EXHIBIT 10.6.1

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                              AMENDED AND RESTATED
                                CREDIT AGREEMENT


                                      among


                       ATLAS FREIGHTER LEASING III, INC.,
                                  as Borrower,


                           THE LENDERS LISTED HEREIN,
                                   as Lenders



                                       and


                      DEUTSCHE BANK TRUST COMPANY AMERICAS,
                            as Administrative Agent.


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

                            Dated as of July 27, 2004

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


                                 $158,588,240.67


                          DEUTSCHE BANK SECURITIES INC.
                                 Lead Arranger
                                      and
                                  Book Manager



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                                            TABLE OF CONTENTS
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SECTION 1. DEFINITIONS ..................................................................................2

           1.1   Certain Defined Terms ..................................................................2
           1.2   Accounting Terms; Utilization of GAAP for Purposes of Calculations
                 Under Agreement .......................................................................22
           1.3   Other Definitional Provisions .........................................................22

SECTION 2. AMOUNTS AND TERMS OF LOANS ..................................................................22

           2.1   Loans; Notes; Register ................................................................22
                 A.      Loans .........................................................................22
                 B.      Notes .........................................................................23
                 C.      The Register ..................................................................23
           2.2   Interest on the Loans .................................................................24
                 A.      Rate of Interest ..............................................................24
                 B.      Interest Periods ..............................................................24
                 C.      Interest Payments .............................................................25
                 D.      Default Rate ..................................................................25
                 E.      Computation of Interest .......................................................25
           2.3   Fees ..................................................................................25
           2.4   Repayments and Prepayments; General Provisions Regarding Payments .....................26
                 A.      Scheduled Repayments of Loans .................................................26
                 B.      Prepayments ...................................................................26
                 C.      General Provisions Regarding Payments .........................................30
           2.5   Use of Proceeds .......................................................................31
                 A.      Loans .........................................................................31
                 B.      Margin Regulations ............................................................31
           2.6   Special Provisions Governing Loans ....................................................31
                 A.      Determination of Applicable Interest Rate .....................................31
                 B.      Inability to Determine Applicable Interest Rate ...............................31
                 C.      Illegality or Impracticability of Loans .......................................32
                 D.      Compensation For Breakage or Non-Commencement of Interest
                         Periods .......................................................................32
                 E.      Booking of Loans ..............................................................32
                 F.      Assumptions Concerning Funding of Loans .......................................32
                 G.      Substitute Basis ..............................................................33
           2.7   Increased Costs, Taxes; Capital Adequacy ..............................................33
                 A.      Compensation for Increased Costs and Taxes ....................................33
                 B.      Withholding of Taxes ..........................................................34
                 C.      Capital Adequacy Adjustment ...................................................37
                 D.      Substitute Lenders ............................................................37
           2.8   Obligation of Lenders to Mitigate .....................................................38
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                                       (i)
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SECTION 3. CONDITIONS TO RESTATEMENT EFFECTIVE DATE ....................................................38

          3.1     Conditions to Effectiveness ..........................................................38

SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES ...................................................42

          4.1     Organization, Powers, Qualification, Good Standing, Business and
                  Subsidiaries .........................................................................42
                  A.     Organization and Powers .......................................................42
                  B.     Qualification and Good Standing ...............................................42
                  C.     Subsidiaries ..................................................................42
                  D.     Collateral Documents ..........................................................42
          4.2     Authorization, etc ...................................................................43
                  A.     Authorization .................................................................43
                  B.     No Conflict ...................................................................43
                  C.     Governmental Consents .........................................................43
                  D.     Binding Obligation ............................................................43
          4.3     Financial Condition ..................................................................44
          4.4     No Material Adverse Change; No Restricted Junior Payments ............................44
          4.5     Title to Properties, Liens ...........................................................44
          4.6     Litigation, Adverse Facts ............................................................45
          4.7     Payment of Taxes .....................................................................45
          4.8     Performance of Agreements ............................................................46
          4.9     Governmental Regulation ..............................................................46
          4.10    Securities Activities ................................................................46
          4.11    Compliance with ERISA ................................................................46
          4.12    Certain Fees .........................................................................46
          4.13    Environmental Protection .............................................................46
          4.14    Employee Matters .....................................................................47
          4.15    Solvency .............................................................................47
          4.16    Disclosure ...........................................................................47
          4.17    Section 1110 .........................................................................47
          4.18    Special Purpose Corporation ..........................................................48
          4.19    Representations and Warranties in Documents ..........................................48
          4.20    Leases ...............................................................................48

SECTION 5. AFFIRMATIVE COVENANTS .......................................................................48

          5.1     Financial Statements and Other Reports ...............................................48
          5.2     Corporate Existence ..................................................................51
          5.3     Payment of Taxes and Claims; Tax Consolidation .......................................51
          5.4     Maintenance of Properties; Insurance .................................................51
          5.5     Inspection; Lender Meeting ...........................................................52
          5.6     Compliance with Laws, etc ............................................................52
          5.7     Environmental Indemnity ..............................................................52
          5.8     Borrower's Remedial Action Regarding Hazardous Materials .............................52
          5.9     Maintenance Contracts ................................................................53
          5.10    Employee Benefit Plans ...............................................................53
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                                      (ii)
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          5.11   Further Assurances ....................................................................53
          5.12   Performance of Obligations ............................................................53
          5.13   Corporate Separateness ................................................................53
          5.14   CRAF Program ..........................................................................54

SECTION 6. BORROWER'S NEGATIVE COVENANTS ...............................................................54

          6.1    Indebtedness ..........................................................................54
          6.2    Liens and Related Matters .............................................................55
                 A. Prohibition on Liens 55 B. No Negative Pledges .....................................55
          6.3    Investments; Joint Ventures ...........................................................55
          6.4    Contingent Obligations ................................................................55
          6.5    Restricted Junior Payments ............................................................55
          6.6    Restriction on Fundamental Changes, Asset Sales, Acquisitions, New
                 Subsidiaries ..........................................................................55
          6.7    Amendments of Material Agreements .....................................................56
          6.8    Restriction on Leases .................................................................56
          6.9    Transaction with Shareholders and Affiliates ..........................................56
          6.10   Conduct of Business ...................................................................57

SECTION 7. EVENTS OF DEFAULT ...........................................................................57

          7.1    Failure to Make Payments When Due .....................................................57
          7.2    Default Under Lease ...................................................................57
          7.3    Breach of Certain Covenants ...........................................................57
          7.4    Breach of Warranty ....................................................................58
          7.5    Other Defaults Under Loan Documents ...................................................58
          7.6    Involuntary Bankruptcy; Appointment of Receiver, etc ..................................58
          7.7    Voluntary Bankruptcy, Appointment of Receiver, etc ....................................58
          7.8    Judgments and Attachments .............................................................59
          7.9    Dissolution ...........................................................................59
          7.10   Change in Control .....................................................................59
          7.11   Failure of Security ...................................................................59
          7.12   Loss of United States Citizen Status ..................................................59
          7.13   Equity Issuance .......................................................................59

SECTION 8. THE ADMINISTRATIVE AGENT ....................................................................60

          8.1    Appointment ...........................................................................60
          8.2    Powers and Duties; General Immunity ...................................................61
                 A.       Powers; Duties Specified .....................................................61
                 B.       No Responsibility for Certain Matters ........................................61
                 C.       Exculpatory Provisions .......................................................61
                 D.       Administrative Agent Entitled to Act as Lender ...............................62
          8.3    Representations and Warranties; No Responsibility For Appraisal of
                 Creditworthiness ......................................................................62
          8.4    Right to Indemnity ....................................................................62
          8.5    Collateral Documents ..................................................................63
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                                      (iii)

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          8.6     Successor Administrative Agent .......................................................63

SECTION 9. MISCELLANEOUS ...............................................................................64

          9.1     Assignments and Participations in Loans ..............................................64
                  A.     General .......................................................................64
                  B.     Assignments ...................................................................64
                  C.     Participations ................................................................65
                  D.     Assignments to Federal Reserve Banks and Others ...............................65
                  E.     Information ...................................................................66
          9.2     Expenses .............................................................................66
          9.3     Indemnity ............................................................................66
          9.4     Set-Off ..............................................................................67
          9.5     Ratable Sharing ......................................................................67
          9.6     Amendments and Waivers ...............................................................68
          9.7     Independence of Covenants ............................................................70
          9.8     Notices ..............................................................................70
          9.9     Survival of Representations, Warranties and Agreements ...............................70
          9.10    Failure or Indulgence Not Waiver; Remedies Cumulative ................................70
          9.11    Marshalling; Payments Set Aside ......................................................71
          9.12    Severability .........................................................................71
          9.13    Obligations Several; Independent Nature of Lenders' Rights ...........................71
          9.14    Headings .............................................................................71
          9.15    Applicable Law .......................................................................71
          9.16    Successors and Assigns ...............................................................72
          9.17    Consent to Jurisdiction and Service of Process .......................................72
          9.18    Waiver of Jury Trial .................................................................72
          9.19    Confidentiality ......................................................................73
          9.20    Counterparts; Effectiveness; Effect if Agreement Does Not Become
                  Effective ............................................................................73
          9.21    Replacement Engines and Airframes ....................................................74
                  A.     Engines .......................................................................74
                  B.     Airframes .....................................................................74
                  C.     Further Assurances ............................................................75
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                                      (iv)
<PAGE>

                  AMENDED AND RESTATED  CREDIT  AGREEMENT,  dated as of July 27,
2004 and entered into by and among ATLAS FREIGHTER LEASING III, INC., a Delaware
corporation ("AFL III" or the "BORROWER"), the Lenders party hereto from time to
time and

DEUTSCHE BANK TRUST COMPANY AMERICAS  ("DBTCA") as administrative  agent for the
Lenders (in such capacity, the "ADMINISTRATIVE  AGENT").  Capitalized terms used
herein and not otherwise defined shall have the meanings specified in Section 1.

                              W I T N E S S E T H:
                               - - - - - - - - - -

                  WHEREAS,  the  Borrower  has  been  established  for the  sole
purpose  of  owning  and  leasing  to Atlas the AFL III  Aircraft  and the Spare
Engines;

                  WHEREAS, pursuant to that certain Credit Agreement dated as of
April 25, 2000 (as the same has been amended,  modified and/or  supplemented to,
but  not  including,  the  Restatement  Effective  Date,  the  "EXISTING  CREDIT
AGREEMENT")  among  the  Borrower,  the  financial  institutions  listed  on the
signature pages  thereunder and the  Administrative  Agent,  the lenders thereof
have made  certain  credit  facilities  available to Borrower for the purpose of
refinancing  the  indebtedness  relating to the AFL III Aircraft and the AFL III
Spare Engines;

                  WHEREAS, the Borrower,  Atlas Air Worldwide Holdings,  Inc., a
Delaware  corporation  ("HOLDINGS"),  Atlas Air,  Inc.,  a Delaware  corporation
("ATLAS"),  the Lenders and the Administrative  Agent entered into a Forbearance
Agreement,  Limited Waiver and Conditional Agreement to Amend the Loan Documents
dated as of July 3, 2003 (as amended,  modified and/or supplemented prior to the
Restatement  Effective  Date,  the  "FORBEARANCE  AGREEMENT")  pursuant to which
certain of the Lenders  agreed to (i) forbear from  exercising  their rights and
remedies  under  the  Existing  Credit  Agreement  and the other  Existing  Loan
Documents while Holdings implemented a comprehensive debt restructuring  program
with respect to Holdings and certain of its  affiliates in  accordance  with the
Restructuring  Proposal Summary distributed to the Lenders on March 27, 2003 (as
amended and restated on November 24, 2003 with the consent of the Administrative
Agent,  but  without  giving  effect to any  further  modifications  without the
consent  of the  Administrative  Agent) and (ii)  waive the  application  of the
default interest provision under the Existing Credit Agreement;

                  WHEREAS,  on January  30,  2004,  Holdings,  Atlas and certain
Affiliates  thereof filed  voluntary  petitions for relief under the  Bankruptcy
Code;

                  WHEREAS, prior to filing for relief under the Bankruptcy Code,
the Borrower, Holdings, Atlas and certain of the Lenders renegotiated certain of
the terms of the Existing Credit Agreement and the other Existing Loan Documents
in accordance with the Forbearance  Agreement and the Letter  Agreement and Term
Sheet  annexed  thereto,  dated  February  2, 2004  among the  Borrower,  Atlas,
Holdings, and the lenders party thereto (collectively,  as amended,  modified or
supplemented  from time to time, the "TERM SHEET"),  which  contemplated,  among
other things,  an amendment and restatement of the Existing Credit  Agreement on
terms satisfactory to the Lenders;

                  WHEREAS,  the parties  hereto  desire to amend and restate the
Existing Credit  Agreement in order to implement the agreements set forth in the
Plan of Reorganization, the

<PAGE>

Forbearance  Agreement and the Term Sheet and to make certain  other  amendments
contained herein;

                  WHEREAS,   it  is  the   intention   of  the   Borrower,   the
Administrative Agent and each of the Lenders that such amendment and restatement
of the Existing Credit Agreement shall not constitute a refinancing of the Loans
outstanding  on the  Restatement  Effective  Date and that,  with respect to the
Loans outstanding prior to the Restatement  Effective Date, the Aircraft Chattel
Mortgages shall continue to constitute purchase-money security interests subject
to Section 1110 of the Bankruptcy Code; and

                  WHEREAS,  the Lenders identified on the signature pages hereof
hold all of the "Loans"  under the Existing  Credit  Agreement as  identified on
Schedule 2.1;

                  NOW   THEREFORE,   in   consideration   of  the  premises  and
agreements, provisions and covenants herein contained, the Borrower, the Lenders
and the  Administrative  Agent hereby agree that the Existing  Credit  Agreement
shall be amended and restated in its entirety as follows:

SECTION 1.

         DEFINITIONS

                  1.1      CERTAIN DEFINED TERMS.

                  The  following  terms  used in this  Agreement  shall have the
following meanings:

                  "ACCELERATED  DEFERRED  AMOUNT  PAYMENT  DATE" means,  for any
Relevant  Period,  the Loan  Repayment  Dates  occurring  in the  months of May,
August, November and February of such Relevant Period.

                  "ACCELERATED   DEFERRED   PAYMENT   AMOUNT"  means,   for  any
Accelerated  Deferred  Amount Payment Date, an amount equal to the lesser of (i)
the excess of (x) the  Aggregate  Accelerated  Deferred  Payment  Amount for the
Relevant  Period in which such  Accelerated  Deferred Amount Payment Date occurs
over (y) the Accelerated  Deferred Payment Amounts paid on the prior Accelerated
Deferred  Amount  Payment  Dates  occurring  in  such  Relevant   Period,   (ii)
$2,500,000,  for any Accelerated Deferred Amount Payment Date occurring prior to
March  2006 and  $4,000,000  for each  subsequent  Accelerated  Deferred  Amount
Payment Date,  and (iii) the amount which results in (after giving effect to the
payment  of such  amount)  the (x)  Unrestricted  Cash and Cash  Equivalents  of
Holdings  and its  Subsidiaries  less the  aggregate  principal  amount  owed by
Holdings and its Subsidiaries of revolving loans under the Exit Facility on such
Accelerated  Deferred  Amount Payment Date to be equal to $100,000,000 or (y) an
amount which  results in  Holdings'  Unrestricted  Cash,  Cash  Equivalents  and
Availability  ("MINIMUM LIQUIDITY") to be equal to the minimum liquidity for the
applicable period set forth in Section 7(f)(2) of the Aircraft Leases.

                  "ADJUSTED  EURODOLLAR  RATE"  means,  for  any  Interest  Rate
Determination  Date,  the rate per annum  obtained by DIVIDING  the offered rate
(expressed  as a rate per annum and rounded  upward to the  nearest  1/16 of one
percent) appearing on the Dow Jones/Telerate

                                      -2-
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Monitor on  Telerate  Access  Service  Page 3750  (British  Bankers  Association
Settlement  Rate) (or such other page as may, in the  opinion of  Administrative
Agent, replace such page on that system for the purpose of displaying such rate)
at or about 11:00 a.m.  (London time) on such Interest Rate  Determination  Date
for U.S.  dollar  deposits  of  amounts  in same  day  funds  comparable  to the
principal  amount  of the Loan for which the  Adjusted  Eurodollar  Rate is then
being  determined  with  maturities  comparable to the Interest Period for which
such  Adjusted  Eurodollar  Rate will apply BY (ii) a  percentage  equal to 100%
MINUS the stated maximum rate of all reserve  requirements  (including,  without
limitation, any marginal,  emergency,  supplemental,  special or other reserves)
applicable on such Interest  Rate  Determination  Date to any member bank of the
Federal  Reserve  System in respect of  "Eurodollar  liabilities"  as defined in
Regulation D (or any successor category of liabilities under Regulation D).

                  "ADMINISTRATIVE  AGENT" has the meaning  provided in the first
paragraph  of  this   Agreement  and  also  means  and  includes  any  successor
Administrative Agent appointed pursuant to subsection 8.6.

                  "AFFECTED  LENDER"  has the  meaning  assigned to that term in
subsection 2.6C.

                  "AFFECTED  LOANS"  has the  meaning  assigned  to that term in
subsection 2.6C.

                  "AFFILIATE"  means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person.  For the purposes of this definition,  "control"  (including,  with
correlative meanings, the terms "controlling", "controlled by" and "under common
control  with"),  as applied to any Person,  means the  possession,  directly or
indirectly,  of the power to direct or cause the direction of the management and
policies of that Person,  whether through the ownership of voting  securities or
by contract or otherwise.

                  "AFL III" has the meaning  provided in the first  paragraph of
this Agreement.

                  "AFL III  AIRCRAFT"  means,  collectively,  the  airframes and
engines listed on Schedule 2.3 hereto, or any of them, as appropriate.

                  "AGGREGATE ACCELERATED DEFERRED PAYMENT AMOUNT" means, for any
Relevant  Period,  an amount equal to (i) the product of (x) 33-1/3% and (y) the
excess of Consolidated  Adjusted EBITDA over the Projected  Consolidated  EBITDA
for such immediately preceding fiscal year.

                  "AGGREGATE AMOUNTS DUE" has the meaning provided in subsection
9.5.

                  "AGREEMENT"  means this Amended and Restated Credit Agreement,
dated  as of  July  27,  2004,  as it  may be  amended,  amended  and  restated,
supplemented or otherwise modified from time to time.

                  "AIRCRAFT  CHATTEL  MORTGAGE"  means, (i) with respect to each
AFL III Aircraft or Spare Engine Pool, a Security Agreement and Chattel Mortgage
substantially  in the form of EXHIBIT  IXA or EXHIBIT  IXB  annexed  hereto,  as
appropriate, granting to the Administrative Agent for the benefit of the Lenders
a first priority security interest in such AFL III Aircraft or Spare

                                      -3-
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Engine Pool, as the case may be, as such Aircraft Chattel Mortgage is amended by
the Aircraft Chattel Mortgage Amendment  delivered with respect thereto pursuant
to  subsection  3.1(xii) and as such  Aircraft  Chattel  Mortgage may be further
amended,  restated,  supplemented  or  otherwise  modified  from time to time in
accordance with the terms hereof and thereof.

                  "AIRCRAFT CHATTEL MORTGAGE AMENDMENT" has the meaning assigned
to such term in subsection 3.1(xii).

                  "AIRCRAFT  LEASE"  or  "AIRCRAFT  LEASES"  means  each  of the
amended and restated lease agreements, in the form of EXHIBIT VIIIA, between the
Borrower, as Lessor and Atlas, as Lessee, as the same may be amended,  modified,
or  supplemented  from time to time in  accordance  with the terms  hereof,  and
including any lease supplement  entered into in accordance with the terms of any
Aircraft Lease.

                  "AIRFRAME"  means,  as the  context  requires,  an Airframe as
defined in a particular  Aircraft Chattel Mortgage,  or all Airframes as defined
in all Aircraft Chattel Mortgages.

                  "APPLICABLE  MARGIN" has the meaning  assigned to that term in
subsection 2.2A.

                  "APPROVED APPRAISER" means any of the following:  AvSolutions,
Inc.,  BK  Associates,  Jack B. Feir  Associates,  Morton  Beyer & Agnew,  Inc.,
Airclaims,  Ltd.,  Aircraft  Information  Services,  Inc.,  Simat,  Helleisen  &
Eichner,  Inc.,  AVITAS,  Inc.  or any other  independent  appraiser  reasonably
satisfactory to the Administrative Agent.

                  "ASSET  SALE"  means the sale  (including  any  sale-leaseback
transaction)  or other  disposition  by the  Borrower to any other Person of any
assets  of  the  Borrower  (whether   tangible  or  intangible)   excluding  (i)
transactions relating to aircraft engines,  components,  parts or spare parts or
other  equipment,  appliances,   instruments,   appurtenances,   accessories  or
furnishings  of whatever  nature that may from time to time be removed  from any
Airframe  or  Engine  in  connection  with  transactions  permitted  by  and  in
accordance with Section 4(d) or Section 4(e) of the Aircraft  Chattel  Mortgages
and (ii)  transactions  effected  in  accordance  with  subsection  9.21 of this
Agreement.

                  "ASSIGNED  VALUE"  means for (x) any AFL III  Aircraft  at any
time, the percentage of the aggregate  principal amount of the Loans outstanding
at such time  specified  on Schedule  2.2 hereto and (y) any Spare Engine at any
time, the amount specified on Schedule 2.2 hereto.

                  "ASSIGNEE NOTES" means any promissory notes issued by Borrower
(i) at the  request  of a Lender  pursuant  to  subsection  2.1B  hereof or (ii)
pursuant  to  the  last  sentence  of  subsection  9.1B(i)  in  connection  with
assignments of the Loans of any Lenders,  substantially  in the form of Exhibits
IIA and  IIB  annexed  hereto,  as the  case  may be,  as they  may be  amended,
supplemented or otherwise modified from time to time.

                  "ASSIGNMENT   AGREEMENT"  means  an  Assignment  Agreement  in
substantially the form of EXHIBIT V annexed hereto.

                  "ATLAS" has the meaning provided in the recitals hereto.

                                      -4-
<PAGE>

                  "ATLAS FIFTH AMENDED AND RESTATED  CREDIT  FACILITY" means the
Fifth Amended and Restated Credit  Agreement,  dated as of July 27, 2004,  among
Atlas,  as borrower,  Holdings,  as guarantor,  the lenders  listed  therein and
Deutsche Bank Trust  Company  Americas,  as  administrative  agent,  but without
giving effect to any amendments, modifications, supplements or waivers thereof.

                  "AVAILABILITY"  means  at any  time,  the  maximum  additional
amount  available  to be  borrowed by Holdings  and its  Subsidiaries  as direct
advances under any  Indebtedness at such time taking into account any applicable
borrowing base or similar  requirements  and limitations at such time,  provided
that all of the conditions to borrowing  (other than the delivery of a notice of
borrowing) required pursuant to such Indebtedness are satisfied at such time.

                  "AVAILABLE  DEFERRED  AMOUNTS"  means an  amount  equal to the
lesser  of (a) 50% of the  actual  payments  made by  Atlas  in  respect  of the
Specified D-Checks of the Specified Aircraft and (b) $20,300,000; provided, that
the amount  specified in clause (a) of this  definition  shall be  determined as
follows: (i) upon initial payment for each Specified D-Check and each subsequent
payment for such Specified  D-Check until completion of such Specified  D-Check,
the  Available  Deferred  Amount shall be increased by an amount equal to 50% of
each payment in respect of the applicable Specified D-Check (provided,  however,
that in the case of the  first  Specified  D-Check,  the  amount  by  which  the
Available  Deferred  Amount is increased by reason of the initial  payment shall
not be  greater  than  $1,450,000  ), so long as  Atlas  has  actually  made the
applicable initial and subsequent payments in respect of such D-Check,  and (ii)
upon each subsequent  payment for a Specified  D-Check after  completion of such
Specified D-Check, the Available Deferred Amount shall be increased by an amount
equal to 50% of each such subsequent  payment, so long as (a) Atlas has made the
applicable  payment  in  connection  with  such  Specified  D-Check  and (b) the
Specified  Aircraft  subject to such Specified  D-Check shall remain  airworthy.
Notwithstanding  the  foregoing,  the  Available  Deferred  Amount  shall not be
increased by any payment made in respect of an Excluded Specified Aircraft after
the date such Specified Aircraft first became an Excluded Specified Aircraft.

                  "BANKRUPTCY  CODE"  means  Title 11 of the United  States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.

                  "BANKRUPTCY  COURT" means the United States  Bankruptcy  Court
for the Southern District of Florida.

                  "BASE RATE"  means,  at any time,  the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.

                  "BORROWER" has the meaning  provided in the first paragraph of
this Agreement.

                  "BUSINESS  DAY" means any day excluding  Saturday,  Sunday and
any day which is a legal holiday under the laws of the State of New York or is a
day on which  banking  institutions  located  in such  state are  authorized  or
required by law or other governmental action to close.

                  "CAPITAL LEASE", as applied to any Person,  means any lease of
any property (whether real, personal or mixed) by that Person as lessee that, in
conformity  with GAAP,  is accounted for as a capital lease on the balance sheet
of that Person.

                                      -5-
<PAGE>

                  "CASH" means money,  currency or a credit balance in a Deposit
Account.

                  "CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable  securities (a) issued or directly and unconditionally  guaranteed as
to interest and principal by the United  States  Government or (b) issued by any
agency of the  United  States  the  obligations  of which are backed by the full
faith and credit of the United  States,  in each case maturing  within two years
after the date of purchase;  (ii) marketable  direct  obligations  (fixed and/or
floating  rate)  issued by any state of the  United  States  of  America  or any
political subdivision of any such state or any public  instrumentality  thereof,
in each case maturing within two years after the date of purchase and having, at
the time of the  acquisition  thereof and at all times  thereafter,  the highest
rating  obtainable  from  at  least  two  of  S&P,  Moody's  and  Fitch;   (iii)
Dollar-denominated  marketable direct  obligations  (fixed and/or floating rate)
issued by any  corporation or commercial  bank  including  medium term notes and
bonds,  deposit  notes  and  eurodollar/yankee  notes  and  bonds,  in each case
maturing  within  two  years  after  the date of  purchase  and,  at the time of
acquisition  thereof and at all times thereafter,  both (A) having a rating from
at least two of S&P, Moody's, and Fitch and (B) not having a rating of less than
A from S&P, A2 from Moody's, or A from Fitch; (iv) Dollar-denominated commercial
paper  maturing no more than two years from the date of purchase and issued by a
corporation  or  commercial  bank  that,  at  the  time  of  acquisition  of the
commercial paper and at all times  thereafter,  both (A) has a short-term credit
rating  from at least  two of S&P,  Moody's,  and  Fitch and (B) does not have a
short-term credit rating of less than A-1 (or the equivalent  thereof) from S&P,
P-1 (or the equivalent thereof) from Moody's, or F-1 (or the equivalent thereof)
from Fitch; (v) Dollar-denominated certificates of deposit, bankers' acceptances
and/or time  deposits  maturing  within two years after the date of purchase and
issued or accepted  by (a) any Lender or (b) any  commercial  bank that,  at the
time of acquisition of such security and at all times thereafter, both (A) has a
short-term  credit rating from at least two of S&P,  Moody's,  and Fitch and (B)
does not have a  short-term  credit  rating of less than A-1 (or the  equivalent
thereof) from S&P, P-1 (or the equivalent  thereof) from Moody's, or F-1 (or the
equivalent thereof) from Fitch; (vi) shares of any money market mutual fund that
(a) has at  least  95% of its  assets  invested  continuously  in the  types  of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than  $500,000,000,  and (c) has the highest rating  obtainable from either
S&P,  Moody's,  or  Fitch;  (vii)  Dollar-denominated   asset-backed  securities
(excluding any mortgage  products) with a stated bullet maturity of no more than
two years from the date of purchase and, at the time of acquisition  thereof and
at all  times  thereafter,  both (A)  having a rating  from at least two of S&P,
Moody's,  and Fitch and (B) not having a rating of less than A from S&P, A2 from
Moody's,  or A from  Fitch;  (viii)  repurchase  agreements  entered  into  with
financial  institutions  satisfying  the  criteria set forth in clause (v) above
with terms of not more than thirty days for securities  described in clauses (i)
and (ii) above and having a fair market  value of at least 102% of the amount of
the repurchase obligations;  and (ix) auction rate securities (auction rate debt
and money market preferreds) with terms of not more than ninety days and, at the
time of  acquisition  thereof  and at all times  thereafter,  both (A)  having a
rating from at least two of S&P, Moody's,  and Fitch and (B) not having a rating
of less than A from S&P, A2 from Moody's, or A from Fitch.

                  "CASH  PROCEEDS"  means,  with respect to any Asset Sale other
than an  Asset  Sale of AFL III  Aircraft,  Cash  payments  (including  any Cash
received by way of deferred payment

                                      -6-
<PAGE>

pursuant to, or monetization of, a note receivable or otherwise, but only as and
when so received) received from such Asset Sale.

                  "CERTIFICATE   RE  NON-BANK   STATUS"   means  a   certificate
substantially  in the form of EXHIBIT VI annexed hereto delivered by a Lender to
the Administrative Agent pursuant to subsection 2.7B(iii).

                  "CF6-50E2  SPARE ENGINE  LEASE" means the amended and restated
lease agreement,  in the form of EXHIBIT VIIIB, between the Borrower,  as Lessor
and Atlas, as Lessee, as the same may be amended,  modified or supplemented from
time to time in  accordance  with the  terms  hereof,  and  including  any lease
supplement  entered  into in  accordance  with the terms of the  CF6-50E2  Spare
Engine Lease.

                  "CF6-50E2  SPARE ENGINE  POOL" means the set of Spare  Engines
leased pursuant to the CF6-50E2 Spare Engine Lease.

                  "CF6-80C2  SPARE ENGINE  LEASE" means the amended and restated
lease agreement,  in the form of EXHIBIT VIIIB, between the Borrower,  as Lessor
and Atlas, as Lessee, as the same may be amended,  modified or supplemented from
time to time in  accordance  with the  terms  hereof,  and  including  any lease
supplement  entered  into in  accordance  with the terms of the  CF6-80C2  Spare
Engine Lease.

                  "CF6-80C2  SPARE ENGINE  POOL" means the set of Spare  Engines
leased pursuant to the CF6-80C2 Spare Engine Lease.

                  "COLLATERAL"  means all of the  properties and assets in which
Liens are purported to be granted by the Collateral Documents.

                  "COLLATERAL  DOCUMENTS"  means each Aircraft  Chattel Mortgage
and any security agreement executed pursuant to subsection 5.11.

                  "COMPLIANCE CERTIFICATE" means a certificate  substantially in
the form of Exhibit III annexed hereto delivered to the Administrative Agent and
the Lenders by the Borrower pursuant to subsection 5.1(iv).

                  "CONDEMNATION  PROCEEDS" has the meaning assigned to that term
in subsection 2.4B(ii)(b).

                  "CONFIRMATION  DATE" means  "Confirmation  Date" as defined in
the Plan of Reorganization.

                  "CONSOLIDATED  ADJUSTED  EBITDA" has the  meaning  assigned to
that term in the Aircraft Leases.

                  "CONTINGENT  OBLIGATION"  means, as applied to any Person, any
direct or indirect liability,  contingent or otherwise,  of that Person (i) with
respect to any Indebtedness,  lease,  dividend or other obligation of another if
the primary  purpose or intent  thereof by the Person  incurring the  Contingent
Obligation is to provide assurance to the obligee of such obligation of

                                      -7-
<PAGE>

another that such obligation of another will be paid or discharged,  or that any
agreements  relating  thereto will be complied with, or that the holders of such
obligation  will be  protected  (in whole or in part)  against  loss in  respect
thereof,  (ii) with  respect to any letter of credit  issued for the  account of
that Person or as to which that Person is otherwise liable for  reimbursement of
drawings,  or (iii) under  Interest  Rate  Agreements  and Currency  Agreements.
Contingent  Obligations  shall include,  without  limitation,  (a) the direct or
indirect guaranty,  endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making,  discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase,  repurchase  or  otherwise  acquire  such  obligation  or any security
therefore,  or to provide funds for the payment or discharge of such  obligation
(whether in the form of loans, advances, stock purchases,  capital contributions
or otherwise)  or (Y) to maintain the solvency or any balance sheet item,  level
of income or  financial  condition  of another if, in the case of any  agreement
described under  subclauses (X) or (Y) of this sentence,  the primary purpose or
intent  thereof is as described  in the  preceding  sentence.  The amount of any
Contingent  Obligation  shall  be  equal  to the  amount  of the  obligation  so
guaranteed  or  otherwise  supported  or,  if less,  the  amount  to which  such
Contingent Obligation is specifically limited.

                  "CONTRACTUAL OBLIGATION",  as applied to any Person, means any
provision  of any Security  issued by that Person or of any material  indenture,
mortgage, deed of trust, deed to secure debt, contract,  undertaking,  agreement
or other instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.

                  "CURRENCY  AGREEMENT"  means  any  foreign  exchange  contract
(other than spot foreign exchange contracts),  currency swap agreement,  futures
contract,  option  contract,   synthetic  cap  or  other  similar  agreement  or
arrangement  designed  to protect  Holdings or any of its  Subsidiaries  against
fluctuations in currency values.

                  "DBTCA"  has the  meaning  assigned  to that term in the first
paragraph of this Agreement.

                  "D-CHECK" has the meaning  assigned to that term in the Atlas'
FAA approved maintenance program.

                  "DEFERRAL  PERIOD" means the period from and including January
1, 2004 through and including March 31, 2005.

                  "DEFERRED AMOUNT" means at any time an amount equal to the sum
of (x) the  aggregate  amount  of the Loan  Repayment  Amounts  which  have been
deferred  prior to or at such time pursuant to  subsection  2.4A(ii) and (y) the
aggregate  amount of the  interest  accrued on the  Deferred  Amounts  which the
Borrower  has elected to defer prior to or at such time  pursuant to  subsection
2.2C and which in the case of clause  (x) and  clause  (y) have not been  repaid
pursuant  to  subsection  2.4B(ii)(c)  at or  prior  to  such  time.  As of  the
Restatement Effective Date the Deferred Amount is $4,749,753.67.

                                      -8-
<PAGE>

                  "DEPOSIT ACCOUNT" means a demand,  time, savings,  passbook or
like account  with a bank,  savings and loan  association,  credit union or like
organization,  other than an account  evidenced by a negotiable  certificate  of
deposit.

                  "DISCLOSURE  STATEMENT"  means the Second  Amended  Disclosure
Statement  under 11 U.S.C.  ss. 1125 In Support of the Debtors'  Second  Amended
Joint  Chapter 11 Plan,  dated  June 8, 2004  pursuant  to  Section  1125 of the
Bankruptcy  Code  relating  to the Plan of  Reorganization,  as  approved by the
Bankruptcy Court, and as the same may be amended,  modified or supplemented from
accordance with the terms hereof and thereof.

                  "DOLLARS" and the sign "$" mean the lawful money of the United
States of America.

                  "DRY  LEASE"  has  the  meaning   assigned  to  such  term  in
subsection 7(g)(9) of the Leases.

                  "DVB APPEAL" means the Notice of Appeal from Order  Confirming
Final  Modified  Second  Amended  Final Plan of  Reorganization  of the  Debtors
Entered July 16, 2004 and Findings of Fact and Conclusions of Law by DVB Bank AG
and Wells Fargo Bank Northwest, National Association, dated July 26, 2004.

                  "ELIGIBLE  ASSIGNEE" means (A) (i) a commercial bank organized
under the laws of the United  States or any state  thereof;  (ii) a savings  and
loan  association or savings bank organized  under the laws of the United States
or any state thereof;  (iii) a commercial  bank organized  under the laws of any
other country or a political subdivision thereof; PROVIDED that (x) such bank is
acting  through a branch or agency located in the United States or (y) such bank
is organized  under the laws of a country  that is a member of the  Organization
for Economic  Cooperation  and  Development  or a political  subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities  Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease  financing  companies,  in each case (under  clauses (i) through
(iv) above) that is reasonably  acceptable to Administrative  Agent; and (B) any
Lender and any  Affiliate  of any Lender;  PROVIDED  that no  Affiliate of Atlas
shall be an Eligible Assignee.

                  "EMPLOYEE  BENEFIT PLAN" means any "employee  benefit plan" as
defined in  Section  3(3) of ERISA  that is, or was at any time,  maintained  or
contributed to by Atlas or by any of its ERISA Affiliates.

                  "ENGINE" means, as the context requires,  an Engine as defined
in a  particular  Aircraft  Chattel  Mortgage,  all  Engines  as  defined in all
Aircraft Chattel Mortgages, a Replacement Engine, all Replacement Engines or all
of any of the foregoing.

                  "ENVIRONMENTAL CLAIM" means any investigation,  notice, claim,
suit  or  order,  by any  governmental  authority  or  any  Person,  arising  in
connection with any alleged or actual  violation of  Environmental  Laws or with
any Hazardous Material,  or with any actual or alleged damage or harm to health,
safety or the environment.

                                      -9-
<PAGE>

                  "ENVIRONMENTAL  LAWS"  means  any and all  current  or  future
statutes, ordinances, orders, rules, regulations, guidance documents, judgments,
governmental   authorizations,   or  any  other   requirement  of   governmental
authorities relating to environmental  matters,  including,  without limitation,
those relating to any Hazardous Materials Activity.

                  "EQUITY  LENDER"  means any Lender that is a Lender under this
Agreement on the Restatement Effective Date.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time, and any successor statute.

                  "ERISA  AFFILIATE"  means,  as applied to any Person,  (i) any
corporation  that is, or was at any  time,  a member  of a  controlled  group of
corporations  within the meaning of Section 414(b) of the Internal  Revenue Code
of which  that  Person  is,  or was at any  time,  a  member,  (ii) any trade or
business, (whether or not incorporated) that is, or was at any time, a member of
a group of trades or  businesses  under  common  control  within the  meaning of
Section  414(c) of the Internal  Revenue Code of which that Person is, or was at
any time, a member,  and (iii) any member of an affiliated  service group within
the meaning of Section 414(m) or (o) of the Internal  Revenue Code of which that
Person,  any corporation  described in clause (i) above or any trade or business
described in clause (ii) above is, or was at any time, a member.

                  "EVENT  OF  DEFAULT"  means  each of the  events  set forth in
Section 7.

                  "EVENT OF LOSS" any of the  following  events with  respect to
any AFL III Aircraft (whether the Airframe or an Engine of such AFL III Aircraft
or both) or any Spare Engine:  (A) loss of such AFL III Aircraft or Spare Engine
or the use thereof  due to theft or  disappearance  of such AFL III  Aircraft or
Spare Engine that results in the loss of possession  thereof for a period of 120
days (or for a shorter  period ending on the date on which there is an insurance
settlement for a total loss on the basis of the theft or  disappearance  of such
AFL III Aircraft or Spare Engine), (B) the destruction,  damage beyond repair or
rendition of such AFL III Aircraft or Spare Engine  permanently unfit for normal
use for any reason whatsoever, (C) the condemnation, confiscation or seizure of,
or requisition of title to, or adverse use or possession  (other than use by the
United States Government if the Borrower obtains adequate  compensation from the
United States  Government)  of such AFL III Aircraft or Spare  Engine,  (D) as a
result of any  rule,  regulation,  order or any  other  action by the FAA or any
other governmental body having jurisdiction, the use of such AFL III Aircraft or
Spare Engine in the normal course of interstate air transportation of persons or
cargo  shall  have been  prohibited  for a period of more than nine  consecutive
months unless the Borrower,  prior to the  expiration of such nine month period,
shall have undertaken and shall be diligently  carrying  forward all steps which
are  necessary  or  desirable  to permit the normal use of such  property by the
Borrower or, in any event,  if such use shall have been  prohibited for a period
of twelve (12) consecutive months; (E) the operation or location of such AFL III
Aircraft or Spare Engine,  while under  requisition for use by the United States
or any  instrumentality or agency thereof, in any area excluded from coverage by
any  insurance  policy in effect with  respect to such AFL III Aircraft or Spare
Engine,  if the  Borrower  shall be  unable to obtain  indemnity  or "war  risk"
insurance in lieu thereof from the United  States;  (F) any damage which results
in an insurance settlement with respect to such AFL III Aircraft or Spare Engine
on the basis of an actual or  constructive  total loss; or (G) a divestiture  of
such Airframe or Spare

                                      -10-
<PAGE>

Engine as  described in Section  4(d)(iii)  or Section  4(d)(vi) of any Aircraft
Chattel Mortgage. An Event of Loss with respect to any AFL III Aircraft shall be
deemed to have  occurred if an Event of Loss occurs with respect to the Airframe
of such AFL III Aircraft.

                  "EXCHANGE ACT" means the  Securities  Exchange Act of 1934, as
amended from time to time, and any successor statute.

                  "EXCLUDED   SPECIFIED   AIRCRAFT"  means  (i)  each  Specified
Aircraft  with respect to which a D-Check has not been  initiated on or prior to
January 31,  2005 to the extent  that  Specified  D-Checks  with  respect to six
Specified  Aircraft  have not been  initiated  by such date (and such  Specified
Aircraft  shall be deemed to be an  Excluded  Specified  Aircraft on January 31,
2005)  and (ii)  the  Specified  Aircraft  which  is not an  Excluded  Specified
Aircraft  under clause (i) if a D-Check has not been  initiated  with respect to
such Specified  Aircraft by April 1, 2005 ( and such Specified Aircraft shall be
deemed to be an Excluded Specified Aircraft on April 1, 2005).

                  "EXISTING  CREDIT  AGREEMENT" has the meaning assigned to that
term in the recitals hereto.

                  "EXISTING  INDEBTEDNESS" has the meaning assigned to that term
in subsection 7(a)(3) of the Leases.

                  "EXISTING LOAN DOCUMENTS" has the meaning assigned to the term
"Loan Documents" in the Existing Credit Agreement.

                  "EXISTING TRANCHE A LOANS" means each "Tranche A Loan," under,
and as defined in, the Existing Credit Agreement.

                  "EXISTING TRANCHE B LOANS" means each "Tranche B Loan," under,
and as defined in, the Existing Credit Agreement.

                  "EXISTING TRANCHE A NOTES" means each "Tranche A Note," under,
and as defined in, the Existing Credit Agreement.

                  "EXISTING TRANCHE B NOTES" means each "Tranche B Note," under,
and as defined in, the Existing Credit Agreement.

                  "EXIT FACILITY" means the credit  agreement to be entered into
among  Holdings and the lenders  party thereto  providing  financing for working
capital and other general corporate purposes, as same may be amended,  modified,
supplemented, refinanced or replaced from time to time.

                  "FACILITY"  means any and all real property now,  hereafter or
heretofore  owned,  leased,  operated  or  used  by the  Borrower  or any of its
predecessors.

                  "FEDERAL AVIATION ACT" means the Federal Aviation Act of 1958,
as amended and as  recodified  in Title 49,  United  States Code, or any similar
legislation of the United States enacted to supersede,  amend or supplement such
Act and the rules and regulations promulgated thereunder.

                                      -11-
<PAGE>

                  "FEDERAL  AVIATION  ADMINISTRATION"  or "FAA" means the United
States Federal Aviation  Administration or any successor  thereto  administering
the functions of the Federal Aviation  Administration under the Federal Aviation
Act.

                  "FEDERAL  FUNDS  EFFECTIVE  RATE"  means,  for any  period,  a
fluctuating  interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers,  as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal  Reserve  Bank of New York,  or, if such rate is not so published
for any day on which is a Business Day, the average of the  quotations  for such
day on such  transactions  received by  Administrative  Agent from three Federal
funds brokers of recognized standing selected by Administrative Agent.

                  "FINAL  MATURITY  DATE"  means,  in the  case  of  each of the
Tranche A Loans and Tranche B Loans, December 31, 2009.

                  "FINAL ORDER" means an order of the  Bankruptcy  Court entered
by the Bankruptcy Court,  which has not been reversed,  vacated or stayed and as
to which the time to appeal, petition for certioreri, or to move for a new trial
has expired and as to which no appeal,  writ of  certioreri or request for a new
trial shall then be pending.

                  "FISCAL  YEAR" means fiscal year ending on December 31 of each
year.

                  "FITCH" means Fitch, Inc.

                  "FORBEARANCE  AGREEMENT"  has  the  meaning  provided  in  the
recitals hereto.

                  "FUNDING  AND  PAYMENT   OFFICE"   means  the  office  of  the
Administrative  Agent  located  at 60 Wall  Street,  New York,  New York  10005,
Attention: David Bell.

                  "GAAP" means,  subject to the  limitations on the  application
thereof set forth in subsection 1.2,  generally accepted  accounting  principles
set forth in opinions and  pronouncements of the Accounting  Principles Board of
the American  Institute of  Certified  Public  Accountants  and  statements  and
pronouncements  of the  Financial  Accounting  Standards  Board or in such other
statements by such other entity as may be approved by a  significant  segment of
the accounting  profession.  Financial statements and other information required
to be  delivered by the  Borrower to Lenders  pursuant to clauses (i),  (ii) and
(iii) of subsection  5.1 shall be prepared in accordance  with GAAP as in effect
at the time of such preparation (and delivered  together with the reconciliation
statements provided for in subsection 5.1(vi)).  Calculations in connection with
the definitions,  covenants and other provisions of this Agreement shall utilize
accounting  principles  and policies in effect for the  preparation of financial
statements of Holdings and its Subsidiaries as of December 31, 2002.

                  "GOVERNMENTAL   AUTHORIZATION"  means  any  permit,   license,
authorization,  plan, directive,  consent order or consent decree of or from any
federal, state or local governmental authority, agency or court.

                                      -12-
<PAGE>

                  "HAZARDOUS  MATERIAL"  or  "HAZARDOUS   MATERIALS"  means  any
chemical or other  material or substance,  exposure to which is now or hereafter
prohibited, limited or regulated under any law.

                  "HAZARDOUS   MATERIALS  ACTIVITY"  means  any  past,  current,
proposed,   or  threatened  use,  storage,   release,   generation,   treatment,
remediation or  transportation  of any Hazardous  Material (i) from,  under, in,
into or on the  Facilities  or  surrounding  property of the  Borrower  and (ii)
caused by, or undertaken by or on behalf of, the Borrower.

                  "HOLDINGS" has the meaning provided in the recitals hereto.

                  "HOLDINGS COMMON STOCK" means the common stock of Holdings.

                  "HOLDINGS  GUARANTY" has the meaning  assigned to that term in
subsection 3.1(xi).

                  "INDEBTEDNESS"  means,  as  applied  to any  Person,  (i)  all
indebtedness  for borrowed money,  (ii) that portion of obligations with respect
to Capital Leases that is properly  classified as a liability on a balance sheet
in conformity with GAAP,  (iii) notes payable and drafts  accepted  representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation  owed for all or any part of the deferred  purchase price of
property or services  (excluding  any such  obligations  incurred  under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the  obligation  in  respect  thereof or (b)  evidenced  by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that  Person  regardless  of whether the  indebtedness
secured  thereby shall have been assumed by that Person or is nonrecourse to the
credit of that  Person.  For the purpose of this  Agreement,  Obligations  under
Interest  Rate  Agreements  and  Currency   Agreements   constitute   Contingent
Obligations and are not Indebtedness.

                  "INDEMNIFIED  LIABILITIES"  has the  meaning  assigned to that
term in subsection 9.3.

                  "INDEMNITEE"   has  the  meaning  assigned  to  that  term  in
subsection 9.3.

                  "INDEPENDENT  DIRECTOR"  means a director of the Borrower that
satisfies the criteria for  "Independent  Director" set forth in the certificate
of incorporation of the Borrower.

                  "INITIAL   DEFERRED   AMOUNT"   means  the   Deferred   Amount
outstanding  on  January  31,  2005,  determined  before  giving  effect  to any
repayments thereof required to be made on such date pursuant to subsection 2.4.

                  "INSTRUCTION  LETTER"  means a letter from an Equity Lender to
Atlas or its designee containing the name, address, tax ID number and the number
of shares Holdings Common Stock to be issued to such Equity Lender.

                  "INSURANCE  PROCEEDS" has the meaning assigned to that term in
subsection 2.4B(ii)(b).

                                      -13-
<PAGE>

                  "INTEREST  PAYMENT  DATE" means the last  Business Day of each
calendar month.

                  "INTEREST  PERIOD"  has the  meaning  assigned to that term in
subsection 2.2B.

                  "INTEREST  RATE  AGREEMENT"   means  any  interest  rate  swap
agreement,  interest rate cap agreement, interest rate collar agreement or other
similar  agreement  or  arrangement  designed  to protect the  Borrower  against
fluctuations in interest rates.

                  "INTEREST RATE DETERMINATION  DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such Interest
Period.

                  "INTERNAL  REVENUE  CODE" means the  Internal  Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.

                  "INVESTMENT"  means (i) any  direct or  indirect  purchase  or
other  acquisition  by the  Borrower  of, or of a  beneficial  interest  in, any
Securities  of any other  Person and (ii) any direct or indirect  loan,  advance
(other than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or
capital  contribution  by  the  Borrower  to  any  other  Person  including  all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the  ordinary  course
of business.  The amount of any  Investment  shall be the original  cost of such
Investment plus the cost of all additions  thereto,  without any adjustments for
increases or decreases in value,  or write-ups,  write-downs or write-offs  with
respect to such Investment.

                  "JOINT  VENTURE" means a joint  venture,  partnership or other
similar  arrangement,  whether in  corporate,  partnership  or other legal form;
PROVIDED,  that in no event  shall any  corporate  Subsidiary  of any  Person be
considered to be a Joint Venture to which such Person is a party.

                  "LEASE" or "LEASES"  means the Aircraft  Leases,  the CF6-50E2
Spare Engine Lease and the CF6-80C2  Spare Engine Lease,  or any of them, as the
context implies.

                  "LENDER"  and  "LENDERS"  means  the  persons   identified  as
"Lenders" and listed on the  signature  pages of this  Agreement,  together with
their successors and permitted assigns pursuant to subsection 9.1.

                  "LIEN" means any lien, mortgage, deed of trust, deed to secure
debt, pledge, assignment, security interest, charge, hypothecation,  preference,
priority, privilege, lease or encumbrance of any kind (including any conditional
sale or other title retention  agreement,  any lease in the nature thereof,  and
any  agreement to give any  security  interest)  and any option,  trust or other
preferential arrangement having the practical effect of any of the foregoing.

                  "LOAN" or "LOANS"  means the Tranche A Loans and the Tranche B
Loans.

                  "LOAN DOCUMENTS"  means this Agreement,  the Notes, the Leases
and the Collateral Documents.

                                      -14-
<PAGE>

                  "LOAN  EXPOSURE"  means,  with respect to any Lender as of any
date of determination the outstanding principal amount of that Lender's Loans.

                  "LOAN REPAYMENT AMOUNT" means for each Loan Repayment Date for
each Tranche of Loans,  the amount set forth  opposite such Loan  Repayment Date
under the column for such Tranche on Schedule 2.4.

                  "LOAN  REPAYMENT  DATE"  means the last  Business  Day of each
calendar month, PROVIDED that,  notwithstanding anything in the foregoing to the
contrary,  the unpaid  amount of all Loans shall be due and payable on the Final
Maturity Date.

                  "MARGIN  STOCK"  has the  meaning  assigned  to  that  term in
Regulation  U of the Board of  Governors  of the  Federal  Reserve  System as in
effect from time to time.

                  "MATERIAL  ADVERSE EFFECT" means (i) a material adverse effect
upon the  business,  operations,  properties,  assets,  condition  (financial or
otherwise) or prospects of the Borrower or (ii) the impairment of the ability of
the  Borrower  to perform the  Obligations,  or the  impairment,  as a result of
actions or inaction by the Borrower,  of the ability of Administrative  Agent or
Lenders to enforce the Obligations.

                  "MINIMUM LIQUIDITY" has the meaning provided in the definition
of "Accelerated Deferred Payment Amount".

                  "MOODY'S" means Moody's Investors Service, Inc.

                  "NET CASH  PROCEEDS"  means,  with  respect to any Asset Sale,
Cash Proceeds of such Asset Sale net of bona fide direct costs of sale including
income taxes  reasonably  estimated  to be actually  payable as a result of such
Asset Sale within two years of the date of such Asset Sale.

                  "1998 PASS THROUGH  TRUST  DOCUMENTS"  means that certain Pass
Through Trust Agreement dated as of February 9, 1998 between Atlas Air, Inc. and
Wilmington Trust Company,  as Trustee (the "1998 PASS THROUGH TRUST  AGREEMENT")
and any trust  indenture  and security  agreements  including  any related trust
indenture  and security  agreement  supplements  which  related to the equipment
notes to be held in trust pursuant to the 1998 Pass Through Trust  Agreement and
all related agreements,  as the same may be amended,  restated,  supplemented or
otherwise  modified from time to time in  accordance  with the terms thereof and
hereof.

                  "1999 PASS THROUGH  TRUST  DOCUMENTS"  means that certain Pass
Through Trust  Agreement  dated as of April 13, 1999 between Atlas Air, Inc. and
Wilmington Trust Company,  as Trustee (the "1999 PASS THROUGH TRUST  AGREEMENT")
and any trust  indenture  and security  agreements  including  any related trust
indenture  and security  agreement  supplements  which  related to the equipment
notes to be held in trust pursuant to the 1999 Pass Through Trust  Agreement and
all related agreements,  as the same may be amended,  restated,  supplemented or
otherwise  modified from time to time in  accordance  with the terms thereof and
hereof.

                  "NON-U.S.  LENDER"  has the  meaning  assigned to that term in
subsection 2.7B(iii)(a).

                                      -15-
<PAGE>

                  "NOTES" means the Tranche A Notes and the Tranche B Notes.

                  "NOTICE  OF  CONFIRMATION"  means  notice  of an  order of the
Bankruptcy Court confirming the Plan of  Reorganization,  which order shall be a
Final Order except for the DVB Appeal.

                  "OBLIGATIONS"  means all  obligations  of every  nature of the
Borrower from time to time owed to  Administrative  Agent, the Lenders or any of
them under the Loan Documents, whether for principal,  interest, fees, expenses,
indemnification or otherwise.

                  "OFFICERS'  CERTIFICATE" means, as applied to any corporation,
a  certificate  executed on behalf of such  corporation  by its  chairman of the
board (if an officer) or its president or one of its vice  presidents and by its
chief  financial  officer  or  its  treasurer;  PROVIDED  that  every  Officers'
Certificate  with respect to the  compliance  with a condition  precedent to the
making of any Loans  hereunder shall include (i) a statement that the officer or
officers  making or giving such Officers'  Certificate  have read such condition
and any  definitions or other  provisions  contained in this Agreement  relating
thereto, (ii) a statement that, in the opinion of the signers, they have made or
have caused to be made such  examination  or  investigation  as is  necessary to
enable them to express an informed  opinion as to whether or not such  condition
has been complied with,  and (iii) a statement as to whether,  in the opinion of
the signers, such condition has been complied with.

                  "OPERATING  LEASE" means, as applied to any Person,  any lease
(including,  without limitation,  leases that may be terminated by the lessee at
any time) of any  property  (whether  real,  personal  or  mixed)  that is not a
Capital Lease other than any such lease under which that Person is the lessor.

                  "PART" means, as the context requires,  a Part as defined in a
particular Aircraft Chattel Mortgage or Parts as defined in all Aircraft Chattel
Mortgages.

                  "PASS  THROUGH  TRUST  DOCUMENTS"  means the 1998 Pass Through
Trust Agreement, the 1999 Pass Through Trust Agreement and the 2000 Pass Through
Trust  Agreement (the "PASS THROUGH TRUST  AGREEMENTS")  and any trust indenture
and security  agreements  including  any related  trust  indenture  and security
agreement  supplements  which related to the equipment notes to be held in trust
pursuant to the Pass Through Trust Agreements and all related agreements, as the
same may be amended,  restated,  supplemented or otherwise modified from time to
time in accordance with this Agreement.

                  "PERMITTED  ENCUMBRANCES"  means the following  types of Liens
(other than any such Lien imposed  pursuant to Section  401(a)(29)  or 412(n) of
the Internal Revenue Code or by ERISA):

                           (i)      Liens for taxes, assessments or governmental
                  charges  or claims the  payment of which is not,  at the time,
                  required by subsection 5.3;

                           (ii)     statutory  Liens of  landlords  and Liens of
                  carriers,  warehousemen,  mechanics and  materialmen and other
                  Liens  imposed  by law  incurred  in the  ordinary  course  of
                  business for sums not yet delinquent or being contested in

                                      -16-
<PAGE>

                  good faith by appropriate  proceedings that do not involve any
                  danger of the sale,  forfeiture or loss of any Collateral,  if
                  such reserve or other appropriate provision,  if any, as shall
                  be required by GAAP shall have been made therefore;

                           (iii)    the  rights of others  under  agreements  or
                  arrangements to the extent expressly permitted by the terms of
                  Sections 4(d) and 4(e) of the Aircraft Chattel Mortgages; and

                           (iv)     Liens  granted  pursuant  to the  Collateral
                  Documents

                  "PERSON"  means and includes  natural  persons,  corporations,
limited partnerships,  general partnerships,  limited liability companies, joint
stock companies, Joint Ventures,  associations,  companies, trusts, banks, trust
companies,  land trusts, business trusts or other organizations,  whether or not
legal entities, and governments and agencies and political subdivisions thereof.

                  "PIK INTEREST AMOUNT" has the meaning assigned to that term in
subsection 2.2A(iii).

                  "PLAN DOCUMENTS" means "Plan Documents" as defined in the Plan
of  Reorganization  and includes the documents  attached to the Notice of Filing
Plan   Documents,   filed  June  8,  2004  in   connection   with  the  Plan  of
Reorganization.

                  "PLAN OF  REORGANIZATION"  means the Joint Second Amended Plan
of Reorganization of the Debtors relating to Atlas,  Holdings and certain of its
Subsidiaries,  dated June 8, 2004, including the exhibits and schedules thereto,
as the  same may be  amended,  modified  or  supplemented  from  time to time in
accordance  with the provisions of the Bankruptcy Code and the terms thereof and
hereof.

                  "POLAR  AIR"  means  Polar  Air  Cargo,   Inc.,  a  California
corporation.

                  "POTENTIAL  EVENT OF DEFAULT" means a condition or event that,
after notice or the expiration of any grace period or both,  would constitute an
Event of Default.

                  "PREFERRED  EQUITY", as applied to the equity interests of any
Person,  means equity  interests of such Person (other than common stock of such
Person) of any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the  distribution  of assets upon any voluntary or
involuntary  liquidation,  dissolution  or winding up of such Person,  to equity
interests of any other class of such Person.

                  "PRIME  RATE"  means  the rate that the  Administrative  Agent
announces from time to time as its prime lending rate, as in effect from time to
time. The Prime Rate is a reference rate and does not necessarily  represent the
lowest or best rate actually charged to any customer.  The Administrative  Agent
or any  other  Lender  may make  commercial  loans  or  other  loans at rates of
interest at, above or below the Prime Rate.

                  "PROCEEDINGS"  has  the  meaning  assigned  to  that  term  in
subsection 5.1(ix).

                                      -17-
<PAGE>

                  "PROCEEDS" has the meaning assigned to that term in subsection
2.4B(ii)(b).

                  "PROJECTED  CONSOLIDATED  EBITDA" means,  for any fiscal year,
the amount set forth opposite such fiscal year in the table below:

                           FISCAL YEAR        PROJECTED CONSOLIDATED
                                                      EBITDA

                              2004                 $ 87,675,000
                              2005                 $167,580,000
                       2006 and thereafter         $157,500,000

                  "PRO RATA  SHARE"  means,  with  respect to each  Lender,  the
percentage  obtained  by  DIVIDING  the  Loan  Exposure  of that  Lender  BY the
aggregate  Loan Exposure of all Lenders,  as such  percentage may be adjusted by
assignments  permitted  pursuant to  subsection  9.1. The Pro Rata Share of each
Lender as of the date  hereof is set forth  opposite  the name of that Lender in
SCHEDULE 2.1 annexed hereto.

                  "REGISTER" has the meaning assigned to that term in subsection
2.1C.

                  "REGULATION A" means Regulation A of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

                  "REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

                  "REGULATION T" means Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

                  "REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

                  "REGULATION X" means Regulation X of the Board of Governors of
the Federal Reserve System, as in effect from time to time.

                  "RELATED  FUND"  means,  with  respect to any Lender that is a
fund that invests in loans,  any other fund that invests in loans and is managed
by the  same  investment  advisor  as such  Lender  or by an  Affiliate  of such
investment advisor.

                  "RELEASE"  means  any  release,   spill,  emission,   leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge,  dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including,  without limitation,  the abandonment or disposal of any
barrels,  containers  or  other  closed  receptacles  containing  any  Hazardous
Materials),  or into  or out of any  facility,  including  the  movement  of any
Hazardous  Material  through  the  air,  soil,  surface  water,  groundwater  or
property.

                  "RELEVANT  PERIOD"  means the period  commencing on April 1 of
the calendar year and ending on March 31 of the immediately  succeeding calendar
year.

                                      -18-
<PAGE>

                  "REPLACEMENT  AIRFRAME" has the meaning  assigned to that term
in subsection 9.21B.

                  "REPLACEMENT  ENGINE" has the meaning assigned to that term in
subsection 9.21A.

                  "REQUISITE  LENDERS"  means Lenders having or holding 50.1% or
more of the aggregate Loan Exposure of all Lenders.

                  "RESTATEMENT  EFFECTIVE  DATE"  means  the date on  which  the
conditions to effectiveness set forth in subsection 3.1 are satisfied.

                  "RESTRICTED  JUNIOR  PAYMENT"  means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of the Borrower now or hereafter  outstanding,  except a dividend payable solely
in  shares  of that  class of  stock  to the  holders  of that  class,  (ii) any
redemption,  retirement,  sinking  fund or similar  payment,  purchase  or other
acquisition for value,  direct or indirect,  of any shares of any class of stock
of the  Borrower  now or  hereafter  outstanding,  and (iii) any payment made to
retire,  or to obtain the surrender  of, any  outstanding  warrants,  options or
other  rights to  acquire  shares of any class of stock of the  Borrower  now or
hereafter outstanding.

                  "RESTRUCTURING  DOCUMENTS" means the Restructuring Agreements,
dated July 27, 2004, among Atlas,  Wilmington Trust Company,  in its capacity as
Trustee to each of the Pass Through Trust  Documents and the other parties party
thereto and any other documents incorporated therein or in connection therewith.

                   "RETURNS" has the meaning assigned to that term in subsection
4.7.

                  "S&P" means Standard & Poor's,  a division of the  McGraw-Hill
Companies, Inc.

                  "SEC" means the Securities Exchange Commission.

                  "SECURITIES  ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.

                  "SECURITY"   or   "SECURITIES"   means  any   stock,   shares,
partnership  interests,  voting trust certificates,  certificates of interest or
participation in any profit-sharing agreement or arrangement, options, warrants,
bonds,  debentures,  notes,  or other  evidences  of  indebtedness,  secured  or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly  known as  "securities"  or any  certificates  of  interest,  shares or
participations  in  temporary  or  interim  certificates  for  the  purchase  or
acquisition  of, or any right to subscribe to,  purchase or acquire,  any of the
foregoing.

                  "SERVICE  AGREEMENT" means the Service Agreement,  dated as of
the Restatement Effective Date, between Atlas and the Borrower.

                  "SOLVENT" means,  with respect to any Person,  that, as of the
date of determination, both (A) (i) the then fair saleable value of the property
of such Person is (y) greater than the total

                                      -19-
<PAGE>

amount of liabilities (including contingent  liabilities) of such Person and (z)
not less than the amount that will be required to pay the  probable  liabilities
on such  Person's  then  existing  debts as they  become  absolute  and  matured
considering  all financing  alternatives  and potential  asset sales  reasonably
available to such Person,  (ii) such Person's capital is not unreasonably  small
in relation to its business or any contemplated or undertaken  transaction,  and
(iii) such Person does not intend to incur, or believe (nor should it reasonably
believe) that it will incur,  debts beyond its ability to pay such debts as they
become due, and (B) such Person is "solvent"  within the meaning given that term
and similar terms under  applicable  laws  relating to fraudulent  transfers and
conveyances.  For  purposes  of this  definition,  the amount of any  contingent
liability at any time shall be computed as the amount  that,  in light of all of
the facts and  circumstances  existing at such time,  represents the amount that
can reasonably be expected to become an actual or matured liability.

                  "SPARE ENGINE POOL" means,  collectively,  the CF6-50E2  Spare
Engine  Pool  and the  CF6-80C2  Spare  Engine  Pool,  or  either  of  them,  as
appropriate.

                  "SPARE  ENGINES"  means  the nine  General  Electric  CF6-50E2
engines with  manufacturer's  serial numbers  530168,  517790,  517530,  517547,
455167,  517602,  517538,  517539,  and 530255,  and the three General  Electric
CF6-80C2 engines with manufacturer's serial numbers 704699, 704860, and 704918.

                  "SPECIFIED  AIRCRAFT" means the AFL III Aircraft identified on
Schedule 2.5 hereto.

                  "SPECIFIED  D-CHECKS"  means the  D-Checks  conducted or to be
conducted by the  Borrower  and/or  Atlas in respect of the  Specified  Aircraft
during the Deferral Period.

                  "SPECIFIED INDEBTEDNESS" has the meaning assigned to that term
in subsection 3.1(vii).

                  "SUBSIDIARIES  GUARANTY" has the meaning assigned to that term
in subsection 3.1(xi).

                   "SUBSIDIARY"   means,   with  respect  to  any  Person,   any
corporation, partnership, association, joint venture or other business entity of
which  more  than 50% of the  total  voting  power of  shares  of stock or other
ownership   interests   entitled  (without  regard  to  the  occurrence  of  any
contingency)  to  vote  in  the  election  of the  Person  or  Persons  (whether
directors,  managers,  trustees or other Persons  performing  similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or  controlled,  directly  or  indirectly,  by that
Person or one or more of the other  Subsidiaries of that Person or a combination
thereof.

                  "SUBSTITUTE  BASIS" has the  meaning  assigned to that term in
subsection 2.6G.

                  "TAX" or  "TAXES"  means  any  present  or future  tax,  levy,
impost,  duty, charge,  fee, deduction or withholding of any nature and whatever
called, by whomsoever,  on whomsoever and wherever imposed,  levied,  collected,
withheld or assessed;  PROVIDED that "TAX ON THE OVERALL NET INCOME" of a Person
shall be construed as a reference to a tax imposed by the

                                      -20-
<PAGE>

jurisdiction  in which  that  Person  is  organized  or in which  that  Person's
principal  office  (and/or,  in the case of a Lender,  its  lending  office)  is
located.

                  "TERM  SHEET"  has the  meaning  assigned  to that term in the
recitals hereto.

                  "TRANCHE"  means  each of the  tranches  of Loans  under  this
Agreement,  there being two such tranches of Loans,  the Tranche A Loans and the
Tranche B Loans.

                  "TRANCHE A LENDER" or  "TRANCHE A LENDERS"  means the  persons
identified  as  "Tranche A Lenders"  and listed on the  signature  pages of this
Agreement,  together with their  successors  and permitted  assigns  pursuant to
subsection 9.1.

                  "TRANCHE A LOAN EXPOSURE" means, with respect to any Tranche A
Lender, as of any date of determination, the outstanding principal amount of the
Tranche A Loans of that Lender.

                  "TRANCHE A NOTES"  has the  meaning  assigned  to that term in
subsection 2.1B.

                  "TRANCHE A PRO RATA SHARE" means, with respect to each Tranche
A Lender,  the  percentage  obtained by dividing the Tranche A Loan  Exposure of
that Tranche A Lender by the aggregate  Tranche A Loan Exposure of all Tranche A
Lenders,  in  each  case as  such  percentage  may be  adjusted  by  assignments
permitted  pursuant to subsection  9.1. The initial  Tranche A Pro Rata Share of
each Tranche A Lender is set forth opposite the name of that Tranche A Lender in
Schedule 2.1 annexed hereto.

                  "TRANCHE A TERM LOAN" has the meaning assigned to that term in
subsection 2.1A(i).

                  "TRANCHE B LENDER" or  "TRANCHE B LENDERS"  means the  persons
identified  as  "Tranche B Lenders"  and listed on the  signature  pages of this
Agreement,  together with their  successors  and permitted  assigns  pursuant to
subsection 9.1.

                  "TRANCHE  B LOAN"  has the  meaning  assigned  to that term in
subsection 2.1A(ii).

                  "TRANCHE B LOAN EXPOSURE" means, with respect to any Tranche B
Lender, as of any date of determination, the outstanding principal amount of the
Tranche B Loans of that Lender.

                  "TRANCHE B NOTES"  has the  meaning  assigned  to that term in
subsection 2.1B.

                  "TRANCHE B PRO RATA SHARE" means, with respect to each Tranche
B Lender,  the  percentage  obtained by dividing the Tranche B Loan  Exposure of
that Tranche B Lender by the aggregate  Tranche B Loan Exposure of all Tranche B
Lenders,  in  each  case as  such  percentage  may be  adjusted  by  assignments
permitted  pursuant to subsection  9.1. The initial  Tranche B Pro Rata Share of
each Tranche B Lender is set forth opposite the name of that Tranche B Lender in
Schedule 2.1 annexed hereto.

                                      -21-
<PAGE>

                  "TRANSACTION" means, collectively, (i) the consummation of the
Plan of Reorganization,  (ii) the occurrence of the Restatement  Effective Date,
and (iii) the payment of fees and expenses in connection with the foregoing.

                  "2000 PASS THROUGH  TRUST  DOCUMENTS"  means that certain Pass
Through Trust Agreement dated as of January 28, 2000 between Atlas Air, Inc. and
Wilmington Trust Company,  as Trustee (the "2000 PASS THROUGH TRUST  AGREEMENT")
and any trust  indenture  and security  agreements  including  any related trust
indenture  and security  agreement  supplements  which  related to the equipment
notes to be held in trust pursuant to the 2000 Pass Through Trust  Agreement and
all related agreements,  as the same may be amended,  restated,  supplemented or
otherwise modified from time to time in accordance with this Agreement.

                  "UCC"  means the  Uniform  Commercial  Code (or any similar or
equivalent legislation) as in effect in any jurisdiction.

                  "UNITED STATES CITIZEN" means a "citizen of the United States"
within the meaning of the Federal Aviation Act.

                  "UNRESTRICTED  CASH AND CASH EQUIVALENTS"  means Cash and Cash
Equivalents that are not subject to any restriction or limitation on the ability
of Holdings or any  Subsidiary to withdraw (in the case of Cash) or sell (in the
case of Cash Equivalents).

                  "VALUE" of any non-Cash  Proceeds,  means the principal amount
of such non-Cash  Proceeds or such other amount as may be agreed by the Borrower
and the Requisite Lenders.

                  1.2      ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF
CALCULATIONS UNDER AGREEMENT.

                  Except as otherwise expressly provided in this Agreement,  all
accounting terms not otherwise  defined herein shall have the meanings  assigned
to them in conformity with GAAP.

                  1.3      OTHER DEFINITIONAL PROVISIONS.

                  References  to  "Sections"  and  "subsections"   shall  be  to
Sections and  subsections,  respectively,  of this  Agreement  unless  otherwise
specifically  provided.  Any of the terms defined in subsection 1.1 may,  unless
the context otherwise requires, be used in the singular or the plural, depending
on the reference.

                                   SECTION 2.

                           AMOUNTS AND TERMS OF LOANS

                  2.1      LOANS; NOTES; REGISTER.

                  A.       LOANS.  (i)  Subject to the terms and  conditions  of
this  Agreement and in reliance upon the  representations  and warranties of the
Borrower set forth herein,  the Existing  Tranche A Loans made by each Tranche A
Lender to the Borrower pursuant to the Existing

                                      -22-
<PAGE>

Credit Agreement and outstanding on the Restatement  Effective Date (immediately
prior  to  giving  effect   thereto)  shall  be  continued,   and  shall  remain
outstanding,  as  borrowings  of term  loans  hereunder  (as so  continued,  the
"TRANCHE A TERM LOANS" and each, a "TRANCHE A TERM LOAN"). Once repaid,  Tranche
A Loans borrowed hereunder may not be reborrowed.

                  (ii) Subject to the terms and conditions of this Agreement and
in reliance upon the  representations  and  warranties of the Borrower set forth
herein,  the  Existing  Tranche  B Loans  made by each  Tranche  B Lender to the
Borrower  pursuant to the  Existing  Credit  Agreement  and  outstanding  on the
Restatement Effective Date (immediately prior to giving effect thereto) shall be
continued,  and shall remain outstanding,  as borrowings of term loans hereunder
(as so  continued,  the  "TRANCHE B LOANS" and each,  a "TRANCHE B LOAN").  Once
repaid, Tranche B Loans borrowed hereunder may not be reborrowed.

                  B.       NOTES.  (i) Each  Existing  Tranche  A Note  shall be
deemed  amended and restated on the  Restatement  Effective  Date to reflect the
extension of the maturity to the Final Maturity Date. To the extent requested by
a Lender,  the Borrower shall execute and deliver on the  Restatement  Effective
Date to each Lender (or to the Administrative Agent for the Lenders) a Tranche A
Note, substantially in the form of Exhibit IIA, to evidence the Lender's Tranche
A Loans (each a "TRANCHE A NOTE" and collectively, the "TRANCHE A NOTES").

                  (ii)     Each Existing  Tranche B Note shall be deemed amended
and restated on the  Restatement  Effective Date to reflect the extension of the
maturity to the Final  Maturity Date. To the extent  requested by a Lender,  the
Borrower  shall execute and deliver on the  Restatement  Effective  Date to each
Lender  (or  the  Administrative  Agent  for  the  Lenders)  a  Tranche  B Note,
substantially  in the form of Exhibit IIB, to evidence  the  Lender's  Tranche B
Loans (each a "TRANCHE B NOTE" and collectively, the "TRANCHE B NOTES").

                  C.       THE  REGISTER.  (i) The  Administrative  Agent  shall
maintain,  at its  address  referred  to in  subsection  9.8,  a  register  (the
"REGISTER")  for the  recordation  of the names and addresses of the Lenders and
the Loans of each  Lender from time to time and the  Administrative  Agent shall
record in the  Register  the Loans  from  time to time of each  Lender  and each
repayment or prepayment in respect of the principal  amount of the Loans of each
Lender.  Such  recordation  shall be conclusive  and binding on the Borrower and
each Lender,  absent  manifest  error;  PROVIDED,  that failure to make any such
recordation,  or any error in such recordation,  shall not affect the Borrower's
Obligations in respect of the applicable  Loans. The Register shall be available
for inspection by the Borrower or by any Lender at any reasonable  time and from
time to time upon reasonable prior notice.

                  (ii)     Each  Lender  shall  record on its  internal  records
(including,  without  limitation,  the Notes held by such  Lender) the amount of
each Loan made by it and each payment in respect  thereof.  Any such recordation
shall  be  conclusive  and  binding  on the  Borrower,  absent  manifest  error;
PROVIDED,  that  failure  to make any  such  recordation,  or any  error in such
recordation,  shall not  affect  the  Borrower's  Obligations  in respect of the
applicable Loans; and PROVIDED FURTHER,  that, in the event of any inconsistency
between the Register and any Lender's records,  the recordations in the Register
shall govern.

                                      -23-
<PAGE>

                  (iii)    The  Borrower,   the  Administrative  Agent  and  the
Lenders  shall deem and treat the Persons  listed as Lenders in the  Register as
the  holders  and  owners of the  corresponding  Loans  listed  therein  for all
purposes  hereof,  and no  assignment  or  transfer  of any such  Loan  shall be
effective in any case unless and until an  Assignment  Agreement  effecting  the
assignment or transfer  thereof  shall have been accepted by the  Administrative
Agent and recorded in the Register as provided in subsection 9.1B(ii).  Prior to
such recordation,  all amounts owed with respect to the applicable Loan shall be
owed to the Lender listed in the Register as the owner thereof, and any request,
authority  or consent of any Person who,  at the time of making such  request or
giving such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent  holder,  assignee or transferee of the
corresponding Loans.

                  (iv)     The Borrower  hereby  designates  the  Administrative
Agent to serve as the Borrower's  agent solely for purposes of  maintaining  the
Register as provided in this  subsection  2.1C,  and the Borrower  hereby agrees
that, to the extent that the Administrative  Agent serves in such capacity,  the
Administrative  Agent  and  its  officers,  directors,   employees,  agents  and
affiliates shall constitute Indemnitees for all purposes under subsection 9.3.

                  2.2      INTEREST ON THE LOANS.

                  A.       RATE OF INTEREST.  (i) Subject to the  provisions  of
subsections  2.6 and 2.7, each Loan shall bear interest on the unpaid  principal
amount thereof from the date made through  maturity  (whether by acceleration or
otherwise) at a rate  determined by reference to the Adjusted  Eurodollar  Rate.
The applicable Interest Period for determining the rate of interest with respect
to the Loans shall be determined in accordance with subsection 2.2B.

                  (ii)     Subject to the  provisions  of  subsections  2.2D and
2.7, the Loans shall bear interest through maturity at a per annum rate equal to
the sum of the Adjusted Eurodollar Rate plus the Applicable Margin.

                  (iii)    The " APPLICABLE MARGIN" means (x) for each Tranche A
Loan,  4.125%  and  (y) for  each  Tranche  B Loan,  4.50%,  provided  that  the
Applicable  Margin  for the  aggregate  principal  amount  of the  Loans of each
Tranche constituting Deferred Amounts shall be increased by 2.00% (the amount of
interest accruing on the Loans by reason of this proviso is hereinafter referred
to as the "PIK INTEREST AMOUNT").

                  B.       INTEREST  PERIODS.  In connection with each Loan, the
interest period  ("INTEREST  PERIOD") to be applicable to such Loan shall be one
month; PROVIDED, that:

                  (i)      each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;

                  (ii)     if an Interest Period would otherwise expire on a day
that is not a  Business  Day,  such  Interest  Period  shall  expire on the next
succeeding Business Day; PROVIDED,  that, if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month,  such Interest Period shall expire
on the next preceding Business Day;

                                      -24-
<PAGE>

                  (iii)    any Interest  Period that begins on the last Business
Day  of a  calendar  month  (or  on a day  for  which  there  is no  numerically
corresponding  day in the  calendar  month at the end of such  Interest  Period)
shall,  subject to clause (v) of this subsection  2.2B, end on the last Business
Day of a calendar month;

                  (iv)     no  Interest  Period  shall  extend  beyond the Final
Maturity  Date;

                  (v)      no  Interest  Period  shall  extend  beyond a date on
which the  Borrower is required to make a scheduled  payment of principal of the
Loans of the same Tranche as such Loan; and

                  C.       INTEREST  PAYMENTS.  Subject  to  the  provisions  of
subsection  2.2D,  interest  on each Loan  shall be  payable  in  arrears on the
Interest  Payment Date applicable to that Loan, upon any prepayment of Loans (to
the extent accrued on the amount being  prepaid) and at maturity  (including the
Final  Maturity  Date),  provided  that, at the option of the Borrower,  the PIK
Interest Amount  otherwise  payable in Cash on the Interest  Payment Date may be
deferred and added to the aggregate principal amount of the Loan of the relevant
Tranche.  Unless the Borrower shall have given the Administrative  Agent written
notice that it intends to pay the PIK  Interest  Amount in cash on or before the
relevant  Interest Payment Date, the Borrower shall be deemed to have elected to
defer the payment of such PIK Interest Amount.

                  D.       DEFAULT  RATE.  Upon the  occurrence  and  during the
continuation of any Event of Default,  the outstanding  principal  amount of all
Loans and, to the extent  permitted by  applicable  law,  any interest  payments
thereon  not paid when due and any fees and other  amounts  then due and payable
hereunder,  shall thereafter bear interest (including  post-petition interest in
any proceeding  under the Bankruptcy Code or other  applicable  bankruptcy laws)
payable  upon  demand at a rate  that is 2% per annum in excess of the  interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or,  in the case of any such fees and other  amounts,  at a rate that is 1% per
annum in excess  of the sum of the Base Rate as in effect  from time to time and
the Applicable Margin for Tranche B Loans);  PROVIDED, that, upon the expiration
of the Interest  Period in effect at the time any such increase in interest rate
is effective,  such Loans shall thereupon bear interest payable upon demand at a
rate  that is 1% per  annum in  excess  of the sum of the Base Rate as in effect
from  time to time and the  Applicable  Margin.  Payment  or  acceptance  of the
increased  rates  of  interest  provided  for in this  subsection  2.2D is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or  otherwise  prejudice or limit any rights or remedies of the
Administrative Agent or any Lender.

                  E.       COMPUTATION OF INTEREST.  Interest on each Loan shall
be computed on the basis of a 360-day  year,  in each case for the actual number
of days elapsed in the period during which it accrues.  In computing interest on
any Loan,  the date of the  making of such Loan or the first day of an  Interest
Period  applicable  to such Loan shall be  included,  and the date of payment of
such Loan or the expiration date of an Interest  Period  applicable to such Loan
shall be excluded;  PROVIDED,  that if a Loan is repaid on the same day on which
it is made, one day's interest shall be paid on that Loan.

                  2.3      FEES.

                                      -25-
<PAGE>

                  The   Borrower   agrees  to  pay  to  the   Lenders   and  the
Administrative  Agent  such fees and in such  amounts  and at such times as have
been separately agreed upon in writing among the Borrower and the Administrative
Agent.

                  2.4      REPAYMENTS  AND   PREPAYMENTS;   GENERAL   PROVISIONS
REGARDING PAYMENTS.

                  A.       SCHEDULED  REPAYMENTS  OF  LOANS.  (i) On  each  Loan
Repayment  Date the Borrower  shall repay the Loans of each Tranche by an amount
equal to the  applicable  Loan  Repayment  Amount for such Tranche for such Loan
Repayment Date; PROVIDED,  that (x) such scheduled  installments of principal of
the Loans of a Tranche  shall be reduced in  connection  with any  voluntary  or
mandatory prepayments of the Loans of such Tranche in accordance with subsection
2.4B and (y) the Loans and all other amounts owed  hereunder with respect to the
Loans shall be paid in full no later than the Final Maturity Date, and the final
installment  payable by the  Borrower in respect of the Loans on such date shall
be in an amount sufficient to repay all amounts owing by the Borrower under this
Agreement with respect to the Loans.

                  (ii)     Notwithstanding anything to the contrary set forth in
this Agreement, the Loan Repayment Amounts due in respect of each Loan Repayment
Date to occur in the  Deferral  Period  may at the  option  of the  Borrower  be
deferred by an aggregate principal amount equal to the Available Deferred Amount
and in such event the amount of the Loan Repayment  Amounts so deferred shall be
due and payable as provided in subsection  2.4B. To the extent that the deferral
of the  Loan  Repayment  Amounts  for a Loan  Repayment  Date  pursuant  to this
subsection  2.4(A)(ii)  shall not be  sufficient  to reduce  the Loan  Repayment
Amounts for such Loan Repayment Date to zero, the amount to be deferred shall be
applied  pro rata to the Loan  Repayment  Amount for Tranche A and Tranche B for
such Loan Repayment Date. In the event that the Borrower decides to defer a Loan
Repayment  Amount due on a Loan  Repayment Date pursuant to this clause (b), the
Borrower  shall  deliver  to the  Administrative  Agent by no  later  than the 3
Business  Days  immediately  preceding  such Loan  Repayment  Date an  Officer's
Certificate  setting forth the  calculation of the Available  Deferred Amount in
reasonable  detail and the amount of the Loan Repayment Amount to be deferred on
such Loan Repayment Date.

                  B.       PREPAYMENTS.

                  (i)      VOLUNTARY  PREPAYMENTS.  The Borrower  may,  upon not
less than three Business  Days' prior written or telephonic  notice given to the
Administrative Agent by 12:00 Noon (New York time) on the date required, and, if
given by telephone,  promptly confirmed in writing to the  Administrative  Agent
(which  original  written or  telephonic  notice the  Administrative  Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay,  without premium or penalty, the Loans on any Business
Day in whole or in part in an aggregate  minimum  amount of $1,000,000  (or such
lesser  amount as may be agreed to by the  Administrative  Agent)  and  integral
multiples of $100,000 in excess of that amount;  PROVIDED,  HOWEVER,  that Loans
may only be prepaid on the expiration of the Interest Period applicable thereto.
Notice of prepayment having been given as aforesaid, the principal amount of the
Loans  specified in such notice  shall become due and payable on the  prepayment
date  specified  therein.  Any such  voluntary  prepayment  shall be  applied as
specified in subsection 2.4B(iii).

                                      -26-
<PAGE>

                  (ii)     MANDATORY PREPAYMENTS.

                  (a)      PREPAYMENTS  FROM ASSET SALES.  (I) No later than the
second  Business  Day  following  the date of  receipt by the  Borrower  of Cash
Proceeds  of any Asset Sale,  the  Borrower  shall  prepay,  without  premium or
penalty (other than pursuant to subsection  2.6D),  the Loans in an amount equal
to the greater of the (i) Assigned Value of the asset subject to such Asset Sale
and (ii) the sum of (x) the Net Cash  Proceeds  of such  Asset  Sale and (y) the
Value  of any  non-Cash  Proceeds  of such  Asset  Sale.  Concurrently  with any
prepayment of the Loans pursuant to this  subsection  2.4B(ii)(a),  the Borrower
shall deliver to the Administrative Agent an Officers' Certificate demonstrating
the derivation of the Net Cash Proceeds of the  correlative  Asset Sale from the
gross sales price  thereof.  In the event that the Borrower  shall,  at any time
after receipt of Cash Proceeds of any Asset Sale requiring a prepayment pursuant
to this subsection  2.4B(ii)(a),  determine that the prepayments previously made
in  respect  of such  Asset  Sale  were in an  aggregate  amount  less than that
required  by the  terms  of this  subsection  2.4B(ii)(a),  the  Borrower  shall
promptly make an additional  prepayment of the Loans, as the case may be, in the
manner described above in an amount equal to the amount of any such deficit, and
the Borrower shall concurrently therewith deliver to the Administrative Agent an
Officers'  Certificate  demonstrating  the derivation of the additional Net Cash
Proceeds resulting in such deficit.  Any mandatory  prepayment  pursuant to this
subsection 2.4B(ii)(a) shall be applied as specified in subsection 2.4B(iii).

                  (b)      PREPAYMENTS   DUE  TO  INSURANCE   AND   CONDEMNATION
PROCEEDS. On or prior to the 270th day following the date of receipt of any cash
payments under any of the casualty insurance policies covering damage to or loss
of property  maintained  pursuant to subsection 5.4 or otherwise  resulting from
damage to or loss of all or any portion of the  Collateral or any other tangible
asset (net of actual and documented reasonable costs incurred in connection with
adjustment and settlement  thereof and in connection  with the  reinvestment  of
proceeds permitted hereby,  "INSURANCE PROCEEDS") or any proceeds resulting from
the taking of assets by the power of eminent  domain,  condemnation or otherwise
(net  of  actual  and  documented  reasonable  costs  incurred  by  Borrower  in
connection  with  adjustment and settlement  thereof and in connection  with the
reinvestment  of  proceeds  permitted  hereby,   "CONDEMNATION   PROCEEDS,"  and
collectively with Insurance  Proceeds,  "PROCEEDS") (other than proceeds applied
pursuant  to  subsection  2.4B(ii)(c))  and so long as at the time of receipt of
such  proceeds  there  shall  exist no  Potential  Event of  Default or Event of
Default,  the  Borrower  may reinvest  such  Proceeds in property  substantially
similar to the property so damaged or lost so long as the  Administrative  Agent
receives a first priority  perfected security interest in such property pursuant
to documentation  acceptable to the  Administrative  Agent, the property is duly
leased to Atlas pursuant to the applicable  Lease and the  Administrative  Agent
receives  all  documents  and  opinions  in  connection  therewith  that  it may
reasonably request, including,  without limitation, an opinion from counsel that
the Borrower as lessor and the  Administrative  Agent as the assignee  under the
Lease are entitled to the benefits of Section 1110 of the  Bankruptcy  Code with
respect to such property.  If, 270 days after receipt of any such Proceeds,  the
Borrower has not reinvested  such Proceeds as described  above or if at the time
of receipt of such proceeds or at the time of  reinvestment  there shall exist a
Potential  Event of  Default  or an Event of  Default  then the  Borrower  shall
immediately  prepay,   without  premium  or  penalty  (other  than  pursuant  to
subsection  2.6D),  the Loans by an amount equal to the amount of such  proceeds
not so reinvested.  Any such mandatory prepayments shall be applied as specified
in

                                      -27-
<PAGE>

subsection 2.4B(iii). Until such time as such proceeds are reinvested or applied
to repay Loans, all such proceeds shall be held by the Administrative Agent in a
cash  collateral  account  with the  Administrative  Agent as  security  for the
Obligations  pursuant  to a cash  collateral  agreement  in form  and  substance
satisfactory to the Administrative Agent and providing that such proceeds may be
invested in Cash or Cash  Equivalents  at the direction of the Borrower with any
earnings thereon being for the account of the Borrower.

                  (c)      PREPAYMENTS  DUE TO AN EVENT OF LOSS.  No later  than
the  earlier of (x) the second  Business  Day  following  the date of receipt by
Holdings or any of its  Subsidiaries  of any Insurance  Proceeds or Condemnation
Proceeds  with  respect to an AFL III Aircraft or a Spare Engine or (y) 180 days
following  an Event  of Loss  with  respect  to an AFL III  Aircraft  or a Spare
Engine,  Borrower shall prepay,  without premium or penalty (other than pursuant
to  subsection  2.6D),  the Loans by an amount  equal to the  greater of the (i)
Assigned  Value of such AFL III Aircraft or Spare Engines and (ii) the Insurance
Proceeds or Condemnation  Proceeds, as the case may be, received with respect to
such AFL III Aircraft or Spare Engines;  PROVIDED that the Borrower shall not be
required to make a  prepayment  pursuant  to this  subsection  2.4B(ii)(c)  with
respect to any proceeds applied  pursuant to Section  4(f)(iv)(A) or 4(f)(vi)(B)
of any Aircraft Chattel Mortgage.

                  (d)      PREPAYMENTS  UNDER  LEASES.  On any date on which the
Borrower receives any prepayments of rent or other amounts pursuant to the terms
of any Lease, the Borrower shall prepay,  without premium or penalty (other than
pursuant to subsection  2.6), the  outstanding  principal  amount of Loans in an
amount equal to such prepayment of rent.

                  (e)      REPAYMENTS AND PREPAYMENTS OF DEFERRED  AMOUNTS.  The
Deferred Amount shall be due and payable as follows:

                  (i)      in the event that Atlas  shall not have  initiated  a
         D-Check for at least six of the Specified Aircraft by January 31, 2005,
         the  Deferred  Amount  shall be repaid on January 31, 2005 by an amount
         equal  to the  product  of the  Deferred  Amount  at such  time and the
         percentage set forth below opposite the number of D-Checks initiated on
         or before January 31, 2005, in the chart below:

           D-Checks Initiated                      Percentage
           ------------------                      ----------

                    5                                  25%

                    4                                  50%

                    3                                  75%

                2 or less                             100%

                  (ii)     in the event that Atlas  shall not have  initiated  a
         D-Check for all seven of the  Specified  Aircraft on or before April 1,
         2005 or completed such D-Checks and all such Specified  Aircraft remain
         airworthy  on or before May 31,  2005,  the  Deferred  Amount  shall be
         repaid  on April 1,  2005 or May 31,  2005,  as the case may be,  by an
         amount  equal  to an  additional  25% of the  Initial  Deferred  Amount
         specified in clause (i) above;

                                      -28-
<PAGE>

                  (iii)    in  the  event  that  the  D-Check  for  any  of  the
         Specified  Aircraft  which had been  initiated on or before January 31,
         2005 is not completed by March 31, 2005 or any such Specified  Aircraft
         is not airworthy on such date,  the Deferred  Amount shall be repaid on
         March  31,  2005 by an  amount  equal  to the  product  of the  Initial
         Deferred  Amount and the percentage set forth below opposite the number
         of D-Checks in respect of Specified  Aircraft which have been completed
         on or  before  March  31,  2005 and  which  Specified  Aircraft  remain
         airworthy on such date in the chart below:

              D-Checks Completed
            and Aircraft Airworthy                     Percentage
            ----------------------                     ----------

                      5                                    25%

                      4                                    50%

                      3                                    75%

                  2 or less                               100%

                  (iv)     on each Accelerated Deferred Amount Payment Date, the
         Borrower  shall  prepay the  Deferred  Amount by an amount equal to the
         Accelerated  Deferred  Payment  Amount  for such  Accelerated  Deferred
         Amount  Payment  Date;  PROVIDED  that not more than  $9,000,000 in the
         aggregate  shall be required to be repaid under this clause (iv) in any
         Relevant  Period;

                  (v)      on the Loan Repayment  Date on which the  outstanding
         principal  amount of the Loans is  required  to be repaid in full,  the
         Borrower shall repay the Deferred Amount then  outstanding in full; and

                  (vi)     on the Final  Maturity Date, the Borrower shall repay
         the Deferred Amount then outstanding in full.

                  (f)      On each Loan  Repayment  Date from the period January
         1, 2006 to, and including,  December 31, 2007, to the extent there is a
         Deferred  Amount  outstanding  on such  date  (and in  addition  to the
         principal  payments  required  pursuant to Schedule  2.4), the Borrower
         shall make a mandatory  prepayment  equal to the lesser of (i) $167,000
         and (ii) the Deferred Amount outstanding at such time.

                  (iii)    APPLICATION OF PREPAYMENTS.

                  (a)      APPLICATION OF VOLUNTARY PREPAYMENTS BY TYPE OF LOANS
AND ORDER OF MATURITY.  Any voluntary prepayments pursuant to subsection 2.4B(i)
shall be applied ratably among the Tranche A Loans and the Tranche B Loans based
on the outstanding  principal amount of the Loans of such Tranche as compared to
the total outstanding  principal amount of all Loans. All voluntary  prepayments
of the Loans  pursuant to  subsection  2.4B(i)  shall be applied pro rata to all
scheduled amortization payments.

                  (b)      APPLICATION OF MANDATORY  PREPAYMENTS  OF LOANS.  Any
mandatory  prepayments  of the Loans  pursuant to subsection  2.4B(ii)  shall be
applied ratably among the

                                      -29-
<PAGE>

Tranche  A Loans  and the  Tranche B Loans  based on the  outstanding  principal
amount  of the  Loans of such  Tranche  as  compared  to the  total  outstanding
principal  amount of all  Loans;  PROVIDED,  that in the  event of a  prepayment
pursuant to subsection 2.4B(ii)(a) such prepayment shall be applied FIRST to the
Loans  relating  to such AFL III  Aircraft  or Spare  Engine  Pool that were the
subject of the Asset Sale on a PRO RATA basis based on the outstanding principal
amount of each Loan as compared to the total outstanding principal amount of all
Loans relating to such AFL III Aircraft or Spare Engine Pool and SECOND, ratably
among the Loans relating to all other AFL III Aircraft and Spare Engine Pools on
a PRO RATA basis  based on the  outstanding  principal  amount of the Loan being
prepaid  as  compared  to the total  outstanding  principal  amount of all Loans
relating to all other AFL III  Aircraft and Spare Engine  Pools.  Any  mandatory
prepayments  of the Loans  pursuant to  subsection  2.4B(ii)(b)  or (c) shall be
applied to the Loans relating to the particular AFL III Aircraft or Spare Engine
Pool,  retained by the Borrower  and/or applied ratably among the Loans relating
to all other AFL III Aircraft and Spare  Engine  Pools in  accordance  with such
sections. All mandatory prepayments of the Loans pursuant to subsection 2.4B(ii)
shall  be  applied  to  scheduled  amortization  payments  in  inverse  order of
maturity.

                  (c)      APPLICATION  TO DEFERRED  AMOUNTS.  All voluntary and
mandatory  prepayments  of the Loans  pursuant  to this  Agreement  (other  than
pursuant to  subsection  2.4A) shall be applied  first to the  prepayment of the
Deferred  Amount  until the  Deferred  Amount  shall  have been paid in full and
thereafter to the prepayment of the other Loans.

                  C.       GENERAL PROVISIONS REGARDING PAYMENTS.

                  (i)      MANNER  AND  TIME OF  PAYMENT.  All  payments  by the
Borrower of principal,  interest, fees and other Obligations hereunder and under
the Notes shall be made in Dollars in same day funds,  without defense,  set-off
or  counterclaim,  free of any  restriction  or condition,  and delivered to the
Administrative  Agent not later  than 12:00 Noon (New York time) on the date due
at the Funding and Payment Office for the account of the Lenders. Funds received
by the Administrative  Agent after that time on such due date shall be deemed to
have been paid by the Borrower on the next succeeding Business Day. The Borrower
hereby  authorizes  the  Administrative  Agent to charge its  accounts  with the
Administrative  Agent  in  order  to  cause  timely  payment  to be  made to the
Administrative Agent of all principal, interest, fees and expenses due hereunder
(subject to sufficient funds being available in its accounts for that purpose).

                  (ii)     APPLICATION  OF PAYMENTS TO PRINCIPAL  AND  INTEREST.
All  payments  in respect  of the  principal  amount of any Loan  shall  include
payment of accrued interest on the principal amount being repaid or prepaid, and
all such payments shall be applied to the payment of interest before application
to principal.

                  (iii)    APPORTIONMENT  OF PAYMENTS.  Aggregate  principal and
interest  payments in respect of Tranche A Loans shall be apportioned  among all
outstanding  Tranche  A Loans  to  which  such  payments  relate,  in each  case
proportionately to each Tranche A Lender's  respective Tranche A Pro Rata Share.
Aggregate principal and interest payments in respect of Tranche B Loans shall be
apportioned among all outstanding Tranche B Loans to which such payments relate,
in each case proportionately to each Tranche B Lender's respective Tranche B Pro
Rata Share. The Administrative  Agent shall promptly  distribute to each Lender,
at its address set

                                      -30-
<PAGE>

forth below its name on the  signature  page hereof or at such other  address as
such  Lender may  request,  its  Tranche A Pro Rata  Share of all such  payments
received  by the  Administrative  Agent in respect  of Tranche A Loans,  and its
Tranche B Pro Rata Share of all such  payments  received  by the  Administrative
Agent in respect of Tranche B Loans.

                  (iv)     PAYMENTS  ON  BUSINESS  DAYS.   Except  as  otherwise
provided herein, whenever any payment to be made hereunder shall be stated to be
due on a day that is not a Business  Day, such payment shall be made on the next
succeeding  Business  Day and such  extension  of time shall be  included in the
computation of the payment of interest hereunder.

                  (v)      NOTATION OF PAYMENT.  Each Lender  agrees that before
disposing  of any Note held by it, or any part  thereof  (other than by granting
participations  therein),  that Lender will make a notation thereon of all Loans
evidenced by that Note and all principal payments previously made thereon and of
the date to which interest thereon has been paid; PROVIDED,  that the failure to
make (or any error in the making of) a notation of any Loan made under such Note
shall not limit or otherwise affect the obligations of the Borrower hereunder or
under  such  Note with  respect  to any Loan or any  payments  of  principal  or
interest on such Note.

                  2.5      USE OF PROCEEDS.

                  A.       LOANS. The proceeds of the Loans were used to finance
the purchase and renovation of the AFL III Aircraft and the Spare Engines Pools.

                  B.       MARGIN REGULATIONS. No portion of the proceeds of any
Loans under this  Agreement  were used by the  Borrower in any manner that might
cause the Loan or the  application  of such  proceeds to violate  Regulation  U,
Regulation T or  Regulation  X of the Board of Governors of the Federal  Reserve
System,  or any other  regulation of such Board, or to violate the Exchange Act,
in each  case as in  effect  on the date or  dates of such  Loan and such use of
proceeds.

                  2.6      SPECIAL PROVISIONS GOVERNING LOANS.

                  Notwithstanding  any other provisions of this Agreement to the
contrary,  the following provisions shall govern with respect to Loans as to the
matters covered:

                  A.       DETERMINATION OF APPLICABLE INTEREST RATE. As soon as
practicable after 10:00 A.M. (New York time) on each Interest Rate Determination
Date, the  Administrative  Agent shall  determine  (which  determination  shall,
absent manifest  error,  be final,  conclusive and binding upon all parties) the
interest  rate that shall apply to the Loans for which an interest  rate is then
being  determined  for the  applicable  Interest  Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to the Borrower
and to each Lender.

                  B.       INABILITY TO DETERMINE  APPLICABLE  INTEREST RATE. In
the  event  that  the   Administrative   Agent  shall  have  determined   (which
determination  shall  be final  and  conclusive  and  binding  upon all  parties
hereto),  on any  Interest  Rate  Determination  Date with respect to any Loans,
that, by reason of  circumstances  affecting the  interbank  Eurodollar  market,
adequate  and  fair  means do not  exist  for  ascertaining  the  interest  rate
applicable to such Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate, the Administrative Agent shall on

                                      -31-
<PAGE>

such date give notice (by telefacsimile or by telephone confirmed in writing) to
the Borrower and to each Lender of such  determination,  whereupon  (i) no Loans
may be  incurred  until  such  time as the  Administrative  Agent  notifies  the
Borrower  and the Lenders that the  circumstances  giving rise to such notice no
longer exist, or until the Borrower,  the  Administrative  Agent and the Lenders
agree upon a Substitute  Basis in accordance  with  subsection 2.6G and (ii) the
rate of interest  applicable  to any Affected  Loans then  outstanding  shall be
determined in accordance with subsection 2.6G.

                  C.       ILLEGALITY OR IMPRACTICABILITY OF LOANS. In the event
that on any date any Lender shall have determined (which  determination shall be
final and  conclusive and binding upon all parties hereto but shall be made only
after  consultation  with the  Borrower and the  Administrative  Agent) that the
maintaining or  continuation of its Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental rule,
regulation,  guideline  or order  (or  would  conflict  with  any  such  treaty,
governmental  rule,  regulation,  guideline or order not having the force of law
even though the failure to comply  therewith  would not be unlawful) or (ii) has
become impracticable,  or would cause such Lender material hardship, as a result
of contingencies  occurring after the date of this Agreement that materially and
adversely affect the interbank  Eurodollar market or the position of such Lender
in that market,  then, and in any such event,  such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by  telefacsimile  or by telephone
confirmed  in  writing) to the  Borrower  and the  Administrative  Agent of such
determination  (which notice the Administrative Agent shall promptly transmit to
each other Lender).  Thereafter,  (a) the  obligation of the Affected  Lender to
make Loans  shall be  suspended  until such  notice  shall be  withdrawn  by the
Affected  Lender,   (b)  the  Affected  Lender's   obligation  to  maintain  its
outstanding  Loans (the "AFFECTED  LOANS") shall be suspended  until such notice
shall be withdrawn by the Affected Lender,  and (c) the parties shall follow the
procedures  set forth in subsection  2.6G with respect to the Affected  Loans so
long as, if following such procedures,  the maintaining of such Loans is lawful.
Nothing in this  subsection 2.6C shall affect the obligation of any Lender other
than an Affected  Lender to make or maintain Loans in accordance  with the terms
of this Agreement.

                  D.       COMPENSATION  FOR  BREAKAGE  OR  NON-COMMENCEMENT  OF
INTEREST  PERIODS.  The Borrower  shall  compensate  each  Lender,  upon written
request by such Lender (which  request shall set forth the basis for  requesting
such amounts), for all reasonable losses,  expenses and liabilities  (including,
without  limitation,  any  interest  paid by such  Lender  to  lenders  of funds
borrowed  by it to make or carry its Loans and any loss,  expense  or  liability
sustained by such Lender in connection  with the  liquidation or reemployment of
such  funds)  that such  Lender  may  sustain:  (i) if any  prepayment  or other
principal  payment occurs on a date prior to the last day of an Interest  Period
applicable to such Loan,  (ii) if any prepayment of any of its Loans is not made
on any date specified in a notice of prepayment given by the Borrower,  or (iii)
as a  consequence  of any other  default by the Borrower in the repayment of its
Loans when required by the terms of this Agreement.

                  E.       BOOKING  OF LOANS.  Any  Lender  may  make,  carry or
transfer  Loans at, to, or for the  account of any of its branch  offices or the
office of an Affiliate of that Lender.

                  F.       ASSUMPTIONS CONCERNING FUNDING OF LOANS.  Calculation
of all  amounts  payable  to a  Lender  under  this  subsection  2.6  and  under
subsection 2.7A shall be made as though

                                      -32-
<PAGE>

that Lender had actually  funded each of its relevant Loans through the purchase
of a Eurodollar  deposit bearing  interest at the rate obtained  pursuant to the
definition of Adjusted  Eurodollar Rate in an amount equal to the amount of such
Loan and  having a  maturity  comparable  to the  relevant  Interest  Period and
through the transfer of such Eurodollar  deposit from an offshore office of that
Lender to a  domestic  office of that  Lender in the United  States of  America;
PROVIDED,  HOWEVER, that each Lender may fund each of its Loans in any manner it
sees fit and the foregoing  assumptions  shall be utilized only for the purposes
of calculating  amounts payable under this  subsection 2.6 and under  subsection
2.7A.

                  G.       SUBSTITUTE  BASIS.  During the 30 days  following the
date of any notice given to the Borrower  pursuant to subsections 2.6B and 2.6C,
the  Administrative  Agent, the Lenders and the Borrower shall negotiate in good
faith in  order  to  arrive  at a  mutually  acceptable  alternative  basis  for
determining the interest rate from time to time applicable to the affected Loans
(the "SUBSTITUTE  BASIS"). If, within the 30 days following the date of any such
notice to the Borrower,  the Administrative  Agent, the Lenders and the Borrower
shall agree upon a Substitute  Basis, such Substitute Basis shall be retroactive
to and effective  from the first day of the then current  Interest  Period until
and including the last day of such Interest  Period.  If, after 30 days from the
date of such  notice,  the Lenders and the  Borrower  shall have failed to agree
upon a  Substitute  Basis,  then each  Lender  shall  certify  in writing to the
Borrower through the Administrative  Agent (such  certification to be conclusive
and binding on all of the parties  hereto  absent  manifest  error) the interest
rate at which such Lender is prepared to make or maintain its affected  Loan for
such Interest Period, it being understood that such Lender's interest rate shall
be at a rate per annum equal to the sum of the  Applicable  Margin  plus, a rate
which  adequately  and fairly  reflects the cost to such Lender of obtaining the
funds  necessary to maintain its affected  Loan for such Interest  Period,  such
interest  rate to be  retroactive  to and  effective  from the first day of such
Interest Period.  If no Substitute Basis is established,  upon receipt of notice
of the  interest  rates at which the  Lenders  are  prepared to make or maintain
their respective affected Loans, the Borrower shall have the right,  exercisable
upon ten Business  Days' prior notice to any Lender  through the  Administrative
Agent,  (A) to continue to borrow Loans at the interest  rates so advised by the
respective  Lenders (as such rates may be  modified,  from time to time,  at the
outset of each subsequent Interest Period) or (B) to prepay in full the Affected
Loans of any Lender, together with accrued interest thereon at the interest rate
certified in writing by such Lender as provided  above,  whereupon such Affected
Loans shall become due and payable on the date specified by the Borrower in such
notice.  In determining  the actual interest rate per annum to be charged on any
Loan,  the  Substitute  Basis or the  interest  rate  advised by the  respective
Lenders to apply to a Loan in accordance  with the provisions of this subsection
2.6G  shall  be  increased  to the rate  per  annum  obtained  by  dividing  the
Substitute  Basis or such advised  interest  rate by a percentage  equal to 100%
MINUS the then stated maximum rate of all required  reserve  requirements  under
applicable  law  (including any marginal,  emergency,  supplemental,  special or
other  reserves) and  applicable on the date of  determination  of such interest
rate  to  any  member  bank  of  the  Federal   Reserve  System  in  respect  of
"Eurocurrency  liabilities" as defined in Regulation D of the Board of Governors
of the Federal Reserve System,  as in effect from time to time (or any successor
category of liabilities under Regulation D).

                  2.7      INCREASED COSTS, TAXES; CAPITAL ADEQUACY.

                  A.       COMPENSATION  FOR INCREASED COSTS AND TAXES.  Subject
to the provisions

                                      -33-
<PAGE>

of  subsection  2.7B,  in the  event  that any  Lender  shall  determine  (which
determination  shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental  rule,  regulation
or order,  or any change  therein or in the  interpretation,  administration  or
application  thereof  (including  the  introduction  of any new law,  treaty  or
governmental  rule,  regulation or order),  or any  determination  of a court or
governmental  authority,  in each case  that  becomes  effective  after the date
hereof,  or compliance by such Lender with any  guideline,  request or directive
issued or made after the date hereof by any central  bank or other  governmental
or quasi-governmental authority (whether or not having the force of law):

                  (i)      subjects  such  Lender  (or  its  applicable  lending
office) to any  additional  Tax (other than any change in the rate of Tax on the
overall net income of such Lender) with respect to this  Agreement or any of its
obligations  hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable hereunder;

                  (ii)     imposes,  modifies  or holds  applicable  any reserve
(including, without limitation, any marginal, emergency,  supplemental,  special
or other reserve),  special deposit,  compulsory loan, FDIC insurance or similar
requirement  against assets held by, or deposits or other  liabilities in or for
the account of, or advances  or loans by, or other  credit  extended  by, or any
other  acquisition  of funds by, any office of such Lender  (other than any such
reserve or other  requirements  with respect to Loans that are  reflected in the
definition of Adjusted Eurodollar Rate); or

                  (iii)    imposes any other condition  (other than with respect
to a Tax matter) on or affecting such Lender (or its applicable  lending office)
or its obligations hereunder or the interbank Eurodollar market;

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to  maintaining  Loans  hereunder  or to reduce any amount  received or
receivable  by such  Lender (or its  applicable  lending  office)  with  respect
thereto; then, in any such case, the Borrower shall promptly pay to such Lender,
upon receipt of the statement referred to in the next sentence,  such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating,  interest or otherwise as such Lender in its sole discretion  shall
determine) as may be necessary to compensate  such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender shall
deliver  to the  Borrower  (with a copy to the  Administrative  Agent) a written
statement,  setting forth in  reasonable  detail the basis for  calculating  the
additional  amounts  owed to such  Lender  under  this  subsection  2.7A,  which
statement  shall be  conclusive  and  binding  upon all  parties  hereto  absent
manifest error.

                  B.       WITHHOLDING OF TAXES.

                  (i)      PAYMENTS  TO BE FREE AND CLEAR.  All sums  payable by
the Borrower  under this  Agreement and the other Loan  Documents  shall be paid
free and  clear of and  (except  to the  extent  required  by law)  without  any
deduction or withholding on account of any Tax (excluding, except as provided in
subsection  2.7B(ii)(e),  any  Tax on the  overall  net  income  of any  Lender)
imposed, levied,  collected,  withheld or assessed by any jurisdiction or by any
political  subdivision  or taxing  authority  thereof or therein with respect to
such payments.

                                      -34-
<PAGE>

                  (ii)     GROSSING-UP OF PAYMENTS. If the Borrower or any other
Person is required by law to make any deduction or withholding on account of any
such Tax from any sum paid or  payable  by the  Borrower  to the  Administrative
Agent or any Lender under any of the Loan Documents:

                  (a)      the Borrower shall notify the Administrative Agent of
any  such  requirement  or any  change  in any such  requirement  as soon as the
Borrower becomes aware of it;

                  (b)      the  Borrower  shall pay any such Tax before the date
on which penalties attach thereto,  such payment to be made (if the liability to
pay is imposed on the  Borrower)  for its own account or (if that  liability  is
imposed  on the  Administrative  Agent  or such  Lender,  as the case may be) on
behalf of and in the name of the Administrative Agent or such Lender;

                  (c)      the sum  payable by the  Borrower in respect of which
the relevant deduction, withholding or payment is required shall be increased to
the  extent  necessary  to  ensure  that,  after the  making of that  deduction,
withholding or payment, the Administrative Agent or such Lender, as the case may
be,  receives on the due date a net sum equal to what it would have received had
no such deduction, withholding or payment been required or made;

                  (d)      within 30 days after  paying any sum from which it is
required by law to make any deduction or  withholding,  and within 30 days after
the due date of payment of any Tax which it is  required  by clause (b) above to
pay, the Borrower shall deliver to the Administrative  Agent certified copies of
tax  receipts  evidencing  such  payment  by  the  Borrower  or  other  evidence
satisfactory  to the other affected  parties of such  deduction,  withholding or
payment and of the remittance thereof to the relevant taxing or other authority;
and

                  (e)      if any  amounts  are  payable  in  respect  of  Taxes
pursuant to  subsection  2.7B(ii)(c),  the  Borrower  agrees to  reimburse  each
Lender,  upon the  written  request  of such  Lender,  for Taxes  imposed  on or
measured by the overall  net income of such  Lender and for any  withholding  of
taxes as such Lender  shall  determine  are payable by, or withheld  from,  such
Lender,  in  respect  of such  amounts  so paid to or on behalf  of such  Lender
pursuant to subsection 2.7B(ii)(c),  and in respect of any amounts paid to or on
behalf of such Lender pursuant to this subsection 2.7B(ii)(e).

                  (iii)    EVIDENCE OF EXEMPTION FROM U.S. WITHHOLDING TAX.

                  (a)      Each  Lender that is not a United  States  person (as
such term is defined in section  7701(a)(30) of the Internal  Revenue Code) (for
purposes of this subsection 2.7B(iii), a "NON-U.S. LENDER") shall deliver to the
Administrative  Agent  for  transmission  to the  Borrower,  on or  prior to the
Restatement  Effective  Date (in the case of each Lender listed on the signature
pages hereof) or on the date of the  Assignment  Agreement  pursuant to which it
becomes  a  Lender  (in the  case of each  other  Lender  that  was not a Lender
hereunder immediately prior to such assignment or transfer),  and, to the extent
legally  entitled  to do so,  at such  other  times as may be  necessary  in the
determination  of  the  Borrower  or  the  Administrative  Agent  (each  in  the
reasonable  exercise of its  discretion),  (1) two  original  copies of Internal
Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption
under an income tax treaty) (or any  successor  forms),  properly  completed and
duly executed by such Lender, certifying to

                                      -35-
<PAGE>

such Lender's entitlement to a complete exemption from United States withholding
tax with respect to any payments to such Lender under any of the Loan  Documents
or (2) if such  Lender  is not a "bank" or other  Person  described  in  Section
881(c)(3)  of the  Internal  Revenue  Code and cannot  deliver  either  Internal
Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption
under an income tax  treaty)  pursuant  to clause (1) above,  a  Certificate  re
Non-Bank Status  together with two original  copies of Internal  Revenue Service
Form W-8BEN (with respect to the portfolio interest exemption) (or any successor
form),  properly completed and duly executed by such Lender,  certifying to such
Lender's  entitlement to a complete exemption from United States withholding tax
with respect to any payments to such Lender of interest payable under any of the
Loan Documents.

                  (b)      Each   Lender   required   to   deliver   any  forms,
certificates  or other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees, from time
to time after the initial delivery by such Lender of such forms, certificates or
other evidence, whenever a lapse in time or change in circumstances renders such
forms,  certificates  or other  evidence  obsolete or inaccurate in any material
respect,  such  Lender  shall  (1)  deliver  to  the  Administrative  Agent  for
transmission to the Borrower two new original copies of Internal Revenue Service
Form  W-8ECI or Form  W-8BEN  (with  respect to the  benefits  of any income tax
treaty), or a Certificate re Non-Bank Status and two original copies of Internal
Revenue Service Form W-8BEN (with respect to the portfolio interest  exemption),
as the  case  may be,  properly  completed  and duly  executed  by such  Lender,
together with any other certificate or statement of exemption  required in order
to confirm or establish the entitlement of such Lender to a continued  exemption
from or reduction in United States  withholding  tax with respect to payments to
such  Lender   under  the  Loan   Documents  or  (2)   immediately   notify  the
Administrative  Agent and the  Borrower  of its  inability  to deliver  any such
forms,  certificates or other  evidence,  in which case such Lender shall not be
required to deliver any such forms,  certificates or other evidence  pursuant to
this subsection 2.7B(iii)(b).

                  (c)      The  Borrower  shall  not  be  required  to  pay  any
additional  amount to any Non-U.S.  Lender under clause (c) or (e) of subsection
2.7B(ii)  if such  Lender  shall have  failed to  satisfy  the  requirements  of
subsection 2.7B(iii)(a); PROVIDED, that if such Lender shall have satisfied such
requirements  on the  Restatement  Effective  Date (in the  case of each  Lender
listed on the signature pages hereof) or on the date of the Assignment Agreement
pursuant to which it became a Lender (in the case of each other Lender), nothing
in this subsection  2.7B(iii)(c) shall relieve the Borrower of its obligation to
pay any additional amounts pursuant to clause (c) or (e) of subsection  2.7B(ii)
in the event that such Lender complies with subsection 2.7B(ii)(b).

                  (d)      Notwithstanding anything to the contrary contained in
the preceding  sentence or elsewhere in this subsection 2.7, the Borrower agrees
to pay  additional  amounts and to indemnify each Lender in the manner set forth
in  subsection  2.7B(ii)  (without  regard to the  identity of the  jurisdiction
requiring the deduction or  withholding)  in respect of any amounts  deducted or
withheld by it as described in the immediately preceding sentence as a result of
any changes after the Restatement  Effective Date in any applicable law, treaty,
governmental  rule,  regulation,  guideline or order,  or in the  interpretation
thereof, relating to the deducting or withholding of income or similar taxes.

                                      -36-
<PAGE>

                  (iv)     If the Borrower pays any additional amount under this
subsection  2.7B to a Lender and such Lender  determines in its sole  discretion
that it has actually received or realized in connection  therewith any refund or
any reduction of, or credit  against,  its Tax liabilities in or with respect to
the taxable year in which the additional  amount is paid,  such Lender shall pay
to the  Borrower  an amount  that such  Lender  shall,  in its sole  discretion,
determine  is equal to the net  benefit,  after tax,  that was  obtained  by the
Lender  in such year as a  consequence  of such  refund,  reduction  or  credit;
provided,  however,  that (i) any Lender may determine,  in its sole  discretion
consistent with the policies of such Lender, whether to seek a tax benefit; (ii)
any  Taxes  that are  imposed  on a  Lender  as a result  of a  disallowance  or
reduction  (including  through the  expiration  of any tax credit  carryover  or
carryback  of such  Lender  that  otherwise  would not have  expired) of any tax
benefit  with  respect to which such  Lender has made a payment to the  Borrower
pursuant  to this  subsection  2.7B(iv)  shall be treated as a Tax for which the
Borrower is  obligated  to  indemnify  such Lender  pursuant to this  subsection
2.7B(iv)  without  any  exclusions  or  defenses;  and  (iii)  nothing  in  this
subsection  2.7B(iv)  shall  require  the Lender to  disclose  any  confidential
information to the Borrower (including, without limitation, its tax returns).

                  C.       CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability after the
date hereof of any law, rule or regulation (or any provision  thereof) regarding
capital   adequacy,   or  any  change  therein  or  in  the   interpretation  or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration  thereof, or compliance
by any Lender (or its applicable lending office) with any guideline,  request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing  the rate of return on the capital of such Lender or
any corporation  controlling  such Lender as a consequence of, or with reference
to, such  Lender's  Loans or other  obligations  hereunder to a level below that
which such Lender or such  controlling  corporation  could have achieved but for
such  adoption,  effectiveness,  phase-in,  applicability,  change or compliance
(taking  into  consideration  the  policies of such  Lender or such  controlling
corporation with regard to capital adequacy), then from time to time, within ten
Business  Days after  receipt by the Borrower  from such Lender of the statement
referred to in the next  sentence,  the  Borrower  shall pay to such Lender such
additional  amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction.  Such Lender shall deliver
to the Borrower (with a copy to the  Administrative  Agent) a written statement,
setting  forth  in  reasonable  detail  the  basis  of the  calculation  of such
additional  amounts,  which  statement  shall be conclusive and binding upon all
parties hereto absent manifest error.

                  D.       SUBSTITUTE LENDERS. In the event that the Borrower is
required under the provisions of subsection  2.6C or this subsection 2.7 to make
payments in a material  amount to any Lender,  the Borrower  may, so long as, no
Event of  Default or  Potential  Event of Default  shall  have  occurred  and be
continuing, elect to terminate such Lender as a party to this Agreement, so long
as, concurrently with such termination, (i) the Borrower pays to that Lender all
principal,  interest and fees and other amounts (including,  without limitation,
amounts, if any, owed under subsection 2.6C or this subsection 2.7) owed to such
Lender  through such date of  termination,  (ii) another  financial  institution
satisfactory  to  the  Borrower  and  the   Administrative   Agent  (or  if  the
Administrative  Agent  is  also  the  Lender  to be  terminated,  the  successor
Administrative  Agent)  agrees,  as of such  date,  to  become a Lender  for all
purposes under this

                                      -37-
<PAGE>

Agreement  (whether by assignment or amendment) and to assume all obligations of
the  Lender to be  terminated  as of such  date,  and (iii)  all  documents  and
supporting materials necessary,  in the judgment of the Administrative Agent (or
if the Administrative  Agent is also the Lender to be terminated,  the successor
Administrative  Agent) to  evidence  the  substitution  of such Lender have been
received and approved by the Administrative Agent as of such date.

                  2.8      OBLIGATION OF LENDERS TO MITIGATE.

                  Each Lender agrees that, as promptly as practicable  after the
officer of such Lender  responsible for  administering  the Loans of such Lender
becomes aware of the occurrence of an event or the existence of a condition that
would cause such Lender to become an Affected  Lender or that would entitle such
Lender to receive  payments  under  subsection  2.7, it will,  to the extent not
inconsistent  with the internal policies of such Lender and any applicable legal
or regulatory  restrictions,  use reasonable efforts (i) to make, issue, fund or
maintain the Affected Loan of such Lender through another lending office of such
Lender, or (ii) take such other measures as such Lender may deem reasonable,  if
as a result  thereof  the  circumstances  that would  cause such Lender to be an
Affected  Lender  would  cease to exist or the  additional  amounts  that  would
otherwise be required to be paid to such Lender pursuant to subsection 2.7 would
be  materially  reduced  and if,  as  determined  by  such  Lender  in its  sole
discretion,  the making,  issuing,  funding or maintaining of such Loans through
such other lending office or in accordance with such other measures, as the case
may be,  would not  otherwise  materially  adversely  affect  such  Loans or the
interests  of such Lender;  PROVIDED,  that such Lender will not be obligated to
utilize such other lending  office  pursuant to this  subsection  2.8 unless the
Borrower  agrees to pay all  incremental  expenses  incurred by such Lender as a
result of utilizing  such other lending office as described in clause (i) above.
A  certificate  as to the amount of any such  expenses  payable by the  Borrower
pursuant to this  subsection 2.8 (setting  forth in reasonable  detail the basis
for  requesting  such amount)  submitted by such Lender to the Borrower  (with a
copy to the Administrative Agent) shall be conclusive absent manifest error.

                                   SECTION 3.

                    CONDITIONS TO RESTATEMENT EFFECTIVE DATE

                  3.1      CONDITIONS TO EFFECTIVENESS.

                  The  effectiveness of this Agreement and the obligation of the
Lenders to  maintain  the Loans are  subject to the  satisfaction  of all of the
following conditions:

                  (i)      each of the parties  hereto  shall have  executed and
delivered counterparts of this Agreement to Administrative Agent;

                  (ii)     the Borrower  shall have  delivered to Lenders (or to
Administrative Agent for Lenders) executed originals of the Notes, duly executed
in accordance with subsection  2.1B,  drawn to the order of each Lender and with
appropriate insertions;

                  (iii)    the    Borrower    shall   have   to   delivered   to
Administrative  Agent the following,  each,  unless otherwise  noted,  dated the
Restatement Effective Date:

                                      -38-
<PAGE>

                           (a)      certified   copies  of  the  certificate  of
                  incorporation (or equivalent  organizational  document) of the
                  Borrower and Atlas,  together with a good standing certificate
                  from the Secretary of State of the state of  organization  and
                  each other state in which the Borrower and Atlas are qualified
                  as a foreign  corporation  to do  business  and, to the extent
                  generally  available,  a certificate or other evidence of good
                  standing as to payment of any applicable  franchise or similar
                  taxes from the  appropriate  taxing  authority of each of such
                  states,  each  dated a recent  date  prior to the  Restatement
                  Effective Date;

                           (b)      copies  of the  bylaws of the  Borrower  and
                  Atlas,  certified in each case as of the Restatement Effective
                  Date by its corporate secretary or an assistant secretary;

                           (c)      resolutions of the Board of Directors of the
                  Borrower and Atlas  approving and  authorizing  the execution,
                  delivery  and  performance  of this  Agreement  and the  other
                  documents  contemplated by the Transaction certified as of the
                  Restatement  Effective  Date  by the  corporate  secretary  or
                  assistant secretary of the Borrower and Atlas as being in full
                  force and effect without modification or amendment;

                           (d)      signature and incumbency  certificate of the
                  officer of the Borrower and of Atlas  executing this Agreement
                  and any other Loan Documents;

                           (e)      a certificate  of an  authorized  officer of
                  (x) the Borrower,  certifying that the conditions set forth in
                  clauses  (vii),  (ix),  (xv)(a),  (xvi)  and  (xvii)  of  this
                  subsection 3.1 are satisfied and (y) Atlas certifying that the
                  conditions set forth in clause (xv)(b) of this  subsection 3.1
                  are satisfied;

                           (f)      the audited  consolidated  balance  sheet of
                  Holdings and its  Subsidiaries as at December 31, 2003 and the
                  related consolidated statements of income, stockholders equity
                  and cash flows of Holdings and its Subsidiaries for the Fiscal
                  Year then ended; and

                           (g)      such other documents as Administrative Agent
                  may reasonably request.

                  (iv)     the Borrower shall have  delivered to  Administrative
Agent a financial condition certificate executed by its Chief Executive Officer,
Chief Financial  Officer or Treasurer and dated the Restatement  Effective Date,
substantially  in the form  annexed  hereto  as  Exhibit  VII  with  appropriate
attachments demonstrating that the Borrower is Solvent;

                  (v)      the  Administrative  Agent  shall have  received  (A)
originally  executed copies of one or more favorable  written opinions of Cahill
Gordon & Reindel LLP,  counsel for Borrower,  in form and  substance  reasonably
satisfactory  to  Administrative  Agent  and  its  counsel,   dated  as  of  the
Restatement  Effective Date and setting forth  substantially  the matters in the
opinions  designated in Exhibit IVA annexed  hereto and as to such other matters
as Administrative  Agent acting on behalf of Lenders may reasonably request, and
(B) the opinion of Cahill  Gordon & Reindel LLP  regarding  Section  1110 of the
Bankruptcy Code, dated the

                                      -39-
<PAGE>

Restatement  Effective Date and setting forth  substantially  the matters in the
opinions designated in Exhibit IVB annexed hereto;

                  (vi)     the Administrative Agent shall have received executed
copies of one or more  favorable  written  opinions  of the  General  Counsel of
Holdings, in form and substance reasonably  satisfactory to Administrative Agent
and its  counsel,  dated the  Restatement  Effective  Date,  and  setting  forth
substantially  the  matters in the  opinions  designated  in Exhibit IVC annexed
hereto;

                  (vii)    the capital,  organization,  ownership and management
structure of Holdings  and its  Subsidiaries  and the form and  substance of the
ACMI Contracts and aircraft lease arrangements (including each Operating Lease),
the Existing Indebtedness,  the Atlas Fifth Amended and Restated Credit Facility
and the Restructuring  Documents  (collectively,  the "SPECIFIED  INDEBTEDNESS")
shall be as set forth in the Plan  Documents  with such  modifications  as shall
have been  approved  in writing by the  Administrative  Agent and the  Requisite
Lenders and shall otherwise be satisfactory to the Administrative  Agent and the
Requisite Lenders;

                  (viii)   the Atlas Fifth Amended and Restated  Credit Facility
shall have become effective in accordance with its terms;

                  (ix)     on and  as of the  Restatement  Effective  Date,  (A)
neither Holdings nor any of its Subsidiaries  shall have any Preferred Equity or
any  Indebtedness  outstanding,  except  for (i) the  Obligations  and  (ii) the
Specified  Indebtedness and (B) all of the Specified  Indebtedness  shall remain
outstanding  after giving effect to the Transaction  and the other  transactions
contemplated hereby without any default or events of default existing thereunder
or  arising  as  a  result  of  the  Transaction  and  the  other   transactions
contemplated  hereby  (except  to the extent  amended  or waived by the  parties
thereto on terms and conditions  reasonably  satisfactory to the  Administrative
Agent and the Requisite Lenders);

                  (x)      on or prior to the  Restatement  Effective  Date, (i)
there shall have been  delivered  to the  Administrative  Agent true and correct
copies of the Plan of Reorganization,  the Disclosure  Statement,  which Plan of
Reorganization  and  Disclosure  Statement  shall,  in each case, be in the form
delivered to the Lenders prior to the  execution and delivery of this  Agreement
and shall not have been amended or modified  without the written  consent of the
Administrative Agent and each Lender, (ii) a Notice of Confirmation, in form and
substance satisfactory to the Administrative Agent, shall have been entered into
and  (iii)  all  conditions  precedent  to the  effective  date  of the  Plan of
Reorganization  shall have been satisfied (and not waived without the consent of
the  Administrative  Agent and the Requisite Lenders) to the satisfaction of the
Administrative Agent and the Requisite Lenders;

                  (xi)     on the Restatement Effective Date, (A) Holdings shall
have duly authorized, executed and delivered the Holdings Guaranty substantially
in the form of Exhibit XI (as amended,  modified,  restated and/or  supplemented
from time to time, the "HOLDINGS GUARANTY")  guaranteeing all of the obligations
of Atlas  under the  Leases as more  fully  provided  therein  and the  Holdings
Guaranty  shall be in full force and effect  and (B) each  Subsidiary  Guarantor
shall have duly  authorized,  executed and delivered the  Subsidiaries  Guaranty
substantially  in the form of Exhibit X (as amended,  modified,  restated and/or
supplemented from

                                      -40-
<PAGE>

time to time, the "SUBSIDIARIES GUARANTY"),  guaranteeing all of the obligations
of Atlas under the Leases as more fully provided  therein,  and the Subsidiaries
Guaranty shall be in full force and effect;

                  (xii)    on the  Restatement  Effective  Date, an amendment to
each  Aircraft  Chattel  Mortgage in respect of each AFL III  Aircraft and Spare
Engine Pool  substantially  in the form of Exhibit IXC hereto (each an "AIRCRAFT
CHATTEL MORTGAGE AMENDMENT") and any documents in connection therewith requested
by the  Administrative  Agent  shall  have been duly  authorized,  executed  and
delivered,  and each such Aircraft Chattel Mortgage, as so amended,  shall be in
full force and effect;

                  (xiii)   on the Restatement Effective Date, a Lease in respect
of each AFL III Aircraft and Spare Engine Pool and any  documents in  connection
therewith requested by the Administrative Agent shall have been duly authorized,
executed and delivered, and shall be in full force and effect;

                  (xiv)    on the Restatement Effective Date, all reasonable and
documented  costs,  fees and  expenses,  and all other  compensation  due to the
Administrative   Agent  and  the   Lenders   (including,   without   limitation,
professional  fees and expenses) shall have been paid to the extent then due and
invoiced at least three Business Days prior to the Restatement Effective Date;

                  (xv)     on  the   Restatement   Effective   Date,   (a)   all
representations  and  warranties  set forth in this Agreement and the other Loan
Documents  shall be true and correct in all  material  respects and no Potential
Event of Default or Event of Default shall exist and (b) all representations and
warranties in the Leases,  the Holdings  Guaranty and the Subsidiaries  Guaranty
shall be true and complete in all  material  respects and no Default or Event of
Default, under and as defined in the Aircraft Leases, shall exist;

                  (xvi)    except  as  otherwise  disclosed  in  the  Disclosure
Statement or Holdings' filings with the SEC delivered prior to the execution and
delivery of this Agreement by the Lenders,  on the  Restatement  Effective Date,
there shall be no  actions,  suits,  proceedings  or  investigations  pending or
threatened (a) with respect to the Transaction or any documentation  executed in
connection   therewith   (including  any  Loan  Document)  or  the  transactions
contemplated hereby and thereby,  (b) with respect to any Existing  Indebtedness
or (c) which the Administrative  Agent or the Requisite Lenders shall reasonably
determine has had, or could  reasonably  be expected to have a Material  Adverse
Effect; and

                  (xvii)   on or prior to the  Restatement  Effective  Date, (i)
all necessary  governmental  (domestic and foreign),  regulatory and third party
approvals  and/or consents in connection with any Specified  Indebtedness or the
Transaction and otherwise referred to herein or therein shall have been obtained
and  remain in full  force and  effect  and  evidence  thereof  shall  have been
provided to the  Administrative  Agent, and (ii) all applicable  waiting periods
shall have  expired  without any action being taken by any  competent  authority
which  restrains,  prevents or imposes  materially  adverse  conditions upon the
consummation of the Transaction  and the  transactions  contemplated by the Loan
Documents  or  otherwise  referred  to herein or therein.  Additionally,  on the
Restatement Effective Date, there shall not exist any judgment,

                                      -41-
<PAGE>

order,  injunction  or other  restraint  issued  or filed or a  hearing  seeking
injunctive relief or other restraint pending or notified prohibiting or imposing
materially   adverse  conditions  upon,  or  materially   delaying,   or  making
economically  unfeasible,  the  consummation  of the  Transaction  or  otherwise
referred to herein or therein.

                  To the  extent  that any of the  conditions  set forth in this
subsection 3.1 requires that any document,  action or condition be  satisfactory
to the Agent,  the Lenders or the Requisite  Lenders,  or a determination by any
such  Person(s),  unless such  Person(s)  shall have given the Borrower  written
notice within (5) five days of the Confirmation Date that such document,  action
or condition is not satisfactory to such Person(s),  or that such Person(s) have
made such determination,  as the case may be, such document, action or condition
shall be deemed to be satisfactory or such determination  shall be deemed not to
have been made, as the case may be.

                                   SECTION 4.

                    BORROWER'S REPRESENTATIONS AND WARRANTIES

         In order to induce Lenders to enter into this  Agreement,  the Borrower
represents and warrants to each Lender, on the Restatement  Effective Date, that
the following statements are true, correct and complete:

                  4.1      ORGANIZATION,  POWERS, QUALIFICATION,  GOOD STANDING,
BUSINESS AND SUBSIDIARIES.

                  A.       ORGANIZATION   AND   POWERS.   The   Borrower   is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.  The Borrower has all  requisite  corporate  power and
authority  to own and operate its  properties,  to carry on its  business as now
conducted and as proposed to be conducted,  to enter into the Loan Documents and
to carry out the transactions contemplated thereby.

                  B.       QUALIFICATION  AND GOOD  STANDING.  The  Borrower  is
qualified to do business and in good  standing in every  jurisdiction  where its
assets  are  located  and  wherever  necessary  to carry  out its  business  and
operations,  except in jurisdictions  where the failure to be so qualified or in
good standing has not had and will not have a Material Adverse Effect.

                  C.       SUBSIDIARIES. The Borrower has no Subsidiaries.

                  D.       COLLATERAL DOCUMENTS.  The security interests created
in favor of the Administrative  Agent under the Collateral Documents have at all
times  from and after the  Initial  Borrowing  Date  under and as defined in the
Existing  Credit  Agreement  constituted  and will  continue to  constitute,  as
security for the obligations purported to be secured thereby, a legal, valid and
enforceable first priority  perfected  security interest in and a Lien on all of
the Collateral referred to therein in favor of the Administrative  Agent for the
benefit of the Lenders,  perfected  and prior to the rights of all third persons
in accordance  with the  requirements  of all  applicable  Collateral  Documents
including,  without  limitation,  all Liens and  security  interests in the cash
proceeds  (or in  the  indubitable  equivalent  thereof)  of the  administrative
priority claim, in the amount,  if any,  required to cure a monetary default (as
described  in  Bankruptcy  Code  Section   1110(a)(2)(B))   provided  under  the
Stipulation Providing for Section 1110(b) Extension

                                      -42-
<PAGE>

Regarding  Intercompany Lease N505MC,  approved by order of the Bankruptcy Court
dated  April  22,  2004.  The  Borrower  has  good and  marketable  title to its
Collateral,  and all such  Collateral  is free and clear of all Liens except for
Liens  permitted by  subsection  6.2. No  consents,  filings or  recordings  are
required in order to perfect (or  maintain  the  perfection  or priority of) the
security interests  purported to be created by any of the Collateral  Documents,
other than such as have been  obtained and which remain in full force and effect
and UCC  financing  statements to be filed,  or delivered to the  Administrative
Agent  for  filing,   on  the  Restatement   Effective  Date  and  periodic  UCC
continuation  filings or as is specifically  otherwise permitted by the terms of
any applicable Collateral Document.

                  4.2      AUTHORIZATION, ETC.

                  A.       AUTHORIZATION.    The    execution,    delivery   and
performance  of the Loan  Documents  have been duly  authorized by all necessary
corporate action on the part of the Borrower.

                  B.       NO CONFLICT. The execution,  delivery and performance
by the Borrower of the Loan Documents and the  consummation  of the  Transaction
and the transactions  contemplated by the Loan Documents do not and will not (i)
violate  any  provision  of any  law  or any  governmental  rule  or  regulation
applicable to of the Borrower,  the certificate or articles of  incorporation or
bylaws of the  Borrower  or any order,  judgment or decree of any court or other
agency of government binding on the Borrower, (ii) conflict with in any material
respect,  result in a material breach of or constitute (with due notice or lapse
of time or both) a material  default  under any  Contractual  Obligation  of the
Borrower, (iii) result in or require the creation or imposition of any Lien upon
any of the  properties  or assets of the Borrower  (other than any Liens created
under any of the Loan Documents in favor of the  Administrative  Agent on behalf
of the Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual  Obligation of the Borrower,  except
for  such  approvals  or  consents  which  will be  obtained  on or  before  the
Restatement Effective Date, are disclosed in writing to the Lenders.

                  C.       GOVERNMENTAL  CONSENTS.  The execution,  delivery and
performance  by the Borrower of the Loan Documents and the  consummation  of the
Transaction and the  transactions  contemplated by the Loan Documents do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal,  state or other governmental authority
or  regulatory  body which has not been obtained or made on or prior to the date
required  to be  obtained  or made  unless  waived  by  Administrative  Agent in
accordance with this Agreement.

                  D.       BINDING  OBLIGATION.  Each of the Loan  Documents has
been duly  executed and  delivered by the Borrower and is the legally  valid and
binding  obligation  of  the  Borrower,  enforceable  against  the  Borrower  in
accordance  with its respective  terms,  except as may be limited by bankruptcy,
insolvency,  reorganization,  moratorium or similar laws relating to or limiting
creditors'   rights   generally   or  by   equitable   principles   relating  to
enforceability.

                                      -43-
<PAGE>

                  4.3      FINANCIAL CONDITION.

                  A.       The Borrower has heretofore  delivered to Lenders, at
Lenders' request,  the following financial  statements and information:  (i) the
audited  consolidated  balance  sheet of  Holdings  and its  Subsidiaries  as at
December  31,  2002,  and  the  related   consolidated   statements  of  income,
stockholders'  equity and cash flows of Holdings  and its  Subsidiaries  for the
Fiscal Year then ended and (ii) the  unaudited  consolidated  balance  sheets of
Holdings and its Subsidiaries as at March 31, 2004, and the related consolidated
statements  of income,  stockholders'  equity and cash flows of Holdings and its
Subsidiaries  for the  fiscal  quarter  then  ended.  All such  statements  were
prepared in conformity with GAAP and fairly present the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective  dates thereof and the results of operations and cash flows (on a
consolidated  basis) of the entities  described  therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements,  to
changes  resulting  from  audit  and  year-end  adjustments.  Holdings  and  its
Subsidiaries  do not have any  Contingent  Obligation,  contingent  liability or
liability for taxes,  long-term lease or unusual forward or long-term commitment
that is not reflected in the foregoing financial statements or the notes thereto
and which in any such case is material in relation to the business,  operations,
properties,  assets, condition (financial or otherwise) or prospects of Atlas or
of Holdings and its Subsidiaries taken as a whole.

                  B.       Except as fully disclosed in the financial statements
delivered  pursuant  to  subsection  4.3A,  there  were,  as of the  Restatement
Effective  Date, no liabilities or obligations  with respect to Holdings and its
Subsidiaries  or to the  Borrower of any nature  whatsoever  (whether  absolute,
accrued,   contingent  or  otherwise  and  whether  or  not  due)  that,  either
individually  or in  aggregate,  could  reasonably be expected to be material to
Holdings and its Subsidiaries taken as a whole but excluding the Borrower, or to
the Borrower on a  stand-alone  basis.  As of the  Restatement  Effective  Date,
neither  Holdings  nor its  Subsidiaries  knows of any basis  for the  assertion
against  it or, in the case of Atlas,  against  it or its  Subsidiaries,  of any
liability or obligation of any nature  whatsoever that is not fully disclosed in
the financial  statements  delivered  pursuant to subsection  4.3A that,  either
individually or in the aggregate, could reasonably be expected to be material to
Holdings and its Subsidiaries taken as a whole but excluding the Borrower, or to
the Borrower on a stand-alone basis.

                  4.4      NO MATERIAL  ADVERSE  CHANGE;  NO  RESTRICTED  JUNIOR
PAYMENTS.

                  Except as otherwise  disclosed in the Disclosure  Statement or
Holdings'  filings with the SEC delivered prior to the execution and delivery of
this  Agreement by the Lenders,  since December 31, 2003, (i) no event or change
has  occurred  that  has  caused  or  evidences,  either  in any  case or in the
aggregate,  a Material  Adverse Effect and (ii) the Borrower has not directly or
indirectly  declared,  ordered,  paid or made,  or set apart any sum or property
for,  any  Restricted  Junior  Payment or agreed to do so except as permitted by
subsection 6.5.

                  4.5      TITLE TO PROPERTIES, LIENS.

                  A.       The Borrower has (i) good, sufficient and legal title
to (in the  case  of fee  interests  in real  property),  (ii)  valid  leasehold
interests in (in the case of leasehold  interests in real or personal property),
or (iii) good title to (in the case of all other personal property), all of the

                                      -44-
<PAGE>

properties  and assets  reflected  in the  financial  statements  referred to in
subsection  4.3,  in each case  except for assets  disposed of since the date of
such  financial  statements  in the ordinary  course of business or as otherwise
permitted under subsection 6.6. Except as permitted by this Agreement,  all such
properties and assets are free and clear of Liens.

                  B.       Each AFL III Aircraft  operated in the United  States
has a current and valid airworthiness  certificate issued by the FAA pursuant to
the Federal  Aviation Act in effect and is in such condition as may be necessary
to enable the airworthiness  certificate to be maintained in good standing. Each
Engine  has a rated  takeoff  horsepower  greater  than 750  horsepower,  or the
equivalent  of such  horsepower.  Each AFL III  Aircraft  operated in the United
States is  registered  with the FAA in the name of  Borrower,  and  Borrower has
authority to operate such AFL III Aircraft.  Borrower has good title to such AFL
III  Aircraft,  free and  clear of all  Liens  other  than  Liens  permitted  by
subsection 6.2.

                  4.6      LITIGATION, ADVERSE FACTS.

                  Except as otherwise  disclosed in the Disclosure  Statement or
Holdings'  filings with the SEC delivered prior to the execution and delivery of
this  Agreement  by the  Lenders,  there  are no  actions,  suits,  proceedings,
arbitrations  or  governmental  investigations  (whether or not  purportedly  on
behalf of the  Borrower) at law or in equity or in admiralty or before or by any
federal, state, municipal or other governmental department,  commission,  board,
bureau,  agency or  instrumentality,  domestic  or  foreign,  pending or, to the
knowledge of the Borrower,  threatened  against or affecting the Borrower or any
property of Holdings or any of its  Subsidiaries  that,  individually  or in the
aggregate,  could reasonably be expected to result in a Material Adverse Effect.
The Borrower is not (i) in violation of any applicable  laws that,  individually
or in the  aggregate,  could  reasonably  be  expected  to result in a  Material
Adverse  Effect or (ii)  subject  to or in  default  with  respect  to any final
judgments, writs, injunctions, decrees, rules or regulations of any court or any
federal, state, municipal or other governmental department,  commission,  board,
bureau, agency or instrumentality, domestic or foreign, that, individually or in
the  aggregate,  could  reasonably  be expected to result in a Material  Adverse
Effect.

                  4.7      PAYMENT OF TAXES.

         Except  to  the  extent  permitted  by  subsection  5.3,  all  returns,
statements, forms and reports for taxes (the "RETURNS") of the Borrower required
to be filed by any of them have been timely  filed with the  appropriate  taxing
authority, and all taxes, assessments,  fees and other governmental charges upon
the Borrower and upon their respective properties,  assets,  income,  businesses
and  franchises  which are due and payable  have been paid when due and payable.
The Borrower does not know of any proposed tax  assessment  against the Borrower
which is not being  actively  contested  by it in good faith and by  appropriate
proceedings;  PROVIDED, that such reserves or other appropriate  provisions,  if
any,  for  liabilities  for taxes as shall be required in  conformity  with GAAP
shall have been made or provided in the  financial  statements  of the Borrower.
Except as set forth in  SCHEDULE  4.7,  there is no  action,  suit,  proceeding,
investigation,  audit,  or claim now  pending or, to the best  knowledge  of the
Borrower,  threatened  by any  authority  regarding  any Taxes  relating  to the
Borrower.

                                      -45-
<PAGE>

                  There are no  agreements  with  respect to taxes  between  the
Borrower and any tax agency or authority.

                  4.8      PERFORMANCE OF AGREEMENTS.

                  A.       The  Borrower  is not in default in the  performance,
observance or  fulfillment  of any of the  obligations,  covenants or conditions
contained in any of its Contractual  Obligations,  and no condition exists that,
with the giving of notice or the lapse of time or both,  would constitute such a
default,  except where the consequences,  direct or indirect, of such default or
defaults, if any, would not have a Material Adverse Effect.

                  B.       The  Borrower  is  not a  party  to  or is  otherwise
subject to any  agreements  or  instruments  or any  charter  or other  internal
restrictions  which,  individually  or in the  aggregate,  could  reasonably  be
expected to result in a Material Adverse Effect.

                  4.9      GOVERNMENTAL REGULATION.

                  The  Borrower  is not subject to  regulation  under the Public
Utility  Holding  Company Act of 1935,  the Federal  Power Act,  the  Interstate
Commerce Act or the Investment Company Act of 1940 or under any other federal or
state statute or regulation which may limit its ability to incur Indebtedness or
which may otherwise render all or any portion of the Obligations unenforceable.

                  4.10     SECURITIES ACTIVITIES.

                  The  Borrower  is not  engaged  principally,  or as one of its
important  activities,  in the business of  extending  credit for the purpose of
purchasing or carrying any Margin Stock.

                  4.11     COMPLIANCE WITH ERISA.

                  The Borrower has no qualified  retirement  plans under Section
401(k) of the Internal  Revenue Code nor medical benefit plans. The Borrower has
never sponsored, maintained,  contributed to (or had an obligation to contribute
to) any Employee Benefit Plans.

                  4.12     CERTAIN FEES.

                  No broker's or finder's fee or commission will be payable with
respect to this Agreement or any of the transactions  contemplated  hereby,  and
the Borrower  hereby  indemnifies the Lenders  against,  and agrees that it will
hold the Lenders  harmless  from,  any claim,  demand or liability  for any such
broker's or finder's fees alleged to have been  incurred in connection  herewith
or  therewith  and  any  expenses  (including   reasonable  fees,  expenses  and
disbursements of counsel)  arising in connection with any such claim,  demand or
liability.

                  4.13     ENVIRONMENTAL PROTECTION.

                  A.       All  Facilities  and  operations of the Borrower are,
and have been to the best of the  Borrower's  knowledge,  in  compliance  in all
material respects with all Environmental Laws.

                                      -46-
<PAGE>

                  B.       Except  as  otherwise  disclosed  in  the  Disclosure
Statement or  Holdings'  filings  with the SEC made prior to the  execution  and
delivery  of this  Agreement  to the  Lenders,  there are no,  and have been no,
conditions,  occurrences,  or  Hazardous  Materials  Activity (a) arising at any
Facilities  or at any other  location  or (b)  arising  in  connection  with the
operations of the Borrower  (including the transportation of Hazardous Materials
in accordance with applicable  regulations),  which  conditions,  occurrences or
Hazardous  Materials  Activity could reasonably be expected to form the basis of
an  Environmental  Claim against the Borrower and which,  individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

                  C.       To the best of the Borrower's knowledge, there are no
pending  or  threatened  Environmental  Claims  against  the  Borrower,  and the
Borrower has not received any notices,  inquiries,  or requests for  information
with  respect  to  any  Environmental  Claims  which,  individually  or  in  the
aggregate, could reasonably be expected to have a Material Adverse Effect.

                  4.14     EMPLOYEE MATTERS.

                  There  is  no  strike  or  work   stoppage  in   existence  or
threatened,  involving the Borrower that could  reasonably be expected to have a
Material Adverse Effect.

                  4.15     SOLVENCY.

                  The Borrower is Solvent.

                  4.16     DISCLOSURE.

                  No representation or warranty of the Borrower contained in any
Loan  Document  or in any  other  document,  certificate  or  written  statement
furnished to the Lenders by or on behalf of the  Borrower for use in  connection
with  the  transactions  contemplated  by this  Agreement  contains  any  untrue
statement  of a material  fact or omits to state a material  fact  (known to the
Borrower,  in the case of any document not furnished by the Borrower)  necessary
in order to make the  statements  contained  herein or therein not misleading in
light of the  circumstances in which the same were made. Any projections and pro
forma  financial  information  contained in such  materials  are based upon good
faith estimates and assumptions believed by the Borrower to be reasonable at the
time made,  it being  recognized by Lenders that such  projections  as to future
events are not to be viewed as facts and that actual  results  during the period
or  periods  covered  by any such  projections  may  differ  from the  projected
results.  There are no facts known (or which should upon the reasonable exercise
of diligence be known) to the Borrower (other than matters of a general economic
nature) that, individually or in the aggregate,  could reasonably be expected to
result in a Material  Adverse Effect and that have not been disclosed  herein or
in such other documents,  certificates  and statements  furnished to Lenders for
use in connection with the transactions contemplated hereby.

                  4.17     SECTION 1110.

                  (i)      The Borrower, as Lessor under the Leases, is entitled
to the  protection of Section 1110 of the  Bankruptcy  Code with respect to each
AFL III Aircraft and Spare Engine in the event of a case under Chapter 11 of the
Bankruptcy Code in which the Lessee is a debtor.

                                      -47-
<PAGE>

                  (ii)     The  Administrative  Agent  will be  entitled  to the
protection of Section 1110 of the  Bankruptcy  Code with respect to each AFL III
Aircraft  and  Spare  Engine  in the  event of a case  under  Chapter  11 of the
Bankruptcy  Code in which  the  Lessee  is a debtor  upon  the  exercise  of the
Administrative Agent's remedies under each Aircraft Chattel Mortgage.

                  (iii)    All  assumptions  made by the appraisers with respect
to the AFL III Aircraft  and Spare  Engines in the  appraisals  delivered to the
Administrative Agent that would affect any Approved  Appraiser's  determinations
as set forth in such appraisal  shall be true and correct as of the  Restatement
Effective Date with respect to each AFL III Aircraft and Spare Engine.

                  4.18     SPECIAL PURPOSE CORPORATION.

                  Except as contemplated by this Agreement,  the Borrower has no
assets or liabilities.

                  4.19     REPRESENTATIONS AND WARRANTIES IN DOCUMENTS.

                  All  representations  and warranties of the Borrower set forth
in the Loan Documents  were true and correct in all material  respects as of the
time such representations and warranties were made and shall be true and correct
in all  material  respects  as of the  Restatement  Effective  Date  as if  such
representations  and warranties were made on and as of such date,  unless stated
to relate to a specific  earlier  date, in which case such  representations  and
warranties shall be true and correct in all material respects as of such earlier
date.

                  4.20     LEASES.

                  The  Leases  are in full  force and  effect and are leases for
U.S. federal income tax purposes of the lessor and the lessee thereunder.

                                   SECTION 5.

                              AFFIRMATIVE COVENANTS

                  Borrower  covenants and agrees that,  until payment in full of
all of the Loans and other Obligations  unless Requisite Lenders shall otherwise
give prior  written  consent,  the Borrower  shall perform all covenants in this
Section 5.

                  5.1      FINANCIAL STATEMENTS AND OTHER REPORTS.

                  The Borrower will maintain a system of accounting  established
and  administered  in  accordance  with  sound  business   practices  to  permit
preparation of financial  statements in conformity  with GAAP. The Borrower will
deliver to Administrative Agent:

                  (i)      [Intentionally Omitted.];

                  (ii)     QUARTERLY FINANCIALS: as soon as available and in any
         event  within 45 days after the end of each of the first  three  fiscal
         quarters of each Fiscal Year beginning with

                                      -48-
<PAGE>

         the Fiscal Year ending  December 31, 2005, (a) the balance sheet of the
         Borrower as at the end of such fiscal quarter and the related statement
         of income, stockholders' equity and cash flows of the Borrower for such
         fiscal  quarter  and for the  period  from  the  beginning  of the then
         current Fiscal Year to the end of such fiscal quarter, setting forth in
         each  case  in  comparative  form  the  corresponding  figures  for the
         corresponding  periods of the previous  Fiscal Year, if applicable,  in
         reasonable  detail and certified by the chief financial  officer of the
         Borrower  that they  fairly  present  the  financial  condition  of the
         Borrower as at the dates  indicated  and the results of its  operations
         and cash flows for the periods indicated,  subject to changes resulting
         from audit and year-end adjustments;

                  (iii)    YEAR-END FINANCIALS:  as soon as available and in any
         event within 90 days after the end of each Fiscal Year  beginning  with
         the Fiscal Year ending  December 31, 2005, (a) the balance sheet of the
         Borrower as at the end of such Fiscal Year and the related statement of
         income,  stockholders'  equity and cash flows of the  Borrower for such
         Fiscal  Year,  setting  forth  in each  case in  comparative  form  the
         corresponding  figures for the previous Fiscal Year, if applicable,  in
         reasonable  detail and certified by the chief financial  officer of the
         Borrower  that they  fairly  present  the  financial  condition  of the
         Borrower as at the dates indicated and the results of their  operations
         and their cash flows for the periods indicated,  and (b) in the case of
         such  financial  statements,  a report  thereon of Ernst & Young LLP or
         other independent  certified public accountants of recognized  national
         standing  selected by the Borrower and  satisfactory to  Administrative
         Agent, which report (x) for Fiscal Year 2005 and each subsequent Fiscal
         Year  thereafter  shall  express  no doubts  about the  ability  of the
         Borrower  to  continue  as a going  concern,  (y) in all cases shall be
         unqualified  as to  scope of  audit,  and (z)  shall  state  that  such
         consolidated  financial  statements  fairly  present  the  consolidated
         financial  position of the Borrower as at the dates  indicated  and the
         results  of their  operations  and their  cash  flows  for the  periods
         indicated in conformity  with GAAP applied on a basis  consistent  with
         prior  years   (except  as  otherwise   disclosed  in  such   financial
         statements) and that the examination by such  accountants in connection
         with such consolidated financial statements has been made in accordance
         with generally accepted auditing standards;

                  (iv)     OFFICERS' AND COMPLIANCE CERTIFICATES:  together with
         each  delivery of  financial  statements  of the  Borrower  pursuant to
         subdivisions (ii) and (iii) above, (a) an Officers'  Certificate of the
         Borrower  stating  that the  signers  have  reviewed  the terms of this
         Agreement and have made, or caused to be made under their  supervision,
         a review in reasonable  detail of the transactions and condition of the
         Borrower  during  the  accounting  period  covered  by  such  financial
         statements and that such review has not disclosed the existence  during
         or at the end of such  accounting  period,  and that the signers do not
         have  knowledge  of the  existence  as at the  date of  such  Officers'
         Certificate,  of any  condition or event that  constitutes  an Event of
         Default or  Potential  Event of Default,  or, if any such  condition or
         event existed or exists,  specifying the nature and period of existence
         thereof and what action the Borrower has taken,  is taking and proposes
         to  take  with  respect  thereto;  and  (b)  a  Compliance  Certificate
         demonstrating in reasonable  detail compliance during and at the end of
         the  applicable  quarterly  and  annual  accounting  periods  with  the
         restrictions contained in Section 6;

                                      -49-
<PAGE>

                  (v)      NOTICE  UNDER  LEASES:  within 3 Business  Days,  all
         notices and other information or documents  delivered or received under
         any of the Leases by the lessor  pursuant  to Section 19 of the Leases,
         including,  without limitation, all additional financial statements and
         reports delivered pursuant to Section 6(a) of the Leases;

                  (vi)     [Intentionally Omitted.];

                  (vii)    ACCOUNTANTS'  REPORTS:  promptly upon receipt thereof
         copies  of  any  comment  letter   submitted  by  such  accountants  to
         management in connection with their annual audit or a special audit;

                  (viii)   EVENTS OF DEFAULT, ETC.: promptly upon any officer of
         the Borrower  obtaining  knowledge  (a) of any  condition or event that
         constitutes  an Event of  Default or  Potential  Event of  Default,  or
         becoming  aware that any Lender  has given any  notice  (other  than to
         Administrative  Agent) or taken  affirmative  action with  respect to a
         claimed  Event of Default or Potential  Event of Default,  (b) that any
         Person has given any notice to the  Borrower or taken any other  action
         with  respect to a claimed  default or event or  condition  of the type
         referred to in subsection 7.2, or (c) of the occurrence of any event or
         change  that has  caused  or  evidences,  either  in any case or in the
         aggregate,   a  Material  Adverse  Effect,  an  Officers'   Certificate
         specifying the nature and period of existence of such condition,  event
         or change,  or specifying  the notice given or action taken by any such
         Person and the nature of such claimed Event of Default, Potential Event
         of Default,  default, event or condition,  and what action the Borrower
         has taken, is taking and proposes to take with respect thereto;

                  (ix)     LITIGATION  OR OTHER  PROCEEDINGS:  promptly upon any
         officer of the Borrower obtaining  knowledge of (X) the institution of,
         or  non-frivolous  threat of, any  action,  suit,  proceeding  (whether
         administrative,  judicial or otherwise),  governmental investigation or
         arbitration  against or  affecting  the Borrower or any property of the
         Borrower  (collectively,  "PROCEEDINGS")  not  previously  disclosed in
         writing by the Borrower to the Lenders or (Y) any material  development
         in any Proceeding that, in any case:

                           (1)      if  adversely  determined,  has a reasonable
                  possibility of giving rise to a Material Adverse Effect; or

                           (2)      seeks to enjoin  or  otherwise  prevent  the
                  consummation of, or to recover any damages or obtain relief as
                  a result of, the transactions contemplated hereby;

         written notice thereof  together with such other  information as may be
         reasonably  available  to the  Borrower  to  enable  Lenders  and their
         counsel to evaluate such matters;

                  (x)      INSURANCE:  as soon as  practicable  and in any event
         within 30 days following the first day of each Fiscal Year, a report in
         form and substance  satisfactory to Administrative  Agent outlining all
         material insurance coverage maintained as of the date of such report by
         the  Borrower  and  all  material  insurance  coverage  planned  to  be
         maintained by the Borrower in such Fiscal Year;

                                      -50-
<PAGE>

                  (xi)     ENVIRONMENTAL   AUDITS  AND   REPORTS:   as  soon  as
         practicable  following  receipt  thereof,  copies of all  environmental
         audits and reports, whether prepared by personnel of the Borrower or by
         independent  consultants,  with  respect to  significant  environmental
         matters at any Facility or which relate to an Environmental Claim which
         could result in a Material Adverse Effect; and

                  (xii)    OTHER INFORMATION:  with reasonable promptness,  such
         other information and data with respect to the Borrower as from time to
         time may be reasonably requested by Administrative Agent or any Lender.

                  5.2      CORPORATE EXISTENCE.

                  Except as permitted under subsection 6.6, the Borrower will at
all times preserve and keep in full force and effect its corporate existence and
all rights and franchises material to its business.

                  5.3      PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.

                  A.       The  Borrower  will pay all  taxes,  assessments  and
other governmental charges imposed upon it or any of its properties or assets or
in respect of any of its income,  businesses or  franchises  before any penalty,
fine or interest accrues thereon, and all claims (including, without limitation,
claims for labor,  services,  materials  and supplies) for sums that have become
due and  payable  and  that by law  have or may  become  a Lien  upon any of its
properties or assets,  prior to the time when any penalty fine or interest shall
be incurred with respect thereto;  PROVIDED that no such charge or claim need be
paid if being  contested  in good  faith  by  appropriate  proceedings  promptly
instituted  and  diligently  conducted and if such reserve or other  appropriate
provision, if any, with respect to any liability for taxes, as shall be required
in  conformity  with  GAAP  shall  have  been made  therefore  in the  financial
statements of the Borrower.

                  B.       The  Borrower  will not file or consent to the filing
of any  consolidated  income tax return  with any  Person  (other  than with any
Subsidiary of Holdings).

                  5.4      MAINTENANCE OF PROPERTIES; INSURANCE.

                  The Borrower  will  maintain or cause to be maintained in good
repair,  working  order and  condition,  ordinary  wear and tear  excepted,  all
material properties used or useful in the business of the Borrower and from time
to time  will make or cause to be made all  appropriate  repairs,  renewals  and
replacements thereof. The Borrower will maintain or cause to be maintained, with
insurers of recognized responsibility and reputation,  insurance with respect to
its  properties  and  business  against  loss  or  damage  (including,   without
limitation, flood insurance, if necessary or advisable) of the kinds customarily
carried or maintained  under similar  circumstances  by corporations  engaged in
similar  businesses and the Borrower will, with respect to each AFL III Aircraft
and Spare  Engine,  maintain the  insurance  specified  in the Aircraft  Chattel
Mortgage with respect to such AFL III Aircraft or Spare Engine.

                  The  Borrower  may  self-insure,   by  way  of  deductible  or
equivalent structures or provisions in insurance policies, the risks required to
be insured against pursuant to this

                                      -51-
<PAGE>

subsection  5.4 in such  reasonable  amounts  as are  then  applicable  to other
similar  aircraft  or spare  engines  in the  Borrower's  fleet,  and as are not
substantially  greater than amounts  self-insured by corporations engaged in the
same or similar  business and similarly  situated  with the Borrower;  PROVIDED,
HOWEVER,  that Borrower may not self-insure in an amount in excess of $1,000,000
per AFL III Aircraft without the prior written consent of Administrative Agent.

                  5.5      INSPECTION; LENDER MEETING.

                  The  Borrower  will  permit  any  authorized   representatives
designated  by any  Lender to visit and  inspect  any of the  properties  of the
Borrower,  including its and their financial and accounting  records,  and, with
the permission of the Borrower which shall not be unreasonably withheld, to make
copies  and take  extracts  therefrom,  and to  discuss  its and their  affairs,
finances  and  accounts  with its and  their  officers  and  independent  public
accountants  (provided that the Borrower may, if it so chooses, be present at or
participate  in any such  discussion),  all upon  reasonable  notice and at such
reasonable  times during normal business hours and as often as may be reasonably
requested;  PROVIDED that so long as no Event of Default shall have occurred and
be  continuing,  such  inspection  shall  not be  disruptive  to the  Borrower's
business,  as reasonably  determined by the Borrower.  Within 150 days after the
end of the 2004  Fiscal  Year,  and within 120 days after the end of each Fiscal
Year  thereafter,  senior  management  of the Borrower  shall  participate  in a
meeting of Lenders  during which  senior  management  will  review,  among other
matters,  the financial results of the Borrower for such Fiscal Year and outline
the  prospects  for the Borrower  for the current  Fiscal Year and report on any
major  changes in the  business  strategy of the Borrower  anticipated  to occur
during the term of this Agreement.

                  5.6      COMPLIANCE WITH LAWS, ETC.

                  The  Borrower  will  comply  with  the   requirements  of  all
applicable laws,  rules,  regulations and orders of any  governmental  authority
(including,  without limitation,  Environmental Laws),  noncompliance with which
could reasonably be expected to cause a Material Adverse Effect.

                  5.7      ENVIRONMENTAL INDEMNITY.

                  The Borrower  agrees to indemnify,  defend,  and hold harmless
Administrative Agent and Lenders, and the officers, directors, employees, agents
and affiliates of Administrative  Agent and Lenders from and against any and all
losses,  claims,  liability or expenses arising in connection with Environmental
Claims against the Borrower or with any Hazardous Materials Activity.

                  5.8      BORROWER'S   REMEDIAL  ACTION   REGARDING   HAZARDOUS
MATERIALS.

                  The Borrower will promptly take any and all necessary remedial
action in connection with the presence,  storage, use, disposal,  transportation
or Release of any  Hazardous  Materials on, under or about any Facility in order
to comply with all applicable Environmental Laws and Governmental Authorizations
to the extent that any failure to take such action could  reasonably be expected
to have a Material  Adverse  Effect.  In the event the  Borrower  is required to
undertake any remedial action with respect to any Hazardous  Materials on, under
or about any

                                      -52-
<PAGE>

Facility,  the  Borrower  will  conduct and  complete  such  remedial  action in
compliance  with all applicable  Environmental  Laws, and in accordance with the
policies,  orders and  directives of all federal,  state and local  governmental
authorities  except when, and only to the extent that, the Borrower's  liability
for such presence,  storage,  use, disposal,  transportation or discharge of any
Hazardous Materials is being contested in good faith by the Borrower.

                  5.9      MAINTENANCE CONTRACTS.

                  Subject  to  Section  10 of  the  Leases  the  Borrower  shall
maintain  contracts  with  respect to the  maintenance  of each AFL III Aircraft
sufficient to insure compliance with the Federal Aviation Act.

                  5.10     EMPLOYEE BENEFIT PLANS.

                  The Borrower  will not  establish or permit to be  established
any Employee Benefit Plans for the Borrower or any of its employees.

                  5.11     FURTHER ASSURANCES.

                  At any  time  or  from  time  to  time  upon  the  request  of
Administrative  Agent,  the Borrower  will,  at its expense,  promptly  execute,
acknowledge and deliver such further documents and do such other acts and things
as  Administrative  Agent may  reasonably  request in order to effect  fully the
purposes of the Loan Documents and to provide for payment of the  Obligations in
accordance  with the terms of this  Agreement,  the  Notes  and the  other  Loan
Documents.

                  5.12     PERFORMANCE OF OBLIGATIONS.

                  The  Borrower  will perform all of its  obligations  under the
terms  of each  Lease,  Collateral  Document  and  Loan  Document,  contract  or
instrument by which it is bound.

                  5.13     CORPORATE SEPARATENESS.

                  The Borrower will take all such action as is necessary to keep
its  operations  separate  and  apart  from  those  of  Holdings  or  any of its
Affiliates, including, without limitation, ensuring that all customary corporate
formalities,  including  the  maintenance  of  separate  corporate  records  and
documents and holding regular meetings,  are followed.  Any financial statements
distributed  to any  creditors  of the  Borrower  shall  clearly  establish  the
corporate separateness of the Borrower from Holdings and each of Holdings' other
Subsidiaries. The Borrower shall not take any action or conduct its affairs in a
manner that is likely to result in the  corporate  existence  of the Borrower on
the one hand and of  Holdings  or any  Subsidiary  of Holdings on the other hand
being  disregarded,  or in  the  assets  and  liabilities  of  Holdings  or  any
Subsidiary  of  Holdings  being  substantively  consolidated  with  those of the
Borrower in a bankruptcy,  reorganization  or other insolvency  proceeding.  The
Borrower shall have at all times at least one Independent  Director who shall be
satisfactory  to the  Administrative  Agent.  The  Borrower  shall  maintain its
principal  executive  office  separate from  Holdings or any of its  Affiliates,
which may be subleased from Holdings on an  arm's-length  basis or maintained as
provided in the Service Agreement.

                                      -53-
<PAGE>

                  The  Borrower  shall  pay out of its own  funds  fees  for its
directors  and  salaries  of its  officers  and  employees,  and shall  promptly
reimburse  any  Affiliate  for any  services  provided  to the  Borrower by such
Affiliate;  PROVIDED,  HOWEVER,  that Atlas may  advance  funds on behalf of the
Borrower  to pay for the  expenses of its  organization  and  funding.  All such
advances shall be duly and properly recorded and promptly repaid as intercompany
advances. The Borrower shall not commingle any of its funds or other assets with
the funds or assets of any other entity or person.  The Borrower  will  maintain
separate bank accounts in its own name.

                  The assets of the Borrower shall be separately  identified and
segregated.  All of the  Borrower's  assets  shall at all times be held by or on
behalf  of the  Borrower,  and,  if held on behalf of the  Borrower  by  another
entity,  shall at all times be kept  identifiable  (in accordance with customary
usages) as assets owned by the Borrower. In no event shall any of the Borrower's
assets be held by Holdings or by any other  Affiliate.  The  Borrower  shall pay
from its assets all  obligations  and  indebtedness  of any kind incurred by the
Borrower,  and shall not pay from its assets any  obligations or indebtedness of
any other entity or person.  The  liabilities of the Borrower will be separately
managed  from  those  of any  Affiliate,  and  all  liabilities,  including  all
administrative  expenses,  shall be paid from its own separate assets; PROVIDED,
HOWEVER,  that the Borrower will be included, to the extent permitted by law, in
the affiliated  group of  corporations  of which Holdings is the "common parent"
for federal income tax returns filed for such affiliated group by Holdings.

                  5.14     CRAF Program.

                  To the extent  any of the AFL III  Aircraft  or any  component
thereof  are  leased or under  contract  to the  United  States or any agency or
instrumentality  thereof  pursuant  to  the  Civil  Reserve  Air  Fleet  Program
established pursuant to 10 U.S.C. 9511-13 (as administered pursuant to Executive
Order 1268, or any substitute  regulation or order),  or a similar program,  the
Borrower  shall use its  reasonable  best  efforts  to take such  actions as the
Administrative  Agent may reasonably  request to ensure that the  Administrative
Agent,  for the benefit of the Lenders,  (i) is a loss payee under any insurance
policy or  indemnity  granted to the  Borrower or any of its  affiliates  by the
United  States  or any  agency  or  instrumentality  thereof  and/or  (ii) has a
perfected  security  interest in the proceeds of any payments made by the United
States or any agency or  instrumentality  thereof pursuant to any such insurance
policy or indemnity.

                                   SECTION 6.

                          BORROWER'S NEGATIVE COVENANTS

                  The Borrower  covenants and agrees that, until payment in full
of all of the  Loans and  other  Obligations,  unless  Requisite  Lenders  shall
otherwise give prior written  consent,  the Borrower shall perform all covenants
in this Section 6.

                  6.1      INDEBTEDNESS.

                  The Borrower shall not, directly or indirectly, create, incur,
assume or guaranty,  or otherwise become or remain directly or indirectly liable
with  respect  to, any  Indebtedness,  except that the  Borrower  may become and
remain liable with respect to the Obligations.

                                      -54-
<PAGE>

                  6.2      LIENS AND RELATED MATTERS.

                  A.       PROHIBITION   ON  LIENS.   The  Borrower  shall  not,
directly or indirectly,  create, incur, assume or permit to exist any Lien on or
with  respect to any  property or asset of any kind  (including  any document or
instrument in respect of goods or accounts receivable) of the Borrower,  whether
now owned or hereafter acquired, or any income or profits therefrom,  or file or
permit the filing of, or permit to remain in effect, any financing  statement or
other  similar  notice of any Lien with  respect  to any such  property,  asset,
income or profits  under the Uniform  Commercial  Code of any state or under any
similar recording or notice statute, except for Permitted Encumbrances.

                  B.       NO NEGATIVE  PLEDGES.  The  Borrower  shall not enter
into any agreement  prohibiting  the creation or assumption of any Lien upon any
of its properties or assets, whether now owned or hereafter acquired.

                  6.3      INVESTMENTS; JOINT VENTURES.

                  The Borrower shall not,  directly or  indirectly,  make or own
any  Investment  in any Person,  including  any Joint  Venture,  except that the
Borrower may make and own Investments in Cash  Equivalents;  PROVIDED,  that (x)
the weighted average  maturity of all Investments in Cash Equivalents  shall not
exceed twelve months, (y) no more than 10% of the Borrower's Investments in Cash
Equivalents shall be in a single security or issuer (other than U.S. treasuries,
U.S. government agency obligations and money market funds), and (z) no more than
50% of the Borrower's  Investments in Cash Equivalents shall be in a single U.S.
treasury or U.S. government agency security.

                  6.4      CONTINGENT OBLIGATIONS.

                  The  Borrower  shall not,  directly or  indirectly,  create or
become or remain liable with respect to any Contingent Obligation.

                  6.5      RESTRICTED JUNIOR PAYMENTS.

                  The  Borrower  shall not,  directly  or  indirectly,  declare,
order,  pay,  make or set  apart  any sum for  any  Restricted  Junior  Payment;
PROVIDED,  that (x) the  Borrower  may make  payments  pursuant  to the  Service
Agreement in an aggregate  annual amount not to exceed  $400,000 per annum;  and
(y) so long as no Event of Default or  Potential  Event of Default has  occurred
and is continuing,  or would result therefrom,  within five Business Days of any
payment  made  under any of the Leases by Atlas to the  Borrower,  to the extent
that such  payment is in excess of amounts  owing to the Lenders  under the Loan
Documents,  the  Borrower  may  distribute  such  excess  amounts  to Atlas as a
dividend, to the extent that the Borrower, after giving effect to such dividend,
has no other  liabilities  and  maintains a reserve of Cash or Cash  Equivalents
adequate to fund all expenses of the Borrower  (exclusive of payments  under the
Loan  Documents)  to be incurred  during the next four quarters  following  such
dividend.

                  6.6      RESTRICTION  ON  FUNDAMENTAL  CHANGES,  ASSET  SALES,
ACQUISITIONS, NEW SUBSIDIARIES.

                                      -55-
<PAGE>

                  The Borrower shall not enter into any transaction of merger or
consolidation,   or  liquidate,  wind-up  or  dissolve  itself  (or  suffer  any
liquidation or dissolution),  or convey,  sell,  lease,  sub-lease,  transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
part of its  business,  property  or  assets,  whether  now  owned or  hereafter
acquired,  or  acquire  by  purchase  or  otherwise  all or any  portion  of the
business,  property  or assets  of,  or stock or other  evidence  of  beneficial
ownership  of, any Person or any  division  or line of business of any Person or
establish any Subsidiary, except that the Borrower may (i) sell no more than (4)
four AFL III Aircraft;  PROVIDED that (t) no Potential Event of Default or Event
of Default exists at the time of such Asset Sale or results therefrom;  (u) such
Asset Sale is to a Person that is not an Affiliate of the  Borrower;  (v) at the
time of such Asset Sale there is no  agreement  of any kind between or among the
Persons party to such Asset Sale that the AFL III Aircraft subject to such Asset
Sale is part of any sale leaseback or similar  transaction to which the Borrower
is party to;  (w) the AFL III  Aircraft  subject to such Asset Sale shall not be
part of any sale leaseback  transaction to which the Borrower is party to for at
least  six  months  after  the   consummation   of  such  Asset  Sale;  (x)  the
consideration  received for such AFL III Aircraft shall be in an amount at least
equal to the fair market value thereof; (y) the consideration received from such
AFL III  Aircraft  shall be at least 75% Cash with the  remaining  consideration
other than Cash to be evidenced by a note or similar financial  instrument;  and
(z) the Loans are repaid in accordance with the  requirements of said subsection
2.4B(iii)(b)  and  (ii)  sell,  lease  or  dispose  of  assets  so  long as such
transaction is effected in accordance  with Section 4(d) or 4(e) of the Aircraft
Chattel Mortgages or subsection 9.21 of this Agreement.

                  6.7      AMENDMENTS OF MATERIAL AGREEMENTS.

                  The  Borrower   shall  not  permit  (i)  its   certificate  of
incorporation  or bylaws to be amended or  otherwise  modified  in any manner or
(ii) any Lease to be amended or otherwise modified in any manner (other than any
amendment  or  modification  which  may  be  required  to  give  effect  to  any
transaction   permitted  by  subsection   6.6(i)  or  subsection  9.21  of  this
Agreement).

                  6.8      RESTRICTION ON LEASES.

                  The  Borrower  shall not  become  liable  in any way,  whether
directly or by assignment or as a guarantor or other surety, for the obligations
of the lessee under any lease,  whether  such lease be an  Operating  Lease or a
Capital Lease.

                  6.9      TRANSACTION WITH SHAREHOLDERS AND AFFILIATES.

                  The Borrower shall not, directly or indirectly,  enter into or
permit to exist any transaction  (including,  without limitation,  the purchase,
sale,  lease or exchange of any property or the  rendering of any service)  with
Holdings  of any  Subsidiary  of  Holdings  or with any other  Affiliate  of the
Borrower;  PROVIDED,  that the  foregoing  restriction  shall  not  apply to (i)
reasonable  and  customary  fees paid to and  indemnification  of members of the
Board of Directors of the Borrower,  (ii)  reasonable  and  customary  salaries,
bonuses and other  compensation paid to and  indemnification of employees of the
Borrower,  (iii) the Leases and (iv) the  Service  Agreement  providing  for the
rendering of accounting, administration and office services by Atlas to the

                                      -56-
<PAGE>

Borrower  on terms  consistent  with the  terms of  similar  agreements  between
unrelated parties, in an aggregate amount not to exceed $400,000 per annum.

                  6.10     CONDUCT OF BUSINESS.

                  (a)      From and after the Initial  Borrowing  Date under and
as defined in the Existing  Credit  Agreement,  the Borrower shall not engage in
any business other than in connection with owning the AFL III Aircraft and Spare
Engines or any replacement aircraft and spare engines and leasing of the AFL III
Aircraft and Spare  Engines or any  replacement  aircraft  and spare  engines to
Atlas, and will have no material assets (other than Cash, Cash Equivalents,  the
AFL III  Aircraft  and  Spare  Engines  or any  replacement  aircraft  and spare
engines,  and the  Leases)  or  liabilities  (other  than the  Loans  and  other
liabilities that are expressly permitted  hereunder);  PROVIDED,  HOWEVER,  that
replacement  aircraft and spare engines may be substituted  for AFL III Aircraft
and Spare  Engines  only in  accordance  with the  applicable  Aircraft  Chattel
Mortgage.

                  (b)      The Borrower  shall not take any action or enter into
any transaction  that requires the approval of the Independent  Director without
the consent of the Independent Director.

                                   SECTION 7.

                                EVENTS OF DEFAULT

                  If any of the  following  conditions  or  events  ("EVENTS  OF
DEFAULT") shall occur:

                  7.1      FAILURE TO MAKE PAYMENTS WHEN DUE.

                  Failure by the Borrower to pay any installment of principal of
any Loan when due,  whether at stated maturity,  by  acceleration,  by notice of
voluntary  prepayment,  by mandatory prepayment or otherwise;  or failure by the
Borrower  to pay any  interest  on any Loan or any fee or any other  amount  due
under this Agreement within five days after the date due; or

                  7.2      DEFAULT UNDER LEASE.

                  Any Aircraft Lease shall at any time be terminated (other than
by its terms) or cease to be in full force and effect (other than by its terms),
or there shall exist a Default or a Lease Event of Default under, and as defined
in, any of the Aircraft Leases; or

                  7.3      BREACH OF CERTAIN COVENANTS.

                  Failure of the  Borrower to perform or comply in any  material
respect with any term or condition  contained in subsections 2.5, 5.1(ix),  5.2,
5.13,  6.1, 6.2,  6.5, 6.6, 6.7 or 6.10 of this  Agreement or in clauses (i) and
(ii) of Section  4(c),  Section  4(d) or Section  4(g) of any  Aircraft  Chattel
Mortgage; or


                                      -57-
<PAGE>

                  7.4      BREACH OF WARRANTY.

                  Any representation, warranty, certification or other statement
made by the Borrower in any Loan Document or in any statement or  certificate at
any time  given by the  Borrower  in  writing  pursuant  hereto or thereto or in
connection  herewith or therewith shall be false in any material  respect on the
date as of which made; or

                  7.5      OTHER DEFAULTS UNDER LOAN DOCUMENTS.

         The Borrower shall default in the performance of or compliance with any
term contained in this Agreement or any of the other Loan Documents,  other than
any such term  referred to in any other  subsection  of this Section 7, and such
default  shall not have been remedied or waived within 15 days after the earlier
of (a) an officer of the Borrower  becoming aware of such default or (b) receipt
by the  Borrower of notice from the  Administrative  Agent or any Lender of such
default; or

                  7.6      INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.

                  (i)      A court having  jurisdiction  in the  premises  shall
enter a decree or order for relief in respect of the Borrower in an  involuntary
case  under  the  Bankruptcy  Code or under  any  other  applicable  bankruptcy,
insolvency  or similar law now or hereafter in effect,  which decree or order is
not stayed;  or any other similar  relief shall be granted under any  applicable
federal or state law; or (ii) an involuntary case shall be commenced against the
Borrower under the  Bankruptcy  Code or under any other  applicable  bankruptcy,
insolvency or similar law now or hereafter in effect;  or a decree or order of a
court having  jurisdiction  in the premises for the  appointment  of a receiver,
liquidator,  sequestrator,  trustee,  custodian or other officer  having similar
powers over the  Borrower,  or over all or a  substantial  part of its property,
shall  have  been  entered;   or  there  shall  have  occurred  the  involuntary
appointment of an interim  receiver,  trustee or other custodian of the Borrower
for all or a  substantial  part of its  property;  or a warrant  of  attachment,
execution or similar process shall have been issued against any substantial part
of the  property of the  Borrower,  and any such event  described in this clause
(ii) shall continue for 60 days unless dismissed, bonded or discharged; or

                  7.7      VOLUNTARY BANKRUPTCY, APPOINTMENT OF RECEIVER, ETC.

                  (i)      The Borrower  shall have an order for relief  entered
with  respect to it or commence a voluntary  case under the  Bankruptcy  Code or
under  any  other  applicable  bankruptcy,  insolvency  or  similar  law  now or
hereafter in effect,  or shall consent to the entry of an order for relief in an
involuntary  case, or to the  conversion of an  involuntary  case to a voluntary
case,  under any such law,  or shall  consent  to the  appointment  of or taking
possession  by a receiver,  trustee or other  custodian for all or a substantial
part of its property;  or the Borrower shall make any assignment for the benefit
of creditors;  or (ii) the Borrower shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become due;
or the Board of Directors of the Borrower (or any committee thereof) shall adopt
any  resolution or otherwise  authorize any action to approve any of the actions
referred to in clause (i) above or this clause (ii); or

                                      -58-
<PAGE>

                  7.8      JUDGMENTS AND ATTACHMENTS.

                  Any money  judgment,  writ or warrant of attachment or similar
process  involving (i) in any individual  case an amount in excess of $5,000,000
or (ii) in the  aggregate  at any time an amount in  excess of  $10,000,000  (in
either  case,  not  adequately  covered by  insurance  as to which a solvent and
unaffiliated  insurance  company has acknowledged  coverage) shall be entered or
filed  against the Borrower or any of its assets and shall remain  undischarged,
unvacated,  unbonded or unstayed  for a period of 60 days (or in any event later
than five days prior to the date of any proposed sale thereunder); or

                  7.9      DISSOLUTION.

                  Any order,  judgment  or decree  shall be entered  against the
Borrower  decreeing the  dissolution  or split up of the Borrower and such order
shall remain undischarged or unstayed for a period in excess of 30 days; or

                  7.10     CHANGE IN CONTROL.

                  Atlas  shall cease to own  beneficially  and to control all of
the issued and outstanding shares of capital stock of the Borrower; or

                  7.11     FAILURE OF SECURITY.

                  Any Collateral  Document  shall,  at any time,  cease to be in
full  force  and  effect  (other  than by  reason  of a  release  of  Collateral
thereunder in accordance with the terms hereof or thereof,  the  satisfaction in
full of the Obligations or any other termination of such Collateral  Document in
accordance with the terms hereof or thereof) or shall be declared null and void,
or the validity or  enforceability  thereof shall be contested in writing by the
Borrower,  or the  Administrative  Agent shall not have or shall cease to have a
valid  security  interest in any  Collateral  purported  to be covered  thereby,
perfected and with the priority  required by the relevant  Collateral  Document,
for any reason,  subject only to Liens permitted under the applicable Collateral
Documents or the Borrower,  as lessor under a Lease or the Administrative Agent,
as  assignee  of the  Borrower's  rights  under such  Lease,  shall  cease to be
entitled to the benefits of Section 1110 of the Bankruptcy  Code with respect to
the rights and remedies under such Lease; or

                  7.12     LOSS OF UNITED STATES CITIZEN STATUS.

                  The  Borrower  for any  reason  ceases  to be a United  States
Citizen; or

                  7.13     EQUITY ISSUANCE.

                  Within 10 Business Days of an Equity Lender providing Atlas an
Instruction  Letter,  such Equity Lender shall have  received its  proportionate
number of shares (calculated as of the Restatement Effective Date by such Equity
Lender) of Holdings  Common Stock which in the aggregate for all Equity  Lenders
shall be an amount  equal to 1.266% of the equity  value of  Holdings  (prior to
giving effect to any employee compensation plan), on terms specified in the Plan
of Reorganization:

                                      -59-
<PAGE>

THEN (I) (i) upon the occurrence of any Event of Default described in subsection
7.6 or 7.7, each of (a) the unpaid  principal  amount of and accrued interest on
the Loans and (b) all other Obligations shall  automatically  become immediately
due and payable,  without presentment,  demand, protest or other requirements of
any kind, all of which are hereby expressly waived by the Borrower and (ii) upon
the occurrence and during the  continuation  of any other Event of Default,  the
Administrative Agent shall, upon the written request or with the written consent
of Requisite  Lenders,  by written  notice to the  Borrower,  declare all or any
portion of the  amounts  described  in clauses  (a) and (b) above to be, and the
same shall  forthwith  become,  immediately  due and  payable  and (II) upon the
occurrence of any Event of Default,  the Administrative  Agent, upon the written
request of the  Requisite  Lenders,  shall,  by written  notice to the Borrower,
enforce  all of  the  Liens  and  security  interests  created  pursuant  to the
Collateral  Documents and exercise all other  remedies at law or in equity or in
admiralty available under the Loan Documents.

                  If, at any time  within 60 days after an  acceleration  of the
Loans pursuant to the preceding paragraph, the Borrower shall pay all arrears of
interest and all  payments on account of  principal  which shall have become due
otherwise than as a result of such acceleration (with interest on principal and,
to the extent permitted by law, on overdue  interest,  at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default (other
than  non-payment of the principal of and accrued interest on the Loans, in each
case that is due and payable solely by virtue of acceleration) shall be remedied
or waived pursuant to subsection 9.6, then Requisite Lenders,  by written notice
to the Borrower, may at their option rescind and annul such acceleration and its
consequences,  but such action shall not affect any subsequent  Event of Default
or  Potential  Event of  Default  or impair any right  consequent  thereon.  The
provisions  of this  paragraph  are  intended  merely to bind the  Lenders  to a
decision  that may be made at the  election  of  Requisite  Lenders  and are not
intended to benefit the  Borrower  and do not grant to the Borrower the right to
require the Lenders to rescind or annul any acceleration hereunder,  even if the
conditions set forth herein are met.

                                   SECTION 8.

                            THE ADMINISTRATIVE AGENT

                  8.1      APPOINTMENT.

                  Deutsche  Bank Trust Company  Americas is hereby  appointed as
Administrative  Agent  hereunder  and under the other Loan  Documents,  and each
Lender  hereby  authorizes  the  Administrative  Agent  to act as its  agent  in
accordance  with the terms of this Agreement and the other Loan  Documents.  The
Administrative Agent agrees to act upon the express conditions contained in this
Agreement and the other Loan  Documents,  as applicable.  The provisions of this
Section  8 are  solely  for the  benefit  of the  Administrative  Agent  and the
Lenders, and the Borrower shall not have rights as a third-party  beneficiary of
any of the provisions thereof. In performing its functions and duties under this
Agreement,  the Administrative Agent shall act solely as an agent of the Lenders
and does not  assume  and shall not be deemed  to have  assumed  any  obligation
towards or relationship of agency or trust with or for the Borrower.

                                      -60-
<PAGE>

                  8.2      POWERS AND DUTIES; GENERAL IMMUNITY.

                  A.       POWERS;  DUTIES  SPECIFIED.  Each Lender  irrevocably
authorizes the Administrative  Agent to take such action on such Lender's behalf
and to exercise such powers,  rights and remedies  hereunder and under the other
Loan Documents as are specifically  delegated or granted to such  Administrative
Agent by the terms hereof and  thereof,  together  with such powers,  rights and
remedies as are reasonably  incidental thereto.  The Administrative  Agent shall
have only those duties and responsibilities that are expressly specified in this
Agreement and the other Loan Documents.  The  Administrative  Agent may exercise
such  powers,  rights and  remedies  and  perform  such duties by or through its
agents or employees.  The Administrative Agent shall not have, by reason of this
Agreement  or any of the other  Loan  Documents,  a  fiduciary  relationship  in
respect of any Lender,  and nothing in this  Agreement  or any of the other Loan
Documents,  expressed or implied,  is intended to or shall be so construed as to
impose  upon  the  Administrative  Agent  any  obligations  in  respect  of this
Agreement  or any of the other  Loan  Documents  except as  expressly  set forth
herein or therein.

                  B.       NO   RESPONSIBILITY   FOR   CERTAIN   MATTERS.    The
Administrative  Agent shall not be  responsible to any Lender for the execution,
effectiveness,   genuineness,   validity,   enforceability,   collectibility  or
sufficiency   of  this   Agreement  or  any  other  Loan  Document  or  for  any
representations,  warranties,  recitals or statements  made herein or therein or
made in any written or oral statements or in any financial or other  statements,
instruments, reports or certificates or any other documents furnished or made by
the  Administrative  Agent to Lender or by or on behalf of the  Borrower  to the
Administrative Agent or any Lender in connection with the Loan Documents and the
transactions  contemplated  thereby or for the  financial  condition or business
affairs  of the  Borrower  or any other  Person  liable  for the  payment of any
Obligations,  nor shall the  Administrative  Agent be required to  ascertain  or
inquire as to the  performance  or observance  of any of the terms,  conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the  proceeds  of the  Loans or as to the  existence  or  possible
existence  of any Event of  Default  or  Potential  Event of  Default.  Anything
contained in this Agreement to the contrary notwithstanding,  the Administrative
Agent shall not have any liability  arising from  confirmations of the amount of
outstanding Loans or the component amounts thereof.

                  C.       EXCULPATORY  PROVISIONS.  Neither the  Administrative
Agent nor any of its officers, directors, partners, employees or agents shall be
liable to the  Lenders  for any action  taken or  omitted by the  Administrative
Agent under or in connection with any of the Loan Documents except to the extent
caused by their  respective  gross  negligence  or  willful  misconduct.  If the
Administrative Agent shall request instructions from the Lenders with respect to
any act or action  (including the failure to take an action) in connection  with
this Agreement or any of the other Loan Documents, Administrative Agent shall be
entitled  to  refrain  from  such act or taking  such  action  unless  and until
Administrative  Agent shall have received  instructions from Requisite  Lenders.
Without  prejudice to the  generality of the foregoing,  (i) the  Administrative
Agent shall be entitled to rely, and shall be fully  protected in relying,  upon
any  communication,  instrument  or  document  believed  by it to be genuine and
correct  and to have been signed or sent by the proper  person or  persons,  and
shall be entitled  to rely and shall be  protected  in relying on  opinions  and
judgments of attorneys  (who may be attorneys  for the  Borrower),  accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall
have any right of

                                      -61-
<PAGE>

action  whatsoever  against  the  Administrative   Agent  as  a  result  of  the
Administrative  Agent  acting or (where so  instructed)  refraining  from acting
under this Agreement or any of the other Loan  Documents in accordance  with the
instructions of Requisite Lenders. The Administrative Agent shall be entitled to
refrain from  exercising any power,  discretion or authority  vested in it under
this  Agreement  or any of the  other  Loan  Documents  unless  and until it has
obtained the instructions of Requisite Lenders.

                  D.       ADMINISTRATIVE  AGENT ENTITLED TO ACT AS LENDER.  The
agency  hereby  created  shall in no way  impair or affect any of the rights and
powers of, or impose any duties or obligations upon, the Administrative Agent in
its   individual   capacity  as  a  Lender   hereunder.   With  respect  to  its
participations in the Loans, the Administrative Agent shall have the same rights
and powers  hereunder as any other Lender and may exercise the same as though it
were not performing the duties and functions delegated to it hereunder,  and the
term "Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise  indicates,   include  the  Administrative  Agent  in  its  individual
capacity.  The Administrative Agent and its Affiliates may accept deposits from,
lend money to and  generally  engage in any kind of  banking,  trust,  financial
advisory or other  business with the Borrower or any of its  Affiliates as if it
were not performing the duties specified  herein,  and may accept fees and other
consideration  from the Borrower for services in connection  with this Agreement
and otherwise without having to account for the same to the Lenders.

                  8.3      REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR
APPRAISAL OF CREDITWORTHINESS.

                  Each Lender  represents  and warrants that it has made its own
independent investigation of the financial condition and affairs of Holdings and
its  Subsidiaries  (including the Borrower) in connection with the  transactions
contemplated  hereunder and that it has made and shall  continue to make its own
appraisal of the  creditworthiness  of Holdings and its Subsidiaries  (including
the Borrower).  The  Administrative  Agent shall have no duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any
such appraisal on behalf of the Lenders or to provide any Lender with any credit
or other  information with respect  thereto,  whether coming into its possession
before  the  making  of the  Loans or at any time or times  thereafter,  and the
Administrative  Agent shall not have responsibility with respect to the accuracy
of or the completeness of any information provided to the Lenders.

                  8.4      RIGHT TO INDEMNITY.

                  Each Lender,  in proportion  to its Pro Rata Share,  severally
agrees to indemnify the Administrative Agent (and its respective  affiliates and
partners),  to the  extent  that the  Administrative  Agent  shall not have been
reimbursed  by  the  Borrower,   for  and  against  any  and  all   liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses  (including,  without  limitation,  counsel fees and  disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Administrative Agent in exercising its powers, rights
and  remedies  or  performing  its  duties  hereunder  or under the  other  Loan
Documents  or  otherwise in its  capacity as  Administrative  Agent,  in any way
relating  to or  arising  out of this  Agreement  or the other  Loan  Documents;
PROVIDED,  that no Lender  shall be liable for any portion of such  liabilities,
obligations, losses, damages, penalties,

                                      -62-
<PAGE>

actions,  judgments,  suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct.

                  8.5      COLLATERAL DOCUMENTS.

                  Without limiting the generality of subsection 8.1, each Lender
hereby further authorizes the Administrative  Agent to enter into the Collateral
Documents  as secured  party on behalf of and for the benefit of such Lender and
agrees to be bound by the terms of each of the Collateral  Documents;  PROVIDED,
that,  except as otherwise  provided below, the  Administrative  Agent shall not
enter into or consent to any amendment,  modification,  termination or waiver of
any provision contained in any Collateral Document without prior written consent
of Requisite  Lenders.  Anything  contained in any of the Loan  Documents to the
contrary notwithstanding, each Lender agrees that no Lender shall have any right
individually  to  realize  upon  any  of the  collateral  under  any  Collateral
Document,  it being  understood and agreed that all powers,  rights and remedies
under the  Collateral  Documents may be exercised  solely by the  Administrative
Agent for the benefit of the Lenders in accordance with the terms thereof.  Each
Lender hereby authorizes the Administrative  Agent (i) to release or subordinate
Collateral  as permitted  or required  under this  Agreement  or the  Collateral
Documents,  and agrees that a certificate  executed by the Administrative  Agent
evidencing  such  release of  Collateral  shall be  conclusive  evidence of such
release  as to any  third  party,  (ii) to  enter  into  any  amendments  of the
Collateral Documents to cure any ambiguity,  defect or inconsistency or to amend
provisions  relating  to  ministerial  or  administrative  matters  that  do not
materially  adversely affect the rights of the Lenders thereunder,  and (iii) in
the event  that an AFL III  Aircraft  or Spare  Engine is subject to a Dry Lease
permitted  by  Section  7(g)(9)  of the  Leases  (as  amended),  to  enter  into
amendments,  supplements,  or other  modifications  of the Collateral  Documents
relating to such AFL III Aircraft or Spare Engine for the purpose of  permitting
such lease and requiring the Lessee to grant a security interest in favor of the
Borrower in such lease and requiring  the Borrower to grant a security  interest
in favor of the Lenders in such Dry Lease and other reasonably related changes.

                  8.6      SUCCESSOR ADMINISTRATIVE AGENT.

                  The  Administrative  Agent may resign at any time by giving 30
days' prior written  notice  thereof to the Lenders and the  Borrower.  Upon any
such  notice of  resignation,  Requisite  Lenders  shall  have the  right,  upon
consultation  with the Borrower,  to appoint a successor  Administrative  Agent.
Upon the acceptance of any appointment  hereunder by a successor  Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and become
vested  with all the  rights,  powers,  privileges  and  duties of the  retiring
Administrative  Agent. Upon the earlier of (x) the acceptance of any appointment
hereunder by a successor  Administrative Agent and (y) 30 days after the written
notice  described in the first sentence of this  subsection 8.6, the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this  Agreement.  After any retiring  Administrative  Agent's  resignation
hereunder as Administrative  Agent, the provisions of this Section 8 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.

                                      -63-
<PAGE>

                                   SECTION 9.

                                  MISCELLANEOUS

                  9.1      ASSIGNMENTS AND PARTICIPATIONS IN LOANS.

                  A.       GENERAL. Each Lender shall have the right at any time
(i) to sell,  assign  or  transfer  to any  Eligible  Assignee,  or (ii) to sell
participations to any Person in, all or any part of any Loan or Loans made by it
or any other interest herein or in any other  Obligations owed to it, so long as
no such sale,  assignment,  transfer or participation shall, without the consent
of the Borrower,  require the Borrower to file a registration statement with the
Securities  and Exchange  Commission or apply to qualify such sale,  assignment,
transfer or participation under the securities laws of any state; PROVIDED, that
no such sale,  assignment  or  transfer  described  in clause (i) above shall be
effective  unless  and  until  an  Assignment  Agreement  effecting  such  sale,
assignment or transfer shall have been accepted by the Administrative  Agent and
recorded in the Register as provided in subsection 9.1B(ii). Except as otherwise
provided in this  subsection  9.1, no Lender shall,  as between the Borrower and
such Lender, be relieved of any of its obligations  hereunder as a result of any
sale,  assignment or transfer of, or any granting of  participations  in, all or
any part of the Loans, or the other Obligations owed to such Lender.

                  B.       ASSIGNMENTS.

                  (i)      AMOUNTS AND TERMS OF ASSIGNMENTS.  Each Loan or other
Obligation  may (a) be  assigned  in any  amount  to  another  Lender,  or to an
Affiliate or Related Fund of the assigning  Lender or another  Lender,  with the
giving of notice to the Borrower and the Administrative Agent or (b) be assigned
in an aggregate  amount of not less than  $5,000,000  (or such lesser  amount as
shall constitute the aggregate amount of the Loans, and other Obligations of the
assigning  Lender) to any other  Eligible  Assignee with the giving of notice to
the Borrower and with the consent of the Administrative  Agent and so long as no
Default or Event of Default has occurred and is continuing,  the Borrower (which
consent shall not be  unreasonably  delayed or  withheld).  To the extent of any
such assignment in accordance with either clause (a) or (b) above, the assigning
Lender shall be relieved of its obligations  with respect to its Loans, or other
Obligations  or the  portion  thereof  so  assigned.  The  parties  to each such
assignment  shall  execute  and  deliver to the  Administrative  Agent,  for its
acceptance and recording in the Register, an Assignment Agreement, together with
a processing and recordation fee of $3,000 and such forms, certificates or other
evidence,  if any, with respect to United States federal income tax  withholding
matters as the  assignee  under such  Assignment  Agreement  may be  required to
deliver  to  the  Administrative  Agent  pursuant  to  subsection  2.7B(iii)(a);
PROVIDED,  HOWEVER,  that such  processing  fee shall not be required  where the
assignee is an existing  Lender.  Upon such  execution,  delivery and acceptance
from and after the effective date specified in such  Assignment  Agreement,  (y)
the assignee  thereunder  shall be a party hereto and, to the extent that rights
and  obligations  hereunder have been assigned to it pursuant to such Assignment
Agreement,  shall have the rights and obligations of a Lender  hereunder and (z)
the assigning Lender thereunder shall, to the extent that rights and obligations
hereunder  have been  assigned  by it  pursuant  to such  Assignment  Agreement,
relinquish its rights and be released from its obligations  under this Agreement
(and,  in the case of an  Assignment  Agreement  covering  all or the  remaining
portion of an assigning  Lender's rights and  obligations  under this Agreement,
such

                                      -64-
<PAGE>

Lender shall cease to be a party hereto).  The Loans hereunder shall be modified
to reflect the Loans of such assignee and any remaining  Loan of such  assigning
Lender and the assigning Lender may, upon the  effectiveness of such assignment,
surrender its applicable Notes to the Administrative Agent for cancellation, and
thereupon new Notes shall be issued to the assignee substantially in the form of
EXHIBIT IIA or EXHIBIT IIB annexed  hereto,  as  appropriate,  with  appropriate
insertions,  to  reflect  the  outstanding  Loans  of the  assignee  and/or  the
assigning Lender.

                  (ii)     ACCEPTANCE BY  ADMINISTRATIVE  AGENT;  RECORDATION IN
REGISTER.  Upon its receipt of an Assignment  Agreement executed by an assigning
Lender and an assignee  representing that it is an Eligible  Assignee,  together
with the processing and  recordation  fee referred to in subsection  9.1B(i) and
any forms,  certificates or other evidence with respect to United States federal
income tax withholding  matters that such assignee may be required to deliver to
the Administrative Agent pursuant to subsection 2.7B(iii)(a), the Administrative
Agent  shall,  if  such  Assignment  Agreement  has  been  completed  and  is in
substantially the form of EXHIBIT V hereto, and if the Administrative  Agent has
consented to the assignment evidenced thereby to the extent that such consent is
required pursuant to subsection 9.1B(i), (a) accept such Assignment Agreement by
executing a counterpart  thereof as provided  therein  (which  acceptance  shall
evidence any required consent of the  Administrative  Agent to such assignment),
(b) record the information contained therein in the Register and (c) give prompt
notice thereof to the Borrower.  The Administrative  Agent shall maintain a copy
of each Assignment Agreement delivered to and accepted by it as provided in this
subsection 9.1B(ii).

                  C.       PARTICIPATIONS.  The  holder  of  any  participation,
other than an Affiliate of the Lender granting such participation,  shall not be
entitled  to require  such  Lender to take or omit to take any action  hereunder
except action directly affecting (i) the extension of the Final Maturity Date of
any Loan  allocated to such  participation,  (ii) a reduction  of the  principal
amount  of or the  rate  of  interest  payable  on any  Loan  allocated  to such
participation  or (iii) a release of Collateral,  and all amounts payable by the
Borrower  hereunder  (including,  without  limitation,  amounts  payable to such
Lender  pursuant to  subsections  2.6D and 2.7) shall be  determined  as if such
Lender had not sold such  participation.  The  Borrower  and each Lender  hereby
acknowledge  and agree that,  solely for  purposes of  subsection  9.5,  (a) any
participation  will  give rise to a direct  obligation  of the  Borrower  to the
participant and (b) the participant shall be considered to be a "Lender."

                  D.       ASSIGNMENTS TO FEDERAL  RESERVE BANKS AND OTHERS.  In
addition to the  assignments  and  participations  permitted under the foregoing
provisions of this  subsection  9.1, any Lender may assign and pledge all or any
portion of its Loans, the other  Obligations owed to such Lender,  and its Notes
to (i) any Federal Reserve Bank as collateral  security pursuant to Regulation A
of the Board of  Governors  of the  Federal  Reserve  System  and any  operating
circular issued by such Federal Reserve Bank or (ii) if such Lender is a "fund",
to any holders of obligations owed or securities issued by such fund as security
for such obligations or securities, or to any trustee for, or any representative
of, such holders;  PROVIDED,  that (i) no Lender shall,  as between the Borrower
and such Lender, be relieved of any of its obligations  hereunder as a result of
any such  assignment and pledge and (ii) in no event shall such Federal  Reserve
Bank or lender be  considered  to be a "Lender"  or be  entitled  to require the
assigning Lender to take or omit to take any action hereunder.

                                      -65-
<PAGE>

                  E.       INFORMATION.  Each Lender may furnish any information
concerning  the Borrower in the  possession  of that Lender from time to time to
assignees and participants  (including  prospective assignees and participants),
subject to subsection 9.19.

                  9.2      EXPENSES.

                  Whether or not the transactions  contemplated  hereby shall be
consummated,  the  Borrower  agrees  to pay  promptly  (i)  all the  actual  and
reasonable costs and expenses of preparation of the Loan Documents; (ii) all the
costs of furnishing all opinions by counsel for the Borrower (including, without
limitation,  any  opinions  requested  by the  Lenders  as to any legal  matters
arising hereunder) and of the Borrower's  performance of and compliance with all
agreements  and  conditions  on its part to be performed or complied  with under
this Agreement and the other Loan Documents, including, without limitation, with
respect to confirming compliance with environmental and insurance  requirements;
(iii)  the  reasonable  fees,  expenses  and  disbursements  of  counsel  to the
Administrative Agent in connection with the negotiation,  preparation, execution
and  administration  of the  Loan  Documents  and the  Loans  and any  consents,
amendments,  waivers  or other  modifications  hereto or  thereto  and any other
documents or matters requested by the Borrower;  (iv) all the costs and expenses
of creating and  perfecting the Liens in favor of the  Administrative  Agent for
the benefit of the Lenders pursuant to the Loan Documents,  including filing and
recording fees and expenses,  title insurance,  fees and expenses of counsel for
providing  such  opinions  as the Lenders  may  reasonably  request and fees and
expenses of legal counsel to the Administrative Agent (including local counsel);
(v)  all  other  actual  and  reasonable  costs  and  expenses  incurred  by the
Administrative   Agent  in  connection  with  the  Loans  and  the  negotiation,
preparation   and  execution  of  the  Loan   Documents  and  the   transactions
contemplated  hereby and thereby;  and (vi) after the  occurrence of an Event of
Default, all costs and expenses, including reasonable attorneys' fees (including
allocated  costs of internal  counsel) and costs of settlement,  incurred by the
Administrative  Agent and the  Lenders in  enforcing  any  Obligations  of or in
collecting any payments due from the Borrower  hereunder or under the other Loan
Documents  by  reason  of such  Event  of  Default  or in  connection  with  any
refinancing  or  restructuring  of the credit  arrangements  provided under this
Agreement  in the  nature of a  "work-out"  or  pursuant  to any  insolvency  or
bankruptcy proceedings.

                  9.3      INDEMNITY.

                  In addition to the payment of expenses  pursuant to subsection
9.2, whether or not the transactions  contemplated  hereby shall be consummated,
the  Borrower   agrees  to  defend,   indemnify,   pay  and  hold  harmless  the
Administrative  Agent and the Lenders,  and the officers,  directors,  partners,
employees,  agents and  affiliates of the  Administrative  Agent and the Lenders
(collectively  called  the  "INDEMNITEES")  from and  against  any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims,  costs,  expenses  and  disbursements  of any kind or nature  whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such  Indemnitees in connection with any  investigative,  administrative  or
judicial proceeding,  commenced or threatened by any Person,  whether or not any
such  Indemnitee  shall be designated as a party or a potential  party thereto),
whether  direct,  indirect or  consequential  and whether  based on any federal,
state or  foreign  laws,  statutes,  rules or  regulations  (including,  without
limitation,  securities and commercial laws, statutes,  rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or

                                      -66-
<PAGE>

otherwise,  that may be imposed on,  incurred  by, or asserted  against any such
Indemnitee,  in any manner  relating to or arising out of this  Agreement or the
other  Loan  Documents  or  the  transactions  contemplated  hereby  or  thereby
(including,  without limitation,  the use or intended use of the proceeds of any
of the Loans) or the statements  contained in the commitment letter delivered by
any  Lender to the  Borrower  with  respect  thereto  (collectively  called  the
"INDEMNIFIED  LIABILITIES");  PROVIDED,  that the  Borrower  shall  not have any
obligation  to  any  Indemnitee   hereunder  with  respect  to  any  Indemnified
Liabilities  to the extent such  Indemnified  Liabilities  arise solely from the
gross  negligence or willful  misconduct  of that  Indemnitee as determined by a
final  judgment  of a court of  competent  jurisdiction.  To the extent that the
undertaking  to  defend,  indemnify,  pay and  hold  harmless  set  forth in the
preceding  sentence may be  unenforceable  because it is violative of any law or
public  policy,  the Borrower shall  contribute  the maximum  portion that it is
permitted  to  pay  and  satisfy  under   applicable  law  to  the  payment  and
satisfaction of all Indemnified  Liabilities  incurred by the Indemnitees or any
of them.

                  9.4      SET-OFF.

                  In  addition  to any rights  now or  hereafter  granted  under
applicable  law  and not by way of  limitation  of any  such  rights,  upon  the
occurrence  of any Event of  Default  each  Lender is hereby  authorized  by the
Borrower at any time or from time to time,  without notice to the Borrower or to
any other Person,  any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness  evidenced by certificates of deposit,  whether
matured  or  unmatured,   but  not  including  trust  accounts)  and  any  other
Indebtedness  at any time held or owing by that  Lender to or for the  credit or
the  account of the  Borrower  against  and on account  of the  obligations  and
liabilities of the Borrower to that Lender under this Agreement,  the Notes, and
the other  Loan  Documents,  including,  but not  limited  to, all claims of any
nature or  description  arising out of or  connected  with this  Agreement,  the
Notes,  or any other  Loan  Document,  irrespective  of  whether or not (i) that
Lender  shall have made any demand  hereunder  or (ii) the  principal  of or the
interest on the Loans or any other amounts due  hereunder  shall have become due
and payable pursuant to Section 7 and although said obligations and liabilities,
or any of them, may be contingent or unmatured.

                  9.5      RATABLE SHARING.

                  The Lenders hereby agree among  themselves that if any of them
shall,  whether by voluntary payment, by realization upon security,  through the
exercise  of any right of set-off or banker's  lien,  by  counterclaim  or cross
action or by the enforcement of any right under the Loan Documents or otherwise,
or as adequate  protection  of a deposit  treated as cash  collateral  under the
Bankruptcy  Code,  receive payment or reduction of a proportion of the aggregate
amount of principal, interest, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender)  which is greater than the  proportion  received by
any other Lender in respect of the  Aggregate  Amounts Due to such other Lender,
then the Lender receiving such proportionately  greater payment shall (i) notify
the  Administrative  Agent and each other  Lender of the receipt of such payment
and (ii) apply a portion of such  payment to purchase  participations  (which it
shall  be  deemed  to  have  purchased  from  each  seller  of  a  participation
simultaneously upon the receipt by such seller of its

                                      -67-
<PAGE>

portion of such  payment) in the  Aggregate  Amounts Due to the other Lenders so
that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders
in  proportion to the Aggregate  Amounts Due to them;  PROVIDED,  that if all or
part of such proportionately  greater payment received by such purchasing Lender
is thereafter  recovered from such Lender upon the bankruptcy or  reorganization
of the  Borrower  or  otherwise,  those  purchases  shall be  rescinded  and the
purchase  prices  paid  for  such  participations  shall  be  returned  to  such
purchasing Lender ratably to the extent of such recovery,  but without interest.
The Borrower expressly consent to the foregoing  arrangement and agrees that any
holder of a  participation  so  purchased  may  exercise  any and all  rights of
banker's lien,  set-off or counterclaim with respect to any and all monies owing
by the Borrower to that holder with  respect  thereto as fully as if that holder
were owed the amount of the participation held by that holder.

                  9.6      AMENDMENTS AND WAIVERS.

                                      -68-
<PAGE>

                  A.       No amendment, modification,  termination or waiver of
any provision of this Agreement or of the Notes,  or consent to any departure by
the  Borrower  therefrom,  shall in any event be  effective  without the written
concurrence  of  Requisite   Lenders;   PROVIDED,   that  any  such   amendment,
modification,  termination, waiver or consent that: reduces the principal amount
of any of the Loans;  changes any Lender's Tranche A Pro Rata Share or Tranche B
Pro Rata Share;  changes in any manner the  definition of  "Requisite  Lenders;"
changes  in any manner  any  provision  of this  Agreement  that,  by its terms,
expressly  requires the approval or  concurrence  of all Lenders;  postpones the
Final Maturity Date (but not the date of any scheduled installment of principal)
of any of the Loans;  postpones  the date on which any  interest or any fees are
payable;  decreases  the interest rate borne by any of the Loans (other than any
waiver of any  increase  in the  interest  rate  applicable  to any of the Loans
pursuant  to  subsection  2.2D) or the  amount  of any fees  payable  hereunder;
increases the maximum duration of Interest Periods permitted hereunder; releases
all or  substantially  all of the  Collateral;  or  changes  in any  manner  the
provisions contained in this subsection 9.6 shall be effective only if evidenced
by a writing signed by or on behalf of all Lenders to whom are owed  Obligations
being directly affected by such amendment, modification,  termination, waiver or
consent. In addition, (i) any amendment, modification,  termination or waiver of
any of the  provisions  contained  in  Section  7  shall  be  effective  only if
evidenced  by a  writing  signed by or on  behalf  of  Administrative  Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written  concurrence of the
Lender that is the holder of that Note,  and (iii) no  amendment,  modification,
termination or waiver of any provision of Section 8 or of any other provision of
this  Agreement  that,  by  its  terms,   expressly  requires  the  approval  or
concurrence of the  Administrative  Agent shall be effective without the written
concurrence  of such  Administrative  Agent.  No  change  shall  be made  (x) to
subsection 2.4B without the consent of the holders of a majority of principal of
the  Tranche A Loans or  Tranche B Loans,  respectively,  and (y) to  subsection
2.4B(iii)  without the consent of the holders of a majority of principal of each
of the Tranche A Loans and Tranche B Loans.  The  Administrative  Agent may, but
shall  have no  obligation  to,  with the  concurrence  of any  Lender,  execute
amendments,  modifications,  waivers or consents on behalf of that  Lender.  Any
waiver or consent shall be effective  only in the specific  instance and for the
specific  purpose for which it was given. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further  notice or demand
in similar or other  circumstances.  Any amendment,  modification,  termination,
waiver or consent  effected  in  accordance  with this  subsection  9.6 shall be
binding  upon each Lender at the time  outstanding,  each future  Lender and, if
signed by the Borrower, upon the Borrower. Notwithstanding anything contained to
the contrary in this  subsection  9.6A,  the Aircraft  Chattel  Mortgages may be
amended in the manner and for the purpose set forth in  subsection  9.21 without
the consents required by this subsection 9.6A.

                  B.       If, in connection with any proposed  change,  waiver,
discharge  or  termination  to  any of  the  provisions  of  this  Agreement  as
contemplated  by the proviso in the first sentence of this  subsection  9.6, the
consent of  Requisite  Lenders is  obtained  but  consent of one or more of such
other Lenders whose consent is required is not obtained,  then the Borrower may,
so long as all  non-consenting  Lenders are so treated,  elect to terminate such
Lender  as a party  to  this  Agreement,  so long  as,  concurrently  with  such
termination,  (i) the Borrower shall pay to that Lender all principal,  interest
and fees and other amounts owed to such Lender through such date of termination,
(ii)  another  financial  institution  satisfactory  to  the  Borrower  and  the
Administrative  Agent (or if the  Administrative  Agent is also the Lender to be
terminated, the

                                      -69-
<PAGE>

successor Administrative Agent) shall agree, as of such date, to become a Lender
for all purposes under this  Agreement  (whether by assignment or amendment) and
to assume all  obligations  of the Lender to be terminated as of such date,  and
(iii) all documents and supporting materials  necessary,  in the judgment of the
Administrative  Agent (or if the  Administrative  Agent is also the Lender to be
terminated,  the successor Administrative Agent) to evidence the substitution of
such Lender shall have been received and approved by the Administrative Agent as
of such date.

                  9.7      INDEPENDENCE OF COVENANTS.

                  All covenants under this Agreement shall be given  independent
effect so that if a particular  action or  condition is not  permitted by any of
such covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the  limitations  of,  another  covenant shall not avoid the
occurrence  of an Event of Default or Potential  Event of Default if such action
is taken or condition exists.

                  9.8      NOTICES.

                  Unless otherwise  specifically  provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served,  telexed or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered in
person or by courier  service,  upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; PROVIDED, that notices to the Administrative Agent shall
not be effective until received.  For the purposes  hereof,  the address of each
party  hereto  shall be as set forth under such  party's  name on the  signature
pages hereof or (i) as to the Borrower and the Administrative  Agent, such other
address as shall be designated by such Person in a written  notice  delivered to
the other parties hereto and (ii) as to each other party,  such other address as
shall  be  designated  by  such  party  in a  written  notice  delivered  to the
Administrative Agent.

                  9.9      SURVIVAL   OF    REPRESENTATIONS,    WARRANTIES   AND
AGREEMENTS.

                  A.       All  representations,  warranties and agreements made
herein shall survive the execution and delivery of this Agreement and the making
of the Loans hereunder.

                  B.       Notwithstanding anything in this Agreement or implied
by law to the contrary,  the agreement of the Borrower set forth in  subsections
2.6D,  2.7,  9.2,  9.3 and 9.4 and the  agreements  of the  Lenders set forth in
subsections  8.2C,  8.4 and 9.5 shall survive the payment of the Loans,  and the
termination of this Agreement.

                  9.10     FAILURE   OR   INDULGENCE   NOT   WAIVER;    REMEDIES
CUMULATIVE.

                  No failure or delay on the part of the Administrative Agent or
any Lender in the exercise of any power,  right or privilege  hereunder or under
any other Loan  Document  shall  impair such  power,  right or  privilege  or be
construed to be a waiver of any default or acquiescence  therein,  nor shall any
single or partial exercise of any such power,  right or privilege preclude other
or further  exercise  thereof or of any other  power,  right or  privilege.  All
rights and remedies  existing  under this Agreement and the other Loan Documents
are  cumulative  to, and not  exclusive  of, any  rights or  remedies  otherwise
available.

                                      -70-
<PAGE>

                  9.11     MARSHALLING; PAYMENTS SET ASIDE.

                  Neither the Administrative Agent nor any Lender shall be under
any obligation to marshal any assets in favor of the Borrower or any other party
or against or in payment of any or all of the  Obligations.  To the extent  that
the Borrower makes a payment or payments to the Administrative  Agent or Lenders
(or to the  Administrative  Agent  for  the  benefit  of  the  Lenders),  or the
Administrative Agent or Lenders enforce any security interests or exercise their
rights  of  set-off,  and such  payment  or  payments  or the  proceeds  of such
enforcement  or  set-off  or any  part  thereof  are  subsequently  invalidated,
declared to be  fraudulent  or  preferential,  set aside  and/or  required to be
repaid to a trustee,  receiver or any other party under any bankruptcy  law, any
other state or federal law,  common law,  the law of admiralty or any  equitable
cause,  then,  to the extent of such  recovery,  the  obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies therefor
or related  thereto,  shall be revived and continued in full force and effect as
if such payment or payments had not been made or such enforcement or set-off had
not occurred.

                  9.12     SEVERABILITY.

                  In case any provision in or obligation under this Agreement or
the Notes shall be invalid,  illegal or unenforceable in any  jurisdiction,  the
validity,   legality  and   enforceability   of  the  remaining   provisions  or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

                  9.13     OBLIGATIONS  SEVERAL;  INDEPENDENT NATURE OF LENDERS'
RIGHTS.

                  The  obligations  of the Lenders  hereunder are several and no
Lender shall be responsible for the  obligations of any other Lender  hereunder.
Nothing  contained herein or in any other Loan Document,  and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute the Lenders as
a partnership,  an association, a joint venture or any other kind of entity. The
amounts  payable at any time  hereunder  to each Lender  shall be a separate and
independent  debt,  and each Lender shall be entitled to protect and enforce its
rights  arising out of this  Agreement,  and it shall not be  necessary  for any
other  Lender to be joined as an  additional  party in any  proceeding  for such
purpose.

                  9.14     HEADINGS.

                  Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

                  9.15     APPLICABLE LAW.

                  THIS  AGREEMENT  SHALL BE GOVERNED  BY, AND SHALL BE CONSTRUED
AND ENFORCED IN  ACCORDANCE  WITH,  THE INTERNAL  LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

                                      -71-
<PAGE>

                  9.16     SUCCESSORS AND ASSIGNS.

                  This  Agreement  shall be binding upon the parties  hereto and
their  respective  successors  and assigns and shall inure to the benefit of the
parties  hereto  and  the  successors  and  assigns  of the  Lenders  (it  being
understood  that the Lenders'  rights of  assignment  are subject to  subsection
9.1).  Neither the Borrower's  rights or obligations  hereunder nor any interest
therein may be assigned or delegated by the Borrower  without the prior  written
consent of all Lenders.

                  9.17     CONSENT TO JURISDICTION AND SERVICE OF PROCESS.

                  ALL JUDICIAL  PROCEEDINGS BROUGHT AGAINST THE BORROWER ARISING
OUT  OF OR  RELATING  TO  THIS  AGREEMENT  OR ANY  OTHER  LOAN  DOCUMENT  OR ANY
OBLIGATION   MAY  BE  BROUGHT  IN  ANY  STATE  OR  FEDERAL  COURT  OF  COMPETENT
JURISDICTION  IN THE STATE OF NEW YORK,  AND, BY EXECUTION  AND DELIVERY OF THIS
AGREEMENT,   THE  BORROWER  ACCEPTS  FOR  ITSELF  AND  IN  CONNECTION  WITH  ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY,  THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID  COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY  JUDGMENT  RENDERED  THEREBY IN  CONNECTION  WITH THIS
AGREEMENT,  SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION (SUBJECT TO ANY RIGHT TO
APPEAL TO A COURT IN THE STATE OF NEW YORK).  The  Borrower  hereby  agrees that
service of all process in any such  proceeding  in any such court may be made by
registered or certified mail, return receipt  requested,  to the Borrower at its
address  provided in subsection  9.8, such service being hereby  acknowledged by
the Borrower to be sufficient  for personal  jurisdiction  in any action against
the Borrower in any such court and to be otherwise effective and binding service
in every respect.  Nothing herein shall affect the right to serve process in any
other  manner  permitted  by law or shall limit the right of any Lender to bring
proceedings against the Borrower in the courts of any other jurisdiction.

                  9.18     WAIVER OF JURY TRIAL.

                  EACH OF THE PARTIES TO THIS  AGREEMENT  HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR  ARISING  OUT OF THIS  AGREEMENT  OR ANY OF THE OTHER LOAN  DOCUMENTS  OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR
THE  LENDER/BORROWER  RELATIONSHIP THAT IS BEING ESTABLISHED.  The scope of this
waiver is intended to be  all-encompassing  of any and all disputes  that may be
filed in any court and that  relate to the subject  matter of this  transaction,
including,  without  limitation,  contract claims,  tort claims,  breach of duty
claims  and all  other  common  law and  statutory  claims.  Each  party  hereto
acknowledges that this waiver is a material  inducement to enter into a business
relationship,  that each has already relied on this waiver in entering into this
Agreement,  and that each will  continue to rely on this waiver in their related
future  dealings.  Each party hereto further warrants and represents that it has
reviewed  this  waiver  with  its  legal  counsel  and  that  it  knowingly  and
voluntarily  waives  its jury trial  rights  following  consultation  with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE

                                      -72-
<PAGE>

MODIFIED  EITHER  ORALLY  OR IN  WRITING,  AND THIS  WAIVER  SHALL  APPLY TO ANY
SUBSEQUENT AMENDMENTS,  RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
OR ANY OF THE OTHER  LOAN  DOCUMENTS  OR TO ANY OTHER  DOCUMENTS  OR  AGREEMENTS
RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.

                  9.19     CONFIDENTIALITY.

                  (a)      Each  Lender  shall hold all  non-public  information
obtained  pursuant  to  the  requirements  of  this  Agreement  which  has  been
identified  as  confidential  by the Borrower in  accordance  with such Lender's
customary  procedures for handling  confidential  information of this nature, it
being  understood and agreed by the Borrower that in any event a Lender may make
disclosures to any Person who evaluates, approves, structures or administers the
Loans  on  behalf  of a  Lender  and  who is  subject  to  this  confidentiality
provision,  or,  reasonably  required by any bona fide  assignee,  transferee or
participant in connection with the  contemplated  assignment or transfer by such
Lender of any Loans or any participation  therein or as required or requested by
any  governmental  or regulatory  agency  (including,  without  limitation,  the
National  Association of Insurance  Commissioners) or representative  thereof or
pursuant  to  legal  process  or  in  accordance  with  any  applicable  law  or
regulation;  PROVIDED, that, unless specifically prohibited by applicable law or
court  order,  each  Lender  shall  notify the  Borrower  of any  request by any
governmental or regulatory agency or representative thereof (other than any such
request in connection  with any  examination of the financial  condition of such
Lender by such  governmental  or regulatory  agency) for  disclosure of any such
non-public  information  prior to disclosure of such  information;  and PROVIDED
FURTHER,  that in no event shall any Lender be  obligated  or required to return
any materials furnished by the Borrower.

         (b)      The Borrower hereby  acknowledges  and agrees that each Lender
may share with any of its affiliates or its investment  advisors any information
related to the Borrower (including,  without limitation,  any nonpublic customer
information regarding the creditworthiness of such entities), PROVIDED that such
Persons shall be subject to the provisions of this  subsection  9.19 to the same
extent as such Lender and shall only use such  information  in  connection  with
matters relating to this Agreement.

         (c)      The Borrower hereby  represents and acknowledges  that, to the
best of its knowledge,  neither the Administrative Agent nor any Lender, nor any
employees or agents of, or other persons  affiliated  with,  the  Administrative
Agent or any Lender,  have directly or indirectly made or provided any statement
(oral or written) to the  Borrower or to any of their  respective  employees  or
agents, or other persons  affiliated with or related to the Borrower (or, so far
as the  Borrower  is  aware,  to any  other  person),  as to the  potential  tax
consequences of the transaction contemplated by this Agreement.

                  9.20     COUNTERPARTS; EFFECTIVENESS; EFFECT IF AGREEMENT DOES
NOT BECOME EFFECTIVE.

         This  Agreement and any  amendments,  waivers,  consents or supplements
hereto or in connection  herewith may be executed in any number of  counterparts
and by different parties hereto in separate counterparts,  each of which when so
executed and delivered shall be deemed

                                      -73-
<PAGE>

an original, but all such counterparts together shall constitute but one and the
same  instrument;  signature  pages  may  be  detached  from  multiple  separate
counterparts  and attached to a single  counterpart so that all signature  pages
are  physically  attached to the same  document.  This  Agreement  shall  become
effective  upon the  execution  of a  counterpart  hereof by each of the parties
hereto  and  receipt  by the  Borrower  and  Administrative  Agent of written or
telephonic  notification of such execution and authorization of delivery thereof
and the  satisfaction  (or  waiver)  of  each of the  conditions  set  forth  in
subsection  3.1. Until this Agreement  becomes  effective,  the Existing  Credit
Agreement remains in full force and effect and, in the event this Agreement does
not become  effective on or before July 27, 2004,  the execution and delivery of
this Agreement  shall be disregarded and this Agreement shall be deemed null and
void for all purposes.

                  9.21     REPLACEMENT ENGINES AND AIRFRAMES.

                  A.       Engines.  So long as no Event of Default or Potential
Event of Default has occurred and is continuing, the Borrower may, upon not less
than five (5) Business Days' prior written notice to the  Administrative  Agent,
replace  any Engine that is the subject of an  Aircraft  Chattel  Mortgage  with
another  engine  (the  "REPLACEMENT  ENGINE")  meeting the  requirements  of the
applicable Aircraft Chattel Mortgage.  In addition the preceding  sentence,  any
Replacement  Engine  shall be an engine  that is the same or  improved  make and
model as the Engine to be replaced,  and that is suitable for  installation  and
use on any Airframe,  and that has a value,  utility and  remaining  useful life
(including  with respect to hours and cycles  remaining until overhaul) at least
equal to the Engine to be replaced thereby.

                  The  Lenders   agree  to  release  the  Lien  created  by  the
applicable  Aircraft  Chattel  Mortgage  for  any  Engine  to be  replaced  by a
Replacement   Engine   promptly  upon  (i)   presentation  by  the  Borrower  of
documentation  necessary to create a legal, valid and enforceable first priority
security  interest  in and to  the  Replacement  Engine,  (ii)  delivery  to the
Administrative Agent of an opinion of Cahill Gordon & Reindel LLP, or such other
counsel as may be acceptable to the  Administrative  Agent,  confirming that the
Administrative  Agent will  continue to be  entitled to the  benefits of Section
1110 of the Bankruptcy Code with respect to such Replacement  Engine free of all
Liens (other than Permitted  Encumbrances  and the  applicable  Lease) and (iii)
receipt of all other  deliveries  required by Section 4(f)(ii) of the applicable
Aircraft Chattel Mortgage.

                  B.       Airframes.   So  long  as  no  Event  of  Default  or
Potential  Event of Default has occurred and is  continuing,  the Borrower  may,
upon not less than 5 Business  Days' prior notice to the  Administrative  Agent,
replace any Airframe  that is the subject of an Aircraft  Chattel  Mortgage with
another airframe (the  "REPLACEMENT  AIRFRAME")  meeting the requirements of the
applicable  Aircraft  Chattel  Mortgage and the  requirements  of an  Acceptable
Alternate Airframe; PROVIDED that, no more than two Airframes may be replaced by
the Borrower  pursuant to this subsection 9.21B. In addition to the requirements
of the preceding sentence, any Replacement Airframe shall be an airframe that is
the same or improved  make and model as the Airframe to be replaced and that has
a value,  utility and remaining useful life (including with respect to hours and
cycles  remaining  until overhaul) at least equal to the Airframe to be replaced
thereby.

                  The  Lenders   agree  to  release  the  Lien  created  by  the
applicable  Aircraft  Chattel  Mortgage  for any  Airframe  to be  replaced by a
Replacement Airframe promptly upon (i)

                                      -74-
<PAGE>

presentation by the Borrower of documentation necessary to create a legal, valid
and  enforceable  first  priority  security  interest in and to the  Replacement
Airframe,  (ii)  delivery  to the  Administrative  Agent of an opinion of Cahill
Gordon  &  Reindel  LLP,  or such  other  counsel  as may be  acceptable  to the
Administrative Agent, confirming that the Borrower (and the Administrative Agent
upon  succeeding  to the  Borrower's  interest  in the  applicable  Lease)  will
continue to be entitled to the benefits of Section 1110 of the  Bankruptcy  Code
with  respect  to such  Replacement  Airframe  free  of all  Liens  (other  than
Permitted  Encumbrances and the applicable Lease) and (iii) receipt of all other
deliveries  required by Section  4(f)(ii)  of the  applicable  Aircraft  Chattel
Mortgage.

                  C.       Further  Assurances.  The Borrower shall, in addition
to the actions required by the preceding  subsections  9.21A and 9.21B, take all
necessary  actions to provide that the Borrower  (and the  Administrative  Agent
upon  succeeding  to the  Borrower's  interest  in the  applicable  Lease)  will
continue to be entitled to the benefits of Section 1110 of the  Bankruptcy  Code
with respect to each Replacement Engine and each Replacement  Airframe,  in each
case free of all Liens (other than  Permitted  Encumbrances  and the  applicable
LEASE).

                  [Remainder of page intentionally left blank]

                                      -75-

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.

                    ATLAS FREIGHTER LEASING III, INC.

                    By: /s/ William C. Bradley
                        ----------------------------------
                        Name:  WILLIAM C. BRADLEY
                        Title: TREASURER & SECRETARY

                    Notice Address:

                    2000 Westchester Avenue
                    Purchase, New York 10577

                    Attention: Treasurer
<PAGE>

                    DEUTSCHE BANK TRUST COMPANY AMERICAS,
                    as Administrative Agent

                    By: /s/ David J. Bell
                        ----------------------------------
                        Name:  David J. Bell
                        Title: Managing Director

                    Notice Address:

                    Deutsche Bank Trust Company Americas
                    60 Wall Street
                    New York, New York 10005

                    Attention: David J. Bell
<PAGE>


                    CANPARTNERS INVESTMENTS IV, L.L.C.,
                    a California Limited Liability Company

                    By: /s/ Mitchell R. Julis
                        ----------------------------------
                        Name:  Mitchell R. Julis
                        Title: Authorised Signatory
<PAGE>


                    CITADEL CREDIT TRADING LTD.

                    By: Citadel Limited Partnership, its Portfolio Manager
                    By: GLB Partners, L.P., its General Partner
                    By: Citadel Investment Group. L.L.C., its General Partner

                    By: /s/ Levoyd E. Robinson
                        ----------------------------------
                        Name:  Levoyd E. Robinson
                        Title: Managing Director
<PAGE>


                    CITADEL EQUITY FUND LTD.

                    By: Citadel Limited Partnership, its Portfolio Manager
                    By: GLB Partners, L.P., its General Partner
                    By: Citadel Investment Group. L.L.C., its General Partner

                    By: /s/ Levoyd E. Robinson
                        ----------------------------------
                        Name:  Levoyd E. Robinson
                        Title: Managing Director
<PAGE>


                    ELC (CAYMAN) LTD.
                    ELC (CAYMAN) LTD. CDO SERIES 1999-I
                    ELC (CAYMAN) LTD. 1999-II
                    ELC (CAYMAN) LTD. 1999-III
                    ELC (CAYMAN) LTD. 2000-I
                    ELC (CAYMAN) CDO I, LTD.
                    TRYON CLO LTD. 2000-I
                    SUFFIELD CLO, LIMITED


                    By: David L. Babson & Company Inc.

                        as Collateral Manager

                    By: /s/ Russell D. Morrison
                        ----------------------------------
                        Name:  Russell D. Morrison
                        Title: Managing Director
<PAGE>


                    Fernwood Associates LLC
                    By: Intermarket Corp.

                    By: /s/ Robert Gaviglio
                        ----------------------------------
                        Name:  Robert Gaviglio
                        Title: Vice President
<PAGE>

                    Fernwood Foundation
                    By: Intermarket Corp.

                    By: /s/ Robert Gaviglio
                        ----------------------------------
                        Name:  Robert Gaviglio
                        Title: Vice President
<PAGE>

                    FERNWOOD RESTRUCTURINGS LIMITED

                    By: /s/ Robert Gaviglio
                        ----------------------------------
                        Name:  Robert Gaviglio
                        Title: Vice President
<PAGE>

                    GMAC Commercial Finance LLC, successor by
                    merger to GMAC Commercial Credit LLC

                    By: /s/ Stephen W. Arnold
                        ----------------------------------
                        Name:  Stephen W. Arnold
                        Title: V.P. Portfolio Manager
<PAGE>

                    Indosuez Capital Funding III, Limited
                    by Indosuez Capital, as Portfolio Advisor

                    By: /s/ Charles Kobayashi
                        ----------------------------------
                        Name:  Charles Kobayashi
                        Title: Portfolio Manager
<PAGE>

                    ML CLO XII PILGRIM AMERICA (CAYMAN) LTD.
                    By: ING Investments, LLC
                        as its investment manager

                    By: /s/ Mark F. Haak
                        ----------------------------------
                        Name:  Mark F. Haak, CFA
                        Title: Vice President
<PAGE>
                    ML CLO XV PILGRIM AMERICA (CAYMAN) LTD.
                    By: ING Investments, LLC
                        as its investment manager

                    By: /s/ Mark F. Haak
                        ----------------------------------
                        Name:  Mark F. Haak, CFA
                        Title: Vice President
<PAGE>
                    SEQUILS - PILGRIM I, LTD
                    By: ING Investments, LLC
                        as its investment manager

                    By: /s/ Mark F. Haak
                        ----------------------------------
                        Name:  Mark F. Haak, CFA
                        Title: Vice President
<PAGE>
                    MERRILL LYNCH CLIENT PRODUCTS, LLC

                    [NAME OF LENDER]

                    By: /s/ Peter Chin
                        ----------------------------------
                        Name:  PETER CHIN
                        Title: VICE PRESIDENT
<PAGE>
                    Addison CDO, Limited
                    By: Pacific Investment Management Company LLC,
                        as its Investment Advisor

                    By: /s/ Mohan V. Phansalkar
                        ----------------------------------
                        Name:  Mohan V. Phansalkar
                        Title: Managing Director
<PAGE>
                    ATHENA CDO, LIMITED
                    By: Pacific Investment Management Company LLC,
                        as its Investment Advisor

                    By: /s/ Mohan V. Phansalkar
                        ----------------------------------
                        Name:  Mohan V. Phansalkar
                        Title: Managing Director
<PAGE>
                    BEDFORD CDO, LIMITED
                    By: Pacific Investment Management Company LLC,
                        as its Investment Advisor

                    By: /s/ Mohan V. Phansalkar
                        ----------------------------------
                        Name:  Mohan V. Phansalkar
                        Title: Managing Director
<PAGE>
                    CAPTIVA III FINANCE LTD.
                    as advised by Pacific Investment
                    Management Company LLC

                    By: /s/ David Dyer
                        ----------------------------------
                        David Dyer
                        Director
<PAGE>
                    CAPTIVA IV FINANCE LTD.
                    as advised by Pacific Investment
                    Management Company LLC

                    By: /s/ David Dyer
                        ----------------------------------
                        David Dyer
                        Director
<PAGE>
                    CATALINA CDO LTD.
                    By: Pacific Investment Management Company LLC,
                        as its Investment Advisor

                    By: /s/ Mohan V. Phansalkar
                        ----------------------------------
                        Name:  Mohan V. Phansalkar
                        Title: Managing Director
<PAGE>
                    DELANO COMPANY
                    By: Pacific Investment Management Company LLC,
                        as its Investment Advisor

                    By: /s/ Mohan V. Phansalkar
                        ----------------------------------
                        Name:  Mohan V. Phansalkar
                        Title: Managing Director
<PAGE>
                    JISSEKIKUN FUNDING, LTD.
                    By: Pacific Investment Management Company LLC,
                        as its Investment Advisor

                    By: /s/ Mohan V. Phansalkar
                        ----------------------------------
                        Name:  Mohan V. Phansalkar
                        Title: Managing Director
<PAGE>
                    Restoration Holdings, Ltd

                    By: /s/ Pamela M. Lawrence
                        ----------------------------------
                        Name:  Pamela M. Lawrence
                        Title: Manager
<PAGE>

                    RZB Finance LLC

                    By: /s/ Christoph Hoedl
                        ----------------------------------
                        Name:  CHRISTOPH HOEDL
                        Title: Vice President


                    By: /s/ John A. Valiska
                        ----------------------------------
                        Name:  John A. Valiska
                        Title: Group Vice President
<PAGE>
                    TRS GANYMEDE LLC

                    By: /s/ Edward Schaffer
                        ----------------------------------
                        Name:  Edward Schaffer
                        Title: Vice President
<PAGE>
                    Sankaty Credit Opportunities, L.P.

                    By: /s/ Diane Exter
                        ----------------------------------
                        Name:  Diane Exter
                        Title: Managing Director/Portfolio Manager
<PAGE>
                    SANKATY HIGH YIELD PARTNERS II, L.P.

                    By: /s/ Diane Exter
                        ----------------------------------
                        Name:  Diane Exter
                        Title: Managing Director/Portfolio Manager
<PAGE>
                    SANKATY HIGH YIELD PARTNERS III, L.P.

                    By: /s/ Diane Exter
                        ----------------------------------
                        Name:  Diane Exter
                        Title: Managing Director/Portfolio Manager
<PAGE>
                    SANKATY HIGH YIELD PARTNERS II, L.P.

                    By: /s/ Diane Exter
                        ----------------------------------
                        Name:  Diane Exter
                        Title: Managing Director/Portfolio Manager
<PAGE>
                    U.S. BANK NATIONAL ASSOCIATION

                    By: /s/ Dale L. Welke
                        ----------------------------------
                        Name:  Dale L. Welke
                        Title: Vice President