Document:

EXHIBIT 10.7.2

                         AMENDMENT AGREEMENT (MSN 32838)

                           Dated as of August 1, 2003

                                     Between

                     TUOLUMNE RIVER AIRCRAFT FINANCE, INC.,
                                    as Lessor

                                       and

                                ATLAS AIR, INC.,
                                    as Lessee

                                  in respect of

                           LEASE AGREEMENT (MSN 32838)

                            Dated as of July 16, 2002

                                  Pertaining to

                          One Boeing 747-47UF Aircraft
                     Manufacturer's Serial Number 32838 and
                    United States Registration Number N416MC

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                                TABLE OF CONTENTS

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SECTION 1.    DEFINITIONS ......................................................    1

    (a)     Definitions as per Lease ...........................................    1

    (b)     Additional Definitions .............................................    1

SECTION 2.    WAIVERS AND RELEASES; ACKNOWLEDGEMENTS AND AGREEMENTS ............    4

    (a)     [Reserved] .........................................................    4

    (b)     Lessor Accommodations ..............................................    4

    (c)     Section 1110 Stipulation ...........................................    5

    (d)     Lessee Party Release ...............................................    7

    (e)     Expenses ...........................................................    7

    (f)     Restructuring Guaranties ...........................................    8

    (g)     Most Favored Nation Treatment ......................................    8

SECTION 3.    AMENDMENT OF THE LEASE ...........................................    9

    (a)     Amendment of Section 3(b) ..........................................    9

    (b)     Amendment of Section 3(c) ..........................................   10

    (c)     Amendment of Section 3(g) ..........................................   10

    (d)     Amendment of Section 7(a)(1) .......................................   11

    (e)     Amendment of Section 7(c) ..........................................   13

    (f)     Amendment of Section 9 .............................................   13

    (g)     Amendment of Section 14 ............................................   15

    (h)     Amendment of Section 15(c) .........................................   16

    (i)     Amendment of Section 15(d) .........................................   17

    (j)     Amendment of Section 17 ............................................   17

    (k)     Amendment of Section 18 ............................................   17

    (l)     Amendment of Section 19 ............................................   17

    (m)     Amendment of Section 20 ............................................   18

    (n)     Amendment of Section 28 ............................................   18

    (o)     Amendment of Section 29 ............................................   18

    (P)     Amendment of Exhibit B-1 ...........................................   18

    (q)     Amendment of Exhibits B-2 and B-3 ..................................   19
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                                TABLE OF CONTENTS
                                   (continued)

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    (r)      Amendment of Exhibit C ............................................   19

    (s)      Amendments to Annex A .............................................   19

SECTION 4.     EFFECTIVE DATE AND CONDITIONS PRECEDENT .........................   23

    (a)      Effective Date and Conditions Precedent ...........................   23

    (b)      Waiver or Deferral of Conditions Precedent ........................   24

    (c)      Delivery by Telecopy ..............................................   24

SECTION 5.     REPRESENTATIONS AND WARRANTIES ..................................   24

    (a)      Lessee Representations and Warranties .............................   24

    (b)      Lessor Representations and Warranties .............................   26

SECTION 6.     EFFECT OF THIS AGREEMENT; CERTAIN TAX TREATMENT .................   27

SECTION 7.     TERM SHEET SUPERSEDED; OTHER TERM SHEET MATTERS .................   27

SECTION 8.     RESERVATION OF RIGHTS ...........................................   28

SECTION 9.     FURTHER ASSURANCES ..............................................   28

SECTION 10.    TIME OF THE ESSENCE; INTEREST AT PAST DUE RATE ..................   28

SECTION 11.    SURVIVAL ........................................................   28

SECTION 12.    JURISDICTION ....................................................   29

SECTION 13.    MISCELLANEOUS ...................................................   29

SECTION 14.    DATING AND EFFECTIVENESS ........................................   29
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                         AMENDMENT AGREEMENT (MSN 32838)

            This AMENDMENT AGREEMENT (MSN 32838) (this "AGREEMENT"), dated as
of August 1, 2003, between TUOLUMNE RIVER AIRCRAFT FINANCE, INC., a corporation
organized and existing pursuant to the laws of the State of Delaware ("LESSOR"),
and ATLAS AIR, INC., a corporation organized and existing pursuant to the laws
of the State of Delaware ("LESSEE").

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

            WHEREAS, Lessor and Lessee are parties to the Lease (such term and
all other capitalized terms used in these recitals but not defined in these
recitals having the meaning ascribed in Section 1 hereof), under and pursuant to
which Lessor leased to Lessee, and Lessee leased from Lessor, the aircraft and
the engines described therein (the Lease and such aircraft and engines being
described on ANNEX I attached hereto);

            WHEREAS, Lessor (and certain of its Affiliates) and Lessee are
parties to the Term Sheet, under and pursuant to which, and subject to the
satisfaction of the conditions precedent set forth in which, Lessor and Lessee
(among other things) amended certain provisions of the Lease (the "LEASE
AMENDMENTS"); and

            WHEREAS, pursuant to, and as contemplated by, the Term Sheet, Lessor
and Lessee are entering into this Agreement for purposes of setting forth the
agreement of Lessor and Lessee with respect to the Lease Amendments (in greater
specificity than is set forth in the Term Sheet).

            NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lessor and Lessee agree as follows:

      SECTION 1. DEFINITIONS.

            (a) DEFINITIONS AS PER LEASE. Unless otherwise specifically defined
herein, all capitalized terms used herein have the meanings stated in the Lease
(as amended hereby).

            (b) ADDITIONAL DEFINITIONS. The following terms have the following
meanings (such meanings to be equally applicable to both the singular and the
plural forms of the terms defined):

            "ADDITIONAL LEASE RESTRUCTURING AMENDMENT" means the Amendment
Agreement, dated as of August 1,2003, between Serviced Lessor and Polar.

            "AGREEMENT" has the meaning specified for such term in the preamble
to this Agreement.

            "AIRCRAFT AND RELATED MATERIALS" has the meaning specified for such
term in Section 2(c)(ii) of this Agreement.

<PAGE>

            "ATLAS HOLDINGS" means Atlas Air Worldwide Holdings, Inc., a
Delaware corporation.

            "BANKRUPTCY CODE" means Title 11 of the United States Code, as
amended (or any successor statute thereto).

            "COMMON STOCK" means shares now or hereafter authorized of any class
or series of the common stock of Atlas Holdings, any stock into which such
shares of common stock shall have been changed or converted or any stock
resulting from any capital reorganization or reclassification of such common
stock, and any other stock of any class of Atlas Holdings, however designated,
the holders of which have the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of Atlas Holdings without limit as to amount.

            "EFFECTIVE DATE" means NOVEMBER 18, 2003.

            "FILING DATE" has the meaning specified for such term in Section
2(c)(ii) of this Agreement.

            "FORBEARANCE DEFAULT" has the meaning specified for such term in
Section 2(c)(ii) of this Agreement.

            "FORBEARANCE PERIOD" has the meaning specified for such term in
Section 2(c)(ii) of this Agreement.

            "GECAS" means GE Capital Aviation Services, Inc., an Affiliate of
Lessor.

            "GOVERNMENTAL ENTITY" means and includes: (i) any national
government, political subdivision thereof, or local jurisdiction therein; (ii)
any board, commission, department, division, organ, instrumentality, court, or
agency of any thereof, however constituted; and (iii) any association,
organization, or institution of which any entity described in clause (i) or (ii)
above is a member or to whose jurisdiction any such entity is subject or in
whose activities any such entity is a participant.

            "LEASE" means the Lease Agreement (MSN 32838), dated as of July 16,
2002, between Lessor and Lessee; PROVIDED, HOWEVER, that as used in any
provision of this Agreement, other than any provision contained in Section 3 or
6 hereof, "LEASE" means the Lease, as amended hereby.

            "LEASE ASSUMPTION" has the meaning specified for such term in
Section 2(c)(ii) of this Agreement.

            "LESSEE PARTIES" means Lessee, Polar and Atlas Holdings.

            "LESSEE PARTY ACKNOWLEDGEMENT AND AGREEMENT" means, with respect to
each Lessee Party other than Lessee, an Acknowledgement and Agreement of such
Lessee Party in the form of Schedule II attached hereto or Schedule III attached
hereto, as applicable.

                                      -2-

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            "LESSOR ACCOMMODATIONS" has the meaning specified for such term in
Section 2(b) of this Agreement.

            "MATERIAL ADVERSE CHANGE" means, with respect to any Person, any
event, condition or circumstance that materially and adversely affects such
Person's business, operations or consolidated financial condition, or such
Person's ability to observe or perform its obligations, liabilities and
agreements under this Agreement, the Lease or the Tax Indemnity Agreement.

            "OTHER CREDITOR" means a creditor (other than GECC, Lessor or any
other Affiliate of GECC) of, or an Other Lessor to, any Lessee Party.

            "OTHER LESSOR" means a lessor or sublessor of aircraft (other than
GECC, Lessor or any other Affiliate of GECC) to any Lessee Party.

            "OTHER LESSOR RESTRUCTURING" has the meaning specified for such term
in Section 2(g) of this Agreement.

            "OTHER TERM SHEET" means the Binding Term Sheet for Lease
Restructure, dated as of April 11, 2003, among Polar, Atlas Holdings and GECAS,
acting on behalf of certain Affiliates of Lessor, as lessors under certain of
the Other Aircraft Leases.

            "PLAN" means a plan of reorganization in a Chapter 11 Case with
respect to any or all of Lessee Parties.

            "PLAN EFFECTIVE DATE" has the meaning specified for such term in
Section 2(f) of this Agreement.

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

            "RELEASED PARTY" has the meaning specified for such term in Section
2(d) of this Agreement.

            "RESTRUCTURING PROGRAM" means the program of Lessee Parties for the
restructuring of their indebtedness and other obligations (including, without
limitation, obligations as lessee or sublessee of aircraft and engines),
regardless of whether such restructuring occurs before, during or after the
commencement of a Chapter 11 Case with respect to a Lessee Party and/or is
effected, in whole or in part, pursuant to a Plan.

            "SECTION 1110 STIPULATION" has the meaning specified for such term
in Section 2(c)(i) of this Agreement.

            "SERVICED LESSOR" means AeroUSA, Inc., a Connecticut corporation.

            "TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated
as of July 16, 2002, between Lessor and Lessee, in respect of the Aircraft;
PROVIDED, HOWEVER, that as used in any provision of this Agreement, other than
Section 3 or 6 hereof, "TAX INDEMNITY

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AGREEMENT" means the Tax Indemnity Agreement, as amended by the Tax Indemnity
Agreement Amendment.

            "TAX INDEMNITY AGREEMENT AMENDMENT" means an Amendment No. 1 to the
Tax Indemnity Agreement, in the form attached hereto as Schedule I.

            "TERM SHEET" means the Binding Term Sheet for Lease Restructure,
dated as of April 11, 2003, among Lessee, Atlas Holdings and GECAS, acting on
behalf of Lessor, as lessor under the Lease, and on behalf of certain Affiliates
of Lessor, as lessors under certain of the Other Aircraft Leases.

      SECTION 2. WAIVERS AND RELEASES; ACKNOWLEDGEMENTS AND AGREEMENTS.

            (a) [Reserved].

            (b) LESSOR ACCOMMODATIONS. Lessee acknowledges and agrees that:

                  (i) Lessee failed to pay when due an installment of Basic Rent
      under and as defined in the Other Aircraft Lease to which Lessee is a
      party; and, under and pursuant to, and subject to the terms, provisions
      and conditions of, the Term Sheet and the Other Restructuring Lease
      Amendment pertaining to such Other Aircraft Lease, the Affiliate of Lessor
      that is the lessor under such Other Aircraft Lease, waived such payment
      default under such Other Aircraft Lease and agreed to certain rental
      restructuring; and Lessee has received and will receive considerable
      benefit from such waiver, rental restructuring and forbearances from
      exercise of remedies;

                  (ii) Polar failed to pay when due an installment of Basic Rent
      under and as defined in each Other Aircraft Lease to which Polar is a
      party; and, under and pursuant to, and subject to the terms, provisions
      and conditions of, the Other Term Sheet and the Other Restructuring Lease
      Amendment pertaining to each such Other Aircraft Lease, the Affiliate of
      Lessor that is the lessor or sublessor under such Other Aircraft Lease,
      waived such payment default under such Other Aircraft Lease and granted
      certain rental deferrals or restructurings and forbearances from exercise
      of remedies (including, without limitation, termination of such Other
      Aircraft Lease and repossession of the aircraft leased pursuant thereto);
      and, because Lessee and Polar are Subsidiaries of Atlas Holdings and
      integral parts of a business enterprise controlled by Atlas Holdings,
      Lessee has received and will receive considerable benefit from such
      waivers, rent deferrals and forbearances from exercise of remedies (the
      rental deferrals and forbearances from exercise of remedies referred to in
      clause (i) above and in this clause (ii) of this Section 2(b) being,
      collectively, the "LESSOR ACCOMMODATIONS");

                  (iii) terms and provisions of this Agreement and the Tax
      Indemnity Agreement Amendment (including, without limitation, those
      pertaining to the right of Lessor to terminate the Lease upon the
      occurrence of a Non-Assumption Event) are in consideration of the Lessor
      Accommodations; and

                                      -4-

<PAGE>

                  (iv) Lessor and its Affiliates have acted to their detriment
      in making the Lessor Accommodations (in lieu of terminating the Other
      Aircraft Leases to which they are parties and repossessing the aircraft
      thereunder).

            (c) SECTION 1110 STIPULATION.

                  (i) In the event of the commencement with respect to Lessee of
      a Chapter 11 Case, (a) Lessee and Lessor shall execute and deliver a
      stipulation and agreement pursuant to Section 1110(b) of the Bankruptcy
      Code with respect to the Lease containing the provisions described in
      Section 2(c)(ii) and otherwise acceptable in form and substance to Lessor
      (the "SECTION 1110 STIPULATION"), (b) Lessee shall file the Section 1110
      Stipulation concurrently with the "first day pleadings" in such Chapter 11
      Case, and (c) Lessee shall cause the Section 1110 Stipulation to be
      entered and approved pursuant to written order of the bankruptcy court
      promptly after the Section 1110 Stipulation is filed with the bankruptcy
      court.

                  (ii) The Section 1110 Stipulation shall provide that:

                        (A) Lessor is entitled to the benefits of Section 1110
            of the Bankruptcy Code with respect to the Aircraft and the Lease;

                        (B) Subject to the terms, conditions and provisions of
            the Section 1110 Stipulation, and pursuant to Section 1110(b) of the
            Bankruptcy Code, Lessor shall forbear from exercising its rights
            under Section 1110 of the Bankruptcy Code during the period (the
            "FORBEARANCE PERIOD") from the date of filing of the petition
            commencing the Chapter 11 Case with respect to Lessee (the "FILING
            DATE") until the earliest to occur of the following: (I) the date
            which is 180 days after the Filing Date; (II) confirmation of a plan
            of re-organization with respect to Lessee providing for the
            assumption by Lessee of the Lease pursuant to Sections 1123(b)(2)
            and 365 of the Bankruptcy Code or entry by the bankruptcy court of a
            separate order providing for such assumption pursuant to Section 365
            of the Bankruptcy Code (referred to herein as "LEASE ASSUMPTION");
            and (III) the occurrence of a "Forbearance Default" (as such term is
            hereinafter defined).

                        (C) During the Forbearance Period, Lessee shall perform,
            observe and comply with all of the terms, conditions and provisions
            of the Lease.

                        (D) Upon termination of the Forbearance Period (if the
            Forbearance Period terminates for any reason other than the
            occurrence of a Forbearance Default or the occurrence of Lease
            Assumption) or on the second Business Day next following the
            termination of the Forbearance Period (if the Forbearance Period
            terminates by reason of the occurrence of a Forbearance Default),
            Lessee shall, at Lessee's cost and expense, (I) return to Lessor, at
            a location designated by Lessor, the Airframe, with the Engines then
            installed thereon, and with all parts, equipment, components,
            systems, logs, manuals, records and documents (in the nature of
            "Aircraft Documents" as defined in the Lease Agreement Enumerating
            Aircraft Documents (as such term is defined in the

                                       -5-

<PAGE>

            Restructuring Letter Agreement)) relating to, or forming part of,
            the Airframe and/or the Engines (collectively the "AIRCRAFT AND
            RELATED MATERIALS"), as the Aircraft and Related Materials are
            required to be returned to Lessor at expiration or termination of
            the Lease, and (II) from time to time upon request of Lessor,
            cooperate reasonably with Lessor or its representative to provide
            such information with respect to any or all of the Aircraft and
            Related Materials as may be requisite for Lessor (Y) to perform any
            applicable governmental filings or to obtain any applicable
            governmental certification or registration pertaining to any or all
            of the Aircraft and Related Materials, or (Z) to cause the Aircraft
            to be in condition for operation, re-lease or sale by Lessor. Upon
            termination of the Forbearance Period (if the Forbearance Period
            terminates for any reason other than the occurrence of Lease
            Assumption), the Lease shall be deemed rejected.

                        (E) As used in the Section 1110 Stipulation,
            "FORBEARANCE DEFAULT" shall mean any one or more of the following:
            (I) an Event of Default under and as defined in the Lease; (II)
            termination of the Lease pursuant to Section 9(e) thereof (by reason
            of a Non-Assumption Event); (III) breach by Lessee of any of its
            covenants contained in the Section 1110 Stipulation; (IV) the
            appointment in the Chapter 11 Case of a trustee or the appointment
            of an examiner with expanded powers (beyond those set forth in
            Sections 1106(a)(3) and (4) of the Bankruptcy Code) under Section
            1106(b) of the Bankruptcy Code, but only if such expanded powers
            include that such examiner takes the place of and assumes the full
            responsibilities and duties of Lessee's management and its board of
            directors or the conversion of the Chapter 11 Case to a case under
            Chapter 7 of the Bankruptcy Code; (V) cessation or material
            curtailment by Lessee of its operations; (VI) rejection of the Lease
            or abandonment of the Aircraft by Lessee; or (VII) acceleration of
            any or all of the indebtedness incurred by Lessee (and/or any other
            Lessee Party) as part of its (and/or their) receipt of debtor in
            possession financing.

                        (F) All Basic Rent and all Supplemental Rent due and
            payable under the Lease at or after the Filing Date (less any
            payments thereof made by Lessee after the Filing Date) shall be
            allowed as an administrative expense pursuant to Sections
            503(b)(l)(A) and 507(a)(1) of the Bankruptcy Code; PROVIDED,
            HOWEVER, that there shall not be allowed as an administrative
            expense (I) any damages payable by reason or in respect of the
            rejection or other termination of the Lease or the exercise by
            Lessor of remedies with respect to the rejection or other
            termination of the Lease or the occurrence of any Event of Default
            under and as defined in the Lease, or (II) any amounts payable by
            Lessee pursuant to Exhibit B to the Lease in respect of the failure
            of the Aircraft to meet the minimum hour and cycle requirements
            specified in Exhibit B to the Lease upon return of the Aircraft to
            Lessor.

                        (G) Except as specifically provided in the Section 1110
            Stipulation, the Section 1110 Stipulation shall not affect, modify
            or waive any term, provision or condition of the Lease or applicable
            Law, including, without limitation, Section 1110 of the Bankruptcy
            Code. The Section 1110 Stipulation

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<PAGE>

            shall not constitute the assumption by Lessee of the Lease or an
            agreement by Lessee to assume the Lease.

                  (iii) Unless otherwise mutually agreed in writing by Lessor
      and Lessee, the form and text of the Section 1110 Stipulation shall be as
      set forth in the Restructuring Letter Agreement (with any blanks therein
      appropriately completed, any bracketed text therein appropriately deleted
      or modified and any information missing therefrom appropriately inserted).

            (d) LESSEE PARTY RELEASE. In consideration of the Lessor
Accommodations, Lessee hereby (and by its execution and delivery of its Lessee
Party Acknowledgement and Agreement, each other Lessee Party) releases,
discharges and acquits Lessor, each Indemnitee (under and as defined in the
Lease and each Other Agreement) and GECAS and each of their respective
Affiliates and the officers, directors, members, agents, representatives and
employees and the respective successors and assigns of each of the foregoing
(each, a "RELEASED PARTY") from, and agrees not to sue upon (or otherwise assert
or pursue any right or remedy with respect to) any and all liabilities,
obligations, losses, damages, penalties, actions, causes of action, judgments,
legal process, suits, claims and costs and expenses, whether by contract or at
law or in equity or otherwise arising and whether known or unknown, that Lessee
had or has, or may have had or have, against any Released Party arising out of
or in connection with facts, circumstances or events (whether known or unknown
by Lessee) existing or occurring prior to or on and as of the Effective Date and
pertaining to any or all of Lessor, any Affiliate of Lessor, the Operative
Documents, the Other Agreements and the transactions contemplated thereby.

            (e) EXPENSES.

                  (i) Lessee and (by its execution and delivery of its Lessee
      Party Acknowledgment and Agreement) Polar agree that (a) on the Effective
      Date, Lessee Parties shall pay to counsel for Lessor, the Affiliates of
      Lessor that are parties to the Other Restructuring Lease Amendments and
      Serviced Lessor, in payment of the fees of such counsel in connection with
      the preparation, negotiation, execution and delivery of this Agreement,
      the Other Restructuring Lease Amendments and the Additional Restructuring
      Lease Amendment, the sum of $225,000, and (b) such sum shall be in
      addition to all retainer deposits made to such counsel (which retainer
      deposits shall be applied to the fees of such counsel in such connection
      that are not paid in full by such additional sum without any necessity or
      obligation on the part of such counsel, GECAS or any other Person to
      refund, return or otherwise account for such retainer deposits or any
      right on the part of any Lessee Party to receive or recover all or any
      portion of such retainer deposits). Notwithstanding anything herein, in
      any Other Lease Restructuring Amendment or in the Additional Restructuring
      Lease Amendment to the contrary, and for the avoidance of any doubt, it is
      expressly stated, acknowledged and agreed that the aggregate amount
      payable by Lessee Parties on the Effective Date pursuant to this Section
      2(e)(i) and Section 2(e)(i) of each of the Other Lease Restructuring
      Amendments and the Additional Restructuring Lease Amendment is $225,000.

                  (ii) Lessee agrees that, on demand, Lessee shall pay or
      reimburse Lessor, Affiliates of Lessor and Serviced Lessor for two-ninths
      (2/9ths) of all out of

                                      -7-

<PAGE>

      pocket costs and expenses (including, without limitation, legal and other
      professional fees and expenses) incurred or payable by Lessor, Affiliates
      of Lessor and Serviced Lessor in connection with or related to (a) the
      issuance of each guaranty pursuant to and as required by Section 2(f) of
      each of this Agreement, each Other Restructuring Lease Amendment and the
      Additional Restructuring Lease Amendment, (b) the issuance of Common Stock
      pursuant to and as required by the Restructuring Letter Agreement and each
      Other Restructuring Letter Agreement, and (c) the preparation,
      negotiation, execution and delivery of amendments and other documents
      pursuant to and as required by Section 2(g) of each of this Agreement, the
      Other Restructuring Lease Amendments and the Additional Restructuring
      Lease Amendment.

                  (iii) Without limitation of any term or provision of Section
      15 of the Lease, Lessee acknowledges, confirms and agrees that all out of
      pocket costs and expenses (including, without limitation, legal and other
      professional fees and expenses) incurred or payable by Lessor in
      connection with or related to the preservation or exercise by Lessor of
      rights and remedies of Lessor and/or the enforcement by Lessor of
      obligations of Lessee and/or, if applicable, obligations of the other
      Lessee Parties (in each case under or in respect of this Agreement, the
      Tax Indemnity Agreement and the other Operative Documents) during the
      pendency of any Chapter 11 Case with respect to Lessee or other proceeding
      under the Bankruptcy Code with respect to Lessee (including, without
      limitation, all such costs and expenses in connection with or related to
      the Section 1110 Stipulation provided for in Section 2(c) hereof, the
      assumption by Lessee of the Lease and/or the exercise by Lessor of its
      rights under Section 9(e) or Section 15 of the Lease, but excluding,
      however, any such costs and expenses in connection with or related to any
      monitoring of developments in any such case that is unrelated to such
      preservation or exercise of rights and remedies or such enforcement of
      obligations) are "enforcement" costs of Lessor for which Lessee is liable
      under Section 15 of the Lease (and which Lessee shall pay or reimburse to
      Lessor on demand by Lessor).

            (f) RESTRUCTURING GUARANTIES. On the earlier to occur of (i) the
date on which a Plan (a) has been confirmed by the bankruptcy court, and (b) all
conditions precedent to the effectiveness of such Plan under the Bankruptcy Code
and/or set forth in such Plan have been satisfied (such date being referred to
as the "PLAN EFFECTIVE DATE"), or (ii) the date on which any Lessee Party issues
to an Other Creditor of any other Lessee Party a guaranty of the obligations of
such other Lessee Party to such Other Creditor, each Lessee Party shall issue a
guaranty of the due and punctual payment and performance of all obligations of
each Affiliate of such Lessee Party under this Agreement, the Lease and each
Other Agreement to and for the benefit of Lessor or the Affiliate of Lessor that
is a party to this Agreement, the Lease or such Other Agreement. Each such
guaranty shall be (i) a guaranty of payment and performance and not of
collection, and (ii) otherwise reasonably acceptable in form and substance to
the beneficiary thereof (it being stated and acknowledged, for the avoidance of
any doubt or misunderstanding, that the form and content of any existing
guaranty by Atlas Holdings of the obligations of Polar under any of the Other
Aircraft Leases shall not be dispositive with respect to the acceptability of
the form and content of any guaranty to be issued pursuant to this Section
2(f)).

            (g) MOST FAVORED NATION TREATMENT. Lessee agrees that if Lessee
Parties (or one or more thereof) enter(s) into definitive documents with respect
to the restructuring,

                                       -8-

<PAGE>

modification or amendment of their (or any of their) obligations to an Other
Lessor (such restructuring, modification or amendment being referred to as an
"OTHER LESSOR RESTRUCTURING") which provide(s) for such Other Lessor to receive
(as part of the Restructuring Program) a lease or sublease rate or other
economic terms, economic provisions or economic conditions that, taking into
account all prevailing facts and circumstances, are more favorable to such Other
Lessor than the lease rate or other economic terms, economic provisions or
economic conditions received by Lessor (as part of the Restructuring Program)
and set Forth in this Agreement and/or reflected in the Operative Documents
after giving effect to this Agreement and/or the Tax Indemnity Agreement
Amendment, then, (i) within thirty (30) days after such entry into such
definitive documents with respect to such Other Lessor Restructuring. Lessee
shall notify Lessor thereof, and (ii) within forty five (45) days after the
request therefor (if any) by Lessor, this Agreement, the Restructuring Letter
Agreement, the Lessee Party Acknowledgments and Agreements and the Operative
Documents shall be amended and/or modified in such manner and to such extent as
may be requisite to provide to Lessor (as part of the Restructuring Program) a
lease rate and other economic terms, economic provisions and economic conditions
that, taking into account all prevailing facts and circumstances, are the same
as the lease or sublease rate and other economic terms, economic provisions and
economic conditions provided to such Other Lessor pursuant to such Other Lessor
Restructuring and the documents relating to such Other Lessor Restructuring.
Notwithstanding anything herein which may be to the contrary, Lessee and Lessor
agree that Lessor's "most favored nation treatment" with respect to the
restructuring, modification and/or amendment of the obligations of Lessee
Parties under and/or in respect of (i) the 1998 7.38% Atlas Air Pass Through
Certificates, Series A, (ii) the 1999 7.20% Atlas Air Pass Through Certificates,
Series A-1, and (iii) the 2000 8.707% Atlas Air Pass Through Certificates,
Series A and, in each case, the lease agreements, lease indentures, leased
equipment notes, indentures, owned equipment notes and other documents and
instruments executed, delivered and/or issued in connection with such
Certificates, shall be as provided in the Restructuring Letter Agreement.

      SECTION 3. AMENDMENT OF THE LEASE. The Lease is hereby amended as follows:

            (a) AMENDMENT OF SECTION 3(b). Section 3(b) of the Lease is amended
to read in its entirely as follows:

                  (b) BASIC RENT.

                        (i) On each Rent Payment Date (during the Basic Term),
            Basic Rent for the use of the Aircraft shall be due and payable, and
            Lessee shall pay Basic Rent in Dollars, in the amount specified for
            such Rent Payment Date on EXHIBIT B-1. On and after the Rent Payment
            Date occurring on April 11, 2003, Basic Rent shall be payable
            (monthly) in advance. Each payment of Basic Rent shall be final,
            subject to SECTION 18 hereof. The amount of Basic Rent allocated to
            each Lease Period shall equal the amount of Basic Rent payable
            during such Lease Period.

                        (ii) Lessor and Lessee agree that Lessee's liability for
            purposes of Section 467 of the Code on account of the use of the
            Aircraft in accordance with this Lease shall be as stated on EXHIBIT
            B-1. It is the intention of the parties

                                       -9-

<PAGE>

            hereto that the allocation of Basic Rent as provided in EXHIBIT B-1
            constitutes a specific allocation of fixed rent within the meaning
            of Treasury Regulation Section 1.467-1(c)(2)(ii)(A) with the effect
            that, pursuant to Treasury Regulation Section 1.467-1(d) and
            1.467-2, each of Lessor and Lessee, on any federal income tax
            returns filed by it (or on any return on which its income is
            included), shall accrue for purposes of Section 467 of the Code the
            amounts of rental income and rental expense, respectively, set forth
            for each period under the column with the heading "Basic Rent
            Payment" on EXHIBIT B-1 and for purposes of Section 467 of the Code
            shall include the amounts in income or as an expense, respectively,
            for each taxable year in accordance with Treasury Regulations
            Section 1.467-1(d)(1).

            (b) AMENDMENT OF SECTION 3(c). Section 3(c) of the Lease is amended
to read in its entirety as follows:

                  (c) ADJUSTMENTS TO BASIC RENT.

                        (i) In the event that Lessee pays an indemnity
            obligation under the Tax Indemnity Agreement, then the Basic Rent
            amounts set forth on EXHIBIT B-1 and the Termination Value amounts
            and the Event of Default Termination Value amounts set forth on
            EXHIBIT C-1 or C-2, as applicable (and on SCHEDULE B to the Tax
            Indemnity Agreement) shall be recalculated upwards or downwards by
            Lessor using the same methods and assumptions (except to the extent
            such assumptions shall be varied to take into account the Loss (as
            defined in the Tax Indemnity Agreement) that is the subject of such
            indemnification and any prior or contemporaneous Loss) used to
            calculate the Basic Rent amounts, the Termination Value amounts and
            the Event of Default Termination Value amounts as the same were
            amended or added pursuant to, and as the same are set forth in, the
            Amendment Agreement and the Tax Indemnification Agreement Amendment
            in order to (1) maintain the Net Economic Return and (2) to the
            extent possible consistent with the preceding clause (1), minimize
            the Net Present Value of Rents.

                        (ii) Any recalculation of Basic Rent amounts,
            Termination Value amounts and Event of Default Termination Value
            amounts pursuant to this SECTION 3(c) shall be determined by Lessor
            and shall be subject to the verification procedure set forth in
            SECTION 3(g).

                        (iii) Any such adjusted Basic Rent amounts, Termination
            Value amounts and Event of Default Termination Value amounts shall
            be set forth in a Lease Supplement or an amendment to the Lease.

            (c) AMENDMENT OF SECTION 3(g). Section 3(g) of the Lease is amended
to read in its entirety as follows:

                        (g) VERIFICATION. Any recalculation of Basic Rent
            amounts, Termination Value amounts and Event of Default Termination
            Value amounts pursuant to this Lease shall be calculated by Lessor
            in accordance with SECTION 3(c); PROVIDED, HOWEVER, that if Lessee
            believes that such calculations by Lessor

                                      -10-

<PAGE>

                  are in error, then Lessee's independent public accountants,
                  Babcock & Brown LP or any other nationally recognized firm of
                  accountants or lease advisory firm selected by Lessee and
                  acceptable to Lessor shall be permitted to verify such
                  calculations and Lessor will make available to the applicable
                  firm performing such verification (subject to the execution by
                  the applicable firm performing such verification of a
                  confidentiality agreement acceptable to Lessor) the methods
                  and assumptions applicable to such calculations in accordance
                  with SECTION 3(c) (and any variances therefrom made in
                  accordance with SECTION 3(c)). In the event of a verification
                  pursuant to this SECTION 3(g), the determination by the
                  applicable firm performing such verification of the
                  recalculated Basic Rent amounts, Termination Value amounts and
                  Event of Default Termination Value amounts shall be final.
                  Lessee shall pay the reasonable costs and expenses of any
                  verification pursuant to this SECTION 3(g); PROVIDED, HOWEVER,
                  that Lessor shall pay the reasonable costs and expenses of any
                  such verification which (i) establishes an error adverse to
                  Lessee, and (ii) results in an adjustment of Basic Rent
                  amounts that causes the Net Present Value of Rents to decline
                  by five (5) or more basis points or a material reduction of
                  the Termination Values or the Event of Default Termination
                  Values. Any recalculated Basic Rent amounts, Termination Value
                  amounts and Event of Default Termination Value amounts that
                  result from a verification pursuant to this SECTION 3(g) shall
                  be set forth in a Lease Supplement or an amendment to the
                  Lease.

                  (d)   AMENDMENT OF SECTION 7(a)(1). Section 7(a)(1) of the
Lease is amended by adding at the end of clause (B) thereof the following
provisos:

                  PROVIDED, HOWEVER, that if Lessee (i) grounds the Airframe,
                  together with the Engines or engines then installed thereon
                  (collectively, the "GROUNDED AIRCRAFT") for longer than a
                  temporary period and/or for reasons other than those
                  previously described in this clause (B) (which Lessee may do,
                  in its discretion, if in connection therewith Lessee complies
                  with the terms of this proviso and the following proviso to
                  this clause (B)), (ii) stores the Grounded Aircraft in a
                  Storage Program for the duration of such grounding, (iii)
                  stores all Engines other than Excepted Engines (collectively,
                  the "GROUNDED ENGINES") in a Storage Program for the duration
                  of such grounding (and maintains the Excepted Engines, or
                  causes the Excepted Engines to be maintained, in accordance
                  with the terms of this Lease (other than the terms of this
                  proviso and the following proviso to this clause (B)), (iv)
                  identifies to Lessor, upon commencement of such grounding and
                  from time to time thereafter upon any change in such location
                  or such information, the locations of the Grounded Aircraft
                  and each Grounded Engine, the owner and the operator of each
                  storage facility at which the Grounded Aircraft and/or each
                  Grounded Engine is stored (setting forth for each such owner
                  and each such operator, its name, address, applicable contact
                  person or persons and their respective telephone numbers,
                  facsimile numbers and, if available, e-mail addresses), and
                  (v) authorizes each such owner and/or operator to discuss with
                  Lessor (or its representatives), and to provide to Lessor (or
                  its representatives) information concerning, the Grounded
                  Aircraft and/or each Grounded Engine, as applicable, and the
                  amounts of, and the payment or non-payment of, the costs,

                                      -11-

<PAGE>

                  expenses and other charges of such owner and/or operator with
                  respect to the Grounded Aircraft and/or each Grounded Engine,
                  as applicable (and, in such connection, Lessee authorizes each
                  such owner and each such operator to rely on a copy of this
                  provision of this Lease as due authorization and instruction
                  by Lessee to such owner or such operator to discuss with
                  Lessor (or its representatives), or to provide to Lessor (or
                  its representatives) information concerning, the Grounded
                  Aircraft and/or each Grounded Engine, as applicable, and the
                  amounts of, and the payment or non-payment of, the costs,
                  expenses and other charges of such owner or such operator with
                  respect to the Grounded Aircraft and/or each Grounded Engine,
                  as applicable), Lessee shall (in lieu of complying with the
                  requirements of this clause (B) other than those requirements
                  set forth in the provisos to this clause (B), but without
                  limitation of any other term or provision of this Lease
                  (including, without limitation, SECTION 5 and the following
                  clauses (C) and (D) of this SECTION 7(a)(1)) or any other
                  Operative Document (including, without limitation, the Tax
                  Indemnity Agreement)) maintain the Grounded Aircraft and each
                  Grounded Engine in accordance with a Storage Program; PROVIDED
                  FURTHER, HOWEVER, that at such time as the Grounded Aircraft
                  or a Grounded Engine is removed from storage, Lessee shall, at
                  its own cost and expense, cause the Grounded Aircraft or such
                  Grounded Engine to be or become in the condition in which, but
                  for the Aircraft or such Grounded Engine being a Grounded
                  Aircraft or a Grounded Engine, the Aircraft or such Engine
                  would have been required by this Lease to be in; and PROVIDED
                  FURTHER, HOWEVER, that if, at any time when the Airframe is
                  not so grounded, (i) Lessee grounds an Engine not then
                  installed on the Airframe (a "SEPARATELY GROUNDED ENGINE") for
                  longer than a temporary period (which Lessee may do, in its
                  discretion, if in connection therewith Lessee complies with
                  the terms of this proviso), and (ii) Lessee complies with (a)
                  the requirements of clauses (iv) and (v) of the second
                  preceding proviso to this clause (B), and (b) the requirements
                  of the next preceding proviso to this clause (B), in each
                  case, with respect to such Separately Grounded Engine (as if
                  each reference in such clause (iv) and (v) and such proviso to
                  "Grounded Engine" was a reference to "Separately Grounded
                  Engine"), Lessee shall (in lieu of complying with the
                  requirements of this clause (B) with respect to such
                  Separately Grounded Engine (other than those requirements set
                  forth in this proviso to this clause (B), but without
                  limitation of any other term or provision of this Lease
                  (including, without limitation, SECTION 5 and the following
                  clauses (C) and (D) of this SECTION 7(a)(i)) or any other
                  Operative Document (including, without limitation the Tax
                  Indemnity Agreement)) maintain such Separately Grounded Engine
                  in accordance with a Storage Program (it being expressly
                  stated, acknowledged and agreed, for the avoidance of any
                  doubt, that, by inclusion in this Lease of the provisos to
                  this clause (B), Lessor waives compliance by Lessee with, and
                  any Default or Event of Default which would arise solely from
                  Lessee's failure to comply with, the requirements of this
                  clause (B) (other than the requirements set forth in the
                  provisos to this clause (B)) with respect to the Grounded
                  Aircraft, the Grounded Engines and the Separately Grounded
                  Engines for the duration of the grounding thereof so long as
                  Lessee complies with the requirements set forth in the

                                      -12-

<PAGE>

            applicable provisos to this clause (B) and each applicable Storage
            Program with respect to the grounding and storage (including
            maintenance during storage) of the Grounded Aircraft, the Grounded
            Engines and the Separately Grounded Engines for the duration (and at
            the termination) of the grounding thereof);

            (e)   AMENDMENT OF SECTION 7(c). Section 7(c) of the Lease is
amended by changing the phrase "and that Lessor or its successors or assigns
will acquire or claim", which appears in the final clause of the last sentence
thereof, to read as follows: "and that neither Lessor nor any of its successors
or assigns will acquire or claim".

            (f)   AMENDMENT OF SECTION 9. Section 9 of the Lease is amended as
                  follows:

                  (i)   the caption of Section 9 of the Lease is amended to read
      in its entirety "Termination";

                  (ii)  the caption of Section 9(a) of the Lease is amended to
      read in its entirety "Termination By Lessee";

                  (iii) Section 9(b) of the Lease is amended to read in its
      entirety as follows:

                        (b)   OPTIONAL SALE OF THE AIRCRAFT; LESSOR RETENTION
            OPTION; REVOCATION OF TERMINATION NOTICE. In the event that Lessee
            shall have exercised its right to terminate this Lease pursuant to
            SECTION 9(a)(i), during the period from the giving of the
            Termination Notice until the proposed Termination Date (unless
            Lessee shall have revoked the Termination Notice specifying such
            proposed Termination Date or Lessor shall have irrevocably elected
            to retain the Aircraft pursuant to this SECTION 9(b)), Lessee, as
            non-exclusive agent for Lessor and at no expense to Lessor, shall
            use commercially reasonable efforts to obtain bids for the purchase
            of the Aircraft and, in the event it receives any bid, Lessee shall,
            within five (5) Business Days after receipt thereof and at least ten
            (10) Business Days prior to the proposed Termination Date, certify
            to Lessor in writing the amount and terms of such bid, and the name
            and address of the party or parties (who shall not be Lessee or any
            Affiliate of Lessee or any Permitted Sublessee or any other Person
            with whom Lessee or any such Affiliate or any Permitted Sublessee
            has an arrangement or understanding regarding the future use of the
            Aircraft by Lessee or any such Affiliate or any Permitted Sublessee
            but who may be Lessor, any Affiliate thereof or any Person contacted
            by Lessor) submitting such bid. Subject to the next succeeding
            sentence, on or before the Termination Date, subject to the release
            of all mortgage and security interests with respect to the Aircraft:
            (1) Lessee shall deliver the Aircraft, or cause the Aircraft to be
            delivered, to the bidder(s), if any, which shall have submitted the
            highest cash bid therefor at least ten (10) Business Days prior to
            such Termination Date, in the same manner and in the same condition
            and otherwise in accordance with all the terms of this Lease as if
            delivery were made to Lessor pursuant to SECTION 5, and shall duly
            transfer to Lessor title to any engines on the Airframe and not
            owned by Lessor all in accordance with the terms of SECTION 5, (2)
            Lessor shall sell in accordance with

                                      -13-

<PAGE>

            the provisions of SECTION 9(c) hereof, subject to prior or
            concurrent payment by Lessee of all amounts due under CLAUSE (3) of
            this sentence, all of Lessor's right, title and interest in and to
            the Aircraft for cash in Dollars to such bidder(s), the total sales
            price realized at such sale to be retained by Lessor, (3) Lessee
            shall simultaneously pay Lessor in funds of the type specified in
            SECTION 3(e) hereof, an amount equal to the sum of (A) the excess,
            if any, of (i) the Termination Value for the Aircraft, computed as
            of the Termination Date, over (ii) the sales price of the Aircraft
            sold by Lessor after deducting the reasonable expenses incurred by
            Lessor in connection with such sale (except that there shall not be
            deducted the fees, commissions or expenses of more than one broker
            per transaction), (B) all unpaid Basic Rent with respect to the
            Aircraft due prior to (but not on) such Termination Date and (C) all
            Supplemental Rent due on or prior to such Termination Date and (4)
            upon and simultaneously with such payment, Lessor will transfer to
            Lessee, in accordance with the provisions of SECTION 9(c), all of
            Lessor's right, title and interest in and to any Engines
            constituting part of the Aircraft which were not sold with the
            Aircraft. Notwithstanding the preceding sentence, Lessor may elect
            to retain title to the Aircraft unless Lessee shall have revoked the
            Termination Notice or shall have accepted a bid for the Aircraft
            prior to Lessee's receipt of notice of Lessor's election. If Lessor
            so elects, Lessor shall give to Lessee written notice of such
            election within thirty (30) days of its receipt of a Termination
            Notice. Upon receipt of notice of such an election by Lessor, Lessee
            shall cease its efforts to obtain bids as provided above and shall
            reject all bids theretofore or thereafter received. On the
            Termination Date, Lessee shall deliver the Airframe and Engines or
            engines to Lessor in accordance with SECTION 5 and shall pay (i) all
            Basic Rent due prior to (but not on) the Termination Date and (ii)
            all Supplemental Rent due on or prior to the Termination Date. If no
            sale shall have occurred on the Termination Date, Lessor may, but
            shall not be obligated to, elect to retain title to the Aircraft and
            terminate the Lease, in which case, Lessee shall pay all Basic Rent
            due prior to (but not on) the Termination Date and all Supplemental
            Rent due on or prior to the Termination Date. At such time as all of
            the payments described in the preceding sentence shall have been
            made, this Lease shall terminate and Lessee shall deliver the
            Aircraft to Lessor in accordance with SECTION 5 thereof. If no sale
            shall have occurred on the Termination Date, this Lease shall
            continue in full force and effect as to the Aircraft, Lessee shall
            pay the costs and expenses incurred by Lessor, if any, in connection
            with the preparation for such sale other than any fees, commissions
            or expenses of any broker retained by Lessor. In the event of any
            such sale or such retention of the Aircraft by Lessor and upon
            compliance by Lessee with the provisions of this paragraph, the
            obligation of Lessee to pay Basic Rent or any other amounts
            hereunder shall cease to accrue and this Lease shall terminate.
            Lessor may solicit cash bids on its own behalf, inquire into the
            efforts of Lessee to obtain bids or otherwise act in connection with
            any such sale other than to transfer (in accordance with the
            foregoing provisions) to the purchaser named in the highest cash bid
            certified by Lessee to Lessor all of Lessor's right, title and
            interest in the Aircraft, against receipt of the payments provided
            herein. Lessee

                                      -14-

<PAGE>

            may revoke a Termination Notice delivered under SECTION 9(a) no more
            than four (4) times during the Term.

                  (iv)  there is added after Section 9(d) a new Section 9(e)
      which reads in its entirety as follows:

                  (e)   TERMINATION BY REASON OF NON-ASSUMPTION EVENT.

                        (i)   Lessor shall have the right (exercisable by the
            giving by Lessor to Lessee of at least two (2) days prior written
            notice specifying the date on which this Lease shall terminate
            pursuant to this SECTION 9(e)) to terminate this Lease at any time
            during the Term if at such time a Non-Assumption Event shall have
            occurred and be continuing. If this Lease terminates pursuant to
            this SECTION 9(e), Lessor shall have the rights and remedies, and
            Lessee shall have the obligations, in each case, that are specified
            in clauses (a) through (e) of SECTION 15 (with the same effect as if
            an Event of Default had occurred and was continuing). Lessee hereby
            waives any right, whether at law or in equity, or otherwise existing
            or arising, to stay, enjoin or otherwise restrict or impede the
            exercise by Lessor of any such right or remedy of Lessor.

                        (ii)  As used herein, "NON-ASSUMPTION EVENT" means that
            (a) this Lease shall not have been assumed by Lessee, by
            confirmation of a plan of re-organization providing for such
            assumption or by separate court order, within 180 days after the
            commencement with respect to Lessee of a case under Chapter 11 of
            Title 11 of the United States Code (or any successor provision of
            any successor statute) (any such case being referred to as a
            "CHAPTER 11 CASE"), or (b) any Other Aircraft Lease, shall not have
            been assumed by Lessee or the other Person that is the lessee or
            sublessee under such Other Aircraft Lease, by confirmation of a
            plan of re-organization providing for such assumption or by separate
            court order, within 180 days after the commencement with respect to
            Lessee or such other Person of a Chapter 11 Case.

            (g)   AMENDMENT OF SECTION 14. Section 14 of the Lease is amended as
follows:

                  (i)   the period at the end of clause (h) of Section 14 of the
      Lease is changed to a semi-colon followed by the word "or"; and

                  (ii)  the following additional clauses are added after clause
      (h) of Section 14 of the Lease:

                        (i)   Lessee shall have failed to pay when due any
            amount payable by it under the Amendment Agreement and such failure
            shall have continued for five (5) Business Days; or Lessee or any
            Affiliate of Lessee that is a party to any Other Agreement shall
            have failed to pay when due any amount payable by it under such
            Other Agreement and such failure shall continue beyond the
            applicable cure or grace period, if any, provided for such failure
            in such Other Agreement; or Lessee or any Affiliate of Lessee shall
            have failed to perform or

                                      -15-

<PAGE>

            observe (or cause to be performed or observed) any covenant or
            agreement to be performed or observed (or caused to be performed or
            observed) by it under SECTION 2(c) or SECTION 2(f) of the Amendment
            Agreement or the analogous provision of any of the Other
            Restructuring Lease Amendments or under PART I of the Restructuring
            Letter Agreement or the analogous provision of any of the Other
            Restructuring Letter Agreements; or

                        (j)   any representation or warranty made or deemed made
            by Lessee or any Affiliate of Lessee in the Amendment Agreement or
            any document or certificate furnished by it pursuant to or in
            connection with the Amendment Agreement (except the Tax Indemnity
            Agreement Amendment and such other documents or certificates
            furnished to Lessor solely in connection with the Tax Indemnity
            Agreement Amendment) shall prove to have been incorrect in any
            material respect at the time made and such incorrectness shall not
            have been cured within thirty (30) days after receipt by Lessee of
            written notice from Lessor.

            (h)   AMENDMENT OF SECTION 15(c). Section 15(c) of the Lease is
amended to read in its entirety as follows:

                        (c)   Whether or not Lessor shall have exercised, or
            shall thereafter at any time exercise, any of its rights under
            paragraph (a) or paragraph (b) above with respect to all or any part
            of the Aircraft, Airframe and/or any Engine, Lessor, by written
            notice to Lessee specifying a payment date which shall be a
            Termination Value Date not earlier than ten (10) days from the date
            of such notice, may demand that Lessee pay to Lessor, and Lessee
            shall pay Lessor, on the payment date so specified, as liquidated
            damages for loss of a bargain and not as a penalty (in lieu of the
            installments of Basic Rent for the Aircraft due on Rent Payment
            Dates occurring on or after the Termination Value Date specified as
            the payment date in such notice), any unpaid Basic Rent or Renewal
            Rent due on Rent Payment Dates prior to (but not on) the payment
            date so specified (including, without limitation, any adjustments
            payable pursuant to SECTION 3(c) hereof) plus whichever of the
            following amounts Lessor, in its sole discretion, shall specify in
            such notice (together with interest, if any, on such amount at the
            Past Due Rate from such Termination Value Date until the date of
            actual payment of such amount): (i) an amount equal to the excess,
            if any, of the present value, computed as of the Termination Value
            Date specified in such notice, discounted to such Termination Value
            Date at a rate per annum equal to 8.6%, of all unpaid Basic Rent for
            the remainder of the Basic Term (if the Basic Term has not
            concluded) or, if a Renewal Term or Additional Renewal Term has
            commenced, of all unpaid Basic Rent during the remaining portion of
            such Renewal Term or Additional Renewal Term, over the aggregate
            fair market rental value (computed as hereafter in this SECTION 15
            provided) of such Aircraft for the remainder of the Basic Term (if
            the Basic Term has not concluded) or, if a Renewal Term or
            Additional Renewal Term has commenced, of the aggregate fair market
            rental value of such Aircraft during the remaining portion of such
            Renewal Term or Additional Renewal Term, after discounting such
            aggregate fair market rental value to present value as of the
            Termination Value Date specified in such notice at

                                      -16-

<PAGE>

            an annual rate equal to 8.6%; or (ii) an amount equal to the excess,
            if any, of the Event of Default Termination Value for the Aircraft,
            computed as of the Termination Value Date in such notice over the
            fair market sales value of the Aircraft (computed as provided below
            in this Section) as of the Termination Value Date in such notice.

            (i)   AMENDMENT OF SECTION 15(d). Section 15(d) of the Lease is
amended by changing the words "any unpaid Basic Rent or Renewal Rent with
respect to the Aircraft due with respect to the period prior to (but not on)
such date (including, without limitation, any adjustments payable pursuant to
SECTION 3 hereof) plus the amount of any deficiency between the net proceeds of
such sale (after deduction of all costs of sale) and the Termination Value of
such Aircraft" which appear after the comma that follows the first parenthetical
in Section 15(d) of the Lease to read as follows: any unpaid Basic Rent or
Renewal Rent with respect to the Aircraft due with respect to the period prior
to (but not on) such date (including, without limitation, any adjustments
payable pursuant to SECTION 3(c) hereof) plus the amount of any deficiency
between the net proceeds of such sale (after deduction of all costs of sale) and
the Event of Default Termination Value of the Aircraft".

            (j)   AMENDMENT OF SECTION 17. Paragraph (a) of Section 17 of the
Lease is amended to read in its entirety as follows:

                  (a)   if to Lessee, c/o Atlas Air Worldwide Holdings, Inc.,
            2000 Westchester Avenue, Purchase, New York 10577, Attention:
            Dorinda Pannozzo (Facsimile No. (914) 701-8750), or to such other
            address or telecopy number as Lessee shall from time to time
            designate in writing to Lessor; and

            (k)   AMENDMENT OF SECTION 18. Section 18 of the Lease is amended as
follows: (i) the fifth sentence of Section 18 of the Lease is deleted; and (ii)
the last sentence of Section 18 of the Lease is amended to read in its entirety
as follows:

            Nothing set forth in this Section 18 shall be construed to prohibit
            Lessee from separately pursuing any claim that it from time to time
            may have against Lessor or any other Person with respect to any
            other matter (other than the absolute and unconditional nature of
            Lessee's obligations under this Lease).

            (l)   AMENDMENT OF SECTION 19. Section 19 of the Lease is amended as
follows:

                  (i)   Section 19(a)(4) of the Lease is amended to read in its
      entirety as follows:

                        (4)   TERMINATION VALUE. The amounts which are payable
            during any Renewal Term or any Additional Renewal Term in respect of
            Termination Value and Event of Default Termination Value with
            respect to the Aircraft shall take into account the fair market
            sales value (as computed pursuant to SECTION 19(c)) of the Aircraft
            as of the commencement of such Renewal Term or such Additional
            Renewal Term and the fair market sales value (as computed pursuant

                                      -17-

<PAGE>

            to SECTION 19(c)) at the end of such Renewal Term or such Additional
            Renewal Term and shall decline ratably on a monthly basis and shall
            be in the amounts set forth in EXHIBIT C-2 to this Lease (as EXHIBIT
            C-2 to this Lease shall be agreed upon by Lessor and Lessee and
            incorporated in this Lease (in the case of such Renewal Term) or
            amended (in the case of such Additional Renewal Term) at the time
            such Renewal Term or such Additional Renewal Term commences) or, if
            applicable, in accordance with SECTION 7(a)(i) of the Tax Indemnity
            Agreement, SCHEDULE B to the Tax Indemnity Agreement (as SCHEDULE B
            to the Tax Indemnity Agreement shall be agreed upon by Lessor and
            Lessee and amended at the time such Renewal Term or such Additional
            Renewal Term commences).

                        (ii)  The second paragraph of Section 19(b) of the Lease
is amended to read in its entirely as follows:

                        Upon payment to Lessor in immediately available funds in
            Dollars of the full amount of the purchase price and payment of any
            other amounts then due hereunder or under the other Operative
            Documents (including all Basic Rent due prior to (but not on) the
            Purchase Option Date and all Supplemental Rent due prior to and on
            the Purchase Date and all reasonable costs or expenses of Lessor (if
            any) in connection with such purchase), Lessor will transfer to
            Lessee all of Lessor's right, title and interest in and to the
            Aircraft, in accordance with the provisions of SECTION 9(c).

            (m)   AMENDMENT OF SECTION 20. Section 20 of the Lease is amended by
changing the last sentence thereof to read in its entirety as follows:

            Upon payment to Lessor in immediately available funds in Dollars of
            the full amount of the Burdensome Buyout Price and payment of any
            other amounts then due hereunder or under the other Operative
            Documents (including all Basic Rent due prior to (but not on) such
            purchase date and all Supplemental Rent due prior to and on such
            purchase date and all reasonable costs or expenses of Lessor (if
            any) in connection with such purchase), Lessor will transfer to
            Lessee all of Lessor's right, title and interest in and to the
            Aircraft, in accordance with the provisions of SECTION 9(c).

            (n)   AMENDMENT OF SECTION 28. Section 28 of the Lease is amended by
deleting the last sentence thereof.

            (o)   AMENDMENT OF SECTION 29. Section 29 of the Lease is amended by
changing the first clause of the first sentence thereof (preceding the word
"except" which appears therein) to read as follows: "Lessee and Lessor shall
keep EXHIBITS B, B-1, B-4, C-1 and C-2 and ANNEX B to this Lease and the Tax
Indemnity Agreement confidential and shall not disclose, or cause to be
disclosed, the same to any Person,".

            (p)   AMENDMENT OF EXHIBIT B-1. Exhibit B-l to the Lease is amended
and restated to read in its entirety as set forth on Exhibit I to this Agreement
(other than the first page thereof).

                                      -18-

<PAGE>

            (q)   AMENDMENT OF EXHIBITS B-2 AND B-3. EXHIBITS B-2 and B-3 to the
Lease are amended by substituting for the entire text of each such Exhibit the
words "Intentionally Omitted".

            (r)   AMENDMENT OF EXHIBIT C. Exhibit C to the Lease is amended by
(i) re-lettering such Exhibit as EXHIBIT C-1 to the Lease, and (ii) changing the
text thereof to read in its entirety as set forth on Exhibit II to this
Agreement (other than the first page thereof).

            (s)   AMENDMENTS TO ANNEX A. Annex A to the Lease is amended as
follows:

                  (i)   DELETIONS. The definitions of the terms "LESSEE 467
      LOAN", "LESSEE 467 LOAN INTEREST", "LESSOR 467 LOAN", "LESSOR 467 LOAN
      INTEREST" and "SECTION 467 LOAN" contained in Annex A to the Lease are
      deleted in their respective entireties.

                  (ii)  CHANGES. The definitions of the terms "BASIC TERM
      EXPIRATION DATE", "BUSINESS DAY", "NET ECONOMIC RETURN", "NET PRESENT
      VALUE OF RENTS", "RENT PAYMENT DATE" and "TERMINATION VALUE" contained in
      Annex A to the Lease are amended to read in their respective entireties as
      follows:

                        "BASIC TERM EXPIRATION DATE" means July 17, 2022, or
            such earlier date as the Lease may be terminated in accordance with
            the provisions thereof.

                        "BUSINESS DAY" means any day other than a Saturday or
            Sunday or a day on which commercial banks are required or authorized
            to close in New York, New York or the city and state where the
            principal office of Lessor is located.

                        "NET ECONOMIC RETURN" means Lessor's net after-tax book
            yield and aggregate after-tax cash flow, in each case computed on
            the basis of the same methods and assumptions as were utilized in
            determining Basic Rent amounts, Termination Value amounts and Event
            of Default Termination Value amounts as the same were amended or
            added pursuant to, and as the same are set forth in, the Amendment
            Agreement and the Tax Indemnity Agreement Amendment, as such
            assumptions may be adjusted for events which have been the basis for
            adjustments to Rent pursuant to SECTION 3(c) of the Lease.

                        "NET PRESENT VALUE OF RENTS" means the net present
            value, as of April 11, 2003, of Basic Rent set forth on EXHIBIT B-1
            to the Lease for all Rent Payment Dates on and after April 11, 2003
            discounted at a rate per Lease Period equal to (a) 8.6% divided by
            (b) the number of Lease Periods per year.

                        "RENT PAYMENT DATE" means (a) July 17, 2002, (b) the
            17th day of each succeeding month to and including March 17, 2003,
            (c) April 11, 2003, (d) the 11th day of each succeeding month during
            the Basic Term, (e) the Basic Term Expiration Date, and (f) the last
            Business Day of any Renewal Term or Additional Renewal Term.

                                      -l9-

<PAGE>

                        "TERMINATION VALUE", with respect to the Aircraft, (a)
            means, as of any Termination Value Date during the Basic Term (with
            respect to which the Termination Value is to be determined), the
            amount set forth opposite such Termination Value Date in the column
            captioned "Termination Value" on EXHIBIT C-1 to the Lease (or, if
            applicable in accordance with SECTION 7(a)(i) of the Tax Indemnity
            Agreement, on SCHEDULE B to the Tax Indemnity Agreement) and (b) as
            of any date during the Renewal Term of any Additional Renewal Term,
            has the meaning specified in SECTION 19(a)(4) of the Lease.

                  (iii) ADDITIONS. The following definitions of the terms
      "AMENDMENT AGREEMENT", "CHAPTER 11 CASE", "EFFECTIVE DATE", "EVENT OF
      DEFAULT TERMINATION VALUE", "EXCEPTED ENGINE", "GECC", "GROUNDED
      AIRCRAFT", "GROUNDED ENGINE", "NON-ASSUMPTION EVENT", "OTHER AGREEMENT",
      "OTHER AIRCRAFT LEASE", "OTHER EXISTING AGREEMENT", "OTHER RESTRUCTURING
      LEASE AMENDMENT", "OTHER RESTRUCTURING LETTER AGREEMENT", "OWNERSHIP
      INTERESTS", "RESTRUCTURING LETTER AGREEMENT", "SEPARATELY GROUNDED
      ENGINE", "STORAGE PROGRAM", "SUBSIDIARY" and "TAX INDEMNITY AGREEMENT
      AMENDMENT" are added to Annex A to the Lease in appropriate alphabetical
      order:

                        "AMENDMENT AGREEMENT" means the Amendment Agreement (MSN
            32838), dated as of August 1, 2003, between Lessor and Lessee.

                        "CHAPTER 11 CASE" has the meaning specified for such
            term in SECTION 9(e)(ii) of the Lease.

                        "EFFECTIVE DATE" has the meaning specified for such term
            in the Amendment Agreement.

                        "EVENT OF DEFAULT TERMINATION VALUE", with respect to
            the Aircraft, (a) means, as of any Termination Value Date during the
            Basic Term (with respect to which the Event of Default Termination
            Value is to be determined), the amount set forth opposite such
            Termination Value Date in the column captioned "Event of Default
            Termination Value" on EXHIBIT C-1 to the Lease (or, if applicable in
            accordance with Section 7(a)(i) of the Tax Indemnity Agreement, on
            SCHEDULE B to the Tax Indemnity Agreement), and (b) as of any date
            during the Renewal Term or any Additional Renewal Term, has the
            meaning specified in SECTION 19(a)(4) of the Lease.

                        "EXCEPTED ENGINE" means an Engine that, at any time at
            which the Airframe is grounded pursuant to SECTION 7(a)(i) of the
            Lease, (i) is installed on an airframe other than the Airframe as
            permitted in accordance with the Lease, (ii) is in maintenance
            (other than maintenance pursuant to a Storage Program), (iii) is on
            the ground for a temporary period consistent with airline industry
            practice in the United States, or (iv) is used by Lessee as a spare
            engine consistent with airline industry practice in the United
            States.

                        "GECC" means General Electric Capital Corporation, a
            Delaware corporation.

                                      -20-

<PAGE>

                        "GROUNDED AIRCRAFT" has the meaning specified for such
            term in SECTION 7(a)(1) of the Lease.

                        "GROUNDED ENGINE" has the meaning specified for such
            term in SECTION 7(a)(1) of the Lease.

                        "NON-ASSUMPTION EVENT" has the meaning specified for
            such term in SECTION 9(e)(ii) of the Lease.

                        "OTHER AGREEMENT" means (a) any Other Aircraft Lease,
            (b) any Other Existing Agreement, or (c) any other agreement,
            document or instrument executed and delivered subsequent to April
            11, 2003 (i) which (A) is a lease or a sublease or (B) is (or
            evidences) a financing arrangement or extension of credit or other
            financial accommodation, (ii) to which Lessee and/or any of its
            Affiliates is a party or a signatory or by which it is bound (other
            than solely as a guarantor thereof), and (iii) to which GECC, Lessor
            and/or any other Subsidiary of GECC is a party or of which GECC,
            Lessor and/or any other Subsidiary of GECC is a named or intended
            beneficiary (pursuant to a trust agreement or otherwise).

                        "OTHER AIRCRAFT LEASE" means a lease or a sublease of an
            aircraft (other than the Lease), executed and delivered prior to,
            and unexpired and unterminated as of, April 11, 2003, and to which
            Lessee or an Affiliate of Lessee is a party as lessee or sublessee
            and GECC, Lessor or any other Subsidiary of GECC is a party as
            lessor or sublessor; and "OTHER AIRCRAFT LEASES" means all seven of
            such leases and subleases. For the avoidance of any doubt, the Other
            Aircraft Leases are identified in the Restructuring Letter
            Agreement.

                        "OTHER EXISTING AGREEMENT" means any one of (a) the two
            engine lease agreements, (b) the aircraft parts consignment access
            agreement, and (c) the credit agreement and related promissory note,
            guarantee, mortgages and security agreements, in each case, executed
            and delivered prior to, and unexpired and unterminated as of, April
            11, 2003, and to which Lessee or an Affiliate of Lessee is a party
            and GECC, Lessor or any other Subsidiary of GECC is a party; and
            "OTHER EXISTING AGREEMENTS" means all of such agreements, documents
            and instruments. For the avoidance of any doubt, the Other Existing
            Agreements are identified in the Restructuring Letter Agreement.

                        "OTHER RESTRUCTURING LEASE AMENDMENT" means an Amendment
            Agreement, dated as of August 1, 2003, pertaining to one of the
            Other Aircraft Leases; and "OTHER RESTRUCTURING LEASE AMENDMENTS"
            means all seven of such amendment agreements.

                        "OTHER RESTRUCTURING LETTER AGREEMENT" means a letter
            agreement, dated as of August 1, 2003, pertaining to one of the
            Other Restructuring Lease Amendments; and "OTHER RESTRUCTURING
            LETTER AGREEMENTS" means all seven of such letter agreements.

                                      -21-

<PAGE>

                        "OWNERSHIP INTERESTS" means, with respect to a Person,
            any capital stock, partnership interests (whether general, limited,
            special or other), limited liability company interests, membership
            interests or other equity interests (however designated and of any
            character) of such Person, including, without limitation, securities
            convertible into any of the foregoing and rights, warrants or
            options to acquire any of the foregoing.

                        "RESTRUCTURING LETTER AGREEMENT" means the letter
            agreement, dated as of August 1, 2003, and captioned "Restructuring
            Letter Agreement (MSN 32838)", between Lessor and Lessee.

                        "SEPARATELY GROUNDED ENGINE" has the meaning specified
            for such term in SECTION 7(a)(1) of this Lease.

                        "STORAGE PROGRAM" means, with respect to the Grounded
            Aircraft, a Grounded Engine or a Separately Grounded Engine, (a)
            Lessee's Roswell New Mexico storage program (as in effect on the
            Effective Date or as modified from time to time so long as (i) such
            storage program, as so modified, satisfies the criteria specified in
            sub-clauses (i) and (ii) of the following clause (b) of this defined
            term, and (ii) in the event of a modification that is material (when
            considered in relation to such storage program taken as a whole or
            to the interests of Lessor in and with respect to the Aircraft),
            such storage program, after giving effect to such modification, is
            otherwise reasonably acceptable to Lessor), or (b) any other storage
            program that (i) is approved for the Grounded Aircraft, such
            Grounded Engine or such Separately Grounded Engine (as applicable)
            by the FAA (or the applicable governmental authority under the laws
            of any jurisdiction (other than the United States of America) in
            which the Aircraft may then be registered as permitted in accordance
            with the Lease), (ii) complies with the guidelines of the
            manufacturers of the Airframe and the Engine(s) or engine(s)
            constituting and/or forming part of the Grounded Aircraft, such
            Grounded Engines or such Separately Grounded Engine (as applicable)
            for the storage (including maintenance during storage) thereof, and
            (iii) otherwise is acceptable to Lessor.

                        "SUBSIDIARY" means, with respect to a Person, (a) any
            corporation of which more than fifty percent (50%) of the
            outstanding stock having ordinary voting power to elect a majority
            of its board of directors, regardless of the existence at the time
            of a right of the holders of any class or classes of securities of
            such corporation to exercise such voting power by reason of the
            happening of any contingency, or any partnership or limited
            liability company of which more than fifty percent (50%) of the
            outstanding Ownership Interests, is at the time owned directly or
            indirectly by such Person, or by one or more Subsidiaries of such
            Person, or by such Person and one or more Subsidiaries of such
            Person, or (b) any other entity which is directly or indirectly
            controlled or capable of being controlled by such Person, or by one
            or more Subsidiaries of such Person, or by such Person and one or
            more Subsidiaries of such Person. For purposes of this definition,
            "control" (including "controlled by") means, with respect to a
            Person,

                                      -22-

<PAGE>

            the power, directly or indirectly, to direct or cause the direction
            of the management and policies of such Person.

                        "TAX INDEMNITY AGREEMENT AMENDMENT" means Amendment No.
            1 to the Tax Indemnity Agreement, dated as of August 1, 2003,
            between Lessor and Lessee.

      SECTION 4. EFFECTIVE DATE AND CONDITIONS PRECEDENT.

            (a)   EFFECTIVE DATE AND CONDITIONS PRECEDENT. This Agreement shall
become effective upon satisfaction in full of each of the following conditions
on or prior to the Effective Date:

                  (i)   DELIVERIES TO LESSOR. Lessor shall have received the
      following (in each case, satisfactory in form and substance to Lessor and
      its legal counsel):

                        (A)   this Agreement, the Restructuring Letter Agreement
            and the Tax Indemnity Agreement Amendment, duly executed by Lessee;

                        (B)   a Lessee Party Acknowledgement and Agreement of
            each Lessee Party other than Lessee, duly executed by such Lessee
            Party;

                        (C)   favorable opinions of (1) Cahill Gordon & Reindel
            LLP, special counsel for Lessee and the other Lessee Parties, and
            (2) Crowe & Dunlevy, special FAA counsel for Lessee, each dated the
            Effective Date, as to such matters relating to this Agreement, the
            Lease, the Tax Indemnity Agreement and the Restructuring Letter
            Agreement and the transactions contemplated hereby and thereby, as
            Lessor shall have reasonably requested; and

                        (D)   payment in full (or evidence of payment in full)
            of all expenses of Lessor and other sums required to be paid to (or
            for the account of) Lessor and its Affiliates pursuant to this
            Agreement, the other Restructuring Lease Amendments, the Other
            Agreements and the Operative Documents (as defined herein and in the
            Other Restructuring Lease Amendments).

                  (ii)  SIMULTANEOUS AMENDMENT OF OTHER AIRCRAFT LEASES. Each of
      the Other Restructuring Lease Amendments shall have become effective prior
      to, or shall become effective simultaneously with, the effectiveness of
      this Agreement.

                  (iii) DELIVERIES TO LESSEE. Lessee shall have received the
      following (in each case, satisfactory in form and substance to Lessee and
      its legal counsel):

                        (A)   this Agreement, the Restructuring Letter Agreement
            and the Tax Indemnity Agreement Amendment, duly executed by Lessor;

                        (B)   an Acknowledgment, Consent and Agreement of Lessor
            Guarantor in the form of Schedule IV hereto, duly executed by Lessor
            Guarantor; and

                                      -23-

<PAGE>

                        (C)   favorable opinions of (1) Paul, Hastings, Janofsky
            & Walker LLP, special counsel for Lessor, and (2) Christopher Beers,
            Esq., inside counsel for Lessor, each dated the Effective Date, as
            to such matters relating to this Agreement, the Lease, the Tax
            Indemnity Agreement and the Restructuring Letter Agreement and the
            transactions contemplated hereby and thereby, as Lessee shall have
            reasonably requested.

            (b)   WAIVER OR DEFERRAL OF CONDITIONS PRECEDENT.

                  (i)   WAIVER OR DEFERRAL BY LESSOR. The conditions specified
      in Sections 4(a)(i) and 4(a)(ii) are for the sole benefit of Lessor and
      may be waived or deferred, in whole or in part and with or without
      condition, in any such case, in writing by Lessor (acting in its sole
      discretion); PROVIDED, HOWEVER, that, in the absence of written notice by
      Lessor to Lessee deferring (rather than waiving) satisfaction of any such
      condition not satisfied at or prior to the time of filing with the FAA of
      this Agreement, the filing with the FAA of this Agreement shall constitute
      waiver by Lessor of any such condition not satisfied at or prior to the
      time of such filing.

                  (ii)  WAIVER OR DEFERRAL BY LESSEE. The conditions specified
      in Section 4(a)(iii) are for the sole benefit of Lessee and may be waived
      or deferred, in whole or in part and with or without condition, in any
      such case, in writing by Lessee (acting in its sole discretion); PROVIDED,
      HOWEVER, that, in the absence of written notice by Lessee to Lessor
      deferring (rather than waiving) satisfaction of any such condition not
      satisfied at or prior to the time of filing with the FAA of this
      Agreement, the filing with the FAA of this Agreement shall constitute
      waiver by Lessee of any such condition not satisfied at or prior to the
      time of such filing.

            (c)   DELIVERY BY TELECOPY. Lessor, Lessee and (by its execution and
      delivery of its Lessee Party Acknowledgment and Agreement) each other
      Lessee Party agrees that delivery of an executed counterpart or an
      executed copy of any document, instrument or agreement required to be
      delivered pursuant to Section 4(a) or 4(b) of this Agreement by telecopy
      shall be equally as effective as delivery of an original executed
      counterpart or an original, as applicable, of such document, instrument or
      agreement. If Lessor, Lessee or any other Lessee Party delivers an
      executed counterpart or an executed copy of any document, instrument or
      agreement required to be delivered pursuant to Section 4(a) or 4(b) of
      this Agreement by telecopy, such person shall deliver an original executed
      counterpart or an original, as applicable, of such document, instrument or
      agreement, but the failure to deliver such original executed counterpart
      or such original, as applicable, shall not affect the validity,
      enforceability or binding effect of such document, instrument or
      agreement.

      SECTION 5. REPRESENTATIONS AND WARRANTIES.

            (a)   LESSEE REPRESENTATIONS AND WARRANTIES. Lessee hereby
represents and warrants to Lessor that as of the Effective Date:

                                      -24-

<PAGE>

                  (i)   POWER AND AUTHORITY. Lessee is a corporation duly
      organized, validly existing and in good standing under the laws of the
      state of its incorporation and is duly qualified as a foreign corporation
      and is in good standing in each jurisdiction in which such qualification
      is required, except where the failure to so qualify would not cause, or be
      reasonably expected to cause, a Material Adverse Change with respect to
      Lessee; and Lessee has all requisite power and authority to execute and
      deliver this Agreement, the Restructuring Letter Agreement and the Tax
      Indemnity Agreement Amendment and to perform its obligations under this
      Agreement, the Restructuring Letter Agreement, the Lease and the Tax
      Indemnity Agreement.

                  (ii)  DUE AUTHORIZATION; NO VIOLATION. The execution and
      delivery by Lessee of this Agreement, the Restructuring Letter Agreement
      and the Tax Indemnity Agreement Amendment and the performance by Lessee of
      this Agreement, the Restructuring Letter Agreement, the Lease and the Tax
      Indemnity Agreement have been duly authorized by all necessary action and
      did not, do not and will not violate or conflict with any provision of the
      certificate of incorporation or by-laws of Lessee or any law or any
      regulation, order, writ, injunction or decree of any Governmental Entity
      applicable to Lessee or by which it or any of its properties is bound, or
      result in a breach of any of the terms, conditions or provisions of, or
      constitute a default under, or require any consent or approval of any
      creditor of Lessee pursuant to, or result in the creation or imposition of
      any Lien upon the Aircraft (other than as permitted under the Lease) or
      any of the assets of Lessee pursuant to the terms of, any mortgage,
      indenture, agreement or instrument to which Lessee is a party or by which
      it or any of its properties is bound, in each case, which violation,
      conflict, breach, default or Lien (other than any Lien upon the Aircraft)
      would cause, or be reasonably expected to cause, a Material Adverse Change
      with respect to Lessee.

                  (iii) GOVERNMENTAL APPROVALS. The execution and delivery by
      Lessee of this Agreement, the Restructuring Letter Agreement and the Tax
      Indemnity Agreement Amendment and the performance by Lessee of its
      obligations under this Agreement, the Restructuring Letter Agreement, the
      Lease and the Tax Indemnity Agreement did not, do not and will not require
      the consent or approval of, or the giving of notice to, or the
      registration with, or the recording or filing of any documents with, or
      the taking of any other action in respect of, any Governmental Entity,
      other than (a) the filing of this Agreement with the FAA and (b) filings,
      recordings, notices or other ministerial actions pursuant to any routine
      recording, contractual or regulatory requirements applicable to Lessee.

                  (iv)  ENFORCEABILITY. Assuming the due authorization,
      execution and delivery thereof by Lessor, this Agreement, the
      Restructuring Letter Agreement, the Lease and the Tax Indemnity Agreement
      constitute legal, valid and binding obligations of Lessee, enforceable
      against Lessee in accordance with their respective terms, except as such
      enforceability may be limited by bankruptcy, insolvency, reorganization,
      receivership, moratorium and other similar Laws affecting the rights of
      creditors generally and by general principles of equity (regardless of
      whether such enforceability is considered in a proceeding at law or in
      equity).

                                      -25-

<PAGE>

                  (v)   NO DEFAULT. No event has occurred and is continuing, or
      would result from the effectiveness of this Agreement, the Restructuring
      Letter Agreement or the Tax Indemnity Agreement Amendment, which
      constitutes a Default or an Event of Default under and as defined in the
      Lease.

            (b)   LESSOR REPRESENTATIONS AND WARRANTIES. Lessor hereby
represents and warrants to Lessee that as of the Effective Date;

                  (i)   POWER AND AUTHORITY. Lessor is a corporation duly
      organized, validly existing and in good standing under the laws of the
      state of its incorporation and is duly qualified as a foreign corporation
      and is in good standing in each jurisdiction in which such qualification
      is required, except where the failure to so qualify would not cause, or be
      reasonably expected to cause, a Material Adverse Change with respect to
      Lessor; and Lessor has all requisite power and authority to execute and
      deliver this Agreement, the Restructuring Letter Agreement and the Tax
      Indemnity Agreement Amendment and to perform its obligations under this
      Agreement, the Restructuring Letter Agreement, the Lease and the Tax
      Indemnity Agreement.

                  (ii)  DUE AUTHORIZATION; NO VIOLATION. The execution and
      delivery by Lessor of this Agreement, the Restructuring Letter Agreement
      and the Tax Indemnity Agreement Amendment and the performance by Lessor of
      this Agreement, the Restructuring Letter Agreement, the Lease and the Tax
      Indemnity Agreement have been duly authorized by all necessary action and
      do not and will not violate or conflict with any provision of the
      certificate of incorporation or by-laws of Lessor or any law or any
      regulation, order, writ, injunction or decree of any Governmental Entity
      applicable to Lessor or by which it or any of its properties is bound, or
      result in a breach of any of the terms, conditions or provisions of, or
      constitute a default under, of require any consent or approval of any
      creditor of Lessor pursuant to, or result in the creation or imposition of
      any Lien upon the Aircraft (other than as permitted under the Lease) or
      any of the other assets of Lessor pursuant to the terms of, any mortgage,
      indenture, agreement or instrument to which Lessor is a party or by which
      it or any of its properties is bound, in each case, which violation,
      conflict, breach, default or Lien (other than any Lien upon the Aircraft)
      would cause, or would reasonably be expected to cause, a Material Adverse
      Change with respect to Lessor.

                  (iii) GOVERNMENTAL APPROVALS. The execution and delivery by
      Lessor of this Agreement, the Restructuring Letter Agreement and the Tax
      Indemnity Agreement Amendment and the performance by Lessor of its
      obligations under this Agreement, the Restructuring Letter Agreement, the
      Lease and the Tax Indemnity Agreement did not, do not and will not require
      the consent or approval of, or the giving of notice to, or the
      registration with, or the recording or filing of any documents with, or
      the taking of any other action in respect of, any Governmental Entity,
      other than (a) the filing of this Agreement with the FAA and (b) filings,
      recordings, notices or other ministerial actions pursuant to any routine
      recording, contractual or regulatory requirements applicable to Lessor.

                                      -26-

<PAGE>

                  (iv)  ENFORCEABILITY. Assuming the due authorization,
      execution and delivery thereof by Lessee, this Agreement, the
      Restructuring Letter Agreement, the Lease and the Tax Indemnity Agreement
      constitute legal, valid and binding obligations of Lessor, enforceable
      against Lessor in accordance with their respective terms, except as such
      enforceability may be limited by bankruptcy, insolvency, reorganization,
      receivership, moratorium and other similar Laws affecting the rights of
      creditors generally and by general principles of equity (regardless of
      whether such enforceability is considered in a proceeding at law or in
      equity).

                  (v)   NO ACTUAL KNOWLEDGE OF EVENTS OF DEFAULT. Lessor has no
      actual knowledge (as of the Effective Date) of any Default or Event of
      Default under and as defined in the Lease (it being expressly acknowledged
      and agreed by Lessee that the foregoing representation and warranty (a)
      shall not (and shall not be construed to) limit, in any manner or to any
      extent, any term or provision of Section 8 of this Agreement, and (b) is
      without prejudice to Lessor's rights and remedies referred to in Section 8
      of this Agreement.)

      SECTION 6. EFFECT OF THIS AGREEMENT; CERTAIN TAX TREATMENT. Except as
specifically amended hereby, the Lease shall remain in full force and effect as
in existence on the date hereof and is hereby ratified and confirmed in all
respects. From and after the Effective Date, any reference in any Operative
Document, or otherwise by Lessor or Lessee, to the Lease shall mean the Lease,
as amended by this Agreement. Lessee and Lessor acknowledge and agree that, as
consideration for the Lessor Accommodations, Lessor is permitted to retain the
outstanding balance of the Lessor 467 Loan (as defined in the Lease prior to the
Effective Date). Thus, (i) on and as of April 11, 2003 (the date on which the
Term Sheet was executed and delivered by or on behalf of Lessor and Lessee), the
Lessor 467 Loan (as defined in the Lease prior to the Effective Date) is deemed
paid, satisfied and discharged in full (without any further obligation of Lessor
to Lessee in respect thereof), and (ii) Lessor will (a) include in its income
for Federal income tax purposes for its tax year ending in 2003 an amount equal
to the outstanding principal balance of the Lessor 467 Loan (as defined in the
Lease prior to the Effective Date) on and as of April 10, 2003, and (b)
characterize such income as ordinary income.

      SECTION 7. TERM SHEET SUPERSEDED; OTHER TERM SHEET MATTERS. This
Agreement, the Restructuring Letter Agreement, the Other Restructuring Lease
Amendments and the Other Restructuring Letter Agreements supersede the Term
Sheet and the Other Term Sheet in their respective entireties. This Agreement
and the Restructuring Letter Agreement supersede the Term Sheet in its entirety
to the extent the Term Sheet relates to the Lease. Lessor, Lessee and (by its
execution and delivery of its Lessee Party Acknowledgment and Agreement) each
other Lessee Party acknowledge and agree that all moneys deposited by Lessees
(as defined in the Term Sheet and the Other Term Sheet) in escrow pursuant to
the Term Sheet and the Other Term Sheet have been released from escrow and
applied to the payment of the installments of Basic Rent under the Leases (as
the terms "Basic Rent and "Leases" are defined in the Term Sheet and the Other
Term Sheet) that are the subject of the Specified Payment Defaults under the
Leases (as the terms "Specified Payment Defaults" and "Leases" are defined in
the Term Sheet and the Other Term Sheet). Lessor, Lessee and (by its execution
and delivery of its Lessee Party Acknowledgment and Agreement) each other Lessee
Party further acknowledge and agree that

                                      -27-

<PAGE>

GECAS has fully performed all obligations to be performed by GECAS under the
Term Sheet (including, without limitation, Section 5 thereof) and the Other Term
Sheet.

      SECTION 8. RESERVATION OF RIGHTS. Except as expressly provided in this
Agreement, nothing in this Agreement shall be construed as a present or future
waiver of existing or future Events of Default under and as defined in the
Lease, or of any rights or remedies of Lessor under the Lease or at law or in
equity. Except as expressly provided in this Agreement, nothing in this
Agreement shall be construed to limit the right of Lessor to exercise rights or
remedies, whether against Lessee or any Affiliate of Lessee or any of its
officers or directors or any other Person, available under the Lease or at law
or in equity by reason or in respect of any facts, circumstances or events
pertaining to Lessee or any of its Affiliates (regardless of whether any of such
facts, circumstances or events has heretofore been disclosed by or on behalf of
Lessee or any of its Affiliates or has heretofore been or is now otherwise in
the public domain and regardless of whether Lessor or any of its Affiliates may
be deemed to have had or to have knowledge of any thereof). Nothing in this
Agreement shall be construed as: (i) a present or future waiver, amendment,
supplement, termination, extension or modification of any agreement or
instrument or any transaction which is not expressly referred to herein and (a)
which has been entered into or which arose prior to the Effective Date
(including, without limitation, the Other Agreements in effect prior to the
Effective Date and the transactions contemplated thereby) or (b) which is
entered into or arises after the Effective Date; or (ii) as entitling Lessee or
any of its Affiliates to any right to reduction of future payments by reason of,
or offset or recoupment against or with respect to, or any other right in, to or
in respect of, any payment previously made by Lessee or any of its Affiliates
under the Lease or any of the other Leases (as the term "Leases" is defined in
the Term Sheet and the Other Term Sheet) (it being understood that the sole
credits, offsets, recoupments or other rights to or in respect of any such
payment were as described in a footnote to an exhibit, schedule or annex to
certain of the other Leases (as so defined) and have been fully given, taken and
effected); or (iii) an admission of any kind.

      SECTION 9. FURTHER ASSURANCES. Each of Lessor and Lessee agrees to do such
further acts and things or cause to be performed such further acts and things,
including, without limitation, execute and deliver, or cause to be executed and
delivered, such agreements and other documents, as the other party hereto shall
reasonably require or deem advisable to effectuate the purposes of this
Agreement, the Restructuring Letter Agreement or the Tax Indemnity Agreement
Amendment or to better assure or confirm its rights and remedies hereunder or
thereunder.

      SECTION 10. TIME OF THE ESSENCE; INTEREST AT PAST DUE RATE. Time is of the
essence with respect to each provision of this Agreement, the Restructuring
Letter Agreement, the Tax Indemnity Agreement Amendment and each of the
Operative Documents in which time is a factor. Amounts not paid by Lessee when
due pursuant to Section 2(e) hereof shall bear interest at the Past Due Rate
from and including the date when due to but excluding the date when paid in
full.

      SECTION 11. SURVIVAL. All covenants, agreements, representations and
warranties made in this Agreement and in any certificates, documents or
instruments delivered pursuant hereto shall survive the execution and delivery
of this Agreement and the occurrence of the Effective

                                      -28-

<PAGE>

Date pursuant hereto; and the agreements contained in Sections 2(d), 2(e), 7 and
8 of this Agreement shall survive termination of the Lease.

      SECTION 12. JURISDICTION. Lessor and Lessee each hereby irrevocably
submits itself to the non-exclusive jurisdiction of the United States of America
District Court for the Southern District of New York and to the non-exclusive
jurisdiction of the Supreme Court of the State of New York, New York County, for
the purposes of any suit, action or other proceeding arising out of this
Agreement, the subject matter hereof or any of the transactions contemplated
hereby brought by Lessor, Lessee, or their successors or permitted assigns.

      SECTION 13. MISCELLANEOUS. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. No term or provision of
this Agreement may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by Lessor and Lessee. The section and
paragraph headings in this Agreement and the table of contents are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof and all references herein to numbered
sections, unless otherwise indicated, are to sections of this Agreement. This
Agreement shall inure to the benefit of, and shall be binding upon, Lessor and
Lessee and their respective successors and permitted assigns. All references
herein to a Person (including, without limitation, Atlas Holdings) shall mean
and include any successor to such Person. This Agreement, the Tax Indemnity
Agreement Amendment, the Restructuring Letter Agreement and the Operative
Documents (i) constitute (as of the Effective Date) the entire agreement of the
parties hereto with respect to the subject matter hereof and thereof, (ii)
supersede all prior and contemporaneous understandings and agreements of such
parties with respect to such subject matter, and (iii) may not be contradicted
by evidence of prior, contemporaneous or subsequent oral agreements of the
parties hereto with respect to such subject matter (it being understood and
agreed, however, that nothing contained herein shall (or shall be deemed or
construed to) supersede or to otherwise alter, limit or affect, in any manner or
to any extent, any term or provision of any Other Restructuring Lease Amendment,
any Tax Indemnification Agreement Amendment or Tax Indemnity Agreement Amendment
(as defined in any Other Restructuring Lease Amendment) or any Other
Restructuring Letter Agreement); and there are no oral agreements of the parties
hereto with respect to such subject matter. THIS AGREEMENT HAS BEEN DELIVERED IN
THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

      SECTION 14. DATING AND EFFECTIVENESS. Although this Agreement is dated as
of the date first written above for convenience, this Agreement shall be
effective as of the Effective Date.

                            [Signature Page Follows]

                                      -29-

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized.

                                TUOLUMNE RIVER AIRCRAFT FINANCE, INC.,
                                as Lessor

                                By /s/ Charles H. Meyer
                                   ---------------------------------
                                   Name:  Charles H. Meyer
                                   Title: Vice President

                                ATLAS AIR, INC.,
                                as Lessee

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

               [Signature Page to Amendment Agreement (MSN 32838)]

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized.

                                TUOLUMNE RIVER AIRCRAFT FINANCE, INC.,
                                as Lessor

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

                                ATLAS AIR, INC.,
                                as Lessee

                                By /s/ William C. Bradley
                                   ---------------------------------
                                   Name:  William C. Bradley
                                   Title: Vice President & Treasurer

               [Signature Page to Amendment Agreement (MSN 32838)]

<PAGE>

                           SCHEDULE TO EXHIBIT 10.7.2

The agreements listed below are substantially identical to this exhibit and are
not being filed separately as exhibits pursuant to instruction 2 to Regulation
S-K, Item 601.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
REGISTRATION        MANUFACTURER'S          LESSEE          LESSOR                   AGREEMENT
NUMBER              SERIAL NUMBER(S)
--------------------------------------------------------------------------------------------------------------
<S>                 <C>                     <C>             <C>                      <C>
N418MC              32840                   Atlas Air,      AFS Investments          Amendment
                                            Inc.            XL-LLC                   Agreement, dated
                                                                                     August 1, 2003,
                                                                                     between AFS
                                                                                     Investments XL-LLC.,
                                                                                     as Lessor and Atlas
                                                                                     Air, Inc., as Lessee in
                                                                                     respect of Lease dated
                                                                                     November 22, 2002
                                                                                     with respect to
                                                                                     Aircraft N418MC
--------------------------------------------------------------------------------------------------------------
</TABLE>

                                       1EXHIBIT 10.8.1

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

                            AIRCRAFT LEASE AGREEMENT

                                     between

                             POLARIS HOLDING COMPANY

                                     Lessor

                                       and

                              POLAR AIR CARGO, INC.

                                     Lessee

                          Dated as of October 24, 2001

                   One Used Boeing 747-200F Freighter Aircraft
                         Manufacturer's Serial No. 22237
             Federal Aviation Administration Registration No. N920FT

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                     <C>
Section 1.    Definitions ........................................................................       1
Section 2.    Lease ..............................................................................      12
Section 3.    Delivery, Acceptance, Term .........................................................      14
Section 4.    Rent ...............................................................................      14
Section 5.    Representations and Warranties .....................................................      17
Section 6.    Registration, Operation, Possession, Subleasing and Records ........................      21
Section 7.    Information ........................................................................      27
Section 8.    Covenants of Lessee ................................................................      28
Section 9.    Maintenance; Operation; Replacement of Parts; Alterations,
                 Modification and Additions ......................................................      31
Section 10.   General Tax Indemnity ..............................................................      34
Section 11.   Casualty Occurrences ...............................................................      35
Section 12.   Insurance ..........................................................................      39
Section 13.   Indemnification ....................................................................      39
Section 14.   Liens ..............................................................................      44
Section 15.   Perfection of Title and Further Assurances .........................................      45
Section 16.   Return of Aircraft and Records .....................................................      46
Section 17.   Events of Default ..................................................................      47
Section 18.   Remedies ...........................................................................      49
Section 19.   Assignment; Merger .................................................................      53
Section 20.   Intentionally Omitted ..............................................................      54
Section 21.   Alienation .........................................................................      54
Section 22.   Foreign Registration ...............................................................      55
Section 23.   Miscellaneous ......................................................................      57
</TABLE>

EXHIBITS

Exhibit A     -  Schedule and Description of Aircraft
Exhibit B     -  Aircraft Documents
Exhibit C     -  Definitions
Exhibit D     -  Lease Supplement
Exhibit E     -  Return Condition Requirements
Exhibit F     -  Report by Insurance Broker
Exhibit G     -  Insurance
Exhibit H-1   -  Form of Opinion of Special Counsel to Lessee
Exhibit H-2   -  Form of Opinion of Special Counsel to Guarantor
Exhibit I     -  Form of Opinion of In-house Counsel to Lessee
Exhibit J-1   -  Form of Opinion of Special Counsel to Lessor
Exhibit J-2   -  Form of Opinion of In-house Counsel to Lessor
Exhibit K     -  Form of Subordination, Non-Disturbance and Attomment Agreement

                                       -1-

<PAGE>

Exhibit L     -  Form of Parent Guaranty

                                      -ii-

<PAGE>

                            AIRCRAFT LEASE AGREEMENT

            THIS AIRCRAFT LEASE AGREEMENT dated as of October 24, 2001 ("Lease")
between POLARIS HOLDING COMPANY, a Delaware corporation, with its principal
place of business at 201 Mission Street, 27th Floor, San Francisco, California
94105 ("Lessor"), and Polar Air Cargo, Inc., a California corporation, with its
principal place of business at One Hundred Oceangate, Fifteenth Floor, Long
Beach, California 90802 ("Lessee").

            Lessee desires to lease from Lessor, and Lessor is willing to lease
to Lessee, the Aircraft (as hereinafter defined) upon and subject to the terms
and conditions of this Aircraft Lease Agreement.

                                    AGREEMENT

            In consideration of the mutual promises herein, Lessor and Lessee
agree as follows:

            Section 1. DEFINITIONS.

            The following terms shall have the following respective meanings for
all purposes of this Lease:

            ACMI CONTRACT means (i) any contract entered into by Lessee pursuant
to which Lessee furnishes the aircraft, crew, maintenance and insurance and the
other party to such contract bears all other operating expenses and (ii) any
similar contract in which the other party to such contract provides the flight
crew, all substantially in accordance with the historical practices of Atlas
Air, Inc. ("Atlas").

            ACT means part A of subtitle VII of title 49, United States Code.

            ACTUAL KNOWLEDGE means, as it applies to Lessor or Lessee, actual
knowledge of a Vice President or more senior officer of Lessor or Lessee,
respectively, or any other officer of Lessor or Lessee, respectively, having
responsibility for the transactions contemplated by the Operative Documents;
PROVIDED that each of Lessee and Lessor shall be deemed to have "Actual
Knowledge" of any matter as to which it has received notice from the other
party, such notice having been given pursuant to Section 23(c) of this Lease.

            ADDITIONAL INSURED shall mean Lessor and its Affiliates, successors
and permitted assigns, and the respective directors, officers, employees and
agents of the foregoing.

            AFFILIATE shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person, including,

<PAGE>

                                       -2-

without limitation, any limited partnership or grantor trust of which such
Person or any Affiliate of such Person is the sole or co-general partner or
managing agent and any trustee of a trust of which the beneficiary is such
Person, any Affiliate of such Person, such a limited partnership, or such a
grantor trust.

            AFTER-TAX BASIS means with respect to any payment to be received
(actually or constructively) by a Person, the amount of such payment plus a
further payment or payments so that the net amount received (actually or
constructively) by such Person, after deducting from such payments and such
further payments the amount of all Taxes imposed on the Person receiving
(actually or constructively) such payments by any taxing authority with respect
to such payments (net of any current credits, deductions or other Tax benefits
arising from the payment by such Person of any amount, including Taxes, with
respect to the payment received or arising by reason of the receipt or accrual
by such Person of the payment received) is equal to the original payment
required to be received (actually or constructively). Unless expressly provided
otherwise, in making calculations pursuant to this definition with respect to a
Person, it shall be assumed that such Person is fully taxable for all income tax
purposes at the highest Federal rate and the highest state and local rates
applicable to corporations in the relevant jurisdiction at the time such amount
is taxable to such Person.

            AIRCRAFT shall mean the Airframe, together with (a) the Engines,
whether or not installed on the Aircraft, (b) all Parts or components thereof,
(c) ancillary equipment or devices furnished with the Aircraft, under this Lease
(such ancillary equipment and devices, if any, will be identified in the Lease
Supplement), (d) all Aircraft Documents, and (e) all substitutions, replacements
and renewals of any and all thereof.

            AIRCRAFT DOCUMENTS shall mean the items identified on EXHIBIT B
hereto, all of which shall be maintained in the English language.

            AIRFRAME shall mean (a) the aircraft described on EXHIBIT A, but not
including any Engine installed thereon, and (b) any and all Parts so long as the
same shall be incorporated or installed on or attached to the Airframe, or so
long as title thereto shall remain vested in the Lessor in accordance with the
terms of Section 9, after removal from the Airframe.

            APPROVED INSURER shall mean any reputable insurance company or
insurance broker of internationally recognized responsibility and standing
specializing in aircraft insurance.

            AVIATION AUTHORITY shall mean the FAA or, if the Aircraft is
permitted to be, and is, registered with any other Governmental Entity under and
in accordance with Section 6(a)(ii), such other Governmental Entity.

<PAGE>

                                       -3-

            BASIC RENT shall mean the rent for the Aircraft specified in Letter
Agreement No. 1 and payable throughout the Term pursuant to Section 4(a),
hereof.

            BASIC RENT PAYMENT DATE shall mean the day for payment of Basic Rent
determined in accordance with the provisions set forth in Letter Agreement No.
1. It is further understood and agreed that if a Basic Rent Payment Date shall
fall on a day which is not a Business Day, any payment due on such Basic Rent
Payment Date shall be made on the next succeeding Business Day.

            BUSINESS DAY shall mean any day other than a Saturday, Sunday or
other day on which banking institutions in New York, New York are authorized or
required by law to be closed.

            CASH EQUIVALENTS means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with any bank, trust company or national banking
association incorporated or doing business under the laws of the United States
or any state thereof having a combined capital and surplus and retained earnings
of at least $500,000,000 and having a rate of "C" or better from the Thomson
Bank Watch Service; or (d) commercial paper of any issuer doing business under
the laws of the United States or one of the states thereof and in each case
having a rating assigned to such commercial paper by Standard & Poor's or
Moody's equal to Al or PI or higher.

            CASUALTY OCCURRENCE means, with respect to the Aircraft, the
Airframe or any Engine, any of the following circumstances, conditions or events
with respect to such property, for any reason whatsoever:

            (a)   the destruction of such property, damage to such property
      beyond economic repair or rendition of such property permanently unfit for
      normal use by Lessee;

            (b)   the actual or constructive total loss of such property or any
      damage to such property, or requisition of title or use of such property,
      which results in an insurance settlement with respect to such property on
      the basis of a total loss or constructive or compromised total loss;

            (c)   any theft, hijacking or disappearance of such property for a
      period of 180 consecutive days or more;

<PAGE>

                                       -4-

            (d)   any seizure, condemnation, confiscation, taking or requisition
      of such property by any Government Entity or purported Government Entity
      that constitutes a taking of title of such property;

            (e)   any seizure, condemnation, confiscation, taking or requisition
      of use of such property by any Government Entity or purported Government
      Entity (other than the U.S. Government or the country of registration of
      the Aircraft) that does not constitute a taking of title to such property
      for a period exceeding 180 consecutive days or, if earlier, the end of the
      Term; and

            (f)   any seizure, condemnation, confiscation, taking or requisition
      of use of such property by the U.S. Government or the country of
      registration of the Aircraft that continues until the 30th day after the
      last day of the Term, PROVIDED that no such Casualty Occurrence shall
      exist if Lessor shall have elected not to treat such event as a Casualty
      Occurrence pursuant to Section 1l(h) of the Lease; and

            (g)   as a result of any law, rule, regulation, order or other
      action by the Aviation Authority or by any Government Entity of the
      government of registry of the Aircraft or by any Government Entity
      otherwise having jurisdiction over the operation or use of the Aircraft,
      the use of such property in the normal course of Lessee's business of
      cargo air transportation is prohibited for a period of 180 consecutive
      days, unless Lessee, prior to the expiration of such 180 day period, shall
      have undertaken and shall be diligently carrying forward such steps as may
      be necessary or desirable to permit the normal use of such property by
      Lessee and such normal use shall have been resumed prior to the expiration
      of a period of two consecutive years, PROVIDED that no Casualty Occurrence
      shall be deemed to have occurred after the expiration of such two-year
      period if (A) such prohibition has been applicable to Lessee's entire U.S.
      fleet of such property and (B) prior to the expiration of such two-year
      period, Lessee shall have conformed at least one unit of such property in
      its fleet to the requirements of any such law, rule, regulation, order or
      other action and commenced regular commercial use of the same in such
      jurisdiction and (C) Lessee shall be diligently carrying forward, in a
      manner which does not discriminate against such property in so conforming
      such property, steps which are necessary or desirable to permit the normal
      use of the Aircraft by Lessee and such normal use shall have resumed prior
      to the expiration of a period of three years or such use shall be
      prohibited at the expiration of the Term.

            CASUALTY VALUE means, with respect to the Aircraft, the amount set
forth in Schedule 1 to the Letter Agreement No. 1 (as adjusted from time to time
in accordance with Section 4(a)(iii) of the Lease) opposite the Casualty Value
Date as of which the Casualty Value is required to be computed.

<PAGE>

                                       -5-

            CASUALTY VALUE DATE means, for any month, the day in such month
specified in Schedule 1 to the Letter Agreement No. 1.

            CERTIFICATED AIR CARRIER shall mean any Person (except the United
States Government) domiciled in the United States of America and holding a
Certificate of Convenience and Necessity issued under Sections 401 or 418 of the
Federal Aviation Act by the Department of Transportation or any predecessor or
successor agency thereto, or, in the event such Certificates shall no longer be
issued, any Person (except the United States Government) domiciled in the United
States of America and legally engaged in the business of transporting for hire
passengers or cargo by air to, from or between points within the United States
of America, and, in either event, operating commercial jet aircraft.

            CITIZEN OF THE UNITED STATES is defined in Section 40102(a)(15) of
the Act and FAA Regulations.

            CONSENT AND AGREEMENT means the Manufacturer Consent and Agreement
dated as of even date with this Lease, of the Manufacturer.

            CRAF means the Civil Reserve Air Fleet Program established pursuant
to 10 U.S.C. Section. 9511-13 or any similar substitute program.

            DEFAULT shall mean any event which with the lapse of time or the
giving of notice or both would become an Event of Default.

            DELIVERY DATE shall mean the date on which the Aircraft is delivered
to and accepted by Lessee for purposes of this Lease, which shall be the date
set forth in the Lease Supplement as the Delivery Date.

            DESIGNATED MANUFACTURER means The Boeing Company, Airbus Industrie,
Rolls Royce plc, Rolls Royce Deutschland GmbH, United Technologies Corp.,
General Electric Company, any of their respective Affiliates, or any successor
thereto.

            DISCOUNT RATE shall have the meaning set forth in Letter Agreement
No. 1.

            DOLLARS shall mean lawful currency of the United States of America.

            DOT means the Department of Transportation of the United States or
any Government Entity succeeding to the functions of such Department of
Transportation.

            ENGINE shall mean (a) any engine installed on or furnished with the
Aircraft on the Delivery Date, such engine being identified as to manufacturer,
type and manufacturer serial number on EXHIBIT A hereto to be designated by the
Lessor on the Delivery Date; or (b) any Replacement Engine which may from-time
to time be substituted therefor pursuant to

<PAGE>

                                       -6-

Section 11, together in each case with any and all Parts incorporated or
installed in or attached thereto or any and all Parts removed therefrom so long
as title thereto remains vested in Lessor in accordance with the terms of
Section 9 after removal from such Engine. Except as otherwise set forth herein,
at such time as a Replacement Engine shall be so substituted, such replaced
Engine shall cease to be an Engine hereunder. The term "Engines" means, as of
any date of determination, all Engines then leased hereunder.

            ENGINE MANUFACTURER shall mean the party specified on EXHIBIT C,
hereto.

            EVENT OF DEFAULT shall have the meaning specified in any one or more
clauses in Section 17.

            EXPIRATION DATE shall mean the date specified on EXHIBIT C, hereto.

            FAA shall mean the Federal Aviation Administration of the United
States Department of Transportation or any successor.

            FAIR MARKET RENTAL VALUE means the fair market rental value in
Dollars for the Aircraft that would apply in an arm's length transaction between
an informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
remainder of the Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made semiannually, and (c) the Aircraft would be leased during any
such remainder of the Term on the same terms and conditions as are set forth in
the Lease with respect to the Term.

            FAIR MARKET SALES VALUE means the fair market sales value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing buyer under no compulsion to buy, and an informed and
willing seller under no compulsion to sell, the Aircraft, in a transaction that
would close on or about the relevant time of determination, assuming that (a)
the Aircraft has been maintained in accordance with, and is in the condition
required by, the Lease and (b) the Aircraft would be delivered to such informed
and willing buyer in the return condition required by the Lease.

            FEDERAL AVIATION ACT shall mean the United States Federal Aviation
Act of 1958, as amended.

            FOP shall mean foreign object damage.

            GAAP shall mean generally accepted accounting principles,
consistently applied with past practices.

<PAGE>

                                       -7-

            GOVEMMENTAL ENTITY shall mean and include (a) any national
government, or political subdivision thereof or local jurisdiction therein; (b)
any board, commission, department, division, organ, instrumentality, court, or
agency of any entity described in (a) above, however constituted; and (c) any
association, organization, or institution of which any entity described in (a)
or (b) above is a member or to whose jurisdiction any such entity is subject or
in whose activities any such entity is a participant but only (except for
purposes of defining Law below) to the extent that any of the preceding have
jurisdiction over the Aircraft or its operations.

            GUARANTOR shall mean Atlas Air Worldwide Holdings, Inc., a Delaware
corporation.

            INDEMNITEE shall mean each of Lessor, GE Capital Aviation Services,
Inc., GE Capital Aviation Services, Limited, and each of their respective
Affiliates, officers, directors and employees; PROVIDED, HOWEVER, that no such
Affiliate that is a manufacturer of the Aircraft, any Engine or any Parts, and
no such Affiliate that provides maintenance or other contractual services to
Lessee, in capacity as such, shall be deemed to be an Affiliate for purposes of
Section 13 of this Lease.

            INSURANCE BROKER shall mean Lessee's regularly retained independent
aircraft insurance broker.

            INTEREST RATE shall have the meaning set forth in Letter Agreement
No. 1.

            LAW shall mean and include (a) any statute, decree, constitution,
regulation, order, judgment or other directive of any applicable Governmental
Entity; (b) any treaty, pact, compact or other agreement to which any applicable
Governmental Entity is a signatory or party; (c) any judicial or administrative
interpretation or application of any Law described in (a) or (b) above; and (d)
any amendment or revision of any Law described in (a), (b) or (c) above.

            LEASE shall mean this Lease, each Lease Supplement, the Letter
Agreement No. 1, and any and all amendments, revisions, supplements and
modifications thereto.

            LEASE IDENTIFICATION shall have the meaning set forth on EXHIBIT C.
hereto.

            LEASE SUPPLEMENT shall mean the Lease Supplement, substantially in
the form of EXHIBIT D hereto, entered into between Lessor and Lessee.

            LESSEE'S ADDRESS shall have the meaning set forth on EXHIBIT C,
hereto.

            LESSOR'S ADDRESS shall have the meaning set forth on EXHIBIT C
hereto.

<PAGE>

                                       -8-

            LESSOR'S LIENS shall mean Liens arising as a result of (a) claims
against Lessor not related to the transactions contemplated by this Lease or the
other Operative Documents; or (b) acts or omissions of Lessor, in violation of
Lessor's obligations under this Lease or other Operative Documents or not
contemplated and expressly permitted under this Lease; or (c) Taxes imposed
against Lessor which are not indemnified against by Lessee pursuant to Section
10; or (d) claims against Lessor arising out of the voluntary transfer by Lessor
of all or any part of its interests in the Aircraft or this Lease, other than a
transfer pursuant to Sections 11 or 18 hereof.

            LETTER AGREEMENT NO. 1 shall mean that certain letter agreement
dated the date of this Lease between Lessor and Lessee, setting forth the
definitions of certain terms used in this Lease and in the Lease Supplement and
addressing certain other matters.

            LIEN shall mean any mortgage, pledge, lien, charge, encumbrance,
lease, exercise of rights, security interest or claim affecting the title to or
any interest in property.

            MAINTENANCE PROGRAM shall mean the FAA approved maintenance program
in effect for the Aircraft as described in Section C of Letter Agreement No. 1,
as the same may be amended from time to time, encompassing scheduled
maintenance, condition monitored maintenance and on-condition maintenance of the
Airframe. Engines and components of the Aircraft.

            MANUFACTURER shall have the meaning set forth on EXHIBIT C, hereto.

            MATERIAL ADVERSE CHANGE shall mean, with respect to any Person, any
event, condition or circumstance that materially and adversely affects such
person's business or consolidated financial condition, or its ability to observe
or perform its obligations, liabilities and agreements under the Operative
Documents.

            MINIMUM LIABILITY INSURANCE AMOUNT shall mean $750,000,000; provided
that if after the Delivery Date one party delivers written notice to the other,
including evidence from an insurance broker(s) of international reputation, in
form and substance satisfactory to the recipient, that the custom in the
commercial U.S. aircraft leasing industry with respect to new lease
transactions, similar to the transactions contemplated by the Operative
Documents, with commercial U.S. cargo air carriers which are similarly situated
with the Lessee and relating Boeing 747 aircraft of the same type as the
Aircraft, is to require an amount of War' Risk Insurance of less (or more) than
$750,000,000, the Lessor and the Lessee shall promptly amend this definition of
"Minimum Liability Insurance Amount" to reflect such lesser (or greater) amount;
provided further that in no event shall the "Minimum Liability Insurance Amount"
be reduced below $565,000,000.

<PAGE>

                                       -9-

            MORTGAGE CONVENTION shall mean the Convention for the International
Recognition of Rights in Aircraft, signed (ad referendum) at Geneva,
Switzerland, on June 19, 1948, and amended from time to time, but excluding the
terms of any adhesion thereto or ratification thereof containing reservations to
which the United States of America does not accede.

            NET ECONOMIC RETURN means the Lessor's nominal after tax book yield
(utilizing the multiple investment sinking fund method of analysis) and
aggregate net after tax cash, computed on the basis of the same methodology and
assumptions as were utilized by the initial Lessor in determining Basic Rent
amounts and Casualty Value amounts, as of the Delivery Date, provided, that, if
the initial Lessor shall have transferred its interest, Net Economic Return
shall be calculated as if the initial Lessor has retained its interest.

            NET PRESENT VALUE OF RENTS means the net present value, as of the
date of calculation, of Basic Rent, discounted at the Discount Rate.

            NET WORTH means, for any Person, the excess of its total assets over
its total liabilities in accordance with GAAP.

            OFFICER'S CERTIFICATE means a certificate signed by the Chairman,
the President, any Vice President (including those with varying ranks such as
Executive, Senior, Assistant or Staff Vice President), the Treasurer or the
Secretary of the party executing the certificate.

            OPERATIVE DOCUMENTS shall mean this Lease, all Lease Supplements
hereto, Letter Agreement No. 1, the Parent Guaranty and any other document or
agreement delivered or entered into in connection with the foregoing, and any
and all amendments, revisions, supplements and modifications thereto.

            PARENT GUARANTY shall mean the Parent Guaranty,  substantially
in the form of EXHIBIT L hereto, entered into by Guarantor, in favor of Lessor.

            PARTIES shall mean Lessor and Lessee and their respective permitted
successors and assigns.

            PARTS shall mean all appliances, components, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than complete Engines or engines), which may now or from time to time be
incorporated or installed in or attached to the Airframe or any Engine. Except
as otherwise set forth herein, at such time as a replacement part shall be
substituted for a Part in accordance with Section 9 hereof, the Part so replaced
shall cease to be a Part hereunder.

            PAYMENT LOCATION shall have the meaning specified on EXHIBIT C,
hereto.

<PAGE>

                                      -10-

            PERMITTED AIR CARRIER means (i) any Permitted Manufacturer, (ii) any
Permitted Foreign Air Carrier, (iii) any person approved in writing by Lessor or
(iv) any U.S. Air Carrier.

            PERMITTED COUNTRY shall mean any country listed on Schedule 2 to the
Letter Agreement.

            PERMITTED FOREIGN AIR CARRIER shall mean any air carrier with its
principal executive offices in any Permitted Country and which is authorized to
conduct commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.

            PERMITTED FOREIGN MANUFACTURER shall mean any Designated
Manufacturer domiciled outside the United States or (ii) any manufacturer of
airframes or aircraft engines, or any Affiliate thereof, which is domiciled in a
Permitted Country.

            PERMITTED INSTITUTION shall mean (a) any bank, trust company,
insurance company, financial institution or corporation (other than, without
Lessee's consent, a commercial air carrier, a commercial aircraft operator, a
freight forwarder or Affiliate of any of the foregoing), in each case with a
combined capital and surplus or Net Worth of at least $75,000,000.

            PERMITTED MANUFACTURER shall mean (i) any manufacturer of airframes
or aircraft engines, or any Affiliate thereof, which is domiciled in the United
States or (ii) any Permitted Foreign Manufacturer.

            PERMITTED SUBLEASE shall mean a sublease permitted under Section
6(b)(vii) of the Lease.

            PERMITTED SUBLESSEE shall mean the sublessee under a Permitted
Sublease.

            PERSONS or PERSONS shall mean individuals, firms, partnerships,
joint ventures, trusts, trustees, Government Entities, organizations,
associations, corporations, government agencies, committees, departments,
authorities and other bodies, corporate or incorporate, whether having distinct
legal status or not, or any member of any of the same.

            RENT shall mean Basic Rent and Supplemental Rent, collectively.

            REPLACEMENT ENGINE shall mean an engine that is the same or improved
make and model as the Engine to be replaced, and that is suitable for
installation and use on the Air-frame, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with this Lease).

<PAGE>

                                      -11-

            SPECIAL DEFAULT shall mean the occurrence of any Default referred to
in Sections 17(a), (e), (f) and (g) of this Lease.

            SUPPLEMENTAL RENT shall mean, without duplication, all amounts,
liabilities and obligations (other than Basic Rent) which Lessee assumes or
agrees to pay hereunder to Lessor, including without limitation, (a) any payment
of Casualty Value and (b) any payment of indemnity required by Sections 10 and
13 hereof.

            TAXES shall mean any and all sales, use, business, gross income,
personal property, transfer, fuel, leasing, occupational, value added, excess
profits, excise, gross receipts, franchise, stamp, income, levies, imposts,
withholdings or other taxes or duties of any nature, together with any
penalties, fines, charges or interest thereon.

            TERM shall mean the period commencing on the Delivery Date and to
and including the Expiration Date; provided that if at the scheduled end of the
Term, the Aircraft or Airframe is being used, or was within six (6) months prior
thereto being used, by the U.S. Government pursuant to CRAF, the Term shall be
deemed extended for the period necessary to accommodate usage of the Aircraft or
Airframe pursuant to CRAF plus up to six months thereafter, and Lessee shall be
obligated to pay Rent with respect to any such period of extension at a daily
equivalent rate equal to the average of the Basic Rent paid prior to the
Expiration Date.

            TRANSFER shall mean the transfer, sale, assignment or other
conveyance of all or any interest in any property, right or interest.

            TRANSFEREE shall mean a person to which the Lessor purports or
intends to Transfer any or all of its right, title or interest in the Aircraft
and the Lease respectively, as described in Section 21 of the Lease.

            TRANSPORTATION CODE means that portion of the United States Code
comprising those provisions formerly referred to as the Federal Aviation Act of
1958, as amended, or any subsequent legislation that amends, supplements or
supersedes such provisions.

            UNITED STATES or "U.S." shall mean the United States of America;
PROVIDED, that for geographic purposes, "United States" means, in aggregate, the
50 states and the District of Columbia of the United States of America.

            U.S. AIR CARRIER shall mean any United States air carrier that is a
Citizen of the United States holding an air carrier operating certificate issued
by the Secretary of Transportation pursuant to chapter 447 of title 49 of the
United States Code for aircraft capable of carrying 10 or more individuals or
6000 pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations,

<PAGE>

                                      -12-

or which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.

            U.S. PERSON shall mean any Person described in Section 7701(a)(30)
of the Code.

            U.S. GOVERNMENT shall mean the federal government of the United
States, or any instrumentality or agency thereof the obligations of which are
guaranteed by the full faith and credit of the federal government of the United
States.

            WET LEASE means any arrangement whereby Lessee or a Permitted
Sublessee agrees to furnish the Aircraft (including the Engines or engines
installed thereon), to a third party pursuant to which the Aircraft (including
the Engines or engines installed thereon) shall at all times be under the
operational control of Lessee or a Permitted Sublessee and operated by a crew
under the operational control of Lessee; PROVIDED that Lessee's obligations
under the Lease (including, without limitation, its obligations with respect to
maintenance, insurance, use and operation) shall continue in full force and
effect notwithstanding any such arrangement.

            When used in Sections 5(a) and 23(b) of this Lease, the first letter
of the above-defined terms shall be underlined.

            Section 2. LEASE.

            (a)   Lessor hereby agrees to lease the Aircraft to Lessee, and
Lessee hereby agrees to lease the Aircraft from Lessor, on the terms of this
Lease, as supplemented by Letter Agreement No. 1, which the parties have
executed and delivered contemporaneously with the execution and delivery of this
Lease, and by the Lease Supplement which the parties have executed and delivered
contemporaneously with the execution and delivery of this Lease.

            (b)   Contemporaneously with the execution of this Lease, Lessee is
delivering the following documents to Lessor:

              (i)   a Lease Supplement in the form of EXHIBIT D, hereto,
      completed, executed and delivered by Lessee;

              (ii)  a Parent Guaranty in the form of EXHIBIT L, hereto,
      completed, executed and delivered by Guarantor;

              (iii) a certificate evidencing due authority of Lessee for the
      execution, delivery and performance of this Lease and all other documents
      related thereto, together with an incumbency certificate as to the person
      or persons authorized to execute and deliver such documents on behalf of
      Lessee;

<PAGE>

                                      -13-

                  (iv)  a favorable opinion of special counsel to Lessee as may
      be reasonably satisfactory to Lessor, dated on or about the date hereof,
      and a favorable opinion of special counsel to Guarantor as may be
      reasonably satisfactory to Lessor, dated on or about the date hereof, each
      in the form of EXHIBIT H-1 and EXHIBIT H-2, respectively, hereto;

                  (v)   a favorable opinion of in-house counsel to Lessee as may
      be reasonably satisfactory to Lessor, dated on or about the date hereof,
      in the form of EXHIBIT I, hereto;

                  (vi)  an Officer's Certificate, dated as of the date hereof,
      stating that: (A) the representations and warranties contained in Section
      5(d) hereof are true and accurate on and as of such date; and (B) no event
      has occurred and is continuing, or would result from the lease of the
      Aircraft which constitutes a Default or an Event of Default under this
      Lease;

                  (vii) an opinion or report, dated as of date hereof, signed by
      an Insurance Broker or Approved Insurer as to the due compliance with the
      insurance provisions of Section 12 hereof with respect to the Aircraft,
      substantially in the form as set forth on EXHIBIT F. hereto;

                  (viii) certificates of an Insurance Broker evidencing the
      insurance as required by Section 12 hereof;

                  (ix)  a favorable opinion from Crowe & Dunlevy P.C., or such
      other counsel as may be acceptable to Lessor, as to completion of the due
      filing of this Lease pursuant to the Federal Aviation Act and rules and
      regarding such other matters as Lessor may reasonably request; and

                  (x)   the requisite financing statements;

                  (xi)  such other documents and matters incident to the
      foregoing as Lessor may reasonably request.

                  (c)   Contemporaneously with the execution of this Lease,
Lessor is delivering the following documents to Lessee:

                     (i)   a Lease Supplement in the form of EXHIBIT D, hereto,
      completed, executed and delivered by Lessor;

                     (ii)  an incumbency certificate as to the person or persons
      authorized to execute and deliver such documents on behalf of Lessor;

<PAGE>

                                      -14-

                  (iii) an Officer's Certificate, dated as of the date hereof,
      stating that the representations and warranties contained in Section 5(a)
      are true and accurate on and as of such date;

                  (iv)  a favorable opinion of special counsel to Lessor as may
      be reasonably satisfactory to Lessee, dated on or about the date hereof,
      and a favorable opinion of in-house counsel to Lessor as may be reasonably
      satisfactory to Lessee, each in the form of EXHIBITS J-l and J-2,
      respectively, hereto;

                  (v)   a copy of the current, valid Standard Certificate of
      Airworthiness for the Aircraft duly issued by the FAA;

                  (vi)  an Aircraft Warranty Assignment and Agreement and a
      Consent and Agreement executed by the Manufacturer; and

                  (vii) lease termination certificates in form suitable for
      recording with the FAA terminating (x) the Aircraft Lease Agreement dated
      as of November 12, 1996, between the Company as lessor and Polar Air
      Cargo, L.P. as lessee, supplemented by Lease Supplement No. 1 dated
      November 12, 1996, recorded by the FAA on December 9, 1996, as Conveyance
      No. SS007186, (y) the Assignment and Assumption of Head Lease and
      Termination of Sublease dated as of February 28, 1997, among Polar Air
      Cargo, L.P. as assignor, Polar Air Cargo, Inc. as assignee, and the
      Company, recorded April 21, 1997, as Conveyance No. HK009138, and (z) the
      Amended and Restated Aircraft Lease Agreement dated as of February 28,
      1997, recorded April 21, 1997, as Conveyance No. HK009139.

                  Section 3. DELIVERY, ACCEPTANCE, TERM.

                  (a)  ACCEPTANCE OF AIRCRAFT. By executing and delivering Lease
Supplement No. 1, Lessee confirms to Lessor that Lessee has duly and irrevocably
accepted delivery of the Aircraft for all purposes of this Agreement. Lessee is
confirming its acceptance of the Air craft by delivering herewith to Lessor a
Lease Supplement in the form set forth as EXHIBIT D hereto.

                  (b)  TERM OF LEASE. The Term of this Lease shall commence on
the Delivery Date and shall continue until the Expiration Date; provided that
this Lease may be earlier terminated or extended pursuant to the provisions
hereof.

                  Section 4. RENT.

                  (a)  Lessee covenants and agrees to pay to Lessor, or its
assigns, the following as Rent for use of the Aircraft:

<PAGE>

                                      -15-

            (i)   BASIC RENT: The Basic Rent as set forth in Letter Agreement
      No. 1 throughout the Term hereof, payable in consecutive installments and
      due on each Basic Rent Payment Date.

            (ii)  SUPPLEMENTAL RENT: Any and all Supplemental Rent as the same
      becomes due.

            (iii) ADJUSTMENTS TO BASIC RENT AND SUPPLEMENTAL RENT: (1) Basic
      Rent and Casualty Values shall be subject to adjustment as follows: In the
      event that Lessee is required to indemnify Lessor under Section B of the
      Letter Agreement No. 1, the Basic Rent amount and the Casualty Values set
      forth in Schedule 1 shall be recalculated (upwards or downwards) by
      Lessor, using the same methods and assumptions (except to the extent such
      assumptions shall be varied to take into account the MACRS Loss (as each
      such term is defined in Section B to the Letter Agreement No. 1) that is
      the subject of such indemnification and any prior or contemporaneous MACRS
      Loss) used to calculate the Basic Rent amounts and the Casualty Values in
      order to (1) maintain Lessor's Net Economic Return and (2) to the extent
      possible consistent with clause (1) hereof, minimize the Net Present Value
      of Rents to Lessee.

            (iv)  CALCULATION OF ADJUSTMENTS: All adjustments pursuant to
      Section 4(a)(iii) shall be made as promptly as practicable after either
      Lessor or Lessee gives notice to the other that an event has occurred that
      requires an adjustment. Lessor and Lessee shall give prompt notice to the
      other of any event requiring an adjustment. Any recalculation of the
      amounts of Basic Rent and the Casualty Values shall be prepared by Lessor,
      subject to verification by Lessee in accordance with Section 4(a)(v),
      using the same methodology and assumptions used by Lessor in determining
      the percentages of Basic Rent and the Casualty Values, as of the Delivery
      Date, except as such methodologies and assumptions have been modified to
      reflect the events giving rise to adjustments hereunder. Promptly after an
      adjustment is made hereunder, Lessor shall deliver to Lessee a description
      of such adjustment, setting forth in reasonable detail the calculation
      thereof. All adjustments required pursuant to Section 4(a)(iii) shall be
      set forth in a Lease Supplement or in an amendment to this Lease.

            (v)   VERIFICATION: If Lessee believes that any calculations by
      Lessor pursuant to Section 4(a)(iv) are in error, and if, after
      consultation, Lessee and Lessor are unable to agree on an adjustment, then
      Babcock & Brown Inc. or any other nationally recognized certified public
      accounting or lease advisory firm selected by Lessee and reasonably
      satisfactory to Lessor shall verify such calculations. Lessor will make
      available to such firm, but not, in any circumstances, to Lessee or any
      representative of Lessee, the methodology and assumptions referred to in
      Section 4(a)(iii) and any modifications thereto made to reflect the events
      giving rise to adjustments hereunder (subject to the execution by such
      firm of a confidentiality agreement, reasonably ac-

<PAGE>

                                      -16-

      ceptable to Lessor, prohibiting disclosure of such methodology and
      assumptions to any third party). The determination by such firm shall be
      final. Lessee will pay the reasonable costs and expenses of such further
      verification by such firm, provided that if such verification results in a
      decrease in Basic Rent which decreases the remaining Net Present Value of
      Rents by $10,000 or more from the remaining Net Present Value of Rents as
      recalculated by Lessor, then Lessor will pay such costs and expenses.

            (b)   PLACE AND METHOD OF PAYMENT. All Basic Rent and Supplemental
Rent and other amounts payable under this Lease shall be paid in immediately
available currency of the United States of America, at the Payment Location
specified on EXHIBIT C hereto, or at such other location as Lessor shall
designate in writing.

            (c)   PROHIBITION AGAINST SETOFF, COUNTERCLAIM, ETC. This Lease is a
net lease. Lessee's obligation to pay all Rent hereunder shall be absolute and
unconditional and shall not be affected or reduced by any circumstances,
including, without limitation, (i) any setoff, counterclaim, recoupment, defense
or other right which Lessee may have against Lessor, the Manufacturer, the
Engine Manufacturer, any seller of or Person or individual person providing
services with respect to the Aircraft or any other Person or individual person,
including without limitation maintenance, modification and other services
provided by any Person for any reason whatsoever; (ii) any defect in the title,
airworthiness or eligibility for registration under applicable Law, or any
condition, design, operation or fitness for use of, or any damage to or loss or
destruction of, the Aircraft, or any interruption or cessation in the use or
possession thereof by Lessee for any reason whatsoever, whether arising out of
or related to an act or omission of Lessee, or any other Person or individual
person; (iii) any Liens with respect to the Aircraft; (iv) the invalidity or
unenforceability or lack of due authorization or other infirmity of this Lease
or any absence of right, power or authority of Lessor or Lessee to enter into
this Lease; (v) any insolvency, bankruptcy, reorganization or similar
proceedings by or against Lessor or Lessee; (vi) any other circumstance or
happening of any nature whatsoever, similar to any of the foregoing; or (vii)
any Taxes; it being the express intention of Lessor and Lessee that all Rent
payable hereunder shall be payable in all events, unless the obligation to pay
the same shall be terminated pursuant to the express provisions of this Lease.

            Lessee hereby waives, to the extent permitted by applicable Law, any
and all rights which it may now have or which at any time hereafter may be
conferred upon it, by Law or otherwise, to terminate this Lease or any
obligation imposed upon Lessee hereunder or in relation hereto.

            Nothing contained in this Section shall be construed as a waiver of
Lessee's right to pursue any claim that it may have, including without
limitation, the right to seek a separate recovery of any payment of Basic Rent
or Casualty Value or other Supplemental Rent which is not due and payable in
accordance with the terms of this Lease.

<PAGE>

                                      -17-

            If for any reason whatsoever this Lease shall be terminated in whole
or in part by operation of law, Lessee nonetheless agrees to pay to Lessor
amounts equal to the Rent payments hereunder at the time such payments would
have become due and payable in accordance with the terms hereof had this Lease
not been terminated, and so long as such payments are made and all other terms
and conditions hereof are complied with by Lessor and Lessee, Lessor and Lessee
will deem this Lease to remain in full force and effect.

            (d)   INVESTMENT OF FUNDS HELD AS SECURITY.

               (i)   INVESTMENT. Any moneys held by Lessor as security for
      Lessee's obligations under this Lease shall, until paid to Lessee as
      provided herein or applied as provided herein, be invested by Lessor from
      time to time as directed in writing by Lessee (or, if Lessee fails to so
      direct, as directed by Lessor in its sole discretion) and at the expense
      and risk of Lessee in Cash Equivalents so long as such Cash Equivalents
      specified by Lessee or Lessor, as the case may be, can be acquired by
      Lessor using its commercially reasonable efforts.

               (ii)  PAYMENT OF GAIN OR LOSS. Any net gain (including interest
      received) realized as the result of investments pursuant to Section
      4(d)(i) (net of any fees, commissions and other reasonable expenses, if
      any, incurred in connection with such investment) shall be held and
      applied in the same manner as the principal amount is to be held and
      applied hereunder. Lessee will promptly pay to Lessor, on demand, the
      amount of any loss realized as the result of any such investment (together
      with any fees, commissions and other reasonable expenses, if any, incurred
      in connection with such investment), such amount so paid to be held and
      applied by Lessor as contemplated in Section 4(d)(i) above.

            Section 5. REPRESENTATIONS AND WARRANTIES.

            (a)   WARRANTIES AND DISCLAIMER OF WARRANTIES. LESSOR LEASES AND
LESSEE TAKES THE AIRCRAFT "AS IS, WHERE IS" AND LESSEE AGREES AND ACKNOWLEDGES
THAT, SAVE AS EXPRESSLY STATED IN THIS LEASE, LESSOR WILL HAVE NO LIABILITY IN
RELATION TO, AND LESSOR HAS NOT AND WILL NOT BE DEEMED TO HAVE MADE OR GIVEN
(WHETHER BY VIRTUE OF HAVING DONE OR FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR
FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS LEASE OR OTHERWISE),
ANY WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO, THE
AIRCRAFT, INCLUDING, WITHOUT LIMITATION, TO:

            (X)   THE TITLE, DESCRIPTION, AIRWORTHINESS, COMPLIANCE WITH
      SPECIFICATIONS, OPERATION, MERCHANTABILITY, FREEDOM FROM CLAIMS OF
      INFRINGEMENT OR THE LIKE, FITNESS FOR ANY PAR-

<PAGE>

                                      -18-

      TICULAR USE OR PURPOSE, VALUE, DURABILITY, CONDITION, OR DESIGN, OR AS TO
      THE QUALITY OF THE MATERIAL OR WORKMANSHIP, THE ABSENCE OF LATENT OR OTHER
      DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER REPRESENTATION OR
      WARRANTY WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY
      ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR USAGE OF TRADE) WITH
      RESPECT TO THE AIRCRAFT, ANY ENGINE OR ANY PART; OR

            (Y)   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT
      OR IN TORT OUT OF ANY NEGLIGENCE OR STRICT LIABILITY OF LESSOR OR
      OTHERWISE; FOR: (A) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE
      CAUSED DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY
      INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR BY ANY OTHER
      CIRCUMSTANCE IN CONNECTION THEREWITH; (B) THE USE, OPERATION, OR
      PERFORMANCE OF THE AIRCRAFT OR ANY RISKS RELATING THERETO; (C) ANY
      INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR
      CONSEQUENTIAL DAMAGES; (D) THE DELIVERY, OPERATION, SERVICING,
      MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, ANY
      ENGINE OR ANY PART; OR (E) ANY OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL
      LOSSES OR DAMAGES.

            THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 5(a)
ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER,
EXPRESS OR IMPLIED, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE ANY OTHER
WARRANTIES, EXCEPT THAT:

               (i)   Lessor warrants that on the Delivery Date title to the
      Aircraft was vested in Lessor and that the Aircraft was free and clear of
      any and all Liens, except for this Lease;

               (ii)  Lessor further represents and warrants that Lessor is a
      corporation duly organized and validly existing and in good standing under
      the laws of Delaware and is, and shall remain so long as it shall be the
      Lessor under this Lease, a Citizen of the United States, and has the
      corporate power and authority to carry on its business as presently
      conducted and to perform its obligations under this Lease;

               (iii) Lessor further represents and warrants that the making and
      performance by Lessor of this Lease has been duly authorized by all
      necessary corporate action on the part of Lessor and does not require
      approval of any shareholder of Lessor (or if such approval is required,
      such approval has been obtained), and neither the execution

<PAGE>

                                      -19-

      and delivery hereof nor the consummation of the transactions contemplated
      hereby nor compliance by Lessor with any of the terms and provisions
      hereof will contravene any Law applicable to Lessor or result in any
      breach of, or constitute any default under, or result in the creation of
      any lien, charge or encumbrance upon any property of Lessor under, any
      credit agreement or instrument corporate charter or bylaw or other
      agreement or instrument to which Lessor is a party or by which Lessor or
      its properties or assets are bound or affected.

            (iv)  Lessor has received every consent, approval or authorization
      of, and has given every notice to, each Governmental Entity having
      jurisdiction with respect to the execution, delivery or performance of
      this Lease (including all monetary and other obligations hereunder) that
      is required for Lessor to execute and deliver this Lease, and to perform
      the transactions contemplated hereby and each such consent, approval or
      authorization is valid and effective and has not been revoked;

            (v)   Lessor further represents and warrants that this Lease and the
      Lease Supplement have been duly entered into and delivered by Lessor, and
      assuming the due authorization, execution and delivery thereof by the
      Lessee, the Lease and Lease Supplement constitute legal, valid and binding
      obligations of Lessor, enforceable against Lessor in accordance with their
      respective terms except as may be limited by bankruptcy, insolvency,
      reorganization, moratorium or other similar laws affecting the enforcement
      of creditors' rights generally, and general principles of equity
      (regardless of whether such enforceability is considered in a proceeding
      in equity or at law).

        (b) WAIVER. LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR, ALL
ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ON
THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER ARISING
AT ANY TIME IN RESPECT OF OR OUT OF THE POSSESSION, OPERATION OR PERFORMANCE OF
THE AIRCRAFT, ANY ENGINE OR ANY PART OF THIS AGREEMENT EXCEPT TO THE EXTENT
ARISING UNDER CLAUSES (i) THROUGH (v) OF SECTION 5(a) HEREOF.

        (c) CONFIRMATION. LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE
PROVISIONS OF THIS SECTION 5 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS HAVE
BEEN CALCULATED BASED ON ITS PROVISIONS.

        (d) LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee hereby makes the
following representations and warranties as of the date hereof which
representations and warranties shall survive the execution and delivery of this
Lease:

            (i)   Lessee is a corporation duly organized, and existing in good
      standing under the Laws of the State of California and has the requisite
      power and authority to

<PAGE>

                                      -20-

      carry on its business as presently conducted and to perform its
      obligations under this Lease;

            (ii)  this Lease has been duly authorized by all necessary action on
      the part of Lessee and does not require any approval of the shareholders
      of Lessee (or if such approval is required, such approval has been
      obtained), and neither the execution and delivery hereof nor the
      consummation of the transactions contemplated hereby nor compliance by
      Lessee with any of the terms and provisions hereof will contravene any Law
      applicable to Lessee or result in any breach of, or constitute any default
      under (other than a breach or default that would not result in a Material
      Adverse Change to Lessee), or result in the creation of any Lien (other
      than as permitted under this Lease), on any property of Lessee under, any
      credit agreement or instrument corporate charter or by-law or other
      material agreement or instrument to which Lessee is a party or by which
      Lessee or its properties or assets are bound or affected in any material
      respect;

            (iii) Lessee has received every consent, approval or authorization
      of, and has given every notice to, each Governmental Entity having
      jurisdiction with respect to the execution, delivery or performance of
      this Lease (including all monetary and other obligations hereunder) that
      is required for Lessee to execute and deliver this Lease, and to perform
      the transactions contemplated hereby and each such consent approval or
      authorization is valid and effective and has not been revoked;

            (iv)  this Lease and the Lease Supplement have been duly executed
      and delivered by Lessee, and, assuming the due authorization, execution
      and delivery thereof by the Lessor, the Lease and the Lease Supplement
      constitute legal, valid and binding obligations of Lessee, enforceable
      against Lessee in accordance with their respective terms, except as
      enforcement thereof may be limited by applicable bankruptcy, insolvency,
      reorganization, receivership, moratorium or other similar laws affecting
      the enforcement of creditors' rights generally, and general principles of
      equity (regardless of whether such enforceability is considered in a
      proceeding in equity or at law);

            (v)   Lessee's chief executive office is located at 100 Oceangate,
      15th Floor, Long Beach, CA 90802; the records of Lessee concerning the
      Aircraft are maintained at such chief executive office and Lessee is
      incorporated under the laws of the State of California and its
      organizational identification number is C1483679;

            (vi)  Lessee is a Citizen of the United States;

            (vii) except for the filing for recordation of this Lease and the
      Lease Supplement with the FAA, the filing of any Uniform Commercial Code
      financing statements required (and continuation statements at periodic
      intervals), the taking of possession and retention of the original
      counterparts of the Lease and Lease Supplement

<PAGE>

                                      -21-

      by Lessor and the placing on the Aircraft and on each Engine of the plates
      containing the legends referred to in Section 6(a)(iii) hereof, no further
      filing or recording of this Lease or of any other document (including any
      financing statement under Article 9 of the Uniform Commercial Code) and no
      further action, is necessary or desirable under the laws of the United
      States of America or any state in order to (A) fully establish Lessor's
      title to, and interest in, and property in rights with respect to the
      Aircraft as against Lessee or any third party and to ensure that under all
      such laws the property rights of Lessor therein will have priority in all
      respects over the claims of all creditors of Lessee, or (B) ensure the
      validity, effectiveness and enforceability of this Lease;

            (viii) as of the date hereof, Lessee does not hold any contract or
      other obligation to operate the Aircraft to any of the countries
      designated under the United States Foreign Asset Control Regulations (31
      C.F.R. Parts 500-599), including, as of the date hereof, North Korea,
      Cambodia, North Vietnam and South Vietnam, except to the extent that
      Lessee has obtained written permission of the United States government,
      copies of which have been provided to Lessor;

            (ix)  Lessee holds all licenses, permits, approvals, certificates,
      etc. required to conduct its business and to lease and operate the
      Aircraft, except where the failure to so hold such licenses, permits,
      approvals and certificates would not give rise to a Material Adverse
      Change to Lessee.

            Section 6. REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND
      RECORDS.

            (a) REGISTRATION AND OPERATION

               (i)   REGISTRATION AND RECORDATION. Subject to the compliance by
      Lessor with its obligations under Section 22(e), Lessee shall cause the
      Aircraft to be, and at all times during the Term to remain, duly
      registered with the FAA under the Act or with such other country of
      registry as shall be permitted under Section 6(a)(ii) below, in the name
      of Lessor as owner and lessor (except to the extent that such registration
      under the Act cannot be effected with the FAA because of Lessor's failure
      to comply with the citizenship requirements for registration of the
      Aircraft under the Act). Lessor shall execute and deliver all such
      documents as Lessee (or any Permitted Sublessee) may reasonably request
      for the purpose of effecting and continuing such registration.

               (ii)  REREGISTRATION. So long as no Event of Default shall have
      occurred and be continuing, Lessee may, by written notice to Lessor,
      request to change the country of registration of the Aircraft. Any such
      change in registration shall be effected only in compliance with, and
      subject to all of the conditions set forth in, Section 22.

<PAGE>

                                      -22-

               (iii) MARKINGS. If permitted by applicable Law, on or reasonably
      promptly after the Delivery Date, Lessee will cause to be affixed to, and
      maintained in, the cockpit of the Airframe and on each Engine, in each
      case, in a clearly visible location (it being understood that the location
      of such placards, as identified to Lessor prior to the Delivery Date,
      shall be deemed to be in compliance with this requirement), a placard of a
      reasonable size and shape bearing the legend, in English, set forth in
      Exhibit C as the Lease Identification. Such placards may be removed
      temporarily, if necessary, in the course of maintenance of the Airframe or
      Engines. If any such placard is destroyed or becomes illegible, Lessee
      shall promptly replace it with a placard complying with the requirements
      of this Section 6(a)(iii).

               (iv)  COMPLIANCE WITH LAWS. Lessee shall not, and shall not allow
      any other person to, operate, use, maintain, service, repair or overhaul
      the Aircraft (A) in violation of any Law binding on or applicable to the
      Aircraft, the Airframe or any Engine, or (B) in violation of any
      airworthiness certificate, license or registration of any Government
      Entity relating to the Aircraft, the Airframe or any Engine, except (1)
      immaterial or non-recurring violations with respect to which corrective
      measures are taken promptly by Lessee or a Permitted Sublessee, as the
      case may be, upon discovery thereof, and (2) to the extent Lessee or any
      Permitted Sublessee is contesting the validity or application of any such
      Law or requirement relating to any such certificate, license or
      registration in good faith in any reasonable manner which does not involve
      any material risk of the sale, forfeiture or loss of the Aircraft, the
      Airframe or any Engine or any material risk of criminal liability or of
      material risk of civil penalty against Lessor.

               (v)   OPERATION. Lessee agrees not to operate, use or locate the
      Aircraft, the Airframe or any Engine, or allow the Aircraft, the Airframe
      or any Engine to be operated, used or located, (A) in any area excluded
      from coverage by any insurance required by the terms of Section 12, except
      in the case of a requisition by or transfer to the U.S. Government where
      Lessee obtains an indemnity in lieu of such insurance from the U.S.
      Government, or insurance from the U.S. Government, covering such area, in
      accordance with Section 12(c) or (B) in any recognized area of hostilities
      unless fully covered in accordance with Section 12 by war-risk insurance,
      unless in any case referred to in this Section 6(a)(v) the Aircraft is
      only temporarily operated, used or located in such area as a result of an
      emergency, equipment malfunction, navigational error, hijacking, weather
      condition or other similar unforeseen circumstances, so long as Lessee
      diligently and in good faith proceeds to remove the Aircraft from such
      area.

            (b)   POSSESSION. Lessee will not, without the prior written consent
of Lessor, sublease or otherwise in any manner deliver, transfer or relinquish
possession of the Air-

<PAGE>

                                      -23-

craft, the Airframe or any Engine or install any Engine, or permit any Engine to
be installed, on any airframe other than the Airframe; PROVIDED, HOWEVER,
subject to the provisions of Section 6(c), Lessee may, without such prior
written consent:

            (i)   INTERCHANGE AND POOLING. Subject or permit any Permitted
      Sublessee to subject any Engine to normal interchange agreements or
      pooling agreements or arrangements, in each case customary in the
      commercial air cargo industry and entered into by Lessee or such Permitted
      Sublessee, as the case may be, in the ordinary course of business;
      PROVIDED, HOWEVER, that if Lessor's title to any such Engine is divested
      under any such agreement or arrangement, then such Engine shall be deemed
      to have suffered a Casualty Occurrence as of the date of such divestiture,
      with the effect that Lessee shall be required to replace such Engine with
      a Replacement Engine.

            (ii)  TESTING AND SERVICE. Deliver or permit any Permitted Sublessee
      to deliver possession of the Aircraft, Airframe, any Engine or any Part
      (A) to the manufacturer thereof or to any third-party maintenance
      provider, for testing, service, repair, maintenance or overhaul work on
      the Aircraft, Airframe, any Engine or any Part, or, to the extent required
      or permitted by the terms of Section 9, for alterations or modifications
      in or additions to the Aircraft, Airframe or any Engine or (B) to any
      Person for the purpose of transport to a Person referred to in the
      preceding clause (i).

            (iii) TRANSFER TO U.S. GOVERNMENT. Transfer or permit any Permitted
      Sublessee to transfer possession of the Aircraft, Airframe or any Engine
      to the U.S. Government, in which event Lessee shall promptly notify Lessor
      in writing of any such transfer of possession and, in the case of any
      transfer pursuant to CRAF, in such notification shall identify by name,
      address and telephone numbers the Contracting Office Representative or
      Representatives for the Military Airlift Command of the United States Air
      Force to whom notices must be given and to whom requests or claims must be
      made to the extent applicable under CRAF.

            (iv)  INSTALLATION OF ENGINES ON OWNED AIRCRAFT. Install or permit
      any Permitted Sublessee to install an Engine on an airframe owned by
      Lessee or such Permitted Sublessee, as the case may be, free and clear of
      all Liens, except (A) those Liens which are permitted by Section 14 hereof
      and those that do not apply to the Engines and (B) the rights of third
      parties under normal interchange or pooling agreements and arrangements of
      the type that would be permitted under Section 6(b)(i).

            (v)   INSTALLATION OF ENGINES ON OTHER AIRFRAMES. Install or permit
      any Permitted Sublessee to install an Engine on an airframe leased to
      Lessee or such Permitted Sublessee, or purchased by Lessee or such
      Permitted Sublessee subject to a mortgage, security agreement, conditional
      sale or other secured financing arrangement, but only if (A) such airframe
      is free and clear of all Liens, except (1) the rights of the par-

<PAGE>

                                      -24-

      ties to such lease, or any such secured financing arrangement, covering
      such airframe and (2) Liens of the type permitted by clauses (A) and (B)
      of Section 6(b)(iv) and (B) Lessee or Permitted Sublessee, as the case may
      be, shall have received from the lessor, mortgagee, secured party or
      conditional seller, in respect of such airframe, a written agreement
      (which may be a copy of the lease, mortgage, security agreement,
      conditional sale or other agreement covering such airframe), whereby such
      Person agrees that it will not acquire or claim any right, title or
      interest in, or Lien on, such Engine by reason of such Engine being
      installed on such airframe at any time while such Engine is subject to
      this Lease or is owned by Lessor.

            (vi)  INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT. Install or
      permit any Permitted Sublessee to install an Engine on an airframe owned
      by Lessee or such Permitted Sublessee, leased to Lessee or such Permitted
      Sublessee, or purchased by Lessee or such Permitted Sublessee subject to a
      conditional sale or other security agreement under circumstances where
      neither Section 6(b)(iv) or 6(b)(v) is applicable; PROVIDED, HOWEVER, that
      any such installation shall be deemed an Casualty Occurrence with respect
      to such Engine, and Lessee shall comply with Section 1l(d) hereof in
      respect thereof. Until Section 11(d) has been fully complied with,
      Lessor's interest in any such Engine shall continue in full force and
      effect.

            (vii) SUBLEASING. With respect to the Aircraft, Airframe or any
      Engine, so long as no Event of Default shall have occurred and is
      continuing, enter into a sublease with any Permitted Air Carrier, but only
      if:

                  (A)   Lessee shall provide written notice to Lessor (such
            notice in the event of a sublease to a U.S. Air Carrier to be given
            promptly after entering into any such sublease or, in the case of a
            sublease to any other Permitted Air Carrier, 10 days in advance of
            entering into such sublease);

                  (B)   At the time that Lessee enters into such sublease, such
            Permitted Air Carrier shall not be subject to any bankruptcy,
            insolvency, liquidation, reorganization, dissolution or similar
            proceeding, and shall not have substantially all of its property in
            the possession of any liquidator, trustee, receiver or similar
            person;

                  (C)   Any such sublease (1) shall not extend beyond the
            expiration of the Term, (2) shall include provisions for the
            maintenance, operation, possession, inspection and insurance of the
            Aircraft that are the same in all material respects as the
            applicable provisions of this Lease and (3) shall be expressly
            subject and subordinate to all the terms of this Agreement and to
            the rights, powers and remedies of Lessor hereunder, including,
            without limitation, Les-

<PAGE>

                                      -25-

            sor's rights under Section 18 to repossess the Aircraft, Airframe
            and Engines and to terminate such sublease upon the occurrence of an
            Event of Default;

                  (D)   In connection with a sublease to a Permitted Foreign Air
            Carrier or a Permitted Foreign Manufacturer, (1) the United States
            maintains diplomatic relations with the country of domicile of such
            Permitted Foreign Air Carrier or Permitted Foreign Manufacturer (or,
            in the case of Taiwan, diplomatic relations at least as good as
            those in effect on the Delivery Date) and (2) Lessee shall have
            furnished Lessor a favorable opinion of counsel, reasonably
            satisfactory to Lessor, in the country of domicile of such Permitted
            Foreign Air Carrier or Permitted Foreign Manufacturer, that (i) the
            terms of such sublease are the legal, valid and binding obligations
            of the parties thereto enforceable under the laws of such
            jurisdiction, (ii) it is not necessary for Lessor to register or
            qualify to do business in such jurisdiction, if not already so
            registered or qualified, as a result, in whole or hi part, of the
            proposed sublease, (iii) Lessor's title to the Aircraft, Airframe
            and Engines will be recognized in such jurisdiction, (iv) the Laws
            of such jurisdiction of domicile require fair compensation by the
            government of such jurisdiction, payable in a currency freely
            convertible into Dollars, for the loss of title to the Aircraft,
            Airframe or Engines in the event of the requisition by such
            government of such title (unless Lessee shall provide insurance in
            the amounts required with respect to hull insurance under Section 12
            covering the requisition of title to the Aircraft, Airframe or
            Engines by the government of such jurisdiction so long as the
            Aircraft, Airframe or Engines are subject to such sublease) and (v)
            the agreement of such Permitted Foreign Air Carrier or Permitted
            Foreign Manufacturer that its rights under the sublease are subject
            and subordinate to all the terms of this Lease is enforce able
            against such Permitted Foreign Air Carrier or Permitted Foreign
            Manufacturer under applicable law;

                  (E)   Lessee shall furnish to Lessor evidence reasonably
            satisfactory to Lessor that the insurance required by Section 12
            remains in effect;

                  (F)   All necessary documents shall have been duly filed,
            registered or recorded in such public offices as may be required
            fully to preserve the title of Lessor in the Aircraft, Airframe and
            Engines;

                  (G)   Lessee shall reimburse Lessor for all of its reasonable
            out-of- pocket fees and expenses, including, without limitation,
            reasonable fees and disbursements of counsel incurred by Lessor in
            connection with any such sublease;

<PAGE>

                                      -26-

                  (H)   For all purposes of this Section 6(b)(vii), the term
            "sublease" shall be deemed to include interchange agreements with
            respect to the Aircraft or Airframe; and

                  (I)   No such sublease shall be made to a Permitted Foreign
            Air Carrier or a Permitted Foreign Manufacturer prior to the close
            of the Tax Attribute Period, unless Lessee prepays on a lump-sum
            basis any liability due under Section B of the Letter Agreement No.
            1 as a result of such sublease based upon the assumption that such
            sublease were to continue for the remainder of the term of such
            sublease; PROVIDED, HOWEVER, that such sublease shall not be
            restricted under this paragraph (i) if it would not have the effect
            of lengthening the "recovery period" (as defined in Section 168 of
            the Code) then applicable to the Aircraft.

            (c)   CERTAIN LIMITATIONS ON SUBLEASINR OR OTHER RELINQUISHMENT OF
POSSESSION. Notwithstanding anything to the contrary in Section 6(b):

            (i)   The rights of any person that receives possession of the
      Aircraft in accordance with Section 6(b) shall be subject and subordinate
      to all the terms of this Lease, and to Lessor's rights, powers and
      remedies hereunder, including, without limitation (A) Lessor's right to
      repossess the Aircraft pursuant to Section 18, (B) Lessor's right to
      terminate and avoid such sublease, delivery, transfer or relinquishment of
      possession upon the occurrence of an Event of Default and (C) the right to
      require such person to forthwith deliver the Aircraft, the Airframe and
      Engines subject to such transfer upon the occurrence of an Event of
      Default;

            (ii)  Lessee shall remain primarily liable hereunder for the
      performance of all the terms of this Lease to the same extent as if such
      transfer had not occurred, and no transfer of possession of the Aircraft,
      the Airframe, any Engine or any Part shall in any way discharge or
      diminish any of Lessee's obligations to Lessor hereunder or under any
      Operative Document;

            (iii) Lessee shall ensure that no sublease, delivery, transfer or
      relinquishment permitted under Section 6(b) shall affect the United States
      registration of the Aircraft, unless also made in accordance with the
      provisions of Section 22;

            (iv)  Any event that constitutes or would, with the passage of time,
      constitute a Casualty Occurrence under paragraph (c), (d), or (e) of the
      definition of such term shall not be deemed to violate the provisions of
      Section 6(b); and

            (v)   Any Wet Lease or ACMI Contract shall not constitute a
      delivery, transfer or relinquishment of possession for purposes of Section
      6(b) and shall not be prohib-

<PAGE>

                                      -27-

      ited by the terms thereof. Neither a Wet Lease nor an ACMI contract shall
      be deemed to be a "sublease", and the counterparty of a Wet Lease or an
      ACMI Contract shall not be deemed to be a sublessee for any purposes under
      this Lease. Any contract that is part of the United States Civil Reserve
      Air Fleet Program shall not be deemed to be a sublease for any purposes
      under this Lease.

            (d)   SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT OF A PERMITTED
SUBLESSEE. Notwithstanding anything to the contrary contained in Sections 6(b)
and 6(c), if: (i) the Lessee assigns a Permitted Sublease to Lessor as security
for the performance of Lessee's obligations under this Lease; (ii) the basic
rent payments under such Permitted Sublease are at least equal to Lessee's
payments under this Lease; and (iii) the Lessee and the Permitted Sublessee
execute and deliver a Subordination, Non-Disturbance and Attornment Agreement in
substantially the form attached hereto as EXHIBIT K (the "Attornment Agreement")
to Lessor, then Lessor: (A) shall execute and deliver such Attornment Agreement
to the Lessee and Permitted Sublessee; (B) agrees that the requirement contained
in Section 6(b)(vii)(C)(3) shall be deemed satisfied by Section 1 of the
Attornment Agreement; and (3) shall not disturb the Permitted Sublessee's
possession of the Aircraft, Airframe or Engines during the term of the Permitted
Sublease nor void the Permitted Sublease so long as no event of default has
occurred under the Permitted Sublease.

            Section 7. INFORMATION.

            During the term of this Lease, Lessee agrees to furnish Lessor the
following:

            (a)   within ninety (90) days following the end of each quarter of
      the fiscal year of Guarantor, if Guarantor is a public reporting company,
      or Lessee, if Guarantor is not a public reporting company, except the last
      such quarter of such year, consolidated balance sheets of Guarantor
      prepared as of the close of each month during such quarterly period,
      together with the related unaudited profit and loss statements and cash
      flow statements for each month during such period, prepared in accordance
      with generally accepted accounting principles, and Lessor agrees that
      delivery of Guarantor's Form 10-Q satisfies the obligation contained in
      this clause (a);

            (b)   within one hundred twenty (120) days after the close of each
      fiscal year of Guarantor, if Guarantor is a public reporting company, or
      Lessee, if Guarantor is not a public reporting company, an audited balance
      sheet, profit and loss statement and cash flow statements, and statement
      of stockholders' equity of Lessee (prepared on a consolidated basis), as
      of the close of such fiscal year, prepared in accordance with generally
      accepted accounting principles, and Lessor agrees that delivery of
      Guarantor's Form 10-K satisfies the obligation contained in this clause
      (b);

<PAGE>

                                      -28-

            (c)   within one hundred twenty (120) days after the close of each
      fiscal year of Lessee, a certificate signed by a duly authorized officer
      of Lessee, stating (i) that such officer is familiar with the relevant
      terms of this Lease and has made a review of Lessee's compliance herewith
      during the preceding fiscal year, and (ii) that no event has occurred
      which constitutes a Default or, if such an event has occurred, the nature
      thereof and action Lessee has taken or is taking to cure the same; and

            (d)   from time to tune such other information as Lessor may
      reasonably request, including information concerning the location,
      condition, use and operation of the Aircraft.

            Lessee shall permit Lessor or its designee, at Lessor's expense, on
ten (10) days' prior written notice to visit and inspect the Aircraft, its
condition, use and operation and the records maintained in connection therewith;
PROVIDED, HOWEVER, that unless an Event of Default has occurred and is
continuing, such inspection right shall be limited to one inspection every 12
months. Any inspection of the Aircraft hereunder shall be limited to a visual,
walk-around inspection and shall not include the opening of any panels, bays or
other components of the Aircraft (although those otherwise open may be
inspected), and no such inspection shall interfere with Lessee's or any
Permitted Sublessee's maintenance and operation of the Aircraft, the Airframe
and the Engines. Lessor shall have no duty to make any such inspection and shall
not incur any liability or obligation by reason of not making any such
inspection. Lessor's failure to object to any condition or procedure observed or
observable in the course of an inspection hereunder shall not be deemed to waive
or modify any of the terms of this Lease with respect to such condition or
procedure. Lessor shall indemnify and hold harmless Lessee from and against any
claims and losses incurred by Lessee and caused by Lessor in connection with any
such inspection.

            Section 8. COVENANTS OF LESSEE.

            (a)   Lessee covenants and agrees that:

            (i)   MAINTENANCE OF CORPORATE EXISTENCE. Except as provided in
      Section 8(iv) and as permitted by Section 19(b), during the term of this
      Lease, Lessee will preserve and maintain its corporate existence and such
      of its rights, privileges, licenses and franchises in any jurisdiction
      where failure to obtain such licensing or qualification would result in a
      Material Adverse Change to Lessee.

            (ii)  MAINTENANCE OF STATUS. Lessee is, and shall remain so long as
      it shall be the Lessee under this Lease, a Citizen of the United States
      and Lessee is and shall maintain and operate the Aircraft at all times as
      a Certificated Air Carrier.

<PAGE>

                                      -29-

            (iii) PLACE OF BUSINESS; STATE OF FORMATION. Lessee will not,
      without prior written notice to Lessor, change its principal place of
      business or chief executive office if there is more than one place of
      business or change its state of formation or existence.

            (iv)  NOTICE OF AN EVENT OF DEFAULT. Immediately after a responsible
      officer of Lessee obtains knowledge of an Event of Default hereunder,
      Lessee shall notify Lessor in writing of such an Event of Default.

            (v)   GOVERNMENTAL CONSENTS. Lessee undertakes to maintain or cause
      its Permitted Sublessee to maintain in full force and effect all
      governmental consents, licenses, authorizations, approvals, declarations,
      filing's and registrations obtained or effected in connection with this
      Lease and every document or instrument contemplated hereby and to take all
      such additional action as may be proper or advisable in connection
      herewith or therewith. Lessee further undertakes to obtain or effect any
      new or additional governmental consents, licenses, authorizations,
      approvals, declarations, filings or registrations as may become necessary
      for the performance of any of the terms and conditions of this Lease or
      any other document or instrument contemplated hereby.

            (vi)  FURNISHING OF DOCUMENTS. Lessee will furnish to Lessor the
      financial statements, documents, certificates and other information and
      materials described in Section 7.

            (b)   Lessor covenants and agrees that:

               (i)   QUIET ENJOYMENT. So long as no Event of Default shall have
      occurred and be continuing, Lessor shall not take or cause to be taken or
      permit any Person lawfully claiming by or through it to take any action to
      interfere with Lessee's (or any Permitted Sublessee's) rights hereunder to
      continued possession, use and operation of, and quiet enjoyment of the
      Aircraft, the Airframe, any Engine or any Part and other rights with
      respect to the Aircraft hereunder during the Term.

            If Lessor has received an assignment of a Permitted Sublease
      pursuant to Section 6(d), so long as no event of default under such
      Permitted Sublease shall have occurred and be continuing, Lessor shall not
      take or cause to be taken or permit any Person lawfully claiming by or
      through it to take any action to interfere with the Permitted Sublessee's
      rights under such Permitted Sublease to continued possession, use and
      operation of, and quiet enjoyment of the Aircraft, the Airframe, any
      Engine or any Part and other rights with respect to the Aircraft
      thereunder during the term of the Permitted Sublease.

<PAGE>

                                      -30-

            (ii)  MANUFACTURERS' WARRANTIES. So long as an Event of Default has
      not occurred and be continuing, Lessor hereby agrees to make available
      such rights as Lessor may have under any warranty, express or implied,
      with respect to the Aircraft made by the Manufacturer, or the Engine
      Manufacturer, to the extent that the same may be assigned or otherwise
      made available to Lessee and hereby authorizes Lessee to exercise such
      rights; PROVIDED, HOWEVER, that upon an Event of Default all such rights
      shall immediately revert to Lessor including all claims thereunder whether
      or not perfected.

            (iii) TITLE TRANSFERS BY LESSOR. If Lessor shall be required to
      transfer title to the Aircraft, Airframe or any Engine to Lessee or any
      other person pursuant to this Lease, then (A) Lessor shall (1) transfer to
      Lessee or such other person, as the case may be, all of Lessor's right,
      title and interest in and to the Aircraft, Airframe or such Engine, as the
      case may be, free and clear of all Lessor's Liens, (2) assign to Lessee or
      such other person, as the case may be, if and to the extent permitted, all
      warranties of Airframe Manufacturer and Engine Manufacturer with respect
      to the Aircraft, Airframe or such Engine, and (3) assign to Lessee or
      such other person, as the case may be, if and to the extent permitted, all
      claims, if any, for damage to the Aircraft, Airframe or such Engine, in
      each case free of Lessor's Liens and without recourse or warranty of any
      kind whatsoever (except as to the transfer described in clause (1) above
      and as to the absence of such Lessor's Liens, as aforesaid), and (B)
      Lessor shall promptly deliver to Lessee or such other person, as the case
      may be, a bill of sale and agreements of assignment, evidencing such
      transfer and assignment, and such other instruments of transfer, all in
      form and substance reasonably satisfactory to Lessee (or such other
      person, as the case may be), as Lessee (or such other person, as the case
      may be) may reasonably request.

            (iv)  LESSOR'S INTEREST IN CERTAIN ENGINES. Lessor hereby agrees for
      the benefit of each lessor, conditional seller, indenture trustee or
      secured party of any engine leased to, or purchased by, Lessee or any
      Permitted Sublessee subject to a lease, conditional sale, trust indenture
      or other security agreement that Lessor, its successors and assigns will
      not acquire or claim, as against such lessor, conditional seller,
      indenture trustee or secured party, any right, title or interest in any
      engine as the result of such engine being installed on the Airframe at any
      time while such engine is subject to such lease, conditional sale, trust
      indenture or other security agreement and owned by such lessor or
      conditional seller or subject to a trust indenture or security interest in
      favor of such indenture trustee or secured party.

            (v)   CHANGE IN CITIZENSHIP. Lessor agrees that, in the event its
      status is to change or has changed as a Citizen of the United States, or
      it makes public disclosure of circumstances as a result of which it
      believes that such status is likely to change, it will notify Lessee of
      (A) such change in status promptly after obtaining Actual

<PAGE>

                                      -31-

      Knowledge thereof or (B) such belief as soon as practicable after such
      public disclosure but in any event within ten Business Days after such
      public disclosure.

            Lessor agrees, solely for the benefit of Lessee, that if, during
      such time as the Aircraft is registered in the United States, (1) it shall
      not be a Citizen of the United States and (2) the Aircraft shall be, or
      would therefore become, ineligible for registration in the name of Lessor
      under the Act and regulations then applicable thereunder (without giving
      consideration to Section 47.9 of the FAA Regulations or any other
      provision that may restrict Lessee's use or operation of the Aircraft),
      then Lessor shall, as soon as is reasonably practicable, but in any event
      within 30 days after obtaining Actual Knowledge of such ineligibility and
      of such loss of citizenship, effect a voting trust or other similar
      arrangements or take any other action as may be necessary to prevent any
      deregistration or maintain the United States registration of the Aircraft.

            Section 9. MAINTENANCE; OPERATIONS; REPLACEMENT OF PARTS;
ALTERATIONS, MODIFICATION AND ADDITIONS.

            (a)   Lessee, at its own cost and expense, shall: (A) on a
nondiscriminatory basis relative to the other aircraft which it operates,
maintain, service, repair and/or overhaul (or cause to be maintained, serviced,
repaired and/or overhauled) (i) so as to keep the Aircraft in as good an
operating condition as when delivered to Lessee (ordinary wear and tear
excepted) and in such condition as necessary to enable the airworthiness
certification for the Aircraft to be maintained in good standing at all times
under Part 121 of the Federal Aviation Regulations (or under the applicable
requirements of an Aviation Authority except (a) when the Aircraft is being
temporarily stored and is not operational, (b) when the Aircraft is being
serviced, repaired, maintained, overhauled, tested or modified as permitted or
required by the terms of this Lease or (c) when all of Lessee's Boeing 747-200F
aircraft of comparable vintage and configuration, powered by power-plants and
having systems and avionics comparable to the Aircraft ("SIMILAR AIRCRAFT") have
been grounded by the FAA or an Aviation Authority under the laws of any
jurisdiction in which the Aircraft may then be registered as permitted by
Section 6(a)(ii) hereof, or such Aviation Authority has revoked or suspended the
airworthiness certificates for all such aircraft, and (ii) in accordance with
the Maintenance Program and utilizing the same manner of maintenance, service,
repair or overhaul used by Lessee (or any Permitted Sublessee) with respect to
Similar Aircraft operated by it and without in any way discriminating against
the Aircraft on the basis of its leased status or otherwise; (C) maintain or
cause to be maintained all records, logs and other materials required to be
maintained in respect of the Aircraft by the FAA or the Aviation Authority; and
(D) promptly furnish to Lessor any information required to enable Lessor to
perform any applicable government filings required of the owner of the Aircraft
by such registration jurisdiction.

            (b)   OPERATION. Lessee will not (and will not allow any other
Permitted Sublessee to) maintain, use, service, repair, overhaul or operate the
Aircraft in violation of any

<PAGE>

                                      -32-

Law or certificate of any government or governmental authority (domestic or
foreign) having jurisdiction over the Aircraft, or contrary to any airworthiness
certificate, license or registration relating to the Aircraft issued by any such
authority, except (A) immaterial or non-recurring violations with respect to
which corrective measures are taken promptly by Lessee or a Permitted Sublessee,
as the case may be, upon discovery thereof, and (B) to the extent Lessee (or any
other Permitted Sublessee) is contesting in good faith and by appropriate
proceedings the validity or application of any such law, rule, regulation or
order which does not involve (x) any material risk of sale, forfeiture or
permanent loss of the Aircraft, the Airframe, any Engine or any Part (y) any
risk of criminal liability to the Lessor or (z) any risk of material civil
liability against the Lessor. Lessee will not (and will not allow any Permitted
Sublessee to) operate the Aircraft in any area excluded from coverage by
insurance provided pursuant to Section 12 hereof; PROVIDED, HOWEVER, that the
failure of Lessee to comply with the provisions of this sentence shall not give
rise to an Event of Default hereunder if indemnification complying with SECTION
12(c) has been provided or where such failure is attributable to extraordinary
circumstances involving an isolated occurrence or series of incidents not in the
ordinary course of the regular operations of Lessee or any Permitted Sublessee
such as a hijacking, medical emergency, equipment malfunction, weather
condition, navigational error, or other isolated extraordinary event beyond the
control of Lessee or any Permitted Sublessee and Lessee or any Permitted
Sublessee is diligently and in good faith proceeding to rectify such failure.

            (c)   REPLACEMENT OF PARTS. Lessee, at its own cost and expense,
will, or will cause a Permitted Sublessee to, at its own cost and expense,
promptly replace (or cause to be replaced) all Parts which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever. In
addition, in the ordinary course of maintenance, service, repair, overhaul or
testing, Lessee may, at its own cost and expense, or may permit a Permitted
Sublessee at its own cost and expense to, remove (or cause to be removed) any
Parts, whether or not worn out, destroyed, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee, except as otherwise provided
herein, at its own cost and expense will, or will cause a Permitted Sublessee at
its own cost and expense to, replace such Parts as promptly as practicable. All
replacement Parts shall be free and clear of all Liens, other than Liens
permitted by Section 14 hereof and pooling arrangements to the extent permitted
by paragraph (c) below, shall be in as good an operating condition as, and have
a utility to and value not less than the utility and value of the Parts replaced
(assuming such replaced parts were in the condition and repair in which they
were required to be maintained by the terms hereof) and, when installed, will
not diminish the useful life of the Airframe or Engine.

            Except as otherwise provided herein, all Parts owned by the Lessor
which are at any time removed from the Aircraft shall remain the property of the
Lessor and subject to this Lease, no matter where located, until such time as
such Parts shall be replaced by Parts

<PAGE>

                                      -33-

which have been incorporated or installed in or attached to the Aircraft and
which meet the requirements for replacement Parts specified above. Immediately
upon any replacement Part becoming incorporated or installed in or attached to
the Aircraft as above provided, without further act, (i) title to the removed
part shall thereupon vest in Lessee, free and clear of all rights of Lessor,
(ii) title to such replacement part shall thereupon vest solely in Lessor,
subject only to Liens permitted by Section 14 hereof and pooling arrangements to
the extent permitted by paragraph (c) below and (iii) such replacement part
shall become subject to this Lease and be deemed a Part for all purposes thereof
and hereof to the same extent as the Part which it has replaced.

            (d)   POOLING OF PARTS. Any Part removed from the Aircraft, Airframe
or any Engine may be subjected by Lessee or a Permitted Sublessee to a normal
pooling arrangement customary in the airline industry and entered into in the
ordinary course of business of Lessee or Guarantor or such Permitted Sublessee,
so long as a Part replacing such removed Part shall be incorporated or installed
in or attached to the Aircraft, Airframe or such Engine in accordance with
paragraph (b) of this Section 9 as promptly as practicable after the removal of
such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Aircraft, Airframe or any Engine may be owned by
any third party subject to such a normal pooling arrangement, so long as Lessee
or Permitted Sublessee, at its own cost and expense, as promptly thereafter as
reasonably possible either (i) causes title to such replacement Part to vest in
Lessor in accordance with paragraph (b) of this Section 9, free and clear of all
Liens (except Liens permitted by Section 14), or (ii) replaces (or causes to be
replaced) such replacement Part by incorporating or installing in or attaching
to the Aircraft, Airframe or such Engine a further replacement Part owned by
Lessee or a Permitted Sublessee free and clear of all Liens (except Liens
permitted by Section 14) and by causing title to such further replacement Part
to vest in Lessor in accordance with paragraph (b) of this Section 9.

            (e)   ALTERATIONS, MODIFICATIONS AND ADDITIONS. Lessee shall, or
shall cause a Permitted Sublessee to, make (or cause to be made) such
alterations and modifications in and additions to the Aircraft, Airframe and
each Engine as may be required from time to time to meet the applicable
standards of the FAA or other Aviation Authority having jurisdiction over the
operation of the Aircraft, to the extent made mandatory in respect of the
Aircraft (a "Mandatory Modification"); PROVIDED, HOWEVER, that (1) Lessee's
obligations are subject to Section C of the Letter Agreement and (2) Lessee or
any Permitted Sublessee may, in good faith and by appropriate procedure, contest
the validity or application of any law, rule, regulation or order in any
reasonable manner which does not materially adversely affect Lessor's interest
in the Aircraft and does not involve any material risk of sale, forfeiture or
loss of the Aircraft, any material risk of material civil penalty or any risk of
criminal liability being imposed on Lessor. In addition, Lessee, at its own cost
and expense, may, or may permit a Permitted Sublessee at its own cost and
expense to, from time to time make such alterations and modifications in and
additions to the Aircraft, Airframe or any Engine (each an "Optional Modifica-

<PAGE>

                                      -34-

tion") as Lessee or such Permitted Sublessee may deem desirable in the proper
conduct of its business, including, without limitation, removal of Parts which
Lessee deems are obsolete or no longer suitable or appropriate for use in the
Aircraft, Airframe or such Engine; PROVIDED, HOWEVER, that no such Optional
Modification shall (i) materially diminish the fair market value, utility, or
useful life of the Aircraft or any Engine below its fair market value, utility
or useful life immediately prior to such Optional Modification (assuming the
Aircraft or such Engine was in the condition required by the Lease immediately
prior to such Optional Modification) or (ii) cause the Aircraft to cease to have
the applicable standard certificate of airworthiness. Except as otherwise
provided herein, title to all Parts (other than Removable Parts (as defined
below)) incorporated or installed in or attached to the Aircraft, Airframe or
such Engine as the result of such Optional Modification shall, without further
act, vest in Lessor and become subject to this Lease.

            Notwithstanding anything to the contrary in this paragraph (d),
Lessee or a Permitted Sublessee may, at any time during the Term, remove any
Part (such Part being referred to herein as a "Removable Part") if (i) such Part
is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Aircraft, Airframe or
such Engine at the time of delivery thereof hereunder or any Part in replacement
of, or substitution for, any such Part, (ii) such Part is not required to be
incorporated or installed in or attached to the Aircraft, Airframe or such
Engine pursuant to the terms of Section A of Exhibit E to the Lease, and (iii)
such Part can be removed from the Aircraft, Airframe or such Engine without
materially diminishing the fair market value, utility or remaining useful life
which the Airframe or such Engine would have had at the time of removal had such
removal not occurred, assuming that such Airframe or Engine was in the condition
and repair required to be maintained by the terms hereof. Removable Parts may be
leased from or financed by third parties other than Lessor. Title to any
Removable Part shall be vested in Lessee or such Permitted Sublessee, and to the
extent such Removable Part is leased from or financed by a third party other
than Lessor, may be vested in such third-party lessor or financing party. Upon
the removal by Lessee or such Permitted Sublessee of any Removable Part as above
provided, title thereto shall remain vested in Lessee or such Permitted
Sublessee or in such third-party lessor or financing party, as the case may be,
and such Part shall no longer be deemed part of the Aircraft, Airframe or such
Engine from which it was removed. Title to any Removable Part not removed as
above provided prior to the return of the Aircraft, Airframe or such Engine to
Lessor hereunder shall, without further act, vest in Lessor.

            Section 10. GENERAL TAX INDEMNITY.

            The general tax indemnity obligations of Lessee are set forth in
Section B of Letter Agreement No. 1.

<PAGE>

                                      -35-

            Section 11. CASUALTY OCCURRENCES.

            (a)   CASUALTY OCCURRENCE WITH RESPECT TO THE AIRFRAME. Within
fifteen (15) days after a Casualty Occurrence with respect to the Airframe and
any Engine then installed thereon, Lessee shall give Lessor written notice of
such occurrence. Within sixty (60) days of such occurrence, Lessee shall give
Lessor written notice of Lessee's election to make payment in respect of the
Casualty Occurrence, as provided in Section 1l(b), or to replace the Airframe
and any such Engines as provided in Section 1l(c). Any failure by Lessee to
give notice of its election shall be deemed an election of the option set forth
in Section 1l(b). In addition, if an Event of Default or Special Default has
occurred and is continuing, Lessee shall be required to make payment in respect
of such Casualty Occurrence pursuant to Section 1l(b).

            (b)   PAYMENT OF LOSS AND TERMINATION OF LEASE, (i) If Lessee elects
or is deemed to have elected, in accordance with Section 1l(a), to make payment
in respect of any such Casualty Occurrence, then Lessee shall pay or cause to be
paid, in the manner and in funds of the type specified in Section 4(b), the
following amounts:

            (A)   on the Casualty Value Date next following the earlier of (x)
      the 90th day following the date of the occurrence of such Casualty
      Occurrence, or so long as Lessee shall be diligently pursuing receipt of
      insurance proceeds, the 180th day following the date of the occurrence of
      such Casualty Occurrence, and (y) the third Business Day following the
      receipt of sufficient insurance proceeds with respect to such occurrence
      (but in any event not earlier than the date of Lessee's election or deemed
      election under Section 11(a) to make payment under this Section 11(b)),
      Lessee shall pay to Lessor an amount equal to the Casualty Value of the
      Aircraft as of the Casualty Value Date plus:

            (B)   any unpaid Basic Rent due prior to the Casualty Value Date but
      excluding any Basic Rent, payable on, the Casualty Value Date; plus

            (C)   all amounts of Supplemental Rent due on or before the Casualty
      Value Date and any reasonable out-of-pocket fees and expenses incurred in
      connection with such Casualty Occurrence by Lessor.

            (ii)  Upon such payment of the amounts set forth in clause (b)(i)
above, (A) the obligations of Lessee to make further payments of Basic Rent
hereunder shall terminate, (B) this Lease shall terminate with respect to the
Aircraft, and (C) Lessor will transfer or cause to be transferred to Lessee,
without recourse or warranty, all of Lessor's right title and interest, if any,
in and to the Airframe and Engines (if any) suffering the Casualty Occurrence,
as well as all of Lessor's right, title and interest in and to any Engine
constituting part of the Aircraft but not installed thereon at the time of the
Casualty Occurrence.

<PAGE>

                                      -36-

            (c)   REPLACEMENT OF AIRFRAME AND ENGINES. (i) If Lessee elects, in
accordance with Section 1l(a), to replace the Airframe, and any Engines
actually suffering the Casualty Occurrence, then Lessee shall, as promptly as
possible and in any event within 180 days after the occurrence of such Casualty
Occurrence, convey or cause to be conveyed to Lessor, in compliance with Section
11 (f) and as replacement for the Airframe, title to a Replacement Airframe
(which shall comply with paragraph (ii) below), and for each such Engine, title
to a Replacement Engine, in each case free and clear of all Liens other than
Liens permitted by Section 14. If Lessee makes such election, but for any reason
fails or is unable to effect such replacement within such time period and in
compliance with the requirements set forth in this Section 11 (c), then Lessee
shall be deemed to have initially made the election set forth in Section 1l(b)
with the effect that Lessee shall immediately pay, in the manner and in funds of
the type specified in Section 4(b), the amounts required under, and in
accordance with, Section 11(b)(i).

            (ii)  Any replacement airframe shall be an airframe that is the same
model as the Airframe to be replaced thereby, or an improved model, and that has
a value, utility and remaining useful life (without regard to hours or cycles
remaining until the next regular maintenance check), at least equal to the
Airframe to be replaced thereby (assuming that such Airframe had been maintained
in accordance with this Lease) (a "Replacement Airframe"). Any such Replacement
Engine shall meet the requirements of, and be conveyed by Lessee to Lessor in
accordance with, Section 1 l(d) (other than the notice requirement set forth in
Section 11 (d)(i)).

            (d)   CASUALTY OCCURRENCE WITH RESPECT TO AN ENGINE. Upon a Casualty
Occurrence with respect to an Engine only, Lessee shall give Lessor prompt
written notice thereof and shall, within ninety (90) days after such occurrence,
convey or cause to be conveyed to Lessor, as replacement for the Engine
suffering a Casualty Occurrence, title to a Replacement Engine. Each Replacement
Engine shall be free of all Liens (except those Liens which are permitted by
Section 14 hereof).

            (e)   ENGINE EXCHANGE. Upon not less than five Business Days' prior
written notice to Lessor, Lessee may replace any Engine leased hereunder with
another engine (the "Exchanged Engine") meeting the requirements of Section 11
(d). Such Exchanged Engine shall be deemed to be a "Replacement Engine" and
Lessor and Lessee shall comply with the provisions of paragraph (f) below with
regard to the Exchanged Engine and the Engine so replaced.

            (f)   CONDITIONS TO ANY REPLACEMENT. Upon full compliance by Lessee
with the terms of this paragraph, Lessor will transfer to Lessee title to the
Engine which suffered the Casualty Occurrence. Prior to or at the time of any
such conveyance of title to any Replacement Airframe or Replacement Engine to
Lessor, Lessee, at its own expense, will promptly (i) furnish Lessor with a full
warranty bill of sale, in form and substance reasonably

<PAGE>

                                      -37-

satisfactory to Lessor, with respect to such Replacement Airframe or Replacement
Engine; (ii) cause a supplement hereto, in form and substance reasonably
satisfactory to Lessor, subjecting such Replacement Airframe or Replacement
Engine to this Lease, to be duly executed by Lessee, and recorded pursuant to
applicable Law; (iii) furnish Lessor with such evidence of title to such
Replacement Airframe or Replacement Engine and of compliance with the insurance
provisions of Section 12 hereof with respect to such Replacement Airframe or
Replacement Engine as Lessor may reasonably request; (iv) furnish Lessor with an
opinion of Lessee's counsel to the effect that such full warranty bill of sale
referred to in clause (i) above constitutes an effective instrument for
conveyance of title to the Replacement Airframe or Replacement Engine; (v)
furnish a certificate signed by a duly authorized financial officer or executive
of Lessee certifying that, upon consummation of such replacement, no Default or
Event of Default will exist hereunder; (vi) furnish Lessor with such documents
as Lessor may reasonably request in connection with the consummation of the
transactions contemplated by this Section 11, in each case in form and substance
satisfactory to Lessor; and (vii) furnish such financing statement covering the
Replacement Airframe or Replacement Engine as may be requested by Lessor. Upon
full compliance by Lessee with the terms of this Section 1l(f), Lessor will
cause to be transferred or will transfer to Lessee all of the right title and
interest in the Airframe or Engine which suffered the Casualty Occurrence and
which was originally leased to Lessee. For all purposes hereof, each such
Replacement Airframe or Replacement Engine shall be deemed part of the property
leased hereunder, shall be deemed an "Airframe" or an "Engine" as defined herein
and shall be deemed part of the same Aircraft as was the Airframe or Engine
replaced thereof. No Casualty Occurrence covered by Section 11 (c) shall result
in any reduction in Rent.

            Lessor and Lessee understand and agree that if at the time of any
replacement of the Airframe or any Engine, as contemplated in this Section 11,
the Airframe was registered in a jurisdiction other than the United States, then
the requirements set forth above in this Section 1l(f) shall be deemed to refer
to the comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.

            (g)   APPLICATION OF PAYMENTS. Any amounts, other than insurance
proceeds in respect of damage or loss not constituting a Casualty Occurrence
(the application of which is provided for in Section 12), received at any time
by Lessor, Lessee or any Permitted Sublessee from any Government Entity or any
other Person in respect of any Casualty Occurrence will be applied as follows:

            (i)   REPLACEMENT OF AIRFRAME AND ENGINES. If such amounts are
      received with respect to the Airframe, and any Engine installed thereon at
      the time of such Casualty Occurrence, upon compliance by Lessee with the
      applicable terms of Section 1l(c) with respect to the Casualty Occurrence
      for which such amounts are received, such amounts shall be paid over to,
      or retained by, Lessee.

<PAGE>

                                      -38-

            (ii)  LOSS OF ENGINE. If such amounts are received with respect to
      an Engine (other than an Engine installed on the Airframe at the time such
      Airframe suffers a Casualty Occurrence), upon compliance by Lessee with
      the applicable terms of Section 1l(d) with respect to the Casualty
      Occurrence for which such amounts are received, such amounts shall be paid
      over to, or retained by, Lessee.

            (iii) PAYMENT OF LOSS. If such amounts are received, in whole or in
      part, with respect to the Airframe, and Lessee makes, has made or is
      deemed to have made the election set forth in Section 1l(b), such amounts
      shall be applied as follows:

                  (a)   first, if the sum described in Section 11 (b) has not
            then been paid in full by Lessee, such amounts shall be paid to
            Lessor to the extent necessary to pay in full such sum; and

                  (b)   second, the remainder, if any, shall be paid to Lessee.

            (h)   REQUISITION FOR USE BY GOVERNMENT WITH RESPECT TO THE
AIRCRAFT. In the event of the requisition for use by a Governmental Entity of
the Airframe or any Engine (other than a requisition constituting a Casualty
Occurrence), Lessee shall promptly notify Lessor of such requisition and all
Lessee's obligations under this Lease with respect to the Airframe or Engine
shall continue to the same extent as if such requisition had not occurred. If
the Air-frame and Engines or engines installed thereon are not returned by the
Government or such government by the end of the Term or within 180 days
thereafter, Lessor, upon notice given not less than forty-five (45) days before
the end of the Term, may elect to treat such event as constituting a Casualty
Occurrence with respect to the Aircraft, and the provisions of Section 11 (b)
shall apply, with payment and determination of Casualty Value with respect to
the Aircraft on and as of the date of expiration of the Term. If Lessor does not
so elect, Section 16 shall apply promptly upon such return by such Governmental
Entity. All payments received by Lessor or Lessee or any Permitted Sublessee
from the Governmental Entity for the use of the Airframe or Engine prior to the
time such requisition becomes a Casualty Occurrence shall be paid over to, or
retained by, Lessee if no Special Default or Event of Default shall have
occurred and be continuing; and all payments received by Lessor or Lessee from
the Governmental Entity for the use of such item thereafter shall be paid over
to, or retained by, Lessor; provided that if such requisition constitutes a
Casualty Occurrence, or Lessor has elected to treat such requisition as a
Casualty Occurrence, then all such payments shall be paid over to Lessor and
applied as provided for in Section 1l(g)(iii).

            (i)   OTHER DISPOSITIONS. Any amounts not payable to or retainable
by Lessee pursuant to this Section 11 or Section 12 hereof because a Special
Default or an Event of Default shall have occurred and be continuing shall be
held by Lessor and shall be paid over to Lessee when such Special Default or
Event of Default shall cease to be continuing, except that if Lessor shall have
theretofore declared this Lease to be in default pursuant to Section 18

<PAGE>

                                      -39-

hereof, such amounts shall be retained by Lessor and disposed of in accordance
with the provisions thereof.

            (j)   APPLICATION IN DEFAULT. Any amount referred to in Section
1l(g) which is otherwise payable to Lessee shall not be paid to Lessee, or, if
it has been previously paid to Lessee, and not yet applied by Lessee as
permitted or required hereunder, shall be delivered from Lessee to Lessor, if at
the time of such payment a Special Default or an Event of Default shall have
occurred and be continuing. In such case, all such amounts shall be paid to and
held by Lessor as security for the obligations of Lessee and shall be invested
pursuant to Section 4(d), or, at the option of Lessor, applied by Lessor toward
payment of any of Lessee's obligations at the time due hereunder, as Lessor may
elect. At such time as there shall not be continuing any such Special Default or
Event of Default, all such amounts at the time held by Lessor in excess of the
amount, if any, which Lessor has elected for application as provided above,
shall be paid to Lessee.

            (k)   REQUISITION FOR USE OF ENGINE. In the event of the requisition
for use by any Governmental Entity of any Engine but not the Airframe, a
Casualty Occurrence shall be deemed to have occurred with respect to such
Engine.

            Section 12. INSURANCE.

            (a)   LESSEE'S OBLIGATION TO INSURE. Lessee shall comply with, or
cause to be complied with, each of the provisions of EXHIBIT G, which provisions
are hereby incorporated by this reference as if set forth in full herein. All
references to "Section 12" or "this Section 12" shall be deemed to include
EXHIBIT G.

            (b)   INSURANCE FOR OWN ACCOUNT. Nothing in this SECTION 12 shall
limit or prohibit (i) Lessee (or any Permitted Sublessee) from maintaining the
policies of insurance required under EXHIBIT G with higher limits than those
specified in EXHIBIT G (and any proceeds greater than those specified in EXHIBIT
G shall be payable to Lessee, as provided in the policy relating thereto), or
(ii) Lessor from obtaining insurance for its own account (and any proceeds
payable under such separate insurance shall be payable as provided in the policy
relating thereto); provided, however, that no insurance may be obtained or
maintained that would limit or otherwise adversely affect the coverage of any
insurance required to be obtained or maintained by Lessee pursuant to this
SECTION 12 and EXHIBIT G.

            (c)   INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE. Lessor
agrees to accept, in lieu of insurance against any risk with respect to the
Aircraft described in EXHIBIT G, indemnification from, or insurance provided by,
the U.S. Government, or upon the written consent of Lessor, other Government
Entity, against such risk in an amount that, when added to the amount of
insurance (including permitted self-insurance), if any, against such risk that
Lessee (or any Permitted Sublessee) may continue to maintain, in accordance with
this SEC-

<PAGE>

                                      -40-

TION 12 shall be at least equal to the amount and terms of insurance against
such risk otherwise required by this SECTION 12.

            (d)   APPLICATION OF INSURANCE PROCEEDS. As between Lessor and
Lessee, all insurance proceeds received as a result of the occurrence of a
Casualty Occurrence with respect to the Aircraft or any Engine under policies
required to be maintained (or caused to be maintained) by Lessee pursuant to
this SECTION 12 will be applied in accordance with SECTION 11(g). All proceeds
of insurance required to be maintained (or caused to be maintained) by Lessee,
in accordance with this SECTION 12 and SECTION B of EXHIBIT G, in respect of any
property damage or loss not constituting a Casualty Occurrence with respect to
the Aircraft, Airframe or any Engine will be applied in accordance with SECTION
B and CLAUSE (12) of SECTION E of EXHIBIT G.

            (e)   APPLICATION OF PAYMENTS DURING EXISTENCE OF A SPECIAL DEFAULT
OR EVENT OF DEFAULT. If a Special Default or Event of Default shall have
occurred and be continuing at any time that an amount described in this Section
12 or clause (12)(ii) of Section E of Exhibit G is payable or creditable to, or
retainable by, Lessee, Lessee shall cause such amount to be paid over to Lessor
as security for the obligations of Lessee under this Lease and shall be invested
pursuant to Section 4(d) hereof unless and until such amount is applied, at the
option of Lessor, or upon the written request of Lessee to Lessor, from time to
time during the continuance of a Special Default or Event of Default, to
Lessee's obligations under this Lease and the other Operative Documents as and
when due, it being understood that any such application shall be made to such
obligations of Lessee as Lessor may determine in its sole discretion. At such
time as there shall not be continuing any Special Default or Event of Default,
such amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 12(e).

            Section 13. INDEMNIFICATION.

            (a)   INDEMNIFICATION. Lessee agrees to indemnify, reimburse and
hold harmless each Indemnitee from and against any and all claims, damages,
losses, liabilities, demands, suits, judgments, causes of action, legal
proceedings, whether civil or criminal, penalties, fines and other sanctions,
and any reasonable attorney's fees and other reasonable costs and expenses in
connection herewith or therewith, including, without limitation, any of the
foregoing arising or imposed with or without Lessor's fault or negligence
(whether passive or active), or under the doctrine of strict liability (any and
all of which are hereafter referred to as "Claims") which in any way may result
from, pertain to or arise in any manner out of, or are in any manner related to
(i) the Aircraft or any of the Operative Documents, or the breach of any
representation, warranty or covenant made by Lessee hereunder or under any other
such document, or (ii) the condition, ownership, manufacture, delivery,
non-delivery, lease, acceptance, possession, return, disposition following the
happening of an Event of Default, use, or operation of the Aircraft either in
the air or on the ground, or (iii) any defect in the Aircraft

<PAGE>

                                      -41-

(whether or not discovered or discoverable by Lessee or Lessor) arising from the
material or any articles used therein or from the design, testing, or use
thereof or from any maintenance, service, repair, overhaul, or testing of the
Aircraft whether or not the Aircraft is in the possession of Lessee and
regardless of where the Aircraft may then be located; or (iv) any transaction,
approval, or document contemplated by this Lease or any of the other Operative
Documents or given or entered into in connection herewith or therewith. In the
event Lessee is required to indemnify any Indemnitee hereunder, Lessee shall pay
to such Indemnitee an amount which, after deduction of all Taxes and like
charges required to be paid by such Indemnitee in respect of such payment, is
equal to the amount of the indemnification required; provided that each
Indemnitee shall pay to Lessee the amount of any tax benefits obtained in
respect of such payment.

            The indemnities contained in this Section 13 shall continue in full
force and effect notwithstanding the expiration or other termination of this
Lease and are expressly made for the benefit of and shall be enforceable by each
Indemnitee.

            Notwithstanding anything to the contrary expressed or implied
herein, Lessee shall have no liability under this Section 13 in respect of any
Claim to the extent the same shall arise out of or be attributable:

            (A)   To any grossly negligent act or omission or willful misconduct
      of any Indemnitee or any related Indemnitee (as defined below);

            (B)   To any Taxes;

            (C)   To a loss of future profits of, a cost or expense unreasonably
      incurred by or the normal and ordinary administrative and operating costs
      and overhead expenses of any Indemnitee;

            (D)   To acts or events which occur after (x) the date the Aircraft
      has been redelivered to Lessor in accordance with Section 16 hereof (it
      being understood that the date of placement of the Aircraft in storage as
      provided in Section 16(1) constitutes the date of redelivery referred to
      herein) pursuant to the terms of and in compliance with this Lease or (y)
      if the Aircraft is not required to be returned, the date of termination of
      the Term in accordance with this Lease, unless any such act or event shall
      itself result from an act or omission of Lessee which occurred during the
      Term;

            (E)   The failure by any Indemnitee or related Indemnitee to perform
      or observe any agreement, covenant or condition on its part to be
      performed or observed in any Operative Document;

<PAGE>

                                      -42-

            (F)   The incorrectness or breach of any representation or warranty
      of any Indemnitee or related Indemnitee contained in or made pursuant to
      any Operative Document;

            (G)   To the extent directly attributable to any Transfer (voluntary
      or involuntary) by or on behalf of Lessor of any interest in the Aircraft,
      except for those out-of-pocket costs and expenses described in Section 18
      incurred as a result of such Transfer, if, at the time of such Transfer, a
      Event of Default shall have occurred and be continuing; PROVIDED that
      nothing herein shall restrict or limit Lessor's right to Transfer in
      accordance with Section 21 or shall restrict or limited any such permitted
      Transferee of Lessor to exercise its rights under this Section 13;

            (H)   To the extent attributable to the offer or sale by an
      Indemnitee or any related Indemnitee of any interest in the Aircraft in
      violation of the Securities Act or other applicable federal, state or
      foreign securities laws (other than any thereof caused by the acts or
      omissions of Lessee);

            (I)   To any amount which such Indemnitee expressly agrees to pay or
      such Indemnitee expressly agrees shall not be paid by or be reimbursed by
      Lessee;

            (J)   To the deregistration of the Aircraft under the Act as a
      result of Lessor (or any related Indemnitee) not being a Citizen of the
      United States as a result of any act;

            (K)   For any Lessor's Lien attributable to any Indemnitee or any
      related Indemnitee;

            (L)   If another provision of this Lease or any Operative Document
      specifies the extent of Lessee's responsibility or obligation with respect
      to such Claim, expense or other amount, to the extent Lessee has complied
      with such specified responsibility or obligation; or

            (M)   For any loss attributable to, arising from or in connection
      with any inspections or inspection rights arising from or in connection
      with any of the Operative Documents, except inspection or inspection
      rights resulting from a Lease Event of Default.

            For purposes of this Section 13, a Person shall be considered a
      "related" Indemnitee with respect to an Indemnitee if such Person is an
      Affiliate or employer of such Indemnitee, a director, officer, employee,
      agent, or servant of such Indemnitee or any such Affiliate or a successor
      or permitted assignee of any of the foregoing.

<PAGE>

                                      -43-

            (b)   NOTICE. If a Claim for any amount that an Indemnitee shall be
indemnified against under this Section 13(a) is made, such Indemnitee shall
give prompt written notice thereof to Lessee. Notwithstanding the foregoing, the
failure of any Indemnitee to notify Lessee as provided in this Section 13(b) or
13(c), shall not release Lessee from any of its obligations to indemnify such
Indemnitee hereunder, except to the extent that such failure results in an
additional or larger Claim (in which event Lessee shall not be responsible for
such additional or larger Claim) or materially impairs Lessee's ability to
contest such Claim.

            (c)   NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS.

            (i)   In case any action, suit or proceeding shall be brought
      against any Indemnitee for which Lessee is responsible under this Section
      13, such Indemnitee shall notify Lessee of the commencement thereof and
      Lessee may, at its expense, participate in and to the extent that it shall
      wish (subject to the provisions of the following paragraph), assume and
      control the defense thereof and, subject to Section 13(c)(iii), settle or
      compromise the same.

            (ii)  Lessee or its insurer(s) shall have the right, at its or their
      expense, to investigate or, if Lessee or its insurer(s) shall agree not to
      dispute liability to the Indemnitee giving notice of such action, suit or
      proceeding under this Section 13(c) for indemnification hereunder or under
      any insurance policies pursuant to which coverage is sought, control the
      defense of, any action, suit or proceeding, relating to any Claim for
      which indemnification is sought pursuant to this Section 13, and each
      Indemnitee shall cooperate with Lessee or its insurer(s) with respect
      thereto; PROVIDED, that Lessee shall not be entitled to control the
      defense of any such action, suit, proceeding or compromise any such Claim
      during the continuance of any Event of Default arising under Section 17(a)
      of the Lease. In connection with any such action, suit or proceeding being
      controlled by Lessee, such Indemnitee shall have the right to participate
      therein, at its sole cost and expense, with counsel reasonably
      satisfactory to Lessee; PROVIDED, that such Indemnitee's participation
      does not, in the reasonable opinion of the independent counsel appointed
      by the Lessee or its insurers to conduct such proceedings, interfere with
      the defense of such case.

            (iii) In no event shall any Indemnitee enter into a settlement or
      other compromise with respect to any Claim without the prior written
      consent of Lessee, which consent shall not be unreasonably withheld or
      delayed. Any settlement or compromise without such consent of Lessee shall
      be deemed a waiver by such Indemnitee of its right to be indemnified with
      respect to such Claim under this Section 13.

            (iv)  In the case of any Claim indemnified by the Lessee hereunder
      which is covered by a policy of insurance maintained by Lessee pursuant to
      Section 12 of the Lease, at Lessee's expense, each Indemnitee agrees to
      cooperate with the insurers in

<PAGE>

                                      -44-

      the exercise of their rights to investigate, defend or compromise such
      Claim as may be required to retain the benefits of such insurance with
      respect to such Claim.

            (v)   If an Indemnitee is not a party to this Agreement, Lessee may
      require such Indemnitee to agree in writing to the terms of this Section
      13 and Section 23(b) prior to making any payment to such Indemnitee under
      this Section 13.

            (d)   INFORMATION. Lessee will provide the relevant Indemnitee with
such information not within the control of such Indemnitee, as is in Lessee's
control or is reasonably available to Lessee, which such Indemnitee may
reasonably request and will otherwise cooperate with such Indemnitee so as to
enable such Indemnitee to fulfill its obligations under Section 13(c). The
Indemnitee shall supply Lessee with such information not within the control of
Lessee, as is in such Indemnitee's control or is reasonably available to such
Indemnitee, which Lessee may reasonably request to control or participate in any
proceeding to the extent permitted by Section 13(c).

            (e)   EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER ASSURANCES.
Upon the payment in full by Lessee of any indemnity provided for under this
Agreement, Lessee, without any further action and to the full extent permitted
by Law, will be subrogated to all rights and remedies of the person indemnified
in respect of the matter as to which such indemnity was paid, including, but not
limited to any rights and remedies which Lessor may have against the
Manufacturer of the Aircraft and its subcontractors. Each Indemnitee will give
such further assurances or agreements and cooperate with Lessee to permit Lessee
to pursue such claims, if any, to the extent reasonably requested by Lessee and
at Lessee's expense.

            (f)   REFUNDS AND RECOVERIES. If an Indemnitee receives any refund
or recovers any amount, in whole or in part, with respect to any Claim paid by
Lessee hereunder, it will promptly pay the amount refunded or recovered (but not
an amount in excess of the amount Lessee or any of its insurers has paid in
respect of such Claim) over to Lessee.

            Section 14. LIENS.

            Lessee shall not directly or indirectly create, incur, assume or
suffer to exist any Lien on or with respect to the Aircraft or any Engine, title
thereto or any interest therein, except (i) the respective rights of Lessor and
Lessee as herein provided or of any Permitted Sublessee under any Permitted
Sublease; (ii) Lessor's Liens with respect to the Aircraft or any Engine; (iii)
Liens in favor of any Affiliate of Lessor with respect to any Engine; (iv) Liens
for Taxes of Lessee or any Permitted Sublessee (and their respective U.S.
federal tax law consolidated groups) or Liens for Taxes of any Indemnitee for
which Lessee is obligated to indemnify such Indemnitee under any Operative
Document, in any case either not yet due or being contested in good faith by
appropriate proceedings so long as there is no material risk of the Aircraft or
such Engine being lost, sold, confiscated, forfeited or seized as a result of
any such

<PAGE>

                                      -45-

Lien; (v) inchoate materialmen's, mechanics', workmen's, repairmen's, employees'
or other like Liens arising in the ordinary course of business, which either are
not delinquent or are being contested in good faith by appropriate proceedings,
so long as there is no material risk of the Aircraft or such Engine being lost,
sold, confiscated, forfeited or seized as a result of any such Lien; (vi) Liens
arising out of any judgment or award against Lessee (or against any Permitted
Sublessee), so long as such judgment shall within 60 days after the entry
thereof, have been discharged or vacated, or execution thereof stayed pending
appeal or shall have been discharged, vacated or reversed within 60 days after
the expiration of such stay, and so long as during any such 60-day period there
is not, or any such judgment or award does not involve, any material risk of the
sale, forfeiture or loss of the Aircraft, the Airframe or any Engine; and (vii)
any other Lien with respect to which Lessee (or any Permitted Sublessee) shall
have provided a bond, cash collateral or other security adequate in the
reasonable opinion of Lessor. Lessee shall promptly take (or cause to be taken)
such action as may be necessary duly to discharge (by bonding or otherwise) any
Lien not excepted above if the same shall at any time arise in respect of the
Aircraft, the Airframe, any Engine or any Part during the Term. Lessee shall
promptly, at its own expense, take such action as may be necessary to duly
discharge any Lien not excepted above if the same shall arise at any time with
respect to the Aircraft or any Engine during the Term.

            Section 15. PERFECTION OF TITLE AND FURTHER ASSURANCES.

            If at any time subsequent to the initial recordation of title under
this Lease, any filing or recording is reasonably necessary to protect the
interest of Lessor, Lessee, at its own cost and expense and upon request by
Lessor, shall cause this Lease, any financing statements with respect hereto,
and any and all additional instruments which shall be executed pursuant to the
terms hereof, to be kept, filed and recorded and to be re-executed, refiled and
rerecorded in the appropriate office or offices pursuant to applicable Laws, to
perfect, protect and preserve the rights and interests of Lessor hereunder and
in the Aircraft. At the reasonable request of Lessor, Lessee, at its expense,
shall furnish to Lessor an Officer's Certificate or other evidence satisfactory
to Lessor of each such filing or refiling and recordation or re-recordation.

            Without limiting the foregoing, Lessee shall do or cause to be done,
at Lessee's cost and expense, any and all acts and things which may be required
under the terms of the Mortgage Convention to perfect and preserve the title and
interest of Lessor in the Aircraft within the jurisdiction of any signatory
which has ratified the Mortgage Convention if such jurisdiction is in the
territory in which Lessee may operate the Aircraft, as Lessor may reasonably
request. Lessee shall also do or cause to be done, at its own cost and expense,
any and all acts and things which may be required under the terms of any other
Law involving any jurisdiction in which Lessee may operate, or any and all acts
and things which Lessor may

<PAGE>

                                      -46-

reasonably request, to perfect and preserve Lessor's ownership rights regarding
the Aircraft within any such jurisdiction.

            In addition, (a) Lessee will promptly and duly execute and deliver
to Lessor such further documents and assurances and take such further actions as
Lessor may from time to time reasonably request in order to more effectively
carry out the intent and purpose of this Lease and to establish and protect the
rights and remedies created or intended to be created in favor of Lessor
hereunder, including, without limitation, if reasonably requested by Lessor at
the expense of Lessee, the execution and delivery of supplements or amendments
hereto in recordable form, subjecting to this Lease any Replacement Engine and
the recording or filing of counterparts thereof, in accordance with the laws of
any appropriate jurisdiction; and (b) Lessee shall do or cause to be done, at
Lessor's expense, any and all acts and things which Lessor may reasonably
request as shall be necessary to maintain, preserve and protect Lessor's
interest in the Aircraft.

            Section 16. RETURN OF AIRCRAFT AND RECORDS.

            (a) CONDITION UPON RETURN. Lessee shall comply with each of the
provisions of EXHIBIT E, which provisions are hereby incorporated by this
reference as if set forth in full herein. All references to "Section 16" or
"this Section 16" shall be deemed to include EXHIBIT E.

            (b) STORAGE AND RELATED MATTERS. If Lessor gives written notice to
Lessee not less than thirty (30) days nor more than one hundred twenty (120)
days prior to the end of the Term requesting storage of the Aircraft upon its
return hereunder, Lessee will assist Lessor, at Lessor's expense, in arranging
storage for the Aircraft for a period up to thirty (30) days, commencing on the
date of such return, and upon request of Lessor to Lessee made at least ten (10)
days prior to the end of such initial thirty (30) day period, for an additional
one hundred twenty (120) day period commencing upon expiration of such initial
period, at such storage facility in the forty eight (48) contiguous states of
the United States of America as Lessee and Lessor may agree; PROVIDED that such
location shall be a location generally used for the storage of commercial
aircraft by aircraft owners or operators. Notwithstanding subsection (a) of
EXHIBIT E, such storage shall be deemed to be the return location of the
Aircraft for purposes of such EXHIBIT E. Such storage shall be at Lessor's risk
and expense and Lessor shall pay all applicable storage, maintenance and
insurance fees and expenses. Lessee's obligation to assist Lessor in arranging
storage for the Aircraft shall be subject to Lessor entering into an agreement
satisfactory to Lessee prior to the commencement of the storage period with the
storage facility providing, among other things, that Lessor shall bear all
storage, maintenance charges (other than those to be paid by Lessee as set forth
herein and maintenance required as a direct breach of Lessee's obligations under
this Section 16) and other costs (including those costs referred to above) other
than those to be paid by Lessee as set forth herein) and incurred relating to
such storage. Lessee agrees to arrange for insurance coverage for the

<PAGE>

                                      -47-

Aircraft during such storage period; PROVIDED that Lessor reimburses Lessee for
its out-of-pocket costs therefor.

            (c) RETURN OF OTHER ENGINES. In the event that any Engine owned by
Lessor shall not be installed on the Airframe at the time of return hereunder,
Lessee shall be required to return the Airframe hereunder with a Replacement
Engine meeting the requirements of, and title of which is transferred to Lessor
in accordance with, this Section 16 and Section 11. Thereupon, Lessor will
transfer or cause to be transferred to Lessee on an "as is, where is, with all
faults" basis the Engine constituting part of such Aircraft but not installed on
such Airframe at the time of the return of the Airframe.

            (d) OBLIGATIONS CONTINUE UNTIL RETURN. If Lessee shall fail to
return the Aircraft at the time and in the condition specified herein, the Term
of this Lease shall be deemed to have been automatically extended (unless Lessor
has terminated this Lease pursuant to Section 18(f) hereof) and all obligations
of Lessee under this Lease shall continue in effect with respect to the Aircraft
until the Aircraft is so returned to Lessor and Lessee shall pay to Lessor an
amount equal to the higher of Fair Market Rental Value and 100% of the average
daily Basic Rent payable by Lessee during the Term for each day after the end of
the Term to, but excluding, the day of such return; PROVIDED, however, that
Lessee shall not be responsible for Lessor's failure to accept return of the
Aircraft in accordance with this Section 16 in a timely manner or for any Rent
with respect to periods after Lessee has tendered the Aircraft for return in
accordance with this Lease. Any Rent owed to Lessor pursuant to this Section
16(d) shall be payable upon acceptance of the Aircraft by Lessor. The provisions
of this Section 16(d) shall not limit any remedy the Lessor would otherwise have
for breach of Section 16(a).

            Section 17. EVENTS OF DEFAULT.

            Any one or more of the following occurrences or events shall
constitute an Event of Default:

            (a) Lessee shall fail to make any payment of Rent to Lessor when due
      under this Lease and such payment shall be overdue for a period of five
      (5) Business Days after written notice thereof is given by Lessor to
      Lessee;

            (b) Lessee shall fail to obtain and maintain or fail to cause to be
      obtained and maintained, any insurance required under the provisions of
      Section 12 hereof;

            (c) Any representation or warranty made by Lessee herein, by
      Guarantor in the Parent Guaranty or in any document or certificate
      furnished Lessor in connection herewith or therewith or pursuant hereto
      (1) is incorrect in any material respect at the time given, (2) such
      incorrect representation is material at the time in question and (3)

<PAGE>

                                      -48-

the same shall remain uncured (to the extent of the adverse impact of such
incorrectness on the interest of Lessor) for a period of 30 days from the date
of written notice thereof from Lessor to Lessee or Guarantor, as the case may
be;

            (d) Lessee or Guarantor shall fail to perform or observe (or cause
to be observed and performed) in any material respect any other covenant,
condition or agreement to be performed or observed by it pursuant to this Lease
or any of the other Operative Documents and such failure shall continue for a
period of thirty (30) days after written notice thereof is given by Lessor to
Lessee or Guarantor, as the case may be; provided, however, that if the Lessee
or Guarantor cannot reasonably cure such failure within such period and is
diligently pursuing such cure, then Lessee or Guarantor shall have an additional
period of up to one hundred eighty (180) days to cure such failure;

            (e) Lessee or Guarantor, as the case may be, consents to the
appointment of a receiver, trustee or liquidator of itself or of a substantial
part of its property, or Lessee or Guarantor admits in writing its inability to
pay its debts generally as they come due, or makes a general assignment for the
benefit of creditors, or Lessee or Guarantor files a voluntary petition in
bankruptcy or a voluntary petition seeking reorganization in a proceeding under
any bankruptcy laws (as now or hereafter in effect), or an answer admitting the
material allegations of a petition filed against Lessee or Guarantor in any such
proceeding, or Lessee or Guarantor by voluntary petition, answer or consent
seeks relief under the provisions of any bankruptcy or other similar law
providing for the reorganization or winding-up of corporations, or provides for
an agreement, composition, extension or adjustment with its creditors;

            (f) An order, judgment or decree is entered by any court, with or
without the consent of Lessee or Guarantor, as the case may be, appointing a
receiver, trustee or liquidator for Lessee or Guarantor, as the case may be, or
of all or any substantial part of its property, or all or any substantial part
of the property of Lessee or Guarantor is sequestered, and any such order,
judgment or decree of appointment or sequestration remains in effect,
undismissed, unstayed or unvacated for a period of ninety (90) days after the
date of entry thereof;

            (g) A petition against Lessee or Guarantor, as the case may be, in a
proceeding under the bankruptcy, insolvency or other similar Laws (as now or
hereafter in effect) of any Governmental Entity is filed and is not withdrawn or
dismissed within ninety (90) days thereafter, or if, under the provisions of any
Law providing for reorganization or winding-up of corporations which may apply
to Lessee or Guarantor, any court of competent jurisdiction assumes jurisdiction
over, or custody or control of, Lessee or Guarantor, as the case may be, or of
all or any substantial part of its property and such jurisdiction, custody or
control remains in effect, unrelinquished, unstayed or unterminated for a period
of ninety (90) days.

<PAGE>

                                      -49-

            (h) The Parent Guaranty shall fail to be in full force and effect
and enforceable according to its terms; or

            (i) Lessee shall have failed to satisfy the return requirement
provisions of Section 16(a), and such failure shall continue unremedied for a
period of 60 days from the last day of the Term that is then in effect, provided
that if the Aircraft has been requisitioned by the United States Government or
the government of registry of the Aircraft as provided in Section 11(h) hereof,
the Lessee's inability to deliver the Aircraft shall not constitute an Event of
Default hereunder unless such failure shall continue unremedied beyond the
earlier of (A) the one hundred and eightieth (180th) day from the last day of
the Term, or (B) the day the requisition of the Aircraft by the United States
Government or the government of registry of the Aircraft has been terminated
(but not earlier than the sixty (60) day period specified above in this clause
(i).

            Section 18. REMEDIES.

            Upon the occurrence of any Event of Default and any time thereafter
so long as the same shall be continuing, Lessor, at its option and without
notice to Lessee, may exercise one or more of the following remedies as Lessor
in its sole discretion shall elect, to the extent available and permitted by,
and subject to compliance with any mandatory requirements of, applicable Law
then in effect:

            (a) Demand that Lessee, and Lessee shall upon the written demand of
      Lessor and at Lessee's expense, immediately return the Aircraft to Lessor
      in the manner specified in such notice, in which event such return shall
      not be delayed for purposes of complying with the return conditions
      specified in Section 16 hereof (none of which conditions shall be deemed
      to affect Lessor's possession of the Aircraft) or delay for any other
      reason. Notwithstanding the foregoing, at Lessor's option Lessee shall be
      required thereafter to take such actions as would be required by the
      provisions of this Lease if the Aircraft were being returned at the end of
      the Term hereof and Lessor agrees to cooperate with Lessee's required
      actions. In addition, Lessor, at its option and to the extent permitted by
      applicable Law, may enter upon the premises where all or any part of the
      Aircraft is located and take immediate possession of and, at Lessor's sole
      option, remove the same (and/or any engine which is not an Engine but
      which is installed on the Airframe, subject to the rights of the owner,
      lessor or secured party thereof) by summary proceedings or otherwise, all
      without liability accruing to Lessor for or by reason of such entry or
      taking of possession whether for the restoration of damage to property, or
      otherwise, caused by such entry or taking, except damages caused by gross
      negligence or willful misconduct.

            (b) Sell at private or public sale, as Lessor may determine, or
      hold, use, operate or lease to others the Aircraft as Lessor in its sole
      discretion may determine, all

<PAGE>

                                      -50-

      free and clear of any rights to Lessee without any duty to account to
      Lessee with respect to such action or inaction or for any proceeds with
      respect thereto, except as hereinafter set forth in this Section 18, and
      except to the extent that such proceeds would constitute, under applicable
      Law, a mitigation of Lessor's damages suffered or incurred as a result of
      the subject Event of Default. Lessor shall give Lessee at least 15 days
      prior written notice of the date fixed for any public sale of the Airframe
      and/or any Engine or of the date on or after which will occur the
      execution of any contract providing for any private sale.

            (c) Whether or not Lessor shall have exercised, or shall thereafter
      at any time exercise, any of its rights under paragraph (a) or paragraph
      (b) of this Section 18, Lessor, by thirty (30) days written notice to
      Lessee specifying a payment date, may demand that Lessee pay to Lessor,
      and Lessee shall pay to Lessor, on the payment date specified in such
      notice (which shall be the Casualty Value Date next occurring not less
      than 10 days after the date of such notice), as liquidated damages for
      loss of a bargain and not as a penally (in lieu of the Basic Rent for the
      Aircraft in respect of all periods commencing on or after the date
      specified for payment in such notice), the following amounts:

                  (A) all unpaid Basic Rent due at any time prior to (but not
            including) the Casualty Value Date specified in such notice; plus

                  (B) whichever of the following amounts Lessor, in its sole
            discretion shall specify in such notice:

                        (1) an amount equal to the excess, if any, of the
                  present value, computed as of the Casualty Value Date
                  specified in such notice, discounted to such date at a rate
                  per annum equal to the Discount Rate, compounded semiannually,
                  of all unpaid Basic Rent during the then remaining portion of
                  the Term, over the Fair Market Rental Value of the Aircraft
                  for the remainder of the Term, after discounting such Fair
                  Market Rental Value to its then present value (at a rate per
                  annum equal to the Discount Rate, compounded semiannually) as
                  of the Casualty Value Date specified in such notice, or

                        (2) an amount equal to the excess, if any, of the
                  Casualty Value for the Aircraft, computed as of the Casualty
                  Value Date specified in such notice, over the Fair Market
                  Sales Value of the Aircraft, as of the Casualty Value Date
                  specified in such notice; plus

<PAGE>

                                      -51-

                  (C) interest on the amounts specified in the foregoing clause
            (A) at the Interest Rate from and including the date on which any
            such amount was due to the date of payment of such amount; plus

                  (D) interest on the amount specified in the foregoing clause
            (B)(l) or (B)(2), according to Lessor's election, at the Interest
            Rate from and including the Casualty Value Date specified in such
            notice to the date of payment of such amount.

            (d) If Lessor, pursuant to Section 18(b) or applicable Law, shall
      have sold the Airframe and/or any Engine, Lessor, in lieu of exercising
      its rights under Section 18(c) with respect to the Aircraft, Airframe or
      any Engine, as the case may be, may, if Lessor shall so elect, upon giving
      written notice to Lessee, demand Lessee to pay Lessor, and Lessee shall
      pay to Lessor, on the date of such sale, as liquidated damages for loss of
      a bargain and not as a penalty (in lieu of the Basic Rent for the Aircraft
      in respect of all periods commencing on or after the date of such sale),
      the following amounts:

                  (i) all unpaid Basic Rent due at any tune prior to (but not
            including) the Casualty Value Date on or immediately preceding the.
            date of such sale; plus

                  (ii) an amount equal to the excess, if any, of (i) the
            Casualty Value of the Aircraft, computed as of the Casualty Value
            Date used in the foregoing clause (a) for the computation of unpaid
            Rent, over (ii) the proceeds of such sale; plus

                  (iii) all reasonable brokerage and other reasonable
            out-of-pocket fees and expenses incurred by Lessor in connection
            with such sale; plus

                  (iv) interest on the amounts specified in the foregoing clause
            (i) at the Interest Rate from and including the date on which any
            such amount was due to the date of payment of such amount; plus

                  (v) interest on the sum of the amounts specified in the
            foregoing clause (ii) at the Interest Rate from and including the
            date of such sale to the date of payment of such amounts.

            (e) Proceed by appropriate court action or actions, either at law or
      in equity, to enforce performance by Lessee of the applicable covenants of
      this Lease and to recover damages for the breach thereof (including,
      without limitation, the payment of all Rent and other amounts which are or
      become due and payable hereunder prior to

<PAGE>

                                      -52-

      the date Lessor recovers possession of the Aircraft and all reasonable
      out-of-pocket expenses incurred by Lessor and occasioned by Lessee's
      failure to return the Aircraft in conformance with all of the requirements
      imposed by this Lease and particularly Section 16(f)) and to rescind this
      Lease.

            (f) By written notice to Lessee, which notice shall be effective
      upon dispatch, terminate the letting of the Aircraft (but without
      prejudice to the obligations of Lessee under this Lease), whereupon all
      rights of Lessee under this Lease shall cease, and whereupon Lessor may
      repossess the Aircraft.

            In effecting any repossession, Lessor and its representatives and
agents, to the extent permitted by law shall: (i) have the right to enter upon
any premises where it reasonably believes the Aircraft, the Airframe, an Engine
or Part to be located; (ii) not be liable, in conversion or otherwise, for the
taking of any personal property of Lessee which is in or attached to the
Aircraft, the Airframe, an Engine or Part which is repossessed; provided,
however, that Lessor shall return to Lessee all personal property of Lessee or
its passengers which was on the Aircraft at the time Lessor retakes possession
of the Aircraft; (iii) not be liable or responsible, in any manner, for any
inadvertent damage or injury to any of Lessee's property in repossessing and
holding the Aircraft, the Airframe, an Engine or Part, except for that caused by
or in connection with Lessor's gross negligence or willful acts; (iv) have the
right to maintain possession of and dispose of the Aircraft, the Airframe, an
Engine or Part on any premises owned by Lessee or under Lessee's control; and
(v) have the right to obtain a key to any premises at which, the Aircraft, the
Airframe, an Engine or Part may be located from the landlord or owner thereof.

            If reasonably required by Lessor, Lessee, at its sole expense, shall
assemble and make the Aircraft, the Airframe, an Engine or Part available at a
place designated by Lessor in accordance with Section 16 hereof. Lessee hereby
agrees that, in the event of the return to or repossession by Lessor of the
Aircraft, the Airframe, an Engine or Part, any rights in any warranty (express
or implied) heretofore assigned to Lessee or otherwise held by Lessee shall
without further act, notice or writing be assigned or reassigned to Lessor, if
assignable. Following an Event of Default, Lessee shall be liable to Lessor
(without duplication) for all reasonable expenses, disbursements, costs and fees
incurred in (i) repossessing, storing, preserving, shipping, maintaining,
repairing and refurbishing the Aircraft, the Airframe, an Engine or Part to the
condition required by Section 16 hereof and (ii) preparing the Aircraft, the
Air-frame, an Engine or Part for sale or lease, advertising the sale or lease of
the Aircraft, the Airframe, an Engine or Part and selling or releasing the
Aircraft, the Airframe, an Engine or Part. Lessor is hereby authorized and
instructed, at its option, to make reasonable expenditures which Lessor
considers advisable to repair and restore the Aircraft, the Airframe, an Engine
or Part to the condition required by Section 16 hereof, all at Lessee's sole
expense.

<PAGE>

                                      -53-

            At any public sale of the Aircraft, the Airframe, an Engine or Part
pursuant to this Section, Lessor may bid for and purchase such property and
Lessee agrees that the amounts paid therefor shall be used in the computation
contemplated herein.

            No remedy referred to in this Section 18 is intended to be
exclusive, but, to the extent permissible hereunder or under applicable Law,
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to Lessor at Law or in equity; and the exercise or
beginning of exercise by Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Lessor of any or all of such
other remedies. No express or implied waiver by Lessor of any Default or Event
of Default shall in any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default.

            Lessee agrees that upon and after the occurrence of an Event of
Default, any sums which may otherwise be due and owing by Lessor to Lessee under
this Lease, shall be offset against any sums due and owing by Lessee to Lessor
under this Lease.

            Section 19. ASSIGNMENT; MERGER.

            (a) IN GENERAL. This Lease shall be binding upon and inure to the
benefit of Lessor and Lessee and their respective permitted successors and
permitted assigns. Except as otherwise expressly permitted by the terms of this
Lease, Lessee will not, without the prior written consent of Lessor, assign any
of its rights under this Lease.

            (b) MERGER OF LESSEE. Lessee shall not consolidate with or merge
into any other Person under circumstances in which Lessee is not the surviving
corporation, or convey, transfer or lease in one or more transactions all or
substantially all of its assets to any other Person, unless:

            (i) such Person is organized, existing and in good standing under
      the Laws of the United States, any State of the United States or the
      District of Columbia and, upon consummation of such transaction, such
      Person will be a U.S. Air Carrier;

            (ii) such Person executes and delivers to Lessor a duly authorized,
      legal, valid, binding and enforceable agreement, reasonably satisfactory
      in form and substance to Lessor, containing an effective assumption by
      such Person of the due and punctual performance and observance of each
      covenant, agreement and condition in the Operative Documents to be
      performed or observed by Lessee;

            (iii) such Person makes such filings and recordings with the FAA
      pursuant to the Act as shall be necessary to evidence such consolidation
      or merger;

<PAGE>

                                      -54-

            (iv) immediately after giving effect to such consolidation or merger
      no Event of Default shall have occurred and be continuing; and

            (v) such Person files any requisite financing statements under the
      Uniform Commercial Code.

            (c) EFFECT OF MERGER. Upon any such consolidation or merger of
Lessee with or into, or the conveyance, transfer or lease by Lessee of all or
substantially all of its assets to, any Person in accordance with this Section
19(c), such Person will succeed to, and be substituted for, and may exercise
every right and power of, Lessee under the Lessee with the same effect as if
such person had been named as "Lessee" therein. No such consolidation or merger,
or conveyance, transfer or lease, shall have the effect of releasing Lessee or
such Person from any of the obligations, liabilities, covenants or undertakings
of Lessee under the Lease.

            Section 20. INTENTIONALLY OMITTED.

            Section 21. ALIENATION.

            (a) During the Term, Lessor shall not Transfer any or all of its
right, title or interest in the Aircraft and to the Lease unless such transfer
is a Transfer of the entire interest held by Lessor, and:

            (i) The Transferee shall have full power, authority and legal right
      to execute and deliver and to perform the obligations of Lessor under the
      Lease and the Operative Documents and shall provide reasonably
      satisfactory evidence of such power and authority to Lessee;

            (ii) The Transferee shall enter into an assignment and assumption
      agreement in form and substance reasonably satisfactory to Lessee;

            (iii) Lessee shall not be obligated to pay any greater amount or
      incur any greater obligation than that which it would have been obliged to
      pay or incur under this Lease or other Operative Document if no transfer
      or assignment had taken place, and the terms and conditions of the Lease
      and the other Operative Documents insofar as they relate to the rights and
      obligations of Lessee shall not be altered;

            (iv) Lessor shall deliver to Lessee, an opinion of counsel (in form
      and substance reasonably satisfactory to Lessee) to the effect that such
      agreement or agreements referred to in paragraphs (a)(ii) and, if
      applicable, (a)(vi) hereof are legal, binding and enforceable in
      accordance with its or their terms and that such transfer will not

<PAGE>

                                      -55-

      violate the Act, the registration provisions of the Securities Act of
      1933, as amended, or any other applicable Federal law;

            (v) The Transferee is a Citizen of the United States (it being
      understood that the existence of any such requirement is to be determined
      without giving consideration to Section 47.9 of the FAA Regulations or any
      other provision that may restrict Lessee's use or operation of the
      Aircraft), or shall use a voting powers trust or similar arrangement in
      order to hold an interest in the Aircraft and the Lease such that the
      Aircraft can be registered in the United States (without giving
      consideration to Section 47.9 of the FAA Regulations); and

            (vi) The Transferee shall be a single entity and shall be either (A)
      a Permitted Institution or (B) any other entity (other than, without
      Lessee's consent, a commercial air carrier, a commercial aircraft
      operator, a freight forwarder or an Affiliate of any of the foregoing) the
      obligations of which under the Operative Documents are guaranteed by a
      Permitted Institution in any case, pursuant to a written guaranty, in form
      and substance reasonably satisfactory to Lessee.

            (b) Lessor shall give written notice to Lessee at least 10 days
prior to any such Transfer, specifying the name and address of the proposed
Transferee, and providing financial statements of the proposed Transferee
evidencing satisfaction of the requirements described in paragraph (a)(vi)(A)
or (B) above.

            (c) Any fees, charges and expenses, including the reasonable legal
fees, charges and expenses incurred by Lessee, in connection with any Transfer
by Lessor permitted by this Section 21, or by the Transferee in any such case,
will be paid for by Lessor.

            Section 22. FOREIGN REGISTRATION.

            Lessor hereby agrees, for the benefit of Lessee but subject to the
provisions of Section 6(a)(ii) of the Lease:

            (a) that Lessee shall be entitled to register the Aircraft or cause
      the Aircraft to be registered in a country other than the United States
      subject to compliance with the following:

                  (i) each of the following requirements is satisfied:

                        (A) such registration shall be made only after the close
                  of the Tax Attribute Period, unless Lessee prepays to Lessor
                  on a lump sum basis any indemnity due under the Section B of
                  the Letter Agreement No. 1 as a result of such registration
                  based upon the assumption that

<PAGE>

                                      -56-

                  such registration would continue for the remainder of the term
                  of the Permitted Sublease described in clause (C) below;

                        (B) no Event of Default shall have occurred and be
                  continuing at the time of such registration;

                        (C) such proposed change of registration is made in
                  connection with a Permitted Sublease to a Permitted Air
                  Carrier;

                        (D) such country is a Permitted Country with which the
                  United States then maintains normal diplomatic relations or,
                  if Taiwan, the United States then maintains diplomatic
                  relations at least as good as those in effect on the Delivery
                  Date;

                  (ii) Lessor shall have received an opinion of counsel (subject
            to customary exceptions) reasonably satisfactory to Lessor addressed
            to Lessor as to the effect that:

                        (A) such country would recognize Lessor's ownership
                  interest in the Aircraft;

                        (B) the obligations of Lessee, and the rights and
                  remedies of Lessor, under the Lease are valid, binding and
                  enforceable under the laws of such jurisdiction (or the laws
                  of the jurisdiction to which the laws of such jurisdiction
                  would refer as the applicable governing law);

                        (C) it is not necessary, solely as a consequence of such
                  change in registration and without giving effect to any other
                  activity of Lessor (or any Affiliate thereof), for Lessor to
                  qualify to do business in such jurisdiction as a result of
                  such reregistration in order to exercise any rights or
                  remedies with respect to the Aircraft pursuant to the Lease;

                        (D) there is no tort liability of the owner or lessor of
                  an aircraft not in possession thereof under the laws of such
                  jurisdiction (it being agreed that, in the event such opinion
                  cannot be given in a form satisfactory to Lessor, such opinion
                  shall be waived if insurance reasonably satisfactory to Lessor
                  is provided to cover such risk); and

                        (E) unless Lessee shall have agreed to provide insurance
                  covering the risk of requisition of use of the Aircraft by the
                  government of such country (so long as the Aircraft is
                  registered under the laws of

<PAGE>

                                      -57-

                  such country), the laws of such country require fair
                  compensation by the government of such country payable in
                  currency freely convertible into Dollars and freely removable
                  from such country (without license or permit, unless Lessee
                  prior to such proposed reregistration has obtained such
                  license or permit) for the taking or requisition by such
                  government of such use;

            (b) In addition, as a condition precedent to any change in
      registration, Lessee shall have given to Lessor assurances reasonably
      satisfactory to it:

                  (i) to the effect that the provisions of Section 12 of the
            Lease will have been complied with after giving effect to such
            change of registration;

                  (ii) of the payment by Lessee of all reasonable out-of-pocket
            expenses of Lessor in connection with such change of registry,
            including, without limitation, (A) the reasonable fees and
            disbursements of counsel to Lessor and (B) any filing or recording
            fees, Taxes or similar payments incurred in connection with the
            change of registration of the Aircraft; and

                  (iii) to the effect that the tax and other indemnities in
            favor of each person named as an indemnitee under Section B of the
            Letter Agreement No. 1 afford each such person substantially the
            same protection as provided prior to such change of registration (or
            Lessee shall have agreed upon additional indemnities that, together
            with such original indemnities, in the reasonable judgment of
            Lessor, afford such protection).

            Section 23, MISCELLANEOUS.

            (a) SEVERABILITY AND CONSTRUCTION. Any provision of this Lease which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by Law, Lessee hereby waives any provisions of Law which renders any
provisions hereof prohibited or unenforceable in any respect. This Lease shall
constitute an agreement of lease, and nothing herein shall be construed as
conveying to Lessee any right, title or interest in the Aircraft or any Engine
or Part except as a lessee only. The headings in this Lease are for convenience
of reference only and shall not define or limit any of the terms of provisions
hereof. Whenever required by the context hereof, the singular shall include the
plural and vice versa. Reference to this Lease shall mean this Lease as amended
or supplemented from time to time.

<PAGE>

                                      -58-

            (b) GOVERNING LAW; JURISDICTION. THIS LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
EXCEPT TO THE EXTENT WHERE THOSE LAWS ARE GOVERNED BY THE FEDERAL LAWS OF THE
UNITED STATES INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
EACH PARTY HEREBY IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST IT OR ANY OF ITS ASSETS WITH RESPECT TO THE LEASE MAY BE BROUGHT IN ANY
JURISDICTION WHERE IT OR ANY OF ITS ASSETS MAY BE FOUND, OR IN ANY COURT OF THE
STATE OF NEW YORK OR ANY FEDERAL COURT OF THE UNITED STATES OF AMERICA LOCATED
IN NEW YORK CITY, NEW YORK AS SUCH PARTY MAY ELECT, AND BY EXECUTION AND
DELIVERY OF THIS LEASE EACH PARTY HEREBY IRREVOCABLY SUBMITS TO AND ACCEPTS WITH
REGARD TO ANY SUCH ACTION OR PROCEEDING, FOR ITSELF AND IN RESPECT OF ITS
ASSETS, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
EACH PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED AIRMAIL, POSTAGE PREPAID, TO SUCH
PARTY AT ITS ADDRESS SET FORTH ON EXHIBIT C HERETO. THE FOREGOING, HOWEVER,
SHALL NOT LIMIT THE RIGHTS OF EITHER PARTY TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING ANY LEGAL ACTION OR PROCEEDING OR TO OBTAIN
EXECUTION OF JUDGMENT IN ANY JURISDICTION. EACH PARTY HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS LEASE BROUGHT IN THE STATE OF NEW YORK, AND HEREBY
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN THE STATE OF NEW YORK HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

            EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIMS OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED
UPON OR ARISING OUT OF OR RELATING TO THIS LEASE OR ANY OTHER OPERATIVE
DOCUMENT.

            (c) NOTICES. All notices required under the terms and provisions
hereof shall be in writing, shall be sent to Lessor, or Lessee at their
respective addresses set forth on EXHIBIT C hereto (or such other addresses as
the parties may designate from time to time in writing) and, except as otherwise
provided herein, such notice shall become effective upon the

<PAGE>

                                      -59-

earlier of the transmission of a facsimile, actual receipt of the notice or the
fifth day following the date such notice is sent by U.S. mail.

            (d) LESSOR'S RIGHT TO PERFORM FOR LESSEE. If Lessee fails to make
any payment of Supplemental Rent required to be made by it hereunder or fails to
perform or comply with any covenant, agreement or obligation contained herein,
Lessor shall have the right but not the obligation to make such payment or
conform or comply with such agreement, covenant or obligation, and the amount of
such payment and the amount of the reasonable expenses of Lessor incurred in
connection with such payment or the performance thereof or compliance therewith,
together with interest thereon at the Interest Rate, shall be payable by Lessee
to Lessor (as Supplemental Rent) upon demand. Lessor agrees to notify Lessee in
writing prior to making any payment under this Section 23(d), unless the
Aircraft will be in danger of loss, sale, confiscation, forfeiture or seizure
should such payment not be made. The making of any such action by Lessor
pursuant to this Section 23(d) shall not constitute a waiver or release of any
obligation of Lessee under the Lease, nor a waiver of any Event of Default which
may arise out of Lessee's nonperformance of such obligation, nor an election or
waiver by Lessor of any remedy or right available to Lessor under or in relation
to this Lease.

            (e) COUNTERPARTS. This Lease may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. To the extent, if
any, that this Lease constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction) no security
interest in this Lease may be created through the transfer or possession of any
counterpart other than the counterpart which has been marked "Original" on the
signature page thereof.

            (f) BROKERS. Each party agrees to indemnify and hold the other
harmless from and against any and all claims, suits, damages, costs and expenses
(including, but not limited to reasonable attorneys' fees) asserted by any
agent, broker or other third party for any commission or compensation of any
nature whatsoever based upon the lease of the Aircraft, if such claim, damage,
cost or expense arises out of any action or alleged action by the indemnifying
party, its employees or agents.

            (g) TIME IS OF THE ESSENCE. Time and strict and punctual performance
are of the essence with respect to each provision of this Lease.

            (h) DISCLAIMER OF CONSEQUENTIAL DAMAGE. LESSEE AGREES THAT IT SHALL
NOT BE ENTITLED TO RECOVER, AND HEREBY DISCLAIMS AND WAIVES ANY RIGHT THAT IT
MAY OTHERWISE HAVE TO RECOVER, CONSEQUENTIAL DAMAGES AS A RESULT OF ANY BREACH
OR ALLEGED BREACH BY LESSOR OF ANY OF THE AGREEMENTS, REPRESENTATIONS

<PAGE>

                                      -60-

OR WARRANTIES OF LESSOR CONTAINED IN THIS LEASE OR ANY OF THE OTHER OPERATIVE
DOCUMENTS.

            (i) INCORPORATION BY REFERENCE. The definitions, and other terms and
provisions set forth in Letter Agreement No. 1 are hereby incorporated in this
Lease to the same extent as if fully set forth herein.

            (j) ENTIRE AGREEMENT MODIFICATION OR REVISION. This Lease and the
other Operative Documents are intended to be a complete and exclusive statement
of the terms of the agreement of the parties hereto, and this Lease and the
other Operative Documents supersede any prior or contemporaneous agreements,
whether oral or in writing. Neither this Lease nor the other Operative Documents
nor any term of this Lease or the other Operative Documents may be modified,
rescinded, changed, waived, discharged or terminated except by a writing signed
by the party to be charged. Lessor and Lessee acknowledge their agreement to the
provisions of this Section 23(j) by their signatures below.

            (k) USURY LAWS. The parties intend to contract in strict compliance
with the usury Laws of the State of New York and, to the extent applicable, the
United States of America. Notwithstanding anything to the contrary in this Lease
or the other Operative Documents, Lessee will not be obligated to pay any
interest in excess of the maximum non-usurious rate, as in effect from time to
time, which may by applicable Law be charged, contracted for, reserved, received
or collected by Lessor in connection with this Lease or the other Operative
Documents. During any period of time in which the then applicable highest lawful
rate is lower than the rate specified in Letter Agreement No. 1, interest will
accrue and be payable at such highest lawful rate; however, if at later times
such highest lawful rate is greater than the rate specified in Letter Agreement
No. 1, then Lessee will pay interest at the highest lawful rate until the
aggregate amount of interest paid by Lessee equals the amount of interest that
would have been payable in accordance with the interest rate specified in Letter
Agreement No. 1.

            (1) WAIVERS. All waivers by Lessee set forth in this Lease or in the
other Operative Documents shall be deemed to have been made by Lessee in its own
capacity.

            (m) PURCHASE DOCUMENTS. Lessor shall endeavor to deliver to Lessee
within 30 days from the Delivery Date copies of the purchase agreement with the
Manufacturer in Lessor's possession relating to its acquisition of the Aircraft
(the "Purchase Documents"); provided, that failure to deliver to Lessee any or
all of the Purchase Documents shall not limit, affect or impair in any respect
Lessee's obligations or Lessor's rights under this Lease.

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Aircraft Lease Agreement to be duly executed as
of the day and year first above written.

                                           LESSOR:

                                           POLARIS HOLDING COMPANY, a
                                           Delaware corporation

                                           By /s/
                                              ----------------------------------
                                              VICE PRESIDENT
                                              ----------------------------------
                                              [Printed Name and Title]

                                           LESSEE:

                                           POLAR AIR CARGO, INC., a California
                                           corporation
                                           By
                                              ----------------------------------

                                              ----------------------------------
                                              [Printed Name and Title]

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee, each pursuant to due
authority, have each caused this Aircraft Lease Agreement to be duly executed as
of the day and year first above written.

                                           LESSOR:

                                           POLARIS HOLDING COMPANY, a
                                           Delaware corporation

                                           By
                                              ----------------------------------

                                              ----------------------------------
                                              [Printed Name and Title]

                                           LESSEE:

                                           POLAR AIR CARGO, INC., a California
                                           corporation

                                           By /s/ Ronald A. Lane
                                              ----------------------------------
                                              Ronald A. Lane
                                              Chief Marketing Officer

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