Document:

AIRCRAFT LEASE

                             COMMON TERMS AGREEMENT

                           DATED AS OF APRIL 20, 2000

                                     BETWEEN

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                       And

                             FRONTIER AIRLINES INC.

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                                    CONTENTS

                                                                   Page

CLAUSE

1.
         INTERPRETATION...............................................1

2.       REPRESENTATIONS AND WARRANTIES...............................2

3.       CONDITIONS  PRECEDENT........................................2

4.       COMMENCEMENT.................................................3

5.       PAYMENTS.....................................................5

6.       MANUFACTURER'S WARRANTIES...................................19

7.       LESSOR'S COVENANTS..........................................20

8.       LESSEE'S COVENANTS..........................................22

9.       INSURANCE...................................................35

10.      INDEMNITY...................................................37

11.      EVENTS OF LOSS..............................................40

12.      RETURN OF AIRCRAFT..........................................41

13.      DEFAULT.....................................................43

14.      TRANSFER....................................................47

15.      MISCELLANEOUS...............................................49

16.      DISCLAIMERS AND WAIVERS.....................................54

17.      BROKERS AND OTHER THIRD PARTIES.............................56

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                               INDEX OF SCHEDULES

Schedule 1                 Definitions
Schedule 2                 Representations and Warranties
Schedule 3                 Conditions Precedent
Schedule 4                 Pre-Delivery Procedures and Delivery Condition
                           Requirements
                                    Part 1 (New Aircraft)
                                    Part 2 (Used Aircraft)
Schedule 5                 Certificate of Technical Acceptance
                                    Part 1 (New Aircraft)
                                    Part 2 (Used Aircraft)
Schedule 6                 Procedures and Operating Condition at Redelivery
Schedule 7                 Insurance Requirements
Schedule 8                 Form of Legal Opinion
Schedule 9                 Events of Default
Schedule 10                Form of Lease Termination Certificate
Schedule 11                Intentionally Omitted
Schedule 12                Lease Supplement No. 1
Schedule 13                Technical Report on Aircraft Usage
Schedule 14                Form of Redelivery Certificate
Schedule 15                Form of GECC Guaranty

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                             COMMON TERMS AGREEMENT

THIS COMMON TERMS AGREEMENT (this "CTA") is made as of April 20, 2000 BETWEEN:

(1)      GENERAL ELECTRIC CAPITAL CORPORATION; and

(2)      FRONTIER AIRLINES, INC.

WHEREAS:

(A)      From  time to time,  Frontier  Airlines,  Inc. or one of its Affiliates
         may  wish to  lease  commercial aircraft from General  Electric Capital
         Corporation  ("GECC") or one of its Affiliates,  and GECC or one of its
         Affiliates may wish to lease commercial aircraft to Frontier  Airlines,
         Inc. or one of its Affiliates;

(B)      Each party hereto wishes to provide in one document for certain  common
         terms and conditions, as hereinafter provided in this CTA, that will be
         applicable,  unless otherwise stated, to each such lease referred to in
         Recital (A);

(C)      Each such lease  transaction  will be concluded only on the terms of an
         agreement entitled "Aircraft Lease Agreement," which together with this
         CTA (which will be  incorporated  into and become part of such Aircraft
         Lease Agreement), will constitute the lease for the applicable aircraft
         as identified therein.

NOW, THEREFORE,  for good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.       INTERPRETATION

1.1      Definitions

All         references   herein  to  "Lease"  mean  the   integrated   agreement
            consisting of the various documents  comprising the Lease as defined
            in Schedule 1. In the Lease,  capitalized words and expressions have
            the  meanings  set out for them in  Schedule  1 and in the  Aircraft
            Lease Agreement.

1.2      Construction

(a)      In the Lease, unless otherwise stated, a reference

(i)      "Lessor,"  "Lessee,"  "GECAS," "Owner" or any other Person includes any
         of their successors and assignees;

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

(iii)    any   document  (except  this  CTA  unless  Lessor and Lessee otherwise
         expressly  agree)   shall   include   such   document  as  amended  and
         supplemented from time to time and any replacement for it;

(iv)     a Section or a Schedule is a reference to a clause of or a schedule  to
         this CTA;

(v)      any  Regulation  shall  include  any changes to that Regulation and any
         replacement for it;

(vi)     an  obligation  of  a  Person  refers to any obligation that Person has
         under or in relation to the Lease; and

(vii)    "includes,"  "including",   "include"  or  similar  terms  shall not be
         construed as limiting and shall mean "including, without limitation."

(b)      Headings  to  Sections  and  Schedules in the Lease are not intended to
         affect their meaning.

2.       REPRESENTATIONS AND WARRANTIES

2.1      Lessee's Representations and Warranties

Lessee      hereby makes the  representations  and warranties set out in Section
            1.1 of Schedule 2 as of the date of execution of the Aircraft  Lease
            Agreement and as of each Delivery Date, and Lessee  understands that
            these  statements  shall  be true,  both  when  the  Aircraft  Lease
            Agreement is executed and on each Delivery Date.

2.2      Lessor's Representations and Warranties

Lessor      hereby makes the  representations  and warranties set out in Section
            1.2 of Schedule 2 as of the date of execution of each Aircraft Lease
            Agreement and as of each Delivery Date, and Lessor  understands that
            these  statements  shall be true,  both  when  each  Aircraft  Lease
            Agreement is executed and on each Delivery Date.

3.       CONDITIONS PRECEDENT

3.1      Conditions Precedent

Lessor      need not deliver any Aircraft under each Lease,  and Lessee need not
            accept Delivery unless each of their respective Conditions Precedent
            listed in Schedule 3 is satisfied.

3.2      Waiver

(a)  Lessor's Waiver.  If any Condition  Precedent in Section 1 of Schedule 3 is
     not satisfied on the Delivery Date and Lessor (in its absolute  discretion)
     nonetheless  agrees to  deliver  the  Aircraft  to Lessee  and to start the
     leasing of the Aircraft,  Lessee will ensure that such Condition  Precedent
     is fulfilled within * days after the Delivery Date, and Lessor may treat as
     an Event of Default the failure of Lessee to do so.

(b)  Lessee's Waiver.  If any Condition  Precedent in Section 2 of Schedule 3 is
     not satisfied on the Delivery Date and Lessee (in its absolute  discretion)
     nonetheless  agrees to accept  Delivery of the Aircraft  from Lessor and to
     start the leasing of the Aircraft,  Lessor will ensure that such  Condition
     Precedent is fulfilled  within * days after the Delivery  Date,  and Lessee
     may treat Lessor's failure to do so as a breach of the Lease.

4.       COMMENCEMENT

4.1      Leasing

(a)  Lessor shall notify Lessee as soon as possible,  but no later than at least
     * (*) days prior to the Scheduled Delivery Month, of the Scheduled Delivery
     Week and Lessor shall notify Lessee as soon as possible,  but no later than
     at least * (*) week prior to the Scheduled  Delivery Week, of the Scheduled
     Delivery  Date.  Subject to Section 4.4,  Lessor will lease the Aircraft to
     Lessee and Lessee will take the Aircraft on lease for the Term, which shall
     commence  upon Lessee's  execution and delivery of the Lease  Supplement on
     the Delivery Date.

(b)  If (i) Lessee is unwilling or unable to accept  delivery of the Aircraft on
     the date on which Lessor  tenders the Aircraft for Delivery to Lessee under
     and in  accordance  with  Section  4.3(a),  or Lessee  fails to fulfil  any
     Condition  Precedent  in Section 1 of Schedule 3 on or before such date and
     (ii)  each  of the  Delivery  Condition  Requirements  and  the  Conditions
     Precedent  in  Section 2 of  Schedule  3 are met or  waived,  then the Rent
     Commencement  Date for the Aircraft shall be deemed to have occurred on the
     date on which it is tendered  by Lessor for  Delivery  in  accordance  with
     subclause (ii) of this Section 4.1(b), and Lessee shall be obligated to pay
     Rent for the  Aircraft  on and from such date  regardless  of  whether  the
     Delivery Date occurs,  but Lessor shall have no obligation to deliver,  and
     Lessee  shall have no lease  interest  in the  Aircraft  or other right to,
     possession of the Aircraft,  unless and until Lessee fulfils all Conditions
     Precedent  specified in Section 1 of Schedule 3 as and when provided in the
     Lease  and  Lessee  accepts  delivery  of the  Aircraft  by  executing  and
     delivering Lease  Supplement No. 1 or a Lease  Supplement  substantially in
     the form of Lease Supplement No. 1 for subsequent Aircraft deliveries,  and
     so long as no Default has occurred and is continuing.

(c)  Lessee will be  responsible  for all risks  associated  with any loss of or
     damage to the Aircraft from the Delivery Date until the Return Occasion.

4.2      Procedure Before Delivery

         Lessor and Lessee will follow the Pre-Delivery Procedure.

4.3      Delivery and Acceptance

            After the Pre-Delivery Procedure has been carried out and so long as
            the  Delivery  Condition  Requirements  are  met,   the   Conditions
            Precedent in Section 2 of  Schedule 3  are  satisfied  and  Lessor's
            representations and  warranties referred  to in Section 2.2 are true
            and correct on such date:

(a)  Lessor  will  tender  the  Aircraft  for Delivery to Lessee at the Delivery
     Location.

(b)  Lessee  will accept the  Aircraft  by signing  Lease  Supplement  No. 1, if
     the first  Aircraft to  deliver  under  the  Lease,  or a Lease  Supplement
     substantially  in the  form of  Lease  Supplement No. 1 for each subsequent
     Aircraft to deliver under the Lease, and delivering the same to Lessor.

(c)  Lessee's  acceptance  of  the  Aircraft  shall  be  regarded  as  absolute,
     unconditional and irrevocable.

4.4      Delayed Delivery

            If Delivery(i)takes place after the Scheduled  Delivery Date or (ii)
            does not occur,  in either case, for any reason other than the gross
            negligence  or wilful  misconduct  of Lessor,  or a breach by Lessor
            hereunder or a payment default under any purchase agreement relating
            to any Aircraft:

(a)  Lessor will not be responsible for any Losses that Lessee suffers resulting
     from the delay or from the non-delivery of the Aircraft;

(b)  Lessee  will not be  entitled  to  terminate  the  Lease or to  reject  the
     Aircraft when it is tendered for Delivery  because of the delay;  provided,
     however,  that if the  Aircraft  has not been  tendered  for  Delivery,  in
     accordance  with Section 4.3, by the Final Delivery Date,  either party may
     terminate the Lease by  delivering  notice to the other party within * days
     of such Final  Delivery  Date (and if such notice is not  delivered  within
     such *-day period the Final  Delivery Date will be deemed  extended for one
     additional period of * days); provided, further, however, that with respect
     to a new Aircraft  delivery,  in the event of an Excusable  Delay, and upon
     receipt of written  notice of Lessee to Lessor  requesting  an extension of
     the Final  Delivery Date,  Lessor  agrees,  subject to its rights under any
     purchase  agreement  to do so,  to  extend  the  Final  Delivery  Date to a
     delivery date notified to Lessor by the  Manufacturer,  which occurs within
     twelve months following the originally Scheduled Delivery Month and each of
     Lessee and Lessor agree that upon delivery of such written notice,  neither
     party shall have the right to terminate until the Final Delivery Date as so
     extended.  The foregoing  *-day  automatic  extension of the Final Delivery
     Date  shall  not apply to an  extension  requested  by  Lessee  based on an
     Excusable  Delay.  Upon the delivery of any such notice or automatically on
     the  expiration of such *-day period if no such notice has been  delivered,
     all obligations of each party under the Lease with respect to such Aircraft
     will end on the date of such notice or the date of the  expiration  of such
     period,  as the case may be,  except  that  Lessor will repay to Lessee the
     Deposit  (if any)  with  respect  to such  Aircraft  or return to Lessee or
     cancel any Letter of Credit  relating to such Aircraft and the parties will
     remain obligated under their respective  indemnities set forth in Section 3
     of Schedule 4.

(c)  Lessee  hereby  agrees  that its only  right or  remedy  for such  delay in
     delivery of the  Aircraft is the remedy set forth in Section  4.4(b)  above
     and Lessee hereby waives any rights it may have under Section 2A-406 of the
     UCC or otherwise for any delay in delivery;  provided,  however,  that with
     respect  only  to a  new  Aircraft,  if  Lessor  receives  payment  of  any
     liquidated damages from the Manufacturer pursuant to its purchase agreement
     with the Manufacturer  relating to an inexcusable  delay in the delivery of
     such new Aircraft,  Lessor shall pay to Lessee all such liquidated  damages
     received which exceed all Losses of Lessor resulting from delay.

5.       PAYMENTS

5.1      Deposit

Lessee  shall pay  Lessor  any  Deposit  that is  specified  in Section 3 of the
Aircraft Lease Agreement.

5.2      Rental Periods

            The first Rental Period will start on the Rent Commencemen  Date and
            each  subsequent  Rental  Period will start on the date  immediately
            following the last day of the previous  Rental  Period.  Each Rental
            Period  will  end on the date  immediately  before  the  numerically
            corresponding day in the next month, except that:

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

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

5.3      Rent

(a)  Time of Payment:  Lessee will pay to Lessor or its order Rent in advance on
     each Rent Date.  If a Rental Period begins on a day which is not a Business
     Day, the Rent payable in respect of that Rental Period shall be paid on the
     immediately preceding Business Day.

(b)  Amount: The Rent payable during the Term shall be calculated  in accordance
     with  Schedule B of the Aircraft Lease Agreement.

5.4      Supplemental Rent and Maintenance Adjustment

(a)  Amount:  If, under the Aircraft Lease Agreement,  Lessee is required to pay
     Supplemental  Rent  or any  Maintenance  Adjustment,  Lessee  will  pay (i)
     Supplemental  Rent,  at the rates  referred to in Section 3 of the Aircraft
     Lease Agreement, to Lessor in relation to each calendar month (or part of a
     month) of the Term,  on the * (*) day  following  the end of that  calendar
     month  (except that the last payment of  Supplemental  Rent during the Term
     shall be paid on the Expiry Date) or (ii) any Maintenance Adjustment in the
     amounts  and at the time  specified  in Section 3.3 of the  Aircraft  Lease
     Agreement.

(b)  Adjustment:  The  Supplemental  Rent  rates  shall be  adjusted  after  the
     Delivery Date not more  frequently  than annually,  for the previous year's
     utilization,  as appropriate,  to reflect the provisions of paragraphs (ii)
     and (iii) below) based on the following:

(i)  Annual  Supplemental  Rent  Adjustment:  The Supplemental  Rent rates shall
     be   increased  annually   by  the  Annual  Supplemental  Rent  Adjustment,
     compounded  annually  commencing  on  the first anniversary of the Delivery
     Date.

(ii) Hour to Cycle  Ratio  Adjustment:  Lessor and Lessee  acknowledge  that the
     Engine Supplemental Rent Rate and the Engine LLP Supplemental Rent Rate are
     based upon the  assumption  that the  Aircraft  will  operate on an Assumed
     Ratio.  If that  assumption  proves to be  incorrect at any time during the
     Term based upon Lessee's actual operating  experience during the previous *
     (*) months,  and the hour to cycle ratio  differs from the Assumed Ratio by
     more than * during such * (*) month  period,  Lessor  shall have the right,
     upon written notice to Lessee, to adjust the Engine  Supplemental Rent Rate
     and the Engine LLP Supplemental Rent Rate (in the case of a decrease in the
     ratio  below the Assumed  Ratio) and  Lessor,  upon  written  request  from
     Lessee,  will make that adjustment (in the case of an increase in the ratio
     above the Assumed Ratio).  Any such adjustment  shall be based on the table
     contained in Schedule B, Part V of each Aircraft  Lease  Agreement.  Actual
     hour to cycle ratios may fall outside the ratios  identified in that table.
     In that case,  the actual values shall be determined by  extrapolating  the
     closest observed intervals in the table.

(iii)Assumed  Utilization   Adjustment:   Lessor  and  Lessee  acknowledge  that
     Airframe   Supplemental  Rent,  APU  Supplemental  Rent  and  Landing  Gear
     Supplemental  Rent payable by Lessee are based upon the assumption that the
     Aircraft will operate on an Assumed Utilization.  If that assumption proves
     to be  incorrect  at any time  during the Term based upon  Lessee's  actual
     operating  experience  during the previous * (*) months such that  Lessee's
     actual utilization of the Aircraft during the previous * (*) months differs
     from the Assumed Utilization by more than * during such * (*) month period,
     Lessor may make, and notify Lessee of, such adjustment as Lessor determines
     is  necessary  (in the case of a decrease in actual  utilization  below the
     Assumed Utilization) in its reasonable  discretion to maintain the rates of
     Airframe   Supplemental  Rent,  APU  Supplemental  Rent  and  Landing  Gear
     Supplemental  Rent at levels which accurately  reflect the costs associated
     with obtaining relevant  maintenance  services at prevailing industry rates
     and Lessor, upon written request from Lessee, will make such adjustment (in
     the case of an increase in the ratio above the Assumed Utilization).

(iv) Material  Revision to  Maintenance  Program:  If the  Lessee's  Maintenance
     Program is materially  revised,  (A) Lessor may make, and notify Lessee of,
     and (B) upon written request from Lessee,  Lessor may make, such adjustment
     as Lessor determines is necessary in its reasonable  discretion to maintain
     the  Supplemental  Rent  at  levels  which  accurately  reflect  the  costs
     associated  with  obtaining  relevant  maintenance  services at  prevailing
     industry rates.

(v)  Each notice or request  delivered  pursuant to paragraphs  (ii),  (iii) and
     (iv) above shall specify (A) the revised  Supplemental  Rent rates, (B) the
     reason  for such  revision,  (C) the  method  by which  such  revision  was
     calculated (with sufficient  specificity to enable the party receiving such
     notice or request to verify such calculation, and (D) the effective date of
     such revision and Lessee shall be bound by such revision,  absent  manifest
     error.

(c)  Lessor's Property: Lessee acknowledges and agrees that Supplemental Rent is
     additional  rent for the leasing of the Aircraft and not cash collateral or
     other collateral  security for Lessee's  maintenance  obligations under the
     Lease. Once paid all Supplemental Rent is the property of Lessor, it is not
     refundable to Lessee under any  circumstances  whatsoever and Lessee has no
     interest therein whatsoever.

5.5      Payments

            All  payments  by  Lessee to Lessor under the Lease will be made for
            value on the due date in Dollars and in immediately  available funds
            by  wire  transfer  to  the  Lessor's  Account  as  specified in the
            Aircraft Lease Agreement.

5.6      Withholding and Tax Credit

(a)  Withholding:  Lessee  shall not deduct any amount from any of its  payments
     under the Lease,  for or on account of any Taxes,  unless it is required by
     law to do so, in which case Lessee shall:

(i)  deduct the minimum amount necessary to comply with applicable Law;

(ii) except as provided in Section  5.7(c),  pay Lessor an additional  amount so
     that Lessor  receives a net amount on the relevant  payment  date,  that is
     equal to the amount that it would have  received if the  deduction  had not
     been made. The amount of any such payment to Lessor shall take into account
     the tax  treatment of that payment to Lessor  applying  the  principles  of
     Section 5.9 such that Lessor  shall be in no worse  position  than it would
     have been if the deduction had not applied in the first place;

(iii)pay  the  Tax to the relevant taxing authority according to applicable Law;
     and

(iv) obtain a receipt (if one is available) from the relevant  taxing  authority
     and furnish a certified copy thereof to Lessor.

(b)  Tax Credit: If Lessor, in good faith, determines that it has realized a tax
     benefit  (by way of  deduction,  credit  or  otherwise)  as a result of any
     payment  for which  Lessee is liable  under  Section  5.6(a),  and such tax
     benefit  was not taken  into  account  in  calculating  the  amount of such
     payment in accordance  with the  definition of  "After-Tax  Basis,"  Lessor
     shall pay to Lessee as soon as  practicable  after the tax benefit has been
     realized  (but not before Lessee has made all payments and  indemnities  to
     Lessor  required  under this  Section),  an amount  which will  ensure that
     (after taking account of the payment  itself) Lessor is in no better and no
     worse  position  than it would have been if the  deduction had not applied.
     Nothing in this Section 5.6(b) shall:

(i)  interfere  with  the right of Lessor to arrange its tax affairs in whatever
     manner it thinks fit; or

(ii) oblige  Lessor  to  disclose any information relating to its Tax affairs or
     any Tax computations.

5.7      Tax Indemnity

(a)      General:

(i)  Except as  provided  in  Section  5.7(c),  Lessee  will on  demand  pay and
     indemnify each Tax  Indemnitee  against any and all Taxes levied or imposed
     against  or upon or payable by such Tax  Indemnitee  or Lessee and  arising
     from,  with respect to or in connection with the  transactions  pursuant to
     the Lease,  including all Taxes  relating or  attributable  to Lessee,  the
     Lease or the  Aircraft,  directly or  indirectly,  in  connection  with the
     importation,  exportation,  registration, ownership (but only to the extent
     relating to or  attributable  to or arising as a result of the  possession,
     operation,  use  or  maintenance  of  the  Aircraft  by  Lessee),  leasing,
     sub-leasing,   purchase,  delivery,  possession,  use,  operation,  repair,
     maintenance,  overhaul,  transportation,   landing,  storage,  presence  or
     redelivery  of the  Aircraft  or any part  thereof  or any rent,  receipts,
     insurance  proceeds,  income,  indemnification  payment  or  other  amounts
     arising  therefrom,  or the making of any Equipment Change or the permanent
     replacement of any Engine.

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

(iii)Any amount payable by Lessee to a Tax  Indemnitee  pursuant to this Section
     5.7(a)  shall be paid  within  ten days after  receipt of a written  demand
     therefor  from  the  relevant  Tax  Indemnitee  accompanied  by  a  written
     statement  describing in reasonable detail the basis for such indemnity and
     the computation of the amount so payable, provided that if an amount of any
     indemnified  Tax is being  contested  in  accordance  with  Section 5.8 and
     Lessee shall have duly  performed  (and shall  continue to perform) all its
     obligations under Section 5.8 with respect to such contest, then payment of
     the  indemnity  with respect to such Tax under  Section  5.7(a)  shall,  at
     Lessee's  election,  be  deferred  until  the  date  the  contest  has been
     completed.

(b)      Sales and Use Taxes:

(i)  Without limiting  Section 5.7(a) above,  Lessee shall pay to Lessor (or, if
     permitted by applicable Law and if requested by Lessor, Lessee shall pay to
     the relevant tax authority for the account of Lessor):

                           (y)      all sales, use, rental, value  added,  goods
                                    and   services  and  similar  taxes  ("Sales
                                    Taxes")  required  to  be  paid  to  the tax
                                    authority of the jurisdiction in  which  the
                                    Delivery Location  is  situated  or  to  the
                                    jurisdiction  of  the  Habitual  Base or the
                                    State of Incorporation with respect  to  the
                                    lease of the Aircraft to Lessee pursuant  to
                                    the Lease unless Lessee  delivers  to Lessor
                                    on  or  prior  to  the  Delivery  Date  such
                                    exemption certificate or other  document  as
                                    may  be  required   by   applicable  Law  to
                                    evidence  Lessee's  entitlement to exemption
                                    from  all   Sales   Taxes  imposed  by  such
                                    jurisdiction with respect to  the  lease  of
                                    the Aircraft pursuant to the Lease; and

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

(ii) Lessee and Lessor will  cooperate  with each other in  connection  with the
     preparation  and filing of any exemption  application  or similar  document
     that is reasonably necessary or desirable under applicable Law to avoid the
     imposition of any Sales Taxes with respect to the transactions contemplated
     by the Lease.

(iii)The  specific  obligations  with  respect to Sales  Taxes set forth in this
     Section  5.7(b)  are in  addition  to,  and  are not in  substitution  for,
     Lessee's  obligation to indemnify for such Sales Taxes  pursuant to Section
     5.7(a).

(c)  Notwithstanding anything to the contrary contained or implied in the Lease,
     Lessee shall not be required to pay any  additional  amounts  under Section
     5.6(a)(ii)  on account of, or  indemnify  a Tax  Indemnitee  under  Section
     5.7(a) to the extent that the Tax arises solely as a result of :

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

(ii) a Tax liability of such Tax Indemnitee has which would have arisen  even if
     the Lease had not been entered into;

(iii)a Tax  liability  charged on the net  income,  profits or gains of such Tax
     Indemnitee by any Government Entity in the United States; but excluding any
     taxes indemnified under Sections 5.7 (d) or (e) below and any Tax that is a
     Sales Tax; or

(iv) a Tax liability  charged with respect to the period, or an event occurring,
     (x) prior to the Delivery  Date or (y) after the Expiry Date and, in either
     case,  unrelated to Lessor's  dealings  with Lessee or to the  transactions
     contemplated by the Lease.

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

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

(f)  Payment.  Each  payment by the Lessee  pursuant  to Clauses  5.7(d) and (e)
     shall be made  within * days  after  receipt of a written  demand  therefor
     accompanied  by a written  statement  describing in  reasonable  detail the
     MACRS Loss or Foreign Tax Credit Loss in question, the amount of additional
     Federal  income  tax,  interest,  penalties  and  additions  to tax and the
     calculation of the payment due in request thereof (but in no event shall be
     required to be paid earlier than * (*) Business Days prior to the date such
     additional  Federal  income taxes are due);  provided that, if a contest of
     the MACRS Loss or Foreign  Tax Credit Loss is being  conducted  pursuant to
     Clause 5.8 hereof,  payment (other than payments required under Clause 5.8)
     shall  not be  required  from  the  Lessee  until * days  after  the  final
     determination of such contest.

(g)  Tax Indemnity Lessee shall indemnify,  on an After-Tax Basis, Lessor, Owner
     and each other Tax Indemnitee for all fees,  expenses and Taxes incurred by
     Lessor,  Owner or any other Tax Indemnitee in connection  with any transfer
     pursuant to Sections 8.13 and 11.1 herein.

5.8      Tax Contest and Information

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

(b)  If a Tax Indemnitee obtains a refund or reimbursement of all or any part of
     any  Taxes  for  which a full  indemnity  was  paid  by  Lessee,  such  Tax
     Indemnitee  shall pay Lessee the  amount of such  refund or  reimbursement,
     reduced by any Taxes  imposed on such Tax  Indemnitee on receipt or accrual
     of such refund or  reimbursement  and  increased by any Taxes saved by such
     Tax  Indemnitee by reason of the  deductibility  of such payment by Lessor.
     If, in addition to such refund or reimbursement,  a Tax Indemnitee receives
     an amount of interest on such refund or reimbursement,  such Tax Indemnitee
     shall  pay  to  Lessee  the  portion  of  such  interest  which  is  fairly
     attributable  to such  refund,  reduced  by any Taxes  imposed  by such Tax
     Indemnitee  on receipt or accrual of such  interest  and  increased  by any
     Taxes  saved by reason of the  deductibility  of such  payment  by such Tax
     Indemnitee.  No Tax  Indemnitee  shall be  required  to make any payment to
     Lessee pursuant to this Section 5.8 if, and for so long as, a Default shall
     have occurred and be continuing.

(c)  Any Tax  Indemnitee,  in its sole discretion (by written notice to Lessee),
     may waive its  rights  to  indemnification  pursuant  to  Section  5.7 with
     respect  to any  claim  for  any Tax and may  refrain  from  contesting  or
     continuing  the contest of such claim,  in which event Lessee shall have no
     obligation  to  indemnify  such Tax  Indemnitee  for the Taxes that are the
     subject of such claim.  If a Tax  Indemnitee  agrees to a settlement of any
     contest  conducted  pursuant to this Section 5.8 without the prior  written
     consent of Lessee, which consent shall not be unreasonably  withheld,  then
     such Tax  Indemnitee  shall be  deemed  to have  waived  its  rights to the
     indemnification  provided  for in  Section  5.7  with  respect  to the  Tax
     liability accepted in such settlement.

(d)      Information:

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

(ii) If any  report,  return  or  statement  is  required  to be made by any Tax
     Indemnitee  with  respect  to any  Tax  for  which  there  is an  indemnity
     obligation of Lessee under the Lease,  Lessee will promptly notify such Tax
     Indemnitee of the requirement and:

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

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

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

5.9      Indemnity Payments - After-Tax Basis

            The amount of any payment made under  Section  5.7  (Tax  Indemnity)
            (including  Section  5.7(d)),  Section 5.20 (Expenses) or Section 10
            (Indemnity) to or for the benefit of any  Indemnitee,  shall include
            such amount as may be necessary to hold such Indemnitee  harmless on
            an  After-Tax  Basis  from  all  Taxes  required  to be paid by such
            Indemnitee with respect to such payment or indemnity  (including any
            payments pursuant to this Section 5.9).

5.10     Lessor Obligations Following Expiry Date

            Within * days (or such shorter period of not less than * days  after
            the Expiry Date to which Lessor may agree after Lessee  demonstrates
            to Lessor's reasonable satisfaction that there is no risk whatsoever
            of any payment made or to be made under the Lease  being avoided (or
            otherwise   rescinded)  under  Section  547  of  the  United  States
            Bankruptcy Code of 1978, as amended, or any similar occurrence under
            any analogous provision of applicable United States federal or state
            law) after:

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

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

            or in  each case  such later time as Lessor is reasonably  satisfied
            that Lessee has  irrevocably  paid  to  Lessor all amounts which may
            then be outstanding under the Lease and the Other Agreements and  no
            Default has occurred and is continuing:

(i)  Lessor will pay to Lessee the balance of the Deposit (if any);

(ii) Lessor will pay to Lessee the amount of any Rent received in respect of any
     period  falling  after the date of redelivery of the Aircraft or payment of
     the Agreed Value, as the case may be; and

(iii)Lessor will return to Lessee or cancel any Letter of Credit.

5.11     Net Lease

The Lease is a net lease. The Lessee's obligation to pay Rent and to perform all
of its other obligations under the Lease is absolute and unconditional no matter
what happens and no matter how  fundamental or unforeseen  the event,  including
any of the  following:  (a) any  right  of  set-off,  counterclaim,  recoupment,
defense or other  right  which  either  party to the Lease may have  against the
other  (including any right of  reimbursement)  or which Lessee may have against
the Manufacturer, any manufacturer or seller of or any Person providing services
with respect to the Aircraft,  any Engine or any Part or any other  Person,  for
any reason  whatsoever;  (b) any  unavailability of the Aircraft for any reason,
including 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  (whether  or not the  same  would,  but  for  this
provision,  result in the termination of the Lease by operation of law); (c) any
lack or  invalidity  of title  or any  other  defect  in  title,  airworthiness,
merchantability, fitness for any purpose, condition, design, or operation of any
kind  or  nature  of the  Aircraft  for  any  particular  use or  trade,  or for
registration or documentation  under the Laws of any relevant  jurisdiction,  or
any  Event  of  Loss  in  respect  of or any  damage  to the  Aircraft;  (d) any
insolvency,  bankruptcy,  reorganization,  arrangement,  readjustment  of  debt,
dissolution,  liquidation or similar proceedings by or against Lessor, Lessee or
any  other  Person;  (e)  any  invalidity  or  unenforceability  or  lack of due
authorization  of, or other defect in, the Lease; (f) any Security  Interests or
Taxes;  and/or (g) any other cause or circumstance  which but for this provision
would or might  otherwise have the effect of terminating or in any way affecting
any obligation of Lessee under the Lease. Lessee acknowledges and agrees that it
has used its own  judgement in  selecting  the  Aircraft,  and has not relied on
Lessor  or  on  any  information  supplied  by  Lessor,  that  Lessor  is  not a
manufacturer  of or dealer in aircraft and that Lessor has all of the rights and
benefits of a lessor under a lease to which Section 2A-407 of the UCC applies as
provided in such Section 2A-407.

Except as expressly set forth elsewhere in the Lease,  Lessee hereby waives,  to
the extent  permitted by applicable Law, any and all right which it may now have
or which  at any  time  hereafter  may be  conferred  upon  it,  by  statute  or
otherwise,  to  terminate,  abate,  cancel,  quit,  reduce,  defer,  suspend  or
surrender the Lease or the Aircraft or any obligation  imposed upon Lessee under
the Lease (including payment of Rent or Supplemental Rent).

Each payment of Rent or Supplemental Rent made by Lessee shall be final.  Lessee
will not seek to recover all or any part of any payment of Rent or  Supplemental
Rent for any reason whatsoever except manifest error.

If for any reason  whatsoever  the Lease shall be terminated in whole or in part
by operation of Law, except as specifically provided in the Lease, Lessee waives
all rights (if any) to any termination or diminution in its Rent or Supplemental
Rent  obligations  hereunder and  nonetheless  agrees to pay to Lessor an amount
equal to each Rent and Supplemental Rent payment at the time such payments would
have become due and payable in  accordance  with the terms thereof had the Lease
not been  terminated  in whole or in part and so long as such  payments are made
and all other terms and  conditions  hereof are complied with by Lessee,  Lessor
and  Lessee  will deem the Lease to remain in full  force and  effect and Lessee
shall  continue in possession of the Aircraft  under the terms and conditions of
the Lease.

Nothing  in this  Section  5.11 will be  construed  to limit  Lessee's  right to
institute  separate  legal  proceedings  against Lessor in the event of Lessor's
breach of the Lease or to limit Lessee's  rights and remedies  against any other
person.

5.12     Further Provisions regarding Deposit

(a)  If,  under the Lease,  Lessee is required to pay a Deposit,  Lessee  hereby
     grants a security  interest  in the  Deposit  to Lessor  and the  remaining
     provisions of this Section shall apply.  Lessee agrees that Lessor shall be
     entitled to  commingle  the Deposit with  Lessor's  general or other funds,
     Lessor will have no obligation to pay any interest  thereon and Lessor will
     not hold any such funds as agent or in trust for  Lessee or in any  similar
     fiduciary capacity.  In this regard, Lessee acknowledges and agrees that it
     is not located in the State of New York within the meaning of Section 7-101
     1-c.  (b) of the New  York  General  Obligations  Law and,  therefore,  the
     requirements  of Section 7-101 of the New York General  Obligations  Law to
     the effect that Lessor  hold the  Deposit in a separate,  interest  bearing
     account do not apply.

(b)  If any Event of Default  shall have  occurred and be  continuing  under the
     Lease or any Other  Agreement,  in  addition  to all  rights  and  remedies
     accorded  to Lessor  elsewhere  in the Lease or under Law in respect of the
     Deposit,  Lessor may immediately or at any time  thereafter,  without prior
     notice  to  Lessee,  apply all or part of the  Deposit  in or  towards  the
     payment  or  discharge  of any  matured  obligation  owed by  Lessee or any
     Affiliate of Lessee under the Lease or the Other Agreements,  in such order
     as Lessor sees fit, and/or exercise any of the rights of set-off  described
     in Section 5.19 against all or part of the Deposit.

(c)  If Lessor exercises the rights  described in Section 5.12(b) above,  Lessee
     shall,  following a demand in writing  from  Lessor,  promptly  restore the
     Deposit to the level at which it stood immediately prior to such exercise.

5.13     Letter of Credit

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

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

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

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

5.14     Guarantee

            If,  under  the  Aircraft  Lease  Agreement,  Lessee  is required to
            provide Lessor with a  Guarantee,  Lessee  will on or  prior  to the
            Delivery  Date provide Lessor with the Guarantee.

5.15     Late Payment Interest

            If Lessee fails to pay any amount payable under the Lease on the due
            date, Lessee will pay on demand from time to time to Lessor interest
            (both before and after judgement) on that amount,  from the due date
            to the date of payment in full by Lessee to Lessor,  at the Interest
            Rate. All such interest will be compounded monthly and calculated on
            the  basis  of the  actual  number  of days  elapsed  in the  month,
            assuming a * day month and a * day year.

5.16     Currency

(a)  Except for Losses and expenses suffered or incurred by Lessor,  which shall
     be payable by Lessee to Lessor in the  currency  and in the amount in which
     such Loss is suffered or incurred,  all amounts payable to Lessor under the
     Lease shall be payable in Dollars in New York and payment in Dollars in New
     York is of the essence.  Lessee  shall  indemnify  Lessor  against any Loss
     Lessor suffers if:

(i)  Lessor  receives an amount relating to Lessee's obligations  in a different
     currency from that in which payments should be made under the Lease; or

(ii) Lessee pays a judgement or claim in a different currency from that in which
     payments should be made under the Lease.

(b)  Lessee  relinquishes  any  right to pay any  amount  under  the  Lease in a
     currency  which is  different  from the  currency  provided  in the  Lease.
     Notwithstanding  any such receipt,  judgement or claim described in Section
     5.16(a),  Lessee shall have a separate  obligation to pay, and Lessor shall
     have a separate  claim against  Lessee for,  amounts to be  indemnified  by
     Lessee under this Section 5.16.

5.17     Certificates

            Except where expressly provided  in  the  Lease, any certificate  or
            determination  by  Lessor  as to any rate of  interest  or as to any
            other  amount  payable  under  the Lease  will,  in the  absence  of
            manifest error, be presumed to be correct.

5.18     Appropriation

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

5.19     Set-off

(a)  In  this  sub-clause,  references  to  Lessee  will  also  include   Lessee
     Affiliates.

(b)  Lessor may set-off any obligations  owed by Lessee under the Lease or under
     the Other  Agreements  against any obligation  Lessor owes Lessee under the
     Lease or owed to  Lessee  by any  Person  under  the  Other  Agreements  or
     otherwise,  regardless of the place of payment or currency.  Promptly after
     making any such set-off, Lessor shall notify Lessee thereof, but failure to
     give such notice shall not affect the effectiveness of any such set-off.

(c)  If the obligations are in different  currencies,  Lessor may convert either
     obligation  at the market rate of exchange  available  in New York.  If the
     amount of an  obligation  is unknown,  Lessor may estimate the amount.  Any
     difference between the estimated  obligation and the actual obligation will
     be paid by either Lessor or Lessee, as appropriate, when the amount becomes
     known.

5.20     Expenses

            Whether or not the  Aircraft  is  delivered  to Lessee, Lessee  will
            pay  to  Lessor  on demand all reasonable  expenses  (including  all
            reasonable legal fees and  expenses  and  the  reasonable  fees  and
            expenses of other professional advisers) that the Lessor has to pay:

(a)  to deal with any  amendments,  extensions,  consents  or  waivers  that are
     required in connection with the Lease (but excluding any expenses  incurred
     in  connection  with the  financing  or any change in the  ownership of the
     Aircraft or a change in the Lease that is otherwise  requested by Lessor or
     Owner or required by Lessor,  Owner or any  Financing  Party outside of the
     terms and conditions of this  Agreement,  and in each case unrelated to any
     consent,  waiver or amendment  requested by Lessee or any Default by Lessee
     under  the  Lease) or to deal with any  replacement  of any  Engine or Part
     (except  for the  replacement  of an Engine by or at the  request of Lessor
     prior to the Delivery Date);

(b)  for FAA counsel and otherwise to act upon any advice and obtain  assistance
     to  perfect  the  Lease  in  the  State  of  Registry   and  the  State  of
     Incorporation (and any other appropriate place); and

(c)  in connection  with,  the  enforcement or  preservation  of any of Lessor's
     rights under the Lease  (including  under  Section 10) or in respect of the
     repossession of any Aircraft.

(d)  All  amounts  payable  pursuant  to this  Section  5.20 will be paid in the
     currency in which they are incurred by Lessor.

5.21     Other Payments

            Lessee will promptly pay all Taxes,  other than any Taxes  described
            in Section 5.7 (which  are  addressed  separately  in such Section),
            which it is required to pay and all  other  amounts  of  any  nature
            imposed by any Government Entity with respect to the Aircraft and/or
            the Lease 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 or Owner.

6.       MANUFACTURER'S WARRANTIES

(a)  So long as no Event of Default has occurred  which is  continuing  and with
     effect from Delivery,  Lessor assigns to Lessee,  and authorizes  Lessee to
     exercise  such rights as Lessor may have under any warranty with respect to
     the  Aircraft,  any  Engine or any Part made by any  manufacturer,  vendor,
     sub-contractor or supplier  (including  compensation for loss of use of the
     Aircraft)  to the extent that the same may be assigned  or  otherwise  made
     available to Lessee.  In furtherance  of the  foregoing,  Lessor shall take
     such  actions,  at  Lessee's  cost and  expense,  as Lessee may  reasonably
     request to make such warranties available to Lessee. The Manufacturer shall
     deliver its consent to the assignment of any such  warranties upon Delivery
     of the  Aircraft.  Lessee will give  Lessor  prompt  written  notice of any
     warranty  claim which is settled with Lessee on the basis of a cash payment
     other than reimbursements for work performed directly by Lessee.

(b)  With effect from Delivery, or such earlier date as Lessor, Manufacturer and
     Lessee may mutually agree,  Lessor shall transfer over to the  Manufacturer
     such rights as Lessor may have under any product support  agreement  Lessor
     may have with the Manufacturer  relating to the Aircraft.  In consideration
     for such transfer,  Lessee shall agree with the Manufacturer an independent
     package of product support.  If an Event of Default shall have occurred and
     is continuing on or before Delivery,  Lessee shall promptly pay Lessor upon
     receipt of a written invoice the value,  as determined by the  Manufacturer
     or vendor, as applicable, of such product support as used by Lessee if such
     support  has been used by Lessee  prior to  Delivery.  and Lessee  does not
     accept Delivery of the Aircraft in accordance with the provisions set forth
     herein.

(c)  If  an  Event  of  Default  has  occurred  and  is  continuing  Lessor  may
     immediately  recover  from  Lessee  the  proceeds  of any  warranty  claims
     previously  paid to Lessee to the  extent  that such  claims  relate to any
     defect in the Aircraft not fully and completely  rectified by Lessee before
     such Event of Default and Lessor may:

(i)  retain for its own  account  any such  proceeds  previously  paid to Lessor
     which  would  have been  remitted  to Lessee  under  this  Section 6 in the
     absence of such Event of Default; and

(ii) cause any proceeds of any pending claims to be paid to Lessor, rather  than
     Lessee.

(d)  Upon Redelivery of each  Aircraft, Lessee assigns to Lessor, and authorizes
     Lessor to exercise  such rights as Lessee may have under any  warranty with
     respect to the Aircraft, any Engine or any Part made by any   manufacturer,
     vendor, sub-contractor or supplier (including compensation for loss of  use
     of the  Aircraft)  to the extent that the same may be assigned or otherwise
     made available to Lessor.In furtherance of the foregoing, Lessee shall take
     such actions, at Lessee's cost  and  expense,  as  Lessor  may   reasonably
     request to make such warranties available to Lessor.

7.       LESSOR'S COVENANTS

7.1      Quiet Enjoyment

                  So long as no Event of Default has occurred and is continuing,
                  neither Lessor nor a Person lawfully  claiming  through Lessor
                  (excluding a Person  claiming  through  Lessor with respect to
                  any  Losses,  Taxes or other  liability  for  which  Lessee is
                  obligated  to  indemnify  Lessor  under the Lease or for which
                  Lessee  is  otherwise   responsible  under  the  Lease),  will
                  interfere  with Lessee's  right to quiet use and possession of
                  the Aircraft during the Term. Exercise by Lessor of its rights
                  of inspection or other rights  expressly  provided to it under
                  the Lease in the  absence of an Event of Default  shall not be
                  considered  to be a breach of the foregoing  covenant.  Lessee
                  agrees that its only right with respect to a default by Lessor
                  under the Lease is to make a claim  against  Lessor for actual
                  damages resulting  directly therefrom and in any event subject
                  to Section 16.3 hereof,  and Lessee  hereby waives any and all
                  other rights or remedies it may have under  Section  2A-211 of
                  the  UCC or  Sections  2A-508  through  2A-522  of the  UCC or
                  otherwise.

7.2      Maintenance Contributions

(a)  If, under the Aircraft Lease Agreement for the Aircraft, Lessee is required
     to pay  Supplemental  Rent,  then provided no Event of Default has occurred
     and  is  continuing,  Lessor  will  pay  (as  a  separate  and  independent
     obligation and not as a return of Supplemental  Rent) the following amounts
     to  Lessee  by way  of  contribution  to the  cost  of  maintenance  of the
     Aircraft,  UPON RECEIPT BY LESSOR, WITHIN * MONTHS AFTER CONCLUSION OF SUCH
     MAINTENANCE  AND IN ANY EVENT WITHIN * MONTHS AFTER THE EXPIRY DATE,  of an
     invoice and  supporting  documentation  reasonably  satisfactory  to Lessor
     evidencing  performance  of any of the  following  work by the  Maintenance
     Performer:

(i)  Airframe: With respect to the Airframe, the completion,  in accordance with
     the Lease, of the Airframe Structural Check , the lesser of (aa) the amount
     of that  invoice and (bb) an amount  equal to the  aggregate  amount of the
     Airframe  Supplemental  Rent  paid  under  the  Lease at the date such work
     starts  less the  aggregate  amount  previously  paid by Lessor  under this
     sub-clause;

(ii) Engine  Life-Limited  Parts: With respect to life-limited  Parts within any
     Engine,  the performance,  in accordance with the Lease, of any replacement
     or repair of those Parts ("Engine LLP Replacement"),  the lesser of (x) the
     amount of that invoice and (y) an amount equal to the  aggregate  amount of
     the Engine LLP  Supplemental  Rent paid in respect of that Engine under the
     Lease at the date such work starts  less the  aggregate  amount  previously
     paid in respect of that Engine by Lessor under this sub-clause;

(iii)Engine  Refurbishment:  With  respect to any Engine,  the  performance,  in
     accordance  with the  Lease,  of Engine  Refurbishment  in  respect of that
     Engine the lesser of (x) the amount of that invoice and (y) an amount equal
     to the  aggregate  amount of the  Engine  Supplemental  Rent paid under the
     Lease in  respect  of that  Engine at the date such  work  starts  less the
     aggregate amount  previously paid in respect of that Engine by Lessor under
     this sub-clause;

(iv) APU:  With  respect to the APU, the  performance,  in  accordance  with the
     Lease, of all shop visits requiring APU removal and disassembly, the lesser
     of (x) the amount of that invoice and (y) an amount equal to the  aggregate
     amount of the APU  Supplemental  Rent paid under the Lease at the date such
     work starts less the aggregate amount  previously paid by Lessor under this
     sub-clause; and

(v)  Landing  Gear:  With  respect  to the  Landing  Gear,  the  performance  in
     accordance with the Lease, of all work on the landing gear in the nature of
     overhaul  and  requiring  removal  and  disassembly,  the lesser of (x) the
     amount of that invoice and (y) an amount equal to the  aggregate  amount of
     the Landing  Gear  Supplemental  Rent paid under the Lease at the date such
     work starts less the aggregate amount  previously paid by Lessor under this
     sub-clause.

PROVIDED THAT Lessor will not pay any such contribution:

(b)  in respect of paragraphs  (i)-(v) above, for repairs arising as a result of
     accidents or incidents (whether or not eligible for recovery under Lessee's
     insurance), operational or maintenance mishandling or, except as and to the
     extent otherwise expressly agreed by Lessor,  airworthiness directive work;
     nor

(c)  in respect of  paragraphs  (ii) and (iii) above,  for repairs  arising as a
     result of foreign object damage, the removal, installation, maintenance and
     repair of QEC (Quick  Engine Change Kits) and/or any  replacement  of parts
     not required  under the  Maintenance  Program to be replaced as part of the
     maintenance described in clause (i) through (v) above, as the case may be.

8.       LESSEE'S COVENANTS

8.1  Duration:  Lessee  shall  perform  and  comply  with its  undertakings  and
     covenants in the Lease at all times during the Term. All such  undertakings
     and covenants shall,  except where expressly otherwise stated, be performed
     at the expense of Lessee.

8.2      Information

Lessee will:

(a)  provide  Lessor  with a Technical  Report for the  Aircraft  within *  days
     after the end of each  calendar month throughout the Term;

(b)  provide Lessor with the Financial Information;

(c)  promptly  notify  Lessor of any Event of Loss and,  promptly  after  Lessee
     becomes  aware  thereof,  of any  event  which is  likely  to  result in an
     insurance claim in excess of the Damage Notification  Threshold and details
     of any  negotiations  with insurers or insurance  brokers  relating to such
     claim;

(d)  promptly notify Lessor of any Default;

(e)  provide  Lessor,  upon  request,  with  evidence that all Taxes and charges
     incurred by Lessee in connection  with the  Aircraft,  its location and its
     operations,  including  those invoiced by airports and air traffic  control
     authorities have been paid in full;

(f)  provide  Lessor  with  such  other  information  concerning  the  location,
     condition,  use and operation of the Aircraft or concerning the business or
     financial  affairs  of Lessee,  as Lessor may from time to time  reasonably
     request;

(g)  give Lessor not less than * days written notice as to  the  scheduled  tim
     and location of all Major Checks;

(h)  notify  Lessor,  promptly,  of the removal of any Engine for the purpose of
     Engine Refurbishment; and

(i)  provide  Lessor  with  all  information  concerning  the  Aircraft,  or its
     location,   condition,   use  and/or  operation  or  concerning  Lessee  as
     reasonably requested by Lessor.

8.3      Lawful and Safe Operation

            Lessee will operate the Aircraft for commercial  purposes  from  the
            Delivery Date  until the  Return  Occasion  from a base  within  the
            State of Registry  or from such  other  base  outside  the State  of
            Registry pursuant  to a  sub-lease  or a  wet-lease  complying  with
            Section 8.4(a),provided, always that Lessee shall not use or operate
            the Aircraft or suffer or permit the Aircraft to be used or operated

(a)  in  violation  of any  applicable Regulations or in a manner causing Lessor
     to be in  violation of any applicable Regulations;

(b)  for any purpose for which the Aircraft was not designed or which is illegal

(c)  to carry cargo which could reasonably be expected to damage the Aircraft;

(d)  in  any  circumstances  or  place  where the Aircraft is not covered by the
     Insurances; or

(e)  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.

8.4      Subleasing

(a)  AT NO TIME WILL LESSEE SUB-LEASE, WET-LEASE OR OTHERWISE GIVE POSSESSION OR
     CONTROL OF THE AIRCRAFT OR ANY ENGINE TO, OR OTHERWISE  PERMIT THE AIRCRAFT
     OR ANY ENGINE TO BE IN THE POSSESSION OR CONTROL OF, ANY PERSON EXCEPT:

(i)  when the prior written consent of Lessor has been obtained such consent no
     to be unreasonably withheld; or

(ii) where the Aircraft or Engine is delivered to a manufacturer  or maintenance
     facility  for  testing  or  work  to be done on it as required or permitted
     under the Lease; or

(iii)to a Permitted  Sub-Lessee  pursuant to a sub-lease which complies with the
     conditions set out in Clause 8.4(b) and provided that no Default shall have
     occurred and be continuing (a "Permitted Sub-lease");

(iv) on a wet- lease which complies with Section 8.4(c); or

(v)  with respect to an Engine, as permitted under Section 8.11.

(b)  Lessor  will not  unreasonably  withhold or delay its consent to a proposed
     Permitted Sub-Lease and to a proposed Permitted Sub-Lessee;  provided that,
     if Lessor grants its consent,  then in addition to any conditions  required
     by Lessor as part of such consent,  each of the following  conditions shall
     be required to be satisfied in relation to any Permitted Sub-Lease prior to
     any sub-leasing pursuant to this Section:

(i)  Notification:  at  least  * days  prior  to  entering  into  any  Permitted
     Sub-Lease, Lessee shall give Lessor written notice, specifying the identity
     of the  Permitted  Sub-Lessee,  the term of the  Permitted  Sub-Lease,  the
     scheduled delivery date under the Permitted Sub-Lease and the habitual base
     of the Permitted Sub-Lessee;

(ii) Term:  the term of the Permitted Sub-Lease shall not extend beyond the
     scheduled Expiry Date;

(iii)Form:   a Permitted Sub-Lease shall:

                           (aa)     not contain provisions inconsistent with the
                                    provisions  of the  Lease  (but  may  impose
                                    additional or more stringent  obligations on
                                    any Permitted Sub-Lessee than are imposed on
                                    Lessee under the Lease);

                           (bb)     provide that no  further  subleases  of  the
                                    Aircraft  by  such  Permitted Sub-Lessee are
                                    permitted; and

                           (cc)     include provisions  substantially  identical
                                    to or having  substantially  the same effect
                                    as Sections 2.1, 5.6, 5.7, 5.9, 5.11,  5.15,
                                    5.16, 5.21, 8, 9, 10, 11, 13, 15.1, 15.8 and
                                    16 and Schedules 2 (Section 1.1), 7 and 9 of
                                    the Lease (but the Permitted  Sub- Lease may
                                    impose    additional   or   more   stringent
                                    obligations on any Permitted Sub-Lessee than
                                    are imposed on Lessee under the Lease);

(iv) Subordination  and Assignment:  the Permitted  Sub-Lease shall provide that
     (aa) the Permitted  Sub- Lease is subject and  subordinate  to the Lease in
     all respects and the rights of the Permitted Sub-Lessee under the Permitted
     Sub-Lease  are subject  and  subordinate  in all  respects to the rights of
     Lessor  under the Lease;  and (bb) prior to delivery of the Aircraft to the
     Permitted  Sub-Lessee  (as a condition  precedent  thereof),  the Permitted
     Sub-Lessee shall provide an  acknowledgement  to Lessor and Owner in a form
     reasonably  satisfactory  to  Lessor,  confirming  its  agreement  to  this
     provision  and  confirming  that its rights to  possession  of the Aircraft
     under  the  Permitted   Sub-Lease  will  terminate   immediately  upon  the
     termination  of the  Lease,  and that it will  redeliver  the  Aircraft  to
     Lessor, upon notification from Lessor that an Event of Default has occurred
     and  that it  has,  as a  result  thereof,  terminated  Lessee's  right  to
     possession   of  the   Aircraft   under  the  Lease   (the   "Subordination
     Acknowledgement").  The  Permitted  Sub-Lease  shall be  assigned to Lessor
     pursuant to an agreement  reasonably  acceptable to Lessor (the  "Sub-Lease
     Assignment");

(v)  Quiet  Enjoyment: the Permitted Sub-Lease shall provide that the  Permitted
     Sub-Lessee  shall have the right to quiet  enjoyment  of the  Aircraft  for
     so long as no Event of Default has occurred under the Lease and/or no event
     of default or termination event (howsoever described)  has  occurred  under
     the Permitted Sub-Lease;

(vi) Obligations of Lessee: Lessee shall remain primarily liable under the Lease
     for the  performance  and  observance  of all its  obligations  to the same
     extent as if no Permitted  Sub-Lease  had been entered  into. To the extent
     that the Permitted  Sub-Lessee  properly  performs an obligation  under the
     Permitted  Sub-Lease,  Lessor  agrees that such  performance  shall also be
     regarded as discharging (to such extent) Lessee's corresponding obligation;

(vii)Insurances:  all  insurance  requirements  herein  shall be  complied  with
     either by Lessee or by the  Permitted  Sub-Lessee  as if  references in the
     insurance  provisions  of the Lease to  "Lessee"  were  references  to "the
     Permitted  Sub-Lessee",  and Lessee shall cause the Permitted Sub-Lessee to
     provide  the  insurance  certificate  and  brokers'  letter of  undertaking
     referred to in Section 9.3(c)(ii) at least * (*) Business Days prior to the
     commencement of the Permitted Sub-Lease;

(viii)Registration: there shall be no change in the registration of the Aircraft
     from its State of Registry;

(ix) Repossession or Political Risk Insurance:  if reasonably required by Lessor
     repossession  or  political  risk  insurance,  as the case may be, shall be
     obtained  by  Lessor  at  Lessee's  cost,  provided  that  repossession  or
     political  risk insurance , as the case may be, will not be required if the
     Permitted Sub-Lessee meets the requirements of Sections 8.7(a)(iv) and (v).
     If  repossession  or political  risk  insurance is required,  the Permitted
     Sub-Lease  shall provide that, if any such  repossession or political risk,
     as the case may be, insurance cannot be obtained or renewed,  a termination
     event  will  occur  upon  notice  by  Lessor  to  Lessee  or the  Permitted
     Sub-Lessee of an inability to procure  repossession  or political  risk, as
     the case may be, insurance;

(x)  Legal Opinions:  as  a  condition   precedent  to  the effectiveness of the
     Permitted  Sub-Lease,  Lessee shall provide to Lessor the  following  legal
     opinions (at Lessee's or Permitted  Sub-Lessee's   expense)   addressed  to
     Lessor, Owner  and  the  Financing  Parties'  Representative  from  counsel
     reasonably acceptable to Lessor;

                                    (aa)    a legal opinion in relation  to  the
                                            Permitted   Sub-Lease  in  form  and
                                            substance   reasonably  satisfactory
                                            to,   and   containing  such   other
                                            matters  set  out    in  Schedule  8
                                            requested by, Lessor and  confirming
                                            further   that    each    of     the
                                            Subordination  Acknowledgement,  the
                                            Permitted    Sub-Lease    and    the
                                            Sub-Lease   Assignment   is   valid,
                                            binding  and  (except  as limited by
                                            any   equitable    principles   and
                                            applicable  bankruptcy,  insolvency,
                                            reorganization,    moratorium     or
                                            similar laws affecting creditors' or
                                            lessors'      rights      generally)
                                            enforceable    against     Permitted
                                            Sub-Lessee and, in the case  of  the
                                            Sub-Lease     Assignment,   properly
                                            perfected as against Lessee; and

                                    (bb)    one or more legal opinions in a form
                                            and    from    counsel    reasonably
                                            acceptable to Lessor in the State of
                                            Registration,     the    State    of
                                            Incorporation for each of Lessee and
                                            the Permitted Sub-Lessee and, if not
                                            in the United  States,  State of the
                                            Habitual  Base to the effect,  inter
                                            alia,  that  Lessor's,  Owner's  and
                                            Financing Parties'  Representative's
                                            interests  in the  Aircraft  will be
                                            recognized  under  the  laws of such
                                            country or countries.

The foregoing  opinion or opinions (x) shall be forwarded  promptly to Lessor at
least * Business  Days prior to the effective  date of the Permitted  Sub-Lease,
and (y) may, if different opinions are required  hereunder,  be made by a single
counsel qualified to render opinions in each such country;

(xi) Filings:  Lessee  shall  co-operate  with  Lessor (at no cost to Lessor) in
     connection  with the  execution  and  filing  of any  documents  reasonably
     required  by Lessor  to be  executed  and filed  from time to time with any
     registry or authority in the Habitual Base, the State of  Registration  and
     State of Incorporation (of each of Lessee and the Permitted  Sub-Lessee) in
     order to protect the  interests  of Lessor,  Owner and  Financing  Parties'
     Representative  in and to the  Aircraft,  the Lease or the  Permitted  Sub-
     Lease and/or to ensure the validity, enforcement or priority thereof;

(xii)Expenses:  Lessee will pay to Lessor on demand all reasonable out of pocket
     expenses  (including  legal,  survey and other costs) and Taxes  payable or
     incurred  by  Lessor,   Owner  or  Financing  Parties'   Representative  in
     connection  with the  review and  approval  of the  documentation  required
     pursuant  to this  Section or  otherwise  incurred in  connection  with any
     requested sub-lease or the sub-leasing of the Aircraft thereunder;

(xiii)Permitted Sub-Lease: Promptly after its  execution, Lessee  shall  provide
      Lessor  with a copy of the signed Permitted Sub-Lease;

(xiv)Acknowledgement  by  Guarantor:  If  a  Guarantee  is  required  under  the
     Aircraft  Lease  Agreement,  Lessee  shall  provide  to  Lessor  at least *
     Business  Days prior to the effective  date of the  Permitted  Sub-Lease an
     acknowledgement  by Guarantor of the Permitted  Sub-Lease and  confirmation
     that the Guarantee  will remain in full force and effect during the term of
     such Permitted Sub-Lease.

(c)  Notwithstanding  Section 8.4 (a),  Lessee  shall be  permitted  to make the
     Aircraft  available to the United States under the CRAF program as provided
     in Section 12.7 and Lessee  shall be  permitted to otherwise  wet lease the
     Aircraft  provided  the  Aircraft  (i) shall be operated  solely by regular
     employees of Lessee  possessing all current  certificates and licenses that
     are required by applicable Regulations, including by the State of Registry,
     and shall remain in the operational  control and possession of Lessee, (ii)
     shall be subject to insurance  coverage as provided for in the Lease, (iii)
     shall be used and  operated  in  accordance  with the  Lease  and  shall be
     maintained or caused to be maintained by Lessee in accordance with Lessee's
     Maintenance  Program and Lessee's normal  maintenance  practices,  and (iv)
     shall not be subject to any change in its State of  Registry;  and provided
     always  that,  except in respect of CRAF,  such  arrangement  is  expressly
     subordinated  to the Lease and the rights of Lessor  thereunder  and to the
     Aircraft,  and Lessee provides Lessor with all opinions,  certificates  and
     other documents requested by Lessor which are required to be provided,  and
     takes all other action requested by Lessor.

8.5      Inspection

(a)  Lessee will permit Lessor's  representatives to inspect the Aircraft at any
     time.  Unless an Event of Default has occurred and is continuing,  any such
     Person will give Lessee reasonable notice of inspection and such inspection
     will not result in a disruption to the scheduled operation of the Aircraft.
     Lessee   shall   comply   with  the   reasonable   requests   of   Lessor's
     representatives  during the course of an inspection,  including any request
     to travel on the flight deck of the Aircraft as an observer, subject to any
     applicable Regulations.

(b)  The cost of conducting an inspection shall be borne by Lessor, unless, as a
     result  of  that  inspection,  Lessee  is  found  to be in  default  of its
     obligations  under  the  Lease  in which  case  the cost  shall be borne by
     Lessee.

(c)  No  liability  or  obligation  will be  incurred  by  Lessor  by  reason of
     non-exercise by it of the inspection rights referred to in this Section.

(d)  Lessor  hereby  indemnifies  and agrees to hold  harmless  Lessee  from and
     against all Losses relating to or arising out of the death or injury to any
     such  observer  or any  employee  of  Lessor  in  connection  with any such
     inspection.

8.6      Ownership; Property Interests; Related Matters

(a)  Lessee will:

(i)  fix and maintain  Nameplates  containing the  Nameplate  Inscription  in  a
     prominent  position  in  the  cockpit  or cabin of the Aircraft and on each
     Engine; and

(ii) take all  reasonable  steps as Lessor may  reasonably  request to make sure
     that such Persons as Lessor  reasonably  specifies know about the interests
     of Owner, Lessor and Financing Parties' Representative in the Aircraft.

(b)  Lessee will not:

(i)  represent that it is the owner of the Aircraft  or that it has an  economic
     interest  (equivalent  to  ownership)  in the Aircraft for Tax treatment or
     other purposes;

(ii) represent to others that Owner, Lessor or Financing Parties' Representative
     is associated with or responsible for the business activities and/or flight
     operations of Lessee;

(iii)allow the Aircraft or the Lease to become or remain subject to any Security
     Interest (other than a Permitted Lien); or

(iv) allow the name of any Person  other  than  Lessor,  Owner or any  Financing
     Party to be placed on the  Aircraft  or any  Engine as a  designation  that
     could  reasonably be  interpreted  as a claim of ownership or as a Security
     Interest;  provided,  that Lessee may place  thereon,  or allow a Permitted
     Sub-Lessee to place thereon, its customary insignia and colors.

8.7      General

(a)  Lessee will:

(i)  maintain its business as a commercial airline,  will preserve its corporate
     existence  (other than as  permitted  in Section 8.7 (vii)  below) and will
     maintain all rights,  privileges,  licenses and franchises material thereto
     or material to performing its obligations under the Lease;

(ii) not operate,  maintain,  insure or deal with,  or keep records with respect
     to, the  Aircraft in a manner  which  discriminates  against  the  Aircraft
     adversely insofar as Lessor's,  Owner's or Financing Parties' interests are
     concerned,  when  compared  with  the  manner  in  which  Lessee  operates,
     maintains,  insures or deals with, or keep records with respect to, similar
     aircraft, engines or parts in Lessee's fleet;

(iii)not change the location of its chief  executive  office from that described
     in the heading of the Aircraft Lease  Agreement or otherwise be located (as
     defined  in  Section  9-103(3)(d)  of the UCC) at any  place in the  United
     States other than the location  described the heading of the Aircraft Lease
     Agreement, except upon 30 days prior written notice thereof to Lessor;

(iv) remain a  Certificated  Air  Carrier and  maintain its status so as to fall
     within  the  purview  of  Section  1110  of  Title 11  of the U.S.C. or any
     analogous statute;

(v)  remain a "citizen of the United States" as defined in Section 40102(a) (15)
     (c) of Title 49 of the U.S.C.;

(vi) not liquidate or dissolve; and

(vii)not consolidate  with or merge into or with any other  corporation or other
     Person,  and not convey,  transfer,  lease or  otherwise  dispose of all or
     substantially  all of its  property  and other assets to, or acquire all or
     any  substantial  part of the property or other assets or capital  stock of
     (if such  acquisition  is  analogous  in  either  purpose  or  effect  to a
     consolidation or merger), any corporation or other Person, unless:

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

                           (y)     the  Person  formed  by  or  surviving   such
                                   consolidation or merger or the  Person  which
                                   acquires by conveyance,  transfer,  lease  or
                                   other disposition all or substantially all of
                                   such property and other  assets or stock (the
                                   "Successor Entity"):(A)shall be a corporation
                                   organized and existing under the laws of  the
                                   United  States  or  any  State thereof or the
                                   District  of  Columbia; (B) immediately after
                                   giving  effect  to such transaction, shall be
                                   Lessee or shall have acquired or succeeded to
                                   all  or substantially all of the property and
                                   other assets of Lessee (if  such  assets  are
                                   being transferred) as an entirety,  and shall
                                   have a  tangible  net  worth  (determined  in
                                   accordance  with  GAAP)  of  not  less   than
                                   Lessee's tangible net  worth  (determined  in
                                   accordance with GAAP)  immediately  prior  to
                                   such  transaction; (C) shall be a "citizen of
                                   the United States" of America  as  defined in
                                   Section  40102(a)(15)(c) of  Title 49  of the
                                   U.S.C. and  Certificated Air Carrier; and (D)
                                   shall  execute  and  deliver  to  Lessor such
                                   recordations   and    filings    with     any
                                   Governmental Entity and such other  documents
                                   as  Lessor   determines  shall  be reasonably
                                   necessary or advisable  to  evidence,  or  in
                                   connection with, such  consolidation, merger,
                                   sale, lease, transfer  or  other  disposition
                                   and  an  agreement,  in  form  and  substance
                                   reasonably satisfactory to Lessor which is  a
                                   legal,   valid,   binding   and   enforceable
                                   assumption by such Successor  Entity  of  the
                                   due and punctual performance  and  observance
                                   of  each  covenant and condition of the Lease
                                   and  the  other related  documents  to  which
                                   Lessee   is   a  party,   and  an   officer's
                                   certificate to such  effect and to the effect
                                   that the other requirements of  this  Section
                                   have been satisfied, and a legal opinion from
                                   counsel to such effect and  otherwise in such
                                   form and substance reasonably satisfactory to
                                   Lessor; and

                           (z)     no  Default  shall  have   occurred  and   be
                                   continuing  or   shall  occur  as  a   result
                                   thereof.
8.8      Records

            Lessee will keep all Aircraft Documents and Records in  English  and
            so they meet the requirements of applicable  Regulations  (including
            FAR 91.417) and Lessee's Maintenance Program.

8.9      Protection

Lessee will:

(a)  take all actions reasonably requested by Lessor that are within its control
     to keep the Aircraft registered with the Air Authority in the name of Owner
     and subject to the  first-priority  Security Interest in favor of Financing
     Parties' Representative; and

(b)  make  any and  all  filings  required  to be made  with  the Air  Authority
     registry that are within its control and take all other actions  within its
     control that are  necessary  or  advisable to reflect on the Air  Authority
     registry any (i) change in the ownership of the Aircraft, or (ii) change in
     the interests of Lessor, Owner or the Financing Parties'  Representative in
     the Lease or the Aircraft,  (iii) modification to the Aircraft (such as the
     permanent  replacement of any Engine or Part in accordance  with the Lease)
     or (iv)  change  in  applicable  Regulation.  Lessor  will  bear any  costs
     incurred as a consequence  of a transfer by Lessor,  Owner or the Financing
     Parties'  Representative in the interests of Lessor, Owner or the Financing
     Parties'  Representative  in the Lease or the  Aircraft  or a change in the
     identity of Lessor, Owner or the Financing Parties' Representative (in each
     case,  unrelated to the  replacement of any Engine or Part or a Default) in
     connection  with the preceding  sub-clauses  (i) and (ii),  and Lessee will
     bear any other costs incurred in complying with this Section,  including in
     connection with the replacement of any Engine or Part.

8.10     Maintenance and Repair

            Lessee will maintain,  overhaul and repair the  Aircraft (or arrange
            for the Aircraft to be maintained, overhauled and  repaired, through
            the Maintenance Performer), so that:

(a)  the  Aircraft  is kept in as good  operating  condition  and  repair as the
     condition of the  Aircraft as at Delivery  and after  giving  effect to any
     post-Delivery  modifications,  repairs or maintenance paid for or otherwise
     provided by or on behalf of Lessor, except for ordinary wear and tear;

(b)  the Lessee has a current  certificate  of  airworthiness (issued by the Air
     Authority in the appropriate public transport category) for the Aircraft in
     good standing at all times;

(c)  the Aircraft  complies with (i) all  applicable  Regulations  including the
     standard  stipulated  by FAR Part 121  Subpart  L and any  other  rules and
     regulations  of the FAA and in at least the same  manner  and with at least
     the  same  care,   including   record  keeping,   maintenance   scheduling,
     modification status and technical condition, as is the case with respect to
     similar  aircraft  owned or  otherwise  operated by Lessee and as if Lessee
     were to retain and continue  operating  the Aircraft in its fleet after the
     Expiry Date,  including all maintenance to the Airframe,  any Engine or any
     Part required to maintain all warranties, performance guaranties or service
     life policies in full force and effect;  and (ii) the  requirements  of all
     Airworthiness  Directives and all service  bulletins issued during the Term
     designated by the State of Design or State of Registry as "mandatory,"  and
     to be carried  out before the Return  Occasion or within a period of * days
     after the Return Occasion;  provided,  that,  Lessor shall reimburse Lessee
     for a portion of the cost of certain Airworthiness  Directives in excess of
     the AD Threshold,  in  accordance  with Schedule B, Part VI of the Aircraft
     Lease Agreement; and

(d)  all maintenance is carried out according to Lessee's Maintenance Program in
     at  least  the same  manner  and with at  least  the same  care,  including
     maintenance scheduling,  modification status and technical condition, as is
     the case with respect to similar  aircraft  owned or otherwise  operated by
     Lessee.

8.11     Removal of Engines and Parts

(a)  General:  Lessee shall replace,  within * (*) days thereof, any Engine that
     has suffered an Engine Event of Loss in  accordance  with Section  8.11(b),
     and any Part  which is  permanently  removed  from  the  Aircraft  shall be
     replaced  in  accordance  with  Section  8.11(b).  Any Engine or Part which
     otherwise  is  lost,  stolen,  destroyed,  seized,  obsolete,  confiscated,
     damaged beyond repair or permanently  rendered unfit for any reason,  shall
     be replaced in accordance with Section  8.11(b).  Any Engine or Part may be
     installed  on another  aircraft  Lessee owns or leases in  accordance  with
     Section  8.11(c).  Lessee  may  temporarily  install  an  engine or part in
     accordance  with  Section  8.11(d).  Lessee shall obtain from any person to
     whom possession of an Engine is given,  and from the lessor of any airframe
     on which an Engine is installed and from any holder of a Security  Interest
     in any  airframe on which an Engine is  installed,  an agreement in writing
     (which  agreement,  in the case of a lease  or  Security  Interest,  may be
     contained in the applicable lease or Security Interest  agreement  covering
     such airframe) to Lessor, Owner and Financing Parties'  Representative,  in
     form and substance reasonably  satisfactory to Lessor, that such Person and
     its  successors  and assigns will respect the interests of Owner and Lessor
     as  owner  and  lessor,   respectively,   and  of  the  Financing  Parties'
     Representative  as holding a Security Interest in, such Engine and will not
     seek to acquire,  claim or exercise  any rights  whatsoever  in relation to
     such Engine.  In the event Lessee shall have  received  from a lessor of or
     secured party holding a Security  Interest in any airframe leased to Lessee
     or owned by Lessee a written agreement  pursuant to the foregoing  sentence
     and the lease or Security  Interest  covering  such airframe also covers an
     engine or engines  owned by the lessor  under such lease or subject to such
     Security  Interest  in favor  of the  secured  party  under  such  Security
     Interest,  Lessor  hereby  agrees for the benefit of such lessor or secured
     party that Lessor  will not  acquire,  claim or  exercise  as against  such
     lessor or secured party, any right, title or interest in any such engine as
     the result of such engine being installed on the Airframe at any time while
     such engine is subject to such lease or Security Interest and owned by such
     lessor or subject to a Security Interest in favor of such secured party.

(b)  Permanent Replacement:  If Lessee permanently replaces an Engine or  Part:

(i)  in the  case of an  Engine,  the  replacement  engine  shall be of the same
     manufacturer  and model,  or at  Lessee's  option an engine of an  improved
     model, and have equivalent or better  remaining  useful life,  modification
     status,  time  elapsed  since  hot  section  refurbishment,   cold  section
     refurbishment,   reduction  gear  overhaul,   life  limited  part  utility,
     serviceability  and equivalent  remaining  warranty status as the Engine it
     replaces, and is otherwise of an equivalent or better value and utility and
     suitable for  installation  and use on the Airframe  without  impairing the
     value  or  utility  of the  Airframe  and  compatible  with  the  remaining
     installed Engine(s);

(ii) in the case of a Part,  the  replacement  part  shall be in good  operating
     condition,  have a value and utility the same or better than the Part it is
     replacing,  have as much useful  life  available  until the next  scheduled
     maintenance procedure, be of the same or a more advanced make and model and
     of  the  same  interchangeable  modification  status  as  the  Part  it  is
     replacing;

(iii)the  replacement  engine  or part  shall  have  become  and  remain,  until
     replaced in accordance  with this Section,  the property of Owner free from
     Security  Interests  (other  than  Permitted  Liens),  and  subject  to the
     applicable Financing Documents; and

(iv) Lessee shall have full details of the source and maintenance records of the
     replacement  engine or part and in the case of  serialized  rotable  parts,
     also have a complete service history as required by the Air Authority.

(c)  Other Aircraft:   An  Engine  or Part may be installed on an aircraft which
     Lessee owns or leases if:

(i)  no payment Default or Event of Default has occurred and is continuing;

(ii) Lessee has operational control over the aircraft;

(iii)Owner keeps the ownership of the Engine or Part concerned until replaced in
     accordance with this Section;

(iv) the Engine or Part does not become  subject to a Security  Interest and the
     applicable  airframe  is not  subject  to any  Security  Interest  except a
     Permitted Lien or a lease or Security Interest described in Section 8.11(a)
     above; and

(v)  the Engine or Part is removed from the aircraft  not  later than the Expiry
     Date;

(d)  Temporary Replacement:Lessee may install any engine or part on the Aircraft
     as a temporary  replacement if:

(i)  no payment Default or Event of Default has occurred and is continuing;

(ii) there is not available an engine or part complying with the requirements of
     the Lease for a replacement Engine or Part;

(iii)it would  result in an  unreasonable  disruption  of the  operation  of the
     Aircraft or the business of Lessee to have the Aircraft grounded until such
     time as an engine or part complying with the  requirements of the Lease for
     a replacement Engine or Part becomes available for installation;

(iv) as soon as  practicable  after  an  engine  or  part  is  installed  on the
     Aircraft,  but before the Expiry Date,  Lessee  removes that engine or part
     and replaces it with the  original  Engine or Part (or by an engine or part
     which is allowed by Section 8.11(b)); and

(v)  the Insurances for the Aircraft are not adversely affected.

(e)  Pooling/Interchange:  Lessee  shall not  subject  any Engine or Part to any
     pooling,  interchange,  lease or similar  arrangement unless Lessee obtains
     Lessor's  prior  written  consent  thereto,  which  consent  shall  not  be
     unreasonably withheld.

8.12     Equipment Changes

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

(i)  is  required  by  applicable  Law or expressly permitted or required by the
     Lease; or

(ii) has the prior written  approval of Lessor or does not diminish the
     condition, utility, airworthiness or  value of the Aircraft and costs  less
     than $*; or

(iii)is otherwise permitted by Section 8.14 herein.

So long as no Default  has  occurred  and is  continuing,  Lessee may remove any
Equipment Change provided that the Equipment Change is not required  pursuant to
the  terms of the Lease or to  maintain  the  Insurances  and  removal  does not
diminish the value,  utility,  airworthiness  or condition of the Aircraft below
what  it  would  have  been  if  such  Equipment   Change  had  never  occurred.
Furthermore,  Lessor may require  Lessee to remove any  Equipment  Change (other
than those  required  by  applicable  Law) on the Expiry Date and to restore the
Aircraft to its condition prior to that Equipment  Change.  Any Equipment Change
not so removed becomes the property of Lessor or Owner, as the case may be.

8.13     Title on an Equipment Change

Title to any equipment  that becomes a Part or an Engine after the Delivery Date
shall vest in Owner  solely by virtue of its  attachment  to the  Airframe or an
Engine  and it shall  then be  subject  to the Lease  and,  if  applicable,  the
Financing Documents,  as if it were attached to the Aircraft at Delivery.  If so
requested  by Lessor,  Lessee will provide a properly  executed  bill of sale or
similar  instrument to evidence the vesting of good and marketable  title,  free
and clear of Liens (except Lessor Liens), to any such equipment in Owner.  After
Lessee has permanently replaced an Engine in accordance with Section 8.11(b) and
this  Section  8.13,  Lessor will,  or will procure that Owner will  transfer to
Lessee,  all of Lessor's or  Owner's,  as the case may be,  rights to the engine
that has been replaced, on an AS IS, WHERE IS basis without recourse or warranty
(except as to the  absence of  Lessor's  Liens),  and will at  Lessee's  expense
provide or will procure that Owner provides a bill of sale or similar instrument
as Lessee may  reasonably  request  to  evidence  such  transfer.  Lessee  shall
indemnify,  on an After-Tax Basis,  Lessor,  Owner and each other Tax Indemnitee
for all fees and expenses incurred by Lessor,  Owner or any other Tax Indemnitee
in connection with any such transfer.

8.14     Inflight Equipment

Notwithstanding any other provision of this Agreement,  Lessor acknowledges that
Lessee may at any time  during the Term  install a  telephone  system  and/or an
inflight  entertainment  system for passenger use  (collectively,  the "Inflight
Equipment") on the Aircraft  notwithstanding that the Inflight Equipment may not
be owned by Lessee provided that:

(a)  Lessee  shall  give  Lessor  notice  of the  installation  of any  Inflight
     Equipment  on the  Aircraft  and the name and  address of the owner of such
     Inflight Equipment (including Lessee as owner, if applicable);

(b)  the  documents  pursuant  to  which  the  owner of the  Inflight  Equipment
     installs same on the Aircraft  shall provide that such owner shall not have
     any lien,  security interest,  claim or other encumbrance on or against the
     Aircraft, and such owner's only right with respect to the Aircraft shall be
     to remove the Inflight  Equipment  from the Aircraft  and,  such  documents
     shall also provide that such owner shall remove the Inflight Equipment from
     the Aircraft not later than the earlier of (A) * (*) days after notice from
     Lessor of the occurrence of an Event of Default, and (B) the Expiry Date;

(c)  such  right of  removal  is  subject  to and  conditional  upon such  owner
     restoring,  or  causing  Lessee to  restore,  all  alterations  made to the
     Aircraft in connection with the  installation of the Inflight  Equipment to
     the condition  prior to the  installation  thereof  (ordinary wear and tear
     excepted).

Lessor acknowledges that at all times:

(i)  the owner of the Inflight  Equipment has and will retain sole and exclusive
     right and title to and in the Inflight Equipment;

(ii) the  Inflight  Equipment  shall  not  constitute  a  Part  or a part of the
     Aircraft;

(iii)title  to  the  Inflight  Equipment  shall  not  transfer to or from Lessor
     pursuant to Clauses 8.12 and 8.13; and

(iv) the Inflight Equipment shall not become subject to the Security Interest of
     any  person to whom  Lessor  grants a  Security  Interest  in the  Aircraft
     pursuant to Clause 14.1.

9.       INSURANCE

9.1      Insurances

Lessee  will  maintain  the  Insurances  in full  force  during  the  Term,  and
thereafter as expressly  required in the Lease, which Insurance shall be through
such brokers and with such insurers of recognised  standing and  reputation  and
shall be subject to such exclusions  consistent with the customary  standard for
similar  operators,  operating similar equipment in similar  circumstances.  The
Insurances  shall in any event meet the requirements set forth in Schedule 7. If
the Insurances do not meet the  requirements set forth in Schedule 7, Lessor may
require that the  Insurances be amended if the scope and level of cover does not
protect the interests of Lessor and each  Indemnitee to at least the same extent
as they were at the commencement of the Term.

9.2      Insurance Undertakings and Information:  Lessee will:

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

(i)  invalidates or may invalidate the Insurances; or

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

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

(b)  not take out without the prior written  approval of Lessor any insurance or
     reinsurance  in respect of the  Aircraft  other than that which is required
     under  the  Lease  unless  relating  solely to hull  total  loss,  business
     interruption,  profit  commission and deductible risk and which does not in
     any  event  adversely  affect  the  Insurances  required  to be  maintained
     hereunder;

(c)  commence renewal procedures  at least * days  prior to expiry of any of th
     Insurances and provide to Lessor:

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

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

(iii)certificates   of  insurance  (and  where   appropriate   certificates   of
     reinsurance),  and  broker's  (and  any  reinsurance  broker's)  letter  of
     undertaking  in a form  reasonably  acceptable  to  Lessor,  detailing  the
     coverage and confirming the insurers'  (and any  reinsurers')  agreement to
     the specified insurance requirements of the Lease on or before each renewal
     date;

(d)  on  request,  provide  to  Lessor  copies  ofdocuments or other information
     evidencing the Insurances; and

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

9.3      Failure to Insure

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

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

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

9.4      Continuing Indemnity

Lessee shall effect and maintain insurance after the Expiry Date with respect to
its liability under Section 10 (Indemnity) for * years, and such insurance shall
name each Indemnitee as an additional insured.

10.      INDEMNITY

(a)  Except as provided  in  Section   10(b)  below,  Lessee  agrees  to  assume
     liability for and to indemnify each of the Indemnitees against  and  agrees
     to pay on demand any and all Losses  which an  Indemnitee  may at any  time
     suffer  or incur at any time,  whether directly or indirectly,  arising out
     of, related to or in any way connected with:

(i)  the  ownership,   maintenance,   overhaul,   service,   repair,   delivery,
     possession,   transfer  of  ownership  or   possession,   import,   export,
     registration,   control,   storage,   modification,   leasing,   insurance,
     inspection, testing, design, date processing,  sub-leasing, use, condition,
     redelivery  or other matters  relating to the  Aircraft,  any Engine or any
     Part (regardless of whether in the air or on the ground,  and regardless of
     whether  such  Losses  are based on strict  liability  in tort,  any act or
     omission, including the negligence, of any Indemnitee, or otherwise); or

(ii) any breach by the Lessee of any of its obligations under the Lease; or

(iii)the design,  testing or use of or any article or material in, the Aircraft,
     any  Engine or any Part or its use or  operation,  including  any defect in
     design and regardless of whether it is  discoverable,  and any infringement
     of patent, copyright,  trademark, design or other proprietary right claimed
     by any Person or a breach of any obligation of  confidentiality  claimed to
     be owed to any Person.

     For the  avoidance of doubt,  the  reference to  "ownership"  in clause (i)
     shall not require  Lessee to indemnify  Lessor in respect of (y) any defect
     in Lessor's or Owner's title to the Aircraft or (z) any decline in residual
     value  of the  Aircraft  if  Lessee  shall  have  fully  complied  with its
     obligations  under the Lease.  (b) Lessee is not required to indemnify  any
     particular Indemnitee under this Section, to the extent a particular Loss:

(i)  is caused by the willful  misconduct of that Indemnitee or gross negligence
     of that Indemnitee,  other than gross negligence imputed to that Indemnitee
     by reason of its interest in the Aircraft or the Lease;

(ii) is  caused  by  Lessor's  breach  of the Lease which does not result from a
     Default;

(iii)is related to any Taxes (but without  prejudice to any Indemnitee's  rights
     under any other provision of this Lease relating to Taxes);

(iv) arises from a claim made, or is based on any event occurring, prior to  the
     commencement of the Term;

(v)  arises from a claim made,  and is based on any event  occurring,  after the
     redelivery of the Aircraft to Lessor in compliance with the Lease;

(vi) caused as a result of any sale,  assignment,  transfer or other disposition
     (whether  voluntary or  involuntary)  by such Indemnitee of the Aircraft or
     Engine  or any  interest  therein,  unless  such  sale,  transfer  or other
     disposition has resulted from or occurred following an Event of Default; or

(vii)consists of normal  administrative  costs and  expenses of such  Indemnitee
     (but excluding any such costs or expenses  resulting from the occurrence of
     any Default); or

(viii)consists of costs or expenses  for which Lessor has expressly agreed to be
     responsible  under any other provision of the Lease; or

(ix) related to a Lessor Lien.

(c)  Notwithstanding  anything to the contrary in this Section 10 and subject in
     all cases to such Losses not being subject to coverage under the Insurances
     or any contest  being  commenced  in violation of the exercise of rights of
     any insurer pursuant to the Insurances,

(i)  if requested by Lessee for any Losses,  each Indemnitee  shall contest (or,
     if Lessee desires and such Indemnitee  consents (which consent shall not be
     unreasonably  withheld or delayed),  allow Lessee to contest in the name of
     such Indemnitee) the payment for which it seeks indemnification hereunder;

(ii) if Lessee  desires  to  contest  the  payment  of any  amount  for which an
     Indemnitee seeks indemnification  hereunder and such Indemnitee is required
     to make a payment of any such amount as a condition precedent to contesting
     payment of such amount,  Lessee shall advance to such Indemnitee the amount
     of such payment on an interest-free basis;

(iii)in the event of a contest Lessee shall indemnify each  Indemnitee  promptly
     for all reasonable  out-of-pocket  expenses  incurred by each Indemnitee in
     connection  with any  participation  by such  Indemnitee  in such  contest,
     including  without  limitation,   all  reasonable  legal,   accounting  and
     investigatory fees and disbursements;

(iv) in the event any contest is  conducted  by an  Indemnitee  (rather  than by
     Lessee in the name of such  Indemnitee)  such Indemnitee  shall consider in
     good faith any views with  respect  to such  contest  offered by Lessee and
     shall keep Lessee  reasonably  informed as to the  progress of such contest
     and  Lessee  shall  have no  liability  hereunder  for any  portion of such
     dispute settled by such Indemnitee without the prior consent of Lessee;

(v)  Lessee shall not be entitled to undertake, or to request than an Indemnitee
     undertake,  any contest  without first  providing to such Indemnitee (1) an
     opinion  (obtained  at  Lessee's  expense)  of  legal  counsel  (reasonably
     acceptable to such Indemnitee) to the effect that a reasonable basis exists
     to contest  and (2)  evidence  satisfactory  to such  Indemnitee  that such
     Losses are not covered by the Insurances required pursuant to Section 9 and
     Schedule 7 herein;

(vi) Lessee  shall  not have any  right to  contest  such  Losses if an Event of
     Default has  occurred  and is  outstanding,  including  without  limitation
     failure  to  comply  with  any  operational  conditions  set  forth  in the
     Insurances pursuant to Section 9 or Schedule 7 herein;

(vii)Lessee  shall not be entitled to contest,  or to require an  Indemnitee  to
     contest,  any  Losses  if such  Indemnitee  agrees in  writing  not to seek
     indemnification  from  Lessee  for (or not to  require  Lessee  to pay) the
     Losses that would be the subject of such contest; and

(viii) Lessee  shall not be  entitled to contest,  or require an  Indemnitee  to
     contest,  any Losses in a proceeding  which involves any possibility of the
     sale,  forfeiture or loss of the Aircraft or any interest therein, the loss
     of any coverage  under any  Insurances  or the  imposition  of any criminal
     penalties or sanctions against any Indemnitee.

11.      EVENTS OF LOSS

11.1     Events of Loss

(a)  If an Event of Loss occurs prior to Delivery of an Aircraft, the Lease will
     immediately terminate with respect to such Aircraft and except as expressly
     stated in the Lease  neither  party will have any further  obligation  with
     respect to such Aircraft  other than pursuant to Section 5.20 and Section 3
     of  Schedule  4,  except  that  Lessor  will return the Deposit (if any) to
     Lessee and return to Lessee or cancel any Letter of Credit.

(b)  If an Event of Loss occurs after Delivery, Lessee will pay the Agreed Value
     to Lessor on or prior to the  earlier  of (i) * (*) days after the Event of
     Loss and (ii) the date of receipt of insurance  proceeds in respect of that
     Event of Loss.

(c)  Subject to the rights of any insurers and  reinsurers or other third party,
     upon  irrevocable  payment  in full to Lessor of the  Agreed  Value and all
     other amounts which may be or become payable to Lessor under the Lease, and
     if Lessee  requests such transfer,  Lessor will, or will procure that Owner
     will  transfer to Lessee all of  Lessor's  or Owner's,  as the case may be,
     rights to the Aircraft,  on an AS IS, WHERE IS basis,  without  recourse or
     warranty  (except as to the absence of Lessor's Liens) and will at Lessee's
     expense,  execute  and  deliver or will  procure  that Owner  executes  and
     delivers such bills of sale and other  documents and  instruments as Lessee
     may reasonably request to evidence (on the public record or otherwise) such
     transfer,  free and  clear of all  rights of  Lessor  and Owner and  Lessor
     Liens.  Lessee shall indemnify,  on an After-Tax Basis,  Lessor,  Owner and
     each other Tax  Indemnitee  for all fees and  expenses  incurred by Lessor,
     Owner or any other Tax Indemnitee in connection with any such transfer.

11.2     Requisition

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

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

(b)  so long as no (i) Default relating to payment  hereunder or under any Other
     Agreement or (ii) Event of Default has occurred and is  continuing,  Lessee
     will be entitled to any compensation paid by the  requisitioning  authority
     in respect of such  authority's  use of the  Aircraft,  such Engine or such
     Part during the Term.  Lessee will, as soon as practicable after the end of
     any such  requisition,  cause  the  Aircraft  to be put into the  condition
     required by the Lease. Lessor will be entitled to all compensation  payable
     by the requisitioning  authority in respect of any change in the structure,
     state  or  condition  of  the  Aircraft   arising   during  the  period  of
     requisition,  and Lessor will apply such compensation in reimbursing Lessee
     for the cost of complying with its  obligations  under the Lease in respect
     of any such change,  but, if (y) any Default relating to payment  hereunder
     or under any Other Agreement or (z) an Event of Default has occurred and is
     continuing,  Lessor may apply the compensation in or towards  settlement of
     any  amounts  owing by  Lessee  under  the  Lease  and/or  under  any Other
     Agreement.

12.      RETURN OF AIRCRAFT

12.1     Return

On the Expiry Date, Lessee will, unless an Event of Loss has occurred, redeliver
the  Aircraft  and the  Aircraft  Documents  and Records at Lessee's  expense to
Lessor at the  Redelivery  Location,  in accordance  with the  procedures and in
compliance  with the  conditions  set forth in Schedule 6, free and clear of all
Security  Interests (other than Lessor Liens) and in a condition  qualifying for
and having a valid and fully effective  certification of airworthiness under FAR
Part 121.

12.2     Non-Compliance

If at the time of Final Inspection Lessee has not fully complied with any of its
obligations under the Lease (including  Schedule 6), or Lessee fails to make the
Aircraft  available to Lessor on a timely basis for  inspection  and  redelivery
pursuant to Section 12.1 and Schedule 6 (whether  such failure is due to any act
or omission of Lessee or any other circumstance  whatsoever),  the Term shall be
extended until the time when the Aircraft has been redelivered to Lessor in full
compliance with the Lease, for the sole purpose of enabling such  non-compliance
or failure to be promptly rectified, and during such extension period:

(a)  Lessee shall not use the Aircraft in flight operations except those related
     directly to the redelivery of the Aircraft to Lessor;

(b)  all  Lessee's  obligations  and  covenants  under the Lease  will remain in
     full force until Lessee so redelivers the Aircraft; and

(c)  Lessee  shall pay Rent to Lessor at a rate per month equal to the amount of
     Rent  payable in respect of the last  scheduled  Rental  Period  during the
     first * (*)  days of  such  extension  period  and at a rate  equal  to the
     monthly Rent plus * percent (*) during the next * (*) days next  succeeding
     such first * (*) days of such  extension  period and at a rate equal to the
     monthly Rent plus * (*) thereafter, calculated on a per diem basis.

     Any such  extension  shall  not  prejudice  Lessor's  right  to treat  such
     non-compliance  or  failure  as an Event of  Default  at any  time,  and to
     enforce  such rights and  remedies as may be available to Lessor in respect
     thereof under the terms of the Lease or applicable  Law.  Without  limiting
     the generality of the foregoing,  Lessee's Rent obligation  under paragraph
     (c) above shall be without  prejudice to Lessor's  rights to terminate  the
     letting of the Aircraft and to indemnification pursuant to Section 13.3.

     Lessor may agree  (either on first  tender of the  Aircraft by Lessee or at
     any time  during the said  extension  period) to accept  redelivery  of the
     Aircraft notwithstanding non-compliance with Section 12.1 or Schedule 6, in
     which case Lessee will indemnify  Lessor on an After-Tax Basis, and provide
     cash to Lessor (in an amount  satisfactory  to Lessor) as security for that
     indemnity,  in respect of the cost to Lessor of putting the  Aircraft  into
     the condition required by the Lease.

12.3     Redelivery

Upon  redelivery  Lessee will provide to Lessor,  upon Lessor's  written  notice
received  within a reasonable  period in advance of the Expiry Date, (i) a valid
and subsisting export  certificate of airworthiness for the Aircraft;  (ii) such
other documents,  which are unrelated to the export certificate of airworthiness
or the  condition of the  Aircraft,  necessary  to export the Aircraft  from the
United  States  which  documents  cannot be  obtained  by  Lessor  and (iii) are
required  in  relation  to the  deregistration  of the  Aircraft  with  the  Air
Authority  if the  Aircraft is subject to a Permitted  Sub-Lease  outside of the
United States.

12.4     Acknowledgement

Provided Lessee has complied with its obligations  under Section 12 and Schedule
6 of the Lease,  following redelivery of the Aircraft by Lessee to Lessor at the
Redelivery   Location,   Lessor  will  deliver  to  Lessee  an  acknowledgement,
substantially  in the form  attached as Schedule 14  confirming  that Lessee has
redelivered the Aircraft to Lessor in accordance with the Lease.

12.5     Storage

If Lessor  so  requests,  Lessee  shall  provide  up to * days  storage  for the
Aircraft following the last day of the Term at the Lessor's risk and expense.

12.6     Civil Reserve Air Fleet:

Lessor  consents and agrees to the  allocation  of the Aircraft by Lessee to the
Civil  Reserve Air Fleet  ("CRAF") in terms of the laws and  regulations  of the
government of the Untied States and its agencies.  Lessor  understands  that the
United  States  government  has the right to activate the CRAF fleet in times of
air lift  emergency  and in such  event the Lessee may not be able to return the
Aircraft  at the  termination  of the  Lease.  Accordingly,  the  Term  shall be
extended  through the period that CRAF remains  activated  and all the terms and
conditions  of the Lease shall  continue to apply during this  extended  period.
Lessee shall give Lessor notice in advance if the Aircraft is to be allocated to
CRAF.

In the event that CRAF  activation  occurs with respect to the Aircraft then (i)
Lessor will accept  indemnification  by the United States  government in lieu of
the Insurances,  provided that such  indemnification  is at least  substantially
equivalent to the  Insurances,  as and to the extent provided in Schedule 7; and
(ii) Lessor shall  inform such United  States  government  official or agency as
shall be advised  by Lessee to Lessor  prior to CRAF  activation  if an Event of
Default shall occur.

13.      DEFAULT

13.1     Events

The  occurrence of any of the events or conditions  set forth in Schedule 9 will
constitute  an Event of Default by Lessee  (whether the  occurrence  of any such
Event of Default is  voluntary or  involuntary  or occurs by operation of Law or
pursuant to or in compliance with any judgement, decree or order of any court or
any order, rule or regulation of any Government Entity).

13.2     Rights and Remedies

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

(a)  by notice to Lessee and with  immediate  effect  cancel the  leasing of the
     Aircraft (but without  prejudice to the  continuing  obligations  of Lessee
     under the  Lease),  whereupon  all rights of Lessee  under the Lease  shall
     cease; and/or

(b)  proceed by  appropriate  court action or actions to enforce  performance of
     the Lease  including the payment of all Rent and all other amounts  payable
     to Lessor or any Indemnitee pursuant to the terms of the Lease; and/or

(c)  proceed by appropriate court action or actions to recover  damages  for the
     breach of the Lease which shall include:

(i)  all Rent and other  amounts  which are or become due and payable  hereunder
     prior to the earlier to occur of the date  Lessor  sells or  re-leases  the
     Aircraft or receives  payment of the amount  calculated  pursuant to clause
     (ii) below;

(ii) an  amount  equaling  the  aggregate  Rent  for the  remainder  of the Term
     (determined  without reference to any right of Lessor to cancel the leasing
     of the  Aircraft,  whether  or not  such  right is  exercised),  discounted
     periodically  (equal to  installment  frequency)  to  present  worth at the
     Discount Rate to the date of payment by Lessee to Lessor,  less the amount,
     if any, of the Mitigation  Credit  (calculated as provided below in Section
     13.4);

(iii)all costs and other incidental  damages  associated with Lessor's  exercise
     of its remedies hereunder or otherwise incurred by Lessor as a result of an
     Event of  Default,  including  repossession  costs,  legal  fees,  Aircraft
     storage,  maintenance and insurance costs,  Aircraft re-lease or sale costs
     (including, in the case of a re-lease, any costs incurred to transition the
     Aircraft to the next operator's  maintenance program) and Lessor's internal
     costs and expenses  (including the cost of personnel time calculated  based
     upon the compensation  paid to the individuals  involved on an annual basis
     and a general Lessor  overhead  allocation),  all such costs and incidental
     damages  being  referred  to  herein   collectively  as  "Enforcement   and
     Remarketing Costs";

(iv) any loss,  premium,  penalty or expense  which may be  incurred in repaying
     funds  raised  to  finance  the  Aircraft  or in  unwinding  any  financial
     instrument  relating  in  whole  or in part to  Lessor's  financing  of the
     Aircraft, all such amounts being referred to herein collectively as "Unwind
     Expenses";

(v)  any loss,  cost,  expense or liability  sustained by Lessor due to Lessee's
     failure to  maintain  the  Aircraft  in  accordance  with the terms of this
     Agreement or Lessee's  failure to redeliver  the Aircraft in the  condition
     required by this Agreement, including any consequential loss of revenues or
     profits, (collectively, the "Aircraft Condition Damages"; and

(vi) such additional  amount, if any, as may be necessary to place Lessor in the
     same economic position, on an After-Tax Basis, as Lessor would have been in
     if  Lessee  had  timely  performed  each  of  its  obligations  under  this
     Agreement; and/or

(d)      either:

(i)  enter upon the  premises  where all or any part of the  Aircraft is located
     and take immediate  possession of and, at Lessor's sole option,  remove the
     same  (and/or any engine  which is not an Engine but which is  installed on
     the  Airframe,  subject  to the  rights  of the  lessor  or  secured  party
     thereof), all without liability accruing to Lessor for or by reason of such
     entry or taking of  possession  whether  for the  restoration  of damage to
     property,  conversion or otherwise,  caused by such entry or taking, except
     damages caused by gross negligence or willful misconduct; or

(ii) by delivering notice to Lessee, require Lessee to redeliver the Aircraft to
     Lessor at Denver (or such other location as Lessor may require) on the date
     specified in such notice and in all respects in the  condition  required by
     the Lease upon the Return  Occasion (it being  understood that Lessee shall
     not delay any such return for the  purpose of placing the  Aircraft in such
     condition,  but shall  nevertheless  be liable to Lessor for the failure of
     the Aircraft to be in such condition); and/or

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

(f)  by written  notice to Lessee  specifying  a payment  date (which shall be a
     date  not  earlier  than * (*)  Business  Days  following  the date of such
     notice),  Lessor may demand that Lessee pay to Lessor, and Lessee shall pay
     to Lessor on the payment date specified in such notice (in lieu of the Rent
     due for the period  commencing after the date specified for payment in such
     notice) the sum of the following amounts:

(i)  all Rent and other  amounts  which are or are  expected to become  due  and
     payable  hereunder  prior to the  payment date specified by Lessor;

(ii) an  amount  equaling  the  aggregate  Rent  for the  remainder  of the Term
     (determined  without reference to any right of Lessor to cancel the leasing
     of the  Aircraft,  whether  or not  such  right is  exercised),  discounted
     periodically  (equal to  installment  frequency)  to  present  worth at the
     Discount Rate to the payment date  specified by Lessee to Lessor,  less the
     amount, if any, of the Mitigation Credit (calculated as provided in Section
     13.4 below);

(iii)an amount  equaling  Lessor's  actual  Enforcement  and Remarketing  Costs,
     Unwind Expenses and Aircraft Condition Damages;

(iv) such additional  amount, if any, as may be necessary to place Lessor in the
     same economic position, on an After-Tax Basis, as Lessor would have been in
     if  Lessee  had  timely  performed  each  of  its  obligations  under  this
     Agreement; and

(g)  draw upon the Deposit or the Letter of Credit and apply such amounts to any
     amounts owing to Lessor  hereunder and/or make demand against any Guarantor
     for any or all of the foregoing.

     In addition to the  foregoing,  Lessor  shall be entitled to exercise  such
     other  rights and  remedies as may be available  under  applicable  Law and
     Lessee shall be liable on an  After-Tax  Basis for, and shall pay Lessor on
     demand:  (i) interest on all unpaid amounts at the Interest Rate,  from the
     due date until the date of payment in full; (ii) all reasonable  legal fees
     and other reasonable costs and expenses incurred by Lessor by reason of the
     occurrence  of any Event of Default or the  exercise of  Lessor's  remedies
     with respect  thereto;  and (iii) all reasonable  expenses,  disbursements,
     costs and fees incurred in (A) repossessing, storing, preserving, shipping,
     maintaining,  repairing and  refurbishing the Aircraft,  the Airframe,  any
     Engine or Part to the  condition  required  by  Section  12 hereof  and (B)
     preparing the Aircraft,  the Airframe, an Engine or Part for sale or lease,
     advertising the sale or lease of the Aircraft,  the Airframe,  an Engine or
     Part and selling or releasing  the  Aircraft,  the  Airframe,  an Engine or
     Part.  Lessor is  hereby  authorized  and  instructed,  but  shall  have no
     obligation,  to make any expenditures which Lessor, in its sole discretion,
     considers  advisable to repair and restore the Aircraft,  the Airframe,  an
     Engine or Part to the  condition  required  by  Section 12 hereof (it being
     understood that Lessee shall be liable for all such expenditures).

     Lessee hereby agrees that, in the event of the return to or repossession by
     Lessor of the Aircraft,  the Airframe, an Engine or Part, any rights in any
     warranty  (express or implied)  previously  assigned to Lessee or otherwise
     held by Lessee shall without  further act, notice or writing be assigned or
     reassigned to Lessor, if assignable.

     No remedy referred to in this Section 13 is intended to be exclusive,  but,
     to the extent  permissible  under the Lease or under  applicable  Law, each
     shall be cumulative  and in addition to any other remedy  referred to above
     or otherwise  available to Lessor at Law or in equity;  and the exercise or
     beginning of exercise by Lessor of any one or more of such  remedies  shall
     not preclude the  simultaneous or later exercise by Lessor of any or all of
     such other  remedies;  provided,  however,  that nothing in this Section 13
     shall be construed to permit  Lessor to obtain a duplicate  recovery of any
     element  of  damages  to which  Lessor is  entitled.  No express or implied
     waiver by Lessor of any Default or Event of Default shall in any way be, or
     be construed to be, a waiver of any future or  subsequent  Default or Event
     of Default.

13.3 Power of Attorney: Lessee hereby appoints Lessor as the attorney-in-fact of
     Lessee,  with full  authority  in the place and stead of Lessee  and in the
     name of Lessee or otherwise, for the purpose of carrying out the provisions
     of the Lease and taking any action and executing any instrument that Lessor
     may  deem  necessary  or  advisable  to  accomplish  the  purposes  hereof;
     provided,  however, that Lessor may only take action or execute instruments
     under  this  Section  13  after an Event of  Default  has  occurred  and is
     continuing.  Lessee hereby  declares that the foregoing  powers are granted
     for valuable  consideration,  constitute powers granted as security for the
     performance of the obligations of Lessee  hereunder and are coupled with an
     interest and shall be irrevocable.  Without  limiting the generality of the
     foregoing  or any  other  rights  of  Lessor  under  the  Lease,  upon  the
     occurrence and during the continuation of an Event of Default, Lessor shall
     have the sole and  exclusive  right  and power to (i)  settle,  compromise,
     compound, adjust or defend any actions, suits or proceedings relating to or
     pertaining to the Aircraft,  Airframe or any Engine,  or the Lease and (ii)
     make proof of loss,  appear in and  prosecute  any action  arising from any
     policy or  policies of  insurance  maintained  pursuant  to the Lease,  and
     settle,  adjust or compromise  any claims for loss,  damage or  destruction
     under, or take any other action in respect of, any such policy or policies.

13.4 Mitigation  Credit:  Lessee shall be entitled to have a  Mitigation  Credit
     deducted  from any recovery by Lessor from Lessee of Rent for the unexpired
     portion  of the  Term.  Such  "Mitigation  Credit"  shall  be in one of the
     following amounts, with Lessor to select the amount which in its reasonable
     judgement will place Lessor in the same economic position,  on an After-Tax
     Basis, as Lessor would have been in if Lessee had timely  performed each of
     its obligations under the Lease:

(a)  in the event  that  Lessor has re-let the  Aircraft  on terms  (other  than
     rental payment terms) which, taken as a whole, Lessor reasonably regards as
     being  substantially  similar to the terms of the Lease, an amount equaling
     the aggregate basic rental payments to become due for the period coinciding
     with the remainder of the Term (determined  without  reference to any right
     of Lessor to cancel the leasing of the Aircraft,  whether or not such right
     is exercised),  discounted periodically (equal to installment frequency) to
     present worth at the Discount Rate to the date of payment by Lessee; or

(b)  in the event that  Lessor has not  re-let  the  Aircraft  or has re-let the
     Aircraft on terms  (other  than rental  payment  terms)  which,  taken as a
     whole, Lessor does not reasonably regard as being substantially  similar to
     the terms of the Lease,  an amount  equaling  the fair market  rental value
     (determined  pursuant to the  Appraisal  Procedure) of the Aircraft for the
     period commencing with the date that Lessor reasonably anticipates that the
     Aircraft  could be re-let at such rental rate and ending with the date that
     the Term was scheduled to expire (determined without reference to any right
     of Lessor to cancel the leasing of the Aircraft,  whether or not such right
     is exercised),  discounted periodically (equal to installment frequency) to
     present worth at the Discount Rate to the date of payment by Lessee.

13.5     Sale or Re-Lease

If an Event of Default  occurs,  Lessor may sell or re-lease or  otherwise  deal
with the  Aircraft  at such time and in such  manner and on such terms as Lessor
considers appropriate in its absolute discretion, free and clear of any interest
of Lessee,  as if the Lease had never been  entered  into.  Lessor shall have no
duty or  obligation  to sell the  Aircraft,  and Lessor  shall be  obligated  to
attempt to re-lease the Aircraft only to the extent, if any, that it is required
to do so under Article 2A of the UCC, and Lessee  hereby  disclaims any right to
compel Lessor to sell or otherwise re-lease the Aircraft.

13.6     Removal of Lease from FAA Registry

If an Event of Default occurs,  Lessee will at the request of Lessor immediately
take all steps  necessary to enable the Aircraft to be  redelivered to Lessor in
accordance  with and free and clear of the Lease and Lessee  hereby  irrevocably
and by way of  security  for its  obligations  under the Lease  appoints  (which
appointment  is coupled  with an  interest)  Lessor as its  attorney-in-fact  to
execute and deliver any  documentation and to do any act or thing not prohibited
by  Law  required  in  connection  with  the  foregoing.  Without  limiting  the
foregoing, Lessor may file with the FAA the Lease Termination provided to Lessor
under the Lease.

14.      TRANSFER

14.1     Lessee

LESSEE  WILL  NOT  ASSIGN,   DELEGATE  OR   OTHERWISE   TRANSFER   (VOLUNTARILY,
INVOLUNTARILY,  BY OPERATION OF LAW OR OTHERWISE),  EXCEPT TO A SUCCESSOR ENTITY
AS PERMITTED BY THIS AGREEMENT IN SECTION  8.7(a)(vii) HEREOF, ANY OF ITS RIGHTS
OR OBLIGATIONS  UNDER THE LEASE  (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR THIS
CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY  INTEREST  (OTHER THAN PERMITTED
LIENS) OVER ANY OF ITS RIGHTS  UNDER THE LEASE  (INCLUDING  THE  AIRCRAFT  LEASE
AGREEMENT OR THIS CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID.

14.2     Lessor

Lessee  acknowledges  and agrees  that  Lessor  will,  if  applicable  under the
Financing  Documents,  assign  as  security  Lessor's  interest  in the Lease as
described in the Acknowledgement and Agreement referred to in Schedule 3.

In addition  insofar as Lessee is concerned,  Lessor may, without the consent of
Lessee, further transfer all or any of its rights or obligations under the Lease
or all or any of its right,  title or  interest in and to the  Aircraft  (each a
"Transfer"), including pursuant to:

(a)  a sale and leaseback; or

(b)  a  novation  or  assignment  of the  Lease  and/or  a sale of the  Aircraft
     (including to a special purpose or  securitization  or monetization  trust,
     fund, limited liability company, corporation,  partnership or other vehicle
     or in connection with any other direct or indirect raising of capital); or

(c)  a secured loan financing.

     Lessor  will  promptly  notify  Lessee of any  transfer  and Lessee  agrees
     promptly  to execute  and  deliver in  connection  with any  transfer  such
     documents and assurances  (including an acknowledgement of the transfer and
     a certificate as to the absence of any Default under the Lease) and to take
     such  further  action as Lessor  may  reasonably  request to  establish  or
     protect the rights and remedies  created or intended to be created in favor
     of the transferee in connection with any transfer.  After any transfer, the
     transferee  shall be entitled to be an Indemnitee  and to such other rights
     under the Lease as Lessor shall  specify.  Upon an  assignment  or novation
     described in clause (b),  Lessor shall be released from all obligations and
     liabilities  under the Lease to the extent such obligations and liabilities
     are assumed by such  transferee,  and the Lease,  including  this CTA as in
     effect at that time and as  incorporated  in the Aircraft Lease  Agreement,
     shall be deemed  applicable  as between  Lessee and the  transferee  of the
     Lease and may be amended,  supplemented or otherwise  modified  without the
     consent  of the  transferor  (if  this  CTA  is  applicable  to  the  Other
     Agreements not so transferred, it shall remain in full force and effect and
     may be amended,  supplemented or otherwise  modified without the consent of
     the transferee).  Notwithstanding any such assignment or novation,  Lessor,
     Owner,  Financing  Parties'  Representative and each other Indemnitee shall
     continue  to be  entitled to  indemnification  under  Section 10, and shall
     continue to be named as an additional insured under all Insurances referred
     to in  Section  9 for a  period  of not  less  than two  years  after  such
     transfer. The agreements,  covenants, obligations and liabilities contained
     in the Lease,  including all  obligations  to pay Rent and  indemnify  each
     Indemnitee, are made for the benefit of Lessor (and, in the case of Section
     10,  each other  Indemnitee)  and its or their  respective  successors  and
     assigns,  notwithstanding  the  possibility  that any such  Person  was not
     originally  a party to the Lease or may,  at the time such  enforcement  is
     sought, not be a party to the Lease.

14.3     Conditions

In connection with any such transfer by Lessor:

(a)  Quiet  Enjoyment:  as a  condition  precedent  to  such  transfer  becoming
     effective,  Lessor will procure that the transferee or any new owner of the
     Aircraft  (except  where such new owner is also the "Lessor"  hereunder) or
     any new holder of a Security  Interest in the  Aircraft or any holder of an
     interest in the Aircraft or the Lease (by way of security or otherwise), as
     the case may be,  shall  execute  and  deliver  to Lessee a letter of quiet
     enjoyment  in respect of Lessee's use and  possession  of the Aircraft in a
     form substantially similar to Section 7.1 hereof;

(b)  Costs:  Lessor  shall  reimburse  to Lessee  its  reasonable  out-of-pocket
     expenses  (including  reasonable legal fees and expenses) actually incurred
     in  connection  with  co-operating  with  Lessor  in  relation  to any such
     transfer  referred to in this Section 14,  provided  that such expenses are
     substantiated to Lessor's reasonable satisfaction;

(c)  Net Worth of Transferee.  Without  Lessee's prior written  consent,  Lessor
     shall not effect such  assignment,  transfer,  sale,  encumbrance  or other
     disposition to any proposed  transferee having a net worth of less than the
     greater of (i) * US Dollars ($*) and (ii) * US Dollars ($*)  multiplied  by
     the number of Aircraft so  transferred in one or more  transactions  to the
     proposed  transferee.  The foregoing  requirement as to net worth shall not
     apply if the  obligations  of the  relevant  transferee  to the  Lessee are
     guaranteed  by an entity  which  meets the  requirements  set forth in this
     Clause 14.3; and

(d)  Permitted  Transferee.  Any  Transfer  shall  be  made  by Lessor only to a
     Permitted Transferee.

15.      MISCELLANEOUS

15.1     Survival

Section 3 of Schedule 4, Sections 5.6, 5.7, 5.9, 5.20, 9.5, 10, 12, and 13.3 and
any other  provision of the Lease  providing  for an  obligation  on the part of
either party to indemnify the other party or any other  Indemnitee shall survive
the  expiration or any  termination  of the Lease and continue in full force and
effect.

15.2     Waivers, Remedies Cumulative

The rights of Lessor under the Lease may be exercised as often as necessary, are
cumulative and not exclusive of its rights under any Law; and may be waived only
in writing and specifically.  Delay by Lessor in exercising, or non-exercise of,
any such right will not constitute a waiver of that right.

15.3     Delegation

Lessor  may  delegate  to  any  Person  all or any  of  the  rights,  powers  or
discretions  vested in it by the Lease, and any such delegation may be made upon
such terms and conditions and subject to such  regulations  (including  power to
sub-delegate) as Lessor in its absolute discretion thinks fit.
15.4     Severability

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

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

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

15.5     Remedy

If Lessee fails to comply with any provision of the Lease,  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 such  non-compliance  as a 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 fees and expenses) in connection with the non-compliance.

15.6     Time of Essence

The time  stipulated  in the Lease for all  payments  payable  by Lessee and the
prompt,  punctual  performance of Lessee's other obligations under the Lease are
of the essence of the Lease.

15.7     Notices

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

(i)  If by letter, on the earlier of the date when delivered and the seventh day
     after dispatch; and

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

     The addresses and facsimile and telephone  numbers of Lessee and Lessor are
     as set forth in the Aircraft Lease Agreement.

15.8     Governing Law; Jurisdiction; WAIVER OF JURY TRIAL

(a)  PURSUANT TO AND IN ACCORDANCE  WITH SECTION  5-1401 OF THE NEW YORK GENERAL
     OBLIGATIONS  LAW,  THE PARTIES  HERETO AGREE THAT THE LEASE IN ALL RESPECTS
     SHALL BE GOVERNED BY, AND  CONSTRUED IN  ACCORDANCE  WITH,  THE LAWS OF THE
     STATE OF NEW YORK,  UNITED STATES,  AS APPLIED TO CONTRACTS TO BE PERFORMED
     WHOLLY WITHIN THE STATE OF NEW YORK  (EXCLUSIVE OF SECTION 7-101 OF THE NEW
     YORK  GENERAL  OBLIGATIONS  LAW WHICH IS  INAPPLICABLE  TO THE LEASE).  THE
     PARTIES AGREE THAT THE LEASE WAS EXECUTED AND DELIVERED IN THE STATE OF NEW
     YORK.

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

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

(i)  (1) Lessee  appoints  Corporation  Service  Company,  80 State Street,  6th
     Floor,  Albany,  New York  12207-2543  as its agent for  service of process
     relating to any  proceedings  before the New York courts in connection with
     the Lease and agrees to maintain the process  agent in New York notified to
     Lessor and (2) Lessor appoints General Electric  Capital  Corporation,  260
     Long Ridge Road,  Stamford,  Connecticut  06927 as its agent for service of
     process  relating  to  any  proceedings  before  the  New  York  courts  in
     connection  with the Lease and agrees to maintain the process  agent in New
     York notified to Lessee

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

(iii)Lessee and Lessor each  consents to the service of process  relating to any
     such  proceedings by prepaid  mailing of a copy of the process to the other
     party's  agent at the address  identified  in  paragraph  (i) or by prepaid
     mailing by air mail,  certified or registered mail of a copy of the process
     to the other party at the address set forth in Section 15.7.

(d)  Each of Lessee and Lessor:

(i)  waives to the fullest  extent  permitted by Law any objection  which either
     may now or  hereafter  have to the courts  referred  to in Section  15.8(b)
     above on grounds of inconvenient forum or otherwise as regards  proceedings
     in connection with the Lease;

(ii) waives to the fullest  extent  permitted by Law any objection  which either
     may now or  hereafter  have to the  laying of venue of any suit,  action or
     proceeding  arising out of or  relating to the Lease  brought in the courts
     referred to in Section 15.8(b); and

(iii)agrees  that a  judgement  or order of any  court  referred  to in  Section
     15.8(b) in connection  with the Lease is  conclusive  and binding on it and
     may be enforced against it in the courts of any other jurisdiction.

(e)  Nothing  in  this  Section  15.8  limits  the  right  of  Lessor  to  bring
     proceedings against Lessee in connection with the Lease:

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

(ii) concurrently in more than one jurisdiction.

(f)  Lessee irrevocably and unconditionally:

(i)  agrees that if Lessor brings legal proceedings  against it or its assets in
     relation  to the Lease no  sovereign  or other  immunity  from  such  legal
     proceedings  (which  will be deemed to include  suit,  court  jurisdiction,
     attachment  prior  to  judgement,  attachment  in  aid  of  execution  of a
     judgement,  other  attachment,  the obtaining of judgement,  execution of a
     judgement or other  enforcement or legal process or remedy) will be claimed
     by or on behalf of itself or with respect to its assets;

(ii) waives any such right of immunity  which it or its assets now has or may in
     the future  acquire and agrees  that the  foregoing  waiver  shall have the
     fullest extent permitted under the Foreign Sovereign Immunities Act of 1976
     of the United States and is intended to be irrevocable  for the purposes of
     such Act; and

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

(g)  EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
     AND ALL  RIGHTS TO A JURY  TRIAL IN RESPECT OF ANY CLAIM OR CAUSE OF ACTION
     BASED  UPON OR  ARISING  OUT OF THE  LEASE  OR ANY  DEALINGS  BETWEEN  THEM
     RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS  CONTEMPLATED THEREBY OR
     THE  LESSOR/LESSEE  RELATIONSHIP  BEING  ESTABLISHED,   including,  without
     limitation,  contract claims, tort claims,  breach of duty claims and other
     common law and statutory  claims.  Each of Lessor and Lessee represents and
     warrants  that each has  reviewed  and  voluntarily  waives  its jury trial
     rights  following  consultation  with its  legal  counsel.  THIS  WAIVER IS
     IRREVOCABLE,  AND THIS  WAIVER  SHALL APPLY TO ANY  SUBSEQUENT  AMENDMENTS,
     RENEWALS,  SUPPLEMENTS  OR  MODIFICATIONS  TO THE  LEASE.  In the  event of
     litigation,  this  Section may be filed as a written  consent to a trial by
     the court.

15.9     Sole and Entire Agreement; True Lease; Section 1110

(a)  Entire Agreement: The Lease 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.  Any  amendments to the
     Lease shall be made in writing and signed on behalf of Lessor and Lessee.

(b)  True Lease: The parties intend and agree that the Lease:

(i)  constitutes  a  "true lease",  and  not a "security interest" as defined in
     Section 1-201(37) of the UCC;

(ii) constitutes  a  "true lease" for United States Federal income tax purposes;
     and

(iii)confers  only a leasehold  interest on Lessee in and to the Aircraft on and
     subject to the terms of the Lease,  and no ownership or other interest with
     respect to the Aircraft is provided to Lessee under the Lease.

Lessee shall not file a tax return that is  inconsistent  with the provisions of
this Section 15.9(b).

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

15.10    Indemnitees

All rights expressed to be granted to each Indemnitee  (other than Lessor) under
the Lease are given to Lessor on behalf of that Indemnitee,  and each Indemnitee
is an express third party beneficiary thereof.

15.11    Counterparts

The Lease  (including the Aircraft Lease Agreement and this CTA) may be executed
in two or more counterparts,  each of which shall be deemed an original, but all
of which together shall constitute one and the same  instrument.  To the extent,
if any, that the Lease constitutes chattel paper (as such term is defined in the
Uniform  Commercial  Code  as in  effect  in any  applicable  jurisdiction),  no
security interest in the Lease may be created through the transfer or possession
of  any  counterpart  other  than  the  original  counterpart,  which  shall  be
identified as the counterpart designated as the "original" on the signature page
of the Aircraft Lease Agreement by Financing Parties'  Representative,  Owner or
Lessor, as the case may be.

15.12    Language

All  notices  to be given  under the Lease  will be in  English.  All  documents
delivered  to  Lessor  pursuant  to the Lease  (including  any  documents  to be
delivered pursuant to the Conditions Precedent) will be in English.

16.      DISCLAIMERS AND WAIVERS

LESSOR AND LESSEE  AGREE THAT THE  DISCLAIMERS,  WAIVERS AND  CONFIRMATIONS  SET
FORTH IN CLAUSES  16.1 TO 16.4 BELOW SHALL  APPLY AT ALL TIMES  DURING THE TERM.
LESSEE'S  ACCEPTANCE  OF THE  AIRCRAFT IN  ACCORDANCE  WITH SECTION 4.3 SHALL BE
CONCLUSIVE  EVIDENCE THAT LESSEE HAS FULLY INSPECTED THE AIRCRAFT AND EVERY PART
THEREOF AND THAT THE AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS
AND  RECORDS ARE  TECHNICALLY  ACCEPTABLE  TO LESSEE AND  SATISFY  THE  DELIVERY
CONDITION  REQUIREMENTS  AND  ARE IN  SUITABLE  CONDITION  FOR  DELIVERY  TO AND
ACCEPTANCE BY LESSEE.

16.1     Exclusion

THE  AIRCRAFT  IS LEASED AND  DELIVERED  UNDER THE LEASE "AS IS,  WHERE IS," AND
LESSEE AGREES AND ACKNOWLEDGES THAT:

(a)  LESSOR WILL HAVE NO  LIABILITY  IN RELATION TO, AND LESSOR HAS NOT AND WILL
     NOT BE DEEMED TO HAVE ACCEPTED,  MADE OR GIVEN (WHETHER BY VIRTUE OF HAVING
     DONE OR FAILED TO DO ANY ACT,  OR HAVING  ACQUIRED OR FAILED TO ACQUIRE ANY
     STATUS  UNDER OR IN RELATION TO THE LEASE OR  OTHERWISE),  ANY  GUARANTEES,
     COVENANTS, WARRANTIES OR REPRESENTATIONS,  EXPRESS OR IMPLIED, WITH RESPECT
     TO, THE AIRCRAFT OR ANY ENGINE OR PART OR ANY  SERVICES  PROVIDED BY LESSOR
     UNDER THE LEASE, INCLUDING (BUT NOT LIMITED TO) THE TITLE (EXCEPT AS AND TO
     THE  EXTENT  EXPRESSLY  PROVIDED  IN  SECTIONS  2.2 AND 7.1),  DESCRIPTION,
     AIRWORTHINESS, COMPLIANCE WITH SPECIFICATIONS,  OPERATION, MERCHANTABILITY,
     QUALITY, FREEDOM FROM INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK OR OTHER
     PROPRIETARY  RIGHTS,  FITNESS FOR ANY  PARTICULAR  USE OR  PURPOSE,  VALUE,
     DURABILITY, DATE PROCESSING,  CONDITION, OR DESIGN, OR AS TO THE QUALITY OF
     THE  MATERIAL  OR  WORKMANSHIP,  THE  ABSENCE  OF LATENT OR OTHER  DEFECTS,
     WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER MATTER WHATSOEVER,  EXPRESS
     OR  IMPLIED  (INCLUDING  ANY  IMPLIED  WARRANTY  ARISING  FROM A COURSE  OF
     PERFORMANCE OR DEALING OR USAGE OF TRADE) WITH RESPECT TO THE AIRCRAFT, ANY
     ENGINE OR ANY PART OR ANY SERVICES PROVIDED BY LESSOR UNDER THE LEASE; AND

(b)  LESSOR  SHALL NOT HAVE ANY  OBLIGATION  OR LIABILITY  WHATSOEVER  TO LESSEE
     (WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER ARISING  BY  REFERENCE
     TO  NEGLIGENCE,  MISREPRESENTATION  OR  STRICT  LIABILITY  OF   LESSOR   OR
     OTHERWISE) FOR:

(i)  ANY  LIABILITY,  LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED  DIRECTLY OR
     INDIRECTLY  BY THE AIRCRAFT OR ANY ENGINE OR BY ANY  INADEQUACY  THEREOF OR
     DEFICIENCY  OR DEFECT  THEREIN OR BY ANY OTHER  CIRCUMSTANCE  IN CONNECTION
     THEREWITH  (EXCEPT AS AND TO THE EXTENT EXPRESSLY  PROVIDED IN SECTIONS 2.2
     and 7.1 HEREOF);

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

(iii)ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR ANY
     OTHER DIRECT, INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGE; OR

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

16.2     Waiver

LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS IN RESPECT OF
ANY CONDITION,  WARRANTY OR REPRESENTATION,  EXPRESS OR IMPLIED,  ON THE PART OF
LESSOR AND ALL CLAIMS AGAINST LESSOR  HOWSOEVER AND WHENEVER ARISING AT ANY TIME
IN RESPECT OF OR OUT OF ANY OF THE MATTERS REFERRED TO IN SECTION 16.1.

16.3     Disclaimer of Consequential Damages

LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND
WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER, LOST PROFITS OR REVENUES
OR CONSEQUENTIAL  DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR OTHERWISE)
AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY OF THE  AGREEMENTS,
REPRESENTATIONS OR WARRANTIES OF THE OTHER PARTY CONTAINED IN THE LEASE.

16.4     Confirmation

LESSEE  CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS SECTION 16 AND
ACKNOWLEDGES  THAT  RENT AND OTHER  AMOUNTS  PAYABLE  UNDER THE LEASE  HAVE BEEN
CALCULATED BASED ON ITS PROVISIONS.

17.      BROKERS AND OTHER THIRD PARTIES

17.1     No Brokers

Each of the parties hereby  represents and warrants to the other that it has not
paid, agreed to pay or caused to be paid directly or indirectly in any form, any
commission,  percentage,  contingent fee, brokerage or other similar payments of
any kind, in connection with the establishment or operation of the Lease, to any
Person (other than fees payable to legal advisers or portfolio services).

17.2     Indemnity

Each party agrees to indemnify and hold the other  harmless from and against any
and all claims, suits, damages, costs and expenses (including,  reasonable legal
fees and  expenses)  asserted by any agent,  broker or other third party for any
commission or compensation of any nature  whatsoever based upon the Lease or the
Aircraft,  if such claim, suit, damage, cost or expense arises out of any breach
by the indemnifying party, its employees or agents of Section 17.1.

<PAGE>

IN WITNESS  WHEREOF the parties hereto have executed the Common Terms  Agreement
on the date shown at the beginning of the document.

GENERAL ELECTRIC CAPITAL CORPORATION

By:      ___________________________
Name:    ___________________________
Title:   ___________________________

FRONTIER AIRLINES INC.
By:      ___________________________
Name:    ___________________________
Title:   ___________________________

<PAGE>

                                   SCHEDULE 1

                                   Definitions

The  following  words and  expressions  have the  respective  meanings set forth
below:

AD Threshold has the meaning given in Schedule B, Part VI of the Aircraft  Lease
Agreement.

Act means the Federal  Aviation Act of 1958,  as amended,  and as  recodified in
Title 49 U.S.C.  pursuant to Public Law 103-272,  or any similar  legislation of
the United States enacted in substitution or replacement thereof.

Affiliate means as to any Person, any other Person that, directly or indirectly,
is in control  of, is  controlled  by, or is under  common  control  with,  such
Person. For purposes of this definition,  "control" of a Person means the power,
directly or indirectly,  either to (a) vote more than * of the securities having
ordinary  voting  power for the  election of  directors  (or persons  performing
similar  functions)  of such Person or (b) direct or cause the  direction of the
management and policies of such Person, whether by contract or otherwise.

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

Agreed Value has the meaning given in the Aircraft Lease Agreement.

Air Authority means the FAA.

Aircraft has the meaning given in the Aircraft Lease Agreement.

Aircraft Lease  Agreement  means the specific  aircraft lease  agreement for the
lease of any Aircraft  entered or to be entered into between the parties  hereto
or Affiliates thereof and incorporating therein by reference the CTA.

Aircraft Documents and Records means the documents,  data and records identified
in the list attached to the Certificate of Technical  Acceptance,  and any other
documents and records  required in connection  with Lessee's  obligations  under
Section 8.8, and all additions,  renewals,  revisions and replacements from time
to time made to any of the foregoing in accordance with the Lease.

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

Airframe  Flight Hour means each hour or part thereof  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.

Airframe Structural Check has the meaning given in the Aircraft Lease Agreement.

Airframe  Supplemental  Rent has the meaning  given in Schedule B, Part V of the
Aircraft Lease Agreement.

Airworthiness  Directive means an airworthiness directive issued by the State of
Design or the State of Registry.

Annual  Supplemental Rent Adjustment has the meaning given in Schedule B, Part V
of the Aircraft Lease Agreement.

Appraisal  Procedure  means the following  procedure for  determining  the "fair
market rental  value" of the Aircraft  pursuant to Sections 13.2 and 13.4 of the
CTA:  (a) Lessor shall select BK  Associates,  Avitas or Airclaims  (other their
successors  or assigns) who shall make a  determination  of "fair market  rental
value" of the Aircraft;  and (b) the fees and expenses of the appraiser shall be
paid by Lessee. "Fair market rental value" shall mean the value determined by an
appraisal completed on an "as-is" and "where-is" basis.

APU means the  auxiliary  power unit  installed  on the Aircraft on the Delivery
Date and any  replacement  auxiliary  power unit  installed  on the Aircraft and
title to which is transferred to Owner in accordance with the Lease.

APU  Supplemental  Rent has the  meaning  given  in  Schedule  B,  Part V of the
Aircraft Lease Agreement.

Assumed Ratio has the meaning given in the Aircraft Lease Agreement.

Assumed Utilization has the meaning given in the Aircraft Lease Agreement.

Business  Day means any day other than a Saturday,  Sunday or other day on which
banking  institutions in New York, New York are authorized or required by Law to
be closed.

"C" Check means a "C" check in accordance with the Lessee's  Maintenance Program
and the  Manufacturer's  Maintenance  Planning  Document  each in  effect on the
relevant date.

Certificate of Technical  Acceptance means a certificate of technical acceptance
in the form of Part 1 or Part 2, as applicable, of Schedule 5.

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

Conditions Precedent means the conditions specified in Schedule 3.

Cycle means one take-off and landing of the Aircraft.

Damage  Notification  Threshold  has the  meaning  given in the  Aircraft  Lease
Agreement.

Deductible Amount has the meaning given in the Aircraft Lease Agreement.

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

Defect  means  any  defect  or  non-conformity   with  the  Delivery   Condition
Requirements notified by Lessee to Lessor during the Pre-Delivery Procedure.

Delivery means the delivery of the Aircraft by Lessor to Lessee under the Lease.

Delivery  Condition  Requirements  has the meaning  given in the Aircraft  Lease
Agreement.

Delivery  Date means  with  respect to any  Aircraft,  the date on which  Lessee
executes  and delivers the Lease  Supplement  with respect to such  Aircraft and
Delivery occurs.

Delivery Location has the meaning given in the Aircraft Lease Agreement.

Deposit has the meaning given in the Aircraft Lease Agreement.

Discount Rate has the meaning given in the Aircraft Lease Agreement.

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

Engine means, whether or not installed on the Aircraft:

(a)  each engine of the  manufacture  and model  specified in the Aircraft Lease
     Agreement for the Aircraft  which Lessor offers to Lessee for delivery with
     the  Airframe on the Delivery  Date,  such  engines  being  described as to
     serial numbers on the Certificate of Technical Acceptance; and

(b) any  Replacement  Engine, with  effect from the time when title  thereto has
     passed to Owner in accordance with the Lease;

and in each case  includes all modules and Parts from time to time  belonging to
or installed in that engine but excludes any properly  replaced  engine title to
which should have passed to Lessee pursuant to the Lease.

Engine Cycle means  operation of an engine on an aircraft  from and  including a
take-off to and including the landing of that aircraft.

Engine  Event of Loss means the  occurrence,  with  respect to the Engine  only,
whether or not  installed on the Airframe,  of any of those events  described in
the definition of Event of Loss.

Engine  Flight  Hour  means  each hour or part  thereof  an Engine is  operated,
elapsing  from the  moment  the wheels of an  aircraft  on which such  Engine is
installed  leave the  ground  until the wheels of such  aircraft  next touch the
ground.

Engine LLP Replacement has the meaning given in Section 7.2(a)(ii);

Engine LLP Supplemental  Rent has the meaning given in Schedule B, Part V of the
Aircraft Lease Agreement.

Engine  Refurbishment  means all scheduled and  unscheduled  off the wing Engine
maintenance  and repair  accomplished  for each  module in  accordance  with the
performance   restoration  or  full  overhaul  sections  of  the  Manufacturer's
workscope planning guide.

Engine Supplemental Rent has the meaning given in the Aircraft Lease Agreement.

Equipment Change has the meaning given in Section 8.12.

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

Event of Default  means any event or  condition  referred to in Section 13.1 and
further specified in Schedule 9.

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

(a)  the actual or constructive,  compromised,  arranged or agreed total loss of
     the  Aircraft  (including  any damage to the Aircraft  which  results in an
     insurance settlement on the basis of a total loss); or

(b)  the Aircraft being destroyed, damaged beyond economic repair or permanently
     rendered unfit for normal use [by Lessee] for any reason whatsoever; or

(c)  the Aircraft being condemned,  confiscated or  requisitioned  for title, or
     title  to  the  Aircraft  being  otherwise  compulsorily  acquired  by  the
     government of the State of Registry or any other Government Entity; or

(d)  the  Aircraft  being  hijacked,  stolen,  confiscated,   detained,  seized,
     condemned or  requisitioned  for use or hire for the lesser of (i) a period
     of more than * days (or * days in the case of  requisition  for use or hire
     by the  government  of the State of  Registry) or (ii) a period equal to or
     exceeding the remaining balance of the Term; or

(e)  as a result of any rule,  regulation,  order or other action by the FAA the
     use of the Aircraft by Lessee or any  Permitted  Sub Lessee shall have been
     prohibited for a period of * (*) consecutive months.

Expiry  Date means the  Scheduled  Expiry  Date or, if earlier (i) the date when
Lessor acting in accordance  with the  provisions of the Lease,  terminates  the
leasing  of the  Aircraft  to Lessee  under the  Lease,  or (ii)  subject to the
provisions  of Section 11.1 and 11.2,  the date when Lessor  receives the Agreed
Value  together  with any other  amounts then due and unpaid under the Lease and
the Other Agreements following an Event of Loss;  provided,  that if the Term is
extended pursuant to Section 12.2, the Expiry Date shall be extended to the date
when the Aircraft has been  redelivered  to Lessor in full  compliance  with the
Lease;

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

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

Final Delivery Date has the meaning given in the Aircraft Lease Agreement.

Final Inspection has the meaning given in Section 1.1 of Schedule 6.

Financial Indebtedness means any indebtedness in respect of:

(a)  moneys borrowed or raised;

(b)  any liability  under any debenture,  bond,  note,  loan stock,  acceptance,
     documentary credit or other security;

(c)  the acquisition cost of any asset to the extent payable before or after the
     time of acquisition or possession; or

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

Financial Information means:

(a)  as soon as available  but not in any event later than * days after the last
     day of each fiscal quarter of Lessee, the consolidated financial statements
     of Lessee  (consisting  of a balance sheet and statements of operations and
     of retained  earnings and cash flows) prepared for the most recent previous
     fiscal  quarter  certified  by a qualified  financial  officer of Lessee as
     being true and correct; and

(b)  as soon as available  but not in any event later than * days after the last
     day of each  fiscal  year of Lessee,  the  audited  consolidated  financial
     statements  of Lessee  (consisting  of a balance  sheet and  statements  of
     operations  and of retained  earnings  and cash  flows),  prepared  for the
     fiscal year then most recently ended certified by the independent  auditors
     of Lessee without qualification.

Financing  Parties (if  applicable)  has the meaning given in the Aircraft Lease
Agreement.

Financing  Parties'  Representative (if applicable) has the meaning given in the
Aircraft Lease Agreement.

Financing  Statements  means Uniform  Commercial  Code  Financing  Statements in
respect of the Lease and the Aircraft and Engines leased thereunder  prepared in
a form  acceptable  for filing with the  applicable  Government  Entities in the
state in which  Lessee's chief  executive  office is located (as the term "chief
executive  office" is defined in Article 9 of the Uniform  Commercial Code as in
effect in such state) and such other  jurisdictions  as Lessor shall  reasonably
require.

Flight Hour means each hour or part thereof  elapsing from the moment the wheels
of the  Aircraft  leave the ground on take off until the wheels of the  Aircraft
next touch the ground.

GAAP means generally accepted accounting principles in the United States.

GE Capital means General Electric Capital Corporation.

GE Capital Guaranty means the guaranty  substantially in the form of Schedule 15
to be delivered by GE Capital to Lessee.

GECAS  means  either or both of GE Capital  Aviation  Services,  Limited  and GE
Capital Aviation Services, Inc.

Government Entity means:

(a)  national government,  political  subdivision thereof, or local jurisdiction
     therein;

(b)  any  instrumentality,  board,  commission,  court,  or agency of any of the
     above, however constituted; and

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

Guarantee  means a  guarantee  in a form to be  agreed  by  Lessor  and  Lessee,
including any guarantee of Lessee's maintenance obligations under the applicable
Lease; and references to the Guarantee include  references to any replacement or
re-issued guarantee.

Guarantor (if applicable) has the meaning given in the Aircraft Lease Agreement.

Habitual Base means the United  States and the state  thereof in which  Lessee's
primary aircraft operations center is located.

Indemnitee has the meaning given in the Aircraft Lease Agreement.

Interest Rate has the meaning given in Schedule B, Part II of the Aircraft Lease
Agreement.

Insurances  means  insurances  in respect of the Aircraft in form and  substance
satisfactory  to Lessor,  and includes  (without  limitation) any insurances and
reinsurances required by Section 9 and Schedule 7.

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

Landing  Gear  Supplemental  Rent has the meaning  given in the  Aircraft  Lease
Agreement.

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

LC Amount has the meaning given in the Aircraft Lease Agreement.

Lease means the  Aircraft  Lease  Agreement  for the Aircraft (of which this CTA
forms a part),  any  schedules or documents  executed  pursuant to the Schedules
hereto or pursuant to the Aircraft Lease Agreement,  any Lease Supplement to the
Lease  (including  Lease  Supplement No. 1), and any side letters related to the
Lease.

Lease Supplement means any Lease Supplement  executed and delivered with respect
to the Lease.

Lease  Supplement No. 1 means a Lease Supplement No. 1 substantially in the form
of Schedule 12.

Lessee  means  the  Person  named as  Lessee in the  applicable  Aircraft  Lease
Agreement.

Lessee  Affiliate  means any Subsidiary or other Affiliate for the time being of
Lessee.

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

Lessor  means  the  Person  named as  Lessor in the  applicable  Aircraft  Lease
Agreement.

Lessor Lien means any Security Interest  whatsoever from time to time created by
Lessor or Owner in connection with the financing of the Aircraft,  including the
Financing  Documents,  and any other  Security  Interest in the  Aircraft  which
results  from acts of or claims  against  Lessor  or Owner  not  related  to the
transactions contemplated by or permitted under the Lease.

Lessor/Owner  Tax  Jurisdiction  has the  meaning  given in the  Aircraft  Lease
Agreement.

Letter of Credit  means any  letter of credit  issued in  relation  to the Lease
pursuant  to Section  5.13 and any  replacement  or  renewal  of that  letter of
credit.

Losses means any and all cost,  expense  (including any and all reasonable legal
fees and  expenses and the fees and  expenses of other  professional  advisers),
claims, proceedings, losses, liabilities,  obligations, damages (whether direct,
indirect,  special,  incidental  or  consequential),  suits,  judgements,  fees,
penalties or fines (whether criminal or civil) of any kind or nature whatsoever,
including  any  of  the  foregoing  arising  or  imposed  with  or  without  any
Indemnitee's  fault or  negligence,  whether  passive  or  active  or under  the
doctrine of strict liability.

Maintenance  Adjustment  means all the  amounts  payable by Lessee  pursuant  to
Clause 5.4 of this Agreement and Section 3 of each Aircraft Lease Agreement.

Maintenance  Contributions  means, as and if applicable,  all amounts payable by
Lessor pursuant to Section 7.2.

Maintenance  Performer  means  Lessee  and such  other  Person or Persons as are
approved  by the  Air  Authority  to  perform  maintenance  and/or  modification
services on commercial aircraft and/or commercial aircraft engines, which Person
shall be agreed by Lessor and Lessee to have recognized  standing and experience
and  facilities  and  equipment  suitable to perform  such  services on aircraft
and/or  engines of the same or improved model as the Aircraft or, in the case of
engines, the Engines.

Maintenance Program means an Air Authority approved  maintenance program for the
Aircraft  in  accordance  with  the   Manufacturer's   specifications,   service
bulletins,   planning   documents,   maintenance   manuals  and   documents  and
encompassing    scheduled    maintenance    (including    block    maintenance),
condition-monitored  maintenance,  and/or on-condition  maintenance of Airframe,
Engines  and  Parts,  including  servicing,   testing,  preventive  maintenance,
repairs,   structural   inspections,    system   checks,   overhauls,   approved
modifications,  service bulletins, engineering orders, airworthiness directives,
corrosion control, inspections and treatments.

Major Checks means any C-check,  multiple  C-check or heavier  check  (including
structural  inspections and CPCP) suggested for commercial  aircraft of the same
model as the Aircraft by its  manufacturer  (however  denominated) as set out in
the Lessee's Maintenance Program.

Manufacturer has the meaning given in the Aircraft Lease Agreement.

Manufacturer's  Maintenance Planning Document means the recommended  maintenance
program for the Aircraft issued by the  Manufacturer as in effect at the time of
any applicable determination.

Minimum APU Limit has the meaning  given in Schedule B, Part VI of the  Aircraft
Lease Agreement.

Minimum Component  Calendar Life has the meaning given in Schedule B, Part VI of
the Aircraft Lease Agreement.

Minimum  Component  Cycles has the  meaning  give in  Schedule B, Part VI of the
Aircraft Lease Agreement.

Minimum  Component  Flight Hour has the meaning  given in Schedule B, Part VI of
the Aircraft Lease Agreement.

Minimum "D" Check Redelivery  Status has the meaning given in the Aircraft Lease
Agreement.

Minimum  Engine  Cycles  has the  meaning  given in  Schedule  B, Part VI of the
Aircraft Lease Agreement.

Minimum  Engine Flight Hours has the meaning given in Schedule B, Part VI of the
Aircraft Lease Agreement.

Minimum Hard Time Component  Cycles has the meaning given in Schedule B, Part VI
of the Aircraft Lease Agreement.

Minimum Hard Time  Component  Flight Hours has the meaning  given in Schedule B,
Part VI of the Aircraft Lease Agreement.

Minimum  Landing Gear Calendar Time has the meaning given in Schedule B, Part VI
of the Aircraft Lease Agreement.

Minimum  Landing Gear Cycles has the meaning given in Schedule B, Part VI of the
Aircraft Lease Agreement.

Minimum  Landing Gear Flight Hours has the meaning  given in Schedule B, Part VI
of the Aircraft Lease Agreement.

Minimum  Liability  Coverage  has  the  meaning  given  in  the  Aircraft  Lease
Agreement.

Minimum Measurable Fuel Requirement has the meaning given in Schedule B, Part VI
of the Aircraft Lease Agreement.

Mitigation Credit has the meaning given in Section 13.4.

Nameplate  Inscription means the inscription to be included on the Nameplates as
requested by Lessor from time to time.

Nameplates  means  the  fireproof  plates to be  installed  on the  Aircraft  in
accordance with Section 8.6(a).

Other Agreements means any aircraft lease agreement or other material  agreement
from time to time entered into between Lessor (or any  Subsidiary,  Associate or
Affiliate of Lessor), on the one hand, and Lessee (or any Subsidiary,  associate
or Affiliate of Lessee), on the other hand.

Owner has the meaning given in the Aircraft Lease Agreement.

Part means, whether or not installed on the Aircraft:

(a)  any component,  part, furnishing or equipment (other than a complete Engine
     or engine)  incorporated  or installed in or attached to or furnished  with
     the Aircraft  (including  any Engine) on the Delivery Date or thereafter if
     paid for or  otherwise  provided  by or on  behalf  of Lessor or so long as
     title to such  Parts  shall  remain  vested in Lessor  in  accordance  with
     Section 8 hereof after removal from the Airframe or any Engine; and

(b)  any other component,  part,  furnishing or equipment (other than a complete
     Engine  or engine  and a  temporary  replacement  part as  provided  for in
     Section  8.11(d)),  with effect from the time when title thereto has passed
     to Lessor pursuant to the Lease;

but excludes any such items title to which should have passed to Lessee pursuant
to the Lease.

Part 36 or FAR Part 36 means Part 36 of the FAR,  as amended  or  modified  from
time to time.

Part 121 or FAR Part 121 means Part 121 of the FAR, as amended or modified  from
time to time.

Permitted Lien means:

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

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

(c)  any Lessor Lien; and

(d)  the rights of others  under any  sub-lease  or  arrangements  to the extent
     expressly permitted under Section 8.4.

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

Permitted  Sub-Lease  means  any  sub-lease  of  the  Aircraft  to  a  Permitted
Sub-Lessee as provided for in Section 8.4(a) to which Lessor has consented.

Permitted  Sub-Lessee  means any  sub-lessee of the Aircraft to which Lessor has
consented as provided in Section 8.4(a).

Permitted Transferee means any Person who

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

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

(c)  enters into a binding agreement  pursuant to which it agrees to be bound by
     the terms of the Lease and  agrees to  perform  all of the  obligations  of
     Lessor thereunder.

Person  means  any  individual   person,  any  form  of  corporate  or  business
association,  trust,  Government Entity, or organization or association of which
any of the above is a member or a participant.

Pre-Approved Bank has the meaning given in the Aircraft Lease Agreement.

Pre-Delivery  Procedure means the procedure  leading to Delivery as specified in
Schedule 4.

Pre-Delivery  Termination  Value has the meaning given in Schedule B, Part II of
the Aircraft Lease Agreement.

Redelivery Location has the meaning given in the Aircraft Lease Agreement.

Regulations  means  any Law or  regulation  (including  any  internal  corporate
regulation),  official  directive or  recommendation,  mandatory  requirement or
contractual undertaking, or airworthiness requirements or limitations.

Rent has the meaning given in the Aircraft Lease Agreement.

Rent Commencement Date has the meaning given in the Aircraft Lease Agreement.

Rental Period means each period ascertained in accordance with Section 5.2.

Rent Date means the first day of each Rental Period.

Replacement  Engine  means an  "Engine"  that has duly  replaced  an "Engine" in
accordance with the requirements of Section 8.11(b).

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

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

Scheduled Delivery Date has the meaning given in the Aircraft Lease Agreement.

Scheduled Delivery Month has the meaning given in the Aircraft Lease Agreement.

Scheduled Delivery Week has the meaning given in the Aircraft Lease Agreement.

Scheduled Expiry Date has the meaning given in the Aircraft Lease Agreement.

Security  Interest  means any mortgage,  chattel  mortgage,  security  interest,
charge,  pledge,  lien,  conditional sale agreement,  title retention agreement,
equipment trust  agreement,  encumbrance,  assignment,  hypothecation,  right of
detention,  right of set-off or any other  agreement or  arrangement  having the
effect of conferring security.

State of Design means the state having  jurisdiction over the Person responsible
for the type design of the Aircraft or any Engine or Part.

State of Incorporation  means the United States and the state of organization of
Lessee as identified in the heading of the Aircraft Lease Agreement.

State of Registry has the meaning given in the Aircraft Lease Agreement.

Subsidiary  means in relation to any  reference to accounts,  any company  whose
accounts  are  consolidated  with the  accounts  of  Lessee in  accordance  with
accounting principles generally accepted under accounting standards of the State
of Incorporation or for any other purpose,  an entity from time to time of which
another has direct or indirect  control or owns directly or indirectly more than
* (*) of the voting share capital

Supplemental Rent has the meaning given in the Aircraft Lease Agreement.

Taxes means any and all present and future taxes, duties, withholdings,  levies,
assessments,   imposts,  fees  and  other  governmental  charges  of  all  kinds
(including any value added or similar tax and any stamp,  documentary,  license,
registration  or  similar  fees or tax),  together  with any  penalties,  fines,
surcharges and interest thereon and any additions thereto.

Tax Indemnitee has the meaning given in the Aircraft Lease Agreement.

Technical  Report means a monthly  report of the Flight  Hours,  Cycles,  Engine
Flight Hours and Engine  Cycles  operated by the Airframe and Engines in respect
of each calendar  month in the form set forth in Schedule 13 attached  hereto or
as otherwise agreed between Lessor and Lessee.

Term means the period  commencing  on the Delivery Date and ending on the Expiry
Date.

UCC means the Uniform Commercial Code as in effect in the State of New York.

Unforeseen Event means:

(a)  civil disturbance or act of any Government Entity;

(b)  natural disaster or any other act of God;

(c)  Law of, or any  allocation  or other action by, a Government  Entity or any
     unexpected  shortage  of  labor,  materials  or  facilities  affecting  the
     Aircraft;

(d)  any damage or Defect;

(e)  labor disputes;

(f) breach of contract by any Person (other than  Lessor),  or other failure to
     deliver or redeliver  the Aircraft by any Person  (whether or not a breach)
     with possession or control of the Aircraft (other than by Lessor, if it has
     possession and control of the  Aircraft),  including any failure to deliver
     or delay in delivery by any prior lessee and any breach by any prior lessee
     or failure to cooperate by any prior  lessee under any previous  lease,  or
     any "excusable" or "inexcusable" delay under any previous lease or purchase
     agreement  for the  Aircraft,  or any purchase  agreement  for the Aircraft
     terminating  prior to Delivery  (including due to Lessor or an Affiliate of
     Lessor voluntarily terminating such agreement);

(g)  delays in  obtaining  the  Aircraft or any  equipment  or services  for the
     Aircraft;

(h)  any delay due to Air Authority certifications; or

(i)  any other cause beyond the control of Lessor or not  occasioned by Lessor's
     gross negligence or willful misconduct.

United States means the United States of America.

U.S.C. means the United States Code.

<PAGE>

                                   SCHEDULE 2

                         REPRESENTATIONS AND WARRANTIES

1.       Lessee's Representations and Warranties

Lessee's representations and warranties to Lessor are as follows:

(a)  Status: It is duly organized,  validly existing and in good standing in its
     State of Incorporation.

(b)  Non-Conflict:  Execution,  delivery  and  performance  of the  Lease do not
     contravene or breach any Regulation applicable to Lessee.

(c)  Power and Authority:  It has all corporate and other power and authority to
     execute,  deliver  and  perform  the  Lease,  and the  Lease  has been duly
     authorized, executed and delivered by Lessee.

(d)  Legal  Validity:  The Lease is its  legal,  valid and  binding  obligation,
     enforceable against Lessee in accordance with its terms.

(e)  No Event of Default:  No Event of Default has occurred and is continuing or
     would occur because of Delivery.

(f)  Litigation: It is not involved in any litigation or other dispute which, if
     adversely  determined,  would materially and adversely affect its financial
     condition or its ability to perform its obligations under the Lease.

(g)  Financial  Information:  Its audited  financial  statements  most  recently
     delivered to Lessor:

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

     (ii) present  fairly  the financial  condition and results of operations of
          Lessee as at the date thereof and for the period then ending.

(h)  Full Disclosure:  Neither its audited financial  statements  referred to in
     paragraph  (g) nor  any  other  financial,  operational  or  credit-related
     information  provided  to Lessor by Lessee  for the  purposes  of the Lease
     contains  any untrue  statement  of a  material  fact or omits to state any
     material  fact  necessary  in  order  to make the  statements  therein  not
     misleading.

(i)  Location:  Lessee's  chief  executive  office  (as that term is  defined in
     Article 9 of the UCC) is located at the address set forth in the heading of
     the Aircraft Lease Agreement;  and the records of the Lessee concerning the
     Aircraft are maintained at such chief executive office or at the operations
     center  in  Denver,  Colorado  where  Lessee  normally  maintains  aircraft
     records.

(j)  Certificated Air Carrier:  Lessee is a Certificated Air Carrier and Lessor,
     as lessor of the Aircraft to Lessee, is entitled to the benefits of Section
     1110 of Title 11 of the U.S.C. with respect to the Aircraft.

(k)  Citizen of the United States: Lessee is a "citizen of the United States" as
     defined in Section 40102 of Title 49 of the U.S.C.

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

(m)  Material  Adverse Change:  there has been no material adverse change in the
     financial condition or operations of Lessee and Lessee Affiliates or in the
     ability of Lessee to comply with its obligations  under the Lease since the
     date of the financial  statements  most  recently  provided to Lessor on or
     prior to the Delivery Date.

1.2     Lessor's Representations and Warranties

Lessor's representations and warranties to Lessee are as follows:

(a)  Status: It is duly organized,  validly existing and in good standing in its
     State of Incorporation.

(b)  Non-Conflict:  Execution,  delivery  and  performance  of the  Lease do not
     contravene or breach any Regulation applicable to Lessor.

(c)  Power and Authority:  It has all corporate and other power and authority to
     execute,  deliver  and  perform  the  Lease,  and the  Lease  has been duly
     authorized, executed and delivered by Lessor.

(d)  Legal  Validity:  The Lease is its  legal,  valid and  binding  obligation,
     enforceable against Lessor in accordance with its terms.

(e)  Title: On each Delivery Date,  Lessor will have good and valid title to the
     Aircraft  being  delivered on such date and,  with respect to new Aircraft,
     will be entitled to the benefit of the Manufacturer's  warranties under the
     purchase agreement with respect to such Aircraft.

(f)  Citizen of the United States: Lessor is a "citizen of the United States" as
     defined in Section 40102 of Title 49 of the U.S.C.

<PAGE>

                                   SCHEDULE 3

                              CONDITIONS PRECEDENT

2.      Lessor's Conditions Precedent

The conditions  precedent to Lessor's  obligation to deliver and to commence the
leasing of the  Aircraft  are as  follows.  All  documents  delivered  to Lessor
pursuant to this  Schedule 3 will be in English,  or if not in English,  will be
accompanied by a certified English translation:

2.1     Preliminary Conditions

Lessor will receive from Lessee,  not later than two Business  Days prior to the
Scheduled Delivery Date, each of the following,  reasonably satisfactory in form
and substance to Lessor:

(a)  Opinion(s):  evidence  that an opinion(s) in the form of Schedule 8 will be
     issued on the Delivery Date by legal  counsel(s)  reasonably  acceptable to
     Lessor with respect to the laws of the State of the  Governing  Law and the
     State of Incorporation;

(b)  Approvals:  evidence  of the issue of each  approval,  license  and consent
     which is required in relation to, or in connection  with the performance by
     Lessee of any of its obligations under the Lease;

(c)  Import:  evidence  that  any  required  import  license,  and  all  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;

(d)  Process Agent:  a letter from the process agent  appointed by Lessee in the
     Lease accepting that appointment;

(e)  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,  including  authority to operate the Aircraft  under FAR Part 121
     and a Certificate of Public  Convenience and Necessity issued under Section
     40102 of Title 49 of U.S.C.;

(f)  UCC:  Financing  Statements with respect to the Lease and the Aircraft in a
     form  acceptable to Lessor shall have been executed and delivered by Lessee
     and duly filed in each jurisdiction reasonably requested by Lessor;

(g)  Letter of Credit (if applicable): the form of the Letter of Credit; and

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

2.2     Final Conditions

(a)  Final  Documents:  Lessor shall receive on or before the Delivery Date each
     of the following:

     (i)  Certificate of Technical  Acceptance and Lease  Supplement No. 1: each
          of the Certificate of Technical Acceptance and Lease Supplement No. 1,
          or a Lease  Supplement  substantially  in the form of Lease Supplement
          No. 1 for subsequent Aircraft  deliveries,  dated and fully completed,
          and  executed  by Lessor  and  Lessee,  and,  in the case of the Lease
          Supplement, filed for recording at the FAA;

     (ii) Opinions:  a signed  original of each of the  opinions  referred to in
          Section 1.1(a) of this Schedule, dated the Delivery Date;

     (iii)Payments:  all sums due to Lessor  under  the  Lease on or before  the
          Delivery Date, including the first payment of Rent and, if applicable,
          the balance of the Deposit;

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

     (v)  Financial  Information:  the latest Financial Information of Lessee as
          requested by Lessor;

     (vi) Letter of Credit (if applicable): the Letter of Credit;

     (vii)Lessee's Maintenance Program:  such information and documents relating
          to the Lessee's  Maintenance Program as Lessor may reasonably require,
          and Lessor  having  acknowledged  in writing the Lessee's  Maintenance
          Program;

     (viii)  Filings:   evidence   that  on  the  Delivery   Date  all  filings,
          registrations, recordings and other actions have been or will be taken
          which are necessary or advisable to ensure the validity, effectiveness
          and  enforceability of the Lease and to protect the interests of Owner
          and the Financing Parties in the Aircraft,  any Engine or any Part and
          in the Lease;

     (ix) FAA Opinion:  evidence that there will be issued an opinion of Crowe &
          Dunlevy  or other  counsel  reasonably  acceptable  to Lessor  who are
          recognized  specialists with regard to FAA  registration  matters in a
          form  reasonably  acceptable  to  Lessor  as to  the  due  filing  for
          recordation  of the  Lease  (the  costs  for  which  shall  be paid by
          Lessee);

     (x)  Certificate of Lease  Termination:  a certificate of lease termination
          executed by a duly authorized  officer of Lessee  substantially in the
          form of  Schedule  10  acknowledging  that the  Lease is no  longer in
          effect with respect to the Aircraft  and  Engines,  which  certificate
          Lessor will hold in escrow to be filed at the FAA upon the  expiration
          or other termination of the Lease in accordance with its terms;

     (xi) Acknowledgement  and  Agreement  re  Assignment  (if  applicable):  an
          acknowledgement   of  and  certain  agreements  with  respect  to  the
          assignment  by Lessor of this  Lease to Owner and  Financing  Parties'
          Representative  in the form previously  provided to Lessee or as Owner
          or Financing Parties' Representative may otherwise reasonably request;
          and

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

(b)  Representations/Warranties: the representations and warranties of Lessee in
     Schedule 2 shall be correct,  and would be correct if repeated on Delivery;
     and

(c)  No Default: no Default shall have occurred and be continuing on Delivery or
     might result from the leasing of the Aircraft to Lessee under the Lease.

20.      LESSEE'S CONDITIONS PRECEDENT

The conditions precedent to Lessee's obligations to accept delivery of and lease
the aircraft from Lessor are as follows:

(a)  Lessor  shall tender  delivery of the Aircraft  meeting all of the Delivery
     Condition  Requirements  as  specified  by Part  III of  Schedule  A to the
     aircraft Lease Agreement or otherwise as permitted by a waiver of Lessee or
     mutual agreement between Lessor and Lessee;

(b)  Delivery to Lessee of a Lease Supplement in the form of Schedule 12 hereto,
     dated  and  fully  completed,  and  executed  by  Lessor,  to be filed  for
     recording at the FAA;

(c)  Representations  and  Warranties:  the  representations  and  warranties of
     Lessor in  Schedule 2 shall be correct  and would be correct if repeated on
     Delivery and

(d)  Delivery  to Lessee of the  Manufacturer's  Consent  and the  Participation
     Agreement  pursuant to Section 6 of the Lease,  as  applicable  for any new
     aircraft.  Manufacturer's  Consent means, with respect to any new Aircraft,
     the  Manufacturer's  consent to the  assignment to Lessee of the warranteis
     with  respect  to  such   Aircraft,   in  form  and  substance   reasonably
     satisfactory to Lessee.

(e)  Delivery of the GE Capital Guaranty.

<PAGE>

                                   SCHEDULE 4

                 PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION

                      REQUIREMENTS - PART 1 (NEW AIRCRAFT)

1.      Licenses

(a)  It is the  responsibility  of Lessee to obtain  all  licenses,  permits  or
     approvals  necessary to export or transport  the Aircraft from the Delivery
     Location;  provided,  however  that  Lessor  shall  provide,  or cause  the
     manufacturer   to   provide   Lessee   with  an   Export   Certificate   of
     Airthworthiness from the Delivery Location to the United States.

(b)  Lessor will provide Lessee with any required data and  information  for the
     purposes of obtaining any such licenses, permits or approvals.

2.      Inspection

Except as otherwise provided in the Aircraft Lease Agreement:

(a)  Subject  to any  applicable  purchase  agreement,  Lessee may  inspect  the
     Aircraft at the Delivery  Location  (including such rights as Lessor has to
     be  present  and  inspect,  on an ongoing  basis,  the  manufacture  of the
     Aircraft  and  including  a  demonstration   flight  with  up  to  two  (2)
     representatives  of Lessee on the Aircraft as observers) to ensure that the
     Aircraft fulfils the Delivery Condition Requirements.

(b)  If Lessee's  inspection  of the Aircraft  shows that the Aircraft  does not
     fulfil the Delivery  Condition  Requirements,  Lessor will,  as promptly as
     practicable,  correct  any  defects  and make the  Aircraft  available  for
     re-inspection by Lessee provided that, in Lessor's reasonable opinion,  the
     cost of repair of such defect does not exceed the Pre-Delivery  Termination
     Value.  If the cost of repair of such  defect may  exceed the  Pre-Delivery
     Termination Value with respect to the Delivery of any new Aircraft,  Lessor
     shall not be required to correct such defect.  Lessor will conduct  further
     demonstration  flights as may be  necessary to verify  compliance  with the
     Delivery Condition Requirements.

(c)  If Lessor  notifies  Lessee  that it does not intend to correct the defect,
     either party may terminate the Lease with respect to such Aircraft.

3.      Indemnity

(a)  Lessee is responsible  for and will indemnify each  Indemnitee  against all
     Losses  arising  from death or injury to any  observer  or any  employee of
     Lessee in connection  with the  inspection  of the Aircraft;  provided that
     Lessee shall not be required to indemnify any  Indemnitee for Losses caused
     by the gross negligence or willful misconduct of any such Indemnitee.

(b)  Lessor is  responsible  for and will  indemnify  Lessee  against all Losses
     arising  from death or injury to any  observer or any employee of Lessor in
     connection with the inspection of the Aircraft;  provided that Lessor shall
     not be  required  to  indemnify  Lessee  for  Losses  caused  by the  gross
     negligence or willful misconduct of Lessee.

<PAGE>

                                   SCHEDULE 4

                 PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION

                      REQUIREMENTS - PART 2 (USED AIRCRAFT)

1.       Licenses

(a)  It is the  responsibility  of Lessee to obtain  all  licenses,  permits  or
     approvals  necessary to export or transport  the Aircraft from the Delivery
     Location.

(b)  Lessor will provide Lessee with any required data and  information  for the
     purposes of obtaining any such licenses, permits or approvals.

2.       Inspection

         Except as otherwise provided in the Aircraft Lease Agreement:

(a)  Subject to any  applicable  purchase  agreement or prior lease,  Lessee may
     inspect the Aircraft  (including a demonstration  flight with up to two (2)
     representatives  of Lessee on the Aircraft as observers) to ensure that the
     Aircraft fulfils the Delivery Condition Requirements.

(b)  If Lessee's  inspection  of the Aircraft  shows that the Aircraft  does not
     fulfil the Delivery  Condition  Requirements,  Lessor will,  as promptly as
     practicable,  correct  any  defects  and make the  Aircraft  available  for
     re-inspection by Lessee provided that, in Lessor's reasonable opinion,  the
     cost to correct  such defect does not exceed the  Pre-Delivery  Termination
     Value.  If the cost to correct  such  defect  may  exceed the  Pre-Delivery
     Termination Value with respect to the Delivery of any used Aircraft, Lessor
     shall not be required to correct such defect.  Lessor will conduct  further
     demonstration  flights as may be  necessary to verify  compliance  with the
     Delivery Condition Requirements.

(c)  If Lessor  notifies  Lessee  that it does not intend to correct the defect,
     either party may terminate the Lease.

3.       Indemnity

(a)  Lessee is responsible  for and will indemnify each  Indemnitee  against all
     Losses  arising  from death or injury to any  observer  or any  employee of
     Lessee in connection  with the  inspection  of the Aircraft;  provided that
     Lessee shall not be required to indemnify any  Indemnitee for Losses caused
     by the gross negligence or willful misconduct of any such Indemnitee.

(b)  Lessor is  responsible  for and will  indemnify  Lessee  against all Losses
     arising  from death or injury to any  observer or any employee of Lessor in
     connection with the inspection of the Aircraft;  provided that Lessor shall
     not be  required  to  indemnify  Lessee  for  Losses  caused  by the  gross
     negligence or willful misconduct of Lessee.

<PAGE>

                                   SCHEDULE 5

           CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 1 (NEW AIRCRAFT)

This Certificate of Technical Acceptance is delivered, on the date set out below
by ________  ("Lessee") to ________  ("Lessor")  pursuant to the Aircraft  Lease
Agreement  dated  ________   between  Lessor  and  Lessee  (the  "Lease").   The
capitalized  terms used in this Certificate shall have the meaning given to such
terms in the Lease.

DETAILS OF ACCEPTANCE

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

________ Aircraft, Manufacturer's Serial Number ________;

________ Engines:

Engine Number       Manufacturer's Serial Number

[To be completed at Delivery]

(each of which has 750 or more rated take off  horsepower  or the  equivalent of
such horsepower)

Fuel Status:      Kilos/lbs ________ ; and

Loose  Equipment  Check List: in  accordance  with the list signed by Lessor and
Lessee and attached hereto.

Aircraft Documents and Records: in accordance with the list signed by Lessor and
Lessee and attached hereto.

LOPA drawing attached.

HOURS AND CYCLES DATA (as of Delivery Date)

Airframe:

Time Since New :---------------                      Cycles Since New :---------

Landing Gear (Main and Nose)

Time Since New : [, Center]                          Cycles Since New :---------

Engines

Position:                                            Time Since New: -----------

                                                     Cycles Since New: ---------

Auxiliary Power Unit :

Number of Flight Hours/APU Hours

(as applicable) since New : --------------------

ACCEPTANCE:

Lessee hereby confirms that the Aircraft,  Engines, Parts and Aircraft Documents
and Records  are  technically  acceptable  to it,  satisfy  all of the  Delivery
Condition Requirements and, except as noted on the attached Exceptions Schedule,
are in the condition for delivery and acceptance as required under the Lease.

IN  WITNESS   WHEREOF,   Lessee  and  Lessor  have,  by  their  duly  authorized
representative, executed this Certificate of Technical Acceptance on the date in
paragraph 1 above.

LESSEE: ________________________
By:      _________________________
Title:   _________________________

LESSOR: _______________________
By:      _________________________
Title:   _________________________

<PAGE>

                                                                      ATTACHMENT

                                 EXCEPTIONS LIST

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

LESSOR                                               LESSEE

19. BY:_______________________                       BY:_____________________
20. TITLE:______________________                     TITLE:____________________

<PAGE>

                                   SCHEDULE 5

          CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 2 (USED AIRCRAFT)

This Certificate of Technical Acceptance is delivered, on the date set out below
by ________  ("Lessee") to ________  ("Lessor")  pursuant to the Aircraft  Lease
Agreement  dated  ________   between  Lessor  and  Lessee  (the  "Lease").   The
capitalized  terms used in this Certificate shall have the meaning given to such
terms in the Lease.

DETAILS OF ACCEPTANCE

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

________ Aircraft, Manufacturer's Serial Number ________;

________ Engines:

Engine Number       Manufacturer's Serial Number

[to be completed at Delivery]

(each of which has 750 or more rated take off  horsepower  or the  equivalent of
such horsepower)

Fuel Status:      Kilos/lbs ________ ; and

Loose  Equipment  Check List: in  accordance  with the list signed by Lessor and
Lessee and attached hereto.

Aircraft Documents and Records: in accordance with the list signed by Lessor and
Lessee and attached hereto.

HOURS AND CYCLES DATA (as of Delivery Date)

Airframe:

Number of Hours since last Airframe Structural Check:         ________ hours

"C" Check (or Equivalent)

Interval:  _______________________

Time Since: _____________________

Landing Gear Overhaul:

Number of Cycles Since Last Overhaul:

[          ] Gear  __________________________ cycles

Interval: __________________________

Engines:

Number of Hours Since Last Engine Refurbishment:

S/N __________ : __________ hours

Hot Section Inspection:

Interval: ___________________________

Time Since (S/N __________) : ______________

Time Remaining to First Restriction:

Engine S/N:

Hours: _____________    Restriction: _____________

Cycles: _____________    Restriction: _____________

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

Auxiliary Power Unit:

Number of APU Hours since Last Heavy Shop Visit:

______________ hours       Date accomplished ___________

Hot Section Inspection:

Interval: _______________________

Time Since: _______________________

Interior Equipment:

LOPA - attached _______________________

Emergency drawing - attached _______________________

Galley Equipment _______________________

<PAGE>

ACCEPTANCE:

Lessee hereby confirms that the Aircraft,  Engines, Parts and Aircraft Documents
and Records  are  technically  acceptable  to it,  satisfy  all of the  Delivery
Condition Requirements and, except as noted on the attached Exceptions Schedule,
are in the condition for delivery and acceptance as required under the Lease.

IN  WITNESS   WHEREOF,   Lessee  and  Lessor  have,  by  their  duly  authorized
representative, executed this Certificate of Technical Acceptance on the date in
paragraph 1 above.

LESSEE:

By:      _________________________
Title:   _________________________
LESSOR:

By:      _________________________
Title:   _________________________

<PAGE>

                                                                      ATTACHMENT

                                 EXCEPTIONS LIST

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

LESSOR                                               LESSEE

21.      BY:_______________________         BY:_____________________

22.      TITLE:______________________       TITLE:____________________

<PAGE>

                                   SCHEDULE 6

                Procedures And Operating Condition At Redelivery

On the Return Occasion the Aircraft, subject to fair ordinary wear and tear of a
kind and to an extent  consistent  with similar  aircraft  engaged in commercial
airline  operations,  will be redelivered to Lessor by Lessee in accordance with
the  procedures  and in any  event  in the  condition  set  out  below.  For the
avoidance of doubt, any damage assessment and/or rectification  criteria used in
assessing the redelivery  condition shall be as prescribed in the Manufacturer's
structural repair manual ("SRM") and/or the Manufacturer's  maintenance  manual,
as appropriate. Any damage outside the scope of the SRM shall require FAA 8110-3
certification.

3.1      FINAL INSPECTION

Immediately  prior  to the  Return  Occasion,  Lessee  will  make  the  Aircraft
available  to Lessor  and  Owner at  Denver,  Colorado  for  inspection  ("Final
Inspection") in order to verify that the condition of the Aircraft complies with
the Lease.  The Final  Inspection  will  include,  and be long  enough to permit
Lessor to:

(a)  inspect the Aircraft Documents and Records;

(b)  inspect the Aircraft  (including an  examination  of all  compartments  and
     bays, with Lessee to open or remove panels as reasonably required by Lessor
     or  Owner),  uninstalled  Parts and the APU  (including  a  complete  video
     borescope inspection of the APU);

(c)  inspect the Engines, including (i) a complete video borescope inspection of
     (A) the low pressure and high pressure compressors and (B) turbine area and
     (ii) engine  condition  runs  (including  full take-off power engine run-up
     performed in accordance  with the  performance  test in the  Manufacturer's
     maintenance  manual,  and the Engines shall not exceed corrected limits for
     all parameters using  temperature  corrected  charts),  and power assurance
     runs; and

(d)  observe a two hour  demonstration  flight at Lessee's cost (with up to 3 of
     Lessor's and Owner's representatives as on-board observers).

Furthermore,  Lessee  acknowledges  that a purchaser or the next operator of the
Aircraft  will need to  inspect  the  Aircraft,  the  Engines  and the  Aircraft
Documents and Records prior to redelivery  and Lessee hereby agrees to cooperate
reasonably at all times during the Term with Lessor, Owner and/or such purchaser
or such next  operator,  who shall  accompany  Lessor,  to  participate  in such
inspections  in order to  coordinate,  assist  and  grant  access  for the above
inspections and/or meetings as necessary.

Lessor  or  Owner,  as the case may be, is  responsible  for and will  indemnify
Lessee  against all Losses  arising  from the death or injury to any observer or
any  employee  of Lessor or Owner,  as the case may be, in  connection  with the
inspection of the Aircraft and any ferry flight under this Section 1.1.

3.2      GENERAL CONDITION

The Aircraft will:

(a)  be in the same  configuration  as at Delivery  after  giving  effect to any
     post-Delivery  modifications,  repairs or  maintenance to the Aircraft paid
     for or  otherwise  provided  by or on  behalf of  Lessor  (or as  otherwise
     mutually agreed),  be in as good operating condition and appearance as when
     delivered   to  Lessee   (after   giving   effect   to  any   post-Delivery
     modifications,  repairs or maintenance paid for or otherwise provided by or
     on behalf of Lessor,  hereafter, the "Modifications"),  except for ordinary
     wear and tear and  alterations  and  modifications  authorized  or required
     under the Lease  and paid for by  Lessee or a  Sub-Lessee,  and be clean by
     major commercial  airline  standards,  and all structural damage shall have
     been repaired to a permanent  standard as per the SRM or, if the SRM is not
     applicable as per the requirements of the Manufacturer;

(b)  have  installed  the full  complement  of  equipment,  parts,  accessories,
     furnishings and loose equipment as when originally delivered to Lessee (and
     after giving effect to any  Modifications) and as normally installed in the
     Aircraft for  continued  regular  service and the Aircraft  (including  the
     Aircraft  Documents  and  Records)  shall be in a  condition  suitable  for
     immediate  registration with the FAA (assuming that the Owner qualifies for
     such  registration) and immediate  operations under FAR Part 121 with a new
     operator,  without waiver,  unless the benefit of such waiver is applicable
     to the next operator of the  Aircraft,  or  restriction;  and if any of the
     engines or parts  tendered for  redelivery  with the Aircraft is not one of
     the Engines  referred to in the  Certificate  of Technical  Acceptance or a
     Replacement  Engine  installed  pursuant to Section  8.11(b)  following  an
     Engine Event of Loss, Lessor shall have no obligation to accept such engine
     or part unless Lessee furnishes to Lessor all the documents and evidence in
     respect of such engine or part in accordance  with Section  8.11(b),  as if
     such engine were a Replacement  Engine or  replacement  part, and otherwise
     complies with such Section 8.11(b) with respect thereto;

(c)  have in existence a valid and effective  certificate of airworthiness  (and
     if  required  by  Lessor,  a valid  and  effective  export  certificate  of
     airworthiness) with respect to the Aircraft issued by the Air Authority (in
     the case of an export  certificate of airworthiness no earlier than 30 days
     prior to the redelivery);

(d)  comply with the manufacturer's  original  specifications as at the Delivery
     Date (after giving effect to the Modifications),  except as modified during
     the  Term in  accordance  with  the  Manufacturer's  service  bulletins  or
     letters, Airworthiness Directives, Air Authority approved data or otherwise
     as permitted by the Lease;

(e)  have  undergone,  immediately  prior to  redelivery,  the next relevant "C"
     Check (or higher check if  applicable) in block format so that all airframe
     inspections falling due within the next "C" Check interval,  as defined in,
     and in accordance with, Lessee's Maintenance Program on the Redelivery Date
     and  the   Manufacturer's   Maintenance   Planning   Document   have   been
     accomplished;

(f)  have had accomplished all outstanding  Airworthiness  Directives  affecting
     that  model of  Aircraft  issued  by the FAA prior to the  Expiry  Date and
     requiring  action  during the Term or within * days after the Expiry  Date;
     for this purpose, compliance shall be by terminating action if:

     (i)  Lessee has complied by  terminating  action for other  aircraft of the
          same model and series then operated by Lessee; or

     (ii) the latest date permitted by such Airworthiness Directive for required
          compliance by terminating  action falls within * days after the Expiry
          Date.

     In no event shall there be any non transferable  time extensions,  waivers,
     deviations  or  alternative  means of  compliance  with  any  Airworthiness
     Directives or other regulations. (g) have installed all applicable vendor's
     and manufacturer's  service bulletin kits received free of charge by Lessee
     during the Term that are appropriate for the Aircraft and to the extent not
     installed, those kits will be furnished free of charge to Lessor;

(h)  have the fuselage,  empennage, wings and pylons stripped (or sanded if only
     three or less coats of paint) and painted white in accordance with standard
     industry practice;

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

(j)  meet the  requirements of FAR Part 36, Appendix C, Stage 3 noise compliance
     as in effect at the Delivery Date, without waiver or restriction;

(k)  have no open,  deferred,  continued,  carry over or  placarded  maintenance
     items or watch items or  placarded  log book items,  and all other log book
     discrepancies shall be cleared;

(l)  all discrepancies  discovered during the inspections  described above which
     exceed  the   Manufacturer's   maintenance   manual  allowable  limits  for
     in-service   aircraft   shall  have  been  repaired  in   accordance   with
     FAA-approved procedures;

(m)  all  repairs  of  a  temporary  or  interim  nature,  requiring  repetitive
     inspections or future  upgrading,  including  external  doublers with blind
     fasteners,  shall be upgraded to permanent  repair in  accordance  with the
     Manufacturer's maintenance manual or structural repair manual; and

(n)  all systems  shall be fully  operational  for their  intended  functions in
     accordance with the Manufacturer's -maintenance manual specifications.

3.3      COMPONENTS

(a)  Each  Airframe  Flight Hour and Cycle  controlled  Hard Time  Component (as
     defined  below and other than the APU) shall have not less than the Minimum
     Component  Flight Hours and the Minimum  Component Cycles of life remaining
     to the next scheduled removal, in accordance with the Lessee's  Maintenance
     Program and shall be supported by appropriate  certification  documentation
     indicating TSN, CSN, TSO and CSO such as FAA form 8130-1;  for this purpose
     "Hard Time Component"  means any component which has a limited on-wing life
     in accordance with the  Manufacturer's  Maintenance  Planning  Document and
     which can have life fully restored through appropriate maintenance;

(b)  Each  calendar-limited  component  including safety equipment will have not
     less  than  its  Minimum  Component  Calendar  Life  remaining  to the next
     scheduled removal in accordance with the Lessee's Maintenance Program;

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

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

(e)  Each Airframe Life-Limited  Component (as defined below) will have not less
     than the Minimum  Component  Flight Hours and the Minimum  Component Cycles
     remaining to next scheduled removal in accordance with Lessee's Maintenance
     Program and will be supported by certification  documentation  necessary to
     demonstrate  back-to-birth  traceability;  for this purpose  "Airframe-Life
     Limited  Component" means a component with an ultimate life which cannot be
     restored through appropriate maintenance.

3.4      ENGINES

Each Engine will be installed on the Aircraft and comply with the following:

(a)  Each  Engine will have not less than the Minimum  Engine  Flight  Hours and
     Minimum Engine Cycles expected life remaining to the next expected removal.
     The  expected  life  remaining  will  be as  reasonably  determined  by the
     inspection and checks accomplished by Lessor in accordance with the Lease;

(b)  Each  Engine  shall  have  completed  during  the  Final  Inspection  a hot
     (including combustion chamber) and cold section video borescope inspection,
     which  inspection  shall be  performed  at  Lessor's  expense,  and a power
     assurance run performed at Lessee's expense in accordance with the Lessee's
     Maintenance  Program or Manufacturer's  maintenance  manual and any defects
     discovered  in such  inspections  which  exceed the  Engine  manufacturer's
     in-service  limits  shall be corrected  at Lessee's  expense.  Lessee shall
     cause such  borescope  inspections  to be  performed  and to be recorded on
     videotape by Lessee,  or if Lessee does not perform the same,  by an agency
     selected by Lessor and shall provide  Lessor with a copy of such  videotape
     on the  Return  Occasion.  No Engine  shall be on  "watch"  for any  reason
     requiring  any special or out of  sequence  inspection.  Each Engine  shall
     comply  with the  operations  specification  of  Lessee  without  waiver or
     exceptions.  All items beyond the Engine  manufacturer's  in-service limits
     shall be repaired;

(c)  Each Engine  Life-Limited  Component (as defined  below) will have not less
     than the  Minimum  Engine  Cycles  remaining  per the  manufacturer's  then
     current limitations for the part number in question,  and will be supported
     by  certification  documentation  necessary  to  demonstrate  back-to-birth
     traceability;  for this purpose "Life Limited  Component" means a component
     with  an  ultimate  life  which  cannot  be  restored  through  appropriate
     maintenance; and

(d)  Each Engine will have no defect which  places less than the Minimum  Engine
     Flight Hours and the Minimum  Engine  Cycles of remaining  life pursuant to
     Manufacturer's or airworthiness requirements until scheduled removal.

3.5      FUSELAGE, WINDOWS AND DOORS

(a)  The  fuselage  will be free of major dents and  abrasions  in excess of the
     limits specified in Manufacturer's  maintenance manual or structural repair
     manual,  loose or pulled or missing rivets and all structural repairs shall
     be permanent repairs;

(b)  Windows will be free of delamination,  blemishes, crazing, in excess of the
     limits  specified in the  Manufacturer's  maintenance  manual or structural
     repair manual and will be properly sealed; and

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

3.6      WINGS AND EMPENNAGE

(a)  Leading edges will be free from damage in excess of the limits specified in
     the Manufacturer's maintenance manual or structural repair manual; and

(b)  Unpainted surfaces will be polished.

3.7      INTERIOR AND COCKPIT

Carpets and seat covers will be in good condition,  clean and free of stains and
meet FAR fire resistance regulations.

3.8      LANDING GEAR; WHEELS AND BRAKES

(a)  The Landing Gear and wheel wells will be clean,  free of leaks and repaired
     as necessary;

(b)  Each  installed  Landing  Gear  shall  have  no more  than * of the  Cycles
     accumulated on the Airframe;  provided, however, that if such Cycles exceed
     * of the Cycles  accumulated  on the  Airframe,  then  Lessee  shall pay to
     Lessor an amount equal to the product of the number of Cycles by which each
     Landing Gear exceeds the Cycles  accumulated on the Airframe  multiplied by
     the Landing Gear  Supplemental  Rent Rate. In any event,  each Landing Gear
     shall have not less than the  Minimum  Landing  Gear  Flight  Hours and the
     Minimum  Landing Gear Cycles and the Minimum  Landing Gear Calendar Time to
     the next scheduled  overhaul or removal,  as the case may be, in accordance
     with the then  current  Manufacturer's  Maintenance  Planning  Document and
     Lessee's Maintenance Program; and

(c)  The  wheels and brakes  will have not less than half of their  useful  life
     remaining.

3.9      RETURN OF AUXILIARY POWER UNIT (APU)

     The APU shall  have  completed  a  borescope  inspection  during  the Final
     Inspection and shall meet all air outputs and temperature limitations under
     load  in  accordance  with  the  Lessee's   Maintenance   Program  and  the
     Manufacturer's  maintenance  manual,  and any  defects  discovered  in such
     inspection, which exceed the APU manufacturer's in-service limits, shall be
     corrected at Lessee's expense. The APU shall have not more than the Minimum
     APU Limit since the last gas path  refurbishment.  APU Life  Limited  Parts
     shall have not less than one half useful life remaining on average.

3.10     CORROSION

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

(b)  The entire fuselage will be  substantially  free from corrosion and will be
     adequately treated in accordance with Lessee's corrosion prevention program
     and the Manufacturer's Maintenance Planning Document; and

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

3.11     FUEL

     At redelivery, the Aircraft fuel tanks shall contain the Minimum Measurable
     Fuel Requirement.

3.12     MAINTENANCE PROGRAM

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

(b)  Lessee will, if requested by Lessor or Owner to do so,  provide  sufficient
     access to Lessee's  Maintenance  Program in order to integrate the Aircraft
     to the next operator's  maintenance program.  Lessor and any Person to whom
     Lessor  grants access to Lessee's  Maintenance  Program shall agree that it
     will not disclose the contents of the Lessee's  Maintenance  Program to any
     Person except to the extent necessary to monitor  Lessee's  compliance with
     the Lease and/or to bridge the  maintenance  program for the Aircraft  from
     the  Lessee's  Maintenance  Program  to  another  program  after the Return
     Occasion.

3.13     AIRCRAFT DOCUMENTS

     At  redelivery  Lessee  will  deliver to Lessor and Owner all  current  and
     complete  historical  records  required  to be  maintained  relevant to the
     Aircraft,  including  documents,  manuals,  data,  overhaul  records,  life
     limited part  traceability  to "zero time since new",  log books,  original
     delivery documents serviceable parts tags, FAA forms,  modification records
     and  inspection  records,  and  including  each of the  following  Aircraft
     Documents and Records:

A.       Certificates

A001     Certificate of Airworthiness

A002     Current Aircraft Registration

A003     C of A for Export (if applicable)

A004     Noise Limitation Certificate (AFM page)

A005     Radio Station License

A007     Aircraft deregistration confirmation

A008     Burn Certificates - Cabin Interiors - as follows:

Certification  of compliance with the fire blocking  requirements as outlined in
FAR Part 25 including:

-           Seat cushions*

-           Back rest cushions*

-           Dress covers*

-           Carpets

-           Curtains

-           Interior Surfaces (if refurbished)

* Including "in combination" burn certification

B.       Aircraft Maintenance Status Summaries

B001     Certified  current  Time  in  Service  (Hours & Cycles) and maintenance
         status

B002     Certified  status  of  Airworthiness  Directives  including  method  of
         compliance

B003     Certified status of Service Bulletin Status

B004     Certified status of SSI

B005     Certified status of CPCP (if applicable)

B006     Certified inventory of Hard Time Components (Fitted listing)

B007     Certified inventory of OC/CM Components (Fitted listing)

B008     Certified status of all non-SB and Major Modifications/STC's  including
         acceptable State of Manufacture Certification

B009     Certified status of Check/Inspection History & Current Status of Checks

B010     List of Deferred Maintenance Items

B011     List of Out of Phase Checks, Special Requirements, Time Limited Repairs
         (if any).

B012     Aircraft Accident & Incident Report.

B013     Structural repairs and damage (including Dent & Buckle Chart).

C.       Aircraft Maintenance Records

C001     Technical Logs (Minimum of 2 years)

C002     A Checks

                  Last complete cycle of A Checks (or equivalent)

C003     C Checks

                  Last Complete cycle of C Checks (or equivalent)

C004     All Major Checks

C005     CPCP Tasks (if applicable)

C006     Periodic Tasks

C007     Dirty Finger Print Certification - AD's

C008     Dirty Finger Print Certification - SB's

C009     Dirty Finger Print Certification - All other modification

C010     Last Weight Report including Schedule

C011     Compass Swing Report

C012     Last Test Flight Report

C013     Certified ETOPS compliance report (if applicable)

C014     Dirty Finger Print certification -  All  Structural  repairs/structural
         damage

C015     Details  of  State  of  Manufacture  certification  basis  -  A non-SRM
         Structural repairs

C016     Aircraft Log Book(s) if applicable

D.       Configuration Status

D001     Approved and certified LOPA

D002     Galley Drawings/Component OHM

D003     Emergency Equipment Drawing/Listing

D004     Loose Equipment Inventory

D005     Inventory Listing of Avonic installed Units.

E.       Aircraft Historical Records

E001     C of A (Export) from State of Manufacture

E002     Manufacturer's AD Report

E003     Manufacturer's Inspection Report, Initial Equipment list

E004     Manufacturer's repair/alteration report

E005     Manufacturer's SB Report

E006     Service Difficulty Reports (if any)

E007     Aircraft Historical Log

E008     Last Flight Data Recorder Read-Out & Corrections

E009     Weighing report

F.       Engine Records

F001     Certified Statement of Status of Each Engine

F002     AD Compliance Report and Compliance Documents

F003     Manufacturer's Modifications & SB Status

F004     In-house Modifications (if applicable)

F005     Certified LLP Listing

F006     Certified listing of installed units

F007     Manufacturer Delivery Document

F008     Complete copies of all historical engine/module Shop Visit Reports

F009     State of Manufacture LLP Traceability

F010     Conditioning Monitoring Report

F011     Engine Log Book/Master Records of Installation/Removals

F012     Last Borescope Report, including video if available

F013     Test Cell Run Report

F014     Last On-Wing Ground Run

F015     Certified Statement that Engines are not involved in an Accident

F016     Approved Release to Service Certification for installed rotables

F017     Approved ETOPS compliance report (if applicable)

G.       APU

G001     Certified Statement on Status of APU (if applicable)

G002     Certified SB Compliance Report/AD Status Report

G003     Approved Release to Service Certification for installed units

G004     APU Log Book/Master Record of Installation/Removals

G005     Complete copies of all APU Shop Visit Reports & Reason for Removal

G006     Statement of APU Hours to Aircraft Flying Hours

G007     LLP Status and Full Traceability to birth

G008     APU Borescope Report

G009     Last On-Wing/Health Check Data sheets (if applicable)

G010     Last Test Cell Run

G011     Approved ETOPS compliance report

H.       Component Records

H001     Approved Release to Service Certification for Hard Time Components

H002     Approved Release to Service Certification for OC/CM Components

I.       Landing Gears

I001     Approved Release to Service Certification for major assemblies on  each
         Gear

I002     Approved LLP Listings for each Gear (with FULL Traceability to Birth)

I003     Last Shop Visit Report (OH)

J.       Manuals

All  Manufacturer's  Manuals delivered with the Aircraft under the Lease updated
to the latest revision standard (applicable as at the Return Occasion) as may be
reasonably requested by Lessor

K.       Microfilm:

J006     WDM

J007     IPC

J008     Maintenance Manual

J009     Schematics

J010     Hook Up Listing

L.       Miscellaneous

K006     Maintenance Program Specifications (Operator's)

K007     Reference  Material  for  Interpretation  of   Status   Summaries,   or
         cross-reference for Part Numbers

<PAGE>

                                   SCHEDULE 7

                             INSURANCE REQUIREMENTS

3.1      Types of Insurance

The Insurances required to be maintained are as follows:

(a)  Hull All Risks of loss or damage  while  flying,  taxiing and on the ground
     with  respect to the Aircraft on an agreed value basis for the Agreed Value
     and with a deductible  not exceeding the Deductible  Amount,  or such other
     amount agreed by Lessor from time to time;

(b)  Hull War and Allied  Perils,  being such risks  excluded  from the Hull All
     Risks Policy to the fullest extent available from the leading international
     insurance markets,  including  confiscation and requisition by the State of
     Registry for the Agreed Value;  provided  that,  when the Aircraft is being
     operated  solely in or over the United  States or Canada,  coverage  may be
     limited to such  coverage as is usual and  customary  for similar  airlines
     operating similar  equipment in similar  circumstances,  namely,  the North
     American buy-backs;

(c)  All Risks  (including  War and Allied  Risk except when on the ground or in
     transit other than by air) property insurance on all Engines and Parts when
     not  installed  on the  Aircraft on an "agreed  value" basis for their full
     replacement value and including engine test and running risks;

(d)  Comprehensive  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 for
     any  one  occurrence  (but in  respect  of  products  and  personal  injury
     liability,  this  limit may be an  aggregate  limit for any and all  losses
     occurring during the currency of the policy). War and Allied Risks are also
     to be covered  under the policy in line with  prudent  market  practice for
     comparable airlines operating similar equipment in similar circumstances;

3.2      Terms of Hull and Spares Insurance

All required  hull and spares  insurance,  so far as it relates to the Aircraft,
will:

(a)  Additional Insureds:  name Lessor, Owner, Financing Parties' Representative
     as additional  insureds for their respective rights and interests  (without
     imposing  on any  such  Person  any  obligation  imposed  on  the  insured,
     including the liability to pay any calls, commissions or premiums);

(b)  Settlement  of Losses:  provide that any loss will be settled  jointly with
     Lessor and  Lessee,  and will be  payable  in  Dollars to Owner  and/or the
     Financing  Parties'  Representative,  if any, as sole loss  payee,  for the
     account of all  interests,  except  where the  insurance  payment  does not
     exceed the Damage  Notification  Threshold,  and no material  Default is in
     existence, in which case the loss will be settled with and paid to Lessee;

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

(d)  No Option to Replace: confirm that the insurers are not entitled to replace
     the Aircraft in the event of an insured Event of Loss.

3.3      Terms of Liability Insurance

All required liability insurances will:

(a)  Additional  Insureds:  include each Indemnitee,  as additional insureds for
     its respective rights and interests,  warranted, each as to itself only, no
     operational  interest  (without  imposing on any such Person any obligation
     imposed  on  the  insured,  including  the  liability  to  pay  any  calls,
     commissions or premiums);

(b)  Severability:  include a  severability  of interests  clause which provides
     that the insurance, except for the limit of liability, will operate to give
     each insured the same  protection as if there was a separate  policy issued
     to each insured;

(c)  Primary Policy:  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,  each Indemnitee or Lessee
     have the  benefit  so as to reduce the  amount  payable  to the  additional
     insureds under such policies;

3.4      Terms of All Insurances

All Insurances will:

(a)  Best Industry  Practice:  be in accordance with normal industry practice of
     persons operating similar aircraft in similar circumstances;

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

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

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

(e)  Subrogation:  provide  that the insurers  will hold  harmless and waive any
     rights of recourse or subrogation against the additional insureds;

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

(g)  Cancellation/Change:  provide that the Insurances  will continue  unaltered
     for the  benefit  of the  additional  insureds  for at  least * days  after
     written  notice by registered  mail or telex of any  cancellation,  change,
     event of  non-payment  of premium or  installment  thereof has been sent by
     insurer(s)  to Lessor,  or where an  insurance  broker is  appointed to the
     insurance  broker who shall promptly send on such notice to Lessor,  except
     in the case of war risks for which * days (or such  lesser  period as is or
     may be customarily available in respect of war risks or allied perils) will
     be given, or in the case of war between the 5 great powers or nuclear peril
     for which termination is automatic;

(h)  Reinsurance:  if reinsurance is a requirement of the Lease such reinsurance
     will:

     (i)  be on the same terms as the original  insurances  and will include the
          provisions of this Schedule;

     (ii) provide that notwithstanding any bankruptcy, insolvency,  liquidation,
          dissolution or similar  proceedings of or affecting the reinsured that
          the reinsurers'  liability will be to make such payments as would have
          fallen due under the relevant  policy of  reinsurance if the reinsured
          had  (immediately  before such  bankruptcy,  insolvency,  liquidation,
          dissolution or similar proceedings) discharged its obligations in full
          under the  original  insurance  policies  in respect of which the then
          relevant policy of reinsurance has been effected; and

     (iii)contain a  "cut-through"  clause in the  following  form (or otherwise
          satisfactory to Lessor):

          "The  Reinsurers and the Reinsured  hereby  mutually agree that in the
          event of any claim  arising  under the  reinsurances  in  respect of a
          total loss or other claim where as provided by the Agreement dated [ ]
          and made  between [ ] and [ ] such  claim is to be paid to the  person
          named as sole loss payee under the primary insurances,  the Reinsurers
          will in lieu of payment to the  Reinsured,  its successors in interest
          and  assigns  pay to the  person  named as sole loss  payee  under the
          primary insurances  effected by the Reinsured that portion of any loss
          due for  which the  Reinsurers  would  otherwise  be liable to pay the
          Reinsured  (subject to proof of loss), it being  understood and agreed
          that any such  payment by the  Reinsurers  will (to the extent of such
          payment) fully  discharge and release the Reinsurers  from any and all
          further liability in connection therewith"; subject to such provisions
          not contravening any Law of the State of Incorporation; and

(i)  Initiating Claims: contain a provision entitling any Indemnitee to initiate
     a claim  under any policy in the event of the  refusal or failure of Lessee
     to do so; and

(j)  Indemnities: accept and insure the indemnity provisions of the Lease to the
     extent of the risks covered by the policies.

3.5      Deductibles

Lessee shall be responsible for any and all deductibles under the Insurances.

3.6      Application of Insurance Proceeds

The Insurances will be endorsed to provide for payment of proceeds as follows:

(a)  Event of Loss: all insurance payments received as the result of an Event of
     Loss  occurring  during  the  Term  will  be  paid  to  Financing  Parties'
     Representative  as sole loss payee, and Lessor will pay or cause to be paid
     any  remaining  balance of those  amounts to Lessee after  deduction of all
     amounts which may be or become  payable by Lessee to Lessor under the Lease
     and the Other Agreements (including under Section 11.1(b));

(b)  Exceeding  Damage  Notification  Threshold:  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  will  be  paid  to  Financing   Parties'
     Representative  as sole loss payee, and applied in payment (or to reimburse
     Lessee) for repairs or replacement  property upon Lessor,  being  satisfied
     that the repairs or replacement  have been effected in accordance  with the
     Lease.  Any balance  remaining  may be retained by Lessor or Owner,  as the
     case may be;

(c)  Below Damage  Notification  Threshold:  insurance proceeds in amounts below
     the Damage  Notification  Threshold may be paid by the insurer  directly to
     Lessee;

(d)  Liability  Proceeds:  all  insurance  proceeds  in respect  of third  party
     liability  will,  except to the extent paid by the insurers to the relevant
     third party, be paid to Lessor, Owner or Financing Parties'  Representative
     to be paid directly in satisfaction of the relevant  liability or to Lessee
     in reimbursement of any payment so made;

(e)  Default: notwithstanding any of the foregoing paragraphs, if at the time of
     the payment of any such insurance proceeds a payment Default or an Event of
     Default has occurred and is  continuing,  all such proceeds will be paid to
     Lessor, Owner or Financing Parties' Representative,  as the case may be, or
     retained to be applied toward payment of any amounts which may be or become
     payable by Lessee in such order as Lessor or Owner, as the case may be, may
     elect; and

To the extent that  insurance  proceeds are paid to Lessee which are required to
be paid to another  Person  hereunder,  Lessee  agrees to hold such  proceeds in
trust  and  comply  with the  foregoing  provisions  and  apply or pay over such
proceeds as so required.

3.7      United States Governmental Indemnity

Notwithstanding  any of the  foregoing  paragraphs,  in the event of a Permitted
Sub-Lease to, or a requisition of use by, or activation of the CRAF program with
respect to the Aircraft by, the United States or any  Governmental  Entity whose
obligations  have the full faith and  credit of the  federal  Government  of the
United States,  Lessor agrees to accept in lieu of insurance  required hereunder
indemnification  or  insurance  from the  United  States or such a  Governmental
Entity in a form  reasonable  acceptable  to Lessor and Owner and  against  such
risks  and in such  amounts  and on such  terms  such  that  when  added  to the
Insurances  maintained  by  Lessee,  Lessee  is  in  full  compliance  with  the
requirements of Section 9 and this Schedule.

<PAGE>

                                   SCHEDULE 8

                              FORM OF LEGAL OPINION

The  following  form shall be  delivered  by Lessee's  counsel to Lessor or such
other form as Lessor shall reasonably agree.

[Lessor]

[Owner]

[Financing Parties' Representative]

Ladies and Gentlemen:

3.1      You  have  asked  us to  render  an  opinion  in  connection  with  the
         transaction  governed by or subject to, inter alia, the under-mentioned
         documents.

3.2      the Agreement as defined in paragraph 1.3 below;

3.3      the [Articles/Certificate of Incorporation and By-laws]* of Lessee; and

         [*Counsel  should  amend this  reference  as  necessary to describe the
         actual constitutional documents of Lessee].

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

         Words and expressions  used and not otherwise  defined herein will bear
         the same  meanings  as defined in an  Aircraft  Lease  Agreement  dated
         ________,  ____ between ________  ("Lessor") and ________ ("Lessee") in
         respect of one ________  aircraft  with  manufacturer's  serial  number
         ________  together  with  the  ____  installed  ________  engines  (the
         "Aircraft").  As used herein the term  "Lease"  means and  includes the
         Aircraft Lease Agreement which  incorporates the Common Terms Agreement
         (as defined therein) and Lease Supplement No. Also, for the purposes of
         this  opinion,   the  term  "Lease"  includes  the  Acknowledgment  and
         Agreement  dated as of the date  hereof  executed by Lessee in favor of
         Owner and Financing Parties' Representative.

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

(a)  Lessee is a company duly  incorporated  and in good standing under the laws
     of ________,  and is qualified to do business as a foreign  corporation  in
     each  jurisdiction  where  failure  to so qualify  would have a  materially
     adverse  effect  on  Lessee's  business  or  its  ability  to  perform  its
     obligations under the Lease;

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

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

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

     (ii) conflict with the  [Articles/Certificate  of Incorporation or By-laws]
          of Lessee; or

     (iii)conflict  with or result in default  under any agreement or instrument
          which is  binding  upon  Lessee or any of its  assets or result in the
          creation of any Security Interest on any of its assets.

(d)  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 United States or any other jurisdiction
     having jurisdiction over Lessee, its operations or its properties to enable
     Lessee:

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

     (ii) to import the Aircraft into ______ for the duration of the Term;

     (iii)to operate  the  Aircraft in ______ and on  international  flights for
          the transport of fare-paying passengers; or

     (iv) to make the payments provided for in the Lease;

(e)  except for the filing and  recordation  of [ a bill of sale in favor of the
     Owner,] the  Financing  Documents  and the Lease with the FAA (which filing
     has been duly  made on or before  this  date) and the  filing of  Financing
     Statements in ________,  it is not  necessary or  desirable,  to ensure the
     priority,  validity and  enforceability  of all the  obligations  of Lessee
     under the Lease, as against Lessee and all third parties, or to perfect the
     interests of Lessor,  Owner or Financing Parties'  Representative in and to
     the Aircraft or the Lease, that the Lease be filed, registered, recorded or
     notarized in any public office or elsewhere or that any other instrument be
     signed,  delivered,  filed, registered or recorded, that any tax or duty be
     paid or that any other action whatsoever be taken;

(f)  the Lease has been duly  executed  and  delivered  on behalf of Lessee  and
     constitutes the legal, valid and binding obligation of Lessee,  enforceable
     against Lessee in accordance with its terms;

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

(h)  there  is no  applicable  usury  or  interest  limitation  law in  ________
     applicable to payments in accordance with the Lease;

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

(j)  the  choice of New York law to govern  the Lease  will be upheld as a valid
     choice of law in any action in the courts of ________;

(k)  the consent to the  jurisdiction by Lessee  contained in the Lease is valid
     and binding on Lessee;

(l)  Lessee is a Certificated Air Carrier;

(m)  Lessee is a "citizen of the United States" as defined in 49 U.S.C.  Section
     40102(a)(15);

(n)  Lessee's "chief executive office" (as referenced in the Uniform  Commercial
     Code adopted in the State of _________________) is _____________________;

(o)  Lessor will not violate any law or regulation of the States of _________ or
     New York or any federal laws or regulations of the United States of America
     and  Lessor  will  not  become  liable  to  income  tax  in  the  State  of
     ____________ solely by reason of Lessor entering into the Lease with Lessee
     or performing its obligations thereunder;

(p)  It is not  necessary  for Lessor to  establish  a place of  business  or be
     licensed or  qualified to do business in the State of _________ or New York
     in order for Lessor to enforce any provisions of the Lease; and

(q)  Lessor is  entitled  to the  benefits  of  Section  1110 of Title 11 of the
     U.S.C. with respect to the Aircraft and the Lease.

                           Very truly yours,

[If there is a  Guarantor/Guarantee  the opinion  shall also include  paragraphs
(a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (o) and (p) revised to be
applicable to the Guarantor/Guarantee]

<PAGE>

                                   SCHEDULE 9

                                EVENTS OF DEFAULT

Each of the following events or conditions constitutes an Event of Default:

(a)  Non-payment:  Lessee fails to make any payment of Rent or Supplemental Rent
     under  the  Lease  on the due date and  such  failure  continues  for * (*)
     Business  Days or more, or Lessee fails to make any other payment under the
     Lease within * Business Days of the due date therefor under the Lease; or

(b)  Insurance:  Lessee  fails to  comply  with any  provision  of  Section 9 or
     Schedule 7, or any insurance  required to be maintained  under the Lease is
     cancelled or terminated, or a notice of cancellation is given in respect of
     any such insurance; or

(c)  Breach:  Lessee  fails to comply with any other  provision of the Lease not
     referenced  in this  Schedule 9 and, if such  failure is capable of remedy,
     such failure continues for * days after notice from Lessor to Lessee; or

(d)  Representation:  any  representation  or  warranty  made (or  deemed  to be
     repeated)  by Lessee in or  pursuant  to the  Lease or in any  document  or
     certificate  or statement  delivered to Lessor  thereunder or in connection
     therewith is or proves to have been incorrect in any material  respect when
     made or deemed to be repeated; or

(e)  Cross-Default:

     (i)  any Financial  Indebtedness of Lessee or any Lessee Affiliate having a
          principal  amount in excess of $* becomes  due as a result of an event
          of default or termination event,  howsoever described,  on the part of
          Lessee  or any  Affiliate  of  Lessee  prior to the date when it would
          otherwise have become due; or

     (ii) material  steps  are  taken  by  the  holder  of  any  such  Financial
          Indebtedness  to  realize  on the  security  for  any  such  Financial
          Indebtedness; or

     (iii)any event of default or termination event, howsoever described, occurs
          under (a) any Other  Agreement,  or any  aircraft  lease  agreement or
          other  material  agreement  from time to time  entered into between GE
          Capital,  GECAS or any Person whose aircraft or engines are managed by
          GE Capital or GECAS (or in each case any Subsidiary of GE Capital), on
          the one hand, and Lessee (or any  Subsidiary of Lessee),  on the other
          hand or (b) any other material lease, hire purchase,  conditional sale
          or credit sale  agreement  of Lessee  relating to aircraft or aviation
          related equipment; or

(f)  Approvals: any consent, authorization,  licence, certificate or approval of
     or registration with or declaration to any Government Entity required to be
     obtained or maintained  by Lessee in  connection  with the Lease and/or the
     operation of the Aircraft  (including any airline  licence or air transport
     licence  including  authority to operate the Aircraft under Part 121 of the
     FARs, a Certificate of Convenience  and Necessity  issued under the Act and
     an aircarrier operating  certificate issued under the Act) is modified in a
     materially  prejudicial  manner or is withheld,  or is revoked,  suspended,
     cancelled,  withdrawn, terminated or not renewed, or otherwise ceases to be
     in full force,  (each a  "De-registration")  in each case for a period of *
     (*) days or more and such  De-registration has a material adverse effect on
     (i) Lessee's ability to perform its obligations under the Lease or (ii) the
     interests of Lessor or Owner in the Aircraft; or

(g)  Bankruptcy, etc:

     (i)  Lessee consents to the appointment of a custodian,  receiver,  trustee
          or  liquidator  of  itself  or all or  substantially  all of  Lessee's
          property  or  Lessee's  consolidated  property,  or  Lessee  admits in
          writing its  inability to, or is unable to, or does not, pay its debts
          generally  as they come due,  or makes a  general  assignment  for the
          benefit  of  creditors,  or  Lessee  files  a  voluntary  petition  in
          bankruptcy  or  voluntary   petition  seeking   reorganization   in  a
          proceeding  under  any  bankruptcy  or  insolvency  laws  (as  now  or
          hereafter in effect), or an answer admitting the material  allegations
          of a petition filed against Lessee in any such  proceeding,  or Lessee
          by  voluntary  petition,  answer or  consent  seeks  relief  under the
          provisions  of any other  bankruptcy,  insolvency or other similar law
          providing for the  reorganization  or winding-up of  corporations,  or
          provides for an agreement,  composition,  extension or adjustment with
          its  creditors,  or any board of  directors or  shareholder  action is
          taken by Lessee in furtherance of any of the foregoing, whether or not
          the same is fully effected or accomplished; or

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

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

(h)  Suspension  of  Business:  Lessee  suspends or ceases or takes  substantive
     steps to  suspend  or cease  to carry on all or a  substantial  part of its
     business as a  Certificated  Air Carrier (other than as a result of a labor
     dispute with Lessee's employees); or

(i)  Rights and  Remedies:  Lessee or any other  Person  claiming  by or through
     Lessee  challenges the existence,  validity,  enforceability or priority of
     the Lease or the rights of Lessor as lessor or of Owner as owner in respect
     of the Aircraft or Financing  Parties'  Representative as holder of a first
     priority Security Interest in the Aircraft and the Lease; or

(j)  Delivery:  Lessee fails to comply with its  obligation  under  Section 4 to
     accept delivery of the Aircraft; or

(k)  Adverse  Change:  any event or series of events occurs which has a material
     adverse  effect on the  financial  condition or operations of Lessee and on
     the ability of Lessee to comply with its obligations under the Lease; or

(l)  Letter of Credit:

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

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

     (iii)any of the events  listed in paragraph (g) above applies to the issuer
          of any Letter of Credit  (references in such paragraph to Lessee being
          deemed to be to the issuer); or

     (iv) where applicable,  any Letter of Credit is not renewed within the time
          required by Section 5.13;

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

(m)  Redelivery:  Lessee  fails to return the  Aircraft  to Lessor on the Expiry
     Date in accordance with Section 12; or

(n)  Litigation:  a judgement  for the payment of money not covered by insurance
     in excess of $* (or the equivalent  thereof in other  currencies)  shall be
     rendered against Lessee and the same shall remain undischarged for a period
     of * days,  unless during such period,  execution of such  judgement  shall
     have been  effectively  stayed by agreement  of the parties  involved or by
     court order or such judgement shall have been adequately bonded; or

(o)  Unlawful:  if the State of Registration is outside of the United States and
     it becomes  unlawful in such State of  Registration  or other  jurisdiction
     outside of the United  States  for  Lessee to perform  any of its  material
     obligations  under the Lease or the Lease becomes invalid or  unenforceable
     in whole or in material part ; or

(p)  Transfer:  Lessee makes or permits any assignment or transfer of the Lease,
     or any interest herein, or of the right to possession of the Aircraft,  the
     Airframe,  or any Engine,  or any  obligations  under the Lease,  or Lessee
     subleases  the Aircraft,  in any case except as expressly  permitted in the
     Lease; or

(q)  Disposal: Lessee disposes, conveys or transfers or has taken material steps
     to dispose,  convey or  transfer  all or  substantially  all of its assets,
     liquidates  or  dissolves or  consolidates  or merges with any other Person
     whether by one or a series of transactions,  related or not, other than for
     the purpose of a  reorganization  of the terms of which have  received  the
     previous  consent in writing of Lessor or as permitted  pursuant to Section
     8.7(a)(vii) herein.

<PAGE>

                                   SCHEDULE 10

                      FORM OF LEASE TERMINATION CERTIFICATE

The  undersigned  hereby certify that the Aircraft Lease  Agreement  dated as of
_________,  ____ between the undersigned  Lessor and undersigned  Lessee, and as
further  described in the Appendix  attached hereto,  has terminated  (except as
described in Section 15.1 thereof) and the aircraft and aircraft engines covered
thereby are no longer  subject to the terms  thereof.  This  certificate  may be
executed in one or more  counterparts  each of which when taken  together  shall
constitute one and the same instrument.

         DATED this __________ day of ____________________, __________

LESSOR                                               LESSEE

[ INSERT LESSOR'S NAME ]                    [   INSERT LESSEE'S NAME   ]

By:________________________________         By:_______________________________

Title:_______________________________       Title:_____________________________

<PAGE>

                                   Schedule 11

                              Intentionally Omitted

<PAGE>

                                   SCHEDULE 12

                             LEASE SUPPLEMENT NO. 1

     LEASE   SUPPLEMENT   NO.   1,   dated    ___________,    ______,    between
____________________________________________, [a corporation organized under the
laws of ______________] [, not in its individual  capacity,  but solely as owner
trustee]  ("Lessor"),  and  ___________________________________,  a  corporation
organized under the laws of the ____________________("Lessee").

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

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

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

1. Lessor  hereby  delivers and leases to Lessee under the  Agreement and Lessee
hereby accepts,  acknowledges receipt of possession and leases from Lessor under
the  Agreement,  that certain  ______________  aircraft,  and the ________ (___)
_____________________  Engines  (each of  which  Engines  has 750 or more  rated
takeoff horsepower or the equivalent of such horsepower) described in Schedule 1
hereto,  together  with the  Aircraft  Documents  and Records  described  in the
Agreement (the "Delivered Aircraft").

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

3. The Term for the Delivered  Aircraft  shall commence on the Delivery Date and
shall end on the Expiry Date, which shall be [insert date].

4. The amount of Rent for the  Delivered  Aircraft is set forth in Schedule B to
the Agreement.

5. Lessee  hereby  confirms to Lessor that (i) the  Delivered  Aircraft and each
delivered  Engine have been duly marked in accordance  with the terms of Section
8.6(a) of the  Agreement,  (ii) the  Aircraft  is  insured  as  required  by the
Agreement,  (iii) the  representations  and warranties of Lessee  referred to in
Section  2.1 of the  Agreement  are hereby  repeated  with effect as of the date
first above  written,  (iv) having  inspected  the  Delivered  Aircraft,  Lessee
acknowledges that the Delivered Aircraft  satisfies all conditions  required for
Lessee's  acceptance  of  delivery  as set forth in the  Agreement,  and (v) the
execution  and  delivery  of  this  Lease  Supplement   signifies  absolute  and
irrevocable  acceptance  by Lessee of the  Delivered  Aircraft  for all purposes
hereof and of the Agreement.

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

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

         IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement
No. 1 to be duly executed as of the day and year first above written.

LESSOR,                                              LESSEE,

[INSERT LESSOR'S NAME]                      [INSERT LESSEE'S NAME]

By:_____________________________            By:_____________________________

Name:__________________________             Name:__________________________

Title:____________________________          Title:____________________________

<PAGE>

                                   SCHEDULE 13

                       TECHNICAL REPORT ON AIRCRAFT USAGE

                      Aircraft Hours/Cycles Monthly Report

<PAGE>

                                   SCHEDULE 14

                                     FORM OF

                             REDELIVERY CERTIFICATE

     REDELIVERY  CERTIFICATE  dated  _______________,   ____,  between  Aviation
Financial  Services  Inc., a  corporation  organized  under the laws of Delaware
("Lessor"),  and Frontier Airlines, Inc., a corporation organized under the laws
of the Colorado ("Lessee").

     Lessor and Lessee have previously  entered into that certain Aircraft Lease
Agreement dated as of April 20, 2000 (herein referred to as the "Agreement", the
defined  terms  therein  being  hereinafter  used  with the same  meaning).  The
Agreement and this Redelivery  Certificate  relate to the Aircraft,  Engines and
Parts as more precisely described below.

1.       Lessee  hereby  redelivers  to Lessor  under the  Agreement  and Lessor
         hereby accepts and acknowledges receipt of possession from Lessee under
         the Agreement,  of that certain [insert  aircraft type]  commercial jet
         Aircraft, and the two (2) CFM International  CFM-56-[____]Engines (each
         of  which  Engines  has 750 or more  rated  takeoff  horsepower  or the
         equivalent of such horsepower) described in Schedule 1 hereto, together
         with  the  Aircraft   Documents   described  in  the   Agreement   (the
         "Redelivered Aircraft").

2.       Lessor  hereby  confirms  to  Lessee  that  (i)  having  inspected  the
         Redelivered Aircraft, Lessor acknowledges that the Redelivered Aircraft
         satisfies all conditions required for Lessor's acceptance of redelivery
         as set forth in the Agreement,  except as noted in the Discrepancy List
         attached to the Certificate of Technical Acceptance annexed as Schedule
         2  hereof,  and (ii) the  execution  and  delivery  of this  Redelivery
         Certificate signifies absolute and irrevocable  acceptance by Lessor of
         the Redelivered Aircraft for all purposes hereof and of the Agreement.

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

                 IN  WITNESS  WHEREOF,  Lessor  and  Lessee  have  caused  this
Redelivery  Certificate  to be duly  executed as of the day and year first above
written.

LESSOR,                                LESSEE,

AVIATION FINANCIAL SERVICES INC.       FRONTIER AIRLINES, INC.
By:                                    By:
   -------------------------              --------------------------
Name:                                  Name:
     -----------------------                ------------------------
Title:                                 Title:
      ----------------------                 -----------------------

<PAGE>

                                   SCHEDULE 1
                                       TO

                             REDELIVERY CERTIFICATE

                                    One Used

                          [Airbus A319/Boeing 737-3B7]

                                    Airframe

                                Registration Mark

Manufacturer's

            Serial No.                   Total Time*               Total Cycles*

                        Installed CFM International, Inc.

                                     Engines

Model No.        Serial No.       Total Time*         Total Cycles*
---------        ----------       ----------          ------------
CFM-56-[____]    ____________     ____________        ____________
CFM-56-3-B2      ____________     ____________        ____________

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

*    The  total   time  and   total   cycles   referred   to  above  are  as  of
     ________[AM][PM],  _______ Time.  Such times and cycles are with ____ hours
     and  ____  cycles  of the  actual  hours  and  cycles  at the  time of this
     Redelivery Certificate.

<PAGE>

                                   SCHEDULE 2

                                       TO

                             REDELIVERY CERTIFICATE

                       CERTIFICATE OF TECHNICAL ACCEPTANCE

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

1.       DETAILS OF ACCEPTANCE

         Lessor  hereby  confirms to Lessee  that Lessor has at [__]  o'clock of
         this [__] day of [____________], 20__, at [ ], technically accepted the
         following, in accordance with the provisions of the Agreement:

          (a)  [Airbus/Boeing Model ________ [Aircraft] airframe, Manufacturer's
               Serial No. [___________].

          (b)  CFM International,  Inc. Model CFM 56-[_____] (operating at [B-1]
               power)   Engines:   Engine  Number   Manufacturer's   Serial  No.
               ------------------------------------------------------------
               1.____________;    and    _____________    2.____________;    and
               _____________  (Each of which  shall  have  more  than 750  rated
               takeoff horsepower or the equivalent of such horsepower).

          (c)  Fuel Status: Pounds [________________]; and

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

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

2.       HOURS AND CYCLES DATA (as of Redelivery Date)
         (a)      Airframe:
                  --------
                  Number of Hours since last phase "D" Check (Heaviest Check):
                  Flight Hours
                  -----------------------------------------------------------
                  "C" Check (or Equivalent):
                  -------------------------
                           Interval:                         _
                                    -------------------------
                           Time Since:                       _
                                      -----------------------
         (b)      Landing Gear Overhaul:
                  ---------------------
                  Number of Cycles Since Last Overhaul:
                           Left Gear                  Cycles
                           Right Gear                 Cycles
                           Nose Gear                  Cycles
                           Center Gear                Cycles

         Interval:         Left Gear                  Cycles
                           Right Gear                 Cycles
                           Nose Gear                  Cycles
                           Center Gear                Cycles

         (c)      Engines:
                  -------
                  Number of Hours Since Last Heavy Shop Visit (Refurbishment):
                           S/N ________:________ Engine Flight Hours
                           S/N ________:________ Engine Flight Hours
                  Number of Hours Since Last Hot Section Refurbishment:
                           S/N ________:________ Engine Flight Hours
                           S/N ________:________ Engine Flight Hours
                  Number of Hours Since Last Cold Section Refurbishment:
                           S/N ________:________ Engine Flight Hours
                           S/N ________:________ Engine Flight Hours
                  Hot Section Inspection:
                           Interval:                         _
                                    -------------------------
                           Time Since (S/N_________):                       _
                                                     -----------------------
                           Time Since (S/N_________):                       _
                                                     -----------------------
                  Time Remaining to First Restriction:
                  Engine S/N: ________
                  Engine Flight Hours: ________      Restriction: ________
                      Cycles: _______ Restriction: ________

                  Engine S/N: ________
                  Engine Flight Hours: ________      Restriction: ________
                      Cycles: _______ Restriction: ________

                  Average Cycles in Life Limited Parts (see attached Schedule):\
                  --------------------
                  Number of APU Hours Since Last Heavy Shop Visit:
                   ________ hours   Date Accomplished ________
                  Hot Section Inspection:
                           Interval:
                                    ------------------------
                           Time Since:
                                      ----------------------
         (e)      Time Controlled Components:  [See attached DUJX Report]
                  --------------------------
         (f)      Fuel on Board on Inspection Date:
                  -------------------------------- -----------------------
         (g)      Interior Equipment:
                  ------------------
                  Number of Passenger Seats and Configuration:

                  Number of Galleys and Location: ________  ________
                  Number of Lavatories and Location: ________  ________
                  LOPA - Attached: ________  ________
                  List of Loose Equipment on Board:

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

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

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

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

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

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

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

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

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

                  ---------------------------------- ---------   ---------
         (i)      Audio System

3.       ACCEPTANCE:

     The  undersigned  hereby  confirms  that the Aircraft,  Engines,  Parts and
Aircraft  Documents are  technically  acceptable to it,  satisfy all  Redelivery
Condition  Requirements  and,  except  as  noted on the  attached  Discrepancies
Schedule,  are in the condition for redelivery and acceptance required under the
Agreement.

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

LESSOR:
AVIATION FINANCIAL SERVICES INC.

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

<PAGE>

                                   SCHEDULE 15

                              FORM OF GECC GUARANTY

                                    GUARANTY

GUARANTY (this  "Guaranty"),  dated April __, 2000 by GENERAL  ELECTRIC  CAPITAL
CORPORATION, a New York corporation ("Guarantor") in favor of Frontier Airlines,
Inc., a company incorporated under the laws of Colorado ("Lessee").  Capitalized
terms used and not otherwise  defined herein shall have the meanings ascribed to
them in the Lease (as defined below).

                                    Recitals

         WHEREAS, Aviation Financial Services Inc., a company incorporated under
the laws of Delaware  ("Lessor") and Lessee have entered into [an Aircraft Lease
Agreement,  dated as of April 20, 2000 (the  "Lease"),  relating to * (*) Airbus
A319  aircraft   bearing   manufacturer's   serial  numbers  to  be  determined]
(collectively, the "Aircraft" and each an "Aircraft"); and

         WHEREAS,  in order to induce  Lessee to lease the Aircraft  from Lessor
under each Lease,  Guarantor,  as the parent of Lessor,  is  entering  into this
Guaranty;

         NOW, THEREFORE, Guarantor hereby agrees as follows:
         Section 1.        Guaranty.
(a) Guarantor hereby unconditionally guarantees the payment and performance, and
not of collection,  of the  obligations of Lessor under each Lease, in each case
after any applicable  notice  requirements  in accordance  with each Lease (such
obligations of Lessor being referred to herein as the "Guaranteed Obligations");
provided,  however, that Guarantor shall not be liable to perform the Guaranteed
Obligations  unless  Lessee  makes  written  demand upon the  Guarantor  for the
performance of the Guaranteed Obligations then due and owing and such Guaranteed
Obligations are not performed in full within ten Business Days (as used herein a
"Business  Day" shall  refer to a day other  than a Saturday  or Sunday on which
commercial  banks  are  open for  business  in New  York  City) of such  demand.
Guarantor hereby agrees that its obligations  hereunder shall be  unconditional,
irrespective of the validity,  regularity or  enforceability  of the Lease,  any
change in or amendment  thereto,  the absence of any action to enforce the same,
any waiver or consent by Lessee  with  respect  to any  provision  thereof,  the
recovery of any judgment  against  Lessor or any action to enforce the same,  or
any other  circumstances  which may  otherwise  constitute  a legal or equitable
discharge or defense of a guarantor  (other than complete  performance) and (ii)
any  difference  between the law selected as the  governing law of the Lease and
the law selected as the governing law of this Guaranty;  provided, however, that
nothing  contained  herein  shall be  construed  to be a waiver by  Guarantor of
presentment,  demand of performance as described  above,  protest or notice with
respect to the Lease and the obligations evidenced thereby or hereby.  Guarantor
covenants  that  this  Guaranty  will  not  be  discharged  except  by  complete
performance of the Guaranteed Obligations and the obligations in this Guaranty.

(b) Guarantor  shall be subrogated to all rights of the Lessee in respect of any
amounts paid by Guarantor pursuant to the provisions of this Guaranty, provided,
however, that Guarantor shall be entitled to enforce, or to receive any payments
arising  out of or  based  upon,  such  right  of  subrogation  only  after  the
Guaranteed  Obligations and all amounts owed to Lessee thereunder have been paid
in full.

(c) This Guaranty shall  continue to be effective or be reinstated,  as the case
may be, if at any time any payment of the  Guaranteed  Obligations  or any other
amount owed to the Lessee hereunder or thereunder is rescinded or must otherwise
be returned by the Lessee upon the insolvency,  bankruptcy or  reorganisation of
the Guarantor,  the Lessor or otherwise, all as though such payment had not been
made.

         Section 2.        Miscellaneous.

         2.1      Notices.
     All notices to Guarantor  under this  Guaranty and copies of all notices to
Lessor under the Lease shall,  until Guarantor  furnishes  written notice to the
contrary,  be mailed or delivered to Guarantor at 260 Long Ridge Road, Stamford,
Connecticut  06927-9400,  and  directed  to the  attention  of the  Senior  Vice
President - Corporate  Treasury and Global Funding Operation of General Electric
Capital  Corporation.  All  notices  shall be  effective  when  received  by the
addressee thereof.

         2.2      Governing Law.
     This  Guaranty  shall be construed  and enforced in  accordance  with,  and
governed by, the laws of the State of New York, United States of America.

         2.3      Interpretation.
     The  headings of the section and other  subdivisions  of this  Guaranty are
inserted  for  convenience  only and shall not be deemed to  constituted  a part
hereof.

         2.4      Attorney's Cost.
     Guarantor  agrees to pay all reasonable  attorney's fees and  disbursements
and all other  reasonable and actual costs and expenses which may be incurred by
Lessee in the enforcement of this Guaranty.

         2.5      Termination.
     This Guaranty shall continue in full force and effect until the earliest to
occur  of  the  following:  (i)  the  complete  performance  of  the  Guaranteed
Obligations,  (ii) the transfer  (other than to an affiliate  of  Guarantor)  of
Lessor's  interest  in the  Lease  under  and in  compliance  with the terms and
conditions  of the Lease,  or (iii) the transfer  (other than to an affiliate of
Guarantor) by Guarantor (or, if applicable, the affiliate of Guarantor that owns
the stock of Lessor) of all of its right, title and interest in and to the stock
of Lessor, provided that (a) the transferee enters into a guaranty substantially
in the form of this Guaranty  pursuant to which the  transferee  guarantees  the
Guaranteed Obligations of Lessor and (b) any such entity complies with the terms
and conditions of the Lease.  In connection  with any such  termination,  Lessee
shall provide such documents or release or discharge as Guarantor may reasonably
request.

         2.6      Indemnity; No Set-off.

     (a)  In  consideration  of the  execution  and delivery of this Guaranty by
          Guarantor,  Lessee  hereby  agrees,  as evidenced by its signature set
          forth on the signature page of this Guaranty,  to indemnify  Guarantor
          as an  "Indemnitee"  in accordance  with Clause 10 of the Common Terms
          Agreement,  and such Clause is  incorporated  by reference in full for
          the benefit of Guarantor with the same force and effect and subject to
          the same limitations and exclusions as though fully set forth herein.

     (b)  By acceptance of this Guaranty,  Lessee shall be deemed to have waived
          any right to set-off, combine,  consolidate,  or otherwise appropriate
          and apply (i) any  assets of  Guarantor  at any time held by Lessee or
          (ii) any  indebtedness or other  liabilities at any time held or owing
          by Lessee to  Guarantor,  as the case may be, or on  account  of,  the
          obligations or liabilities  owed by Guarantor to the Lessee under this
          Guaranty.

         2.7  Counterparts.
     This   Guaranty  may  be  executed  by  the  parties   hereto  in  separate
counterparts, each of which when so executed and delivered shall be an original,
but all  such  counterparts  shall  together  constitute  but  one and the  same
instrument.

         2.8 Currency of Payment.
     Any payment to be made by Guarantor  shall be made in the same  currency as
designated  for  payment in the Lease and such  designation  of the  currency of
payment is of the essence.

         IN WITNESS  WHEREOF,  Guarantor  has caused  this  Guaranty  to be duly
executed as of the day and year first above written.

GENERAL ELECTRIC CAPITAL
CORPORATION

By:      ________________________
         Name:
         Title:

Accepted and Agreed:

FRONTIER AIRLINES, INC.

By:      ________________________
         Name:
         Title:TO THE EXTENT THAT THIS AIRCRAFT LEASE AGREEMENT  CONSTITUTES  CHATTEL PAPER (AS
DEFINED  IN  THE  UNIFORM  COMMERCIAL  CODE  AS  IN  EFFECT  IN  ANY  APPLICABLE
JURISDICTION),  NO SECURITY  INTEREST IN THIS  AIRCRAFT  LEASE  AGREEMENT MAY BE
CREATED  THROUGH  TRANSFER  OR  POSSESSION  OF ANY  COUNTERPART  OTHER  THAN THE
ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART DESIGNATED AS
THE  ORIGINAL ON THE  SIGNATURE  PAGE OF THIS  AGREEMENT  BY AVIATION  FINANCIAL
SERVICES INC.

                            AIRCRAFT LEASE AGREEMENT

                           Dated as of April 20, 2000

                                     between

                        AVIATION FINANCIAL SERVICES INC.

                                    as Lessor

                                       and

                             FRONTIER AIRLINES, INC.

                                    as Lessee

                                  in respect of

                          Fifteen Airbus A319 Aircraft

                          as further identified herein

                        incorporating the provisions of a

                             COMMON TERMS AGREEMENT

<PAGE>

                            AIRCRAFT LEASE AGREEMENT

THIS AIRCRAFT LEASE AGREEMENT is made as of April 20, 2000 and is BETWEEN:

(1)  Aviation  Financial  Services,  Inc., a corporation  incorporated under the
     laws of Delaware and a wholly owned  subsidiary of General Electric Capital
     Corporation,  a New York corporation ("GECC") having its principal place of
     business at c/o GE Capital  Aviation  Services,  Inc., 201 High Ridge Road,
     Stamford, Connecticut 06927 ("Lessor"); and

FRONTIER AIRLINES,  INC., a corporation  incorporated under the laws of Colorado
     with its principal  place of business and chief  executive  office at 12015
     East 46th Avenue, Suite 200 Denver, Colorado 80239 ("Lessee").

WHEREAS:

(A)      Lessee wishes to lease the Aircraft (as defined below) from Lessor, and
         Lessor wishes to lease the Aircraft to Lessee, on the terms and subject
         to the conditions provided herein;

(B)      GECC and Lessee  have  entered  into the  Common  Terms  Agreement  (as
         defined  below) in respect of aircraft  that may be leased from time to
         time by  Lessee  or one of its  Affiliates  from  Lessor  or one of its
         Affiliates; and

(C)      Lessor and Lessee wish to  incorporate  by reference  such Common Terms
         Agreement,  as well as  Schedules  A and B attached  hereto,  into this
         Aircraft Lease Agreement for each of the Aircraft;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

16.      INTERPRETATION

16.1     Definitions: In this Aircraft Lease Agreement,the following capitalized
         words and expressions have the respective meanings set forth below:

         Agreed Lessee  Modifications  means any modifications or changes to the
         GECC A319 Baseline  Specification  as requested by Lessee and agreed by
         Lessor for  incorporation  on any  Aircraft  prior to  Delivery of such
         Aircraft.   Lessor  agreement  to  such  modifications   shall  not  be
         unreasonably  withheld. All requests for any Agreed Lessee Modification
         shall be made no  later  than * months  prior  to the  Delivery  of any
         Aircraft.

Airbus  Aircraft  means  individually  each  of  the *  A319-100  Aircraft  with
installed Engines, Parts and Aircraft Documents and Records as further described
in Schedule A hereto and each Lease Supplement upon delivery.

Aircraft means individually,  each of the Airframes, Engines, Parts and Aircraft
Documents and Records relating to each individual Aircraft described on Schedule
A hereto, and collectively all of the Airbus Aircraft as so further described.

Airframe Maintenance  Adjustment shall have the meaning as set forth in Schedule
B, Part VI hereof.

Airframe 4C Check means the 4C check including 5 year structural inspections all
in accordance  with Lessee's  Maintenance  Program  which,  at a minimum,  shall
comply with the Manufacturer's  Maintenance Planning Document and Manufacturer's
Maintenance Review Board Report.

Airframe 8C Check means the 8C check  including 10 year  structural  inspections
all in accordance with Lessee's  Maintenance Program which, at a minimum,  shall
comply with the Manufacturer's  Maintenance Planning Document and Manufacturer's
Maintenance Review Board Report.

Airframe  Structural Check means a heavy  maintenance  visit which shall include
but not be limited to  accomplishment  of either or both of an Airframe 4C Check
and an Airframe 8C Check.

Airframe 4C Supplemental  Rent and Airframe 4C Supplemental Rent Rate shall have
the  respective  meanings  set forth in Clause (a) of Schedule B, Part V hereof.
Airframe 8C Supplemental  Rent and Airframe 8C Supplemental Rent Rate shall have
the respective meanings set forth in Clause (a) of Schedule B, Part V hereof.

Alternate  Scheduled  Delivery Month means one Aircraft in each * as alternative
delivery months to a Scheduled Delivery Month; subject, however to the continued
availability  of any  Aircraft in any month other than an  originally  Scheduled
Delivery Month.

APU Supplemental  Rent and APU Supplemental  Rent Rate shall have the respective
meanings set forth in Clause (d) of Schedule B, Part V hereof.

Common Terms Agreement means the "Aircraft Lease Common Terms  Agreement"  dated
as of April  20,  2000  executed  by GECC and  Lessee  (as in effect on the date
hereof without,  unless Lessor and Lessee otherwise  expressly agree, giving any
effect to any subsequent  amendment,  supplement,  waiver or other  modification
thereto), and which forms part of this Aircraft Lease Agreement.

Delivery Condition  Requirements means the requirements specified in Part III of
Schedule A.

Delivery  Location means  Hamburg,  Germany or such other location as Lessor and
Lessee mutually agree.

Deposit means all amounts payable pursuant to Section 3.1 hereof.

Discount Rate means *.

Engine LLP Supplemental  Rent and Engine LLP  Supplemental  Rent Rate shall have
the respective meanings set forth in Clause (b) of Schedule B, Part V hereof.

Engine Refurbishment  Maintenance Adjustment shall have the meaning as set forth
in Schedule B, Part VI hereof.

Engine  Refurbishment  Supplemental Rent and Engine  Refurbishment  Supplemental
Rent Rate shall have the respective meanings set forth in Clause (c) of Schedule
B, Part V hereof.

Final  Delivery  Date means the date that is * months  after the last day of the
Scheduled Delivery Month for each Aircraft, respectively.

Financing Documents means any documentation  reflecting a mortgage or other debt
financing  for any of the  Aircraft  as the  same may be  restated,  refinanced,
replaced or refunded, from time to time as notified by Lessor to Lessee.

Financing  Parties  means  the  holders  of  any  indebtedness  relating  to the
Aircraft.

Financing  Parties'   Representative   means  any  lender  under  the  Financing
Documents, if any, and its successors or assigns.

Guarantor means any guarantor, if any, of the Lessee's obligations hereunder.

Indemnitee  means  each of Lessor,  Owner,  GE  Capital,  GECAS,  the  Financing
Parties'  Representative  and the Financing  Parties,  and their  successors and
assigns,  and  each of their  shareholders,  contractors,  directors,  officers,
representatives, agents and employees.

Landing Gear  Supplemental  Rent and Landing Gear  Supplemental  Rent Rate shall
have the  respective  meanings  set forth in Clause  (e) of  Schedule  B, Part V
hereof.

Maintenance  Adjustment means collectively the Airframe Maintenance  Adjustment,
the Engine  Refurbishment  Maintenance  Adjustment,  the Engine LLP  Maintenance
Adjustment,  the APU  Maintenance  Adjustment  and the Landing Gear  Maintenance
Adjustment  payable  by Lessee  pursuant  to  Section  5.4 of the  Common  Terms
Agreement,  Section  3 of  this  Agreement  and  Schedule  B,  Part  VI of  this
Agreement.

Manufacturer means the manufacturer of each of the Airframe or an Engine, as the
case may be, as set forth on Schedule A hereto.

Owner  means  Lessor or such  other  entity as  notified  by Lessor to Lessee in
writing in accordance with the terms of the Lease,  including  Section 14 of the
Common Terms Agreement.

Redelivery Location means Denver,  Colorado,  or such other location on Lessee's
route system within the Continental  United States as Lessor shall advise Lessee
in writing at least * prior to the Expiry Date;  provided  that,  if an Event of
Default has  occurred  and is  continuing,  such notice may be  delivered on the
Expiry Date.

Rent means all  amounts  payable  pursuant to Section 3.2 hereof for each of the
Aircraft, respectively.

Rent  Commencement  Date means each  respective  date on which Lessor tenders an
Aircraft for Delivery to Lessee in  accordance  with Clause 4.3(a) of the Common
Terms Agreement.

Scheduled  Delivery  Date  means  the date  notified  by  Lessor  to  Lessee  in
accordance  with Clause 4.1(a) of the Common Terms Agreement for the delivery of
each Aircraft in the Scheduled Delivery Month.

Scheduled Delivery Month means one Aircraft in each of *.

Scheduled   Expiry  Date  means  the  date   immediately   preceding   the  date
corresponding  to the  Delivery  Date in the month that is the * month after the
Delivery Date for each Aircraft,  which date shall be specifically  set forth in
Lease Supplement for such Aircraft

State of Registry means United States.

Supplemental  Rent means, as applicable,  all amounts payable under the Lease in
respect of each of Airframe  Supplemental  Rent, Engine  Supplemental  Rent, APU
Supplemental Rent and Landing Gear Supplemental Rent.

Supplemental  Rental Cap shall have the  meaning set forth in Schedule B, Part V
hereof.

Tax Indemnitee means each of Owner, Lessor,  Financing Parties'  Representative,
and each member of the  consolidated  group of which Lessor or Owner is a member
for United States Federal Income Tax purposes, and their successors and assigns.

16.2     Interpretation:  Unless otherwise defined herein, words and expressions
         defined in the Common Terms Agreement have the same respective meanings
         for the purposes of this Aircraft  Lease  Agreement.  The  construction
         provisions of Section 1.2 of the Common Terms  Agreement shall apply to
         this Aircraft Lease Agreement.

17.      LEASING

17.1     Agreement to Lease:  Subject to the terms and  conditions of the Lease,
         Lessor will lease each Aircraft to Lessee and Lessee will take delivery
         of and lease each Aircraft from Lessor in accordance with the Lease for
         the duration of the Term for each such Aircraft respectively.

17.2     Term:  Subject  to  Sections  4.1  through  4.4  of  the  Common  Terms
         Agreement,  Delivery  of  each  Aircraft  will  occur  at the  Delivery
         Location  specified for such  Aircraft,  whereupon  Lessee shall accept
         each such  Aircraft  hereunder  by  executing  and  delivering  a Lease
         Supplement  substantially  in the  form of  Lease  Supplement  No. 1 as
         provided in Section  4.3 of the Common  Terms  Agreement.  The Term for
         each Aircraft  will  commence on the Delivery  Date for such  Aircraft,
         which  Delivery  Date is scheduled to occur on the  Scheduled  Delivery
         Date for such  Aircraft,  and will expire on the Scheduled  Expiry Date
         for such Aircraft  unless  terminated  earlier in  accordance  with the
         provisions of the Lease.

18.      PAYMENTS

18.1     Deposit  and Letter of Credit:  Lessee  shall pay to Lessor the Deposit
         for each  Aircraft  in cash or by Letter of Credit  (to which each such
         Deposit,  Sections  5.12 and 5.13,  as  applicable  of the Common Terms
         Agreement  shall  apply) in the  amount  and at the times  provided  in
         Schedule B hereto.

18.2     Rent:  Lessee  shall pay Rent for each  Aircraft to Lessor on each Rent
         Date for such  Aircraft  during  the Term in the amount  determined  in
         accordance  with  Schedule B hereto and as provided in Sections 5.2 and
         5.3 of the Common Terms  Agreement.  The first  instalment  of Rent for
         each Aircraft  shall be due and payable on the Rent  Commencement  Date
         for such Aircraft as defined  herein.  Provided no Event of Default has
         occurred and is continuing,  (i) during the first * Rental Periods with
         respect to each of the first * A319  Aircraft to deliver,  Lessor shall
         grant Lessee a credit in an amount equal to the Initial Aircraft Rental
         Credit and (ii) during the first three Rental Periods of this Agreement
         with  respect to each of the  remaining  * A319  Aircraft  to  deliver,
         Lessor  shall  grant  Lessee a credit in an amount  equal to the Second
         Aircraft  Rental Credit.  Each such credit shall be applied against the
         Rent  for  the  applicable  Aircraft  then  due  and  payable  for  the
         applicable  Rental  Periods as set forth above  following each Aircraft
         Delivery Date or in such other manner as Lessor and Lessee may agree.

18.3     Supplemental  Rent and  Maintenance  Adjustment:  Lessee  shall pay (a)
         Supplemental  Rent for each Aircraft to Lessor on each  applicable date
         during the Term in  accordance  with  Section  5.4 of the Common  Terms
         Agreement and in the amounts provided in Schedule B hereto; and (b) the
         Maintenance  Adjustments  for each  Airbus  Aircraft  to  Lessor on the
         Return  Occasion  in the  amounts  provided in Schedule B hereto and as
         provided in Section 5.4 of the Common  Terms  Agreement.  Lessor  shall
         retain all Supplemental  Rent and Maintenance  Adjustments,  subject to
         Section 3.4 below. Lessee's obligation to pay Supplemental Rent for any
         Airbus Aircraft shall be suspended when the Supplemental Rental Cap for
         such Aircraft has been reached.  The  Supplemental  Rental Cap for each
         Airbus Aircraft shall be maintained  during the Term and increased from
         time to time by an amount equal to any Lessor Maintenance  Contribution
         made by Lessor with respect to such  Aircraft,  whereupon  Lessee shall
         recommence  payment of Supplemental Rent until the Supplemental  Rental
         Cap for each such Airbus Aircraft shall again have been reached.

18.4     Lessor's  Maintenance   Contribution:  Lessor  shall  make  Maintenance
         Contribution  payments as and to the  extent provided in Section 7.2 of
         the Common Terms Agreement.

18.5     Lessor's  Bank  Account:  For the purposes of Section 5.5 of the Common
         Terms Agreement,  Lessor's bank account and wire transfer  particulars,
         to which all payments to Lessor  shall be made,  are at the date hereof
         Bankers  Trust  Company,  ABA number * for the  account of GECC T&I Air
         Depository Account, Account No. *.

19.      Condition of the aircraft at delivery

19.1     On each Delivery Date, as a condition to Lessee's  obligation to accept
         delivery thereof,  each Aircraft shall be in the condition  provided in
         Part III of Schedule A hereto.

20.      CONDITION OF THE AIRCRAFT AT REDELIVERY

20.1     On the Return  Occasion for each Aircraft,  Lessee shall redeliver each
         such  Aircraft  to  Lessor  at the  Redelivery  Location  and  at  such
         redelivery  each such Aircraft  shall be in the  condition  provided in
         Part  IV of  Schedule  A  hereto  and in the  Common  Terms  Agreement,
         including Schedule 6 of the Common Terms Agreement.

21.      ADDRESSES FOR NOTICES

The addresses  and  facsimile and telephone  numbers of Lessor and Lessee are as
follows:

         Lessor:           Aviation Financial Services Inc.
                           c/o GE Capital Aviation Services, Inc.
                           201 High Ridge Road
                           Stamford, CT  06927

         Attention:        Contracts Leader
         Facsimile:        (203) 357-3201
         Telephone:        (203) 357-4482

         Lessee:           Frontier Airlines, Inc.
         Address:          12015 East 46th Avenue, Suite 200
                           Denver, Colorado 80239

         Attention:        General Counsel
         Facsimile:        (303) 371-7007
         Telephone:        (303) 371-7400

22.      THE SCHEDULES AND COMMON TERMS AGREEMENT

All the provisions of Schedule A, Schedule B and the Common Terms  Agreement are
incorporated  by reference  herein and are part of this Aircraft Lease Agreement
as if they were set out in full herein.  Without  limiting the generality of the
foregoing,  by its signature below, the Lessee  acknowledges and agrees that the
Lease of the  Aircraft  hereunder  is on an "AS IS, where is" basis and that the
disclaimers,  exculpations and limitations of liability, indemnities, the choice
of New York Law as the  governing  law,  THE  LESSEE'S  submission  to  personal
jurisdiction  in New  York,  and THE  waiver  of any  right  to a trial  by jury
provided  for in the Common  Terms  Agreement  are  incorporated  herein by sUCH
reference  and ARE PART OF this  Agreement  as if the same  were set out in full
herein.

8.       RIGHTS AND REMEDIES. The exercise by Lessor of its rights and  remedies
         pursuant  to Section 13.2 of the CTA is subject to Part VII of Schedule
         B of the Lease.

9.       No amendment except in writing

No provision of this Lease, including any provision of Schedule A, Schedule B or
the  Common  Terms  Agreement,  may  be  amended,  rescinded,  changed,  waived,
discharged,  terminated or otherwise modified in any way whatsoever, except by a
writing signed by the party to be charged.  Lessor and Lessee  acknowledge their
agreement to the provisions of this Section 8 by their initials below:

Lessor:                             Lessee:

IN WITNESS  whereof,  the  parties  hereto have  executed  this  Aircraft  Lease
Agreement, each by their duly authorized representative(s), as of the date shown
at the beginning of this Aircraft Lease Agreement.

LESSOR:                                     LESSEE:

AVIATION FINANCIAL SERVICES INC.            FRONTIER AIRLINES, INC.

By:      __________________________         By:      __________________________

Name:    __________________________         Name:    __________________________

Title:   __________________________         Title:   __________________________

<PAGE>

                                   SCHEDULE A

                     PART I-Airframe and engines description

AIRBUS AIRCRAFT

         Manufacturer:              Airbus
         Model:                     (15) x A319-100
         Serial Number:             To be advised
         MTOW                       154,300 pounds

ENGINES  (each  of  which  has  750 or  more  rated  takeoff  horsepower  or the
equivalent of such horsepower)

         Engine Type:               CFM56-5B5/P
         Serial Nos:                To be advised at Delivery and included in
                                    each respective Lease Supplement.

The serial numbers stated under "Aircraft" and "Engines" above are those advised
to Lessor by the Manufacturer.  If the Manufacturer advises of any change to any
serial  number,  the new number will be deemed  inserted  under "Serial  Number"
under "Aircraft" and "Engines" above, as the case may be, above.

<PAGE>

                                   SCHEDULE A

                           PART II-AIRCRAFT DOCUMENTS

MANUALS AVAILABLE (headlines)
1 - ENGINEERING DOCUMENTS
2 - MAINTENANCE & ASSOCIATED MANUALS
3 - MISCELLANEOUS PUBLICATIONS
4 - OPERATIONAL MANUALS AND DATA
5 - OVERHAUL DATA
6 - STRUCTURAL MANUALS
<TABLE>
<S>                                                <C>        <C>      <C>      <C>    <C>

     MANUALS AVAILABLE (detailed)                  Abbr       Form     Type     Qty.    Delivery
                                                   ---------------------------------------------

1.   ENGINEERING DOCUMENTS

     Process and Material Specification              PMS        F      E        1       0***
     Standards Manual                                SM         F      E        1       -90
2.   MAINTENANCE & ASSOCIATED MANUALS

     APU Build-up Manual                             ABM        P2     E        2       -90
     Aircraft Maintenance Manual                     AMM        F      C        10      0 to +90
                                                                MF     C        1       0 to +90
     Aircraft Time Limits/Maintenance Checks         TLMC       P2     C        3       90
     Aircraft Schematics Manual                      ASM        F      C        10      0 to +90
                                                                MF     C        1       0 to +90
     Aircraft Wiring Manual                          AWM        F      C        5       0 to +90
                                                                MF     C     1          0 to +90
     Aircraft Wiring Lists                           AWL        F      C     5          0 to +90
                                                                MF     C     1          0 to +90
     Consumable Material List                        CML        P2     E     1          -90
     Duct Repair Manual                              DRM        P2     E     1          90***
     Fuel Pipe Repair Manual                         FPRM       P2     E     1          90***
     Illustrated Parts Catalog (Airframe)            IPC        F      C     10         0 to +90
                                                                MF     C     1          0 to +90
     Illustrated Parts Catalog (Power Plant)**PIPC   F          C      10    0 to +90
                                                                MF     C     1          0 to +90
     Illustrated Tools and Equipment Manual          TEM        P2     E     3          -180
     Maintenance Facility Planning                   MFP        P2     E     2          -360
     Maintenance Planning Document                   MPD        P2     P     1          -180
                                                                       E     3          -90
     Power Plant Build-up Manual**                   PBM        P2     C     2          -90
     Support Equipment Summary                       SES        P1     E     2          -180
     Tool and Equipment Drawings                     TED        AC     E        1       -180
     Tool and Equipment Index                        TEI        P2     E        2       360
     Tool and Equipment Bulletins                    TEB        P1     E        3       0
     Trouble Shooting Manual                         TSM        F      C        10      0 to +90
                                                                MF     C        1       0 to +90
3.   MISCELLANEOUS PUBLICATIONS

     Airplanes Characteristics for Airport Planning  AC         P2     E        2       -360***
     Aircraft Recovery Manual                        ARM        P2     E        2       0***
     Cargo Loading System Manual                     CLS        P2     E        2       -90
     Crash Crew Chart                                CCC        P1     E        5       -180
     List of Radioactive and Hazardous Elements      LRE        P2     E        1       90***
     List of Applicable Publications                 LAP        P1     C        1       -180
     Livestock Transportation Manual                 LTM        P2     E        1       90***
     Service Bulletin                                SB         P2     C        2       0
                                                                F      E        1       -90
     Technical Publications Combined Index           TPCI       D      E        1       -90
     Service Information Letters                     SIL        P1     E        1       0
     Transportability Manual                         TM         P1     E        1       -90***
     Vendor Information Manual                       VIM        D      E        1       360
     Vendor Information Manual GSE                   VIM/GSE    P2     E        2       360

The         quantities  listed  below are in  addition to the set of one copy of
            each  operational  manual to be delivered with the Aircraft  (except
            PEP/PPM).

4.   OPERATIONAL MANUALS AND DATA

     Quick Reference Handbook                        QRH        P2     C        3       -90
     Flight Crew Operating Manual                    FCOM       P2     C        3       0
     Flight Manual                                   FM         P2     C        1       -90
                                                                       C        3       0
     Master Minimum Equipment List                   MMEL       P2     C        3       0
     Performance Engineering Program                 PEP        MT     C        1       -90
                                                                D      C        1       -90
     Performance Program Manual                      PPM        P2     C        3       90
     Weight and Balance Manual                       WBM        P2     C        3       0

5.   OVERHAUL DATA

     Component Documentation Status                  CDS        D            C    1     180***
     Component Evolution List                        CEL        P2           E    1     ***
     Cable Fabrication Manual                        CFM        P2           E    1     90***
     Component Maintenance Manual Airframe
     Manufacturer                                    CMMM       F            E    2     -180 to +180*

6.   STRUCTURAL MANUALS

     Nondestructive Testing Manual                 NTM        P2           E      2   -90***
     Structural Repair Manual                      SRM        F            E      2   -90***
</TABLE>

**      Supplied by the Propulsion Systems manufacturer.
***      Optional.  Delivered as follow-on for CDS.

MANUAL FORMAT AND TYPE IDENTIFICATION

FORM     AC    APERTURE CARD.  Refers to 35mm film contained in punched aperture
               cards.
         D     FLOPPY DISK 3"1/2
         F     MICROFILM.  Refers to 16mm roll film on 3M type cartridges.
         MF    MASTER FILM.   Refers  to  thick  diaz  film suitable for further
               reproduction.
         MP    Refers to paper  printed  one side,  unpunched  quality  shall be
               suitable  for  further reproduction or microfilming.
         MT    MAGNETIC TAPE
         P1    PRINTED ONE SIDE.  Refers  to  manuals in paper with print on one
               side of the sheets only.
         P2    PRINTED BOTH SIDES.  Refers  to  manuals with print on both sides
                of the sheets.

TYPE     C     CUSTOMIZED.  Refers to manuals which are customized.
         E     ENVELOPE.  Refers to manuals which are not customized.
         P     PRELIMINARY.   Refers  to  preliminary  data or manuals which may
               consist of:

         o  either one time issue not maintained by revision service, or
         o  preliminary issues maintained by revision service until final manual
            or data  delivery,  or o supply of best available data  under  final
            format with progressive completion through revision service.

DELIVERY          Manual  delivery  is  expressed  either as the  number of days
                  prior to delivery of the first  Aircraft or as nil (0),  which
                  designates the date of delivery of the first  Aircraft.  It is
                  agree that the number of days  indicated will be rounded up to
                  the next regular revision release date.

<PAGE>

                                   SCHEDULE A

                    PART III-DELIVERY CONDITION REQUIREMENTS

Set forth below is a description of the condition in which each Airbus  Aircraft
must be in order for Lessee to be obligated to accept each such  Aircraft  under
the Lease. It is solely a description of such condition  precedent and shall not
be construed as a representation,  warranty or agreement of any kind whatsoever,
express  or  implied,  by  Lessor  with  respect  to each such  Aircraft  or its
condition,  all of which have been  disclaimed by Lessor and waived by Lessee as
set forth in the Lease, including in the Common Terms Agreement. Airbus Delivery
Condition Requirements:

1.   The  "Delivery  Condition  Requirements"  for each Airbus  Aircraft  are as
     follows:

     On Delivery,each Airbus  Aircraft  shall

     (i)  be new, ex factory and painted in Lessee's livery;

     (ii)have a valid Export Certificate of Airworthiness for the United States;

     (iii)have an issued FAR 121 Compliance Statement from the Manufacturer;

     (iv) on  or  prior  to  the  Delivery  Date,  have  had   accomplished  all
          outstanding mandatory service bulletins,  Airworthiness Directives and
          similar  requirements  applicable to the Aircraft  having a compliance
          date prior to the  Delivery  Date or within * days after the  Delivery
          Date and which are  required  by the State of  Design,  the FAA or the
          Manufacturer.

     (v)  and  otherwise be in the condition  required for delivery  pursuant to
          each of two Purchase Agreements, dated July 16, 1996 and September 29,
          1998, respectively, each between the Manufacturer and GE Capital (each
          a "Purchase  Agreement" and together,  the "Purchase  Agreements") and
          the Airbus Aircraft  Specification Number D.000.0200,  Issue Number 4,
          dated April 30, 1995,  except as amended by change orders initiated by
          Lessor  under  the  terms  of the  Purchase  Agreement,  including  as
          modified to include the  additional  GECC  baseline SCNs in accordance
          with the GECC A319  baseline  specification  Issue 1 (the  "GECC  A319
          Baseline Specification.")

2.   Modifications  (a) The Agreed Lessee  Modifications  shall be  accomplished
     pre-delivery  at the sole cost and  expense  of  Lessee.  Lessor  shall use
     reasonable efforts to accomplish all Agreed Lessee  Modifications  prior to
     Delivery.  Cost of all Agreed Lessee  Modifications,  including charges for
     any "out of sequence production", shall be invoiced to Lessee upon Lessor's
     receipt of invoice applicable to each individual Agreed Lessee Modification
     from the relevant third party vendor.  If Lessor  notifies  Lessee that any
     Agreed Lessee  Modification  cannot be  accomplished  prior to the Delivery
     Date,  including  without  limitation  any  delays  in  accomplishing  such
     Modifications caused by failure of Lessee to deliver any materials or parts
     to  the   Manufacturer  by  the  required   on-dock  dates  as  advised  by
     Manufacturer,  such Agreed Lessee  Modification  shall be excluded from the
     Delivery Condition Requirements.

(b)  Cost  Adjustment.  Lessor  and  Lessee  agree  that if all fees,  costs and
     expenses  invoiced to Lessor  directly  attributable  to the Agreed  Lessee
     Modifications,  including without limitation, the order, purchase, delivery
     and installation on the Aircraft of the galleys,  seats,  avionics, APU and
     wheels and brakes (collectively,  the "BFE/SFE") selected by Lessee as part
     of the  Agreed  Lessee  Modifications  are less than such  fees,  costs and
     expenses  invoiced to Lessor for the BFE/SFE  selected by Lessor as part of
     the GECC A319 Baseline  Specification  , then upon the delivery of each new
     Aircraft,  Lessor shall pay to Lessee the difference between (i) the Lessee
     selected  BFE/SFE , pro-rata for each Aircraft leased by Lessee from Lessor
     ,  and  (ii)  the  Lessor  selected  BFE/SFE  for  such  Aircraft.   Lessee
     acknowledges that Lessor is subject to confidentiality  agreements with its
     vendors  relating the price of the above referenced  BFE/SFE.  Lessor shall
     certify to Lessee the net difference  between the costs of Lessee  selected
     BFE/SFE if less than the Lessor selected BFE/SFE.

(c)  Specification  Credit.  Lessee has requested that the items listed below in
     this  clause  (c ) (the  "Listed  Items")  be  removed  from the GECC  A319
     Baseline  Specification and not be included in any Aircraft.  Lessor shall,
     in its  discretion,  determine  whether  each  Listed  Item is,  or is not,
     removed from any Aircraft. In consideration thereof, Lessee hereby receives
     a credit for each Aircraft in the amount of * (the "Specification  Credit")
     (i) first, against any amounts due and payable by Lessee to Lessor relating
     to the  cost of any  additions  to the  GECC  A319  Baseline  Specification
     selected by Lessee;  (ii) second,  to the extent any  Specification  Credit
     remains,  against any amounts due and payable by Lessee to Lessor  relating
     to the cost of any increase in BFE or SFE not already  included in the GECC
     A319   Baseline   Specification   and  (iii)  third,   to  the  extent  any
     Specification Credit remains, against any amounts due and payable by Lessee
     to Lessor  under this  Agreement.  No Listed Items shall be included in the
     cost adjustments provided in clause 2 (b) above.
<PAGE>

                                                       Listed Items:

Ozone Catalytic Converters                           (G8EO2J1011101S1H)

HF LRU                                               (G8E23J1113004S1H)

Third Radio Management Panel                         (G8E23J1310102S1H)

System Prov. For Audio Pax Entertainment Sys.        (G8E23J3670000G1H)

System Provisions for PES  Video                     (G8E23J3670000G1H,
                                                      G8E23J3610501S1H)

Lav. D Mod. for Stretcher Loading                    (G8E25J2070000G1H)

Prov. For Mech. Bulk Loading                         (G8E25J5231501S1H,
System in Fwd. And Aft Cargo Holds                    MCG8E25.52.003J1MO1)

<PAGE>

                                   SCHEDULE B

                                COMMERCIAL TERMS

         Lessor  and  Lessee  hereby  agree  that  the   definitions  and  other
commercial  and financial  terms set forth in this Schedule B shall apply to the
leasing of the Aircraft under the Lease.

         In addition, Lessor and Lessee understand and agree that the commercial
and financial  information contained in this Schedule B are considered by Lessor
and Lessee as proprietary and confidential. Lessor and Lessee each hereby agree,
and any of their  assignees,  upon  becoming such shall agree that it will treat
this Schedule B as proprietary and  confidential and will not, without the prior
written  consent  of the other,  disclose  or cause to be  disclosed,  the terms
hereof  or  thereof  to  any  Person,  except  to its  agents,  representatives,
advisors,  employees,  counsel,  underwriters,  auditors,  investors,  financing
parties and head lessors as necessary or appropriate for the leasing transaction
which is the subject hereof,  or except (a) as may be required by applicable Law
or pursuant to an order, or a valid and binding request,  issued by any court or
other Government Entity having jurisdiction over Lessor,  Lessee or the assignee
of either of them,  as the case may be, or (b) as necessary to enable  Lessor or
its assignee to make transfers,  assignments or other  dispositions to potential
transferees, assignees or participants of its interest in and to the Lease.

         In connection with any such disclosure or any filing of the information
contained herein or therein pursuant to any such applicable Law, Lessor,  Lessee
or the assignee of either of them, as the case may be, shall request and use its
best reasonable efforts to obtain confidential  treatment of this Schedule B and
the other party will  cooperate  in making and  supporting  any such request for
confidential treatment.

PART I   PART I-CASUALTY OCCURRENCE DEFINITIONS

Agreed Value The Agreed Value shall be $* for each Airbus Aircraft.

Damage Notification Threshold means $*.

Deductible Amount means $*.

Minimum Liability Coverage means $*.

PART II  DEPOSIT; LC AMOUNT; INTEREST RATE

Deposit means, for the purposes of Section 3.1 hereof,  for each Airbus Aircraft
$*, * of which  shall  have  been  paid on or before  the date  hereof;  and the
balance of which  shall be paid no later than * days prior to  delivery  of each
Aircraft;  provided,  however,  that  Lessee may elect to provide  Lessor with a
Letter of Credit in an amount,  from a financial  institution  and  otherwise in
form and substance,  reasonably  acceptable to Lessor.  Lessee  acknowledges and
agrees  that it is not  located in the State of New York  within the  meaning of
Section 7-101 1-c(b) of the New York General  Obligations Law, and therefore the
requirements  of Section  7-101 of the New York General  Obligations  Law do not
apply to the Deposit.

Initial  Aircraft Rental Credit means, in respect of the first * Airbus Aircraft
to deliver, an amount equal to $* per Airbus Aircraft.

Interest Rate: The Interest Rate shall be the "prime rate" as quoted in the Wall
Street Journal from time to time during the applicable  period plus * per annum,
but not to exceed the maximum amount permitted by Law.

LC Amount  means,  for the purposes of Section 3.1 hereof,  the amount of one or
more Deposits for each Aircraft secured by a Letter of Credit.

Pre-Delivery Termination Value means $* per Airbus Aircraft.

         Quotation  Date means the day two  Business  Days before the  Scheduled
Delivery Date.  Second  Aircraft  Rental Credit means,  in respect of the last *
Airbus Aircraft to deliver, an amount equal to $* per Airbus Aircraft.

PART III RENT

         Assumed  Rent  means  (i) for the  first * Rental  Periods  (a) $* with
         respect to each of the first * Aircraft to be delivered  hereunder (the
         "Initial  Aircraft")  and (b) $*  with  respect  to each of the  last *
         Aircraft to be delivered  hereunder (the "Subsequent  Aircraft");  (ii)
         for  Rental  Periods * through * (a) $* with  respect  to each  Initial
         Aircraft and (b) $* with respect to each Subsequent Aircraft; and (iii)
         for each of the Aircraft  for each Rental  Period  thereafter,  $*. The
         foregoing amounts are based upon the  Manufacturer's  Aircraft Price in
         June,  1999 and an eight year swap rate  between *% and *%. The Assumed
         Rent  shall be (A)  increased  by an  amount  equal to $* per  month if
         Lessee elects to pay the Deposit for any Aircraft  pursuant to a Letter
         of Credit and (B) increased by (i) $* per month if Lessee elects,  upon
         no less than * months prior written notice,  to reschedule  Delivery of
         such Aircraft to any Alternate  Scheduled Delivery Month in lieu of the
         current Scheduled Delivery Month as herein defined or (ii) $* per month
         if Lessee elects,  upon no less than * months prior written notice,  to
         reschedule  Delivery  of  such  Aircraft  to a  month  which  is  not a
         Scheduled Delivery' Month or an Alternate Scheduled Delivery Month.

         Rent. The Rent payable in respect of each Rental Period during the Term
         for each  Airbus  Aircraft  shall be payable in *  consecutive  monthly
         installments,  in advance on each Rent Date, with each such installment
         equal to an amount calculated as follows:

         Rent = * where:

          *    is the Assumed Rent for the applicable Rental Period;

          *    means the assumed  8-year U.S.  Dollar Swap rate  expressed  as a
               number determined as follows: (i) ifs is less than or equal to *,
               then * is equal to *%, (ii) ifs is greater  than *% and less than
               *%,  then * is equal to *, and (iii)  ifs is equal to or  greater
               than *%, then * is equal to *%;

          *    is (i) the  actual  8 year  Dollar  swap  rate  ("Open"  rate per
               Bloomberg  screen  "IRSB" ) expressed as a number and obtained by
               Lessor on the Quotation  Date:  or, if on the Quotation  Date the
               Bloomberg  Screen  "IRSB" is not  available  or does not  display
               rates for the required period, the 8-year Dollar swap rate quoted
               on  the  applicable  Reuters  page,  expressed  as a  number  and
               obtained by Lessor on the  Quotation  Date; or (ii) the sum of(a)
               the  actual 8 year  Dollar  swap  rate as set  forth in (i) above
               fixed on a date, at Lessee's option,  which is earlier than title
               Quotation Date upon 30 days' prior written notice to Lessor;  and
               (b) 15 basis points for each year from the effective date of such
               notice (which  effective  date shall be 30 days after the date of
               such notice) until the Scheduled Delivery Date, pro rated for any
               partial year;

          *    is $*; and

          *    is *, rounded to the nearest * places of decimals, where:

               *    is the  Manufacturer's  Gross Invoice Price for the Aircraft
                    on the basis of  delivery of the  Aircraft  on the  Delivery
                    Date;  provided,  however,  that * shall not be disclosed by
                    Lessor to Lessee and

               *    is the  Manufacturer's  Gross Invoice Price for the Aircraft
                    which  would  apply if the  Aircraft  were  delivered  in *;
                    provided,  however,  that * shall not be disclosed by Lessor
                    to Lessee.

PART IV   [INTENTIONALLY OMITTED]

PART V   SUPPLEMENTAL RENT

The  Supplemental  Rent  payable  will  be  determined  with  reference  to  the
following:

Airframe  Supplemental Rent means all (i) Airframe 4C Supplemental Rent and (ii)
Airframe 8C Supplemental  Rent in each case payable by Lessee pursuant to Clause
(a) below.

Annual Supplemental Rent Adjustment means (*%)

APU Supplemental  Rent means all Supplemental Rent payable by Lessee pursuant to
Clause (d) below.

Assumed  Ratio  Adjustment:  For the purposes of Section 5.4 of the Common Terms
Agreement,  Assumed  Ratio means a * hour to one cycle ratio (*) for each Airbus
Aircraft  and any  adjustment  pursuant  to  Clause  5.4  shall  be based on the
following table:

<PAGE>

Airbus A319 Aircraft - FH/CYC      *      *       *      *       *      *
Ratio
Airframe 4C Supplemental Rent      $*     $*      $*     $*      $*     $*
Rate
Airframe 8C Supplemental Rent      $*     $*      $*     $*      $*     $*
Rate
Engine Refurbishment               $*     $*      $*     $*      $*     $*
Supplemental Rent Rate
Engine LLP Supplemental Rent Rate  $*     $*      $*     $*      $*     $*
APU Supplemental Rent Rate         $*     $*      $*     $*      $*     $*
Landing Gear Supplemental Rent     $*     $*      $*     $*      $*     $*
Rate

Assumed  Utilization  means an annual  utilization of * hours per annum for each
Airbus Aircraft.

Engine  Supplemental  Rent means all (i) Engine LLP Supplemental Rent payable by
Lessee pursuant to Clause (b) below, and (ii) Engine Refurbishment  Supplemental
Rent payable by Lessee pursuant to Clause (c) below.

Landing Gear  Supplemental  Rent means all  Supplemental  Rent payable by Lessee
pursuant to Clause (e) below.

Supplemental Rent equals each of the following amounts:

(a)  Airframe:   in  respect  of  each  Airframe  4C  Check,  $*  ("Airframe  4C
     Supplemental  Rent  Rate") for each  Flight  Hour  operated  by each Airbus
     Aircraft   during  each  calendar  month  during  the  Term  ("Airframe  4C
     Supplemental  Rent") and Airframe 8C Check,  $* ("Airframe 8C  Supplemental
     Rent Rate") for each Flight Hour  operated by each Airbus  Aircraft  during
     each calendar month during the Term ("Airframe 8C Supplemental Rent");

(b)  Engine  Life-Limited  Parts: in respect of the life-limited  Parts for each
     Engine installed on an Airbus Airframe,  $* ("Engine LLP Supplemental  Rent
     Rate") for each Flight Hour  operated by that Engine  during each  calendar
     month during the Term ("Engine LLP Supplemental Rent");

(c)  Engine  Refurbishment:  in respect of each  Engine  installed  on an Airbus
     Airframe,  $*  ("Engine  Refurbishment  Supplemental  Rent  Rate") for each
     Engine  Flight Hour (or fraction  thereof)  operated by that Engine  during
     each  calendar  month during the Term ("Engine  Refurbishment  Supplemental
     Rent"); -

(d)  APU:  in respect of the APU  relating  to each  Airbus  Airframe,  $* ("APU
     Supplemental  Rent Rate") for each  Flight Hour  operated by the APU during
     each calendar month during the Term ("APU Supplemental Rent"); and

(d)  Landing  Gear:  in  respect  of the  Landing  Gear  installed  on an Airbus
     Airframe,  $* ("Landing Gear  Supplemental Rent Rate") for each Flight Hour
     operated by the Landing  Gear during each  calendar  month  during the Term
     ("Landing Gear Supplemental Rent").

Supplemental  Rental Cap means an aggregate amount of all Supplemental Rent paid
in respect of each Airbus Aircraft during the Term in an amount equal to the sum
of (I) $* plus (ii) the amount of all Maintenance  Contributions  made by Lessor
in respect of each such Airbus Aircraft.

   PART VI RETURN CONDITION DEFINITIONS; MAINTENANCE PAYMENTS AT REDELIVERY;
                    AIRWORTHINESS DIRECTIVE SHARING PAYMENTS

DEFINITIONS:

Engine Cycles Restriction means * Engine Cycles.

Engine Flight Hours Restriction means * Engine Flight Hours.

Engine  Refurbishment  means all scheduled and unscheduled  off-the-wing  Engine
maintenance  and repair  accomplished  for each  module in  accordance  with the
performance  restoration,  minimum  restoration or full overhaul sections of the
Manufacturer's  workscope planning guide and including  performing the following
for each of the modules, for each of the Engines:

                  Hot Section Module means the combustor,  combustor casing, HPT
                  nozzle, HPT rotor, LPT nozzle (stage one).

                  Hot Section Module  Refurbishment  means,  with respect to any
                  Engine,   the   accomplishment   of  a   "Performance   Level"
                  refurbishment,  per the CFMI Workscope  Planning Guide, of the
                  Hot Section  Module  including  the  complete  inspection  and
                  repair as  necessary  per the shop  manual  of the  combustor,
                  combustor casing,  high pressure turbine nozzle section,  high
                  pressure  turbine rotor, and low pressure turbine nozzle stage
                  1 in an engine  repair/overhaul  station,  including  (without
                  limitation)  complete unstacking of the high pressure turbine;
                  de-blading  of  discs;   visual   inspections  of  all  discs;
                  verification  that all snap  diameters  on  discs  are  within
                  limits;  inspection  of all  blades for tip  condition,  blade
                  length and cracking. Repair or replacement of all blades below
                  minimum  with new or  refurbished  blades;  blade-up  of discs
                  using new lock  plates;  assembly  of  rotors in the  turbine;
                  balance of all rotors; installation of rotor in the Engine.

                  HPC Module means the high  pressure  compressor  rotor and the
                  high pressure compressor forward and aft stator .

                  HPC Module  Refurbishment  means,  with respect to any Engine,
                  the accomplishment of a "Performance Level" refurbishment, per
                  the CFMI Workscope Planning Guide, of the HPC Module including
                  the  completion of the following:  complete  unstacking of the
                  high pressure  compressor and complete shop manual inspection;
                  of the forward and aft stator cases,  de-blading discs; visual
                  inspections of all discs; verification that all snap diameters
                  on discs are  within  limits;  inspection  of all  blades  for
                  proper chord dimensions,  cracking; and erosion on leading and
                  trailing edges; repair or replacement of blades below minimum;
                  inspection  and repair of stators as  necessary;  blade-up  of
                  discs  using  new  lock  plates;  assembly  of  rotor  in  the
                  compressor;  balance of all rotors;  and installation of rotor
                  in the Engine..

                  Fan and Booster  Module means the fan rotor and  booster,  the
                  number 1 and 2 bearing  support,  inlet  gearbox  and number 3
                  bearing assembly, and the fan frame assembly.

                  Fan and Booster Module  Refurbishment  means,  with respect to
                  any  Engine,   the   accomplishment   of  a  "Minimum   Level"
                  refurbishment,  per the CFMI Workscope  Planning Guide, of the
                  fan  and  booster  module  including  the  completion  of  the
                  following:  removal from engine and shop manual  inspection of
                  fan/booster  assembly,  removal and shop manual  inspection of
                  fan blades,  booster blades, and spacers.  The fan disk should
                  be separated  from the booster spool only for cause.  Visually
                  inspect the exposed  areas of the fan disk and booster  spool.
                  Recontour  fan  blades,  inspection  of all  blades for proper
                  chord dimensions and cracking; repair or replacement of blades
                  below minimum;  inspection and repair of stators as necessary;
                  blade-up of discs using new lock plates; assembly of rotors in
                  the compressor;  balance of all rotors;  installation of rotor
                  in the Engine..

                  LPT Module means the low pressure turbine,  LPT shaft, and LPT
                  Frame.

                  LPT Module  Refurbishment  means,  with respect to any Engine,
                  the accomplishment of a "Minimum Level" refurbishment, per the
                  CFMI Workscope Planning Guide, of the LPT Module including the
                  complete visual  inspection and repair as necessary of the low
                  pressure   turbine   module   of  an   Engine   in  an  engine
                  repair/overhaul   station,   including  (without   limitation)
                  complete  unstacking  of the low  pressure  turbine;  complete
                  visual inspection; de-blading of discs ; visual inspections of
                  all discs;  verification  that all snap diameters on discs are
                  within  limits;  inspection  of all blades  for  proper  chord
                  dimensions  and cracking;  repair or replacement of all blades
                  below minimum;  inspection and repair of stators as necessary;
                  blade-up of discs using new lock plates; assembly of rotors in
                  the turbine;  balance of all rotors; and installation of rotor
                  in the Engine.

                  Accessory  Drive  Module  means   the  Transfer  Gearbox   and
                  Accessory Gearbox.

                  Accessory Drive Module Refurbishment means with respect to any
                  engine the inspection and repair per shop manual.

Minimum APU Limit means * Flight Hours since the last gas path refurbishment.

Minimum Component Calendar Life means * months.

Minimum Component  Cycles means * Cycles

Minimum Component Flight Hours means * Flight Hours

Minimum Engine Cycles means * Cycles.

Minimum Engine Flight Hours means * Flight Hours.

Minimum Landing Gear Calendar Time means * months

Minimum Landing Gear Cycles means * Cycles.

Minimum Landing Gear Flight Hours means * Flight Hours.

Minimum Measurable Fuel Requirement means the amount of fuel as at Delivery.

         Redelivery  "C"  Check  means  the next  sequential  Block `C' check in
         accordance  with  the  Lessee's  Maintenance  Program  including  those
         bridging tasks identified in the  Manufacturer's  Maintenance  Planning
         Document,  Appendix J, to bridge the Aircraft  back to a block  program
         and "Block `C' Structural Check" with at least * Flight Hours remaining
         to the next "C" or higher check.

AD Sharing

AD Threshold means $*.

         If  any  Airworthiness  Directive  is  issued  by  the  FAA  for  which
         terminating  action is required to be performed  by Lessee  pursuant to
         Section  8.10(c)(ii) of the Common Terms Agreement and FAR Part 121 and
         if the actual cost incurred by Lessee (as documented in the same manner
         and paid  within the same time as  required  under  Section  7.2 of the
         Common  Terms  Agreement  for a  Maintenance  Contribution  payment  by
         Lessor) in  performing  or causing to be performed  such  Airworthiness
         Directive exceeds the AD Threshold,  Lessor shall, following receipt of
         the invoice in such amount and provided no (i) Default  relating to any
         payment under the Lease or (ii) any other Event of Default has occurred
         and  is  continuing,  reimburse  to  Lessee  an  amount  calculated  in
         accordance with the following formula:

                  * where:
                  * = Total actual invoiced cost of such Airworthiness Directive
                  * = AD Threshold.
                  * = * months.
                  * = Months remaining to the Scheduled Expiry Date.

MAINTENANCE ADJUSTMENTS:

Maintenance  Adjustment:  In respect of each  calendar  month (or part  thereof)
during the Term,  Lessee will pay to Lessor at the end of the Term in accordance
with Section 5.4 of the Common Terms Agreement and Section 3.3 of this Agreement
the following Maintenance Adjustments for each Airbus Aircraft:

(a)  Airframe  Maintenance  Adjustment:  in respect of the Airframe 4C Check and
     Airframe 8C Check, upon redelivery of the Aircraft to Lessor (but not after
     the  occurrence of an Event of Loss with respect to the  Aircraft),  Lessee
     shall  pay to  Lessor  for each  Flight  Hour  since  new or since the last
     Airframe  Structural  Check,  as applicable,  an amount equal to (i)(A) the
     number of Flight Hours on the Airframe since new or since the last Airframe
     Structural  Check,  as  applicable,  multiplied  by  (B)  the  Airframe  4C
     Supplemental Rent Rate less (C) the Remaining Airframe 4C Supplemental Rent
     and an amount  equal to (ii)(A) the number of Flight  Hours on the Airframe
     since new or since  the last  Airframe  Structural  Check,  as  applicable,
     multiplied  by (B) the  Airframe  8C  Supplemental  Rent  Rate less (C) the
     Remaining  Airframe  8C  Supplemental  Rent  (collectively,  the  "Airframe
     Maintenance Adjustment").

(b)  Engine  Refurbishment  Maintenance  Adjustment:  in respect of each Engine,
     upon  redelivery of the Aircraft to Lessor (but not after the occurrence of
     an Event of Loss with respect to the Aircraft or any Engine),  for any life
     used since new or since the latest  Engine  Refurbishment  of each  defined
     module (as further  described below, each a "Defined Module") in accordance
     with  the  applicable  percentage,  whichever  is  less,  to  the  date  of
     Redelivery,  Lessee  shall pay to  Lessor  an amount  equal to (i) for each
     Engine  Flight Hour (or  fraction  thereof)  operated by that Engine in the
     aggregate during each calendar month during the Term since new or since the
     last  Engine  Refurbishment  multiplied  by (ii) the  Engine  Refurbishment
     Supplemental   Rent  Rate  less  (iii)   Remaining   Engine   Refurbishment
     Supplemental Rent (the "Engine Refurbishment Maintenance Adjustment").  For
     purposes  of  this  Clause,  Defined  Modules  shall  include  each  of the
     Combustion  Chamber/ High Pressure Turbine (*% of the Engine  Refurbishment
     Supplemental  Rent  Rate);  High  Pressure  Compressor  (*% of  the  Engine
     Refurbishment  Supplemental Rent Rate); the Low Pressure Turbine (*% of the
     Engine  Refurbishment  Supplemental  Rent Rate) and the Fan  Booster (*% of
     Engine Refurbishment Supplemental Rent Rate).

provided,  however, if any of the amounts described above is less than zero then
the applicable Maintenance Adjustment shall be equal to zero.

(c)  Engine  Life  Limited  Parts:  with  respect to Engine  Life-Limited  Parts
     ("Engine  LLPs"),  upon redelivery of the Aircraft to Lessor (but not after
     the  occurrence  of an Event of Loss with  respect to the  Aircraft  or any
     Engine),  within any Engine,  Lessee shall pay to Lessor an amount equal to
     (i) for each Engine  Flight  Hour (or  fraction  thereof)  operated by that
     Engine in the aggregate  during each  calendar  month during the Term since
     new or since the last Engine  Refurbishment  multiplied  by (ii) the Engine
     LLP  Supplemental  Rent Rate less (iii) Remaining  Engine LLP  Supplemental
     Rent (the "Engine LLP Maintenance Adjustment").

(d)  APU:  with respect to the APU,  upon  redelivery  of the Aircraft to Lessor
     (but not  after the  occurrence  of an Event of Loss  with  respect  to the
     Aircraft),  Lessee shall pay to Lessor an amount equal to (i) $* per Flight
     Hour since new or HSI in accordance with the Manufacturer's recommendations
     less  (ii) the  Remaining  APU  Supplemental  Rent  (the  "APU  Maintenance
     Adjustment").

(e)  Landing Gear Adjustment:  with respect to Landing Gear (per shipset),  upon
     redelivery  of the Aircraft to Lessor (but not after the  occurrence  of an
     Event of Loss with respect to the Aircraft),  Lessee shall pay to Lessor an
     amount equal to (i) $* per Flight Hour since new or since complete overhaul
     in accordance with the Manufacturer's  recommendations,  whichever is less,
     minus (ii) the Remaining  Landing Gear Supplemental Rent (the "Landing Gear
     Maintenance Adjustment")

For purposes of this section:  "Remaining Airframe  Supplemental Rent" means the
amount equal to the aggregate  amount of Airframe 4C  Supplemental  Rent and the
Airframe  8C  Supplemental  Rent paid under the Lease  during the Term minus the
aggregate amount previously paid by Lessor under Section 7.2(a)(i) of the Common
Terms Agreement. "Remaining Engine LLP Supplemental Rent" means the amount equal
to the  aggregate  amount of Engine LLP  Supplemental  Rent paid under the Lease
during the Term  minus the  aggregate  amount  previously  paid by Lessor  under
Section 7.2(a)(ii) of the Common Terms Agreement. "Remaining Engine Supplemental
Rent" means the amount equal to the aggregate amount of Engine Supplemental Rent
paid under the Lease during the Term minus the aggregate amount  previously paid
by Lessor under Section  7.2(a)(iii) of the Common Terms  Agreement.  "Remaining
APU  Supplemental  Rent" means the amount equal to the  aggregate  amount of APU
Supplemental  Rent paid  under the Lease  during  the Term  minus the  aggregate
amount  previously  paid by Lessor under Section  7.2(a)(iv) of the Common Terms
Agreement.  "Remaining Landing Gear Supplemental Rent" means the amount equal to
the  aggregate  amount of Landing  Gear  Supplemental  Rent paid under the Lease
during the Term  minus the  aggregate  amount  previously  paid by Lessor  under
Section 7.2(a)(v) of the Common Terms Agreement.

<PAGE>

                                   SCHEDULE B

INTENTIONALLY  DELETED FROM THE VERSION OF THIS  DOCUMENT  FILED WITH THE FAA AS
CONTAINING CONFIDENTIAL AND PROPRIETARY INFORMATION.

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