 Lessee agrees that subject to Clauses 4.3(4)(b), 5.1.2, 7.2 and
               11.1 and to Lessee's rights at law and in equity, all right,
               title and interest in any Cash Deposit paid by Lessee to Lessor
               pursuant to this Clause 5 shall vest in the recipient absolutely,
               irrevocably and unconditionally free and clear of any liens,
               claims, charges or encumbrances or any other interest of Lessee
               or of any third person.

          5.1.9 Any interest earned with respect to the Cash Deposit or any draw
               down of a Letter of Credit shall be for Lessor's account, free
               and clear of any claims, charges or any interest of Lessee.

          5.1.10 Lessee shall cause the Letters of Credit, in the respective
               amounts then required to be maintained by the terms of this
               Agreement, to be replaced or renewed from time to time in order
               that they remain in full force and effect through the date
               fifteen (15) days after the Expiry Date as required hereunder,
               and shall deliver to Lessor a replacement or renewal letter of
               credit at least 10 days prior to the date on which a Letter of
               Credit is to expire. If Lessee shall fail to deliver to Lessor a
               replacement or renewal letter of credit at least 10 days prior to
               the date on which the applicable Letter of Credit is to expire,
               Lessor may drawdown the full amount of such Letter of Credit and
               hold it for application in the same manner as in the case of the
               Cash Deposit. In any such case, if Lessee delivers a replacement
               letter of credit satisfying the requirements of this Agreement,
               Lessor shall return to Lessee the principal amount of such
               drawdown, so long as no Default or Event of Default has occurred
               and is continuing.

     5.2  RENT

          5.2.1 TIME OF PAYMENT: Lessee will pay to Lessor or its order Rent on
               the first Rent Date and in advance on each subsequent Rent Date.
               Payment must be initiated adequately in advance of each Rent Date
               to ensure that Lessor

                                     PAGE 32

<PAGE>

               receives credit for the payment of Rent payable on such Rent
               Date, or on the immediately preceding Business Day if such Rent
               Date is not a Business Day.

          5.2.2 RENTAL PERIODS: The first Rental Period will commence on the
               Delivery Date and end on the fourteenth (14th) day of the second
               month following the Delivery Date. The second Rental Period will
               commence on the fifteenth (15th) day of the second month
               following the Delivery Date, with each subsequent Rental Period
               commencing on the fifteenth (15th) day of each subsequent month
               for the duration of the Term. The last Rental Period shall end on
               the Expiry Date.

     5.3  SUPPLEMENTAL RENT

          5.3.1 PAYMENT: Upon Redelivery of the Aircraft to Lessor at the time
               and in the manner provided hereunder, Lessee shall make a single
               payment to Lessor of Supplemental Rent in respect of Aircraft
               usage during the Term.

          5.3.2 CALCULATION:

               (1)  Not less than six (6) months prior to the scheduled Expiry
                    Date, Lessee shall provide to Lessor sufficient industry
                    estimates, reasonably satisfactory to Lessor, to enable
                    Lessor and Lessee to calculate the estimated amount of
                    Supplemental Rent payable by Lessee on Redelivery, such
                    estimates to be based on Lessee's actual utilization of the
                    Aircraft during the first 54 months of the Term. Such data
                    shall include bona fide, arm's length market estimates from
                    not fewer than three (3) mutually acceptable,
                    internationally recognized aircraft maintenance providers of
                    the cost of providing to Lessor or to another third party,
                    other than Lessee or Continental Airlines, Inc., (i) a block
                    D-Check, including a lower level check on the Airframe, (ii)
                    a full restoration shop visit of each Engine, and (iii) a
                    complete overhaul of the APU and the Landing Gear, including
                    in each case all routine and non-routine work, material,
                    labor and reasonable handling charges prevailing at the
                    time, but excluding the cost of any replacement of Life
                    Limited Parts (each of the Airframe, each Engine, the APU
                    and the Landing Gear referred to as a "Component," and each
                    of the respective costs described in subclauses (i) through
                    (iii) referred to as a "Check/Overhaul Cost," for purposes
                    of this Clause 5.3.2). Prior to the Expiry Date, Lessor and
                    Lessee shall discuss in good faith, and agree on, the
                    applicable Check/Overhaul Cost for each Component.

               (2)  On the Expiry Date, Lessee shall pay to Lessor Supplemental
                    Rent in respect of each Component in an amount equal to the
                    product of (i) the Check/Overhaul Cost, times (ii) the
                    result of (A) the time since such Component was new or since
                    such Component had a full

                                     PAGE 33

<PAGE>

                    restoration shop visit or complete overhaul, divided by (B)
                    the mean time between overhaul ("Interval") for such
                    Component as defined or estimated by the manufacturer of
                    such Component, adjusted for the actual utilization of such
                    Component by Lessee during the last six (6) months of the
                    Term and as provided in clause (3) below.

               (3)  The amount of Supplemental Rent calculated in accordance
                    with clause (2) above shall be adjusted by deducting from
                    the aggregate amount so calculated an amount equal to the
                    sum of the Check/Overhaul Cost allocable to the first 20% of
                    the Interval for each Component, provided that any such
                    aggregate adjustment shall not result in a negative number
                    and in no event shall Lessor be obligated to make any
                    payment to Lessee under this Clause 5.3.2.

               (4)  On the Expiry Date, if the time remaining on the life of any
                    Life Limited Part is less than 80%, Lessee shall pay to
                    Lessor an amount equal to the product of (i) the actual cost
                    to replace such Life Limited Part, times (ii) the
                    difference, expressed as a percentage of the life of such
                    Life Limited Part, between (A) 80% and (B) the time
                    remaining on the life of such Life Limited Part expressed as
                    a percentage. If the time remaining on the life of any Life
                    Limited Part is more than 80%, Lessee shall receive a credit
                    against any amounts then owing by it under clauses (2) and
                    (3) above in an amount equal to the product of (i) the cost
                    to replace such life Limited Part as determined above, times
                    (ii) the difference, expressed as a percentage of the life
                    of such Life Limited Part, between (A) 20% and (B) the time
                    used on such Life Limited Part since new, expressed as a
                    percentage.

     5.4  PAYMENTS

          5.4.1 All payments by Lessee to Lessor under this Agreement will be
               made for value on the due date in Dollars, and if in relation to
               amounts incurred by Lessor other than in Dollars, in the Dollar
               equivalent advised by Lessor's bankers, and in same day funds
               settled through the New York Clearing House System or such other
               funds as may for the time being be customary for the settlement
               in New York City of international payments in Dollars by
               telegraphic transfer to the Payment Account. Lessee shall make
               all arrangements in advance to ensure that payment is received as
               above by Lessor on the due date.

          5.4.2 All payments by Lessor to Lessee under this Agreement will be
               made by telegraphic transfer to the Payment Account in Dollars,
               and if in relation to amounts incurred by Lessee other than in
               Dollars, in the Dollar equivalent advised by Lessor's bankers.

                                     PAGE 34

<PAGE>

     5.5  GROSS-UP

          5.5.1 All payments by Lessee under or in connection with this
               Agreement will be made without set-off or counterclaim, free and
               clear of and without deduction for or on account of any or all
               Taxes.

          5.5.2 All Taxes in respect of payments under this Agreement shall be
               for the account of and will be paid by Lessee prior to the date
               on which penalties apply, except to the extent that such payment
               is being contested in good faith by appropriate proceedings, in
               respect of which adequate reserves have been provided by Lessee
               and non-payment of which does not give rise to any material
               likelihood of the Aircraft or any interest therein being sold,
               forfeited or otherwise lost or of criminal liability on the part
               of Lessor.

          5.5.3 If Lessee is compelled by law to make payment subject to any Tax
               and Lessor or Beneficiary does not actually receive for its own
               benefit on the due date a net amount equal to the full amount
               provided for under this Agreement, Lessee will pay all necessary
               additional amounts to ensure receipt by Lessor of the full amount
               so provided for.

     5.6  TAXES AND OTHER PAYMENTS

          Except as may be otherwise expressly provided herein, Lessee will
          promptly pay, or promptly after demand indemnify Lessor and
          Beneficiary against:

          (1)  all Taxes and other fees or charges of any nature imposed by any
               Government Entity or other person including any airport or
               provider of service with respect to this Agreement, including
               without limitation the delivery, leasing, possession, use,
               operation, maintenance, storage, return or replacement of any
               Engine or Part or any other disposition or dealing by Lessee with
               or relating to the Aircraft during the Term; and

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

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

     5.7  VALUE ADDED TAX

          5.7.1 For the purposes of this sub-clause:

               (1)  "VAT" means value added tax and any sales or turnover tax,
                    imposition or levy of a like nature (other than Lessor
                    Taxes); and

                                    PAGE 35

<PAGE>

               (2)  "supply" includes anything on which VAT is chargeable.

          5.7.2 Lessee will pay to Lessor or the relevant taxing authority, as
               the case may be, the amount of any VAT chargeable in respect of
               any supply for VAT purposes under this Agreement.

          5.7.3 Each amount stated as payable by Lessee under this Agreement is
               exclusive of VAT (if any) and is accordingly to be construed as a
               reference to that amount plus any VAT in respect of it.

     5.8  INFORMATION

          If Lessee is required by any applicable law, or by any third party, to
          deliver any report or return in connection with any Taxes, Lessee
          will, to the extent the same shall be pertinent, state therein that
          Lessee is exclusively responsible for the use and operation of the
          Aircraft and for any Taxes arising therefrom and Lessee will on
          request supply a copy of the report or return to Lessor. Lessor shall
          provide Lessee with such information in the possession of Lessor or
          otherwise reasonably available to it as Lessee may reasonably request
          to fulfill its tax filing requirements under this Clause 5.8 and any
          audit information request arising in connection with the Taxes subject
          to this Clause 5. If any report or return is required to be made with
          respect to any obligations of Lessee under this Clause 5, Lessee will
          make such report or return, provided that Lessee shall have no
          obligation to file any such return or report if (A) Lessor, after
          Lessee's written request therefor, shall have failed to furnish Lessee
          with such information as is peculiarly within the control of, or
          reasonably available to Lessor and is necessary for the filing of such
          report or return, or (B) such return or report would or should have
          been filed by Lessor even if it had not entered into this Agreement.

     5.9  TAXATION OF INDEMNITY PAYMENTS

          5.9.1 If and to the extent that any sums payable to an Indemnitee by
               Lessee under this Agreement by way of indemnity are insufficient,
               by reason of any Taxes payable in respect of those sums, for such
               Indemnitee to discharge the corresponding liability to the
               relevant third party (including any taxation authority), or to
               reimburse such Indemnitee for the cost incurred by it to a third
               party (including any taxation authority), Lessee will pay to such
               Indemnitee such sum as will after the Tax liability has been
               fully satisfied leave such Indemnitee with the same amount as it
               would have been entitled to receive in the absence of that
               liability, together with interest on the amount of the deficit at
               the rate of interest stated in Clause 5.10 (both before and after
               judgment) in respect of the period commencing on the date on
               which the payment of the Tax is finally due until payment by
               Lessee.

          5.9.2 If and to the extent that any sums constituting (directly or
               indirectly) an indemnity to an Indemnitee but paid by Lessee to
               any person other than

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               such Indemnitee are treated as taxable in the hands of such
               Indemnitee, Lessee will pay to such Indemnitee, within 5 Business
               Days of a written demand accompanied by reasonable evidence of
               liability, such sum as will after the tax liability has been
               fully satisfied indemnify such Indemnitee to the same extent as
               it would have been indemnified in the absence of such liability.

     5.10 DEFAULT INTEREST

          If Lessee fails to pay any amount payable under this Agreement or
          another Lessee Document on the due date, Lessee will pay on demand
          from time to time to Lessor or such other party as shall have a right
          thereto interest (both before and after judgment) on that amount, from
          the due date to the date of payment in full by Lessee to Lessor or
          such other party, at the rate calculated by Lessor to be 3% per cent
          per annum plus LIBOR at the rate quoted for the period closest to the
          length of time from such due date to such payment date. All such
          interest will be compounded monthly and calculated on the basis of the
          actual number of days elapsed and a 360 day year.

     5.11 CONTEST

          If a claim is made in writing against any Lessor (whether on audit or
          otherwise) or if Lessee disputes the amount of any Tax payable by
          Lessor for which Lessee is required to reimburse or indemnify
          hereunder for any Taxes that Lessee is required to pay or indemnify
          against pursuant to Clause 5.6, Lessor shall notify Lessee in writing
          within 10 Business Days of the receipt of such claim, provided that a
          failure to so notify will not diminish or relieve Lessee of any
          obligations under Clause 5.6, except to the extent Lessee is entitled
          to contest or to cause Lessor to contest such Taxes and Lessee's or
          Lessor's successful defense of such claim is materially prejudiced or
          precluded thereby. If the amount of the claim exceeds $25,000 and if
          requested by Lessee in accordance with this Clause 5.11 and in writing
          within 30 Business Days after receipt by Lessee of the notice
          described in the preceding sentence, Lessor shall in good faith and
          with due diligence contest (including pursuing administrative and
          judicial appeals) in the name of Lessor or, if permitted by law and
          requested by Lessee in the name of Lessee, the validity, applicability
          or amount of such Taxes in appropriate administrative or judicial
          proceedings to be determined by Lessor, provided that (1) prior to
          taking such action, Lessee shall have agreed to pay Lessor all
          out-of-pocket costs and expenses that Lessor may incur in connection
          with contesting such claim, including, without limitation, all
          reasonable legal and accountant's fees and disbursements and costs of
          administrative and judicial proceedings, and the amount of any
          interest or penalties that may be attributable to and payable as a
          result of contesting such claim (or, at Lessor's request, Lessee shall
          advance to Lessor funds with which to pay the foregoing amounts, and
          Lessor's obligation to contest any Tax shall be suspended during any
          period Lessee does not advance sufficient funds to pay such amounts as
          they accrue or become payable), (2) if such contest is to be initiated
          by the payment of, and the claiming of a refund for such Taxes (and
          any interest and penalties that also must be paid), Lessee shall have
          advanced Lessor sufficient funds (on an interest-free basis)

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<PAGE>

          to make such payment, (3) no Event of Default has occurred and is
          continuing, (4) the action to be taken will not result in a material
          risk of sale, forfeiture or loss of Lessor's title to the Aircraft
          (unless Lessee provides a bond or other security satisfactory to
          Lessor), (5) at Lessor's request, Lessee shall provide to Lessor a
          written opinion in form and substance reasonably satisfactory to
          Lessor of independent legal counsel reasonably satisfactory to Lessor
          that there is a reasonable basis for such contest and (6) Lessee
          acknowledges and agrees, in writing, that in the event such contest is
          unsuccessful Lessee shall fully indemnify Lessor against such Taxes
          (and any related interest and penalties). Notwithstanding that the
          conditions set forth in clauses (1), (2), (3), (4), (5) and (6) above
          may have been satisfied, Lessor, after consulting in good faith with
          Lessee, may elect not to pursue any contest or proceeding pursuant to
          the preceding sentence or elect to discontinue (by settlement or
          otherwise) any such contest or proceeding commenced pursuant to the
          preceding sentence, but such election shall constitute a waiver by
          Lessor of any right to payment or indemnification pursuant to Clause
          5.6 with respect to the adjustment that was the subject of such
          proposed contest or proceeding (and any other adjustment the contest
          of which is precluded by such failure to contest) and, if Lessee has
          theretofore paid or provided Lessor with funds to pay any amount with
          respect to such adjustment, Lessor shall promptly repay such amount to
          Lessee. If Lessor shall obtain a refund in whatever form of all or any
          part of any Taxes that Lessee shall have paid or reimbursed to Lessor
          hereunder, Lessor shall, provided that no Event of Default shall have
          occurred and be continuing, pay to Lessee an amount that is equal to
          the sum of the amount of such refund or credit, plus any interest
          received on such refund fairly attributable to any Taxes paid by or
          with funds provided by Lessee prior to receipt of such refund, reduced
          by any Taxes incurred by Lessor by reason of the receipt or accrual of
          such refund and interest and net of any expenses described above that
          have not been previously reimbursed, and increased by any Tax benefit
          realized by Lessor as a result of any payment by Lessor made pursuant
          to this sentence, provided further that, if, at the time of such
          payment an Event of Default shall have occurred and be continuing,
          Lessor shall hold the amount of such payment as security for the
          obligations of Lessee to Lessor under the Lease, and at such time as
          there shall not be continuing any such Event of Default, shall pay
          such amount to the Lessee. Lessor hereby agrees that it will inform
          Lessee of the time and place of, and Lessor will not object to
          Lessee's presence at, any proceeding conducted pursuant to this clause
          5.11, provided that Lessor shall be entitled to conduct any
          proceedings in respect of taxes for which Lessee is not obligated to
          indemnify Lessor outside the presence of Lessee and Lessee's presence
          also must be allowed by applicable law and provided further that the
          conditions set forth in clauses (1), (2), (3), (4), (5) and (6) above
          shall have been, and shall continue to be, satisfied.

     5.12 COMPUTATIONS

          At Lessee's request, the computation by Lessor of any amount payable
          by Lessee pursuant to this Clause 5 shall be verified by an
          independent accounting firm of national reputation selected by Lessor.
          The fees of such accountants shall be paid by Lessee unless such
          accountants determine that the amount payable to Lessee is at

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<PAGE>

          least 25% more, or the amount payable by Lessee is at least 25% less,
          than the amount computed by Lessor, in which case such fees shall be
          payable by Lessor.

     5.13 PAYMENTS ABSOLUTE

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

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

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

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

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

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

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

          Nothing in this Clause 5.13 shall be construed to prohibit Lessee from
          separately pursuing any claim that it may have from time to time
          against Lessor or any other Person with respect to any matter,
          provided that any such claim shall not contest the applicability or
          enforceability of the foregoing provisions of this Clause 5.13.

6.   MANUFACTURERS' WARRANTIES

     6.1  BENEFIT OF WARRANTIES

          Unless an Event of Default shall have occurred and be continuing,
          Lessor agrees to make available to Lessee such rights as Lessor may
          have under any warranty with respect to the Aircraft of any Engine
          made by the Manufacturer or the Engine Manufacturer, respectively,
          pursuant to their respective standard assignment forms. To the extent
          that any warranties and/or rights (if any), express or implied, with

                                    PAGE 39

<PAGE>

          respect to or otherwise related to the Aircraft, any Engine or any
          Part from the Manufacturer, the Engine Manufacturer or any other
          manufacturer, vendor, subcontractor or supplier to Lessor, are not
          directly assignable by Lessor to Lessee, Lessor agrees to extend to
          Lessee, at Lessee's cost, the benefit of each such warranty and right
          to the extent possible.

     6.2  PARTS

          Except to the extent Lessor otherwise agrees in a particular case,
          Lessee will procure that all engines, components, furnishings or
          equipment provided by the manufacturer, vendor, subcontractor or
          supplier in replacement of a defective Engine or Part pursuant to the
          terms of any warranty will be installed promptly by Lessee and that
          title thereto vests in Lessor free of Liens. On installation those
          items will be deemed to be an Engine or Part, as applicable.

     6.3  REASSIGNMENT

          At the expiration or earlier termination of the Term as provided
          herein, Lessee shall reassign to Lessor, or its designee, without
          recourse or warranty, the benefit of any subsisting warranty and right
          assigned by Lessor to Lessee pursuant to this Agreement or otherwise.
          Lessee at its own cost and expense will do all such things and execute
          such documents as may reasonably be required for this purpose.

7.   LESSOR'S COVENANTS

     7.1  QUIET ENJOYMENT

          Lessor covenants that so long as an Event of Default shall not have
          occurred and be continuing, (i) Lessee shall quietly enjoy, in
          accordance with the terms hereof, the Aircraft and all rents,
          revenues, profits and income thereof, without interference from
          Lessor, or from any Person lawfully claiming by or through Lessor
          (including, without limitation, any Person providing financing or
          refinancing for the Aircraft), and (ii) neither Lessor nor any Person
          lawfully claiming by or through Lessor shall take or cause to be taken
          any action contrary to such right of quiet enjoyment. Lessor shall
          cause any Person providing financing or refinancing for the Aircraft
          to provide to Lessee a comparable covenant of quiet enjoyment.

     7.2  END PAYMENT

          7.2.1 Promptly following:

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

               (2)  payment to Lessor of the Agreed Value following an Event of
                    Loss after the delivery Date;

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<PAGE>

               or, in each case, such later time as Lessor is satisfied Lessee
               has paid to Lessor all amounts which may then be due and payable
               under this Agreement, Lessor will:

                    (a)  pay to Lessee the amount of any Rent received in
                         respect of any period falling after the Redelivery Date
                         or payment of the Agreed Value, as the case may be;

                    (b)  return to Lessee any remaining Cash Deposit, subject to
                         any application and reduction by Lessor pursuant to
                         Clause 5.1; and

                    (c)  return the Letters of Credit to Lessee, subject to any
                         drawings pursuant to Clause 5.1.

          7.2.2 If, at the end of the Term, an Event of Default has occurred and
               is continuing, the rebate and payments and return of the Letters
               of Credit, contemplated above will only be made following (1) any
               cure by Lessee to Lessor's reasonable satisfaction of such Event
               of Default, and (2) any set-off by Lessor hereunder, but any such
               rebate and return of the Letters of Credit or payment shall only
               be to the extent of the applicable balance remaining following
               such set-off.

     7.3  MANUFACTURER CREDIT AND PRODUCT SUPPORT

          7.3.1 Lessor shall, on or prior to delivery of the Aircraft hereunder,
               assign or shall cause to be assigned or otherwise provided to
               Lessee a new operator credit memorandum in the amount of the New
               Operator Credit to be issued by Manufacturer under the Purchase
               Agreement at the time of delivery of the Aircraft under the
               Purchase Agreement, such credit memorandum to be used in
               accordance with the terms thereof for the purchase of spare parts
               or training from Manufacturer or for the cost of certification to
               comply with applicable requirements of the Panamanian aviation
               authorities.

          7.3.2 Lessor shall, on or prior to delivery of the Aircraft hereunder,
               assign or cause to be assigned to Lessee training, product
               support and onsite technical assistance applicable to the
               Aircraft and to the Engines to be furnished by Manufacturer
               pursuant to the Purchase Agreement and by the Engine manufacturer
               pursuant to its agreements with Lessor or Beneficiary, as the
               case may be, respectively.

          7.3.3 Lessee shall provide directly to Manufacturer or to Lessor, as
               the case may be, all indemnities and insurance coverage, and
               perform all related obligations, required by Manufacturer or the
               Engine manufacturer in connection with such training, product
               support and onsite technical assistance, and shall otherwise
               indemnify and hold harmless Lessor from and against all claims
               and liabilities of any kind related thereto.

                                    PAGE 41

<PAGE>

     7.4  AIRWORTHINESS DIRECTIVE COST SHARING

          Where the cost of any single non-repetitive airworthiness directive to
          be accomplished pursuant to Clause 14.8 of Schedule 3 or which Lessee
          is otherwise required by the terms of this Agreement to accomplish
          exceeds US$**Material Redacted**, Lessor shall pay to Lessee, as long
          as no Default has occurred and is continuing, an amount calculated in
          accordance with the following formula:

               C x (N - R) / N

               Where

               N = **Material Redacted**

               R = the number of complete months remaining in the Term after
                   completion of the modification

               C = the cost of the modification in excess of US$**Material
                   Redacted**.

8.   LESSEE'S COVENANTS

     8.1  DURATION

          Subject to Clause 10.2, the undertakings of Lessee under this
          Agreement will:

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

          (2)  remain in force until the earlier to occur of (a) Redelivery of
               the Aircraft to Lessor in accordance with this Agreement either
               at the end of the Term, or earlier as provided herein, and
               payment of all obligations of Lessee hereunder or (b) receipt by
               Lessor of the Agreed Value pursuant to an Event of Loss.

     8.2  FURTHER COVENANTS

          Lessee also covenants to Lessor to perform the covenants set out in
          Schedule 3.

9.   INSURANCE

     9.1  INSURANCES

          Lessee will maintain in full force during the Term insurances in
          respect of the Aircraft in form and substance reasonably satisfactory
          to Lessor and in conformity with and covering such risks as are set
          forth in Schedule 5 hereof (the "Insurances," which expression
          includes, where the context so admits, any relevant re-insurance(s))
          through such brokers, with such lead underwriters being subject to
          such exclusions as may be approved by Lessor, such approval not to be
          unreasonably withheld, and in such amounts and having such deductibles
          as are set forth in Schedule 5 hereof. The Insurances will be effected
          either:

                                    PAGE 42

<PAGE>

          (1)  on a direct basis with insurers of recognized standing who
               normally participate in aviation insurances in the leading
               international insurance markets and led by reputable
               underwriter(s) approved by Lessor (such approval not to be
               unreasonably withheld or delayed); or

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

     9.2  REQUIREMENTS

          Lessor's current requirements as to required Insurances are as
          specified in this Clause 9 and in Schedule 5. Also, Lessor may request
          the addition of additional insureds, as appropriate.

     9.3  CHANGE

          Lessor shall be entitled to revoke its approval of Lessee's broker or
          lead underwriter(s) provided that: (i) there shall have occurred after
          the date hereof, any event or series of events which in Lessor's
          reasonable opinion, after consultation with Lessee and such broker or
          underwriter(s), has adversely affected such broker's or underwriter's
          ability to perform its obligations with respect to the Insurances
          required to be maintained hereunder; (ii) a majority of Lessee's other
          lessors of aircraft consent to the resulting change in broker or lead
          underwriter(s); and (iii) similar insurance is then generally
          available through other brokers and underwriters in the major
          international insurance markets upon terms substantially similar to
          the then current policy or policies.

     9.4  INSURANCE COVENANTS

          Lessee will:

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

               (a)  the Aircraft is not in material risk of detention or
                    forfeiture;

               (b)  the Insurances remain valid and in full force and effect;
                    and

               (c)  the interests of the Indemnitees in the Insurances and the
                    Aircraft, any Engine or any Part are not thereby prejudiced;

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<PAGE>

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

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

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

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

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

          (4)  [Intentionally omitted.]

          (5)  commence renewal procedures in due time prior to expiry of any of
               the Insurances and provide to Lessor:

               (a)  if requested by Lessor, a written status report of renewal
                    negotiations 10 days prior to each expiry date;

               (b)  facsimile or telexed confirmation of completion of renewal
                    together with summary of conditions prior to each expiry
                    date; and

               (c)  certificates of insurance (and where appropriate
                    certificates of reinsurance) and broker's (and any
                    reinsurance brokers') letter of undertaking in a form
                    reasonably acceptable to Lessor in accordance with the
                    provisions of this Clause 9, in English, detailing the
                    coverage and confirming the insurers' (and any reinsurers')
                    agreement to the specified insurance requirements of this
                    Agreement within 7 days of renewal;

          (6)  [Intentionally omitted.]

          (7)  [Intentionally omitted.]

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

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

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

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<PAGE>

     9.5  FAILURE TO INSURE

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

          (1)  to pay the premiums due or to effect and maintain insurances
               satisfactory to it or otherwise remedy Lessee's failure in such
               manner (including, without limitation to effect and maintain an
               "owner's interest" policy) as it considers appropriate. Any sums
               so expended by it will become immediately due and payable by
               Lessee to Lessor (or an Indemnitee) together with interest
               thereon at the rate specified in Clause 5.10, from the date of
               expenditure by it up to the date of reimbursement by Lessee; or

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

     9.6  CONTINUING INDEMNITY

          Lessor may require Lessee to effect and to maintain insurance after
          the Expiry Date with respect to its liability under the indemnities in
          Clause 10 for such period as Lessor may reasonably require (but in no
          event for a period longer than the earlier to occur of two years
          following the Expiry Date or the next D-check, or equivalent) and
          which provides for each Indemnitee to be named as additional insured.
          Lessee's obligation in this clause shall not be affected by Lessee's
          ceasing to be Lessee of the Aircraft and/or any of the Indemnitees
          ceasing to have any interest in respect of the Aircraft.

     9.7  APPLICATION OF INSURANCE PROCEEDS

          As between Lessor and Lessee:

          (1)  all insurance proceeds, other than proceeds of insurance
               described in Clause 9.8, received as the result of an Event of
               Loss occurring during the Term will be paid to Lessor;

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

                                    PAGE 45

<PAGE>

          (3)  all insurance proceeds in respect of third party liability will
               be paid by the insurers to the relevant third party in
               satisfaction of the relevant liability or to Lessor or Lessee in
               reimbursement of any payment so made by them with the agreement
               of the insurers; and

          (4)  notwithstanding Clauses 9.7(1), (2) or (3), if at the time of the
               payment of any such insurance proceeds a Default has occurred and
               is continuing, all such proceeds will be paid to or retained by
               Lessor as security for the performance of Lessee's obligations
               hereunder and may be applied toward payment of any amounts which
               may then be payable by Lessee under this Agreement or any Sister
               Lease in such order as Lessor reasonably sees fit. The amount so
               retained or the balance thereof after application of any portion
               thereof as provided in this Clause 9.7(4) shall be paid to Lessee
               at such time as such Default shall have ceased to exist.

     9.8  INSURANCE FOR LESSEE'S OWN ACCOUNTS

          Nothing herein shall be deemed to prevent Lessee, at its sole expense,
          from carrying insurance covering the Aircraft, the Airframe, the
          Engines or any engine or engines from time to time installed on the
          Airframe or any Part in addition to the Insurances required under this
          Clause 9, or in amounts greater than those required under this Clause
          9 (any such insurance "Additional Insurance"), provided that such
          Additional Insurance does not adversely affect the rights of Lessor,
          Beneficiary or any other Additional Insured to make any claim or
          obtain recovery or coverage in full under any of the Insurances
          required to be maintained pursuant to this Clause 9. The proceeds of
          any such Additional Insurance shall be paid directly to and shall be
          deemed the sole property of Lessee.

10.  INDEMNITY

     10.1 GENERAL

          Except as set forth in Clause 10.3, Lessee agrees to defend, indemnify
          and hold harmless the Indemnitees from and against any and all claims,
          proceedings, losses, liabilities, suits, judgment, costs (including
          attorneys' fees and related costs), expenses, penalties or fines (each
          a "Claim") (where any such Claim relates to an occurrence suffered,
          incurred, or arising out of an event the happening of which was during
          the Term or prior to redelivery of the Aircraft, but not before the
          Term) regardless of when the Claim is made whether or not it arises
          out of or is attributable to any act or omission, negligent or
          otherwise, of any Indemnitee:

          (1)  which may at any time be suffered or incurred directly or
               indirectly as a result of or connected with the possession,
               delivery, performance, management, registration, control,
               maintenance, condition, service, repair, overhaul, leasing, use,
               operation or return of the Aircraft, any Engine or Part (either
               in the air or on the ground) whether or not the Claim may be

                                    PAGE 46

<PAGE>

               attributable to any defect in the Aircraft, any Engine or any
               Part or to its design, testing or use or otherwise;

          (2)  which arises otherwise from or in connection with the leasing of
               the Aircraft to Lessee under this Agreement and any act or
               omission of Lessee;

          (3)  which arises out of any act or omission which invalidates or
               which renders voidable any of the Insurances; or

          (4)  which, except as to the Manufacturer, may at any time be suffered
               or incurred as a consequence of any design, production, article
               or material in the Aircraft, any Engine or any part or its
               operation or use constituting an infringement of patent,
               copyright, trademark, design or other proprietary right or a
               breach of any obligation of confidentiality owed to any person;

          but excluding any Claim to the extent that the Claim is covered
          pursuant to another indemnity provision of this Agreement or to the
          extent it arises solely as a result of Lessor Taxes or a Lessor Lien.

     10.2 DURATION

          The indemnities contained in this Agreement will continue in full
          force after the Expiry Date.

     10.3 EXCEPTIONS

          Notwithstanding anything to the contrary herein, Lessee shall not be
          required to indemnify any Indemnitee in respect of any Claim arising
          from or otherwise attributable to:

          (1)  acts or events which occur prior to execution of this Agreement
               or after Redelivery of the Aircraft to the Lessor in the manner
               and in the condition required hereunder, provided that nothing
               herein shall be deemed to release Lessee from any of its
               obligations hereunder that provide for performance after
               termination of the Term;

          (2)  the gross negligence or willful misconduct of such Indemnitee;

          (3)  Lessor Taxes;

          (4)  Lessor Liens;

          (5)  ordinary and usual operating or overhead expenses of such
               Indemnitee other than arising in connection with a Default or an
               Event of Default hereunder;

          (6)  the financing of the Aircraft or any voluntary or involuntary
               assignment, transfer, conveyance or other disposition
               (collectively a "Transfer") of all or any interest of such
               Indemnitee in or to the Aircraft, any Engine or Part or

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<PAGE>

               this Lease by any Person other than the Lessee unless such
               Transfer arises in connection with the exercise by Lessor of any
               available remedies during the existence of an Event of Default);
               and

          (7)  as to the Manufacturer, any breach by Manufacturer or Engine
               Manufacturer of any of their respective warranties as set forth
               in the Purchase Agreement or any other agreement or instrument
               between Manufacturer, Engine Manufacturer or any vendor, supplier
               or subcontractor of Manufacturer or Engine Manufacturer, or as a
               consequence of any design or production defect.

          Lessee shall be subrogated to the rights and remedies which any
          Indemnitee may have against the Manufacturer, the Engine Manufacturer
          or any supplier, vendor, subcontractor or other manufacturer of any
          Part or any other Person claiming against such Indemnitee, provided
          Lessee shall have satisfied its indemnification obligations hereunder.

          If any Indemnitee obtains a recovery of all or any portion of any
          indemnity amount which Lessee has paid in full to such Indemnitee,
          provided that at such time as no Default has occurred and is then
          continuing, such Indemnitee shall pay to Lessee the net amount
          recovered by such Indemnitee within ten Business Days after receipt
          thereof.

11.  EVENTS OF LOSS

     11.1 PRE-DELIVERY

          If an Event of Loss occurs prior to delivery of the Aircraft to
          Lessee, this Agreement will immediately terminate and except as
          expressly stated in this Agreement neither party will have any further
          obligation or liability under this Agreement other than pursuant to
          Clause 17.9, except that Lessor will return to Lessee the Cash Deposit
          and the Deposit Letter of Credit.

     11.2 POST-DELIVERY

          If an Event of Loss occurs in respect of the Aircraft after delivery
          of the Aircraft to Lessee, Lessee will pay the Agreed Value to Lessor
          on or prior to the earlier of (1) 90 days after the Event of Loss and
          (2) the date of receipt of insurance proceeds in respect of that Event
          of Loss. Subject to the rights of any insurers and reinsurers or other
          third party, upon irrevocable payment in full to Lessor of that amount
          and all other amounts which may then be payable to Lessor under this
          Agreement, Lessor will without recourse or warranty (except as to
          Lessor's Liens) and without further act, be deemed to have transferred
          to Lessee all of Lessor's rights to any Engines and Parts not
          installed when the Event of Loss occurred, all on an as-is, where-is
          basis, and will at Lessee's reasonable expense (including Taxes, if
          any), execute and deliver such bills of sale and other documents and
          instruments as Lessee may reasonably request to evidence (on the
          public record or otherwise) the transfer and the vesting of

                                    PAGE 48

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          Lessor's rights in such Engines and Parts in Lessee, free and clear of
          all of Lessor Liens.

     11.3 ENGINES

          If an Event of Loss occurs with respect to any Engine not then
          installed on the Aircraft, or upon any Event of Loss with respect to
          an Engine installed on the Aircraft not involving an Event of Loss of
          the Aircraft occurring after delivery of the Aircraft to Lessee,
          Lessee shall give Lessor prompt written notice thereof and Lessee
          shall replace such Engine as soon as reasonably possible by duly
          conveying to Lessor title to another engine owned or to be acquired by
          Lessee, which engine shall be free and clear of all Liens other than
          Permitted Liens, and shall be of the same make or model or an improved
          or advanced version, in such operating condition and of such value and
          utility as the Engine which sustained the Event of Loss was (or would
          have been if it had been maintained in accordance with the terms
          hereof). Such replacement engine shall be deemed an "Engine" as
          defined herein. Lessee agrees to take such action as Lessor may
          reasonably request in order that any such replacement Engine shall be
          duly and properly titled in Lessor and leased hereunder to the same
          extent as the Engine replaced thereby. Lessee's obligation to pay the
          Rent hereunder shall continue in full force and effect, but Lessee
          shall be entitled to be reimbursed by Lessor the amount of insurance
          or condemnation proceeds, if any, received by Lessor with respect to
          such replaced Engine, subject to insurers' rights.

     11.4 REQUISITION

          During any requisition for use or hire of the Aircraft, any Engine or
          Part which does not constitute or has not matured into an Event of
          Loss and provided always that it does not arise out of any act or
          omission of Lessor, Beneficiary or any Person claiming by or through
          Lessor or Beneficiary:

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

          (2)  so long as no Default has occurred and is continuing, Lessee will
               be entitled to any hire paid by the requisitioning authority in
               respect of the Term, but if a Default has occurred and is
               continuing, Lessor will be entitled to such hire to be held as
               security for Lessee's obligations hereunder and paid over to
               Lessee at such time as such Default shall not be continuing, if
               not applied in full or partial satisfaction of such obligations.
               Lessee will, as soon as practicable after the end of any such
               requisition, cause the Aircraft to be put into the condition
               required by this Agreement. Lessor will be entitled to all
               compensation payable by the requisitioning authority in respect
               of any change in the structure, state or condition of the
               Aircraft arising during the period of requisition, and Lessor
               will apply such compensation in

                                    PAGE 49

<PAGE>

               reimbursing Lessee for the cost of complying with its obligations
               under this Agreement in respect of any such change, but so that,
               if any Default has occurred and is continuing, Lessor may apply
               the compensation or hire in or towards settlement of any amounts
               owing by Lessee under this Agreement.

12.  REDELIVERY OF AIRCRAFT

     12.1 NOTIFICATION

          Lessee will notify and provide Lessor with a schedule for the
          Redelivery of the Aircraft not later than 30 days prior to the
          commencement of the Redelivery Check, and Schedule 4 shall apply in
          relation to the Redelivery Check.

     12.2 REDELIVERY

          On the Expiry Date or termination of the leasing of the Aircraft under
          this Agreement, unless an Event of Loss has occurred, Lessee will, at
          its expense, redeliver the Aircraft including all Documents and
          Records to Lessor at the Redelivery Location in a condition complying
          with this Agreement and in particular Schedule 4, free and clear of
          all Liens and Permitted Liens (other than Lessor Liens).

     12.3 REDELIVERY ACKNOWLEDGMENT

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

     12.4 SHORT TERM STORAGE

          At the election of Lessor, the Lessee shall store the Aircraft either
          at Lessee's facility or, at Lessee's option, at another facility that
          is satisfactory to Lessor for a period of up to 30 days following
          Redelivery of the Aircraft by Lessee to Lessor, so long as Lessor has
          given Lessee 30 days' written notice of such storage intent prior to
          the Redelivery Date. If Lessor gives Lessee written notice of its
          intent to store the Aircraft less than 30 days prior to the Redelivery
          Date, Lessee shall only be obligated to provide such storage if space
          is available in the Lessee's storage facilities. Lessee will maintain
          the Aircraft per the Manufacturer's recommended storage program, and
          Lessor shall pay all actual and reasonable expenses of such storage
          and maintenance.

     12.5 EXPENSES

          All expenses associated with the Redelivery Check, in accordance with
          this Clause 12 and Schedule 4, and any other Redelivery requirement,
          will be at the expense of the Lessee, unless specifically noted in
          this Agreement, or otherwise mutually agreed in writing.

                                    PAGE 50

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     12.6 WARRANTY TRANSFER

          Any warranties remaining from work accomplished by outside vendors or
          Parts installed on the Aircraft will be transferred to Lessor. For any
          component repair or overhaul performed by Lessee's internal shops,
          warranties will be transferred to Lessor on the understanding that
          Lessee's warranty is substantially the same as the industry standard
          of that component.

     12.7 NON-COMPLIANCE

          To the extent that at the time of Final Inspection and demonstration
          flight, the Aircraft does not comply with the Redelivery condition of
          this Agreement, Lessee will at Lessor's option:

          (1)  immediately rectify the non-compliance at Lessee's expense and to
               the extent the non-compliance extends beyond the Expiry Date, the
               Term will automatically be extended and this Agreement will
               remain in force until the non-compliance has been rectified to
               the mutual satisfaction of both parties, or

          (2)  redeliver the Aircraft to Lessor and indemnify Lessor, and
               provide to Lessor's satisfaction security for such indemnity,
               against the cost of putting the Aircraft into the condition
               required by this Agreement, and pay to Lessor such actual and
               reasonable costs to troubleshoot and repair the non-compliant
               item as incurred by Lessor within 5 business days after the
               receipt of Lessor's invoice therefor, provided that all such
               repairs shall be completed within 90 days of Redelivery.

     12.8 EXPORT

          At Redelivery, Lessee will provide to Lessor all documents necessary
          to export (if applicable) the Aircraft from the Redelivery Location if
          outside the USA (including without limitation, a valid and subsisting
          export license for the Aircraft). Lessee will also provide to Lessor
          all necessary assistance to enable the Lessor to obtain customs
          clearance and any other permissions and documentation relevant to
          exportation from the Redelivery Location if outside the USA and pay
          any Taxes incurred in respect of the exportation of the Aircraft from
          the Habitual Base.

     12.9 LATE REDELIVERY

          If the Aircraft is not duly redelivered on the Expiry Date due to
          delays not caused by Lessor and unforeseen or foreseen in meeting
          return conditions, Lessee will be liable to Lessor (1) during the one
          month period following the Expiry Date, for Rent on the basis of the
          applicable Rent in the preceding Rental Period, and (2) thereafter for
          150% such Rent. If in the reasonable judgment of Lessor the delay
          could have been avoided by the prudent planning of Lessee, Lessee will
          be liable to Lessor for Rent in the amount of 150% of the otherwise
          applicable Rent commencing on the fifteenth (15th) day following the
          scheduled Expiry Date. In each case, Rent will be prorated

                                    PAGE 51

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          on a daily basis in an amount equal to 1/30th of the monthly Rent and
          payable on a weekly basis, in advance, for each day following the
          Expiry Date, until the Aircraft is duly redelivered. Following
          redelivery of the Aircraft, Rent will be adjusted for the actual
          number of days between the Expiry Date and the actual Redelivery Date.
          Any excess amounts paid will be returned to Lessee upon satisfaction
          of all open items associated with the Redelivery. During this extended
          period, all of the Lessee's other responsibilities and obligations
          will remain in full force and effect and Lessee will use its best
          commercially reasonable efforts to redeliver the Aircraft as soon as
          possible.

13.  DEFAULT

     13.1 EVENTS

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

          (1)  NON-PAYMENT: Lessee fails to make any payment under this
               Agreement or another Lessee Document on the due date and such
               failure shall continue for a period of 5 Business Days; or

          (2)  INSURANCE: Lessee fails to comply with any provision of Clause 9
               or Schedule 5 or any insurance required to be maintained under
               this Agreement is canceled or terminated or otherwise fails to
               remain in full force and effect; or

          (3)  BREACH: Lessee fails to comply with any other provision of this
               Agreement or another Lessee Document and, if such failure is in
               the reasonable opinion of Lessor capable of remedy, the failure
               continues for 30 days after notice from Lessor to Lessee; or

          (4)  REPRESENTATION: Any representation or warranty made (or deemed to
               be repeated) by Lessee in or pursuant to this Agreement or
               another Lessee Document, or in any document, certificate or
               statement, is, or proves to have been, incorrect in any material
               respect when made or deemed to be repeated and, to the extent
               that the same are capable of remedy the circumstances giving rise
               to such representation or warranty being incorrect are not
               remedied within 30 days after notice from Lessor to Lessee; or

          (5)  CROSS DEFAULT:

               (a)  any Financial Indebtedness of Lessee or COPA Holdings is not
                    paid when due, after giving effect to any applicable grace
                    period; or

               (b)  any such Financial Indebtedness becomes due or capable of
                    being declared due prior to the date when it would otherwise
                    have become due; or

                                    PAGE 52

<PAGE>

               (c)  the security for any such Financial Indebtedness becomes
                    enforceable; or

               (d)  under any Sister Lease, any "Event of Default" as therein
                    defined occurs; or

          (6)  APPROVALS: Any consent, authorization, license, certificate or
               approval of or registration with or declaration to any Government
               Entity in connection with this Agreement and the other Lessee
               Documents, including, without limitation:

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

               (b)  any authorization required by Lessee to authorize, or which
                    may be related to, the execution, delivery, validity,
                    enforceability or admissibility in evidence of this
                    Agreement or the performance by Lessee of its obligations
                    under this Agreement; or

               (c)  the registration of the Aircraft; or

               (d)  any airline license or air transport license;

               is materially and adversely modified or is withheld, or is
               revoked, suspended, canceled, withdrawn, terminated or not
               renewed, or otherwise ceases to be in full force and Lessor
               reasonably determines, which determination shall be conclusive,
               that there is a material risk that such withholding, revocation,
               suspension, cancellation, withdrawal, termination or non-renewal
               or cessation will materially and adversely prejudice its rights
               under or in connection with this Agreement and the other Lessee
               Documents, have a material adverse effect on Lessee's ability to
               perform its obligations hereunder, jeopardize the interests of
               Lessor in the Aircraft, or give rise to any criminal liability on
               Lessor; or

          (7)  INSOLVENCY:

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

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

                                    PAGE 53

<PAGE>

               (c)  a creditor applies for the suspension of payments of Lessee
                    or COPA Holdings, and such application is not dismissed
                    within sixty (60) days after the filing thereof; or

          (8)  LIQUIDATION, BANKRUPTCY OR SIMILAR PROCEEDINGS:

               (a)  a meeting of the shareholders or directors of Lessee or COPA
                    Holdings is convened to consider a resolution to present an
                    application for a moratorium, administration order, or any
                    such resolution is passed; or

               (b)  any step (including petition proposal or convening a
                    meeting) is taken with a view to composition, assignment or
                    arrangement with any of its creditors of, or the
                    rehabilitation, administration, custodianship, liquidation,
                    or dissolution of Lessee or COPA Holdings; or any other
                    involuntary insolvency proceedings involving Lessee or COPA
                    Holdings are commenced and remain undismissed for a period
                    of sixty (60) days; or

               (c)  any order is made or resolution passed for any such
                    composition, assignment, arrangement, rehabilitation,
                    administration, custodianship, liquidation, dissolution or
                    insolvency proceedings, of Lessee or COPA Holdings becomes
                    subject to or enters into any of the foregoing; or

               (d)  any order, judgment or decree is entered by any court of
                    competent jurisdiction finding Lessee or COPA Holdings to be
                    a bankrupt or authorizing the liquidation, reorganization,
                    bankruptcy, composition or readjustment of debts of Lessee
                    or COPA Holdings; or

          (9)  RECEIVER:

               (a)  an administrative or other receiver or manager is appointed
                    in respect of Lessee or COPA Holdings or any part of its
                    assets; or

               (b)  Lessee or COPA Holdings requests any person to appoint such
                    a receiver or manager; or

               (c)  any sequestration of any substantial part of the assets of
                    Lessee or COPA Holdings that remains in force undismissed,
                    unstayed and unvacated for a period of 60 days; or

          (10) FINAL ADVERSE JUDGMENT: A final judgment for the payment of money
               in excess of $3,000,000 that is not covered by insurance shall be
               rendered against Lessee and the same shall remain unpaid,
               unstayed or undischarged for a period of 60 days; or

                                    PAGE 54

<PAGE>

          (11) OTHER JURISDICTION: There occurs in relation to Lessee or COPA
               Holdings any event anywhere which, in the reasonable opinion of
               Lessor, corresponds with any of those mentioned in Clauses
               13.1(8) or (9); or

          (12) UNLAWFUL: It becomes unlawful for Lessee to perform any of its
               obligations under this Agreement or this Agreement becomes wholly
               or partly invalid or unenforceable, subject to the provision in
               Clause 15.1; or

          (13) SUSPENSION OF BUSINESS: Lessee or COPA Holdings suspends or
               ceases or threatens to suspend or cease to carry on all or a
               substantial part of its business or that of any of its material
               subsidiaries as currently conducted and any such partial
               suspension or cessation would materially adversely affect
               Lessee's ability to perform its obligations under this Agreement;
               or

          (14) DISPOSAL: Lessee or COPA Holdings disposes or threatens to
               dispose of all or a material part of its operating fixed assets
               (including, but not limited to, aircraft and spares), whether by
               one or a series of transactions, related or not, other than for
               the purpose of a reconstruction or amalgamation, the terms of
               which have received the previous consent in writing of Lessor,
               which consent will not be unreasonably withheld, and any such
               disposition would materially adversely affect Lessee's ability to
               perform its obligations under this Agreement; or

          (15) RIGHTS: The existence, validity, enforceability or priority of
               the rights of Lessor as Lessor in respect of the Aircraft are
               challenged by Lessee or any other person claiming by or through
               Lessee; or

          (16) CHANGE OF OWNERSHIP: Any person or group of persons, excluding
               the shareholders of Lessee or COPA Holdings and any Affiliate or
               Subsidiary thereof, acquires, after the date hereof, more than
               50% of the equity share capital of Lessee, or control of Lessee,
               without the consent of Lessor, which consent shall not be
               unreasonably withheld, and such acquisition of equity or control
               shall have a material adverse affect on Lessee's ability to
               perform its obligations hereunder. For the purposes of this
               Clause 13.1(16), "control" means the power to direct the
               management and policy of Lessee whether by control of the
               composition of the board of directors (or similar governing body)
               of Lessee, or by contract or otherwise; or

          (17) DELIVERY: Lessee fails to accept delivery of the Aircraft when
               validly tendered by Lessor pursuant to this Agreement; or

          (18) ADVERSE CHANGE: Any event or series of events occurs (exclusive
               of events affecting the airline industry generally) which, in the
               reasonable opinion of Lessor, shall have had a material adverse
               effect on Lessee's ability to perform its obligations hereunder
               and such event (or series of events) shall continue unremedied
               for a period in excess of 60 days.

                                    PAGE 55

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          (19) LETTERS OF CREDIT:

               (a)  the issuer of either Letter of Credit fails to make any
                    payment under any Letter of Credit when due and Lessee fails
                    to procure the making of such payments within 3 Business
                    Days after notice from Lessor to Lessee; or

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

               (c)  Lessee fails to provide and deliver replacement, renewal or
                    further Letters of Credit pursuant to Clause 5.1; or

               (d)  any of the events listed in sub-clauses 13.1(7), (8) or (9)
                    apply to that issuer (references in those sub-clauses to
                    Lessee being deemed to be to the issuer) and Lessee has not
                    provided to Lessor other letters of credit in the principal
                    amount and in substantially the same form of the Letters of
                    Credit issued or confirmed by a bank reasonably satisfactory
                    to Lessor in Lessor's sole discretion, within 10 days of the
                    occurrence of that event.

     13.2 RIGHTS

          If an Event of Default occurs and is continuing, Lessor may at its
          option (and without limitation or prejudice to any other rights and
          remedies that may be available to Lessor under this Agreement or at
          law or equity), at any time thereafter:

          (1)  by notice to Lessee and with immediate effect unilaterally and as
               a matter of law terminate the lease of the Aircraft hereunder
               (but without prejudice to the continuing obligations of Lessee
               under this Agreement), whereupon all rights of Lessee under this
               Agreement shall cease without any further action or judicial
               order; and/or

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

          (3)  terminate the lease of the Aircraft hereunder as a matter of law
               and without further action or judicial order by either:

               (a)  taking possession of the Aircraft, for which purpose Lessor
                    may enter any premises belonging to or in the occupation of
                    or under the control of Lessee where the Aircraft may be
                    located, or cause the Aircraft to be redelivered to Lessor
                    at an airport designated by the Lessor (or such other
                    location as Lessor may require), and Lessor is hereby
                    irrevocably by way of security for Lessee's obligations
                    under this Agreement appointed attorney for Lessee in
                    causing the redelivery or in directing the pilots of Lessee
                    or other pilots to fly the Aircraft to

                                    PAGE 56

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                    that airport and will have all the powers and authorizations
                    necessary for taking that action; or

               (b)  serving notice requiring Lessee to redeliver the Aircraft to
                    Lessor at an airport designated by the Lessor in the USA.

     13.3 EXPORT

          If an Event of Default occurs and is continuing and Lessor terminates
          this Agreement pursuant to Clause 13.2, Lessor may sell or otherwise
          deal with the Aircraft as if this Agreement had never been made and
          Lessee will at the request of Lessor take all steps necessary to
          effect (if applicable) export of the Aircraft from the country where
          the Aircraft is then situated and any other steps necessary to enable
          the Aircraft to be immediately redelivered to Lessor in accordance
          with this Agreement. Lessee hereby irrevocably and by way of security
          for its obligations under this Agreement appoints Lessor as its
          attorney to execute and deliver any documentation and to do any act or
          thing required in connection with the foregoing, including, but not
          limited to, filing any documents and taking any actions necessary for
          the purpose of requesting cancellation of the registration of the
          Aircraft with the Air Authority.

     13.4 DEFAULT PAYMENTS

          If:

          (1)  Default occurs and is continuing; or

          (2)  the Aircraft is not delivered on the proposed Delivery Date by
               reason of failure of Lessee to satisfy any conditions to that
               delivery except in the event of an Excusable Delay;

          Lessee will indemnify Lessor on demand against any loss (including
          loss of profit), damage, expense, cost or inability which Lessor may
          sustain or incur directly or indirectly as a result thereof including
          but not limited to:

               (a)  any loss of profit suffered by Lessor because of Lessor's
                    inability to place the Aircraft on lease with another lessee
                    on terms as favorable to Lessor as this Agreement or because
                    the following are not as profitable to Lessor as such lease
                    would have been but for such Default or non-delivery
                    referred to in (1) and (2) above, namely (i) whatever use if
                    any to which Lessor is able to put the Aircraft as an
                    alternative to the Lease under this Agreement or (ii) any
                    consequent sale or disposal by Lessor of the Aircraft and
                    the funds arising upon such sale or disposal; and

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

                                    PAGE 57

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     13.5 SURVIVAL

          All the representations, warranties, indemnities and unperformed
          covenants and Lessor's rights contained in this Agreement shall
          survive and continue in full force after the Expiry Date,
          notwithstanding the termination of this Agreement or the lease of the
          Aircraft for any reason whatsoever.

14.  ASSIGNMENT, NOVATION

     14.1 LIEN

          Lessee will not assign, or create or permit to exist any Lien, other
          than Permitted Liens, over, any of its rights under this Agreement,
          the other Lessee Documents or the Insurances.

     14.2 LEASE ASSIGNMENT/NOVATION

          Subject at all times and in all cases to Lessee's rights under this
          Agreement and such other restrictions as are set forth herein, Lessor,
          at its sole cost and expense, may sell, assign, pledge, transfer or
          convey (in each case a "Transfer") to any Person (each a
          "Transferee"), any or all of Lessor's rights, title and interest in,
          to and under this Agreement and in respect of the Aircraft; provided
          however, that no such Transfer shall, directly or indirectly, (i)
          materially increase Lessee's obligations, duties or liabilities under
          this Agreement or in respect of the Aircraft in any manner whatsoever,
          (ii) diminish or adversely affect Lessee's rights under this Agreement
          or in respect of the Aircraft; (iii) be made to any airline, or (iv)
          otherwise cause Lessee to incur any obligations, cost or expense in
          excess of those for which it would have been responsible in the
          absence of such Transfer; provided further however, that (a) any
          Transferee, whether of all or any part of Lessor's interest in and to
          this Agreement or the Aircraft, shall have executed and delivered to
          Lessee written confirmation in form reasonably satisfactory to Lessee
          that such Transferee agrees to be bound by all of the terms and
          conditions of this Agreement and (b) any Transferee, whether of all or
          any part of Lessor's interest in and to this Agreement or the
          Aircraft, shall have executed and delivered to Lessee, a letter of
          quiet enjoyment, in form and substance substantially equivalent to
          Clause 7.1 hereof. Notwithstanding the foregoing, in the case of any
          Transfer of this Agreement or the Aircraft as security for any
          obligations of Lessor (whether in respect of any financing
          arrangements made by Lessor in respect of the Aircraft or otherwise),
          Lessor shall remain fully liable to Lessee for the prompt and due
          payment and performance of all of its duties, liabilities and
          obligations under this Agreement to the full extent as if no such
          Transfer had been made. Lessee acknowledges and agrees that should
          Lessor sell, assign transfer or convey to a Transferee, other than by
          way of security, all of Lessor's interest under this Agreement and in
          the Aircraft, Lessor shall thereupon be relieved of all of its
          obligations hereunder and Lessor's Transferee shall succeed to all of
          Lessor's rights, interests and obligations under this Agreement,
          subject however to Lessor's compliance with the terms and provisions
          of this Clause.

                                    PAGE 58

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          Subject to compliance by Lessor with this Clause 14.2, lessee shall
          execute and deliver, at Lessor's sole cost and expense, any and all
          instruments or documents reasonably requested by Lessor and shall
          otherwise reasonably cooperate with Lessor in connection with and to
          effectuate any such Transfer.

15.  ILLEGALITY

     If, notwithstanding the provisions of Clause 17.7, it becomes unlawful in
     any jurisdiction for Lessor or Lessee to give effect to their respective
     obligations as contemplated by this Agreement, the affected party shall
     notify the other in writing. Lessor and Lessee will consult in good faith
     as to any steps which may be taken to restructure the transaction to avoid
     that unlawfulness but neither party will be under no obligation to take any
     such steps. Notwithstanding the foregoing, as Lessor in its discretion
     considers appropriate or advisable while any such illegality exists and
     prior to any such cure thereof, Lessor may by notice in writing to Lessee
     terminate the leasing of the Aircraft under this Agreement. Upon any such
     termination, Lessee will immediately redeliver the Aircraft to Lessor as
     follows: (i) if the illegality causing such termination relates to the
     rights or powers of Lessee and is attributable to the laws or regulations
     of the Republic of Panama or any other jurisdiction with jurisdiction over
     the rights or powers of Lessee, Lessee shall redeliver the Aircraft to
     Lessor in accordance with the requirements of Clause 12 and Schedule 4;
     (ii) if the illegality causing such termination relates to the rights or
     powers of Lessor or Beneficiary and is attributable to the laws of the USA
     or any other jurisdiction with jurisdiction over the rights or powers of
     Lessor or Beneficiary, Lessee shall return the Aircraft to Lessor in
     accordance with the requirements of Clauses 12.2, 12.4 12.5 12.6 and 12.8
     of this Agreement, together with Clauses 1.0, 2.4, 2.8, 2.14, 2.15, 3.1,
     4.1, 4.3 and 5.1 through 5.5 of Schedule 4.

16.  DISCLAIMERS AND WAIVERS

     16.1 EXCLUSION AND WAIVER

          AS BETWEEN LESSOR AND LESSEE, THE AIRCRAFT IS BEING DELIVERED AND
          LEASED TO LESSEE UNDER THIS AGREEMENT "AS IS, WHERE IS" AND, EXCEPT
          FOR LESSOR'S REPRESENTATIONS AND WARRANTIES SET FORTH IN CLAUSE 2.4 OF
          THIS AGREEMENT, NEITHER LESSOR NOR ANY OTHER INDEMNITEE (OTHER THAN
          MANUFACTURER) MAKES ANY WARRANTIES OR REPRESENTATIONS WHATSOEVER.
          LESSOR'S REPRESENTATIONS AND WARRANTIES SET FORTH IN CLAUSE 2.4 ARE
          EXCLUSIVE AND IN SUBSTITUTION FOR, AND LESSEE, FOR THE BENEFIT OF
          LESSOR AND ANY OTHER INDEMNITEE (OTHER THAN MANUFACTURER), HEREBY
          WAIVES, RELEASES AND RENOUNCES ALL OTHER WARRANTIES, PATENT AND OTHER
          INDEMNITIES, OBLIGATIONS AND LIABILITIES OF LESSOR AND ANY OTHER
          INDEMNITEE (OTHER THAN MANUFACTURER), AND ANY AND ALL RIGHTS, CLAIMS
          AND REMEDIES OF LESSEE, ITS SUCCESSORS OR PERMITTED ASSIGNS, EXPRESS
          OR IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY
          NONCONFORMANCE OR DEFECT IN THE AIRCRAFT, ANY PART THEREOF OR ANY
          OTHER THING

                                    PAGE 59

<PAGE>

          DELIVERED, LEASED, CHARTERED, SOLD OR TRANSFERRED UNDER THIS LEASE,
          INCLUDING, BUT NOT LIMITED TO:

          (1)  ANY WARRANTY AS TO THE DESCRIPTION, CONFORMITY TO THE PROVISIONS
               OF THE PURCHASE AGREEMENT, AIRWORTHINESS, VALUE, CONDITION,
               DESIGN, OPERATION OF, OR QUALITY OF THE MATERIAL OR WORKMANSHIP
               IN, OR ANY DEFECT IN, THE AIRCRAFT, THE AIRFRAME, ANY ENGINE, ANY
               PART, ANY DOCUMENTS, ANY RECORDS, ANY DATA OR ANY OTHER THING
               DELIVERED, SOLD OR TRANSFERRED HEREUNDER;

          (2)  ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR
               A PARTICULAR PURPOSE;

          (3)  ANY EXPRESS OR IMPLIED WARRANTY AS TO TITLE;

          (4)  ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE
               OF DEALING OR USAGE OF TRADE;

          (5)  ANY OBLIGATION OR LIABILITY WITH RESPECT TO ANY ACTUAL OR ALLEGED
               INFRINGEMENT OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER
               INTELLECTUAL PROPERTY;

          (6)  ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT,
               WHETHER OR NOT IN STRICT OR ABSOLUTE LIABILITY OR ARISING FROM
               THE NEGLIGENCE OF LESSOR OR ANY OTHER INDEMNITEE, WHETHER ACTUAL
               OR IMPUTED, ACTIVE OR PASSIVE;

          (7)  THE ABSENCE OF LATENT OR OTHER DEFECT OR NONCONFORMANCE IN THE
               AIRFRAME, ANY ENGINE, ANY PART, ANY DOCUMENTS, ANY RECORDS, ANY
               DATA OR ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER,
               WHETHER OR NOT DISCOVERABLE; AND

          (8)  ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OR
               DAMAGE TO THE AIRCRAFT, THE AIRFRAME, ANY ENGINE, ANY PART, ANY
               DOCUMENT, ANY RECORD, ANY DATA OR ANY OTHER THING DELIVERED,
               LEASED OR TRANSFERRED HEREUNDER, FOR ANY LIABILITY OF LESSEE TO
               ANY THIRD PARTY OR FOR ANY LOSS OF USE, REVENUE OR PROFIT OR FOR
               ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

     16.2 CERTIFICATE OF ACCEPTANCE

          DELIVERY BY LESSEE TO LESSOR OF THE CERTIFICATE OF ACCEPTANCE WILL BE
          CONCLUSIVE PROOF AS BETWEEN LESSOR AND

                                    PAGE 60

<PAGE>

          LESSEE THAT LESSEE HAS EXAMINED AND INVESTIGATED THE AIRCRAFT, THAT
          THE AIRCRAFT AND THE DOCUMENTS AND RECORDS ARE SATISFACTORY TO LESSEE
          AND THAT LESSEE HAS IRREVOCABLY AND UNCONDITIONALLY ACCEPTED THE
          AIRCRAFT FOR LEASE HEREUNDER WITHOUT ANY RESERVATIONS WHATSOEVER
          EXCEPT AS MAY BE STATED THEREIN.

17.  MISCELLANEOUS

     17.1 WAIVERS, REMEDIES, CUMULATIVE

          The rights of Lessor under this Agreement:

          (1)  may be exercised as often as necessary;

          (2)  are cumulative and not exclusive of its rights under any law; and

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

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

     17.2 DELEGATION/AGENCY AGREEMENT

          Lessor may delegate to any person or persons all or any of the trusts,
          powers or discretions vested in it under this Agreement and any such
          delegation may be made upon such terms and conditions and subject to
          such regulations (including power to sub-delegate) as Lessor
          determines in its absolute discretion, provided that Lessor shall
          remain responsible for the performance of any such trusts, powers and
          discretions so delegated.

          Pursuant to the Purchase Agreement, certain obligations remain to be
          performed by Lessor in connection with the manufacture, fabrication
          and completion of the Aircraft by Manufacturer, which obligations,
          including the furnishing of certain equipment for the Aircraft, will
          be performed by Lessee. Lessee will act as Lessor's agent with respect
          to such matters as set forth in, and pursuant to, the terms of an
          agency agreement to be entered into by Lessor and Lessee in form and
          substance reasonably satisfactory to Lessor and Lessee. Lessee will
          perform its obligations as set forth in such agency agreement and
          provide the Aircraft equipment which must be provided by Lessee within
          the time periods required by Manufacturer, save for excusable delay.

     17.3 CERTIFICATES

          Except as expressly provided in this Agreement, any certificate or
          determination by Lessor as to any rate of interest or as to any other
          amount payable under this Agreement will, in the absence of manifest
          error, be conclusive and binding on Lessee provided that the same
          shall be accompanied by a written explanation, or

                                    PAGE 61

<PAGE>

          reasonable detail, as to the calculation or determination of any
          amount stated to be payable therein.

     17.4 APPROPRIATION

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

     17.5 CURRENCY INDEMNITY

          17.5.1 If Lessor receives an amount in respect of Lessee's liability
               under this Agreement or if such liability is converted into a
               claim, proof, judgment or order in a currency other than the
               currency in which the amount is expressed to be payable under
               this Agreement (the "contractual currency"), then:

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

               (2)  If the amount received by Lessor, when converted into the
                    contractual currency (at the market rate at which Lessor is
                    able on the relevant date to purchase the contractual
                    currency with such other currency) is less than the amount
                    owed in the contractual currency, Lessee will, immediately
                    on demand, pay to Lessor an amount in the contractual
                    currency equal to the deficit; and

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

          17.5.2 Lessee waives any right it may have in any jurisdiction to pay
               any amount under this Agreement in a currency other than the
               contractual currency.

     17.6 SET-OFF

          Lessor may set off any matured obligation owed by Lessee under this
          Agreement, any Sister Lease or any other agreement between Lessor (or
          any affiliate or subsidiary of Lessor) and Lessee (each an "Other
          Agreement") in respect of which an Event of Default (or similar event)
          has occurred and is continuing (to the extent beneficially owned by
          Lessor) against any obligation (whether or not matured) owed by Lessor
          to Lessee, regardless of the place of payment or currency. If the
          obligations are in different currencies, Lessor may convert either
          obligation at the market rate of exchange available for the purpose of
          the set-off. If an obligation is unascertained or unliquidated, Lessor
          may in good faith estimate that obligation and set off in respect of
          the estimate, subject to the relevant party accounting to the other
          when the obligation is ascertained or liquidated. Lessor will not be
          obliged to pay amounts to Lessee under this Agreement or any Other
          Agreements in respect of

                                    PAGE 62

<PAGE>

          which an Event of Default has occurred and is continuing so long as
          any sums which are then due to Lessor by Lessee under this Agreement
          remain unpaid and any such amounts which would otherwise be due will
          fall due only if and when Lessee has paid all such sums except to the
          extent Lessor otherwise agrees or sets off such amounts against such
          payment pursuant to the foregoing.

     17.7 SEVERABILITY

          If any provision hereof shall be held invalid, illegal or
          unenforceable in any respect in any jurisdiction, then to the extent
          permitted by law, (a) all other provisions hereof shall remain in full
          force and effect in such jurisdiction and (b) such invalidity,
          illegality or unenforceability shall not affect the validity, legality
          or enforceability of such provision in any other jurisdiction. If,
          however, any law pursuant to which such provisions are held invalid,
          illegal or unenforceable may be waived, such law is hereby waived by
          the parties hereto to the full extent permitted, to the end that this
          Agreement shall be deemed to be a valid and binding agreement in all
          respects, enforceable in accordance with its terms.

     17.8 REMEDY

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

     17.9 EXPENSES

          17.9.1 Whether or not the Aircraft is delivered to Lessee pursuant to
               this Agreement unless any failure to effect delivery results from
               an act or omission to act by Lessor or Beneficiary not
               anticipated or otherwise permitted under this Agreement, Lessee
               will pay to Lessor on demand all reasonable expenses (including
               investigation and appraisal expenses, attorneys' fees and other
               costs) payable or incurred by Lessor in connection with the
               enforcement of or preservation of any of Lessor's rights under
               this Agreement or any related agreement, or in respect of the
               repossession of the Aircraft pursuant to Clause 13.2. 17.9.2 Each
               party shall bear all other expenses (including legal,
               professional, and out-of-pocket expenses) incurred or payable by
               such party in connection with the negotiation, preparation, and
               execution of this Agreement and/or the other documents
               contemplated hereby.

          17.9.3 All expenses payable pursuant to Clause 17.9.1 will be paid in
               the currency in which they are incurred by Lessor.

                                    PAGE 63

<PAGE>

     17.10 TIME OF ESSENCE

          The time stipulated in this Agreement for all payments payable by
          Lessee to Lessor and for the performance of Lessee's other obligations
          under this Agreement will be of the essence.

     17.11 NOTICES

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

          (1)  if by letter, when delivered; and

          (2)  if by fax, when transmitted and full transmission has been
               separately notified by telephone by the transmitting party.

          The address, telephone numbers and facsimile numbers of Lessee and
          Lessor and Beneficiary are as follows (or such other address,
          telephone number or facsimile number notified by the relevant party):

Lessee:           Address:     Avenida Justo Arosemena y Calle 39
                               Panama 1, Republic of Panama
                  Attention:   Executive President
                  Facsimile:   507-227-1952
                  Telephone:   507-227-4551

Lessor:           Address:     79 South Main Street
                               Salt Lake City, Utah 84111 USA
                  Attention:   Corporate Trust Department
                  Facsimile:   802-246-5053
                  Telephone:   802-246-5630

with a copy to:

Beneficiary:      Address:     3780 Kilroy Airport Way, Suite 700
                               Long Beach, California 90806 USA
                  Attention;   Contracts Director
                  Facsimile:   562-988-2694
                  Telephone:   562-988-2688

                                    PAGE 64

<PAGE>

     17.12 LAW AND JURISDICTION

          17.12.1 This Agreement shall in all respects be governed by, and
               construed in accordance with, the internal laws of the State of
               New York, inclusive of all matters of construction, validity and
               performance.

          17.12.2 Lessee and Lessor hereby irrevocably submit to the
               jurisdiction of any New York state or federal court sitting in
               New York City in any action or proceeding arising out of or
               relating to this Lease, and hereby irrevocably agree that all
               claims in respect of such action or proceeding may be heard and
               determined in such New York state court or, to the extent
               permitted by law, in such federal court. Lessee and Lessor hereby
               irrevocably waive, to the fullest extent they may effectively do
               so, the defense of an inconvenient forum to the maintenance of
               such action or proceeding. Lessor hereby irrevocably appoints CT
               Corporation System, with an office on the date hereof at 1633
               Broadway, New York, New York 10019, and Lessee hereby irrevocably
               appoints Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel,
               200 Park Avenue, New York, New York 10019 (the "Process Agents"),
               as their respective Process Agents to receive on their behalf
               proper service of copies of the summons and complaint and any
               other process that may be served in any such action or
               proceeding. Such service may be made by mailing or delivering a
               copy of such process to Lessee or Lessor, as the case may be, in
               care of their respective Process Agents at such Process Agent's
               above address, and Lessee and Lessor hereby irrevocably authorize
               and direct their respective Process Agents to accept such service
               on their behalf. Lessee and Lessor agree that a final
               non-appealable judgment in any such action or proceeding shall be
               conclusive and may be enforced in other jurisdictions by suit on
               the judgment or in any other manner provided by law. Nothing in
               this Clause 17.12.2 shall affect the right of any Person to serve
               legal process in any other manner permitted by law or affect the
               right of any other party to bring any action or proceeding
               against Lessee or Lessor, or their respective properties in the
               courts of other jurisdictions. LESSEE AND LESSOR HEREBY WAIVE
               TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE
               PARTIES INVOLVING, DIRECTLY OR INDIRECTY, ANY MATTER ARISING OUT
               OF OR RELATING TO THIS LEASE.

          17.12.3 Lessee agrees that any final non-appealable judgment or order
               of a Federal or State court located in the State of New York in
               connection with this Agreement and the other Lessee Documents is
               conclusive and binding on it and may be enforced against it in
               the courts of any other jurisdiction.

          17.12.4 Lessee irrevocably and unconditionally:

               (1)  agrees that if Lessor brings legal proceedings against it or
                    its assets in relation to this Agreement and the other
                    Lessee Documents, no immunity from such legal proceedings
                    (which will be deemed to

                                    PAGE 65

<PAGE>

                    include without limitation, suit, attachment prior to
                    judgment, other attachment, the obtaining of judgment,
                    execution or other enforcement) will be claimed by or on
                    behalf of itself or with respect to its assets;

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

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

     17.13 SOLE AND ENTIRE AGREEMENT

          This Agreement (including all Schedules hereto) is the sole and entire
          agreement between Lessor and Lessee in relation to the leasing of the
          Aircraft, and supersedes all previous agreements in relation to that
          leasing.

     17.14 INDEMNITIES

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

     17.15 COUNTERPARTS

          This Agreement may be executed in counterparts each of which will
          constitute one and the same document.

     17.16 LANGUAGE

          All notices to be given under this Agreement will be in English. All
          documents delivered to Lessor pursuant to this Agreement will be in
          English, or will be accompanied by a certified English translation. If
          there is any inconsistency between the English version of this
          Agreement and any version in any other language, the English version
          will prevail.

     17.17 MODIFICATION

          No modification, change, waiver or amendment to this Agreement or any
          related letter agreements shall be deemed to be made unless in writing
          signed by the party to be charged.

                                    PAGE 66

<PAGE>

     17.18 OWNER TRUSTEE

          (1)  Except as expressly provided in this Agreement, Lessee
               acknowledges (i) that this Agreement is executed by First
               Security Bank, National Association, not in its individual
               capacity, but solely as owner trustee, except as otherwise
               expressly provided herein, under the Trust Agreement with
               Beneficiary as grantor, in the exercise of the power and
               authority conferred and vested in it as such owner trustee, (ii)
               this Agreement is intended to bind only the Trust Estate (as
               defined in the Trust Agreement) except to the extent of the
               representations and warranties made herein by First Security
               Bank, National Association in its individual capacity, and (iii)
               that nothing herein contained shall be construed as creating any
               liability on First Security Bank, National Association,
               individually or personally, to perform any agreement herein, all
               such liability, if any, being expressly waived by Lessee and by
               each and every person now or hereafter claiming by, through or
               under Lessee, except with respect to the negligence or willful
               misconduct of First Security Bank, National Association.

          (2)  If First Security Bank, National Association shall cease to be a
               "citizen of the United States" within the meaning of 49 U.S.C.
               Section 40102 and the rules and regulations of the FAA
               thereunder, First Security Bank, National Association, in its
               individual capacity, agrees to give Lessee and Beneficiary prompt
               notice thereof, upon an officer of First Security Bank, National
               Association becoming aware thereof, and agrees to cooperate with
               the efforts of Beneficiary promptly to replace it as owner
               trustee of the trust owning the Aircraft and as Lessor hereunder
               with a person who is such a "citizen of the United States."

                     [This space intentionally left blank.]

                                    PAGE 67

<PAGE>

                                                                         ANNEX A

                              **Material Redacted**

                                   **3 pages**

                                    PAGE 68

<PAGE>

                                                                         ANNEX A

                                  CERTAIN TERMS

Defined Term                                                          Definition

                         [Intentionally omitted from the
               version of this document filed with the FAA and the
                        Directorate of Civil Aeronautics
               and recorded with the Office of the Public Registry
               as containing confidential financial information.]

                                    PAGE 69

<PAGE>

                                    SCHEDULES

                                     Page 1

<PAGE>

                                   SCHEDULE 1

                                     PART 1

                             DESCRIPTION OF AIRCRAFT

AIRCRAFT

MANUFACTURER:  The Boeing Company

MODEL:         737-71Q

SERIAL NUMBER: 29048

GENERAL FEATURES (subject to change and offer ability by Boeing): As set out in
Part 2 of Schedule 1

AIRCRAFT SPECIFICATION

The Aircraft specification is as per Boeing Detail Specification Documents
(D6-38808-27) ("Tombo Baseline Specification") (including such production
improvements as may be incorporated into the Aircraft), as further modified to
incorporate any change orders accepted by Manufacturer in respect of the
Aircraft, and any further changes as agreed from time to time, together with
Documents and Records.

ENGINES

ENGINE TYPE AND NO: Two (2) CFM56-7B24 engines rated at 24,000 lbs of thrust.

EACH OF THE ENGINES IS 750 OR MORE RATED TAKE-OFF HORSEPOWER OR ITS EQUIVALENT.

MANUFACTURER: CFM International, Inc.

SERIAL NOS: As set out in the Certificate of Acceptance

                                     Page 1

<PAGE>

                                   SCHEDULE 1

                                     PART 2

                                GENERAL FEATURES

     The following are to be incorporated on delivery in each case subject to
confirmation by Boeing after signature of this Agreement that Boeing will
incorporate them in the Aircraft on delivery, which Lessor shall request after
signature.

0310MP3528   MTW/MTOW 153,500/153,000 LBS
7200CG3255   24,000 LBS THRUST
             DUAL MMR -ILS/GPS
             ENHANCED GPWS 3446 MK 3244
             PREDICTIVE WINDSHEAR/WX RADAR

                                     Page 2

<PAGE>

                                   SCHEDULE 1

                                     PART 3

                                LESSEE'S OPTIONS

This listing represents changes assumed to accommodate the desired Lessee
configuration and is subject to confirmation on availability and agreed effect
on lease pricing and delivery schedule.

                                       I.

<TABLE>
<S>          <C>
2210CG3197   G/S CAP INHIBIT BEFORE LOC (ADD)
2210CG3198   DFCS - CWS WARN (DELETE)
2210CG3232   DFCS - ALT ALERT 200/900 FT (DELETE)
2210CG3235   DFCS - ALT ALERT 300/900 (ADD)
2350CG3147   CW INTERPHONE SW - SPRING LOAD TO OFF W/LOCK (DELETE)
2350CG3158   CW INTERPHONE SW - SPRING LOAD TO OFF  (ADD)
2350CG3153   FLT COMP AUDIO MUTE REVISION - ONE SIDE MUTING (ADD)
2350CG3163   DIG. AUDIO REMOTE ELECT. UNIT - DEL HEADSET AURAL  (ADD)
3162CG3018   ENHANCED MACH / A/S DISPLAY (DELETE)
3162CG3019   R/A DISPLAY - ROUND DIAL (ADD)
3162CG3020   R/A ABOVE ADI (DELETE)
3162CG3021   R/A BELOW ADI (ADD)
3162CG3025   R/A ALERT 2,500 FT (DELETE)
3162CG3026   ALT. COMPARATOR - STEADY (ADD)
3162CG3027   ALT. COMPARATOR - FLASHING (DELETE)

3162CG3036   AUTOTUNED NAVIDS - DISPLAYED (ADD)
3162CG3037   AUTOTUNED NAAIDS - SUPPRESSED (DELETE)

3162CG3104   ENG INSTR DISPLAY - SIDE BY SIDE (ADD)
3162CG3105   ENG INSTR DISPLAY - OVER & UNDER (DELETE)
3162CH3135   ADDED T/O BUG - NOT DISPLAYED (ADD)
3162MP3186   WX RDR RANGE IND - RANGE MARKS IN LIEU ARCS (ADD)
3446CG3120   GPWS ACT OF DESCENT BELOW MIN (MODE 6) (DELETE)
3446CG3127   GPWS R/A CALLOUTS (100, 50, 30, 20, 10) (ADD)
3446MP3172   GPWS VOICE "HALF VOL" IN LIEU "FULL VOL" (ADD)
3461CG3432   THRUST REDUCTION ALT - T/O PROFILE (ADD)
3461CG3498   FMC ACTIVATION - 1 MEG DATA BASE (ADD) $77,300
3461CH3562   FMC ACTIVATION - RETENTION OF WAYPOINT AFTER DIRECT TO $9.900
</TABLE>

                                     Page 3

<PAGE>

                                       II.

<TABLE>
<CAPTION>
     P/N SWAP                  CONTINENTAL                    TOMBO
     --------                  -----------                    -----
<S>                            <C>                            <C>
1    SSCVR                     LORAL/FAIRCHILD 2100-1010-00   ALLIED SIG
                               2370MP3215                     2370CH3199

2    FLASHLIGHT                DME P2-07-0001-215             P2-07-0001-214
                               2564MP3127

3    DFDAU                     223300-83                      TELEDYNE DFDMU
                               3131MP3883, 3131MP3999         3131CH3935
                               RR97155-26,-29

4    SSDFDR                    LOCKHEED
                               3131MP3847                     ?

5    NOSE & MLG WHLS/BRAKES    BF GOODRICH                    ALLIED SIGNAL
                               3240CG3235                     3240CG3226

6    MLG TIRES                 H44.5 X 16.5 X 21 / 28 PLY     26 PLY
                               3245CG3031                     3245CG3030

7    WX RDR W/PWS              COLLINS 622-5132-631           ALLIED SIGNAL
                               3443MP3264                     3443CG3184

8    WX RDR SPLIT FUNC C/P     COLLINS 622-5129-205
                               3443MP3259                     ?

9    TCAS II                   622-8971-500 COLLINS           ALLIED SIG
                               3445MP3289                     3445CG3169

10   ATC/TCAS CONT. PNL        GABLES G6992-40                ?
                               3445MP3332

11   FMC CDU (MULTI-PURPOSE)   FMC/ACARS/FDAU                 FMC CDU ONLY
                               3461CG3465                     3461CG3464

12   CREW O2 BOTTLE            114 CU FT                      76 CU FT
                               3510CE3098                     3510CG3097

13   POT H20 VOL.              60 GAL                         40 GAL
                               3810CG3V31                     COLLECTOR

14   RADOME REV.               M&N AEROSPACE                  BAC STD
                               5352MP3015

15   EVM                       ENDEVCO W/TRIM BAL             VIBROMETER
                               7731CG3038                     7731MP3045

16   COOL WHITE LIGHT          3320MP3039                     STD

17   PERMANENT NO SMOKE LITE   3324MP3018
</TABLE>

                                     Page 4

<PAGE>

                                      III.

BOEING ADD & DEL

<TABLE>
<S>                    <C>
1124CG3V02             EXIT TACTILE LOCATOR (ADD)
3450MP3006             REMOVAL ADF
                       DELETE 144 ALL COACH SEATS
                       INSTALL CONTINENTAL G1/G4B GALLEYS
                       DELETE DRAPE MAT
                       INSTALL CONTINENTAL CARPET AND FLOORING
                       DELETE G2 GALLEY
                       INSTALL CO EMERGENCY EQUIPMENT LOCATION
                       INSTALL CO F/C CLOSET
</TABLE>

                                       IV.

BOEING PAPER CHANGES

<TABLE>
<S>                    <C>
2528CG3V10             MAGAZINE SORAGE RACK
2528CG3V20             O/H BIN WITH BULL NOSE FOR B737-700
0220MP3368             HI ALT AIRPORT
0225CH3026             ETOPS
</TABLE>

                                       V.

MISC.

<TABLE>
<S>                    <C>
0160MS3209             A/C I.D.#'S FDRS/MODES/REGISTRY
1110MP3354             COURTAULD H.S. PAINT (COPA) 9/25/98 DEADLINE
</TABLE>

                                     Page 5

<PAGE>

                                   SCHEDULE 1

                                     PART 4

                     LESSEE'S POST-PRODUCTION MODIFICATIONS:

                                       PDM

1    DUAL H.F. (COLLINS) Z311MP3553
2    THIRD VHF COMM (COLLINS) Z312MP3529
3    PA HANDSET INSTL IN FLT DECK AISLESTAND 2331CH3179
4    PAVES VIDEO SYSTEM (INSTL HARDWARE ONLY) 2332MP3742
5    AUDIO SELECT PNL MOVE O/B 2350CH3206
6    INTERPHONE BFE MIC/HANDSETS/HEADPHONES 2350CH3207
7    30 MIN STBY PWR WITH ADDED LOAD 2433CH3150
8    12/112 INTERIOR CONFIG (KOITO SEATS) 2520CH3816, 3818, 2523CG3V16
9    INSTL SELL G1, G2, G4B GALLEYS & INSERTS 3450CG3V09, 3450CG3V14, 3V28,
     2528CG3V20, 2530CH3635, 2530CH3636, 5620CG3V02
10   ADD CLASS DIVIDER 2524CG3V16
11   ADD F/C CLOSET 2524MP3605
12   CONNECT SEAT MOUNT AISLE LITE 3351MP3049, 3351CH3030
13   INSTL FLOORING (CARPETS/LONCOIN) 2527MP3134
14   INTL DRAPES 2524CG3V20
15   BILINGUAL PLACARDS & SIGNS 2523MP3176, 2523CG3V05, 2523CG3V10
16   DELETE 2ND OBSERVER'S SEAT
17   G2 HARD POINTS RELOCATION
18   LIQUID SOAP DISP 2541CH3043
19   EMERG EQUIP P/N & RELOCATION 2502CG3V09, 3V10, 3V12, 2564CG3V03, 2564MP3136
20   ADD PAX LIFE VESTS 2562CG3V11
21   ADD LIFE RAFT 46 MAN X 3 EA 2562MP3225
22   RETRACTABLE EMERG EQ PNL 2564CH3095
23   PARK BRAKE WARNING LITE
24   STERILE C/P LITE 3310CH3020
25   PERMANENT NO SMOKE SIGNS 3324MP3018
26   EXTERNAL POS LIGHT SW INSTL 3343MP3044
27   GPWS FLAP WARNING INHIBIT ONLY 3446CH3128
28   BFE NAV DATA BASE 3461CG3403
29   2ND FMC 3461CG3496
30   JET 254 2900MP3035
31   TOTAL MISC PARTS
32   LIFELINE INSTL @ OVERWING EXIT 2560CG3V08
33   APU FIRE FIRE BOTTLE 224 IN3 RR97155-21
34   P.A. COLLINS P/N ARINC 700 RR97155-22
35   SELCAL GABLES P/N 6959-06 RR97155-24

                                     Page 6

<PAGE>

                                   SCHEDULE 1

                                     PART 5

                                    DOCUMENTS

The Documents listed below, include, but are not limited to, the following:

AIRCRAFT CURRENT OPERATING AND STATUS RECORDS.

1.   Certified Interior Drawing (LOPA) with STC (FAA approved).
2.   Certified Emergency Equipment Drawing certified by FAA.
3.   List of Oil and Fluids.
4.   Cockpit Installation Drawings.
5.   Avionics Equipment List.
6.   Copy of exemptions/deviations granted by the NTSB/FAA.
7.   Airframe and Engine Ownership Placards.
8.   Airplane Flight Manual (FAA Approved).
9.   Flight Crew Operating Manual.
10.  Minimum Equipment List, with Procedures (MEL).
11.  Configuration Deviations List Manual (CDL).
12.  All required Cockpit Manuals, Documents, and Checklists.
13.  Weight and Balance Manual, with last Weighing Report.
14.  Loading and Control Manual.
15.  Fuel Measuring Document Manual.
16.  Boeing Detailed Specification (D6-38808-27).
17.  Boeing Aircraft Readiness Log.
18.  Boeing Significant Rework Log (SRL).
19.  Boeing Miscellaneous Brochure.
20.  Boeing PRR Listing.
21.  Boeing Life Limited Landing Gear Parts Report.
22.  Boeing FAA Airworthiness Directive Compliance Record Status Report.
23.  Boeing Service Bulletin Compliance Record Status Report.
24.  Boeing Rigging Brochure.
25.  Boeing Delivery Exceptions, Equipment, Shortages and Aircraft Condition
     Items Letter.
26.  Aircraft Logbooks and certification (Manufacturer Documents).
27.  Operator Maintenance Program and Requirements.
28.  Aircraft Maintenance Manual.
29.  Aircraft Illustrated Parts Catalogue.
30.  Wiring Diagram Manual, Including Equipment List, Termination and Hook-Up
     Charts.
31.  Structural Repair Manual (SRM).
32.  Fault Reporting Manual.
33.  Interior Furnishings Manual, including Galley, Seat, and IFE Manuals.
34.  Engine Data Submittal Sheets and Manufacture Documentation (CFMI).

                                     Page 7

<PAGE>

CERTIFIED LETTERS AND CERTIFICATES

1.   Redelivery Letter certifying status, time and cycles of the Airframe,
     Engine and APU, time to next check or inspections, and time to next
     inspection/removal of engines and components.

2.   Quality Assurance Statements.

     (a)  Status and History of Major Repairs and Alterations.

     (b)  Computerized Record System.

     (c)  Accident, Incident, and Damages.

     (d)  Assistance in acquiring outstanding records with contractual release
          assigned to Lessors.

     (e)  Deferred Item Status.

     (f)  Installation of Non-Lessor or Lessee equipment on Aircraft.

3.   Upon request of Lessor, identification of signatures, stamps, initials
     utilized in the verification and authentication of Records.

4.   Copy of FAA Approval of Maintenance and Inspection Program (FAA Form 1014
     or equivalent).

5.   Inventory List of Documents and Records transferred with the Aircraft.

6.   Original Export Certificate of Airworthiness.

7.   Current, or last, Certificate of Airworthiness.

8.   Current, or last, Registration.

9.   Current, or last, Radio License.

10.  Current Export Certificate of Airworthiness, if available.

11.  Supplement Type Certificates.

12.  Galley Certificate of Sanitary Construction.

                                     Page 8

<PAGE>

                                   SCHEDULE 1

                                     PART 6

                                     RECORDS

The Records listed below, include, but are not limited to, the following:

AIRCRAFT MAINTENANCE RECORDS

1.   Aircraft Logbooks: Flight, Maintenance, and Cabin, as applicable to the
     Operator.

2.   Aircraft Maintenance and Flight Log Sheets for prior 12 months in service
     (minimum).

3.   Complete cycle of all "Letter" Checks.

4.   All Time Controlled Inspection/Task (out of phase) Maintenance Records.

5.   Component Airworthiness Approval Tags (FAA 8130-3 Form or JAA-1 Form or
     equivalent) with indication of work performed at shop.

6.   Time Controlled Component (hard time) records back to last overhaul,
     including all intermediary Repair Records.

7.   Life Limited Part (LLP) Records providing status and traceability to origin
     and manufacturer, including installation records of each component.

8.   Airworthiness Directive Records and Compliance Documentation (Airframe and
     Appliances) including Alternate Means of Compliance Approval.

9.   Service Bulletin Status and Method of Compliance records.

10.  [Intentionally omitted.]

11.  Listing of all FAR revision compliance, including date of accomplishment
     and record of proof of compliance.

12.  Accident and Incident Report Records.

13.  Major Structural Damage Reports and Repair Records with necessary
     approvals.

14.  Major Repair/Alteration Compliance Records with FAA 337 Form (or its
     equivalent).

15   Major and Minor Repair Records.

16.  Records of current Engine, Landing Gear, and APU Installation.

17.  Modification Records, copies of all engineering orders and related
     engineering drawings and STCs which have been accomplished on the Aircraft,
     components, Engines, and APU, including documentation for work accomplished
     by the previous owner(s) and operator(s).

AIRCRAFT CURRENT OPERATING AND STATUS RECORDS

1.   Provide the following Status and Summary Report (or Reports) that furnish
     the following types of data and information regarding the Certified Status
     of the Aircraft and Engines.

     (a)  Aircraft Time & Cycle Report, including daily utilization recordings.

     (b)  Aircraft Description & Status Summary.

     (c)  Aircraft Maintenance Inspection & Status Report, including total time,
          interval, time-to-go, and last compliance times for all items of the
          Agreed Maintenance Program.

     (d)  Component Status and Listing Report (H/T, O/C, C/M, and LLP).

     (e)  Airworthiness Directive Status and Summary Report (airframe, engines,
          and appliances).

                                     Page 9

<PAGE>

     (f)  Service Bulletin Status and Compliance Report.

     (g)  Listing of all Major Repairs/Alterations and STCs.

     (h)  Aircraft Life Limited Component Status Report.

     (i)  Deferred Item (non-MEL, long term) and Engineering Deviations
          Listings.

2.   Current Weighing Report, including current Operational Weights and Weight &
     Balance changes since last actual weight (delta weight change).

3.   Accident, Incident and Damage Report.

4.   Sampling Programs, history and status.

5.   Record of Last Compass Swing.

6.   Record of Last Altimeter and Transponder Certification.

7.   Record of Last Flight Recorder Certification.

8.   Flight Control Balance Records.

ENGINE AND APU RECORDS (FOR EACH ENGINE)

1.   Overhaul and Repair Records, at a minimum, back to the last overhaul of
     each Module (or New Manufacture). In the case of the APU back to last
     overhaul and HSI (minimum).

2.   Component Status Report and Records, with Airworthiness Tags and Work
     Orders.

3.   Time Controlled Component Records back to last overhaul, including all
     intermediary Repair Records.

4.   Time Controlled Inspection Records.

5.   Borescope and Isotope Inspection Records (including NDT Records & Videos).

6.   Airworthiness Directive Records and Compliance Documentation.

7.   Life Limited Part Status and traceability to origin and manufacture, with
     installation records.

8.   Service Bulletin Status and Method of Compliance Instructions.

9.   Current (Last) Test Cell Report.

10.  Engine Condition Monitoring Reports.

11.  Engine Logbooks and Manufacture Delivery Records.

12.  Current Installation Records.

13.  All Records, Technical Orders, STC, Major Repairs, alterations and other
     relevant events.

NOTES:

All records will be delivered as original hard copy, "dirty finger print"
records. Computerized records will be supported with original hard copy records.

Any records not identified within this Schedule 1, Part 6 "Records" that become
required due to regulatory change, FAA requirement, or export requirements shall
be provided as part of the return.

All computerized reports and summaries will be certified and signed by the
Director of Quality Assurance (or Authorized Official of the airline). In the
case of computerized reports and summaries issued on behalf of Lessee by
Lessee's third party approved maintenance provider, the Lessee will make a
certified statement in writing that identifies the authenticity of such reports
made on behalf of the Lessee.

                                    Page 10

<PAGE>

                                   SCHEDULE 2

                                     PART 1

                            CERTIFICATE OF ACCEPTANCE

This Certificate of Acceptance is delivered, on the date set out below, by
Compania Panamena de Aviacion, S.A. (COPA) ("Lessee"), to First Security Bank,
National Association, not in its individual capacity but solely as Owner Trustee
("Lessor"), pursuant to the Aircraft Lease Agreement (MSN 29048) dated as of
October 1, 1998 between Lessor and Lessee (the "Agreement"). The capitalized
terms used in this Certificate shall have the meaning given to such terms in the
Agreement.

1.   DETAILS OF ACCEPTANCE

     Lessee hereby confirms to Lessor that Lessee has at ________ o'clock on
     this day of _______________, ____________, at _____________________,
     accepted the following, in accordance with the provisions of the Agreement:

(1)  AIRCRAFT:

Airframe Manufacturer's Serial No.:

TSN ________________________
CSN ________________________

(2)  ENGINES:

Engine Number Manufacturer's Serial No.:

1 __________   TSN __________
               CSN __________

2 __________   TSN __________
               CSN __________

(3)  LANDING GEAR:

<TABLE>
<CAPTION>
       NOSE   MAIN LEFT   MAIN RIGHT
       ----   ---------   ----------
<S>    <C>    <C>         <C>
TSN:
CSN:
</TABLE>

                                     Page 1

<PAGE>

(4)  APU:

           MSN:
           TSN:
           CSN:

(5)  FUEL STATUS: ______________ Pounds

(6)  LOOSE EQUIPMENT CHECK LIST: as per list signed by Lessor and Lessee and
     attached hereto.

(7)  DOCUMENTS AND RECORDS: as per list signed by Lessee and attached hereto.

(8)  DAMAGE CHART: as per the diagram signed by Lessor and Lessee and attached
     hereto.

2.   CONFIRMATION

Lessee confirms to Lessor that as of the time indicated above, being the
Delivery Date:

     (1)  the representations and warranties contained in Clause 2 of the
          Agreement are hereby repeated;

     (2)  the Aircraft is insured as required by the Agreement;

     (3)  Lessee confirms that there have been affixed to the Aircraft and the
          Engines the fireproof notices of the type and in the locations
          required by the Agreement;

     (4)  Lessee's authorized technical experts have inspected the Aircraft to
          ensure the Aircraft conforms to Lessee's requirements. The Aircraft is
          in accordance with the specifications of the Agreement and
          satisfactory in all respects.

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

                                        COMPANIA PANAMENA DE AVIACION,
                                        S.A. (COPA)

                                        By:
                                            ------------------------------------
                                        Title:
                                               ---------------------------------

                                     Page 2

<PAGE>

                                   ATTACHMENTS

"Loose Equipment Checklist":

Documents and Records:

Damage Chart:

                                      etc.

-------------------------------------
Signed by Lessee and Lessor

                                     Page 3

<PAGE>

                                   SCHEDULE 2

                                     PART 2

                          AIRCRAFT DELIVERY CONDITIONS

1.0  AIRCRAFT SPECIFICATION AT DELIVERY

1.1  The Aircraft shall be a Boeing Model 737-700 airplane with two CFM56-7B24
     engines rated at 24,000 lbs of thrust. The Aircraft and attached Engines
     shall be delivered new from the Manufacturer.

1.2  The physical specification of the Aircraft is as defined in Parts 1, 2 and
     3 of Schedule 1.

1.3  The Documents and Records that comprise part of the Aircraft and are
     delivered with the Aircraft at delivery are defined in Parts 5 and 6 of
     Schedule 1.

2.0  CONDITION OF AIRCRAFT

2.1  Except as otherwise specified in this Agreement, as between Lessor and
     Lessee the Aircraft will be delivered "as is, where is".

2.2  The Aircraft will have a Standard FAA Certificate of Airworthiness or FAA
     Export Certificate of Airworthiness as the case may be. The Aircraft will
     be suitable for immediate operation in commercial service except for
     specific items which the Air Authority may require of Lessee for
     registration, certification and operation in the Jurisdiction of
     Registration (this may include but is not limited to language placards and
     operational requirements).

2.3  The Aircraft will be delivered in Lessee's external livery provided that
     Lessee shall provide sufficient information, such as paint specification
     and paint drawing, to and when required by Manufacturer.

3.0  INSPECTIONS AND CORRECTIONS

3.1  During the course of final assembly of the Aircraft, Lessee or Lessee's
     representative will be provided reasonable access for inspection of the
     Aircraft, subject to conditions as may be set forth by the Manufacturer, to
     ensure conformity with this Agreement, including being provided with the
     Tombo Baseline Specification, a copy of which will be made available to
     Lessee.

3.2  Prior to Aircraft delivery, Lessee or Lessee's representative will be
     provided an opportunity to perform a walk around inspection and system
     checks.

3.3  Lessor will provide Lessee or Lessee's representative (up to 2 persons
     including any personnel from the Air Authority) the opportunity to
     participate as observers in an acceptance demonstration flight as made
     available to Lessor pursuant to the Purchase Agreement.

                                     Page 4

<PAGE>

3.4  Lessee will notify Lessor promptly and prior to the Delivery Date of any
     defect or non-conformity with Manufacturer's specifications, noted during
     the above inspections or demonstration flight. Lessor will correct or
     procure the correction of the defect or non-conformity as promptly as
     practicable subject to provisions available to Lessor in the Purchase
     Agreement.

3.5  In the event that remedy to the noted defect or non-conformity will delay
     delivery of the Aircraft, subject to Clause 4.3 of the Agreement, (i)
     Lessor may postpone the delivery to the date which Lessor notifies Lessee
     that the defect or non-conformity has been rectified or (ii) provided that
     the Aircraft is airworthy, Lessor may elect to deliver the Aircraft but
     will be responsible to rectify, or cause Manufacturer to rectify, the
     defect or non-conformity promptly after the Delivery Date at the earliest
     practicable date in cooperation with the Lessee. In the case of (ii) in the
     preceding sentence, when such defect or non-conformity has been (a)
     rectified to the reasonable satisfaction of the Lessee, or (b) in the event
     there is no reasonable remedy available for such defect or non-conformity
     and to the extent that it has no material adverse effect on the use,
     operation and maintenance of the Aircraft, such defect or non-conformity
     issue will be deemed closed and Lessor will have no further responsibility
     to rectify such defect or non-conformity.

4.0  ACCEPTANCE AND DELIVERY

4.1  As between Lessor and Lessee, Lessee acknowledges that in accepting the
     Aircraft, Lessee is relying on its own inspection and knowledge of the
     Aircraft in determining whether it meets the requirements of this
     Agreement.

4.2  The on-board fuel provided to the Lessee at delivery will be that amount as
     provided by the Manufacturer in accordance with the Manufacturer's standard
     allowance at delivery.

4.3  Lessee will at its expense obtain all licenses, permits, and approvals
     which may be necessary to export and/or ferry the Aircraft from the
     Delivery Location. Lessor will furnish to Lessee any data and information
     available to Lessor and provide assistance to Lessee as may be reasonably
     required by Lessee to obtain such licenses, permits or approvals.

                                     Page 5

<PAGE>

                                   SCHEDULE 3

                               LESSEE'S COVENANTS

Sub-Index

PART 1 INFORMATION

1.    General Information
2.    Technical Information
3.    Financial Information

PART 2 LESSEE GENERAL COVENANTS

4.    General
5.    Third Party
6.    [Intentionally omitted.]

PART 3 OPERATION AND INSPECTION

7.    Lawful and Safe Operation
8.    Protection
9.    Sub-Leasing
10.   Inspection

PART 4 TITLE, POOLING

11.   Title
12.   Title on Equipment Changes
13.   Pooling of Engines and Parts

PART 5 TECHNICAL COVENANTS

14.   Maintenance and Repair
15.   Removal of Engines and Parts
16.   Installation of Engines, Landing Gear and Parts
17.   Non-Installed Engines, Landing Gear and Parts
18.   Equipment Changes
19.   Documents and Records

                                     Page 1

<PAGE>

PART 1 INFORMATION

1.   GENERAL INFORMATION

     Lessee will:

     (1)  notify Lessor promptly of the occurrence of any Default or any other
          event which would reasonably be expected to have a material adverse
          affect on Lessee's ability to perform any of its obligations under
          this Agreement; and

     (2)  furnish any information or other documents to be provided to Lessor
          under this Agreement in English.

2.   TECHNICAL INFORMATION

     Lessee will:

     (1)  provide Lessor with reports in English not later than the 10th day of
          the end of each six-month period of the Term in the form containing
          the information set out in Schedule 7 in relation to the matters
          reportable in each reporting period;

     (2)  promptly notify Lessor of:

          (a)  any loss, theft, damage or destruction to the Aircraft, Engines,
               APU or any Part or any repair or modification to the Aircraft if
               the potential cost may exceed the Damage Notification Threshold;

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

          (c)  any extended periods (exceeding 7 days) of the Aircraft being out
               of service for any cause other than scheduled maintenance;

          (d)  any change in any engine installed on the Aircraft;

     (3)  use reasonable efforts to give Lessor not less than 30 days prior
          written notice as to the time and location of all Major Checks; and

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

                                     Page 2

<PAGE>

3.   FINANCIAL INFORMATION

3.1  Lessee will provide to Lessor:

     (1)  within sixty (60) days after the end of the relevant quarter, the
          unaudited, management prepared accounts of Lessee and COPA Holding, in
          each case comprising balance sheet and profit and loss statements and
          cash flow statement and in the original language and in English
          prepared for each quarter of their respective financial years prepared
          in accordance with Panamanian generally accepted accounting principles
          applicable to Lessee and to COPA Holding and consistently applied;

     (2)  as soon as available and not more than 120 days after the last day of
          each financial year starting with 1998 of Lessee and COPA Holding in
          each case in English, their audited balance sheets and the audited
          consolidated balance sheet as of such day and their audited profit and
          loss statements and the audited consolidated profit and loss statement
          for the year ending on such day;

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

     (4)  on request from time to time, such other information regarding Lessee
          and COPA Holding and their respective business as if not proprietary
          and as Lessor may reasonably request;

     (5)  on request, not more frequently than annually unless a Default is
          continuing, evidence reasonably satisfactory to Lessor that all Taxes
          incurred by Lessee with respect to the Aircraft have been paid and
          discharged in full, except to the extent that such payment is being
          contested in good faith by appropriate proceedings, in respect of
          which adequate reserves have been provided by Lessee and non-payment
          of which does not give rise to any material likelihood of the Aircraft
          or any interest therein being sold, forfeited or otherwise lost or of
          criminal liability on the part of Lessor; and

     (6)  on request during any continuing Default, evidence satisfactory to
          Lessor that all charges incurred by Lessee affecting the Aircraft,
          including without limitation all payments due to any air traffic
          control authorities, airports, fuel suppliers, maintenance and repair
          shops and other suppliers of services have been paid and discharged in
          full or are being contested in good faith by appropriate proceedings
          and are not material in the aggregate.

3.2  Lessee shall meet with Lessor at Lessor's request no more frequently than
     every six months in order for Lessee to explain its financial and business
     position and general planning overview, and at such meeting Lessee shall
     discuss with Lessor Lessee's operational statistics, RPMs, ASMs, CASMs,
     load factors and yields; Lessor shall treat all such information as
     confidential.

                                     Page 3

<PAGE>

PART 2 LESSEE GENERAL COVENANTS

4.   GENERAL: Lessee will not make any substantial change in the nature of the
     business in which it is engaged and will preserve its corporate existence
     (other than in connection with a solvent reconstruction, the terms of which
     have been approved by Lessor, such approval not to be unreasonably
     withheld); and

5.   THIRD PARTY: Lessee will procure that no person acting on behalf of Lessee
     (other than Lessor) will act in any manner inconsistent with its
     obligations under this Agreement and that all such persons will comply with
     those obligations as if references to "Lessee" included a separate
     reference to those persons.

6.   [INTENTIONALLY OMITTED]

PART 3 OPERATION AND INSPECTION

7.   LAWFUL AND SAFE OPERATION: Lessee will ensure that:

     (1)  the law in effect in any country or jurisdiction which may be
          applicable to the Aircraft, its maintenance and condition or, relating
          to the use and operation of the Aircraft is complied with, any
          required modification or alteration to the Aircraft, any Engine or
          Part will be made and all reasonable steps will be taken to ensure
          that the Aircraft is not used for any illegal purpose;

     (2)  the Aircraft is not used in any manner contrary to any recommendation
          of the relevant manufacturer of the Aircraft, any Engine or any Part
          or any recommendation or regulation of the Air Authority or for any
          purpose for which the Aircraft is not designed or reasonably suitable;

     (3)  the crew and engineers employed in connection with the operation and
          maintenance of the Aircraft have the qualifications and hold the
          licenses required by the Air Authority and applicable law;

     (4)  the Aircraft is used solely in commercial or other operations duly
          authorized by the Air Authority and applicable law;

     (5)  the Aircraft is not used for the carriage of:

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

                                     Page 4

<PAGE>

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

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

          (d)  any illegal item or substance;

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

     (7)  the Aircraft is not caused or permitted to proceed to, or remain at,
          any location which would for the time being violate any law, order or
          regulation of:

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

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

          (c)  any Government Entity having jurisdiction over Lessor or the
               Aircraft, and Lessor will notify Lessee as soon as reasonably
               practicable after Lessor becomes aware of any such prohibition
               order (or any similar order or directive) of the application of
               same;

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

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

                                     Page 5

<PAGE>

     (10) the Aircraft is operated and maintained in accordance with the
          Documents and the Records, including for the redelivery of the
          Aircraft hereunder, to specified contractual standards, Manufacturer's
          specifications and type design, and any other rules and regulations as
          may be applicable to ensure that the Air Authority transport category
          certificate of airworthiness and aircraft registration shall remain
          legal and valid throughout the Term, permitting commercial passenger
          and cargo revenue service in accordance with the rules and regulations
          of the Air Authority and, in addition, to a standard equivalent to
          that required for a USA operator to comply with all rules,
          regulations, and restrictions issued by the FAA for operation in
          accordance with FAR (including, but not limited to, Part 121 and any
          other rules and regulations of the FAA as may be applicable to
          passenger category aircraft of the same manufacture and model);

     (11) any Part installed on the Aircraft complies with FAA fire resistance
          regulations and U.S. TSO requirement, as applicable; and

     (12) no change occurs in the Habitual Base of the Aircraft without the
          prior written consent of Lessor, and Lessee shall pay to Lessor on
          demand any reasonable legal or other costs of Lessor relating to the
          consideration of such change whether or not Lessor consents thereto.
          Any consent of Lessor may be subject to such conditions as Lessor may
          require to protect its rights and interests in the Aircraft.

8.   PROTECTION: Lessee will ensure that:

     (1)  the registration of the Aircraft is maintained with the Air Authority
          reflecting (so far as permitted by applicable law) the interests of
          Lessor and the Lessee shall not do or allow anything to be done which
          might adversely affect that registration; and

     (2)  subject to Clause 14 of the Agreement and, in respect of Clause (a)
          below, at Lessor's sole cost and expense, and otherwise at Lessee's
          sole cost and expense, all acts and things are done (including,
          without limitation, making any filing or registration with the Air
          Authority or any other Government Entity) and executing and delivering
          all documents (including, without limitation, any amendment of this
          Agreement) as may reasonably be required by Lessor:

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

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

          (c)  to establish, maintain, preserve, perfect and protect the rights
               of Lessor under this Agreement, in the Aircraft and the other
               Lessee Documents; and

                                     Page 6

<PAGE>

     (3)  Lessee obtains all documents, data, and records relating to
          maintenance, inspection or repair performed by Lessee's contractors
          employed for such purpose.

9.   SUB-LEASING:

9.1  Lessee will not without the prior written consent of Lessor, which consent
     will not be unreasonably withheld, sub-lease, sub-charter or otherwise part
     with possession of the Aircraft, the Engines or any Part, except that:

     (1)  Lessee may part with possession with respect to the Aircraft, the
          Engines or any Part to the relevant manufacturer for testing or
          similar purposes or to the Agreed Maintenance Performer for service,
          repair, maintenance or overhaul work, or alterations, modifications or
          additions to the extent required or permitted by this Agreement;

     (2)  wet leasing and chartering, being cases where Lessee retains full
          operational control and its own aircrew, are permitted; and

     (3)  Lessee may sublease the Aircraft for a period not to extend beyond the
          end of the Term to Continental Airlines, Inc. pursuant to a sublease
          agreement reasonably satisfactory in form and substance to Lessor.

9.2  Where Lessee wishes to dry sub-lease the Aircraft, which shall be subject
     to the consent of the Lessor in its absolute discretion, Lessee shall give
     notice to Lessor of its request and pay to Lessor a fee of $10,000 for
     Lessor to assess the proposed arrangements, such notice only to be
     effective upon confirmation by Lessor of its receipt of that fee, and in
     any event Lessee shall pay on demand any reasonable legal or other costs of
     Lessor relating to the evaluation of any wet-lease, dry sub-lease or
     charter whether or not Lessor consents thereto. Any consent of Lessor may
     be subject to such conditions as Lessor may require to protect its rights
     and interests in the Aircraft.

10.  INSPECTION:

10.1 Lessor and any person designated by Lessor may, upon reasonable notice and
     at reasonable times that do not unreasonably interfere with Lessee's normal
     business and maintenance operations, inspect and survey the Aircraft, any
     Engine, the APU, any Part or the Documents and Records and for such purpose
     may, subject to any applicable Air Authority regulation, travel on the
     flight deck as an observer on any non-revenue test flights as allowed by
     the applicable air authority, and Lessee shall ensure that all reasonable
     arrangements are made for Lessor and any designated person. Lessor reserves
     the right to perform an inspection at least once each year and preferably
     during the accomplishment of a C-Check, such inspection shall be a ground
     inspection and shall not require the opening of any panels additional to
     those already opened in the course of any ongoing maintenance.

10.2 In the case of inspection of Documents and Records, Lessee shall use
     commercially reasonable efforts to prepare them for inspection by Lessor
     within 2 weeks after notice from Lessor.

                                     Page 7

<PAGE>

10.3 Lessor will:

     (1)  have no duty to make, or liability arising from any such visit,
          inspection or survey; and

     (2)  for so long as a Default has not occurred and is continuing, not
          exercise such right other than on reasonable notice so as not to
          disrupt unreasonably the commercial operations of Lessee.

PART 4 TITLE, POOLING

11.  TITLE: Lessee will ensure that:

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

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

     (3)  at any time (a) Lessor is not represented or held out as carrying
          goods or passengers on the Aircraft or as being in any way connected
          or associated with any operation or carriage (whether for hire or
          reward or gratuitously) which may be undertaken by Lessee or (b) it
          shall not pledge, or allow to be pledged, Lessor's credit;

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

               "This Aircraft/Engine which is owned by First Security Bank,
               National Association, not in its individual capacity but solely
               as Owner Trustee (Lessor), is leased to Compania Panamena de
               Aviacion, S.A. (COPA) and may not be operated by any other person
               without the prior written consent of Lessor";

     (5)  there is not created or permitted to exist any Lien upon the Aircraft,
          any Engine or any Part other than Permitted Liens;

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

     (7)  the Aircraft, the Engine or any Part is not abandoned;

                                     Page 8

<PAGE>

     (8)  there is paid and discharged when due and payable, or adequate
          provision is made by way of security, or otherwise, for all debts,
          damages, claims and liabilities which have given or might give rise to
          a Lien (other than Permitted Liens) over or affecting the Aircraft,
          any Engine or any Part;

     (9)  it shall not attempt, or hold itself out or permit any other Person to
          hold itself out as having any power, to sell, lease or otherwise
          dispose of the Aircraft, any Engine or any Part; and

     (10) all charges relating to navigation and charges of airports, fuel
          suppliers, maintenance and repair shops and other suppliers of
          services are paid when due.

12.  TITLE ON EQUIPMENT CHANGES:

12.1 Title to all Landing Gear, APU and Parts installed on the Aircraft,
     excluding engines whether by way of replacement, as the result of an
     Equipment Change, or otherwise (except those installed pursuant to Clause
     16(1)(b) of this Schedule 3), will on installation, without further act,
     vest in Lessor subject to this Agreement free and clear of all Liens other
     than Permitted Liens. Lessee will at its own expense take all such steps
     and execute, and procure the execution of, all such instruments as Lessor
     may require and which are necessary to ensure that title so passes to
     Lessor according to all applicable laws. At any time when requested by
     Lessor, Lessee will provide evidence to Lessor's satisfaction (including
     the provision, if required, to Lessor of one or more legal opinions) that
     title has so passed to Lessor.

12.2 Any Landing Gear, APU or Part at any time removed from the Aircraft will
     remain the property of Lessor until a replacement has been made in
     accordance with this Agreement and until title in that replacement has
     passed, according to applicable laws, to Lessor subject to this Agreement
     free of all Liens, whereupon title to the Landing Gear, APU or Part will,
     provided no Default has occurred and is continuing, pass to Lessee.

12.3 Engines shall remain the property of Lessor even after any removal from the
     Airframe unless the Engine or Engines are:

     (1)  deemed to be the subject of an Event of Loss and title to a
          replacement Engine passes to the Lessor pursuant to Clause 11.3; or

     (2)  removed from the Aircraft in accordance with Clause 15 of this
          Schedule 3 and it is impractical to reinstate them, and Lessee
          installs a substitute engine or engines in accordance with Clause 16
          of this Schedule 3, title to which was transferred to Lessor in
          accordance with Clause 16, provided that the obligations under Clause
          16(1)(a) shall apply absolutely and not subject to Lessee's using its
          reasonable efforts to ensure their application, and that title shall
          be transferred to Lessor in accordance with the terms of Clause 16.

                                     Page 9

<PAGE>

13.  POOLING OF ENGINES AND PARTS:

13.1 Lessee shall not enter into any pooling agreement or make any pooling
     arrangement in respect of Engines without the prior written consent of the
     Lessor, it being understood that (i) as of the date hereof, Lessee and
     Continental Airlines, Inc. are contemplating an engine pooling or sharing
     agreement that Lessor agrees to duly consider, and (ii) Lessee shall not
     enter into the foregoing engine pooling or sharing agreement in respect of
     the Engines without the prior written consent of Lessor, which consent
     shall not be unreasonably withheld.

13.2 Lessee may make pooling arrangements in respect of Parts pursuant to a
     pooling agreement with the Agreed Maintenance Performer which may be
     inspected by Lessor on request, provided that the obligations under Clause
     16.1 of this Schedule 3 shall be absolute and not subject to Lessee using
     its reasonable efforts to ensure their application.

PART 5 TECHNICAL COVENANTS

14.  MAINTENANCE AND REPAIR

14.1 Lessee will insure compliance with this Part 5 subject to the requirements
     of the Air Authority and standards equivalent to that of a United States
     operator in compliance with FAA requirements under FAR 121 and otherwise in
     compliance with this Schedule 3.

14.2 The Aircraft shall be kept airworthy in all respects and in good repair and
     condition, ordinary wear and tear excepted.

14.3 MAINTENANCE PROGRAM

14.3.1 The Aircraft shall be maintained through an Agreed Maintenance Performer
     in accordance with applicable rules and regulations of the FAA and the Air
     Authority, and in compliance with the Agreed Maintenance Program and the
     Agreement.

14.3.2 [Intentionally omitted.]

14.3.3 The Agreed Maintenance Program shall include an anti-fungus/biological
     growth and contamination prevention, control and treatment program of all
     fuel tanks if required by Manufacturer documents in accordance with the
     Manufacturer's approved procedures and specifications.

14.3.4 Lessee shall provide Lessor with reasonable access to the Agreed
     Maintenance Program throughout the Term.

                                     Page 10

<PAGE>

14.4 MAINTENANCE STANDARDS

14.4.1 Lessee shall at a minimum ensure that the Aircraft shall at all times be
     treated and receive the same level of attention, maintenance and
     improvements as Lessee affords the balance of its fleet, including but not
     limited, to Service Bulletin incorporation, improvements, repairs,
     cleanliness and correction of items of a cosmetic nature, such as, but not
     limited to, hail damage, except where the terms of this Agreement dictate
     higher standards.

14.4.2 Lessee shall, if required by the Air Authority, maintain a current
     certificate as to maintenance, issued by or on behalf of the Air Authority
     to Lessee or the Agreed Maintenance Performer in respect of the Aircraft
     and will from time to time provide to Lessor a copy on request.

14.4.3 In the event the Aircraft is out of service for any period exceeding 2
     weeks, other than for scheduled maintenance in accordance with the Agreed
     Maintenance Program, Lessee shall maintain the Aircraft in accordance with
     Lessee's or Manufacturer's storage maintenance program.

14.5 REPAIRS

     Lessee shall act as follows in respect of repairs to the Aircraft or any
     part thereof:

14.5.1 In the event the Aircraft requires repair, all repairs will be classified
     as "Major" or "Minor", in accordance with FAA regulations or its
     equivalent.

14.5.2 All Major repairs shall be accomplished in accordance with Manufacturer
     approved data as specified in Manufacturer's Structural Repair Manuals and
     other Manufacturer's applicable FAA approved manuals or if not contained in
     such manuals, provided with FAA Designated Engineering Representative
     approval.

14.5.3 In the event Major repair instructions are not listed in FAA approved
     Manufacturer Repair Manuals and other Manufacturer's applicable FAA
     approved manuals, Manufacturer approval and appropriate substantiating
     documents, including all drawings, calculations, materials list, and any
     other pertinent data, as available, will be provided.

14.6 [Intentionally omitted.]

14.7 SERVICE BULLETINS: Lessee shall procure all applicable service bulletin
     kits which are offered "No charge" by or claimable under warranty from the
     Manufacturer, prior to the expiration of the "No charge" warranty period.

                                     Page 11

<PAGE>

14.8 AIRWORTHINESS DIRECTIVES

14.8.1 Lessee shall accomplish all airworthiness directives issued by the FAA
     and all rules and regulations and directives of the Air Authority in
     accordance with specific instructions issued by the Air Authority at any
     time during the Term, including all routine and non-routine requirements as
     applicable to the Aircraft, Engines, including all Parts and the APU.

14.8.2 All documentation necessary to establish the source data, method of
     compliance, verification of accomplishment, Quality Assurance approval and
     all schedules for recurring action, including Air Authority approved data
     used to substantiate compliance with Air Authority airworthiness
     directives, rules and regulations and all mandatory inspection and
     modification requirements shall form a permanent part of the Documents and
     Records.

15.  REMOVAL OF ENGINES, LANDING GEAR, APU AND PARTS

15.1 Lessee will ensure that no Engine, Landing, Gear, APU or Part installed on
     the Aircraft is at any time removed from the Aircraft other than

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

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

     (3)  (a)  during the course of maintaining, servicing, repairing,
               overhauling or testing that Engine, Landing Gear, APU, Part or
               the Aircraft, as the case may be; or

          (b)  as part of a normal rotation program; or

          (c)  for the purpose of making such modifications to the Engine,
               Landing Gear, APU, Part or the Aircraft, as the case may be, as
               are permitted under this Agreement; and then in each case only if
               it is reinstalled or replaced by an engine or part complying with
               Clause 16(1) of this Schedule 3 as soon as practicable and in any
               event by the earlier of within 30 days after completion of any
               off-Aircraft maintenance or by the Expiry Date.

15.2 Subject to Clause 11.3 of the Agreement, Lessee shall procure promptly the
     replacement of any Engine, Landing Gear, APU or Part which has become time,
     cycle or calendar expired, lost, stolen, seized, confiscated, destroyed,
     damaged beyond repair, unserviceable or permanently rendered unfit for use
     or whose removal is required under the Agreed Maintenance Program, with an
     engine or part complying with the conditions set out in Clause 16.1 of this
     Schedule 3.

                                     Page 12

<PAGE>

16.  INSTALLATION OF ENGINES, LANDING GEAR, APU AND PARTS

     Lessee will:

     (1)  subject to Clause 16(2) of this Schedule 3, ensure that, except as
          permitted by this Agreement, no engine or part is installed on the
          Aircraft unless:

          (a)  ENGINES, LANDING GEAR AND APU: it is in airworthy condition, is
               the same model, thrust rating, modification status, service
               bulletin and airworthiness directive compliance and incorporation
               status, or an improved or advanced version of the Engine
               (including all modules), Landing Gear or APU it replaces.

               The replacement engine, including all modules, Landing Gear or
               APU, shall be in airworthy condition, certified serviceable, in
               the same or better operating condition than the installed part
               prior to its failure or removal, including all manufacturer's
               performance parameters.

          (b)  PARTS: it is in airworthy condition, is the same model,
               modification, status, service bulletin and airworthiness
               directive interchangeability status, or an improved or advanced
               version of the item it replaces and meets all FAA TSO
               requirements.

               The replacement item shall be in airworthy condition, certified
               serviceable, in the same or better operating condition than the
               installed part prior to its failure or removal.

               The replacement item shall have substantially equivalent value,
               utility and airworthiness as the replaced Part.

          (c)  Subject to (2) below, in each case, it has become and remains the
               property of Lessor free from Liens other than Permitted Liens and
               on installation on the Aircraft will without further act be
               subject to this Agreement; and

     (2)  if no Default has occurred which is continuing, be entitled to install
          any engine or part on the Aircraft by way of replacement,
          notwithstanding (1) above, if:

          (a)  there is not available to Lessee at the time and in the place
               that engine or part is required to be installed on the Aircraft,
               a replacement engine complying with the requirements of (1)
               above;

          (b)  it would result in an unreasonable disruption of the operation of
               the Aircraft and/or the business of Lessee to ground the Aircraft
               until an engine or part, as the case may be, complying with (1)
               above becomes available for installation on the Aircraft;

          (c)  such engine or part is of the same model, is in airworthy
               condition and is serviceable; and

                                     Page 13

<PAGE>

          (d)  as soon as the Engine becomes available to be reinstalled on the
               Aircraft but in any event by the earlier of (i) the next
               scheduled D-Check, (ii) 45 days after completion of any
               off-aircraft maintenance of the Engine or (iii) the Expiry Date,
               Lessee removes any such engine or part and replaces it with the
               Engine or Part replaced by it or by an engine or part, as the
               case may be, complying with (1) above.

17.  NON-INSTALLED ENGINES, LANDING GEAR, APU AND PARTS

     Lessee will:

     (1)  ensure that any Engine, Landing Gear, APU or Part which is not
          installed on the Aircraft (or any other aircraft as permitted by this
          Agreement) is, except as expressly permitted by this Agreement,
          properly and safely stored, and kept free from Liens other than
          Permitted Liens;

     (2)  not be permitted to install any Engine (except as permitted in clause
          (3) below or elsewhere in the Agreement), Landing Gear, APU or Part on
          another aircraft, or in the case of a Part, another engine;

     (3)  notwithstanding the foregoing provisions of this Clause 17, be
          permitted if no Default has occurred and is continuing, to install any
          Engine on an aircraft operated by Lessee; and

     (4)  on Lessor's request procure that any person to whom possession of an
          Engine, APU or Landing Gear is given, acknowledges in writing to
          Lessor, in form and substance satisfactory to Lessor, that it will
          respect the interests of Lessor in the Engine, APU or Landing Gear and
          will not seek to exercise any rights whatsoever in relation thereto;

     provided that:

          (a)  upon Lessor's request, Lessee shall notify Lessor from time to
               time of the details of that aircraft or engine and of the lessor
               under such lease, the seller under such conditional sale
               agreement, the owner of such aircraft or engine or the holder of
               such Lien as the case may (in this Clause 17 being "interested
               parties"); and

          (b)  the terms of any such lease, conditional sale agreement or a Lien
               will not have the effect of prejudicing the interests of Lessor
               in that Engine, Landing Gear, APU or Part.

                                     Page 14

<PAGE>

18.  EQUIPMENT CHANGES

18.1 Lessee will not make any modification or addition to the Aircraft, except
     for an Equipment Change which is permitted by this Agreement, has the prior
     written approval of Lessor and which does not materially diminish the
     value, utility, condition, or airworthiness of the Aircraft, or is required
     by the Air Authority, Manufacturer or Engine manufacturer.

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

18.3 At Redelivery, Lessee may elect to remove any Equipment Change and restore
     the Aircraft to its condition prior to that Equipment Change.

18.4 In the event the Aircraft requires modification or alteration, all
     modifications and alterations will be classified as "Major" or "Minor" in
     accordance with FAA regulations.

18.5 No modification or alteration costing more than $100,000 shall be
     accomplished without the Lessor's prior consent.

18.6 All Major modifications and Major alterations incorporated throughout the
     Term which deviate from the Aircraft certified specifications, type design,
     or configuration shall be accomplished in accordance with Manufacturer's
     recommendations and instructions, as approved in any event by the Air
     Authority, and where they deviate from the certified configuration of the
     Aircraft, shall be covered by a FAA Supplemental Type Certificate ("STC")
     as well as by approval from the Air Authority; if an STC is not obtained,
     Lessee shall provide all and complete data which Lessor deems necessary to
     obtain an STC and such approval.

18.7 Any Part or equipment removed from the Aircraft pursuant to the terms
     hereof may be shipped by Lessee to Lessor for proper storage by Lessor.
     Upon Redelivery, if Lessor shall elect to have such Part or equipment
     reinstalled on the Aircraft, :Lessor shall ship such Part or equipment to
     Lessee for reinstallation on the Aircraft. If Lessor does not so elect, at
     Lessee's written request and at Lessee's reasonable expense, Lessor shall
     ship such Part or equipment to Lessee and, without further action, such
     Part or equipment shall become Lessee's property.

19.  DOCUMENTS AND RECORDS

19.1 Documents and Records shall at a minimum meet all Air Authority
     requirements and shall be prepared and maintained in accordance with FAR
     121 and 145 and any other FAR applicable from time to time.

                                     Page 15

<PAGE>

19.2 All documents and data as required by the FAR (including technical and
     engineering data, calculations and drawings) evidencing compliance with any
     of the requirements or procedures set out in Clause 14 above shall form a
     permanent part of the Documents and Records. All manufacturer and vendor
     manuals and documents which are affected by a Major repair, compliance with
     a Service Bulletin, modification or alteration, including the
     Manufacturer's Weight & Balance manual, shall be revised to reflect the
     current specification and configuration of the Aircraft.

19.3 The Documents and Records shall be maintained in the English language or
     accompanied by a certified translation thereof. All Documents and Records
     shall be in plain language and all coded forms must have cross references,
     including but not limited to parts numbers, engineering order numbers and
     Service Bulletin numbers.

19.4 All records included in the Documents and Records shall be original hard
     copy "dirty fingerprint" records. Documents and Records produced by
     Electronic Data Processing (EDP) or other computers are not acceptable,
     except as summary documents, without accompanying substantiating records
     and documents reasonably approved by Lessor, providing the means of
     verification of accomplishment. In addition, these summary documents shall
     include instructions for interpretation of the information provided.

19.5 All Computerized Reports and Summaries will be certified and signed by the
     Director of Quality Control or an authorized official of the Lessee.

19.6 Documents and Records and in particular serialized shop record including
     all airworthiness approval tags (JAA-1 Form or FAA 8130 Form) and
     serviceable ("yellow") tags shall form a permanent part of the Documents
     and Records.

19.7 Life Limited Parts as specified by the Aircraft and Engines types
     certificates shall be provided with appropriate documents and records that
     identify current status, life history (removal and installation), total
     time in service, authenticity and origin back to manufacturer.

19.8 Time controlled Parts as identified by the Agreed Maintenance Program,
     shall be provided with all records necessary to establish documentation,
     expressed in Flight Hours, Cycles, or calendar time, back to overhaul
     (including all interim repair records since overhaul).

19.9 Lessee shall be responsible for maintaining a revision service for all
     manufacturers and operators manuals, reports and documents which shall at
     all times contain the latest issued revisions, and reflect the current
     specification, configuration and status of the Aircraft and Engines, which
     includes APU, systems, assemblies and components. Lessee will have all
     modifications, wiring changes, and engineering orders (or equivalent)
     incorporated into the relevant manuals.

                                     Page 16

<PAGE>

                                   SCHEDULE 4

                               AIRCRAFT REDELIVERY

1.0  GENERAL CONDITION

1.1  The Aircraft will be in the same configuration (except as per Clause 1.5 of
     this Schedule 4) and operating condition as at delivery to Lessee,
     including post-delivery modifications as defined in Schedule 1, Parts 1
     through 4, ordinary wear and tear excepted and be clean by international
     commercial airline standards for an aircraft exiting a C-Check (or as the
     case may be D-Check) and ready for flight with all of the equipment,
     components and systems fully functional and operating within limits and/or
     guidelines established by the relevant manufacturers and the FAA..

1.2  The Aircraft will have installed the full complement of Engines, APU,
     equipment, components, furnishings and loose equipment as when originally
     delivered to Lessee and shall not have installed thereon any engines, APU,
     components, parts, equipment and furnishings which are owned by any person
     other than the Lessor or the Lessee.

1.3  The Aircraft will have a current legal and valid transport category
     certificate of airworthiness issued by the Air Authority, or if required by
     Lessor, an export certificate of airworthiness, if available, for export to
     the USA. In such case, the Aircraft will be deregistered from the country
     registered at Lessee's cost upon the Redelivery.

1.4  Subject to Lessee's consent, Lessor may elect to retain certain Equipment
     Changes incorporated on the Aircraft by Lessee during the Term of this
     Agreement, excluding leased equipment. In this event any equipment or
     components that were removed from the Aircraft, not substituted by way of
     such Equipment Change, and not shipped to Lessee for storage, will be
     returned in a serviceable and airworthy condition to Lessor with the
     Aircraft.

1.5  The Aircraft will be in a condition as to immediately be eligible to
     receive a USA certificate of airworthiness issued by FAA in accordance with
     FAR part 21, and to be placed on the operating certificate of a USA airline
     in accordance with FAR 121.

1.6  The Aircraft will be free of Liens other than Lessor Liens.

2.0  AIRCRAFT CONDITION

2.1  The Aircraft will be fresh out of the next scheduled full and complete
     zonal, systems and structural C-Check (including all segments if segmented)
     or equivalent type maintenance check, in accordance with Appendix J of the
     then latest Boeing Maintenance Planning Document ("MPD"). This check will
     clear all lower level checks including "A", "B" and service checks. Should
     Lessee be required to perform any tasks in respect of the Agreed
     Maintenance Program in addition to the tasks required to be performed
     pursuant to the block C-Check in accordance with Appendix J of the MPD,
     such tasks shall be performed by Lessee and the reasonable costs and
     expenses incurred by Lessee in connection therewith shall be promptly paid
     for by Lessor.

                                     Page 1

<PAGE>

2.2  The Aircraft will be weighed prior to Redelivery and have a current weight
     and balance report in form acceptable to the FAA.

2.3  The Aircraft will be in compliance with all Airworthiness Directives, FAR
     revisions and other mandatory orders issued by the FAA requiring compliance
     during or within 90 days or 750 Flight Hours or 500 Cycles (whichever is
     most limiting) after Redelivery of the Aircraft. If any waivers, extensions
     or other special dispensations were granted by the Air Authority (except
     for such waivers, extensions or dispensations granted to the industry as a
     whole) with respect to any Airworthiness Directive, FAR revision or other
     mandatory order, Lessee shall incorporate the required Airworthiness
     Directives, FARs or other mandatory order as if such waiver, extension or
     dispensation had not been granted.

2.4  All "No Charge" service bulletin kits procured by Lessee but not installed
     on the Aircraft will be returned to Lessor with the Aircraft.

2.5  The Aircraft will have all open and deferred items, including maintenance
     and temporary repair items (except those deferred to the next D-Check, in
     which case financial adjustments shall be negotiated at that time, but in
     no case shall Lessee have any repair or financial obligations for items
     deferred beyond the next D-Check), MEL/CDL items, and pilot/cabin/engine
     logbook items, rectified on a terminating action basis. Any waivers,
     extensions or dispensations granted to this Aircraft by the manufacturers,
     the FAA, or the Air Authority (except for such waivers, extensions or
     dispensations granted to the industry as a whole) which require
     incorporation of special operations, inspections or maintenance tasks to
     this Aircraft will be treated as if such waivers, extensions or
     dispensations had not been granted.

2.6  The Aircraft (excluding Engines) will have any and all maintenance items,
     including inspections and replacements of life limited/time controlled
     parts, required by the Agreed Maintenance Program and the MPD cleared for
     3,000 Flight Hours or 2,000 Cycles, whichever is more limiting, and 12
     months beyond the Redelivery Check. In the event that an item is due more
     often than the periods noted above, that item will be cleared for its
     maximum interval.

2.7  All tires and brakes will have at least 50% of full service life remaining.

2.8  All repairs made to the Aircraft will be in accordance with the
     Manufacturer's FAA Structural Repair Manual (SRM) or otherwise traceable to
     FAA or FAA DER approval.

                                     Page 2

<PAGE>

2.9  The Aircraft will be properly stripped, corrosion protected and painted per
     Manufacturer's specifications in such external livery as advised by Lessor.
     This shall include corrosion protection and painting of fuselage,
     empennage, wings, vertical/horizontal stabilizer, flight control surfaces,
     engine cowling/nacelle and wheel wells. Control surfaces will be rebalanced
     as required. Prior to painting the Aircraft, all previous exterior
     markings, logos, or other distinctive insignia will be removed in
     accordance with Manufacturer's instructions and recommendations. All
     fairings and skin laps seams will be properly refinished and resealed. The
     repaint of the Aircraft will be of high quality; free from flaking,
     overspray, peeling, drips or other cosmetically unacceptable items and
     Lessor shall be responsible for the actual costs of repainting the
     Aircraft, provided that Lessee shall use its reasonable efforts to ensure
     that the costs are not in excess of industry practice.

2.10 The Aircraft, both interior and exterior, will have no evidence of
     untreated or uncorrected corrosion or delamination.

2.11 The Landing Gear assemblies or the Aircraft will have a minimum of 12
     months remaining to its next expected overhaul.

2.12 No Engine, Landing Gear or APU will have more than 130% of the total Flight
     Hours or Cycles on the Aircraft.

2.13 No Aircraft LLP (see Clause 3.2 for Engine LLPs) will have less than 3,000
     Flight Hours, 2,000 cycles or 12 months remaining to useful life
     replacement.

2.14 All fuel tanks will be at least as full as at delivery of Aircraft. All oil
     and fluid tanks will be full.

2.15 All "loose equipment", galley inserts, cargo containers will be returned
     with the Aircraft in good and serviceable condition, ordinary wear and tear
     excepted..

3.0  ENGINES AND APU CONDITION

3.1  Each Engine will be installed on the Aircraft and will be the Engine
     originally installed at delivery, unless such Engine was the subject of an
     Event of Loss and has been replaced in accordance with Clause 11.3, or
     unless such Engine has otherwise been replaced with a suitable replacement
     Engine in accordance with Clause 16 of Schedule 3.

3.2  The Engines will have no less than 3,000 Flight Hours and 2,000 Cycles
     remaining on the "mean time between unscheduled removals" as determined by
     the applicable manufacturer ("MTBUR"). There will be no LLP replacement
     scheduled within 2,000 Cycles of life remaining.

3.3  The Engines will not be "on-watch", nor have records or Engine Monitoring
     Program trend data that based on the Engine manufacturer's experience would
     require Engine removal or maintenance for any cause within 3,000 Flight
     Hours or 2,000 Cycles of operation.

                                     Page 3

<PAGE>

3.4  Immediately prior to Redelivery of the Aircraft, each Engine will have a
     full hot and cold section video borescope and a maximum power assurance
     (MPA) run in accordance with the Manufacturer's procedures.

3.5  The APU will be in serviceable condition, fresh from a hot section
     inspection or borescope, and with a full APU performance run per
     manufacturer's procedures. The APU will not have less than 3,000 Flight
     Hours remaining on the MTBUR.

4.0  REDELIVERY INSPECTION AND DEMONSTRATION FLIGHT

4.1  During the Redelivery Check and at Redelivery, Lessor or its
     representatives will have an opportunity to inspect the Aircraft and
     Documents and Records and participate in and review all aspects of the
     Redelivery Check to ensure to Lessor's satisfaction that Redelivery
     conditions are met.

4.2  During the course of the Redelivery Check and Final Inspection, if
     corrosion or other problems are detected, Lessee will open adjacent areas
     as required to ensure that the detected problem is rectified in accordance
     with Manufacturer's specifications.

4.3  Prior to the Redelivery of the Aircraft, Lessee will perform a
     demonstration flight of not less than two hours of the Aircraft in
     accordance with the Lessee's post-C-Check Flight Functional Acceptance
     Procedures. The demonstration flight will show that the Aircraft, its
     Engines, and its various components and systems are fully operational and
     capable of full rated performance throughout the operational envelope of
     the Aircraft. Lessor's representative(s) will be allowed on the flight to
     monitor compliance. The demonstration flight will be at Lessee's expense.
     Any squawks found in the flight will be corrected at Lessee's cost and
     expense. Lessee and Lessor will reasonably cooperate to combine this
     demonstration flight with the flight to the Redelivery Location.

5.0  DOCUMENTS AND RECORDS

5.1  The Documents and Records will be made available to Lessor or Lessor's
     representative not less than 10 Business Days prior to scheduled Redelivery
     Date. Lessor or Lessor's representative will review and inventory to
     determine that the Documents and Records are in compliance with the
     requirements specified in this Agreement.

5.2  Upon request of Lessor, Lessee will provide a current and complete copy of
     the Agreed Maintenance Program. Lessor shall use and retain the copy of the
     Agreed Maintenance Program on a strictly confidential basis, and shall
     return said Document to Lessee after integrating the Aircraft into the next
     operator's maintenance program.

5.3  Lessee shall return all Documents and Records delivered to Lessee at
     delivery (as specified in Parts 5 and 6 of Schedule 1). All Documents and
     Records shall reflect the Redelivery condition and current status of the
     Aircraft at time of Redelivery, including all modifications and maintenance
     activity performed on the Redelivery Check.

                                     Page 4

<PAGE>

5.4  In the event of missing, incomplete, or otherwise unacceptable Documents or
     Records, Lessee will take all necessary steps to replace such Documents or
     Records (whether by reaccomplishing tasks, recreating documents,
     reverifying, or otherwise).

5.5  Lessee will provide assistance as reasonably required by Lessor or Lessor's
     representative to locate and inventory the Documents and Records and to
     ensure their accuracy and completeness.

5.6  Lessee will provide a work scope detailing all scheduled maintenance and
     other activities (including any alterations, modifications, Airworthiness
     Directives, component changes, service bulletin and engineering order
     incorporation) to be accomplished during the Redelivery Check.

5.7  Lessee will provide Lessor with a final audited copy of all work
     accomplished during the Redelivery Check at Redelivery.

                                     Page 5

<PAGE>

                                   SCHEDULE 5

                             INSURANCE REQUIREMENTS

The Insurances required to be maintained are on the basis of AVN 67B and as
follows:

1.   HULL ALL RISKS of Loss or Damage whilst flying and on the ground with
     respect to the Aircraft on an "agreed value basis" for the Agreed Value and
     with a deductible not exceeding the Insurance Deductible Amount, or such
     other amount agreed by Lessor from time to time, and to include deductible
     insurances, if necessary, to achieve that limit.

2.   WAR AND ALLIED PERILS, being such risks excluded from the Hull All Risks
     Policy to the fullest extent available from the leading international
     insurance markets including confiscation and requisition by the
     Jurisdiction of Incorporation for the Agreed Value.

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

4.   AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE, CARGO AND MAIL
     AND AIRLINE GENERAL THIRD PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a
     Combined Single Limit (Bodily Injury/Property Damage) of an amount not less
     than the Minimum Liability Coverage for the time being any one occurrence
     (but in respect of products and personal injury liability this limit may be
     an aggregate limit for any and all losses occurring during the currency of
     the policy). War and Allied Risks are also to be covered under the Policy
     to the fullest extent available from the leading international insurance
     markets.

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

     (1)  name Lessor as sole loss payee up to the Agreed Value; (2) provide
          that any loss will be payable in Dollars, and:

          (a)  in respect of any claim that becomes payable on the basis of an
               Event of Loss, settlement shall be made to or to the order of
               Lessor up to the Agreed Value;

          (b)  in respect of any other claim, settlement (net of any policy
               deductible) shall be made with such party(ies) as may be
               necessary to repair the Aircraft unless otherwise agreed after
               consultation between the insurers, Lessee and, where the loss
               exceeds the Damage Notification Threshold, Lessor; and

                                     Page 1

<PAGE>

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

6.   All required liability insurances (specified above) will:

     (1)  include Lessor, and its successors and assigns and their respective
          shareholders, subsidiaries, directors, officers, agents, employees and
          Indemnitees as additional insureds for their respective rights and
          interests, warranted, each as to itself only, no operational interest;

     (2)  operate in all respects as if a separate policy had been issued
          covering each party insured, but shall not include any claim under
          hull and spares insurances (as specified above); notwithstanding the
          foregoing, the total liability of insurers shall not exceed the limits
          of liability stated in the policy; and

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

7.   All Insurances will:

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

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

     (3)  operate on a world-wide basis subject to such limitations and
          exclusions as Lessor may reasonably agree;

     (4)  provide that, in relation to the interests of each of the additional
          assureds the Insurances 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 the additional insured party so protected
          has not caused, contributed to or knowingly condoned the said act or
          omission;

     (5)  provide that upon payment of any loss or claim to or on behalf of any
          additional assureds, insurers shall to the extent and in respect of
          such payment be thereupon subrogated to all legal and equitable rights
          of that additional assured indemnified hereby (but not against any
          additional assureds). Insurers shall not exercise such rights without
          the consent of those indemnified, such consent not to be unreasonably
          withheld. At the expense of insurers such additional assureds shall do
          all things reasonably necessary to assist the insurers to exercise
          said rights;

                                     Page 2

<PAGE>

     (6)  provide that the additional assureds will have no obligation or
          responsibility for the payment of any premiums due and that the
          insurers will not exercise any right of set-off or counter-claim in
          respect of any premium due against the respective interests of the
          additional assureds other than outstanding premiums relating to the
          Aircraft, any Engine or Part which is the subject of the relevant
          claim;

     (7)  provide that, except in respect of any provision for cancellation or
          automatic termination specified in the Policy or any endorsement
          thereof, cover provided by the Insurances may only be cancelled or
          materially altered in a manner adverse to the additional assureds by
          the giving of not less than 30 days (7 days or such less period as may
          be customarily available in respect of war risks and allied perils)
          notice in writing to the appointed broker, who shall undertake to
          notify Lessor promptly. Notice shall be deemed to commence from the
          date such notice is given by the insurers. Such notice will not,
          however, be given the normal expiry date of the Policy or any
          endorsement; and

     (8)  reinsurance will (a) be on the same terms as the original insurances
          and will include the provisions of this Schedule, (b) provide that
          notwithstanding any bankruptcy, insolvency, liquidation, dissolution
          or similar proceedings of or affecting the reinsured that the
          reinsurers' liability will be to make such payments as would have
          fallen due under the relevant policy of reinsurance if the reinsured
          had (immediately before such bankruptcy, insolvency, liquidation,
          dissolution or similar proceedings) discharged its obligations in full
          under the original insurance policies in respect of which the then
          relevant policy of reinsurance has been effected; and (c) contain a
          "cut-through" clause in the following form (or otherwise, satisfactory
          to Lessor): "The Reinsurers and the Reinsured hereby mutually agree
          that in the event of any claim arising under the reinsurances in
          respect of a total loss or other claim where as provided by the
          Aircraft Lease Agreement (MSN 29048) dated as of October 1, 1998 and
          made between Lessor and Lessee such claim is to be paid to the person
          named as sole loss payee under the primary insurances, the Reinsurers
          will in lieu of payment to the Reinsured, its successors in interest
          and assigns pay to the person named as sole loss payee under the
          primary insurances effected by the Reinsured, that portion of any loss
          due for which the Reinsurers would otherwise be liable to pay the
          original Reinsured (subject to proof of loss), it being understood and
          agreed that any such payment by the Reinsurers will (to the extent of
          such payment) fully discharge and release the Reinsurers from any and
          all further liability in connection therewith" subject to such
          provisions not contravening any law of the Jurisdiction of
          Incorporation.

                                     Page 3

<PAGE>

                                   SCHEDULE 6

                              FORM OF LEGAL OPINION

To: First Security Bank, National Association
    Tombo Aviation, Inc.

Date: _____________

Dear Sirs,

1.   You have asked us to render an opinion in connection with the transaction
     governed, inter alia, by the under mentioned documents. Words and
     expressions used herein will bear the same meanings as defined in an
     Aircraft Lease Agreement (MSN 29048) (the "Lease") dated as of October 1,
     1998 between First Security Bank, National Association, not in its
     individual capacity, except as otherwise expressly provided herein, but
     solely as Owner Trustee, and Compania Panamena de Aviacion, S.A.:

     (1)  the Lease;

     (2)  the constitutional documents comprising [______] of Lessee; and

     (3)  all other documents, approvals and consents of whatever nature and
          wherever kept which it was, in our judgment and to our knowledge,
          necessary or appropriate to examine to enable us to give the opinion
          expressed below.

2.   Having considered the documents listed in paragraph 1 above, and having
     regard to the relevant laws of Panama, we are pleased to advise that in our
     opinion:

     (1)  Lessee was duly constituted in accordance with the laws of Panama on
          [______] as [__________] and is a validly existing separate legal
          entity, is subject to suit in its own name, and, to the best of our
          knowledge, no steps have been, or are being, taken to appoint a
          receiver or liquidator over, or to dissolve, Lessee;

     (2)  Lessee has the corporate power to enter into and perform, and has
          taken all necessary corporate action to authorize the entry into,
          performance and delivery of, the Lease and the transactions
          contemplated by the Lease;

     (3)  the entry into and performance by Lessee of, and the transactions
          contemplated by, the Lease do not and will not:

          (a)  conflict with any laws binding on Lessee;

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

                                     Page 1

<PAGE>

          (c)  conflict with or result in default under any document which is
               binding upon Lessee or any of its assets nor result in the
               creation of any Lien over any of its assets.

     (4)  no authorizations, consents, licenses, approvals and registrations
          (other than those which have been obtained and of which copies are
          attached hereto) are necessary or desirable to be obtained from any
          governmental or other regulatory authorities in the Jurisdiction of
          Incorporation to enable Lessee:

          (a)  to enter into and perform the transactions contemplated by the
               Lease;

          (b)  to import the Aircraft into Panama for the duration of the Term;

          (c)  to operate the Aircraft for the transport of fare-paying
               passengers; or

          (d)  to make the payments provided for in the Lease in the currency,
               in the accounts and otherwise in accordance with the terms and
               conditions provided in the Lease;

     (5)  other than(i) registering the Aircraft and filing this Agreement with
          the Panamanian Directorate of Civil Aeronautics, and (ii) recording
          this Agreement and the bill of sale evidencing Lessor's title to the
          Aircraft with the Office of the Public Registry of Panama, it is not
          necessary or desirable, to ensure the priority, validity and
          enforceability of all the obligations of Lessee under the Lease that
          the Lease be filed, registered, recorded or notarized in any public
          office or elsewhere or that any other instrument relating thereto be
          signed, delivered, filed, registered or recorded, that any tax or duty
          be paid or that any other action whatsoever be taken under the laws of
          Panama; accordingly, upon completion of the registration and recording
          set forth above, pursuant to the Lease, Lessor will be deemed to be
          the full legal and beneficial owner of the Aircraft and all rights and
          interests with respect thereto, Lessee shall not be deemed to have
          acquired any interest in the Aircraft other than the leasehold
          interest contemplated by the Lease, and such leasehold interest of
          Lessee at all times shall be subject to the terms and conditions
          provided in the Lease;

     (6)  no other steps beyond (i) registering the Aircraft and filing this
          Agreement with the Panamanian Directorate of Civil Aeronautics, and
          (ii) recording this Agreement and the bill of sale evidencing Lessor's
          title to the Aircraft with the Office of the Public Registry of Panama
          are necessary or desirable to record or perfect Lessor's interest in
          the Aircraft in Panama;

     (7)  on termination of the Lease (whether on expiry or otherwise) as
          contemplated in the Lease, Lessor would be entitled:

          (a)  to repossess the Aircraft; and

          (b)  to export the Aircraft from Panama;

                                     Page 2

<PAGE>

          without requiring any further consents, approvals or licenses from any
          governmental or regulatory authority in Panama;

     (8)  the Lease has been properly signed and delivered on behalf of Lessee
          and the obligations on the part of Lessee contained therein, assuming
          them to be valid and binding according to the Governing Law, are valid
          and legally binding on and enforceable against Lessee respectively
          under the laws of Panama;

     (9)  the events described in Clause 13.1(7), (8) and (9) of the Lease
          comprise an accurate and complete statement of all events and
          situations provided for by the laws Panama which may lead to the
          cessation of activities, winding up or dissolution of Lessee, and upon
          the occurrence of any such described events, and the Lessor's exercise
          of its rights to affect a termination of the Lease based on such
          Events of Default: the Lease shall terminate; Lessee shall have no
          further interest in the Aircraft; the Aircraft shall be excluded from
          any reorganization or other legal proceedings with respect to the
          Lessee; no receiver, trustee, liquidator, administrator, judicial
          official or other Person shall have any interest in or rights under or
          with respect to the Lessee or the Aircraft; and Lessor shall be
          entitled to immediate return and unrestricted possession and control
          of the Aircraft free and clear of any liens, claims or other
          encumbrances and without any liability to Lessee or any other Person;

     (10) Upon Lessor's giving the type of notice to Lessee set forth in Clause
          13.2(1) following an Event of Default of the type set forth in Clause
          13.1(8)(d), the Lease shall terminate (but without prejudice to the
          continuing obligations of Lessee under the Lease) without the need of
          any further action or judicial order; Lessee shall have no further
          interest in the Aircraft; the Aircraft shall be excluded from any
          liquidation or other legal proceedings with respect to the Lessee; no
          receiver, trustee, liquidator, administrator, judicial official or
          other Person shall have any interest in or rights under or with
          respect to the Lessor or the Aircraft; and Lessor shall be entitled to
          immediate return and unrestricted possession and control of the
          Aircraft free and clear of any liens, claims or other encumbrances and
          without any liability to Lessee or any other Person;

     (11) the obligations of Lessee under the Lease rank at least pari passu
          with all other present and future unsecured and unsubordinated
          (including contingent) obligations of the Lessee upon an Event of
          Default or other breach by Lessee of the Lease, Lessor at all times
          shall be entitled without restriction to set off any damage suffered
          or amounts owing by Lessee against any obligation of Lessor to return
          any deposits or other funds or otherwise make any payments or
          performance to Lessee or any Person claiming by, through or on behalf
          of Lessee;

     (12) there is no withholding tax or other Tax to be deducted from any
          payment whatsoever or which may be made by Lessee pursuant to the
          Lease; with respect to any withholdings, the provisions of Clauses
          5.5, 5.6 and 5.9 of the Lease are fully effective; and the
          arrangements contemplated by the Lease do not give rise to any charge
          whatsoever to Taxes in Panama;

                                     Page 3

<PAGE>

     (13) there is no applicable usury or interest limitation law in Panama
          which may restrict the recovery of payments in accordance with the
          Lease;

     (14) there are no registration, stamp or other taxes or duties of any kind
          payable in Panama in connection with the signature, performance or
          enforcement by legal proceedings of the Lease;

     (15) Lessor will not violate any law or regulation in Panama nor become
          liable to tax by reason of entering into the Lease with Lessee, or
          performing its obligations thereunder;

     (16) it is not necessary to establish a place of business in Panama in
          order to enforce any provisions of the Lease;

     (17) the choice of the Governing Law to govern the Lease will be upheld as
          a valid choice of law in any action in the Courts of Panama;

     (18) the consent to jurisdiction by Lessee contained in the Lease is valid
          and binding on Lessee and not subject to revocation;

     (19) any judgment for a definite sum given by an arbitration proceeding or
          court as provided in the Lease against Lessee would be recognized and
          accepted by the Courts of Panama without re-trial or examination of
          the merits of the case;

     (20) Lessee is subject to civil commercial law with respect to its
          obligations under the Lease, and neither Lessee nor any of its assets
          is entitled to any right of immunity, and the entry into and
          performance of the Lease by Lessee constitute private and commercial
          acts;

     (21) there are no circumstances under the law of Panama whereby Lessee may
          be deprived of the Aircraft by any Government Entity or any other
          person; and

     (22) The Republic of Panama has ratified the Geneva Convention without any
          reservations or limitations thereto, and all requirements set forth in
          Article XXI of the Geneva Convention for Panama to become incorporated
          as a member of the Geneva Convention have been completed.

3.   We do not purport to be experts on, and do not purport to be generally
     familiar with or qualified to express legal opinions based on, any law
     other than the laws of Panama and accordingly express no legal opinion
     herein based upon any law other than the laws of Panama.

Yours faithfully,

                                     Page 4

<PAGE>

                                                   Paragraph 2 (1) of Schedule 3

                                   SCHEDULE 7

                                 FORM OF REPORT

                        AIRFRAME AND ENGINE STATUS REPORT
                      FOR EACH SIX-MONTH PERIOD ("PERIOD")

Report for the Calendar Period Ended:    _______________________
Aircraft Type:                           _______________________
Manufacturer Serial/Registration Number: _______________________

1.   AIRCRAFT UTILIZATION

     Aircraft Total Hours:    ____________________
     Aircraft Total Cycles:   ____________________
     Flight Hours for Period: ____________________
     Cycles for Period:       ____________________

2.   DELIVERED ENGINE STATUS

<TABLE>
<CAPTION>
ENGINES                                  POS. 1    POS. 2
-------                                 -------   -------
<S>                                     <C>       <C>
Serial No. of Present Engine:           _______   _______

Serial No. of Delivered Engine:         _______   _______

Current Location of Delivered Engine:   _______   _______

Flight Hours Since New :                _______   _______

Cycles Since New:                       _______   _______

Flight Hours for Period:                _______   _______

Cycles for Period:                      _______   _______
</TABLE>

                                     Page 1

<PAGE>

The following sections need be reported only if one of the following events has
taken place during the foregoing Period:

     (A) D-Check or equivalent - Complete Section 3
     (B) C-Check or equivalent - Complete Section 3
     (C) Engine Change or Shop Visit - Complete Section 4

3.   MAJOR CHECK REPORT

Date of Check: _____________ Total Hours: _____________ Total Cycles: __________

Location: ________________ Agent: _________________ Downtime: ___________Days

Type of Check: _______________________________________________

MODS / ADs / SBs Accomplished During Check: ____________________________________

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Next Check Due In: _______________________________ Hours / Months / Years

Estimated Date: _________________

4.   ENGINE REMOVAL AND SHOP VISIT REPORT

For Removed Engine: _____________________________________   ____________________
Serial Number: ___________________  Date of Removal: ___________________________
Position: ________________________  Airframe Total Hours at Removal: ___________
Engine Total Hours: ______________  Airframe Total Cycles at Removal: __________
Engine Total Cycles: ______________

Reason for Removal: ____________________________________________________________
Repair Agent: __________________________ Location: _____________________________

Intended Workscope: ____________________________________________________________

MODS / ADs / SBs to be Accomplished: ___________________________________________

Or Installed Engine: ___________________________________________________________
Serial Number: ________________ Time Since Last Shop Visit: ____________________
Position: _____________________ Last Shop Visit Description: ___________________
Engine Total Hours: _____________ Next Limiter: ________________________________
Engine Total Cycles: ____________ Time to Next Limiter: ________________________

                                     Page 2<PAGE>
          CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
             SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
                PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT

                                                                    Exhibit 10.5

                              FIRST SECURITY BANK,
                              NATIONAL ASSOCIATION
                              79 SOUTH MAIN STREET
                           SALT LAKE CITY, UTAH 84111

                             As of November 6, 1998

Compania Panamena de Aviacion, S.A. (COPA)
Avenida Justo Arosemena y Calle 39
Panama 1, Republic of Panama

     Re:   Letter Agreement Amending Lease (MSN 29048)

Ladies and Gentlemen:

     Reference is hereby made to (i) that certain Aircraft Lease Agreement (MSN
29048) ("Lease"), dated as of October 1, 1998 between Compania Panamena de
Aviacion, S.A. (COPA), as Lessee (this and all other capitalized terms used but
not defined herein shall have the respective meanings set forth in the Lease),
and First Security Bank, National Association, not in its individual capacity,
but solely as Owner Trustee, as Lessor, and (ii) that certain Side Letter
Agreement Involving Aircraft Modification (MSN 29048), dated October 10, 1998
between Beneficiary and Lessee ("Side Letter").

     Pursuant to the terms of the Lease and the commitments set forth in the
Side Letter, the parties hereto hereby acknowledge and agree to the following
terms regarding modifications to the Aircraft:

1.   Part 4 of Schedule 1 of the Lease is hereby amended by adding the following
     three post-production modifications:

     a.   Category IIIa Certification (Boeing Paper)

     b.   Optical QAR

     c.   ACARS with Printer.

2.   The costs of the modifications to the Aircraft described in Parts 3 and 4
     of Schedule 1 of the Lease (as amended above) in excess of the Modification
     Limit shall be allocated between the Lessor and Lessee as follows:

     a.   Lessor shall pay for the first $**Material Redacted** of such excess
          costs;

     b.   At the election of Lessee, which election must be made prior to the
          Delivery Date, the next $**Material Redacted** of such excess costs
          shall

<PAGE>

          be paid either by Lessor or by Lessee, provided that (i) if Lessor
          pays for such costs, the Rent for each Rental Period shall be
          increased by one percent (1%) of the aggregate amount of such costs
          paid by Lessor, (ii) if Lessee pays for such costs, Lessee must make
          such payment prior to Delivery, and (iii) if any of such costs paid
          for by the Lessee arise from the purchase of any of the following five
          items of Equipment, Lessee may remove and retain such Equipment upon
          Redelivery in the manner provided for in the Lease, provided that
          Lessee must select such Equipment in the following order of priority:

          (1)  Optical QAR

          (2)  ACARS with Printer

          (3)  2nd FMC

          (4)  Dual H.F. (Collins)

          (5)  3rd VHF Comm (Collins); and

     c.   Lessor and Beneficiary shall not be liable for paying any modification
          costs in excess of the amounts described in clauses "a" and "b" above.

     This letter agreement (i) shall constitute an amendment to the Lease, (ii)
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and permitted assigns of the parties hereto, (iii)
constitutes the entire agreement between the parties concerning the subject
matter hereof, and supersedes all previous proposals, agreements,
understandings, negotiations and other written and oral communications in
relation thereto, including, but not limited to, the Side Letter, and (iv) may
be executed in counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same letter agreement.

                                        Very truly yours,

                                        FIRST SECURITY BANK, NATIONAL
                                        ASSOCIATION, not in its individual
                                        capacity but solely as Owner Trustee

                                     PAGE 2

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