Document:

<PAGE>

                                                                   FINAL VERSION

                     BENEFICIAL INTEREST PURCHASE AGREEMENT

                            dated as of June 26, 2001
                                  by and among

                         LEASE INVESTMENT FLIGHT TRUST,

                                       and

                              AUTOMATIC LIFT I, LP

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                                TABLE OF CONTENTS

                  This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.

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                                                                                                                 Page
                                                                                                                  No.
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                                    ARTICLE I

                SALE OF INTERESTS; CAPITAL CONTRIBUTION; CLOSING

1.01     Purchase and Sale of Interests...........................................................................1
1.02     Closing..................................................................................................1
1.03     Purchaser's Conditions Precedent.........................................................................2
1.04     Further Assurances; Post-Closing Cooperation.............................................................3

                                   ARTICLE II

                    REPRESENTATIONS AND WARRANTIES OF SELLER

2.01     Organization of Seller...................................................................................3
2.02     Authority................................................................................................3
2.03     Organization of Sub......................................................................................4
2.04     Beneficial Interest......................................................................................4
2.05     Subsidiaries.............................................................................................4
2.06     No Conflicts.............................................................................................4
2.07     Governmental Approvals and Filings.......................................................................5
2.08     Taxes....................................................................................................5
2.09     Legal Proceedings........................................................................................5
2.10     Compliance With Laws and Orders..........................................................................5
2.11     Employees................................................................................................5
2.12     Bankruptcy Proceedings...................................................................................6
2.13     Liabilities..............................................................................................6
2.14     Contracts................................................................................................6
2.15     Brokers..................................................................................................6
2.16     Citizenship..............................................................................................6

                                   ARTICLE III

             SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS

                                   ARTICLE IV

                                 INDEMNIFICATION

4.01     Indemnification..........................................................................................7
4.02     Method of Asserting Claims...............................................................................7
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                                      -i-
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                                    ARTICLE V

                                   DEFINITIONS
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<S>      <C>                                                                                                     <C>

5.01     Definitions.............................................................................................10

                                   ARTICLE VI

                                  MISCELLANEOUS

6.01     Notices.................................................................................................14
6.02     Entire Agreement........................................................................................15
6.03     Expenses................................................................................................15
6.04     Covenant Against Instituting Bankruptcy Proceedings.....................................................15
6.05     Waiver..................................................................................................15
6.06     Amendment...............................................................................................15
6.07     No Third Party Beneficiary..............................................................................15
6.08     No Assignment; Binding Effect...........................................................................16
6.09     Headings................................................................................................16
6.10     Consent to Jurisdiction, Service of Process and Waiver of Jury Trial....................................16
6.11     Jurisdiction............................................................................................16
6.12     Invalid Provisions......................................................................................16
6.13     Governing Law...........................................................................................17
6.14     Counterparts............................................................................................17
</TABLE>

                                    EXHIBITS

EXHIBIT A        General Partner's Certificate on behalf of Seller

                                    SCHEDULES

Schedule 1       Subsidiaries of Sub; Aircraft; Leases/Lessees
Schedule 2       Purchase Price Wire Instructions

                              DISCLOSURE SCHEDULES

2.03             Trustees
2.05             Record Owners of Subsidiaries' Equity Interests
2.06             Violations, Conflicts
2.07             Government Approvals
2.14             Material Contracts

                                      -ii-
<PAGE>

                  This BENEFICIAL INTEREST PURCHASE AGREEMENT dated as of June
26, 2001 is made and entered into by and among LEASE INVESTMENT FLIGHT TRUST, a
Delaware business trust ("PURCHASER"), and AUTOMATIC LIFT I, LP, a Delaware
limited partnership ("SELLER"). Capitalized terms not otherwise defined herein
have the meanings set forth in SECTION 5.01.

                  WHEREAS, Seller owns 100% of the equity interests of LIFT
Trust-Sub 1, a Delaware business trust ("SUB") (such equity interests being
referred to herein as the "INTERESTS") and Sub owns all of the equity or
membership interests of the entities set forth on SCHEDULE 1 attached hereto;
and

                  WHEREAS, Seller desires to sell, and Purchaser desires to
purchase, the Interests on the terms and subject to the conditions set forth in
this Agreement;

                  WHEREAS, the sale of the Interests is intended by the parties
hereto to constitute a valid transfer of the legal and beneficial right, title
and interest in the Interests such that after the sale the Seller shall not
retain any right, title or interest in the Interests;

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

                                    ARTICLE I

                SALE OF INTERESTS; CAPITAL CONTRIBUTION; CLOSING

                  1.01. PURCHASE AND SALE OF INTERESTS. Seller agrees to sell
to Purchaser, and Purchaser agrees to purchase from Seller, all of the right,
title and interest of Seller in and to the Interests at the Closing on the terms
and subject to the conditions set forth in this Agreement. The aggregate
purchase price for the Interests is $5,472,000 (the "PURCHASE PRICE"), payable
in immediately available United States funds at the Closing in the manner
provided in SECTION 1.02. Each of Subsidiaries as they may exist prior to
Closing shall continue to be subsidiaries of Sub immediately following Closing.
The transactions described in this SECTION 1.01 will be treated by Purchaser and
Seller as a sale for accounting and tax purposes. To the extent the transfer of
the Interests is not deemed a sale of such Interests, the transfer shall be
deemed a contribution by Seller into Purchaser.

                  1.02. CLOSING. The Closing will take place at the offices
of Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, New
York 10005, or at such other place as Purchaser, Seller and Sub mutually agree,
at approximately 1:00 p.m. local time, on the Closing Date. At the Closing,
Purchaser will pay the Purchase Price by wire transfer of immediately available
funds as follows: (a) $2,472,000 will be paid to such account or accounts of
Seller, or such other recipients as directed by Seller, pursuant to written
instructions delivered by Seller to Purchaser no later than two (2) Business
Days prior to Closing and (b) $3,000,000 to the Class A Contingent Collateral
Account pursuant to the instructions specified in SCHEDULE 2 attached hereto.
Simultaneously, Seller will assign and transfer to Purchaser all of Seller's
right, title and interest in and to the Interests by delivering to the Security
Trustee a certificate or

<PAGE>

certificates representing the Interests, in genuine and unaltered form, duly
endorsed in blank or accompanied by duly executed interest powers endorsed in
blank, with requisite transfer tax stamps, if any, attached.

                  1.03. PURCHASER'S CONDITIONS PRECEDENT. The obligation of
Purchaser to purchase the Interests on the Closing Date is subject to
satisfaction of the following express conditions precedent on such Closing Date,
subject to the right of Purchaser to waive any condition pursuant to SECTION
6.05:

                  (a) Purchaser shall have received from Seller a certificate,
dated as of the Closing Date and executed in the name and on behalf of Seller by
the general partner of Seller, substantially in the form and to the effect of
EXHIBIT A hereto;

                  (b) Purchaser shall have received a certification from Seller
dated as of the Closing Date to the effect that the representations and
warranties of Seller hereunder are true and correct as of the Closing Date;

                  (c) Receipt of the following documents by Purchaser:

                  (i) a certificate of solvency dated as of the Closing Date in
         the Agreed Form relating to the Seller issued by the general partner
         thereof;

                  (ii) a favorable opinion of independent counsel to the Seller,
         dated as of the Closing Date, reasonably acceptable to Purchaser in the
         Agreed Form, that the sale of the Interests constitutes, or will
         constitute, a "true-sale" and a valid transfer of title to such
         Interests and that after the transfer of such Interests Seller retains,
         or will retain, no interest in such Interests and as to such other
         matters as Purchaser may reasonably request with regard to the subject
         matter contemplated herein;

                  (iii) evidence that all governmental and other licenses,
         approvals, consents, certificates, exemptions, registrations and
         filings necessary in the state of formation of Sub for any matter or
         thing contemplated by this Agreement and any notices or other documents
         to be given pursuant hereto and for the legality, validity,
         enforceability, admissibility in evidence and effectiveness hereof have
         been obtained or effected on an unconditional basis and remain in full
         force and effect (or in the case of effecting any certificates,
         exemptions, registrations and filings, that arrangements satisfactory
         to Purchaser have been made for the effectiveness of the same within
         any time limit provided therefor under applicable law);

                  (d) The Asset Purchase Agreement shall be in full force and
effect as against Sub and Sub shall not have waived, in writing, any of the
conditions precedent to its performance under the Asset Purchase Agreement,
unless Purchaser has consented to such waiver in writing;

                  (e) Seller shall have delivered to Purchaser copies of all
documents delivered by the "Sellers" (as defined in the Asset Purchase
Agreement) under the Asset Purchase Agreement;

                                      -2-

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                  (f) All transactions contemplated, and all documents to be
executed and delivered, under the Indenture shall have been completed by all
parties;

                  (g) Each manager, officer and director, if any, of Sub and
each Subsidiary shall have tendered, effective as of the Closing Date, his or
her resignation as such; and

                  (h) There shall not be in effect on the Closing Date any Order
or Law restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.

                  1.04. FURTHER ASSURANCES; POST-CLOSING COOPERATION. (a) At
any time or from time to time after the Closing, Seller shall execute and
deliver to Purchaser such other documents and instruments, provide such
materials and information and take such other actions as Purchaser may
reasonably request more effectively to vest title to the Interests in Purchaser
and, to the full extent permitted by Law, to put Purchaser in actual possession
and operating control of Sub and the Subsidiaries and their Aircraft and Books
and Records, and otherwise to cause Seller to fulfill its obligations under this
Agreement.

                  (b) If, in order properly to prepare its Tax Returns,
other documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the business or condition of Sub and the Subsidiaries,
and such information, documents or records are in the possession or control of
the other party, such other party shall use its best efforts to furnish or make
available such information, documents or records (or copies thereof) at the
recipient's request, cost and expense.

                                   ARTICLE II

                    REPRESENTATIONS AND WARRANTIES OF SELLER

                  Seller hereby represents and warrants to Purchaser as follows:

                  2.01. ORGANIZATION OF SELLER. Seller is a limited
partnership duly organized, validly existing and in good standing under the Laws
of the State of Delaware. Seller has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, including without limitation to
own, hold, sell and transfer (pursuant to this Agreement) the Interests.

                  2.02. AUTHORITY. The execution and delivery by Seller of
this Agreement, and the performance by Seller of its obligations hereunder, have
been duly and validly authorized by the general partner of Seller, no other
action on the part of Seller or its partners being necessary. This Agreement has
been duly and validly executed and delivered by Seller and constitutes a legal,
valid and binding obligation of Seller enforceable against Seller in accordance
with its terms.

                                      -3-
<PAGE>

                  2.03. ORGANIZATION OF SUB. Sub is a statutory business
trust duly organized, validly existing and in good standing under the Laws of
the State of Delaware. The names of each trustee of Sub on the date hereof are
listed in Section 2.03 of the Disclosure Schedule.

                  2.04. BENEFICIAL INTEREST. The Interests are duly
authorized, validly issued, outstanding, fully paid and nonassessable. Seller
owns the Interests, beneficially and of record, free and clear of all Liens.
Except for this Agreement, there are no outstanding Options with respect to Sub.
The delivery of a certificate or certificates at the Closing representing the
Interests in the manner provided in SECTION 1.02 will transfer to Purchaser good
and valid title to the Interests, free and clear of all Liens. There are no
voting trusts, membership contracts, proxies or other contracts or
understandings in effect with respect to the voting rights or transfer rights of
the Interests.

                  2.05. SUBSIDIARIES. SCHEDULE 1 lists the name of each
Subsidiary, all aircraft each Subsidiary owns (the "AIRCRAFT") and the Lease
applicable to such Aircraft, including the name of the Lessee thereunder. Each
Subsidiary is duly organized and validly existing under the Laws of its
jurisdiction of organization. SECTION 2.05 OF THE DISCLOSURE SCHEDULE lists for
each Subsidiary the record owners of such Subsidiary's equity interests. Sub
owns 100% of the equity interest, beneficially and of record, of each Subsidiary
free and clear of all Seller Liens subject only to (a) such limitations and
defects conveyed to Sub under the Asset Purchase Agreement and (b) the Liens
arising under or in connection with the Indenture. There are no outstanding
Options with respect to any Subsidiary. Since the APA Closing, and with respect
to the period prior to the APA Closing, to Seller's knowledge, as to each
Subsidiary, there are no voting trusts, membership or shareholder agreements,
proxies or other agreements or understandings in effect with respect to the
voting rights or transfer rights of the membership interests, shares or other
equity interests of the Subsidiaries.

                  2.06. NO CONFLICTS. The execution and delivery by Seller of
this Agreement do not, and the performance by Seller of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not:

                  (a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the organizational documents (I.E.,
corporate charter documents, limited liability company, partnership or trust
agreements) of Seller, Sub or any Subsidiary;

                  (b) conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to Seller, Sub or any
Subsidiary; or

                  (c) except as disclosed in SECTION 2.06 OF THE DISCLOSURE
SCHEDULE, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Seller or Sub to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the terms
of, (iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (vi) result in the creation or

                                      -4-

<PAGE>

imposition of any Lien upon Seller, Sub or any Subsidiary under, any Contract to
which Seller, Sub or any Subsidiary is a party.

                  2.07. GOVERNMENTAL APPROVALS AND FILINGS. Except as
disclosed in SECTION 2.07 OF THE DISCLOSURE SCHEDULE, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority on
the part of Seller or Sub is required in connection with the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby.

                  2.08. TAXES. Sub is and has been since its organization an
entity taxable either as a disregarded entity or as a partnership for Federal
income tax purposes. Sub has not engaged in any activity other than entering
into and performing under the Indenture, the Asset Purchase Agreement and all
other transactions contemplated thereunder. Neither Seller nor any of its
Affiliates (other then Sub) is liable, or will be liable, for any taxes for
which Sub, its Subsidiaries or any of their assets could be subject. Seller is a
"United States person" within the meaning of 7701(a)(30) of the Code. Not more
than three (3) individuals, all of whom are citizens of the United States,
directly or indirectly own all of the outstanding beneficial interests in
Seller.

                  2.09. LEGAL PROCEEDINGS.(a) There are no Actions or
Proceedings pending or, to the Knowledge of Seller, threatened against, relating
to or affecting Seller or Sub which could reasonably be expected to result in
the issuance of an Order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement.

                  (b) To the Knowledge of Seller, and except as disclosed to Sub
in the Asset Purchase Agreement, there are no Actions or Proceedings pending or
threatened against, relating to or affecting any Subsidiary which could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or the Asset Purchase Agreement.

                  (c) To the Knowledge of Seller, there are no Orders
outstanding against Sub or any Subsidiary.

                  2.10. COMPLIANCE WITH LAWS AND ORDERS. (a) The Sub is not
and has not at any time since its organization as an entity been, or has
received any notice that it is or has at any time since its organization as an
entity been, in violation of or in default under, in any material respect, any
Law or Order applicable to Sub or any of its Assets and Properties.

                  (b) Since the APA Closing, no Subsidiary is, or has received
any Notice that it, at any time since the APA Closing, has been, in violation of
or in default under, in any material respect, any Law or Order applicable to
such Subsidiary.

                  2.11. EMPLOYEES. The Sub has no employees. Since the APA
Closing, no Subsidiary has hired any employees.

                                      -5-

<PAGE>

                  2.12. BANKRUPTCY PROCEEDINGS. (a) No liquidator,
provisional liquidator, analogous or similar officer has been appointed in
respect of all or any part of the assets of Seller or Sub nor has any
application been made to a court which is still pending for an order for, or any
act, matter or thing been done which with the giving of notice, lapse of time or
satisfaction of some other condition (or any combination thereof) will lead to,
the appointment of any such officers or equivalent in any jurisdiction.

                  (a) Since the APA Closing, no liquidator, provisional
liquidator, analogous or similar officer has been appointed in respect of all or
any part of the assets of any Subsidiary nor has any application been made to a
court which is still pending for an order for, or any act, matter or thing been
done which with the giving of notice, lapse of time or satisfaction of some
other condition (or any combination thereof) will lead to, the appointment of
any such officers or equivalent in any jurisdiction.

                  2.13. LIABILITIES. Except for Liabilities incurred in
connection with its organization and liabilities arising under the Asset
Purchase Agreement and the Indenture, Sub has no other liabilities.

                  2.14. CONTRACTS. (a) Full and accurate particulars of all
material Contracts to which Sub is a party at the Closing Date, all of which are
listed in SECTION 2.14(A) OF THE DISCLOSURE SCHEDULE, have been disclosed to
Purchaser and each Contract (i) is legal, valid and binding on Sub and is in
full force and effect in accordance with its terms and (ii) upon completion of
the transactions contemplated by this Agreement, shall continue in full force
and effect, without penalty or adverse consequence. Sub is not in breach of, or
default under, any Contract to which it is a party.

                  (b) Since the APA Closing, no Subsidiary has become a party to
any additional Contracts.

                  2.15. BROKERS. None of Seller, Sub or any Subsidiary is
liable, or upon completion of the transactions contemplated hereunder will
become liable, to any Person for any fees, commissions or similar payments for
services in connection with the negotiation of this Agreement and the
transactions contemplated hereunder.

                  2.16. CITIZENSHIP. Seller is a "citizen of the United
States" as such term is defined in Section 40102(a)(15) of Part A of Subtitle
VII of Title 49 of the United States Code and in the Federal Aviation
Regulations.

                  2.17. OWNERSHIP OF CERTAIN SECURITIES. As of the date
hereof, neither Seller nor any Person who holds a direct or indirect equity
interest in Seller, owns any notes or other securities issued pursuant to the
Indenture..

                                   ARTICLE III

             SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS

                                      -6-

<PAGE>

                  3.01. SURVIVAL OF REPRESENTATIONS. The representations,
warranties, covenants and agreements of Seller and Purchaser contained in this
Agreement will survive the Closing (a) until sixty (60) days after the
expiration of all applicable statutes of limitation (including all periods of
extension, whether automatic or permissive) with respect to matters covered by
SECTION 2.08 and; (c) until the third anniversary of the date hereof in the case
of all other representations and warranties and any covenant or agreement to be
performed in whole or in part on or prior to the Closing; PROVIDED that any
representation, warranty, covenant or agreement that would otherwise terminate
in accordance with clause (a) or (b) above will continue to survive if a Claim
Notice or Indemnity Notice (as applicable) shall have been timely given under
Article IV on or prior to such termination date, until the related claim for
indemnification has been satisfied or otherwise resolved as provided in ARTICLE
IV.

                                   ARTICLE IV

                                 INDEMNIFICATION

                  4.01. INDEMNIFICATION. Subject to the other Sections of
this ARTICLE IV, Seller shall indemnify the Purchaser Indemnified Parties in
respect of, and hold each of them harmless from and against, any and all Losses
suffered, incurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of or relating to any breach of
representation or warranty or nonfulfillment of or failure to perform any
covenant or agreement on the part of Seller contained in this Agreement.

                  4.02. METHOD OF ASSERTING CLAIMS. All claims for
indemnification by any Indemnified Party under SECTION 4.01 will be asserted and
resolved as follows:

                  (a) In the event any claim or demand in respect of which
an Indemnified Party might seek indemnity under SECTION 4.01 is asserted against
or sought to be collected from such Indemnified Party by a Person other than
Seller or any Affiliate of Seller or of Purchaser (a "THIRD PARTY CLAIM"), the
Indemnified Party shall deliver a Claim Notice with reasonable promptness to the
Indemnifying Party. The Indemnifying Party will notify the Indemnified Party as
soon as practicable within the Dispute Period whether the Indemnifying Party
disputes its liability to the Indemnified Party under SECTION 4.01 and whether
the Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.

                  (i) If the Indemnifying Party notifies the Indemnified Party
         within the Dispute Period that the Indemnifying Party desires to defend
         the Indemnified Party with respect to the Third Party Claim pursuant to
         this SECTION 4.02(a), then the Indemnifying Party will have the right
         to defend, with counsel reasonably satisfactory to the Indemnified
         Party, at the sole cost and expense of the Indemnifying Party, such
         Third Party Claim by all appropriate proceedings, which proceedings
         will be vigorously and diligently prosecuted by the Indemnifying Party
         to a final conclusion or will be settled at the discretion of the
         Indemnifying Party (but only with the consent of the Indemnified Party,
         which consent will not be unreasonably withheld, in the case of any
         settlement that provides for any relief other than the payment of
         monetary damages as to which the

                                      -7-

<PAGE>

         Indemnified Party will be indemnified in full). The Indemnifying Party
         will be deemed to have waived its right to dispute its liability to
         the Indemnified Party under SECTION 4.01 with respect to any Third
         Party Claim as to which it elects to control the defense. The
         Indemnifying Party will have full control of such defense and
         proceedings, including (except as provided in the immediately
         preceding sentence) any settlement thereof; PROVIDED, HOWEVER, that
         the Indemnified Party may, at the sole cost and expense of the
         Indemnifying Party, at any time prior to the Indemnifying Party's
         delivery of the notice referred to in the first sentence of this
         clause (i), file any motion, answer or other pleadings or take any
         other action that the Indemnified Party reasonably believes to be
         necessary or appropriate to protect its interests; and PROVIDED
         FURTHER, that if requested by the Indemnifying Party, the Indemnified
         Party will, at the sole cost and expense of the Indemnifying Party,
         provide reasonable cooperation to the Indemnifying Party in contesting
         any Third Party Claim that the Indemnifying Party elects to contest.
         The Indemnified Party may retain separate counsel to represent it in,
         but not control, any defense or settlement of any Third Party Claim
         controlled by the Indemnifying Party pursuant to this clause (i), and
         the Indemnifying Party will bear its own costs and expenses with
         respect to such separate counsel, except as provided in the preceding
         sentence and except that the Indemnifying Party will pay the costs and
         expenses of such separate counsel if (x) in the Indemnified Party's
         good faith judgment, it is advisable, based on advice of counsel, for
         the Indemnified Party to be represented by separate counsel because a
         conflict or potential conflict exists between the Indemnifying Party
         and the Indemnified Party or (y) the named parties to such Third Party
         Claim include both the Indemnifying Party and the Indemnified Party
         and the Indemnified Party determines in good faith, based on advice of
         counsel, that defenses are available to it that are unavailable to the
         Indemnifying Party. Notwithstanding the foregoing, the Indemnified
         Party may retain or take over the control of the defense or settlement
         of any Third Party Claim the defense of which the Indemnifying Party
         has elected to control if the Indemnified Party irrevocably waives its
         right to indemnity under SECTION 4.01 with respect to such Third Party
         Claim.

                  (ii) If the Indemnifying Party fails to notify the Indemnified
         Party within the Dispute Period that the Indemnifying Party desires to
         defend the Third Party Claim pursuant to SECTION 4.02(a), or if the
         Indemnifying Party gives such notice but fails to prosecute vigorously
         and diligently or settle the Third Party Claim, then the Indemnified
         Party will have the right to defend, at the sole cost and expense of
         the Indemnifying Party, the Third Party Claim by all appropriate
         proceedings, which proceedings will be prosecuted by the Indemnified
         Party in good faith or will be settled at the discretion of the
         Indemnified Party (with the consent of the Indemnifying Party, which
         consent will not be unreasonably withheld). The Indemnified Party will
         have full control of such defense and proceedings, including (except as
         provided in the immediately preceding sentence) any settlement thereof;
         PROVIDED, HOWEVER, that if requested by the Indemnified Party, the
         Indemnifying Party will, at the sole cost and expense of the
         Indemnifying Party, provide reasonable cooperation to the Indemnified
         Party and its counsel in contesting any Third Party Claim which the
         Indemnified Party is contesting.

                                      -8-
<PAGE>

         Notwithstanding the foregoing provisions of this clause (ii), if the
         Indemnifying Party has notified the Indemnified Party within the
         Dispute Period that the Indemnifying Party disputes its liability
         hereunder to the Indemnified Party with respect to such Third Party
         Claim and if such dispute is resolved in favor of the Indemnifying
         Party in the manner provided in clause (iii) below, the Indemnifying
         Party will not be required to bear the costs and expenses of the
         Indemnified Party's defense pursuant to this clause (ii) or of the
         Indemnifying Party's participation therein at the Indemnified Party's
         request, and the Indemnified Party will reimburse the Indemnifying
         Party in full for all reasonable costs and expenses incurred by the
         Indemnifying Party in connection with such litigation. The
         Indemnifying Party may retain separate counsel to represent it in, but
         not control, any defense or settlement controlled by the Indemnified
         Party pursuant to this clause (ii), and the Indemnifying Party will
         bear its own costs and expenses with respect to such participation.

                  (iii) If the Indemnifying Party notifies the Indemnified Party
         that it does not dispute its liability to the Indemnified Party with
         respect to the Third Party Claim under SECTION 4.01 or fails to notify
         the Indemnified Party within the Dispute Period whether the
         Indemnifying Party disputes its liability to the Indemnified Party with
         respect to such Third Party Claim, the Loss arising from such Third
         Party Claim will be conclusively deemed a liability of the Indemnifying
         Party under SECTION 4.01 and the Indemnifying Party shall pay the
         amount of such Loss to the Indemnified Party on demand following the
         final determination thereof. If the Indemnifying Party has timely
         disputed its liability with respect to such claim, the Indemnifying
         Party and the Indemnified Party will proceed in good faith to negotiate
         a resolution of such dispute, and if not resolved through negotiations
         within the Resolution Period, such dispute shall be resolved by
         litigation in a court of competent jurisdiction.

                  (b) In the event any Indemnified Party should have a claim
under SECTION 4.01 against any Indemnifying Party that does not involve a
Third Party Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that an Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss arising from the claim specified in such Indemnity Notice will
be conclusively deemed a liability of the Indemnifying Party under SECTION 4.01
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by litigation in a
court of competent jurisdiction.

                                    ARTICLE V

                                      -9-

<PAGE>

                                   DEFINITIONS

                  5.01. DEFINITIONS. (a) DEFINED TERMS. As used in this
Agreement, the following defined terms have the meanings indicated below:

                  "ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.

                  "AFFILIATE" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified.

                  "AGREED FORM" means, when used in relation to any draft
certificate, document, agreement or opinion referred to in this Agreement, (a)
substantially in the form agreed between Purchaser and Seller on or before the
Closing Date with such changes thereto as may subsequently be agreed between
Purchaser and Seller and (b) in the case of any opinion, such form as each of
the Rating Agencies (as defined in the Indenture) shall approve.

                  "AGREEMENT" means this Beneficial Interest Purchase Agreement
and the Exhibits, the Disclosure Schedule and the Schedules hereto and the
certificates delivered in accordance with SECTION 1.02, as the same shall be
amended from time to time.

                  "AIRCRAFT" has the meaning ascribed to it in Section 2.05.

                  "APA CLOSING" shall mean the completion of the transactions
contemplated under the Asset Purchase Agreement.

                  "ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement
dated as of June 26, 2001 between General Electric Capital Corporation and the
Other Sellers listed on Annex A thereto and Sub.

                   "BUSINESS DAY" means a day other than Saturday, Sunday or any
day on which banks located in the State of New York are authorized or obligated
to close.

                  "CLAIM NOTICE" means written notification pursuant to Section
4.02(a) of a Third Party Claim as to which indemnity under SECTION 4.01 is
sought by an Indemnified Party, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim against the Indemnifying Party under SECTION 4.01,
together with the amount or, if not then reasonably determinable, the estimated
amount, determined in good faith, of the Loss arising from such Third Party
Claim.

                  "CLASS A CONTINGENT COLLATERAL ACCOUNT" shall have the meaning
specified in the Supplementary Security Trust Agreement dated June 26, 2001
between the Grantors named therein and Bankers Trust Company.

                  "CLOSING" means the closing of the transactions contemplated
by SECTION 1.02.

                                      -10-

<PAGE>

                  "CLOSING DATE" means (a) the date hereof, or (b) such other
date as Purchaser, Seller and Sub mutually agree upon in writing.

                  "CODE" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.

                  "CONTRACT" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).

                  "CONTRIBUTION AMOUNT" has the meaning ascribed to it in
SECTION 1.02.

                  "DISCLOSURE SCHEDULE" means the record delivered to Purchaser
by Seller herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Seller pursuant to this Agreement.

                  "DISPUTE PERIOD" means the period ending sixty (60) days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.

                  "GOVERNMENTAL OR REGULATORY AUTHORITY" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.

                  "INDEBTEDNESS" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.

                  "INDEMNIFIED PARTY" means any Person claiming indemnification
under any provision of Article IV.

                  "INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of ARTICLE IV.

                  "INDEMNITY NOTICE" means written notification pursuant to
SECTION 4.02(b) of a claim for indemnity under ARTICLE IV by an Indemnified
Party, specifying the nature of and basis for such claim, together with the
amount or, if not then reasonably determinable, the estimated amount, determined
in good faith, of the Loss arising from such claim.

                  "INDENTURE" means the Trust Indenture dated as of June 26,
2001 between Purchaser, Sub, Phoenix American Financial Services, Inc. and
Bankers Trust Company.

                  "INTERESTS" has the meaning ascribed to it in the forepart of
this Agreement.

                  "IRS" means the United States Internal Revenue Service.

                                      -11-

<PAGE>

                  "KNOWLEDGE OF SELLER" or "KNOWN TO SELLER" means the knowledge
of any officer, director or employee of Seller, Sub or any Subsidiary.

                  "LAWS" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.

                  "LEASE" means, for any Aircraft, the aircraft lease agreement
(as amended or supplemented by any relevant Lease Document) between the relevant
Subsidiary as Lessor thereof and the relevant Lessee identified as such in
SCHEDULE 1 or the Substitute Aircraft Supplement, as applicable, concerning such
Aircraft.

                   "LESSEE" means, for any Aircraft, the lessee of such Aircraft
as identified in Schedule 1 or the Substitute Aircraft Supplement, as
applicable.

                   "LIABILITIES" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).

                  "LICENSES" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.

                  "LIENS" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.

                  "LOSS" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including without limitation interest, court
costs, fees of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment).

                  "OPTION" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of such Person or
(ii) receive or exercise any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock of such Person, including
any rights to participate in the equity or income of such Person or to
participate in or direct the election of any directors or officers of such
Person or the manner in which any shares of capital stock of such Person are
voted.

                  "ORDER" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).

                                      -12-

<PAGE>

                   "PERMITTED LIEN" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property subject to such Lien or the use of such property in the conduct of the
business of Sub or any Subsidiary.

                  "PERSON" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.

                  "PURCHASE PRICE" has the meaning ascribed to it in SECTION
1.01.

                  "PURCHASER" has the meaning ascribed to it in the forepart of
this Agreement.

                  "PURCHASER INDEMNIFIED PARTIES" means Purchaser and its
officers, directors, employees, agents and Affiliates.

                  "RESOLUTION PERIOD" means the period ending thirty (30) days
following receipt by an Indemnified Party of a written notice from an
Indemnifying Party stating that it disputes all or any portion of a claim set
forth in a Claim Notice or an Indemnity Notice.

                  "SECURITY TRUSTEE" means Bankers Trust Company, as the
Security Trustee and the Operating Bank under the Security Trust Agreement dated
as of the date hereof by and among Purchaser, Seller, the additional grantors
thereunder and the Security Trustee.

                  "SELLER" has the meaning ascribed to it in the forepart of
this Agreement.

                  "SELLER LIENS" means any Lien which is created by or results
from Liabilities or actions or omissions of Seller or its Affiliates; provided,
however, for purposes of this definition, the Subsidiaries shall be deemed not
to be Affiliates of Seller or Sub.

                  "SUB" has the meaning ascribed to it in the forepart of this
Agreement.

                  "SUBSIDIARY" means any Person in which Sub, directly or
indirectly through Subsidiaries or otherwise, beneficially owns more than fifty
percent (50%) of either the equity interests in, or the voting control of, such
Person.

                   "THIRD PARTY CLAIM" has the meaning ascribed to it in Section
4.02(a).

                   (b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
the terms "Article" or "Section" refer to the specified Article or Section of
this Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business

                                      -13-

<PAGE>

consistent with past practice" refer to the business and practice of Seller, Sub
or a Subsidiary. Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified.

                                   ARTICLE VI

                                  MISCELLANEOUS

                  6.01. NOTICES. All notices, requests and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally or by facsimile transmission or mailed (first
class postage prepaid) or by a reputable overnight delivery service to the
parties at the following addresses or facsimile numbers:

                  If to Purchaser, to:

                  Lease Investment Flight Trust
                  c/o Wilmington Trust Company
                  1100 North Market Street
                  Rodney Square North
                  Wilmington, Delaware 19890
                  Facsimile No.: (302) 651-8882
                  Attn: Corporate Trust Administration

                  with a copy to:

                  Phoenix American Financial Services, Inc.
                  2401 Kerner Boulevard
                  San Rafael, California 94901
                  Facsimile No.: (415) 485-4522
                  Attn: Financial Services Division

                  If to Seller, to:

                  Automatic LIFT I, LP
                  222 Delaware Avenue
                  P.O. Box 2306
                  Wilmington, Delaware 19899

                  with a copy to:

                  Wayne D. Lippman
                  Grand Bay Plaza
                  2665 South Bayshore Drive
                  Suite 1006
                  Coconut Grove, Florida 33133

                                      -14-

<PAGE>

                  Facsimile No.: (305) 858-7757

All such notices, requests and other communications will (i) if delivered
personally or by a reputable overnight delivery service to the address as
provided in this Section, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to the facsimile number as provided in this Section, be
deemed given upon receipt, and (iii) if delivered by mail in the manner
described above to the address as provided in this Section, be deemed given upon
receipt (in each case regardless of whether such notice, request or other
communication is received by any other Person to whom a copy of such notice,
request or other communication is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice specifying
such change to the other party hereto.

                  6.02. ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.

                  6.03. EXPENSES. Except as otherwise expressly provided in
this Agreement, whether or not the transactions contemplated hereby are
consummated, each party will pay its own costs and expenses, and Seller shall
pay the costs and expenses of Sub and the Subsidiaries, incurred in connection
with the negotiation, execution and closing of this Agreement and the
transactions contemplated hereby.

                  6.04. COVENANT AGAINST INSTITUTING BANKRUPTCY PROCEEDINGS.
Seller shall not take any steps for the purpose of procuring the appointment of
any administrative receiver or the making of any administrative order or for
instituting any bankruptcy, reorganization, arrangement, insolvency, winding up,
liquidation, composition or any like proceedings under the laws of any
jurisdiction in respect of Sub, any Subsidiary or Purchaser or in respect of any
of their respective liabilities, including, without limitation, as a result of
any claim or interest of Seller.

                  6.05. WAIVER. Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.

                  6.06. AMENDMENT. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto.

                  6.07. NO THIRD PARTY BENEFICIARY. The terms and provisions
of this Agreement are intended solely for the benefit of each party hereto and
their respective successors or

                                      -15-

<PAGE>

permitted assigns, and it is not the intention of the parties to confer
third-party beneficiary rights upon any other Person other than any Person
entitled to indemnity under Article IV.

                  6.08. NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void, except for assignments and transfers by operation
of Law; provided, however, Purchaser may assign its rights hereunder to the
Security Trustee without the prior written consent of Seller. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns.

                  6.09. HEADINGS. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.

                  6.10. CONSENT TO JURISDICTION, SERVICE OF PROCESS AND
WAIVER OF JURY TRIAL. (a) Each party hereto hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York State court sitting in New York City for the
purposes of all legal proceedings arising out of or relating to this agreement
and each other operative document or the transactions contemplated hereby or
thereby. Each of Purchaser and Seller irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum. Each of Purchaser and Seller hereby irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
to it or in any other manner permitted by Applicable Law.

                  (b) To the extent permitted by Applicable Law, each of
the parties hereto hereby irrevocably waives the right to demand a trial by
jury, in any such suit, action or other proceeding arising out of this
agreement, the other operative documents, or the subject matter hereof or
thereof or the overall transaction brought by any of the parties hereto or their
successors or assigns.

                  6.11. JURISDICTION. Nothing in SECTION 6.10 limits the
right of Seller or Purchaser to bring proceedings against Purchaser or Seller in
connection with this Agreement:

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

                  (ii) concurrently in more than one jurisdiction.

                  6.12. INVALID PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future Law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, and (c) the

                                      -16-
<PAGE>

remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.

                  6.13. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York applicable to
a Contract executed and performed in such State.

                  6.14. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.

                                      -17-
<PAGE>

                  IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.

                                   LEASE INVESTMENT FLIGHT TRUST

                                   By:  Wilmington Trust Company, not in its
                                           individual capacity but solely as
                                           Owner Trustee

                                           By:  /s/ W. Chris Sponenberg
                                                ---------------------------
                                                Name:  W. Chris Sponenberg
                                                Title:  Assistant Vice President

                                   AUTOMATIC LIFT I, LP

                                   By:  Automatic LIFT GP I, LLC, as General
                                         Partner of Automatic LIFT I, LP

                                        By:  Automatic Flight Operations, LLC,
                                              as Manager of Automatic
                                                 LIFT GP I, LLC

                                             By:     /s/ Marc H. Lippman
                                                     ---------------------------
                                                     Name:  Marc H. Lippman
                                                     Title:  Manager

                                      -18-
<PAGE>

                                                                       EXHIBIT A

                          AUTOMATIC LIFT I, LP

                          General Partner's Certificate

                  Automatic Lift GP I, LLC, as general partner (the "GENERAL
PARTNER") of Automatic Lift I, LP, a Delaware limited partnership ("SELLER"),
pursuant to SECTION 1.02 of the Beneficial Interest Purchase Agreement dated as
of June 26, 2001 (the "AGREEMENT") between Lease Investment Flight Trust, a
Delaware business trust, Seller and Lift Trust-Sub 1, a Delaware business trust,
DOES HEREBY CERTIFY on behalf of Seller as follows:
                  (1) Attached hereto as Exhibit A is a true, complete and
correct copy of the Certificate of Limited Partnership of Seller as in full
force and effect on the date hereof and on file with the Secretary of State as
of the date hereof, with a certificate of good standing issued by the Secretary
of State of the State of Delaware dated within the previous five business days
of the date hereof.
                  (2) Attached hereto as Exhibit B is a true, complete and
correct copy of the Limited Partnership Agreement of Seller as in full force and
effect on the date hereof.
                  (3) Attached hereto as Exhibit C is a true, complete and
correct copy of the written authorization adopted by the General Partner of
Seller with respect to the Agreement and the transactions contemplated thereby.
Such authorization is in full force and effect on the date hereof in the form in
which adopted and the General Partner has not authorized or taken any action
inconsistent with the authorizations contained in Exhibit C.
                  (4) Each of the named individuals listed on Exhibit D
attached hereto is a duly elected or appointed, qualified and acting manager of
Automatic Flight Operations, LLC ("Operations"), the manager of the General
Partner, who holds the office of manager of

<PAGE>

Operations, each such person is authorized to execute the Agreement, and all
other documents delivered pursuant thereto, on behalf of Seller (in such
person's capacity as a manager of Operations), and the signature written
opposite the name of such person is such person's genuine signature.

                                      -2-
<PAGE>

                  IN WITNESS WHEREOF, Seller has caused this Certificate to be
executed on its behalf by the undersigned on and as of the 26th day of June,
2001.

                                    By:  AUTOMATIC LIFT GP I, LLC, as General
                                         Partner of Automatic LIFT I, LP

                                         By:  Automatic Flight Operations, LLC,
                                              as manager of Automatic LIFT GP I,
                                              LLC

                                              By: ____________________________
                                                  Name:  Marc H. Lippman
                                                  Title:  Manager

                                      - 3 -
<PAGE>

                                   Schedule 1

                  Subsidiaries of Sub; Aircraft; Leases/Lessee

<TABLE>
<CAPTION>

---------------------------------------- -------------------------------------- --------------------------------------
             Subsidiaries                              Aircraft                             Leases/Lessee
---------------------------------------- -------------------------------------- --------------------------------------
<S>                                      <C>                                    <C>
---------------------------------------- -------------------------------------- --------------------------------------

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

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

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

---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>

<PAGE>

                                   Schedule 2

                        Purchase Price Wire Instructions

Class A Contingent Collateral Account

         Provided Separately.<PAGE>

Exhibit 4.4

     THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON CONVERSION OF THIS NOTE
     HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
     THIS NOTE AND THE COMMON SHARES  ISSUABLE UPON CONVERSION OF THIS NOTE
     MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR  HYPOTHECATED  IN THE
     ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS NOTE UNDER
     SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ONE VOICE
     TECHNOLOGIES, INC., THAT SUCH REGISTRATION IS NOT REQUIRED.

                                CONVERTIBLE NOTE
                                ----------------

     FOR VALUE RECEIVED, ONE VOICE TECHNOLOGIES, INC., a Nevada corporation
(hereinafter called the "Borrower"), hereby promises to pay to LAURUS MASTER
FUND, LTD., c/o Onshore Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate
House, South Church Street, Grand Cayman, Cayman Islands, Fax: 345-949-9877 (the
"Holder") on order, without demand, the sum of Six Hundred Thousand Dollars
($600,000), with simple interest accruing at the annual rate of 8%, on September
7, 2003 (the "Maturity Date").

     The following terms shall apply to this Note:

                                    ARTICLE I

                           DEFAULT RELATED PROVISIONS

     1.1 Payment Grace Period. The Borrower shall have a ten (10) day grace
         --------------------
period to pay any monetary amounts due under this Note, after which grace period
a default interest rate of twenty percent (20%) per annum shall apply to the
amounts owed hereunder.

     1.2 Conversion Privileges. The Conversion Privileges set forth in Article
         ---------------------
II shall remain in full force and effect immediately from the date hereof and
until the Note is paid in full.

     1.3 Interest Rate. Subject to the Holder's right to convert, interest
         -------------
payable on this Note shall accrue at the annual rate of eight percent (8%) and
be payable in arrears commencing September 30, 2001 and quarterly thereafter,
and on the Maturity Date, accelerated or otherwise, when the principal and
remaining accrued but unpaid interest shall be due and payable, or sooner as
described below.

                                       1

<PAGE>

                                   ARTICLE II

                                CONVERSION RIGHTS

     The Holder shall have the right to convert the principal amount and
interest due under this Note into shares of the Borrower's Common Stock as set
forth below.

     2.1. Conversion into the Borrower's Common Stock.
          -------------------------------------------

     (a) The Holder shall have the right from and after the issuance of this
Note and then at any time until this Note is fully paid, to convert any
outstanding and unpaid principal portion of this Note, and at the Holder's
election, the interest accrued on the Note, (the date of giving of such notice
of conversion being a "Conversion Date") into fully paid and nonassessable
shares of common stock of the Borrower as such stock exists on the date of
issuance of this Note, or any shares of capital stock of the Borrower into which
such stock shall hereafter be changed or reclassified (the "Common Stock") at
the conversion price as defined in Section 2.1(b) hereof (the "Conversion
Price"), determined as provided herein. Upon delivery to the Borrower of a
Notice of Conversion as described in Section 8 of the Securities Purchase
Agreement entered into between the Borrower and certain persons who are
signatories thereto, including the Holder, relating to this Note (the "Purchase
Agreement") of the Holder's written request for conversion, the Borrower shall
issue and deliver to the Holder within four business days beginning on the day
following the date that the Company receives the Notice of Conversion that
number of shares of Common Stock for the portion of the Note converted in
accordance with the foregoing. At the election of the Holder, the Borrower will
deliver accrued but unpaid interest on the Note through the Conversion Date
directly to the Holder on or before the Delivery Date (as defined in the
Purchase Agreement). The number of shares of Common Stock to be issued upon each
conversion of this Note shall be determined by dividing that portion of the
principal of the Note to be converted and interest, if any, by the Conversion
Price.

     (b) Subject to adjustment as provided in Section 2.1(c) hereof, the
Conversion Price per share shall be the lower of (i) eighty percent (80%) of the
average of the three lowest closing prices for the Common Stock on the NASD OTC
Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System, American
Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the
time the principal trading exchange or market for the Common Stock, the
"Principal Market"), or if not then trading on a Principal Market, such other
principal market or exchange where the Common Stock is listed or traded, for the
thirty (30) trading days prior to but not including the Closing Date (as defined
in the Purchase Agreement) in connection with which this Note is issued
("Maximum Base Price"); or (ii) eighty percent (80%) of the average of the three
lowest closing prices for the Common Stock on the Principal Market, or on any
securities exchange or other securities market on which the Common Stock is then
being listed or traded, for the thirty (30) trading days prior to but not
including the Conversion Date.

     (c) The Maximum Base Price described in Section 2.1(b)(i) above and number
and kind of shares or other securities to be issued upon conversion determined
pursuant to Section 2.1(a) and 2.1(b), shall be subject to adjustment from time
to time upon the happening of certain events while this conversion right remains
outstanding, as follows:

         A. Merger, Sale of Assets, etc. If the Borrower at any time shall
            ---------------------------
consolidate with or merge into or sell or convey all or substantially all its
assets to any other corporation, this Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be deemed to evidence the
right to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of such

                                       2

<PAGE>

consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance. The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.

         B. Reclassification, etc. If the Borrower at any time shall, by
            ---------------------
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid principal portion thereof and accrued interest thereon, shall thereafter
be deemed to evidence the right to purchase an adjusted number of such
securities and kind of securities as would have been issuable as the result of
such change with respect to the Common Stock immediately prior to such
reclassification or other change.

         C. Stock Splits, Combinations and Dividends. If the shares of Common
            ----------------------------------------
Stock are subdivided or combined into a greater or smaller number of shares of
Common Stock, or if a dividend is paid on the Common Stock in shares of Common
Stock, the Conversion Price shall be proportionately reduced in case of
subdivision of shares or stock dividend or proportionately increased in the case
of combination of shares, in each such case by the ratio which the total number
of shares of Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to such
event.

         D. Share Issuance. Subject to the provisions of this Section, if the
            --------------
Borrower at any time shall issue any shares of Common Stock prior to the
conversion of the entire principal amount of the Note (otherwise than as: (i)
provided in Sections 2.1(c)A, 2.1(c)B or 2.1(c)C or this subparagraph D; or (ii)
pursuant to options, warrants, or other obligations to issue shares, outstanding
on the date hereof as set forth in the Schedules to the Purchase Agreement; ((i)
and (ii) above, are hereinafter referred to as the "Existing Option
Obligations") for a consideration less than the Conversion Price that would be
in effect at the time of such issue, then, and thereafter successively upon each
such issue, the Conversion Price shall be reduced as follows: (i) the number of
shares of Common Stock outstanding immediately prior to such issue shall be
multiplied by the Conversion Price in effect at the time of such issue and the
product shall be added to the aggregate consideration, if any, received by the
Borrower upon such issue of additional shares of Common Stock; and (ii) the sum
so obtained shall be divided by the number of shares of Common Stock outstanding
immediately after such issue. The resulting quotient shall be the adjusted
conversion price. Except for the Existing Option Obligations and options that
may be issued under any employee incentive stock option and/or any qualified
stock option plan adopted by the Borrower, or securities issued in connection
with equipment leasing financings or other related transactions, for purposes of
this adjustment, the issuance of any security of the Borrower carrying the right
to convert such security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in an adjustment to the Conversion
Price upon the issuance of shares of Common Stock upon exercise of such
conversion or purchase rights.

     (d) During the period the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note shall constitute full authority to its officers, agents,
and transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.

     2.2 Method of Conversion. This Note may be converted by the Holder in whole
         --------------------
or in part as described in Section 2.1(a) hereof and the Purchase Agreement.
Upon partial conversion of this Note, a new Note

                                       3

<PAGE>

containing the same date and provisions of this Note shall, at the request of
the Holder, be issued by the Borrower to the Holder for the principal balance of
this Note and interest which shall not have been converted or paid.

                                   ARTICLE III

                                EVENT OF DEFAULT

     The occurrence of any of the following events of default ("Event of
Default") shall, at the option of the Holder hereof, make all sums of principal
and interest then remaining unpaid hereon and all other amounts payable
hereunder immediately due and payable, except as set forth below:

     3.1 Failure to Pay Principal or Interest. The Borrower fails to pay any
         ------------------------------------
installment of principal or interest hereon or on any other promissory note
issued pursuant to the Purchase Agreement, when due and such failure continues
for a period of five (5) days after the due date.

     3.2 Breach of Covenant. The Borrower breaches any material covenant or
         ------------------
other term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of seven (7) days after written notice
to the Borrower from the Holder.

     3.3 Breach of Representations and Warranties. Any material representation
         ----------------------------------------
or warranty of the Borrower made herein or in the Purchase Agreement, shall be
false or misleading.

     3.4 Receiver or Trustee. The Borrower shall make an assignment for the
         -------------------
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.

     3.5 Judgments. Any money judgment, writ or similar final process shall be
         ---------
entered or filed against the Borrower or any of its property or other assets for
more than $50,000, and shall remain unvacated, unbonded or unstayed for a period
of forty-five (45) days.

     3.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation
         ----------
proceedings or other proceedings or relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Borrower and the
bankruptcy shall not have been stayed or discharged within 60 days.

     3.7 Delisting. Delisting of the Common Stock from the Principal Market or
         ---------
such other principal exchange on which the Common Stock is listed for trading;
the Borrower's failure to comply with the conditions for listing; or
notification that the Borrower is not in compliance with the conditions for such
continued listing, and such failure or non-compliance is not cured within 25
days.

     3.8 Concession. A concession by the Borrower, after applicable notice and
         ----------
cure periods, under any one or more obligations in an aggregate monetary amount
in excess of $50,000.

     3.9 Stop Trade. An SEC stop trade order or Principal Market trading
         ----------
suspension.

                                       4

<PAGE>

     3.10 Failure to Deliver Common Stock or Replacement Note. The Borrower's
          ---------------------------------------------------
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note and Section 8 of the Purchase Agreement, or if required a
replacement Note.

     3.11 Registration Default. The occurrence of a Non-Registration Event as
          --------------------
described in Section 9.4 of the Purchase Agreement and such event shall be
continuing for a period of 15 days.

     3.12 Approval Default. The occurrence of an Approval Default as described
          ----------------
in Section 8.7 of the Purchase Agreement.

                                   ARTICLE IV

                                  MISCELLANEOUS

     4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of
         --------------------------------
the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

     4.2 Notices. Any notice herein required or permitted to be given shall be
         -------
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party notified, (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
Borrower at the address as set forth on the signature page to the Purchase
Agreement executed in connection herewith and to the Holder at the address set
forth on the signature page to the Purchase Agreement for such Holder, with a
copy to Daniel M. Laifer, Esq. 135 West 50th Street, Suite 1700, New York, New
York 10020, facsimile number (212) 541-4434, or at such other address as the
Borrower or the Holder may designate by ten days advance written notice to the
other parties hereto. A Notice of Conversion shall be deemed given when made to
the Borrower pursuant to the Purchase Agreement.

     4.3 Amendment Provision. The term "Note" and all reference thereto, as used
         -------------------
throughout this instrument, shall mean this instrument as originally executed,
or if later amended or supplemented, then as so amended or supplemented.

     4.4 Assignability. This Note shall be binding upon the Borrower and its
         -------------
successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder.

     4.5 Cost of Collection. If default is made in the payment of this Note, the
         ------------------
Borrower shall pay the Holder hereof reasonable costs of collection, including
reasonable attorneys' fees.

     4.6 Governing Law. This Note shall be governed by and construed in
         -------------
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York

                                       5

<PAGE>

or in the federal courts located in the state of New York. Both parties and the
individual signing this Note on behalf of the Borrower agree to submit to the
jurisdiction of such courts. The prevailing party shall be entitled to recover
from the other party its reasonable attorney's fees and costs. In the event that
any provision of this Note is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or unenforceability of
any other provision of this Note.

     4.7 Maximum Payments. Nothing contained herein shall be deemed to establish
         ----------------
or require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

     4.8 Prepayment. This Note may not be paid (in whole or in part) prior to
         ----------
the Maturity Date without the consent of the Holder.

     4.9 Construction. Each party acknowledges that its legal counsel
         ------------
participated in the preparation of this Note and, therefore, stipulates that the
rule of construction that ambiguities are to be resolved against the drafting
party shall not be applied in the interpretation of this Note to favor any party
against the other.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

                                       6

<PAGE>

     IN WITNESS WHEREOF, the Borrower has caused this Note to be signed in its
name by its Chief Executive Officer on this 7th day of September, 2001.

                                         ONE VOICE TECHNOLOGIES, INC.

                                         By:________________________________

WITNESS:

____________________________________

                                       7

<PAGE>

                              NOTICE OF CONVERSION
                              --------------------

(To be executed by the Holder in order to convert the Note)

     The undersigned hereby elects to convert $_________ of the principal and
$_________ of the interest due on the Note issued by ONE VOICE TECHNOLOGIES,
INC. on September 7, 2001 into Shares of Common Stock of ONE VOICE TECHNOLOGIES,
INC. (the "Borrower") according to the conditions set forth in such Note, as of
the date written below.

Date of Conversion:_____________________________________________________________

Conversion Price:_______________________________________________________________

Shares To Be Delivered:_________________________________________________________

Signature:______________________________________________________________________

Print Name:_____________________________________________________________________

Address:________________________________________________________________________

        ________________________________________________________________________

Exhibit 4.5

THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO ONE VOICE TECHNOLOGIES, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.

                  Right to Purchase 100,0000 Shares of Common Stock of ONE VOICE
                  TECHNOLOGIES, INC. (subject to adjustment as provided herein)

                          COMMON STOCK PURCHASE WARRANT

No. 2001-1                                        Issue Date:  September 7, 2001

     ONE VOICE TECHNOLOGIES, INC., a corporation organized under the laws of the
State of Nevada (the

                                       8

<PAGE>

"Company"), hereby certifies that, for value received, LAURUS MASTER FUND, LTD.,
or assigns (the "Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company from and after the Issue Date of this Warrant and at
any time or from time to time before 5:00 p.m., New York time, through five (5)
years after such date (the "Expiration Date"), up to 100,000 fully paid and
nonassessable shares of Common Stock (as hereinafter defined), $.001 par value
per share, of the Company, at a purchase price of the lesser of (i) $.82 per
share or (ii) 120% of the average of the three lowest closing prices of the
Common Stock as reported by Bloomberg Financial for the Principal Market (as
defined in the Purchase Agreement hereinafter referred to) for the ten trading
days immediately preceding the date of the exercise of this Warrant (such
purchase price per share as adjusted from time to time as herein provided is
referred to herein as the "Purchase Price"). The number and character of such
shares of Common Stock and the Purchase Price are subject to adjustment as
provided herein.

     As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:

     (a) The term "Company" shall include ONE VOICE TECHNOLOGIES, INC. and any
corporation which shall succeed or assume the obligations of ONE VOICE
TECHNOLOGIES, INC. hereunder.

     (b) The term "Common Stock" includes (a) the Company's Common Stock, $.001
par value per share, as authorized on the date of the Securities Purchase
Agreement referred to in Section 9 hereof, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on or after
such date, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even if the right so to vote has been suspended by the
happening of such a contingency) and (c) any other securities into which or for
which any of the securities described in (a) or (b) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.

     (c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

     1. Exercise of Warrant.
        -------------------

         1.1. Number of Shares Issuable upon Exercise. From and after the date
              ---------------------------------------
hereof through and including the Expiration Date, the holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 4.

         1.2. Full Exercise. This Warrant may be exercised in full by the holder
              -------------
hereof by delivery of an original or fax copy of the form of subscription
attached as Exhibit A hereto (the "Subscription Form") duly executed by such
Holder, to the Company at its principal office or at the office of its warrant
agent (as provided hereinafter), accompanied by payment, in cash, wire transfer,
or by certified or official bank check payable to the order of the Company, in
the amount obtained by multiplying the number of shares of Common Stock for
which this Warrant is then exercisable by the Purchase Price (as hereinafter
defined) then in effect.

         1.3. Partial Exercise. This Warrant may be exercised in part (but not
              ----------------
for a fractional share) by surrender of this Warrant in the manner and at the
place provided in subsection 1.2 except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying (a) the number
of shares of Common Stock designated by the holder in the Subscription Form by
(b) the Purchase Price then in effect. On any such partial exercise, the
Company, at its expense, will forthwith issue and deliver to or upon the order
of the holder hereof a new Warrant of like tenor, in the name of the holder
hereof or as such holder (upon payment by such holder of any applicable transfer
taxes) may request, the number of shares of Common Stock for which such Warrant
may still be exercised.

                                       9

<PAGE>

         1.4. Fair Market Value. Fair Market Value of a share of Common Stock as
              -----------------
of a particular date (the "Determination Date") shall mean the Fair Market Value
of a share of the Company's Common Stock. Fair Market Value of a share of Common
Stock as of a Determination Date shall mean:

             (a) If the Company's Common Stock is traded on an exchange or is
quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System or the NASDAQ SmallCap Market, then
the closing or last sale price, respectively, reported for the last business day
immediately preceding the Determination Date.

             (b) If the Company's Common Stock is not traded on an exchange or
on the NASDAQ National Market System or the NASDAQ SmallCap Market but is traded
on the NASD OTC Bulletin Board, then the mean of the closing bid and asked
prices reported for the last business day immediately preceding the
Determination Date.

             (c) Except as provided in clause (d) below, if the Company's Common
Stock is not publicly traded, then as the Holder and the Company agree or in the
absence of agreement by arbitration in accordance with the rules then standing
of the American Arbitration Association, before a single arbitrator to be chosen
from a panel of persons qualified by education and training to pass on the
matter to be decided.

             (d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company's charter, then all amounts to be payable
per share to holders of the Common Stock pursuant to the charter in the event of
such liquidation, dissolution or winding up, plus all other amounts to be
payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are outstanding
at the Determination Date.

         1.5. Company Acknowledgment. The Company will, at the time of the
              ----------------------
exercise of the Warrant, upon the request of the holder hereof acknowledge in
writing its continuing obligation to afford to such holder any rights to which
such holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such holder any such rights.

         1.6. Trustee for Warrant Holders. In the event that a bank or trust
              ---------------------------
company shall have been appointed as trustee for the holders of the Warrants
pursuant to Subsection 3.2, such bank or trust company shall have all the powers
and duties of a warrant agent (as hereinafter described) and shall accept, in
its own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

     2.1 Delivery of Stock Certificates, etc. on Exercise. The Company agrees
         ------------------------------------------------
that the shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within 7 days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct in compliance with
applicable Securities Laws, a certificate or certificates for the number of duly
and validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such holder shall be entitled on such exercise, plus,
in lieu of any fractional share to which such holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share, together with any other stock or other securities and
property (including cash, where applicable) to which such holder is entitled
upon such exercise pursuant to Section 1 or otherwise.

     2.2. Cashless Exercise.
          -----------------

                                       10

<PAGE>

         (a) Payment may be made either in (i) cash or by certified or official
bank check payable to the order of the Company equal to the applicable aggregate
Purchase Price, or (ii) by delivery of Warrants, Common Stock and/or Common
Stock receivable upon exercise of the Warrants in accordance with Section (b)
below, for the number of Common Shares specified in such form (as such exercise
number shall be adjusted to reflect any adjustment in the total number of shares
of Common Stock issuable to the holder per the terms of this Warrant) and the
holder shall thereupon be entitled to receive the number of duly authorized,
validly issued, fully-paid and non-assessable shares of Common Stock (or Other
Securities) determined as provided herein.

         (b) Notwithstanding any provisions herein to the contrary, if the Fair
Market Value of one share of Common Stock is greater than the Purchase Price (at
the date of calculation as set forth below), in lieu of exercising this Warrant
for cash, upon consent of the Company, the holder may elect to receive shares
equal to the value (as determined below) of this Warrant (or the portion thereof
being cancelled) by surrender of this Warrant at the principal office of the
Company together with the properly endorsed Subscription Form in which event the
Company shall issue to the holder a number of shares of Common Stock computed
using the following formula:

                           X=Y (A-B)
                                ---                              A
                                                  ----------------

                  Where    X=       the number of shares of Common Stock to be
                                    issued to the holder

                           Y=       the number of shares of Common Stock
                                    purchasable under the Warrant or, if only a
                                    portion of the Warrant is being exercised,
                                    the portion of the Warrant being exercised
                                    (at the date of such calculation)

                           A=       the Fair Market Value of one share of the
                                    Company's  Common Stock (at the date of
                                    such calculation)

                           B=       Purchase Price (as adjusted to the date of
                                    such calculation)

     3. Adjustment for Reorganization, Consolidation, Merger, etc.
        ---------------------------------------------------------

         3.1. Reorganization, Consolidation, Merger, etc. In case at any time or
              ------------------------------------------
from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.

         3.2. Dissolution. In the event of any dissolution of the Company
              -----------
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the effective date
of such dissolution pursuant to this Section 3 to a bank or trust company having
its principal office in New York, NY, as trustee for the holder or holders of
the Warrants.

         3.3. Continuation of Terms. Upon any reorganization, consolidation,
              ---------------------
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities,

                                       11

<PAGE>

including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
in Section 4. In the event this Warrant does not continue in full force and
effect after the consummation of the transaction described in this Section 3,
then only in such event will the Company's securities and property (including
cash, where applicable) receivable by the holders of the Warrants be delivered
to the Trustee as contemplated by Section 3.2.

         3.4. Share Issuance. Except for the Excepted Issuances as described in
              --------------
Section 10 of the Purchase Agreement, if the Company at any time shall issue any
shares of Common Stock prior to the complete exercise of this Warrant for a
consideration less than the Purchase Price that would be in effect at the time
of such issue, then, and thereafter successively upon each such issue, the
Purchase Price shall be reduced as follows: (i) the number of shares of Common
Stock outstanding immediately prior to such issue shall be multiplied by the
Purchase Price in effect at the time of such issue and the product shall be
added to the aggregate consideration, if any, received by the Company upon such
issue of additional shares of Common Stock; and (ii) the sum so obtained shall
be divided by the number of shares of Common Stock outstanding immediately after
such issue. The resulting quotient shall be the adjusted Purchase Price. For
purposes of this adjustment, the issuance of any security of the Company
carrying the right to convert such security into shares of Common Stock or of
any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Purchase Price upon the issuance of shares of Common Stock
upon exercise of such conversion or purchase rights.

     4. Extraordinary Events Regarding Common Stock. In the event that the
        -------------------------------------------
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be increased to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the numerator
is the Purchase Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.

     5. Certificate as to Adjustments. In each case of any adjustment or
        -----------------------------
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the holder of the Warrant and any
Warrant agent of the Company (appointed pursuant to Section 11 hereof).

     6. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
        -------------------------
Statements. The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of the Warrants, all shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of the
Warrant. This Warrant entitles the holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.

     7. Assignment; Exchange of Warrant. Subject to compliance with applicable
        -------------------------------
Securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a "Transferor") with respect to any
or all of the Shares. On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of

                                       12

<PAGE>

Exhibit B attached hereto (the "Transferor Endorsement Form") and together with
evidence reasonably satisfactory to the Company demonstrating compliance with
applicable Securities Laws, the Company at its expense but with payment by the
Transferor of any applicable transfer taxes) will issue and deliver to or on the
order of the Transferor thereof a new Warrant or Warrants of like tenor, in the
name of the Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a "Transferee"), calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant so surrendered by the Transferor.

     8. Replacement of Warrant. On receipt of evidence reasonably satisfactory
        ----------------------
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

     9. Registration Rights. The Holder of this Warrant has been granted certain
        -------------------
registration rights by the Company. These registration rights are set forth in a
Securities Purchase Agreement entered into by the Company and Purchaser of the
Company's 8% Convertible Notes (the "Notes") at or prior to the issue date of
this Warrant. Upon the occurrence of a Non-Registration Event as described in
the Securities Purchase Agreement, in the event the Company is unable to issue
Common Stock upon exercise of this Warrant that has been registered in the
Registration Statement described in Section 9.1(d) of the Securities Purchase
Agreement, within the time periods described in the Securities Purchase
Agreement, which Registration Statement must be effective throughout the
exercise period of this Warrant, then upon written demand made by the Holder,
the Company will pay to the Holder of this Warrant, in lieu of delivering Common
Stock, a sum equal to the closing price of the Company's Common Stock on the
Principal Market (as defined in the Securities Purchase Agreement) or such other
principal trading market for the Company's Common Stock on the trading date
immediately preceding the date notice is given by the Holder, less the Purchase
Price, for each share of Common Stock designated in such notice from the Holder.

     10. Maximum Exercise. The Holder shall not be entitled to exercise this
         ----------------
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this proviso is being made on
an exercise date, which would result in beneficial ownership by the Holder and
its affiliates of more than 4.99% of the outstanding shares of Common Stock of
the Company on such date. For the purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to
aggregate exercises which would result in the issuance of more than 4.99%. The
restriction described in this paragraph may be revoked upon 75 days prior notice
from the Holder to the Company or upon an Event of Default under the Notes. The
Holder may allocate which of the equity of the Company deemed beneficially owned
by the Subscriber shall be included in the 4.99% amount described above and
which shall be allocated to the excess above 4.99%.

     11. Warrant Agent. The Company may, by written notice to the each holder of
         -------------
the Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.

     12. Transfer on the Company's Books. Until this Warrant is transferred on
         -------------------------------
the books of the Company, the Company may treat the registered holder hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

     13. Notices, etc. All notices and other communications from the Company to
         ------------
the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder or, until any such holder furnishes to the
Company an address, then to, and at the address of, the last holder of this
Warrant who has so furnished an address to the Company.

                                       13

<PAGE>

     14. Voluntary Adjustment by the Company. The company may at any time during
         -----------------------------------
the term of this Warrant reduce the then current Purchase Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.

     15. Miscellaneous. This Warrant and any term hereof may be changed, waived,
         -------------
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be governed by and construed in accordance with the
laws of State of New York without regard to principles of conflicts of laws. Any
action brought concerning the transactions contemplated by this Warrant shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. The individuals executing this Warrant on behalf of the
Company agree to submit to the jurisdiction of such courts and waive trial by
jury. The prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Warrant. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision. The Company acknowledges
that legal counsel participated in the preparation of this Warrant and,
therefore, stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the interpretation
of this Warrant to favor any party against the other party.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

                                       14

<PAGE>

     IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of
the date first written above.

                                      ONE VOICE TECHNOLOGIES, INC.

                                      By:_____________________________________

Witness:

_________________________________

                                       15

<PAGE>

                                                                       Exhibit A

                              FORM OF SUBSCRIPTION
                   (To be signed only on exercise of Warrant)

TO:  ONE VOICE TECHNOLOGIES, INC.

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):

___      ________ shares of the Common Stock covered by such Warrant; or

___      the maximum number of shares of Common Stock covered by such Warrant
pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):

___      $__________ in lawful money of the United States; and/or

___      the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock (using a Fair Market
Value of $_______ per share for purposes of this calculation); and/or

___      the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 2, to exercise
this Warrant with respect to the maximum number of shares of Common Stock
purchaseable pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to ____________________ whose address is ________________
______________________________________

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the "Securities Act") or pursuant to an exemption from
registration under the Securities Act.

Dated:___________________                _______________________________________
                                         (Signature  must  conform to name of
                                         holder as  specified  on the face of
                                         the Warrant)

                                         _______________________________________
                                         (Address)

                                       16

<PAGE>

                                                                       Exhibit B

                         FORM OF TRANSFEROR ENDORSEMENT
                   (To be signed only on transfer of Warrant)

     For value received, the undersigned hereby sells, assigns, and transfers
unto the person(s) named below under the heading "Transferees" the right
represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of ONE VOICE TECHNOLOGIES, INC. to which the within
Warrant relates specified under the headings "Percentage Transferred" and
"Number Transferred," respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the books
of ONE VOICE TECHNOLOGIES, INC. with full power of substitution in the premises.

================================================================================
                                   Percentage                     Number
       Transferees                 Transferred                 Transferred
       -----------                 -----------                 -----------
--------------------------------------------------------------------------------

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

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

================================================================================

Dated:                  ,
       -----------------  ------        ----------------------------------------
                                        (Signature  must  conform to name of
                                        holder as  specified  on the face of the
                                        warrant)

Signed in the presence of:

-------------------------------         ----------------------------------------
         (Name)                                (address)

                                        ----------------------------------------
ACCEPTED AND AGREED:                           (address)
[TRANSFEREE]

-------------------------------
         (Name)

                                       17

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